United States v. Simon ( 2021 )

United States Court of Appeals
For the First Circuit
Nos. 20-1368
20-1412
UNITED STATES OF AMERICA,
Appellee/Cross-Appellant,
v.
RICHARD M. SIMON,
Defendant, Appellant/Cross-Appellee.
Nos. 20-1369
20-1411
UNITED STATES OF AMERICA,
Appellee/Cross-Appellant,
v.
SUNRISE LEE,
Defendant, Appellant/Cross-Appellee.
Nos. 20-1370
20-1413
UNITED STATES OF AMERICA,
Appellee/Cross-Appellant,
v.
JOSEPH A. ROWAN,
Defendant, Appellant/Cross-Appellee.
Nos. 20-1382
20-1409
UNITED STATES OF AMERICA,
Appellee/Cross-Appellant,
v.
JOHN KAPOOR,
Defendant, Appellant/Cross-Appellee.
Nos. 20-1410
20-1457
UNITED STATES OF AMERICA,
Appellee/Cross-Appellant,
v.
MICHAEL J. GURRY,
Defendant, Appellant/Cross-Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Allison D. Burroughs, U.S. District Judge]
Before
Howard, Chief Judge,
Selya, Circuit Judge,
and Gelpí,* District Judge.
William W. Fick, with whom Daniel N. Marx and Fick & Marx LLP
were on brief, for defendant Simon.
Peter Charles Horstmann for defendant Lee.
* Of the District of Puerto Rico, sitting by designation.
Michael Kendall, with whom Karen Eisenstadt, Alexandra I.
Gliga, and White & Case LLP were on brief, for defendant Rowan.
Martin G. Weinberg and Kosta S. Stojilkovic, with whom Martin
G. Weinberg Law, P.C., Beth A. Wilkinson, Chanakya A. Sethi, and
Wilkinson Walsh LLP were on brief, for defendant Kapoor.
Megan A. Siddall, with whom Tracy A. Miner and Miner Orkand
Siddall LLP were on brief, for defendant Gurry.
David M. Lieberman, Attorney, Appellate Section, United
States Department of Justice, with whom Nicholas L. McQuaid, Acting
Assistant Attorneys General, Criminal Division, Robert A. Zink,
Acting Deputy Assistant Attorney General, Nathaniel R. Mendell,
Acting United States Attorney, Donald C. Lockhart, Appellate
Chief, and Mark T. Quinlivan, Fred Wyshak, K. Nathaniel Yeager,
and David G. Lazarus, Assistant United States Attorneys, were on
brief, for the United States.
August 25, 2021
SELYA, Circuit Judge. A noted British ethologist once
observed that "[t]he total amount of suffering per year in the
natural world is beyond all decent contemplation." Richard
Dawkins, River Out of Eden 131-32 (Basic Books 1995). Some of
this suffering is unavoidable, but some is caused by those who
callously place profits over principle. The facts of this mammoth
case, as supportably found by the jury, tell a chilling tale of
suffering that did not need to happen. It involves a group of
pharmaceutical executives who chose to shunt medical necessity to
one side and shamelessly proceeded to exploit the sickest and most
vulnerable among us — all in an effort to fatten the bottom line
and pad their own pockets.
The tale told by this case chronicles the pernicious
practices employed by a publicly held pharmaceutical firm, Insys
Therapeutics, Inc. (Insys), with respect to the marketing and sale
of Subsys, a fentanyl-laced medication approved by the United
States Food and Drug Administration (FDA) for use in the treatment
of breakthrough cancer pain. When the government got wind of these
practices, it launched an investigation. That investigation
produced evidence that led a federal grand jury to indict seven of
the company's top executives on charges brought under the Racketeer
Influenced and Corrupt Organizations Act (RICO), 18 U.S.C
§ 1962(d). Two of the executives eventually entered into plea
agreements, but the rest stood their ground. Following a fifty-
- 4 -
one-day trial, the jury convicted the five remaining defendants as
charged (with an exception described below), and the district court
(again with an exception described below) declined to set aside
the jury verdicts. The court then sentenced the defendants to
prison terms of varying lengths, ordered defendant-specific
restitution, and directed the forfeiture of certain assets.
On appeal, the defendants — ably represented — raise a
gallimaufry of claims. The government cross-appeals, assigning
error to the district court's refusal to embrace the whole of the
jury verdicts and to its computation of the forfeiture amounts.
After careful consideration of an amplitudinous record, we uphold
the jury verdicts in full, affirm the defendants' sentences (which
are unchallenged), vacate the restitution and forfeiture orders,
and remand for further proceedings consistent with this opinion.
I
We begin with a snapshot of the relevant facts drawn
from the evidence adduced at trial. We then briefly rehearse the
travel of the case.
A
Insys is a pharmaceutical firm founded by one of the
defendants, Dr. John Kapoor. Under the Insys umbrella, Kapoor
sought to develop sublingual spray drug-delivery formulations.
The firm explored various options, but soon concentrated on
- 5 -
developing a sublingual fentanyl spray. This product came to be
called "Subsys."
In early 2012, the FDA approved Subsys for the treatment
of patients suffering from "breakthrough cancer pain." The term
"breakthrough cancer pain" is a term of art: it refers to brief
spikes in pain (typically lasting less than one hour) in patients
with cancer who are already dealing with constant and relatively
steady pain. All other uses of Subsys were deemed "off-label."
When Subsys went on the market, its FDA-approved label
declared that "[t]he initial dose of Subsys to treat episodes of
breakthrough cancer pain is always 100 micrograms." Moreover, the
label warned that "Subsys contains fentanyl," which is a "Schedule
II controlled substance with an abuse liability similar to other
opioid analgesics." Relatedly, the label carried a limitation on
who could prescribe the drug: due to "the risk for misuse, abuse,
addiction and overdose," Subsys could be prescribed "only through
a restricted program . . . called 'Risk Evaluation and Mitigation
Strategy'" (REMS). This program formed part of the FDA's
Transmucosal Immediate Release Fentanyl REMS Access Program, which
required patients, prescribers, and pharmacists to sign a form
stating that they understood the risks presented by the prescribed
drug.
Subsys made its debut in the marketplace in March of
2012 (shortly after FDA approval was secured). At that point in
- 6 -
time, Kapoor was serving as Insys's executive chairman, Michael
Babich was serving as its chief executive officer, Shawn Simon was
serving as its vice president of sales, and Matthew Napoletano was
serving as its vice president of marketing.
Around the time of the Subsys launch, Insys assembled a
marketing team. It proceeded to provide its sales force with
access to data that ranked physicians "based on their history of
prescribing within the opiate market, in particular, the fentanyl
market." The ranking system assigned a number between 1 and 10 to
each doctor — the higher the number the greater the volume of
prescriptions written. Salespeople were instructed to target
doctors ranked 5 or above and to give their "highest attention" to
those assigned a 10. They were also told to employ a "switch
strategy" aimed at persuading prescribers whose patients already
had been determined to need a similar fentanyl product to jettison
the similar product in favor of Subsys. Although the only approved
use for Subsys was for treatment of breakthrough cancer pain, most
of the prescribers listed in the database were pain-management
specialists, not oncologists.
Notwithstanding Insys's strategic plan, Kapoor was
disappointed with initial sales and revenue figures. He told
colleagues that it was "the worst f*****g launch in pharmaceutical
history he's ever seen." In Kapoor's view, the "main issue" was
that the majority of patients who started on Subsys would stay on
- 7 -
the drug only for the first month and would not refill their
prescriptions. Napoletano hypothesized that patients were
electing not to stick with Subsys because insurance companies were
choosing not to cover it. Patients, he suggested, did not want to
pay out of pocket to refill Subsys prescriptions.
Kapoor, though, had a different take: he attributed the
widespread failure to refill Subsys prescriptions to patients
"starting on too low of a dose." Because the Subsys label
specified the initial dose as 100 micrograms, Kapoor expressed
concern that patients who were used to a higher dose of a competing
product would not be satisfied with the pain management offered by
Subsys at that initial dosage. Consistent with Kapoor's concerns,
sales data (which Insys executives analyzed daily) showed that the
lower a patient's starting dose, the higher the "falloff rate."
By the fall of 2012, Insys had begun to overhaul its
marketing team. Shawn Simon was cashiered, and Alec Burlakoff
(previously a regional manager) replaced him as vice president of
sales. Defendant Joseph A. Rowan was promoted into Burlakoff's
former role. Defendants Sunrise Lee and Richard M. Simon were
installed as regional managers, and defendant Michael J. Gurry
became vice president for managed markets.1
1 To avoid any confusion between Richard Simon and Shawn
Simon, we subsequently refer to Richard Simon — and only Richard
Simon — as "Simon."
- 8 -
In addition to these executive-suite changes, Insys
revamped its sales and marketing strategy. That fall, it hosted
both a national sales meeting and a national sales call to train
its sales force on a "new plan of attack." This plan had several
components:
• A new "switch program" allowed patients who were
transitioning to Subsys from a competing drug to
receive vouchers to defray the cost of Subsys for
as long as they needed it or until it was covered
by their insurance.
• A new "super voucher" program offered a means of
providing free product to patients.
• A specially crafted "effective dose" message
informed prescribers that, despite the statements
on the FDA-approved labelling, 100- or 200-
microgram doses were not effective. To complement
this "effective dose" messaging, sales
representatives were notified "each and every time"
a prescriber wrote a Subsys prescription for 100-
or 200-micrograms; and they were instructed to
report back within 24 hours both as to the reason
why the doctor had prescribed the low dose and as
to how the doctor planned to titrate the patient to
the "effective dose."
- 9 -
• A revised compensation structure was put in place.
This structure rewarded sales representatives for
pushing doctors to prescribe higher doses of
Subsys. Under it, larger prescribed doses yielded
salespeople larger bonuses both because bonus
percentages were higher for higher doses and
because higher doses were more costly.
The icing on the cake was Insys's inauguration of a
speaker program in August of 2012. The ostensible "objective of
the program" was to provide "peer-to-peer education." To that
end, Insys would invite physicians whom it envisioned as potential
Subsys prescribers and the speaker (a fellow health-care provider)
would "present the information [about the drug] to them." These
presentations would take place through "online web hosting[s]" or
at "dinner meetings." Each sales region was to host a roughly
equal number of programs.
In its original incarnation, the speaker program never
got off the ground. Instead, Kapoor transmogrified it. About a
month after Napoletano announced the inauguration of the program,
Kapoor "put on hold all speaker programs effective immediately."
This directive emanated from Kapoor's disagreement with Napoletano
about what the objective of the program ought to be: as Kapoor
saw it, the speaker program "was designed for the speakers," not
- 10 -
for the physicians who comprised the audience. Kapoor "wanted
every speaker to write" Subsys prescriptions.
To accomplish this objective, Kapoor asked Napoletano
for a list of the doctors who served as speakers, along with data
as to "how many of them were writing [Subsys]" and data as to "what
percentage of the prescriptions came from them." Napoletano
balked, responding that "it's the attendees that you measure" —
not the speakers. Kapoor "was not in agreement with that" and
continued to insist upon a restructuring of the program.
In September, Kapoor, Burlakoff, Babich, and Napoletano
met to discuss the direction of the speaker program. Consistent
with Kapoor's vision, Burlakoff argued against the original peer-
to-peer education model. When Napoletano pointed out that "in
accordance with pharma code" each event had to have "a minimum of
two to four people" attend, Burlakoff replied that he "d[idn't]
care if there are any attendees" and that "he expect[ed] every
speaker to write" prescriptions. He said that the speaker program
should be "about the speaker and getting return from the speaker."
Although the meeting "was very contentious," Kapoor was satisfied
that his message had been received and proceeded to lift his "hold"
on the speaker program.
Burlakoff then emailed the sales force stating that
speaker programs are "the number one opportunity to grow [their]
business." He predicted that "[t]he hungry, motivated sales
- 11 -
representatives will be facilitating as many speaker programs as
humanly possible." He also suggested that a successful speaker
program would require salespersons to seek out speakers who are
"expert[s] with the utilization of Subsys in [their] clinical
practice" and who "have at least 20 patients on Subsys."
