A grand jury indicted her on 40 counts of health care fraud and 15 counts of failure to maintain records of the clinical drug studies in violation of 21 U.S.C. § 355(i) and 21 C.F.R. § 312.62(b) with intent to defraud and mislead. Counts 41-52 included allegations of inaccuracies in Dr. Palazzo’s psychiatric evaluations of subjects participating in the Paxil studies and alleged that her psychiatric evaluations in those studies stated that the subjects suffered from disorders without a diagnosis of those disorders. Counts 53-55 alleged that Dr. Palazzo reported that she examined a subject when she had not.
The District Court (E.D. La.) dismissed counts 41-55 on the nondelegation doctrine, holding that § 355(i) did not permit the FDA to promulgate regulations making clinical investigators liable for failure to keep records and report accurate information.
Different circuits used different legal frameworks to determine whether § 355(i) allowed the FDA to criminalize conduct of clinical investigators who failed to adhere to the FDA’s regulations regarding record keeping and information reporting. The District Court followed the rationale espoused by the Ninth Circuit in United States v. Smith, 740 F.2d 734 (9th Cir. 1984), and held that Congress did not specifically authorize regulations giving rise to criminal liability under § 355(i).
The Court of Appeals (5th Cir.) held that, on its face, § 355(i) did not provide criminal liability for sponsors or manufacturers of investigational drug studies or clinical investigators. 21 U.S.C. § 331(e) prohibited violations of § 355(i), and 21 U.S.C. § 333(a) contained criminal penalties for violating § 331(e). Therefore, it had to examine §§ 331(e), § 333, and the FDA’s regulations concerning clinical investigators to determine whether clinical investigators could have been criminally liable for failure to adhere to record keeping and reporting requirements.
Under § 331, the FDA had the authority to promulgate regulations requiring clinical investigators to adhere to record keeping and reporting requirements. Thus, under § 355(i), via 21 C.F.R. § 312.62(b), Dr. Palazzo was required to adhere to the FDA’s recording keeping and reporting requirements. There was no ambiguity about whether she could be prosecuted for violating those record keeping requirements. Under § 331(e), failure to establish or maintain any record or make any report required under § 355(i) was prohibited. Section 331(e) did not just apply to records and reports submitted directly to the Secretary of the FDA.
The Court of Appeals reversed the judgment and remanded the case.
Judge(s): Carl E. Stewart
Jurisdiction: U.S. Court of Appeals, Fifth Circuit
Related Categories: Administrative Law , Criminal Justice , Government / Politics
|Plaintiff Lawyer(s)||Plaintiff Law Firm(s)|
|Stephen A. Higginson||U.S. Department of Justice|
|Steve I. Frank||US Department of Justice|
|Douglas N. Letter||US Department of Justice|
|Defendant Lawyer(s)||Defendant Law Firm(s)|
|Herbert V. Larson, Jr.|
|William P. Gibbens||Schonekas Winsberg Evans & McGoey LLC|