RICO Indictment Of NECC Executives For Acts Of Second-Degree Murder

An Unprecedented Approach to Regulatory Violations

In December 2014, the United States Attorney for the District of Massachusetts obtained a sweeping indictment that charges business executives of the New England Compounding Center ("NECC") with 25 acts of second-degree murder as predicate offenses under the Racketeer Influenced and Corrupt Organizations ("RICO") Act.1 The Government's decision to pursue a RICO indictment for deaths allegedly resulting from regulatory violations is a marked departure from past practice. Query whether this case is a stark anomaly or a new approach in cases where regulatory violations allegedly resulted in death or extreme patient injury.

131-Count Indictment Charges Second-Degree Murder Based on NECC's Allegedly Unsafe, Unsanitary and Unlawful Production Practices

In September 2012, the U.S. Centers for Disease Control and the Food and Drug Administration began to investigate a nationwide outbreak of fungal meningitis.2 The agencies traced the outbreak to contaminated vials of preservative-free methylprednisolone acetate (MPA) manufactured by NECC, a compounding pharmacy located in Framingham, Massachusetts.3 According to the CDC, 751 individuals in 20 different states suffered from fungal infections after receiving injections of NECC's MPA.4 Those injections allegedly caused the death of 64 patients in 9 states.5

A little more than two years later, on December 17, 2014, a federal grand jury in the District of Massachusetts charged 14 individuals associated with NECC with a host of crimes related to the outbreak, including racketeering, conspiracy to defraud the Government, mail and wire fraud, criminal contempt, and violations of the Food, Drug and Cosmetics Act, such as introduction of adulterated and misbranded drugs into interstate commerce.6 Most seriously, the indictment charges NECC's owner and head pharmacist, Barry J. Cadden, as well as the company's supervisory pharmacist, Glenn A. Chin, with 25 predicate acts of second-degree murder under RICO.7 These charges stem from the deaths of patients in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia.8

In its 131-count indictment, the Government alleges that from at least 2006 until approximately October 2012, the defendants knowingly made and sold numerous drugs in an unsafe manner and under unsanitary conditions while simultaneously promoting and selling their products without disclosing these issues and concealing their wrongdoing from regulators.9

According to the Government, the defendants used expired ingredients, employed improper sterilization practices, and mislabeled drugs.10 Surface and air-sampling reports allegedly produced "alert level and action-level results" showing that mold and bacteria were growing in NECC's "clean" facilities.11 Chin allegedly instructed technicians "to prioritize production over cleaning and disinfecting" and to fraudulently complete cleaning logs.12 Meanwhile, Cadden allegedly told sales representatives to say that NECC "was providing the highest quality compounded medications" with a "strictly enforced environmental monitoring program and a comprehensive end-product testing program for its drugs."13 To avoid oversight, the defendants allegedly misled regulators by claiming that they only produced drugs pursuant to valid, patient-specific prescriptions, when in fact they produced drugs in bulk.14 The indictment alleges that these acts constituted a wanton and reckless indifference to human life in violation of seven states' second-degree murder statutes.15 Thus, the indictment...