Even with this sharp change in direction, Insys's top
brass disagreed as to how to measure the program's success. In
October, Kapoor, Napoletano, Babich, and Burlakoff met regarding
that issue. Napoletano wanted to "track [the attendees] moving
forward to see if the presentation had any impact and if they
adopted the product in their practice." Burlakoff disagreed and
reiterated that "the metric to track is the speaker." The meeting
concluded with the issue still up in the air.
At a subsequent meeting, Kapoor resolved the issue. He
stated that he "wanted to make sure every speaker wrote" Subsys
prescriptions and "wanted a positive ROI" — a shorthand reference
to return on investment. The ROI, as Kapoor measured it, would be
the ratio between net revenue and the amount paid for speaker
services. After a heated exchange, Napoletano capitulated and
agreed to begin preparing reports tracking speakers and their
corresponding ROIs. These reports allowed Kapoor to "see how
successful [the] speakers were and how much product they were
writing, based on how much money [Insys] had given them so far."
Once this data became available, any speaker who "did not generate
- 12 -
at least two times in revenue what was being paid to them" was
"flagged" for a "temporary hold on programming." Refined to bare
essence, the flagged speakers "wouldn't get programs" and, thus,
would not receive honorariums.
This new protocol transformed the speaker programs from
pedagogical exercises into funding mechanisms for a pay-for-play
fandango. It is, therefore, unsurprising that with the new
protocol in place, Burlakoff sought to identify "whales." He
coined the term "whales" to refer to physicians who "ha[d] agreed
in a very clear and concise manner that they [were] up for the
deal, which [meant that] they [would] be compensated based on the
number of prescriptions of Subsys they wr[ote]." A corollary to
that deal was that "the more they wr[ote] and the more they
increase[d] the dose, the more they'[d] get paid to speak." At
Burlakoff's urging, regional sales managers were to have a "candid
conversation" with each potential whale and make clear that if the
physician was going to receive payments from Insys, he was "going
to write a significant amount of Subsys prescriptions to new
patients as well as increase the doses of current patients."
Burlakoff told sales managers to view speakers as their "business
partner[s]."
Burlakoff's whale hunt was fruitful: he identified many
whales, including Drs. Mahmood Ahmad, Gavin Awerbuch, Steven Chun,
Patrick Couch, Paul Madison, Judson Somerville, and Xiulu Ruan.
- 13 -
These prescribers were frequently mentioned on the daily 8:30 a.m.
management calls, in which Kapoor, Babich, Napoletano, Burlakoff,
and Gurry regularly participated. All of the whales committed to
prescribing large quantities of Subsys. And if a whale failed to
meet prescription expectations, an Insys representative would put
pressure on him to get him back on track.
Without exception, the prescription numbers of these
physicians increased when they joined the speaker program. In an
email, Burlakoff described the doctors as "clueless" because they
"prescribe strictly based on their relationship with the sales
manager." As a result of that relationship and the pressure that
sales representatives exerted, practitioners designated as
"[s]peakers" generated approximately $4,200,000 in net revenue (60
percent of Insys's total net revenue) after receiving more than
$550,000 in speakers' fees. Pleased with the success of the
reconstituted speaker program, Kapoor raised the speaker budget in
subsequent years.
Insys allocated speaker programs primarily to whales and
other prolific Subsys prescribers. These practitioners were paid
between $1,000 and $3,000 per event, depending on the particular
practitioner's "résumé or . . . influence." Speakers' payments
were routinely sent by mail. Multiple speaker events featured the
same practitioner. Insys initially capped annual speaking fees at
$100,000 per practitioner but later raised the ceiling to $125,000.
- 14 -
At a meeting in January of 2014, Babich, Burlakoff, and Richard
Simon compiled a list of "doctors that had the highest potential
to write." Burlakoff then "mobilized the sales force to go out
and make sure that these 19 or 20 doctors reached their [fees]
cap."
Despite the largess shown to speakers, the speaking
events themselves had little to no attendance. Often, only the
speaker, a friend or family member, and the sales representative
were on hand. Even when more people were in attendance, the
speaker programs were mostly "social outings" or "just a reason to
gather people and have dinner and pay [the doctor]." Although
sales representatives were required to submit sign-in forms and
attendee evaluation forms to a third-party compliance firm (Sci
Medica), they frequently submitted inaccurate documentation,
including sign-in sheets with names and signatures of people who
were not present, to give the speaking programs an aura of
legitimacy. And when Kapoor replaced Sci Medica with an in-house
compliance officer, the apocryphal documentation continued to
flow.
While the revamped speakers' program drove up the volume
of Subsys prescriptions, insurance coverage remained a problem.
Medicare, Medicaid, and private insurance companies covered the
cost of Subsys prescriptions only if a practitioner obtained prior
authorization to prescribe the drug. And because of the FDA label,
- 15 -
coverage was limited to patients with a current cancer diagnosis
who both suffered from breakthrough cancer pain and already had
tried other opioid medication.
Nor did the coverage limitations stop there. As a
condition precedent to coverage, insurers required that a patient
had tried a generic fentanyl product that had either failed to
ameliorate the breakthrough cancer pain or proved difficult to
ingest. To seek prior authorization, a practitioner typically
submitted patient and diagnosis information to the insurer, and
the insurer relied upon the accuracy of the submitted information
in its decisionmaking. When Insys launched Subsys, it processed
prior authorization requests through a third party and achieved
only a 30-35 percent success rate for prior authorization
approvals.
To enhance the approval rate, Gurry suggested bringing
the approval process in-house. With Kapoor's blessing, Gurry hired
Elizabeth Gurrieri in October of 2012 to found the Insys
Reimbursement Center (IRC), which operated out of Insys
headquarters. Insys created an opt-in form through which Subsys
prescribers could authorize the IRC to contact insurers and request
prior authorizations. The form listed patient information that
insurers typically would request during the prior authorization
process, such as whether the patient had tried certain medications.
Particular items from the list could be checked off as applying to
- 16 -
a specific case. This streamlined the process: a prescriber would
sign and fax an opt-in form to the IRC; the IRC would call the
insurer; and if the insurer needed additional information, the IRC
would reach out to the sales representative who would then follow
up with the prescriber. Insys encouraged physicians to use the
IRC, knowing that if the prior authorization was approved, "[t]he
sales rep would get paid, Insys would get paid, and the script
would get paid." A pilot program achieved an approval rate of 65-
70 percent. As a result, Insys quickly transitioned the IRC out
of its pilot phase and expanded it. Gurrieri was promoted to
manager of reimbursement services in March of 2013.
The IRC proved to be a rousing success. It owed much of
its success to the sales representatives. They interacted with
the physicians and collected documentation requested by insurers
during the prior-authorization process. A sales representative
would often spend at least one day per week in a physician's
office, reviewing patient files, assisting with authorizations,
and completing the opt-in forms.
Another factor in the IRC's success was the hiring of
"area business liaison[s]." These individuals were assigned to
the physicians who prescribed Subsys in substantial volume. Each
area business liaison worked in a physician's office processing
authorizations, but was paid by Insys, thereby reducing the
physician's overhead.
- 17 -
The third, and perhaps most impactful, factor in the
IRC's success was Insys's decision to begin collecting data on
each coverage decision. The IRC identified diagnoses and
conditions that historically had prompted particular insurers to
approve Subsys prescriptions. It proceeded to list these diagnoses
and conditions on the opt-in form, and sales representatives
encouraged physicians to employ them when seeking Subsys
authorizations. For example, Gurrieri noted success using "the
terminology 'history of cancer,' which means that they didn't have
cancer at the time but they had a history of cancer." Once
salespeople heard that use of that phrase could help obtain
insurance approval, the IRC, "all of a sudden, saw more opt-ins
having 'history of cancer' on them, which [led] to better approval
ratings."
Management regularly discussed the IRC on the daily 8:30
a.m. calls. All updates about the IRC were communicated by Gurry
during those calls. Although Insys had made great strides in
upping its approval rate, Kapoor put constant pressure on the IRC
to achieve a rate of 90 percent or higher. Striving to attain
this benchmark, the IRC started to offer training sessions to sales
representatives on "how to get the drug approved." Similarly,
Gurry started to advise sales representatives about what diagnoses
and conditions should be checked on the opt-in forms. He famously
directed IRC employees "to ride the gray line," that is, to "work
- 18 -
around the insurance companies" and "find ways around their
questions." Following that direction, the IRC developed
strategies to mislead insurers into granting prior authorizations
for the use of Subsys. Some of these strategies included
misleading the insurer into believing that the caller was calling
from the physician's office rather than from the IRC; representing
that a patient had cancer even if the available information
reflected only a history of cancer; giving the ICD-9 diagnosis
code as "338" to obscure the fact that the diagnosis was chronic
pain (which uses code 338.29 or 338.4) and not cancer pain or
neoplasm-related pain (which uses code 338.3); listing tried-and-
failed medications that the patient had never used; and falsely
stating that patients had dysphagia (difficulty swallowing).
Insys expected insurance companies to ask whether a
physician had prescribed Subsys to treat "breakthrough cancer
pain." Gurrieri instructed IRC staff to respond with "the spiel,"
which was pat phrasing designed to obfuscate the purpose of the
prescription. The essence of the spiel was that "[t]he physician
is aware that the medication is intended for the management of
breakthrough pain in cancer patients, and the physician is treating
the breakthrough pain." Phrased in this way, the expectation was
that "the person on the other end of the phone would be misled to
think the patient had cancer and approve the prior authorization."
- 19 -
The record makes manifest that the IRC, in practice, was
more interested in transmitting information that would prompt
favorable coverage determinations than it was in transmitting
accurate information. Through the IRC, the insurers were fed a
steady diet of deceptions, evasions, and half-truths.
Just as sales representatives were incentivized to push
physicians to prescribe higher doses of Subsys, IRC staffers were
incentivized to obtain insurance approvals. Goals known as "gates"
were set weekly. If the gate was opened, the staff member (usually
paid a low hourly wage) would receive a bonus.
The cocktail that Insys had mixed — including its revised
marketing and sales strategies, its use of speaker programs as
vehicles for bribes to physicians, its use of business liaisons,
and its no-holds-barred tactics within the IRC — proved to be
lucrative. Insys was able to go public only a year after
introducing Subsys to the market. Within two years after the
initial public offering, the company reached a market cap of over
$3,000,000,000. And by the end of 2015, Insys's stock price had
nearly quadrupled. Throughout, the defendants received
substantial salaries, bonuses, and stock options.
But Insys's meteoric rise appeared too good to be true,
and the company attracted unwanted attention. When federal
authorities began probing the details of how Insys was marketing
Subsys, the defendants' scheme began to unravel.
- 20 -
B
In the wake of the federal investigation, a federal grand
jury sitting in the District of Massachusetts charged Kapoor, Lee,
Simon, Gurry, and Rowan with conspiracy to distribute Subsys
through a pattern of racketeering activity.2 See id. The
conspiracy was effected, the indictment said, through acts of mail
fraud, see id. § 1341; honest-services mail fraud, see id. §§ 1341,
1346; wire fraud, see id. § 1343; honest-services wire fraud, see
id. §§ 1343, 1346; and Controlled Substances Act (CSA) violations,
see 21 U.S.C. § 841(a)(1). Following lengthy pretrial
maneuvering, not relevant here, a fifty-one-day trial ensued.
The jury returned guilty verdicts against all of the
defendants. In connection with those verdicts, the jury made a
series of special findings that all the defendants were guilty of
committing predicate acts of mail-fraud and wire-fraud, and that
all the defendants (except Gurry) were guilty of agreeing to
distribute a controlled substance and to commit honest-services
mail fraud and honest-services wire fraud.
The defendants moved for judgments of acquittal and/or
new trials. See Fed. R. Crim. P. 29(a), 33(a). The district court
granted in part the joint motion for judgments of acquittal filed
by Kapoor, Lee, Simon, and Rowan, vacating as to them the adverse
2Babich and Burlakoff were also named as defendants. Both
of them entered guilty pleas before trial.
- 21 -
findings with respect to the CSA and honest-services predicates.
See United States v. Gurry, 427 F. Supp. 3d 166, 222 (D. Mass.
2019). But with respect to all five defendants, the court rejected
their challenges to the mail- and wire-fraud predicates, rejected
their efforts to secure judgments of acquittal, and declined to
order a new trial. See id. The court sentenced the defendants to
terms of immurement of varying lengths and entered a series of
restitution and forfeiture orders.3 See United States v. Babich,
No. 16-CR-10343, 2020 WL 1235536, at *10 (D. Mass. Mar. 13, 2020).
