Aggressive focus by DOJ has put increased burden on stakeholders to understand their obligations and exposure.
Since the Consumer Protection Branch of the US Department of Justice (DOJ) announced publicly late last year that “clinical trial fraud” will be the focus of “aggressive” enforcement,1 rampant research misconduct is only beginning to be exposed in a series of prosecutions. The government, pharmaceutical drug sponsors, contract research organizations (CROs), and study subjects all have been victims of these schemes. Under federal law, the government is required to provide notice to crime victims of their rights,2 but the receipt of such a notice also may impose certain obligations on the recipient. Close attention to these responsibilities is critical, as more criminal prosecutions are in the works, and civil claims will follow shortly.
To date, the federal government has charged at least 16 individuals, including principal, a/k/a “clinical,” investigators, and sub-investigators, with research fraud-related crimes. The defendants and associated companies were located primarily in Florida. In this regard, geography may provide a degree of historical insight. Much like compounding and opioid abuses proliferated in Florida and spread northward, early indications suggest that Florida is again a hotbed of research fraud.
These frauds are somewhat sophisticated and require organized efforts across perpetrators to succeed. First, fictitious subjects are enrolled. These individuals are: (1) real patients of the principal investigator who were never actually enrolled; (2) real people who are victims of identity theft; or (3) completely fake and non-existent humans. Second, all of the underlying documentation, including consent forms, case histories, drug disposition logs, lab reports, and e-diary phone records, is forged. Finally, sponsor payments to study participants and research organizations are disguised through money laundering transactions and the proceeds of fraud distributed.
The potential ramifications arising from research misconduct are far too broad to cover here, but a few preliminary considerations are noted. First and foremost, the research organizations publicly identified in the foregoing enforcement actions were Tellus Clinical Research, Inc., and Unlimited Medical Research LLC, both based in Miami.Although not identified publicly, a third company, Clinical Research Solutions LLC, based in Ohio and Tennessee, also appears to be implicated. Hence, clients should understand the degree of their contacts with these companies.
Second, sponsors and CROs should determine whether their studies involved the principal investigators and other co-conspirators that have been charged with federal crimes. Information gathered in the due diligence and vetting process should be analyzed for further insights. Any necessary process enhancements or amplifications should be considered. In addition, monitoring should be implemented to track developments and ensure appropriate response to new information, including the receipt of potential victim-witness notifications.
Third, if the investigational drug is a controlled substance, be mindful of potential overlap with obligations beyond those imposed by the Food & Drug Administration. For example, the Drug Enforcement Administration (DEA) requires the filing of a Form 106 to report the theft or loss of controlled substances. Therefore, even if the sponsor has delegated its responsibilities to a CRO, that may not include compliance to DEA rules and regulations in these circumstances.
Finally, it is noteworthy that certain of the sponsors and CROs at issue discovered the fraud and reported it to the government. Hence, a fairly high expectation has been set, i.e., that this genre of fraud is detectable. Whether or not true, clients should be prepared to respond to the resulting scrutiny that may follow, both from government regulators and private litigants. Under the False Claims Act (FCA), for example, relators may allege that a defendant “recklessly disregarded” certain indicia suggestive of fraud to establish liability for the knowing submission of false claims to government payors.
Of concern, the clinical research frauds at issue date back at least to 2013. This significantly increases the burden on organizations to understand the extent of their obligations and potential exposure. In addition to the threshold considerations noted above, all clinical trial professionals are well-advised to take steps to validate compliance processes and controls. While the integrity of a study ultimately may not be subject to challenge, significant consideration should be given to potential reputational consequences.
Anthony J. Mahajan, Chair of Frier Levitt’s White Collar Defense and Government Investigations practice