U.S. District Judge Legrome Davis sentenced Michael Huggins and Thomas Higgins to nine months in jail. He sentenced John Walsh to five months in jail. Another executive, Richard Bohner’s sentencing hearing was continued indefinitely after his lawyer collapsed in the courtroom and had to be escorted out by paramedics.
All four men pleaded guilty in 2009 to misdemeanor counts of violating the responsible corporate officer doctrine of the Food, Drug & Cosmetic Act. Sentencing guidelines called for prison terms of as much as six months. Huggins was taken immediately into custody. Davis gave Higgins, who has an ailing wife, two weeks to surrender to prison officials. Walsh, whose daughter turns seven today, was given until Nov. 28 to report.
“This is shameful behavior,” Davis said during the abbreviated hearing for Bohner. “There is no credit here that belongs to anyone.”
Synthes, the world’s largest maker of bone-related medical devices, its Norian Corp. unit, and the four officers were indicted in June 2009 over claims they conspired to conduct unapproved clinical trials of Norian-branded cements from May 2002 to late 2004.
The cement, approved for elsewhere in the body, was used in the spines of 200 patients with fractured vertebrae. Three patients died from a rapid drop in blood pressure during spinal surgeries, prosecutors said.
West Chester, Pennsylvania-based Synthes agreed to plead guilty, sell the Norian unit and pay a $23.5 million fine to settle the case. The agreement allowed the company to keep operating in the U.S. without its products being banned from Medicare reimbursement programs.
Johnson & Johnson agreed to buy Synthes in April for $21.3 billion to become the leader in the $5.5 billion market for devices to treat trauma victims. Synthes has 50 percent of the market for sales of screws, plates, bone grafts and other products to treat skeletal injuries.
The Justice Department had asked Davis to sentence Huggins and three other former Synthes executives to prison for up to a year, partly to serve as a deterrent to other health-care industry executives.
Lawyers for Huggins and the other executives had argued that prison terms would be excessive, and that probationary or fine-only sentences are sufficient. Each of the former executives pleaded guilty in 2009 to a misdemeanor charge of shipping adulterated and misbranded bone cement into interstate commerce, and agreed to pay the maximum fine of $100,000.
Synthes and its Norian unit agreed last year to plead guilty to charges that between 2002 and 2004 they conspired to conduct unauthorized clinical trials of the Norian bone cement in surgeries to treat vertebral compression fractures of the spine, a type of fracture that often occurs in the elderly.
The prescribing label for the Norian bone cement, however, specifically warned against using it for vertebral compression fractures, due to concerns it could cause dangerous blood clots. The cement was approved to fill bony voids or defects that weren't essential to bone stability.
Three patients died on the operating table after spine surgeons used the Synthes product in 2003 and 2004. The Department of Justice hasn't proved that the cement caused the deaths, but the agency has said the deaths should have raised red flags at Synthes about the product's safety risks.
To settle the corporate charges, Synthes and Norian agreed to pay $23.2 million in fines, and Synthes sold Norian to Kensey Nash Corp. KNSY -1.03% . Synthes, which has its headquarters in Switzerland and has major operations in the Philadelphia suburbs, has agreed to be acquired by Johnson & Johnson JNJ -1.43% for about $21 billion in a deal expected to close next year.
In addition to Huggins, the former Synthes executives facing sentencing Monday are: Thomas B. Higgins, former president of the Synthes spine division; Richard E. Bohner, former vice president of operations at Synthes; and John J. Walsh, former director of regulatory and clinical affairs in the Synthes spine unit.
The four men pleaded guilty under the so-called responsible corporate officer doctrine. Under this doctrine, corporate officers can be found criminally liable if they held positions of authority in which they could have prevented or promptly corrected an alleged corporate violation, but failed to do so.
The doctrine is controversial, however, because it doesn't require proof that a corporate officer had knowledge or awareness of the alleged wrongdoing.
The Justice Department alleged in court papers that in the Synthes case, the men were aware of and participated to some extent in the underlying criminal conduct, and that their conduct caused harm to the public.
"Due to the egregious facts of this case, the Court could and should consider whether a sentence of imprisonment up to the statutory maximum of 12 months would be appropriate," the U.S. attorney's office said in a court filing earlier this year. One year in prison would be above the federal sentencing guidelines of up to six months imprisonment.
But defense lawyers said in court filings that prison terms would be unusual and extraordinary for executives who have pleaded guilty to misdemeanors under the responsible corporate officer doctrine.
Lawyers for Huggins--the highest-ranking of the former executives--acknowledged in a court document he "failed to heed warning signs concerning Norian's use in the spine" and "is painfully aware that three patients died during operations involving Norian."
Huggins' lawyers also said the evidence in the case "shows that Mr. Huggins committed a serious offense but does not show the sort of intentional misconduct that the government has alleged in this case."
Huggins' lawyers say a sentence of probation is sufficient because he accepted responsibility for his conduct, agreed to the fine, and his career in health care is over.
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