All of the defendants appealed, and the government cross-appealed.
II
In this venue, we are faced with a kaleidoscopic array
of claims. Kapoor, Lee, Simon, and Rowan contend that the evidence
was insufficient to convict on the various mail- and wire-fraud
predicates, assigning error to the district court's denial of their
joint motion for judgment of acquittal. Relatedly, all defendants
claim error in the admission of patient-harm testimony and
3 The court sentenced Kapoor to a sixty-six-month term of
immurement, ordered restitution of $59,755,362.45, and directed
forfeiture of $1,914,771.20. As to Lee, the court imposed a prison
sentence of a year and a day, ordered restitution of $5,000,000,
and directed forfeiture of $1,170,274. As to Simon, the court
imposed a thirty-three-month term of immurement, ordered
restitution of $5,000,000, and directed forfeiture of
$2,338,078.72. Gurry's sentence was identical to Simon's, except
that he was ordered to forfeit $3,390,472.89. Finally, the court
sentenced Rowan to serve a twenty-seven-month prison term, ordered
restitution of $5,000,000, and directed forfeiture of
$2,078,217.66.
- 22 -
prejudicial spillover arising out of the government's efforts to
prove the CSA and honest-services predicates through that
testimony.
Some defendants raise individual claims as well. Lee
challenges the district court's order denying her pretrial motion
for severance, certain of the district court's evidentiary
rulings, and one of the district court's jury instructions. Rowan
claims that the government unlawfully withheld exculpatory
material, and that the district court erred in denying his mid-
trial motion to compel production of that material. The
defendants, jointly and severally, offer a plethora of reasons as
to why they — or some of them — ought to be granted new trials,
including claims relating to allegedly conflicted counsel, weight
of the evidence, and prosecutorial misconduct during closing
arguments.4 And although the defendants do not challenge their
4At various points, some of the defendants purport to
incorporate by reference arguments made by other defendants. See
Fed. R. App. P. 28(i). For example, a footnote in Rowan's brief
purports to "adopt[] and incorporate[] the facts and arguments in
the briefs of co-defendants Dr. John Kapoor, Richard Simon, Michael
Gurry, and Sunrise Lee, whether or not this brief explicitly
mentions them." Lee's and Gurry's briefs each contains similar
statements.
The rule in this circuit is that "[a]doption by
reference . . . cannot occur in a vacuum; to be meaningful, the
arguments adopted must be readily transferrable from the
proponent's case to the adopter's case." United States v. David,
940 F.2d 722, 737 (1st Cir. 1991). Given this rule, the shorthand
adoption by reference attempted by these defendants is partially
an empty gesture. And to the extent that the incorporated
arguments pass through this screen, they fail on the merits (except
- 23 -
prison sentences, they do contest the district court's ancillary
orders awarding restitution and forfeiture. The government cross-
appeals, assigning error to the district court's order vacating
the jury's findings adverse to Kapoor, Lee, Simon, and Rowan on
the CSA and honest-services predicates. It also appeals the
district court's calculation of forfeiture amounts with respect to
Lee, Simon, Gurry, and Rowan.
We start our journey with the parties' competing claims
concerning the sufficiency of the evidence with respect to the CSA
and honest-services predicates. From there, we wend our way
through the remaining sufficiency-of-the-evidence claims, the
admissibility of the patient-harm testimony, questions pertaining
to evidentiary spillover, and a myriad of other claims of trial
error. Our journey ends with an appraisal of the parties' opposing
views regarding issues related to restitution and forfeiture.
III
Under RICO, it is a crime "for any person employed by or
associated with any enterprise engaged in, or the activities of
which affect, interstate or foreign commerce," to conspire "to
conduct or participate, directly or indirectly, in the conduct of
such enterprise's affairs through a pattern of racketeering
activity." See 18 U.S.C. § 1962(c), (d). A pattern of
with respect to certain incorporated arguments, identified in
Parts XIV and XV, infra, regarding restitution and forfeiture).
- 24 -
racketeering activity requires at least two predicate racketeering
acts within ten years of each other. See id. § 1961(5). A
defendant need not have "agree[d] to commit or facilitate each and
every part of the substantive offense" in order to be found guilty.
Salinas v. United States, 522 U.S. 52, 63 (1997). Nor need such
a defendant be capable of committing the substantive offense. See
id. Instead, "[a]ll the government need show is that the defendant
agreed to facilitate a scheme in which a conspirator would commit
at least two predicate acts, if the substantive crime [had]
occurred." United States v. Rodríguez-Torres, 939 F.3d 16, 29
(1st Cir. 2019); see Salinas, 522 U.S. at 65 ("A [RICO] conspirator
must intend to further an endeavor which, if completed, would
satisfy all of the elements of a substantive criminal offense, but
it suffices that he adopt the goal of furthering or facilitating
the criminal endeavor.").
In this case, the critical questions involve whether —
as to each defendant — the record sufficiently supports the jury's
verdict that he or she, directly or through another conspirator,
committed the charged offenses. While the jury answered these
questions in the affirmative (except as to Gurry, who was found
guilty only with respect to the mail- and wire-fraud predicates),
the district court found the government's proof of the CSA and
honest-services predicates wanting. The court ruled that,
although "it would not have been unreasonable for the jury to infer
- 25 -
that the nefarious tacit understanding the Government describes
existed," it "would have been equally reasonable for the jury to
infer from the same evidence that no such tacit understanding
existed." Gurry, 427 F. Supp. 3d at 186. Because the proof "gives
equal or nearly equal circumstantial support to a theory of guilt
and a theory of innocence," the court vacated the jury findings
regarding the CSA and honest-services predicates vis-à-vis Kapoor,
Lee, Simon, and Rowan. Id. (quoting United States v. Burgos, 703
F.3d 1, 10 (1st Cir. 2012)).
The government appeals from this ruling. Our task is
familiar. We afford de novo review to the district court's rulings
on the defendants' joint motion for judgment of acquittal. See
United States v. Kilmartin, 944 F.3d 315, 325 (1st Cir. 2019);
United States v. Olbres, 61 F.3d 967, 970 (1st Cir. 1995). "Where,
as here, the defendant[s] challenge[] the sufficiency of the
evidence, all of the proof 'must be perused from the government's
perspective.'" Kilmartin, 944 F.3d at 325 (quoting United States
v. Gomez, 255 F.3d 31, 35 (1st Cir. 2001)). This lens demands
that "we scrutinize the evidence in the light most compatible with
the verdict, resolve all credibility disputes in the verdict's
favor, and then reach a judgment about whether a rational jury
could find guilt beyond a reasonable doubt." Olbres, 61 F.3d at
970 (quoting United States v. Taylor, 54 F.3d 967, 974 (1st Cir.
1995)).
- 26 -
In conducting this tamisage, "we must honor the jury's
evaluative choice among plausible, albeit competing, inferences."
United States v. Rodríguez-Vélez, 597 F.3d 32, 40 (1st Cir. 2010).
When all is said and done, "[t]he court need not be convinced that
the verdict is correct; it need only be satisfied that the verdict
is supported by the record." Kilmartin, 944 F.3d at 325.
Consequently, a "verdict must stand unless the evidence is so scant
that a rational factfinder could not conclude that the government
proved all the essential elements of the charged crime beyond a
reasonable doubt." Rodríguez-Vélez, 597 F.3d at 39 (emphasis in
original).
Our next chore is to elaborate the elements of the CSA
predicates. The CSA makes it a crime "for any person knowingly or
intentionally . . . to manufacture, distribute, or dispense . . . a
controlled substance." 21 U.S.C. § 841(a)(1). Even so, licensed
health-care practitioners (typically, physicians) registered under
the CSA are authorized to dispense controlled substances. See id.§ 822(b). This authorization, though, is not absolute. Such
practitioners face criminal liability "when their activities fall
outside the usual course of professional practice." United States
v. Moore, 423 U.S. 122, 124 (1975); see United States v.
Limberopoulos, 26 F.3d 245, 249 (1st Cir. 1994) ("[T]he statute
applies to a pharmacist's (or physician's) drug-dispensing
activities so long as they fall outside the usual course of
- 27 -
professional practice."). Because a RICO conspiracy conviction
requires proof that defendants "specifically intended that some
conspirator commit each element of" the predicate racketeering
acts, Ocasio v. United States, 136 S. Ct. 1423, 1432 (2016)
(emphasis in original), the government had to prove that the
defendants specifically intended that a licensed practitioner
would prescribe Subsys "with no legitimate medical purpose,"
United States v. Volkman, 797 F.3d 377, 391 (6th Cir. 2015); see
United States v. Feingold, 454 F.3d 1001, 1008 (9th Cir. 2006).
Against this backdrop, we canvass the proof as to Kapoor,
Lee, Simon, and Rowan.
A
Through his motion for judgment of acquittal, Kapoor
challenged, inter alia, the jury's finding that he was guilty of
conspiracy to commit racketeering activities through a pattern of
racketeering acts that included the CSA and honest-services
predicates. As we have said, the district court set aside the
jury's findings with respect to those predicates. The question is
one of evidentiary sufficiency.
The record is replete with support for the proposition
that Kapoor intended physicians to write medically illegitimate
prescriptions. Kapoor sought out pill mill doctors (that is,
doctors who were notorious for their readiness to prescribe drugs
regardless of medical necessity). See, e.g., United States v.
- 28 -
Iriele, 977 F.3d 1155, 1161 (11th Cir. 2020) (describing as "pill
mill" a clinic where people "could get prescriptions for their
controlled substances of choice with few, if any, questions
asked"). For instance, Burlakoff testified that, to increase
sales, Kapoor wanted him to do "[w]hatever it took with whomever
[they] called on, including pill mill doctors."
Perhaps the best illustration of Kapoor's intent is
found in the evidence concerning his attitude toward Dr. Madison.
Kapoor encouraged dealings with Dr. Madison despite having
reviewed an email in which a sales representative wrote that "Dr.
Madison runs a very shady pill mill and only accepts
cash. . . . He basically just shows up to sign his name on the
prescription pad, if he shows up at all." Kapoor also knew that
another sales representative had observed a "shady setup" in Dr.
Madison's office with "many patients . . . going in and out of
there . . . just seeking medication." As one expert witness put
it, this prescribing behavior was inconsistent with a doctor's
duty to carry out "those things that are necessary to reasonably
diagnose the problem," such as "history taking, physical
examination, and the obtaining and evaluation of diagnostic
studies."
Although on unmistakable notice of the kind of operation
that Dr. Madison appeared to be running, Kapoor pursued him.
Babich testified that Kapoor "wanted [Dr. Madison] to write the
- 29 -
drug" and awarded him speaker programs (and, thus, kickbacks) "as
much as once a week." This was consistent both with Babich's
description of Kapoor's avowed "philosophy" and with other
evidence reflecting Kapoor's appetite for whales. The jury
reasonably could have found that Kapoor's decision to continue
courting and compensating Dr. Madison, notwithstanding his
knowledge that the doctor was running a notorious pill mill, was
proof of at least a tacit understanding of Kapoor's culpable role
in the distribution scheme. See United States v. King, 898 F.3d
797, 809 (8th Cir. 2018).
Kapoor complains that this is a bridge too far. He
laments that he received hundreds of emails a day, that he was
busy with other business pursuits and charitable endeavors, and
that Dr. Madison is only one of 13 doctors discussed in the four-
page email. It follows, Kapoor suggests, that a reasonable jury
could not infer that he read the sales representative's description
of Dr. Madison.
This suggestion is little more than whistling past the
graveyard. It conveniently overlooks that the jury heard evidence
that Kapoor demanded information on "every [Subsys] script that
was written" and "every doctor that wrote it." He demanded
spreadsheets to parse doctor-level data and sought to identify
"whales" — doctors who understood that, in exchange for speaker-
- 30 -
program payments, they would prescribe "a significant amount of
Subsys prescriptions."
What is more, Babich testified that Kapoor expressed
great interest in these kinds of sales reports. Kapoor "want[ed]
every single rep every Friday to e-mail [Babich] a list of all
their top physicians and what happened with those top physicians
that week." An assistant "print[ed] these out" and put "them on
[Kapoor's] desk for Monday morning, so he c[ould] review" them.
