Federal Prosecutors Charge NECC Employees with Second Degree Murder: A Shot Across the Bow to Healthcare Companies Navigating Uncertain Regulatory Environments

22 December 2014 Health Care Law Today Blog

Federal prosecutors charged the head pharmacist and the president of New England Compounding Center (NECC), a now-bankrupt Massachusetts compounding pharmacy, with second-degree murder and racketeering in the U.S. District Court District of Massachusetts on Tuesday, December 16. The charges relate to NECC’s 2012 distribution of contaminated steroid injection vials in twenty states. The contaminated vial distribution resulted in a multistate meningitis outbreak causing sixty-four deaths and 751 cases of fungal infections according to the latest Centers for Disease Control and Prevention (CDC) report.

In an unprecedented move, prosecutors filed charges against fourteen individuals of NECC instead of the now defunct company and used Massachusetts’ licensing regulation, Section 9.01(3) of Title 247 of Massachusetts Regulations (requiring pharmacists to comply with the United States Pharmacopeia (USP), a volume published by the United States Pharmacoepeial Convention, as the basis for the indictment. The indictment charged NECC supervising pharmacist, Glenn A. Chin and President Barry Cadden and others with second-degree murder and racketeering, and alleged numerous violations of the USP. Furthermore, the indictment cited the individuals with “wanton and willful disregard of the likelihood that…their actions would cause death or great bodily harm” and further alleged violations regarding the use of expired ingredients; lack of personnel training and education; non-compliant cleaning and sterilization practices; and, fraudulent labeling.

In addition to the filing of federal criminal charges against individuals, NECC is facing a multi-million dollar products liability class action and Chapter 11 bankruptcy. This case is another indication of the growing trend of the government seeking to hold individuals liable for their actions and underscores the importance for health care entities working in regulatory environments to err on the side of caution and comply with all guidance and regulations on both an individual and corporate level.

Taking a few precautionary steps can prevent costly litigation, expenses, unwanted media attention, bankruptcy as well as criminal and civil charges. Businesses should consider the following at all times while working in regulatory environments and before entering into any novel healthcare venture:

  • Seek the advice of competent health care counsel
  • Ensure compliance with both federal and state regulations
  • Review licensing, criminal, and civil statutes
  • Review regulatory guidance and manuals
  • Review peer groups and third party guidance
  • Envision long-term and short-term objectives
  • Create, maintain, and enforce internal training and compliance manuals
  • Monitor employee compliance with licensing requirements
  • Review hiring policies
  • Review professional conduct guidelines
  • Consider the field’s standard of care
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