Given that level of attention to detail vis-à-vis prescribers, the
inference that Kapoor read the email about Dr. Madison seems
compelling.
Last — but surely not least — Babich confirmed that he
gave the four-page email directly to Kapoor. He also testified
that — several months after he had forwarded that email about Dr.
Madison to Kapoor — the same sales representative again reiterated
that Dr. Madison operated a pill mill and added that Dr. Madison
faced possible legal action. Babich described this matter as "a
serious issue" and testified that he personally reviewed this
information with Kapoor. Kapoor responded that Dr. Madison "still
has a medical license. I don't want him taken off the call list"
for speaker programs.
We need not tarry. The evidence, taken in the light
most hospitable to the verdict, plainly supports the inference
that Kapoor knew of Dr. Madison's illegitimate prescribing habits
- 31 -
yet took steps to ensure that he would continue prescribing Subsys.
Indeed, the evidence warrants an inference that Kapoor sought to
recruit Dr. Madison as a speaker (that is, as a kickback recipient)
precisely because of these habits. Such an inference is consistent
with other evidence that pill mill doctors were prized by Kapoor:
he tracked physicians' prescription patterns, gave favorable
treatment to the doctors who prescribed Subsys most profligately,
and — according to Burlakoff — did "whatever it took" to increase
Subsys sales. As Burlakoff put it, Kapoor's message to the sales
force was that "pill mills for [Insys] meant dollar signs."
The evidence also showed that Kapoor led Insys's effort
to influence physicians' prescription decisions through "effective
dose" messaging. The FDA-approved label stated that "[t]he initial
dose of Subsys to treat episodes of breakthrough cancer pain is
always 100 micrograms." Doctors were supposed to "look at one
patient at a time" and "titrate one patient at a time" to the dose
of the drug that achieves "the desired effect." Noting that
patients on higher doses were more likely to refill their Subsys
prescriptions, Kapoor sought to ride roughshod over this regime
and "move patients to higher doses." His mantra was to "push the
dose." To that end, he incorporated into the speaker program
kickbacks for dosage increases — the greater the increase, the
greater the payout. Predictably, Kapoor's campaign to increase
dosages resulted in the sales force negotiating dosage agreements
- 32 -
with doctors. And Insys closely monitored these agreements: for
example, when Dr. Somerville's dosage numbers appeared to be low,
a sales representative was instructed to "[d]rill into [the medical
assistant's] head that every refill has to be 180 to 240
[micrograms]" because "Dr. Somerville agreed to do this."
To sum up, the evidence plainly supports a finding that
Kapoor intended practitioners to prescribe Subsys as much as
possible, even when there was no medical necessity for the drug or
the dosage prescribed. His "effective dose" campaign was designed
to dissuade doctors from prescribing medically appropriate lower
dosages and to accelerate dose titration. A reasonable jury could
infer that, by taking these actions, Kapoor pushed physicians — in
Burlakoff's words — to "initiate a new habit" that would transform
patients into repeat customers, quite apart from medical
necessity. See United States v. Clough, 978 F.3d 810, 820-21 (1st
Cir. 2020) (concluding that giving "opioid-dependent patients high
dosages of this highly-addictive fentanyl drug, even when patients
had no problems with their existing regimen" supported reasonable
inference that defendant's "behavior was not reminiscent of a
physician assistant prescribing based on need, but rather [that]
of a drug pusher"). And having thrown medical necessity to the
wind, Kapoor's "push the dose" message effectively directed Insys
salespersons, who were not health-care professionals, to enforce
mandatory ranges of dosages. Following Kapoor's lead, they shaped
- 33 -
doctors' prescription decisions without regard to any individual
patient information by getting the doctors to commit to meeting
prescription-quantity numbers on a weekly basis. Jurors are
allowed to use common sense and — surveying this unattractive
tableau — a reasonable jury could have inferred that Kapoor, in
"push[ing] the dose," intended doctors to increase doses of Subsys
regardless of who the patient was or what the patient's medical
needs might be. See United States v. Guzman, 571 F. App'x 356,
363 (6th Cir. 2014) ("[T]he jury could reasonably infer the
requisite agreement to distribute controlled substances, as well
as knowledge and participation" from "evidence showing that
[defendants] tried to modify the prescribing practices of another
nurse practitioner," including by directing a "nurse to prescribe
short-acting rather than long-acting medications and to prescribe
prednisone for all customers.").
So, too, a reasonable jury could conclude that when drug
wholesalers reported suspicious Subsys ordering patterns to the
federal Drug Enforcement Administration (DEA), Kapoor sought to
tamp down any suspicions so that Insys could continue its modus
operandi while concealing it from outside scrutiny. Wholesalers
serve as middlemen between pharmaceutical manufacturers and
pharmacies and they impose quantity limits on the amount of
controlled substances that a pharmacy can receive each month. When
wholesalers notice suspicious ordering patterns, they are
- 34 -
obligated to notify the DEA. During the relevant time frame,
several pharmacies that served Insys speakers overshot their
monthly quantity limits. As a result, drug wholesalers froze
Subsys shipments to those pharmacies.
Insys executives knew that the reason for the freeze was
that wholesalers' software algorithms to monitor order patterns
had flagged Subsys orders as "potentially suspicious." In an email
to Kapoor, Christopher Homrich, an Insys executive, told him that
it was "very likely" that the DEA software would flag future orders
from those pharmacies as "suspicious" due to the "material"
increase in projected Subsys sales. Such freezes would be inimical
to Insys's strategic aim of getting doctors to prescribe Subsys in
heavy doses and without regard to medical necessity. Because
"Kapoor wanted to keep doing business" with the physicians
(particularly the whales) associated with the targeted pharmacies,
he demanded that Insys executives "find an alternative to make
sure one of our top customers has the product."
To accomplish this end run around the DEA and to avoid
the imminent freezes, Kapoor decided to explore a direct-ship
option. Such an option would have Insys ship Subsys straight to
the pharmacy associated with the prescribing doctor. Insys's
distribution manager (Dion Reimer) advised against this setup "at
least a dozen times." Given that Subsys was a controlled
substance, "[t]rying to circumvent any of the systems that are out
- 35 -
there could raise red flags." Kapoor disregarded Reimer's protests
and authorized sales representatives to negotiate supply
commitments and direct-ship agreements with individual doctors.
At his direction, Insys proceeded down this crooked path.5
Kapoor insists that the direct-ship agreements were made
only to "maximize sales of Subsys" and that he was "not trying to
evade DEA rules." But something that prowls like a tiger and
growls like a tiger usually is a tiger — and Reimer's assessment
of the direct-ship option as a means of circumventing DEA
guidelines seems spot-on.
In arguing to the contrary, Kapoor points to Babich's
testimony recounting how Insys retained "outside attorneys who
have expertise with the DEA rules" to ensure the direct-ship
arrangements were done "the right way." Babich also testified,
though, that Insys "did not tell the lawyers who drafted the
agreement[s] that [Insys was] providing kickbacks to the
physicians" associated with these pharmacies. According to
Babich, that omission was deliberate: the company feared that the
bribes contravened federal anti-kickback law. Under certain
circumstances, a party's retention of counsel may (as Kapoor
Unscrupulous practitioners apparently welcomed the direct-
5
ship option. In one of the weekly sales representative reports,
Kapoor was informed that Dr. Ahmad had committed to write "more
scripts than [Insys] can handle . . . once the pharmacy issue is
resolved." Other practitioners, including Drs. Couch, Ruan, and
Awerbuch, also benefited from direct-ship agreements.
- 36 -
suggests) ground an inference of benevolent motive. See United
States v. Powers, 702 F.3d 1, 9 (1st Cir. 2012). But viewing what
happened here in context, a jury instead could reasonably infer
that direct-ship agreements were evidence of Kapoor's efforts to
have doctors continue to prescribe Subsys illegitimately. See id.(explaining that advice-of-counsel defense "is not available to
one who omits to disclose material information to advisors"
(quoting Janeiro v. Urological Surgery Prof. Ass'n, 457 F.3d 130,
140 (1st Cir. 2006))).
Taking the evidence in the light most favorable to the
verdict, a jury reasonably could conclude — as this jury did —
that Kapoor relentlessly pursued pill mill doctors, pressured
health-care practitioners to increase dosages regardless of
medical need (through financial incentives and upfront
prescription commitments), knew of and encouraged certain
physicians' illegitimate prescribing habits, and — facing
regulatory scrutiny for the burgeoning sales generated through
these tactics — tried to hide the true state of affairs by cutting
out the middleman. Cf. Volkman, 797 F.3d at 391 (holding that
evidence that defendants "were aware of the reality that the
prescriptions from their clinic had no legitimate medical purpose"
and that "[i]nstead of rectifying the . . . issues with [the]
prescriptions, [defendants] exacerbated the problem
by . . . cutting out the middleman" sufficed "for a jury to find
- 37 -
that [defendants] executed a plan to unlawfully distribute
controlled substances with no legitimate medical purpose").
Consequently, we are satisfied that the adverse finding against
Kapoor as to the CSA predicates was supported by the record and,
therefore, should have been allowed to stand.
This holding also dictates that we reinstate the jury's
verdict against Kapoor as to the honest-services predicates.
Federal law prohibits a "scheme or artifice to defraud," 18 U.S.C.
§§ 1341, 1343, including "a scheme or artifice to deprive another
of the intangible right of honest services," id. § 1346. A person
contravenes this provision if, "in violation of a fiduciary duty,
[he] participate[s] in bribery or kickback schemes." Skilling v.
United States, 561 U.S. 358, 407 (2010). Kapoor disputes the
"fiduciary duty" element and contends that the government failed
to prove that he specifically intended health-care professionals
to write medically illegitimate Subsys prescriptions.
As the district court noted, the "overlap" between the
CSA and honest-services predicates is striking. Gurry, 427 F.
Supp. 3d at 187-88. Just as the jury instructions for the CSA
predicates required proof beyond a reasonable doubt that a
particular defendant agreed that a health-care practitioner would
prescribe Subsys outside the usual course of medical practice, the
honest-services predicates required evidence that "the Defendant
agreed and specifically intended that health-care practitioners
- 38 -
would breach their fiduciary duty to their patients by prescribing
Subsys or a particular dose of Subsys outside the usual course of
professional practice and not for a legitimate purpose."
Accordingly, the evidence supporting the intent element of the CSA
predicates was "coextensive" with the evidence supporting the
fiduciary duty element of the honest-services predicates. Id. at
188.
That is game, set, and match. Because we already have
concluded that the evidence supports the jury's finding with
respect to Kapoor's guilt regarding the CSA predicates, we must
perforce conclude that the evidence supports the findings with
respect to Kapoor's guilt regarding the honest-services
predicates. It follows that we must reverse the district court's
partial grant of the Rule 29(c) motion in favor of Kapoor and
reinstate the jury's findings as to him insofar as they pertain to
both the CSA and honest-services predicates.
B
The district court set aside the jury's finding that Lee
was guilty of conspiracy to commit racketeering activities through
a pattern of racketeering acts that included the CSA and honest-
services predicates. The jury heard evidence, though, that Lee
supervised the sales representative who reported that Dr. Madison
had a "shady setup" and that patients at Dr. Madison's office "were
just seeking medication." When the sales representative spoke to
- 39 -
Lee about her concerns with Dr. Madison's potential law-
enforcement issues, Lee replied that "[i]t was okay." Like Kapoor,
she appeared unfazed by Dr. Madison's potential criminal liability
and "ensured that Dr. Madison understood that he would
speak . . . as much as [Insys] can utilize him" — which meant, of
course, that Dr. Madison would continue to receive kickbacks. The
only condition was that "he would prescribe a significant amount
of Subsys, more and more as time went on, and increas[e] the dose."
This condition had nothing to do with medical necessity.
Lee's hot pursuit of Dr. Madison supports the conclusion
that getting doctors to write illegitimate prescriptions was not
merely an unforeseeable risk of her work for Insys but, rather, an
integral part of the business model that she assiduously followed
while doing that work. As Babich explained, Dr. Madison was made
a speaker notwithstanding that his clinic was a pill mill
"[b]ecause he was the biggest writer of the type of product in the
Chicago land area, and getting that revenue was very important to
[Insys] as a company." A jury could reasonably infer that Insys
knowingly counted on revenue from illegitimate prescriptions and
that Lee (as a regional sales manager who benefitted handsomely
from greater sales) intended to keep that revenue stream flowing
even if it meant prescribing Subsys to patients who did not
legitimately need it.
- 40 -
Other evidence corroborated the conclusion that Lee
intended prescribing doctors to expand the company's customer base
to people who did not qualify medically to use Subsys. The
regional managers were instructed by Simon "to get a specific
number of scripts per week that is mutually agreed to and an
outline of how [the representatives who reported to them] will
hold [them]selves and [their] customers to this plan." In other
words, salespeople were to negotiate prescription quotas with the
doctors in their territories. These quotas had no apparent
relationship to either medical necessity or patient needs, and the
jury had an ample basis for inferring that Lee followed Simon's
instructions.
Here, too, Lee's experience with Dr. Madison exemplifies
the point. As a speaker, Dr. Madison was expected to maintain or
exceed previous prescription-writing numbers. When Dr. Madison
fell short, Lee would order a sales representative "to continue to
put pressure on [Dr. Madison]" and tell the doctor "that if he's
going to keep doing these programs, he needs to keep his writing
up." There was no medically informed rationale for Dr. Madison's
quota, and his agreement to abide by such a quota is a surefire
sign that Lee knew that, under that agreement, Dr. Madison would
be prescribing Subsys illegitimately. Cf. United States v. Hughes,
895 F.2d 1135, 1142 (6th Cir. 1990) (reaching similar conclusion
regarding quota for blood tests). Her incessant enforcement of
- 41 -
the quota therefore is evidence that she intended for Dr. Madison
to write those illegitimate prescriptions. The way that Lee did
business with Dr. Madison is emblematic of her intent to have
health-care practitioners forsake medical necessity for financial
gain.
We conclude that the adverse finding against Lee as to
the CSA predicates was supported by the record and, therefore,
should have been allowed to stand. And as with Kapoor, see supra
Part III(A), this holding dictates that we reinstate the jury's
findings as to the honest-services predicates. It follows that we
must reverse the district court's partial grant of the Rule 29(c)
motion in favor of Lee as it pertains to both the CSA and honest-
services predicates.
C
The district court set aside the jury's finding that
Simon was guilty of conspiracy to commit racketeering activities
through a pattern of racketeering acts that included the CSA and
honest-services predicates. Once again, we disagree. On this
record, a reasonable jury could conclude that Simon (also a
regional manager) intended health-care providers to prescribe
Subsys outside the usual course of professional practice.
Simon encouraged the sales force to agree with each
practitioner on a "specific number of scripts per week" — a quota
— and to "push the dose." Relatedly, sales representatives under
- 42 -
his supervision pressured health-care practitioners to write
medically illegitimate prescriptions. For example, nurse Heather
Alfonso agreed with her sales representative "to do one to two
scripts per week." She later admitted that she "had come to rely
on th[e] extra money" and had "broke[n her] duty to patients."
So, too, Dr. Awerbuch was informed, at Simon's behest, that "the
average of his prescriptions was very low, within the one to 200
microgram range." As he recalled it, he then "started prescribing
[Subsys] to patients who didn't really even need to be on it just
to increase [his] numbers."
A reasonable jury could infer from the evidence that
illegitimate prescriptions were not an unintended consequence of
Simon's sales techniques but, rather, were a goal. With an eye on
revenue, Simon specifically sought to have practitioners prescribe
Subsys to patients who did not need it. It was Simon, for instance,
who endeavored to enforce a minimum-dosage agreement with Dr.
Somerville. As a result, Dr. Somerville entered into a Faustian
bargain with Insys that required, in Simon's own words, "every
refill" to be for at least 180 micrograms. In facilitating this
arrangement, Simon not only knew that prescriptions would
thereafter be untethered from patients' medical histories but also
solicited precisely that outcome. As one defense expert explained,
a doctor "decide[s]" whether the medication is warranted "at the
moment while [she's] seeing the patient," not "a week in advance."
- 43 -
Accordingly, a reasonable jury could find that Simon intended
doctors to prescribe Subsys outside the course of professional
practice because his quota arrangements required them to commit
both to specific numbers of Subsys prescriptions and to specific
dosages before they had a chance either to examine their patients
or to assess patients' medical needs. See Hughes, 895 F.2d at
1142; United States v. Mahar, 801 F.2d 1477, 1487 (6th Cir. 1986)
("[T]hat patients were regularly sold controlled substances
. . . selected by non-physician[s] . . . would further support a
finding that controlled substances were issued outside the usual
course of medical practice and for no legitimate medical
purpose.").
We conclude that the adverse finding against Simon as to
the CSA predicates was supported by the record and, therefore,
should have been allowed to stand. And as with Kapoor, see supra
Part III(A), this holding dictates that we reinstate the jury's
findings as to the honest-services predicates. It follows that we
must reverse the district court's partial grant of the Rule 29(c)
motion in favor of Simon as it pertains to both the CSA and honest-
services predicates.
D
As with Kapoor, Lee, and Simon, the district court set
aside the jury's finding that Rowan was guilty of conspiracy to
commit racketeering activities through a pattern of racketeering
- 44 -
acts that included the CSA and honest-services predicates. Here,
too, the evidence supports a finding that Rowan intended doctors
to write medically illegitimate prescriptions. Rowan worked hard
to develop quota agreements. For example, he was not shy about
communicating his prescription expectations to Dr. Couch.
According to one witness, Rowan gave Dr. Couch "a hard time about
the fact he hadn't been prescribing enough" and threatened to
"take[] away" the speaking programs (and, thus, the kickback
payments) if Dr. Couch "wasn't prescribing enough." Rowan's
aggressive enforcement of prescription quotas is evidence that he
knew that he was soliciting prescriptions that were not medically
necessary. See Hughes, 895 F.2d at 1135. Given that knowledge,
the kickbacks that Rowan was arranging constituted incentives for
prescribers to prescribe Subsys illicitly. See id.The jury also heard evidence that Rowan had reason to
believe that successful performance of his job depended on
promoting illicit prescription-writing. His dealings with Dr.
Ruan illustrate this point. Rowan spoke directly with Dr. Ruan to
make clear that Insys would "pay [Dr. Ruan] as much as we possibly
and humanly can in exchange to write as much Subsys as [Dr. Ruan]
humanly can." In the same vein, the government introduced evidence
that Rowan understood that Dr. Ruan would find a way to prescribe
more as long as the dollars kept flowing. The facts on the ground
confirmed Rowan's understanding: Dr. Ruan ultimately wrote enough
- 45 -
Subsys prescriptions to boost Rowan into a position as Insys's top
sales representative anywhere in the country. Moreover, Rowan's
soaring sales figures exemplified the success of the kickback
scheme, and he was repeatedly mentioned in the 8:30 a.m. management
calls as a poster child for the proposition that "if you give these
[doctors] programs, they're going to write the drug for you."
There was more. After the DEA froze opioid shipments to
the pharmacy that principally filled Dr. Ruan's prescriptions,
Rowan learned that the pharmacy had access to an "unlimited supply"
of a competing opioid. He learned as well that the pharmacy wanted
not only a similar arrangement for Subsys in order to circumvent
"limits on [Schedule II drugs] in place by [the] current
wholesaler" but also "to ensure uninterrupted delivery to patients
of Dr. [Ruan]." Although by then Rowan either knew or was
willfully ignorant of Dr. Ruan's pill mill tendencies, he
nonetheless became involved in negotiating a direct-ship agreement
for Dr. Ruan. He (along with Kapoor and Babich) attended the
dinner meeting with Dr. Ruan at which the direct-ship agreement
was finalized.
Taking this proof in the light most favorable to the
verdict, a reasonable jury could conclude that Rowan intended Drs.
Couch and Ruan to prescribe Subsys outside the accepted course of
medical practice. See Volkman, 797 F.3d at 391. Because the
record supports a determination that Rowan agreed to commit CSA
- 46 -
violations, the jury's finding to that effect should not have been
vacated. See Kilmartin, 944 F.3d at 325. And as with Kapoor, see
supra Part III(A), this holding dictates that we reinstate the
jury's findings as to the honest-services predicates. It follows
that we must reverse the district court's partial grant of the
Rule 29(c) motion in favor of Rowan as it pertains to both the CSA
and honest-services predicates.
E
We add a coda. As said, the district court rested its
vacation of certain predicates on the so-called equipoise
principle, holding that because the proof "gives equal or nearly
equal circumstantial support to a theory of guilt and a theory of
innocence," Gurry, 427 F. Supp. 3d at 186 (quoting Burgos, 703
F.3d at 10), those predicate-act findings should be set aside. We
conclude that the equipoise principle was inapposite: the
evidence, viewed in the requisite light, was not so evenly
balanced. We summarize our reasoning.
We start with common ground: we agree with the district
court that the equipoise principle is entrenched in this circuit's
jurisprudence. When "the 'evidence viewed in the light most
favorable to the verdict gives equal or nearly equal circumstantial
support to a theory of guilt and a theory of innocence of the crime
charged,' this court must reverse the conviction." United States
v. Flores-Rivera, 56 F.3d 319, 323 (1st Cir. 1995) (quoting United
- 47 -
States v. Sanchez, 961 F.2d 1169, 1173 (5th Cir. 1992)). But "this
equal-evidence rule takes hold only after [the inquiring court]
ha[s] drawn all reasonable inferences in favor of the verdict."
Magraw v. Roden, 743 F.3d 1, 5 (1st Cir. 2014) (emphasis in
original). Here — as we already have explained — the evidence,
viewed in the light most favorable to the jury verdicts, clearly
favors a finding that the defendants conspired to distribute Subsys
even when the drug served no legitimate medical purpose. See supra
Parts III(A)-(D). "When the[se] pieces of evidence are layered,
with inferences taken in the government's favor, this is not a
case in equipoise." United States v. Ortiz, 447 F.3d 28, 34 (1st
Cir. 2006). Rather, it is a case in which a jury could find,
beyond a reasonable doubt, that the four affected defendants
(Kapoor, Lee, Simon, and Rowan) conspired with health-care
practitioners to write Subsys prescriptions outside the course of
accepted medical practice and without any medical justification.
We conclude, therefore, that the equipoise principle simply did
not apply. To the contrary, this is a case in which the jury
supportably found that the government had proved the CSA and
honest-services predicates beyond a reasonable doubt. It follows,
then, that the district court erred in vacating those findings.
IV
The jury found all five defendants guilty with respect
to the mail- and wire-fraud predicates. In their joint Rule 29(c)
- 48 -
motion, four of the defendants (Kapoor, Lee, Simon, and Rowan)
challenge the sufficiency of the evidence underlying these
findings.6 As the district court saw it, however, the evidence
supported those portions of the jury's findings and, thus, left
them intact. The four named defendants appeal that ruling.
The mail-fraud statute prohibits use of the mails in
connection with a "scheme or artifice to defraud." 18 U.S.C.
§ 1341. To establish the commission of this offense, the
government must show a scheme to defraud using false pretenses,
the defendant's knowing and willing participation in the scheme
with the intent to defraud, and the use of the mails in furtherance
of that scheme. See United States v. Soto, 799 F.3d 68, 92 (1st
Cir. 2015).
The mail- and wire-fraud offenses share common elements.
They differ only in that, to prove a violation of the wire-fraud
statute, the government must establish the use of wires (rather
than the use of the mails) in furtherance of the alleged scheme.
See United States v. Arif, 897 F.3d 1, 9 (1st Cir. 2018).
A
We start with Kapoor's claims of evidentiary
insufficiency with respect to the mail-fraud predicate. We can
make short shrift of them.
6 Gurry separately challenges these findings in his motion
for a new trial. See infra Part XII.
- 49 -
1
Kapoor disputes the sufficiency of the evidence in
connection with the mail-fraud predicate only with respect to the
third element: whether the use of the mails furthered the alleged
scheme. To this end, he argues that the mailed bribes to
practitioners did not further the misrepresentations to insurers
regarding patients' conditions. We do not agree.
The "in furtherance" requirement is to be read broadly.
United States v. Hebshie, 549 F.3d 30, 36 (1st Cir. 2008). "[T]he
use of the mails need not be an essential element of the scheme."
Schmuck v. United States, 489 U.S. 705, 710 (1989). To prove this
element, the government need only show that the mailing was
"incident to an essential part of the scheme," id. at 711 (quoting
Pereira v. United States, 347 U.S. 1, 8 (1954)), or "a step in
[the] plot," id. (quoting Badders v. United States, 240 U.S. 391,
394 (1916)). We therefore parse the record to determine whether
the evidence shows some "connection or relationship" between the
mailing and the fraudulent scheme. Hebshie, 549 F.3d at 36(quoting United States v. Pimental, 380 F.3d 575, 587 n.5 (1st
Cir. 2004)).
We find that the record shows a sufficient connection.
The mailed bribes generated prescriptions, which were fraudulently
processed through the IRC's authorization scheme. And in order to
facilitate the fraudulent processing of prior-authorization
- 50 -
requests, Insys offered business liaisons to whales (prolific
prescribers) who received bribes through the mail. Such bribe
recipients included Drs. Awerbuch, Chun, and Ahmad.
"The relevant question at all times is whether the
mailing is part of the execution of the scheme." Schmuck, 489
U.S. at 715. Because the scheme alleged here involved mailing
bribes for writing medically illegitimate Subsys prescriptions and
then obtaining insurance payments for those prescriptions, we
conclude that a jury reasonably could answer this question in the
affirmative.
Kapoor resists this conclusion. He argues that because
the IRC processed all the prescriptions that it received
(regardless of whether the prescribing doctor was bribed), the
scheme to defraud insurers did not "depend" on the bribes mailed
to doctors. In support, Kapoor notes that the bribed doctors were
only a "small fraction" of the doctors whose prescriptions were
fraudulently processed through the IRC.
This argument misses the mark: the government need not
show that the fraudulent scheme would have petered out without the
bribes. The mail-fraud statute does "not require[] a 'but-for'
link between a mailing and the fraudulent scheme." Hebshie, 549
F.3d at 36 (quoting Pimental, 380 F.3d at 587). It requires only
a connection between the two, and the record, read in the light
most favorable to the government, supports an inference that the
- 51 -
bribes, in increasing the volume of prescriptions, facilitated the
scheme. No more is exigible to uphold the jury's mail-fraud
finding.
2
As a fallback, Kapoor essays a constructive amendment
claim. In mounting this claim, he says that the mail-fraud scheme
described by the district court differed from that charged in the
indictment. The government, he adds, failed to adduce sufficient
proof of the latter scheme.
Specifically, he calls our attention to paragraph 31 of
the indictment, in which the grand jury alleged that "[h]ad the
insurers known that the defendants gave bribes and kickbacks to
the targeted practitioners, the insurers would not have authorized
payment for Subsys." Because the government did not show that
Kapoor "intended for the IRC to affirmatively misrepresent"
Insys's bribes to practitioners, his thesis runs, it failed to
substantiate the scheme it alleged. Although Kapoor gets high
marks for ingenuity, his claim fails the constructive-amendment
test.
"A constructive amendment 'occurs when the charging
terms of the indictment are altered, either literally or in effect,
by prosecution or court after the grand jury has last passed upon
them.'" United States v. Dunn, 758 F.2d 30, 35 (1st Cir. 1985)
(quoting Gaither v. United States, 413 F.2d 1061, 1071-72 (D.C.
- 52 -
Cir. 1969)). "[O]ur practice has been to look to statutory
elements in response to claims by defendants that 'the crime
charged' has been changed." United States v. Mubayyid, 658 F.3d
35, 51 (1st Cir. 2011). Therefore, "[s]o long as the statutory
violation remains the same, the jury can convict even if the facts
found are somewhat different than those charged." Id. (quoting
United States v. Twitty, 72 F.3d 228, 231 (1st Cir. 1995)); see
United States v. Dowdell, 595 F.3d 50, 68 (1st Cir. 2010).
In this case, the putative amendment occurred after
trial (when the court denied the defendants' joint Rule 29(c)
motion). Thus, Kapoor had no realistic opportunity to assert his
constructive amendment claim below. Consequently, this claim of
error engenders de novo review. See United States v. Rodriguez,
919 F.3d 629, 635 (1st Cir. 2019); United States v. Hernández, 490
F.3d 81, 83 (1st Cir. 2007).
We discern nothing resembling a constructive amendment
here. The crime charged was not altered because the language in
paragraph 31 did not implicate the statutory elements of the RICO
conspiracy. To prove a RICO conspiracy, "it is enough to prove
that a defendant agreed with one or more others that two predicate
offenses be committed." Aetna Cas. Sur. Co. v. P & B Autobody, 43
F.3d 1546, 1562 (1st Cir. 1994) (emphasis in original). The
predicate offenses themselves, however, are not elements required
to be proved. See id. Since Kapoor was not "convicted of a crime
- 53 -
other than that charged in the indictment," no constructive
amendment occurred.7 United States v. Day, 700 F.3d 713, 720 (4th
Cir. 2012) (quoting United States v. Randall, 171 F.3d 195, 203
(4th Cir. 1999)).
"[T]he rule against constructive amendments . . . is
focused not on particular theories of liability but on the offenses
charged in an indictment." Id. at 720 (emphasis in original).
Although the district court's order "eliminated a theory of
liability" alleged in paragraph 31, United States v. Celestin, 612
F.3d 14, 25 (1st Cir. 2010), "the statutory violation remain[ed]
the same," Mubayyid, 658 F.3d at 51 (quoting Twitty, 72 F.3d at
231). For that reason, the district court's order did not
constructively amend the indictment in any forbidden way. See
Celestin, 612 F.3d at 25; United States v. Miller, 471 U.S. 130,
145 (1985); cf. United States v. Mueffelman, 470 F.3d 33, 38 (1st
Cir. 2006) (distinguishing forbidden constructive amendment from
7 For the sake of completeness, we note that the challenged
language tracked one of the government's earlier theories of fraud
liability. The government originally alleged that each time Insys
submitted a Subsys authorization request on behalf of a bribed
doctor, the defendants committed fraud just by omitting
information about the bribe. The district court rejected this
theory, ruling from the bench that not "every prescription is bogus
just because there was a kickback behind it." Hence, the court
said, there was "[no] obligation to disclose [the kickback]." From
that point forward, the government elected to pursue only the
remaining mail-fraud allegations in the indictment.
- 54 -
one alleging "a scheme similar to but somewhat narrower in breadth
and malignity than that charged in the indictment").
B
Lee's challenge to the sufficiency of the evidence
underlying the mail- and wire-fraud predicates need not detain us.
We previously have limned the elements of those offenses. Lee
disputes only the second element of each offense — her knowing and
willing participation in the scheme with the intent to defraud —
and claims that the government failed to show that she had the
requisite knowledge of, or involvement in, the scheme. The record
belies her protestations.
Wire transmission of authorization requests and
approvals was essential to the operation of the IRC, and the
government's proof showed that Lee had both extensive interactions
with the IRC and a working knowledge of the approval process. A
few examples will suffice to hammer home the point:
• During the IRC's pilot phase, Gurrieri communicated
directly with Lee about Dr. Awerbuch's
prescriptions. Lee received a list of over one
hundred prescriptions that the IRC was attempting
to process on Dr. Awerbuch's behalf.
• Lee supervised the representative assigned to Dr.
Awerbuch, who helped process the authorization
requests; she also arranged the hiring of Dr.
- 55 -
Awerbuch's niece as a business liaison to "fill out
the forms," "get the prescriptions pushed through,"
and "work[] with th[e] IRC."
• Lee was "very close" to an IRC authorization
specialist and lobbied for her promotion.
• Lee tried very hard to maximize the authorization
rate because she understood that Insys got paid
(and her own compensation increased) only if
insurers approved the drug.
We add, moreover, that the record supports an inference
that Lee pushed for prior authorizations with knowledge that the
information that the IRC relayed to insurers was inaccurate. She
worked closely with Drs. Madison and Awerbuch, who were two of the
most prolific prescribers of Subsys in the country. The record
likewise supports an inference that Lee knew that these prescribers
were writing medically illegitimate prescriptions. Because these
prescriptions would not get insurance approval organically, sales
representatives had to be "coach[ed]" on the misleading diagnosis
codes to be provided to insurers, and Lee was aware of this
coaching because she was copied in emails that discussed it.
On this record, a jury unquestionably could conclude
that Lee knew that the IRC was processing medically illegitimate
prescriptions by deliberately providing insurers misleading
information. The jury also could conclude that Lee agreed to
- 56 -
facilitate the fraudulent scheme by generating more prescriptions
for the IRC to process through mailed bribes and by streamlining
Dr. Madison's and Dr. Awerbuch's insurance-authorization
processes. The district court, therefore, did not err in denying
Lee's motion for judgment of acquittal on the mail- and wire-fraud
predicates.
C
Simon's evidentiary insufficiency claim with respect to
the mail- and wire-fraud predicates is easily dispatched. Like
Lee, Simon disclaims knowledge of or involvement in the insurance-
fraud scheme. See Soto, 799 F.3d at 92; Arif, 897 F.3d at 9. The
record, however, tells a different tale: it supports the jury's
findings as to both predicates.
The evidence shows that Simon understood, assisted, and
furthered the IRC's fraudulent activities. The sales
representatives who reported to him informed him whenever a doctor
granted the IRC permission to contact an insurer for an
authorization, and he was copied on emails reporting denials by
insurers. To convey this information to senior management, Simon
created "charts in progress" reports which documented the IRC's
efforts to obtain authorization for each Subsys prescription. In
addition, it was Simon who created the business liaison program.
A jury reasonably could envision these efforts as knowing
facilitation of the IRC's corrupt authorization processes.
- 57 -
The record also supports an inference that Simon sought
to maximize the IRC's success despite knowing that the information
the authorization specialists supplied to insurers was misleading
and/or false. He was an occasional participant in the 8:30 a.m.
daily management calls, during which Kapoor and other senior
executives regularly discussed the IRC and strategies for
obtaining insurer authorizations. Such strategies included the
use of misleading words, phrases, and diagnosis codes, as well as
the "spiel." What is more, the government introduced evidence
that Simon saw these strategies in action when he visited the IRC
and listened to calls during which employees contacted insurers
and requested Subsys authorizations. From this evidence, a jury
reasonably could find that Simon had knowledge of the IRC's
fraudulent activities, yet chose to feed the IRC more prescriptions
by bribing doctors through the mail. It follows that the district
court did not err in denying Simon's motion for judgment of
acquittal on the mail- and wire-fraud predicates.
D
Rowan's claim of error with respect to the sufficiency
of the evidence underlying the mail- and wire-fraud predicates is
bootless. He, too, challenges only the intent element of the
jury's adverse findings on the mail- and wire-fraud predicates.8
8 The government asserts that Rowan failed to preserve this
claim of error and that, therefore, review is only "for clear and
- 58 -
See Soto, 799 F.3d at 92; Arif, 897 F.3d at 9. Our review
discloses, however, that the record is shot full of evidence that
Rowan monitored, facilitated, and participated in the IRC
authorization process. For instance, he personally arranged a
liaison for Dr. Chun and he instructed his subordinate (a sales
representative) to have the "[prior authorization] form filled out
every day with update to [Gurry]" and "to do whatever we could to
help and assist in getting that insurance pull-through." Various
of his subordinates reported to Rowan to confirm that doctors had
completed IRC opt-in forms and to alert him when doctors
encountered difficulty obtaining insurance approvals. A jury
reasonably could conclude that these were deliberate efforts to
support the corrupt IRC authorization procedure.
To cinch the matter, a jury reasonably could conclude
that Rowan undertook these efforts notwithstanding his knowledge
that the IRC was deliberately misleading insurers. Rowan had every
reason to believe that Dr. Ruan was prescribing Subsys
illegitimately, and a reasonable jury could infer that Rowan knew
that the IRC's efforts to get prior authorization for many of Dr.
Ruan's prescriptions were likewise illegitimate. His attendance
at an IRC training session corroborates such an inference. At
gross injustice." United States v. Foley, 783 F.3d 7, 12 (1st
Cir. 2015). We assume, without deciding, that the claim was
preserved and, therefore, engenders de novo review. See Kilmartin,
944 F.3d at 325.
- 59 -
that session, Rowan heard about the IRC's "history of cancer"
practice, including an explicit instruction to the authorization
specialists to include a reference to cancer even if "that's not
what we're seeing them for" because such a reference meant a "sure
approval" from insurers. So, too, Rowan learned that the IRC
maintained a list of drugs for authorization specialists to include
as tried-and-failed medications — a list that was to be used
liberally even if particular patients had not furnished any
information about prior medications. It thus seems nose-on-the-
face plain that, after this session, Rowan knew that the IRC was
defrauding insurers both because it cited bogus medical rationales
in support of prescriptions and because it provided apocryphal
lists of tried-and-failed medications. Yet, he continued to work
hand-in-glove with the IRC.
We do not gainsay that the jury was free to conclude, as
Rowan argues, that the IRC training session was innocuous. But
there were two sides to this particular story, and "it [was] within
the jury's purview to evaluate [these] competing factual
inferences." United States v. Ridolfi, 768 F.3d 57, 61 (1st Cir.
2014). Rowan's efforts to bribe doctors through the mail and to
push through Dr. Ruan's prescriptions despite Rowan's knowledge of
what was going on supports the conclusion that he knowingly and
willingly participated in the scheme with the intent to defraud
insurers. It follows that the district court did not err in
- 60 -
denying Rowan's motion for judgment of acquittal on the mail- and
wire-fraud predicates.
V
The district court admitted at trial testimony of nine
patients who had received Subsys prescriptions from doctors who
participated in the kickback scheme. All of the defendants
challenge the admission of their testimony as irrelevant and unduly
prejudicial. Some stage-setting is needed.
The defendants had anticipated the government's
presentation of evidence that patients had suffered harm from
taking Subsys. Prior to the trial, they moved to exclude such
evidence in its totality. The district court granted their motion
in part, leaving the government free to present testimony about
"the medical care that patients received from co-conspirator
physicians" and their "medical status." This evidence was allowed
for the purpose of showing "that prescribing was not medically
necessary or was in excess of what was medically necessary, or
that a patient's medical status was different from what was
represented to insurers in furtherance of claims for
reimbursement." The court also allowed the introduction of
evidence showing "that a patient became addicted to Subsys, the
medical consequences of that addiction, and whether and how
prescribing practices changed thereafter." Striving to strike a
balance, though, the court prohibited "evidence concerning the
- 61 -
social consequences to the patient of wrongful prescribing or
addiction, such as loss of employment, erosion of familial
relationships, and the like."
At the final pretrial conference, the defendants renewed
their objections to patient-harm evidence. The government argued
that it should be allowed to elicit testimony as to patients'
medical histories (e.g., whether a patient had cancer) "because
the IRC, which is run by Insys, is telling the pharmacy benefit
managers and other insurers that patients have cancer when the
patient doesn't have cancer." This testimony, the government said,
was intended "primarily to prove the fraud." So, too, the
government wanted to adduce testimony about the effects that Subsys
had on patients — that they "couldn't function[,] [t]hey slept all
day[,] [t]hey became addicted."
The district court essentially reaffirmed its earlier
ruling. The court noted that the charged conspiracy involved "not
just defrauding the insurance company," but also
"overprescri[ption] and increase [in] prescriptions." It
therefore concluded that the government should be "allowed to put
that evidence on to show that [the defendants] succeeded in their
objective, which is evidence of the fact that it was their
objective."
During trial, the defendants objected for a third time
to evidence of patient harm. In response, the district court
- 62 -
reiterated that it would not broadly preclude such testimony. When
the defendants renewed their objections yet again, the court
reiterated that testimony regarding addiction was "fair game."
All in all, nine patients testified about the
debilitating effects of addiction that they experienced while
ingesting Subsys. We offer a representative sampling of this
testimony:
• Cathy Avers testified that, as a result of taking
Subsys, she "bec[a]me an addict" such that "[n]o
matter how much [she] took, eventually it just
wasn't enough." She testified to side effects such
as "having a hard time functioning, standing up,
going to sleep. It was such an impact on [her]
being able to get up, out of bed, get dressed, and
do anything." She confirmed that the information
Insys had provided to her insurer — that she had a
current cancer diagnosis, was taking morphine and
hydromorphone, and was using a fentanyl patch — was
apocryphal.
• Paul Lara testified that, while taking Subsys, he
wound up "not finding [his] way home in a town
[he'd] lived in all [his] life" and having "to call
[his] wife to get directions home." He repeatedly
hallucinated and "thought [he] was going crazy."
- 63 -
He could not follow what customers were saying to
him at work and once "literally three or four" of
his teeth "[fell] out right there [while] talking
to a customer." He also confirmed that Insys's
representations to his insurer that he had a
current diagnosis of cancer were spurious.
• Sara Dawes testified that, while taking Subsys, she
was "unable to function" and spent "most of [her]
time in bed." When she stopped taking Subsys, she
"was very, very, very sick and mentally couldn't
hold it together" to the point that she had "a
breakdown" and "drove off and left [her] kids on
Christmas." She also testified that, contrary to
what Insys had told her insurer, she never had
cancer, never had taken methadone, and did not have
difficulty ingesting generic fentanyl products.
• Betty Carrera testified that, while taking Subsys,
she began having such phantasmagoric hallucinations
that the police had to be called several times.
She could not function and spent her days sleeping.
She said that, when withdrawing from Subsys, she
had nightmares and hallucinations, and she would
"[wake] up at night screaming." She also
- 64 -
contradicted Insys's representations to her insurer
and testified that she never had issues swallowing.
• Woodrow Chestang described "slobber . . . just
run[ning] down [his] mouth," watching the clock,
and craving more Subsys between doses. When he was
unable to get Subsys, he experienced delirium
tremens, nausea, and inability to eat or drink. He
sometimes curled "into a fetal position" and
realized that he was "burn[ing] up with fever." He
added that, contrary to the information that Insys
had given to his insurer, he neither had a history
of cancer nor had previously been prescribed
generic opioid containing fentanyl.
• Scott Byrd testified that Subsys was "life-
changing" because "[i]t put [him] into an addiction
state that [he] almost couldn't come out of."
Because he used more than the quantity that his
doctor had prescribed, he ran out early and
experienced major withdrawal. He also swore that
the signature on the opt-in form purportedly
authorizing Insys to contact his insurer on his
behalf was not his and, in fact, misspelled his
name.
- 65 -
• Kendra Skalnican testified that she developed an
addiction after starting on Subsys, and, as a
result, began to take more of the medication than
had been prescribed. When she ran out, she
experienced severe withdrawal, sweating, vomiting,
diarrhea, and pain all over her body. She told the
jury that Subsys "made [her] addicted" and "[she]
slept a lot of [her] life away." She also testified
— contrary to information provided by Insys to her
insurer — that she never had issue swallowing pills
and never had tried other fentanyl products.
• Michelle DiLisio (previously Kamzyuk) testified
that, while taking Subsys, she was lethargic,
fatigued, dizzy, and felt "out of it." She reported
that she suffered from severe withdrawal symptoms
after she stopped taking the medication. And she
made clear that the information that Insys had
furnished to her insurer was false: she never had
"any cancer ever" and, specifically, she never had
ovarian cancer (indeed, she had undergone ovary-
removal surgery years before Subsys had been
prescribed for her).
• Alicia Hinesley testified that Subsys made her
"extremely sleepy" and led to difficulty in
- 66 -
thinking. Sometimes she would sit or sleep all
day. Belying Insys's statements that she was
experiencing breakthrough cancer pain, she flatly
denied that she ever had cancer.
After the jury verdicts had been returned, the
defendants moved for a new trial. They argued that the admission
of the patient-harm testimony constituted reversible error. The
district court thought not: it concluded that "[t]he patient
testimony at trial conformed to the Court's motion in limine ruling
in which it allowed only limited use of patient testimony and
carved out most inflammatory aspects, such as the social
consequences of addiction." Gurry, 427 F. Supp. 3d at 203. The
testimony, the court said, "was relevant to show the medical care
that patients received from co-conspirator prescribers, to
demonstrate that certain prescriptions were not medically
necessary or were excessive, and to support claims that a patient's
medical status was different from what was represented to
insurers." Id.
It hardly bears repeating that a trial court enjoys
considerable discretion with respect to its evidentiary rulings.
See United States v. Zaccaria, 240 F.3d 75, 78 (1st Cir. 2001).
We review the rulings that the defendants challenge here only for
abuse of that discretion. See Iacobucci v. Boulter, 193 F.3d 14,
20 (1st Cir. 1999).
- 67 -
A
We start with the defendants' claim that the challenged
testimony was irrelevant. The standard for relevancy is not
exacting. See United States v. Rivera Calderón, 578 F.3d 78, 97
(1st Cir. 2009). The patient-harm testimony is relevant if it has
the "tendency to make the existence of any fact that is of
consequence to the determination of the action more probable or
less probable than it would be without the evidence." Id. (quoting
Fed. R. Evid. 401).
The district court appropriately found that the patient-
harm testimony was relevant. To prove the CSA predicates, the
government had to show that the defendants agreed that a health-
care practitioner would prescribe Subsys outside the usual course
of medical practice and without any legitimate medical purpose.
See Volkman, 797 F.3d at 391. The evidence of the patients'
altered behavior, addiction, and withdrawal symptoms was plainly
relevant to show that the doctors' treatment was outside the course
of professional practice. This is particularly true where, as
here, each doctor continued to prescribe Subsys to his or her
patient despite knowing of the patient's addiction. Taking a
practical view of what had transpired, the jury reasonably could
have regarded the patient-harm testimony as powerful proof both
that the coconspirator doctors prescribed Subsys in the absence of
any medical necessity and that they failed to minimize the risk of
- 68 -
adverse effects when setting dosages. In fine, the patient-harm
testimony was relevant to show that the doctors contravened their
professional obligations. See United States v. Singh, 54 F.3d
1182, 1187 (4th Cir. 1995). And we think it obvious that evidence
that the doctors prescribed Subsys outside the usual course of
professional practice while receiving kickbacks constitutes
evidence relevant to show that the defendants had entered into an
agreement to bring about exactly that result. See United States
v. Rivera-Santiago, 872 F.2d 1073, 1079 (1st Cir. 1989) (explaining
that "[t]he actions, as well as the words of the [coconspirators],
are evidence of the existence and scope of a conspiracy"). On
this record, evidence about the exploitation of addiction was
relevant to show that all of the coconspirators, including the
defendants, viewed addiction less as a societal problem and more
as a pathway to predatory profits.
On the same basis, we dismiss Gurry's contention that he
"had no connection to prescribers' medical decision-making." The
patient-harm testimony is relevant as to Gurry because it helped
establish the scope of the conspiracy. See id. "The fact that
[Gurry] participated in one retail link of the distribution chain,
knowing that it extended beyond his individual role, was
sufficient" to establish relevancy as to him. Id.The defendants erect a straw man. They submit that the
patient-harm testimony "said nothing about what [they], who had no
- 69 -
contact with any of these patients and no knowledge of [what] they
were affected by Subsys, specifically intended." But as we already
have discussed, a core component of the conspiracy to distribute
Subsys was influencing doctors to "push the dose." The most
logical reason for the defendants' unremitting efforts to increase
dosages was their knowledge that patients on higher doses would
refill their Subsys prescriptions while patients on lower doses
would not. The patient-harm testimony showed vividly just how the
"effective dose" messaging furthered the scheme.
At the risk of carting coal to Newcastle, we add that
the patient-harm testimony also helped to explain how the
defendants could expect doctors to fulfill their commitments to
Insys representatives, that is, to meet quotas obligating them to
prescribe inordinately high amounts of Subsys. The patients
trusted the doctors; the doctors provided a limited explanation of
the drug to the patients; and by the time the patients realized
they were addicted, they were powerless to refrain from seeking
more and more Subsys.
To say more about relevancy would be to paint the lily.
Because the patient-harm testimony tended to show the ins and outs
of the defendants' scheme, it was within the district court's
discretion to deem this evidence relevant. See United States v.
Hale, 857 F.3d 158, 171 (4th Cir. 2017).
- 70 -
B
The defendants next argue that the patient-harm
testimony, even if relevant, was unfairly prejudicial. In
examining this claim, we begin with evidentiary bedrock. A
district court may exclude relevant evidence if an objecting party
can show that "its probative value is substantially outweighed by
a danger of . . . unfair prejudice." Fed. R. Evid. 403. But under
Rule 403, one size does not fit all. Thus, we afford the district
court "considerable latitude in steadying the balance which Rule
403 demands." United States v. Cadden, 965 F.3d 1, 22 (1st Cir.
2020) (quoting United States v. Rodriguez-Estrada, 877 F.2d 153,
156 (1st Cir. 1989).
Through serial rulings, the court below exercised care
in weighing the considerations affecting the Rule 403 balance.
From the beginning, the court precluded evidence concerning the
social consequences of addiction and — in its own words — took
pains to "carve[] out most inflammatory aspects" of the testimony.
Gurry, 427 F. Supp. 3d at 203. Even so, the defendants complain
that the court did not carve out a sufficiently wide exclusionary
swath.
The defendants' argument relies primarily on our
decision in Kilmartin, 944 F.3d at 315. Kilmartin, though, is a
horse of a different hue. There, the government prosecuted — for
fraud-related crimes — a defendant who advertised cyanide to
- 71 -
suicidal individuals, collected their money, and sent them Epsom
salts instead. See id. at 323-24. At trial, the government
offered as "anecdotal background evidence" testimony from victims
(other than those named in the charged counts) who had tried to
purchase cyanide from the defendant. Id. at 333. This testimony
"went into excruciating detail about the . . . victims' personal
lives, medical issues, histories of depression, earlier suicide
attempts, suicidal motivations, and the like." Id. at 335. We
later described the testimony as "copious," "emotionally charged,"
and as having "virtually no probative value." Id. at 337. Because
the inordinate potential for prejudice "substantially outweighed"
the dubious probative value of the anecdotal evidence, we held
that the district court abused its discretion in admitting that
evidence. Id. at 338.
This case is a world apart from Kilmartin. The patient-
harm testimony here was relatively brief and squarely probative,
established that the patients became addicted to Subsys and
suffered withdrawal symptoms, shed a bright light on the
prescribing habits of the coconspirator physicians, tied the
"effective dose" messaging into the scheme, and catalogued (in
checklist fashion) many of the ways in which the IRC misrepresented
patient information. Perhaps most importantly, the patient-harm
testimony explained how the charged conspiracy was able to function
and how it generated product demand. And, finally, the testimony
- 72 -
was concise: no testifying patient was permitted to dwell unduly
on the harm that he or she suffered. Viewed in this perspective,
the patient-harm testimony was less like the challenged testimony
in Kilmartin and more like the victim testimony in Cadden, 965
F.3d at 22 — the admission of which we approved because it was
relatively brief and the trial court precluded more graphic
details.
To be sure, the patient-harm testimony packed a punch.
Nevertheless, the issue is not prejudice simpliciter but, rather,
whether particular evidence crosses the line into the forbidden
realm of unfair prejudice.9 See United States v. Pitrone, 115 F.3d
1, 8 (1st Cir. 1997) ("[I]t is only unfair prejudice against which
the law protects." (emphasis in original)). The fact that
addiction is ugly does not bar the government from offering
evidence about it when — as in this case — the defendants' scheme
has made addiction relevant and probative. See, e.g., United
States v. Morales-Aldahondo, 524 F.3d 115, 120 (1st Cir. 2008)
(holding that, although admitted images of child pornography
"undoubtedly had an emotional impact on jurors," district court
"properly balanced the competing concerns of Rule 403" when
evidence was probative and court "limit[ed] the number of images
9We have observed before that "all evidence is meant to be
prejudicial." Rodriguez-Estrada, 877 F.2d at 156. If it was not
intended to influence the jury in one way or another, it is
unlikely that any party would seek to introduce it.
- 73 -
presented"). In the last analysis, a "court is not required to
scrub the trial clean of all evidence that may have an emotional
impact, where the evidence is part of the Government's narrative."
Id. at 120 (internal quotation omitted).
We are aware that the defendants offered to stipulate
that none of the testifying patients had cancer. But such a
stipulation was not an acceptable proxy for the patients'
testimony. The scope of the proffered stipulation was much
narrower than the scope of the testimony, and the government was
entitled to show (for example) other misrepresentations made by
the IRC. We consistently have rejected parties' attempts to insist
that district courts accept stipulations that are not commensurate
substitutes for live proof, see, e.g., Cadden, 965 F.3d at 22, and
we do so here.
To sum up, we discern no abuse of discretion in the
court's construction of the Rule 403 balance. The patient-harm
testimony bore on the government's theory of the case in salient
ways, and the court took prudent steps to soften the emotional
impact of the testimony. We have stated before that "[o]nly rarely
— and in extraordinarily compelling circumstances — will we, from
the vista of a cold appellate record, reverse a district court's
on-the-spot judgment concerning the relative weighing of probative
value and unfair effect." United States v. Mehanna, 735 F.3d 32,
59 (1st Cir. 2013) (quoting Freeman v. Package Mach. Co., 865 F.2d
- 74 -
1331, 1340 (1st Cir. 1988)). This is not so rare an instance, and
the district court acted within the encincture of its discretion
under Rule 403 in allowing the challenged testimony.
C
The defendants' challenge to the admissibility of the
patient-harm testimony incorporates one last point. They contend
that the patient-harm testimony was cumulative of other proof.
They note, for example, that Dr. Awerbuch and Nurse Alfonso
testified that their Subsys prescriptions were not medically
necessary and that Gurrieri and other IRC staffers testified that
they lied to insurers about patients' conditions. Since the
defendants did not raise this objection below, plain error review
obtains. See Taylor, 54 F.3d at 972-73; United States v. Nivica,
887 F.2d 1110, 1116 (1st Cir. 1989).
"The plain error hurdle is high," United States v.
Hunnewell, 891 F.2d 955, 956 (1st Cir. 1989), and a purported error
must (among other things) be "clear or obvious" in order to be
"plain." United States v. Duarte, 246 F.3d 56, 60 (1st Cir. 2001).
Cumulativeness is almost always a matter of degree, and the
defendants' claim of cumulativeness — if it suggests an error at
all — at most suggests an error that is neither clear nor obvious.
See United States v. Sepulveda, 15 F.3d 1161, 1185 (1st Cir. 1993)
("We have routinely found cumulative evidence impotent when
- 75 -
accidentally uncorked."). Plain error is, therefore, plainly
absent.
VI
Gurry — whom the jury acquitted with respect to the CSA
and honest-services predicates — contends that the evidence
admitted with respect to those predicates unfairly influenced the
jury's findings against him on the mail- and wire-fraud
predicates.10
This is, for all intents and purposes, a claim of
prejudicial spillover. As relevant here, prejudicial spillover
occurs when the evidence admitted to prove a charge as to which
the defendant was acquitted "was so extensive, inflammatory, and
prejudicial that it necessarily spilled over into the jury's
consideration of [his] guilt on other charges." Mubayyid, 658
F.3d at 72.
To determine whether an unacceptable threat of
prejudicial spillover materialized, we must evaluate whether the
record evinces "a 'serious risk' that the joinder of offenses
compromised a specific trial right or 'prevent[ed] the jury from
10Although the other four defendants advanced similar
contentions in their briefs, those contentions have been rendered
moot by our vacatur of the district court's partial grant of their
Rule 29(c) motions. See supra Part III (A)-(D); see also Mubayyid,
658 F.3d at 73 (holding claim of prejudicial spillover without
merit after appellate court reinstated the previously vacated
conviction).
- 76 -
making a reliable judgment about guilt or innocence.'" Id.(quoting United States v. Houle, 237 F.3d 71, 75-76 (1st Cir.
2001)). The devoir of persuasion rests with the defendant to show
"prejudice so pervasive that a miscarriage of justice looms."
United States v. Trainor, 477 F.3d 24, 36 (1st Cir. 2007) (quoting
United States v. Levy-Cordero, 67 F.3d 1002, 1008 (1st Cir. 1995)).
In the court below, Gurry argued that the government's
"accusation" that he and the other defendants intended to coax
doctors to prescribe Subsys illegitimately, coupled with the
patient-harm testimony, tainted the jury's findings against him on
other matters. The district court rejected this argument and
refused to order a new trial on this ground. See Gurry, 427
F. Supp. 3d at 196-97. It found that the patient-harm testimony
was properly admitted as to all the defendants and all the charged
predicates and observed that its jury instructions had been custom
tailored to guard against prejudicial spillover. See id.
We review the district court's denial of a new trial
based on allegations of prejudicial spillover for abuse of
discretion. See United States v. Neal, 36 F.3d 1190, 1205 (1st
Cir. 1994). We discern none.
At the outset, it bears mentioning that Gurry's argument
repastinates much of the same ground covered in our discussion of
the admissibility of the patient-harm testimony. See supra Part
V. He was charged as a coconspirator and, thus, almost all of the
- 77 -
evidence properly admitted against other coconspirators was
relevant to and independently admissible against him. See United
States v. O'Bryant, 998 F.2d 21, 26 (1st Cir. 1993). And because
the patient-harm testimony was independently admissible against
Gurry, he hardly can be heard to complain about an untoward
spillover effect. See id. Simply put, the government's case
against Gurry would have comprised essentially the same evidence
even if the government had not seen fit to charge him with the
acquitted predicates.
We add that Gurry's argument that patient-harm testimony
likely "incited [the jury's] ire" is severely wounded by his
acquittal with respect to the CSA and honest-services predicates.
That the jury's findings distinguished among defendants and
differentiated among proposed predicates is strong evidence that
no spillover prejudice occurred. See United States v. Williams,
809 F.2d 75, 88 (1st Cir. 1986); cf. United States v. Natanel, 938
F.2d 302, 308 (1st Cir. 1991) ("The introduction of evidence
against other defendants cannot realistically be viewed as having
jeopardized [the defendant's] chances on [one count] when the jury
proved willing to treat the case against [him] on its own merits
by acquitting him on the other counts."). Here, moreover, the
jury differentiated not only between counts but among defendants
— and that selectivity is "strong evidence" that the jury was not
blinded by raw emotion but, rather, properly compartmentalized and
- 78 -
applied the law to the facts. United States v. Bailey, 405 F.3d
102, 112 (1st Cir. 2005); see United States v. Dworken, 855 F.2d
12, 29 (1st Cir. 1988) (giving credence to "jury's ability to
segregate the evidence and carefully weigh against which defendant
it was applicable" (quoting United States v. Richman, 600 F.2d
286, 299-300 (1st Cir. 1979)).
Much of the credit for the jury's discernment must go to
the district court. The court excluded the most inflammatory
evidence about the effects of Subsys and prudently instructed the
jury both to treat each defendant individually and to weigh
separately the evidence as to each defendant. As a general rule,
"instructing the jury to consider each charged offense, and any
evidence relating to it, separately as to each defendant"
constitutes an "adequate measure[] to guard against spillover
prejudice." United States v. Casas, 425 F.3d 23, 50 (1st Cir.
2005); see, e.g., United States v. Figueroa, 976 F.2d 1446, 1454
(1st Cir. 1992) (holding that "district court minimized any danger
from prejudicial spillover through its repeated instructions that
the jury was to give separate consideration to each charge against
each defendant"). Gurry has not pointed to anything that would
take this case out of the general rule.
Little more need be said. The jury acquitted Gurry with
respect to the CSA and honest-services predicates while at the
same time finding the four other defendants guilty of those
- 79 -
charges. This result constituted "an uncommonly convincing 'ex
post validation' of the jury instructions." Figueroa, 976 F.2d at
1454. In the circumstances of this case, Gurry's claim of
prejudicial spillover lacks force, and the district court acted
well within the ambit of its discretion in refusing to grant him
a new trial on that ground.
VII
During pretrial proceedings, Lee moved for a severance
of the charges against her. See Fed. R. Crim. P. 14(a). The
district court denied her motion. Lee assigns error.
A
In support of severance, Lee argued below that the
government charged two distinct conspiracies: one to bribe doctors
who would prescribe Subsys indiscriminately and another to defraud
insurers to pay for those prescriptions. From this starting point,
she asserted that a joint trial would prejudice her because she
was not personally involved in the second of these conspiracies.
The district court denied her motion, concluding that Lee had
failed to make a sufficient showing of potential prejudice.
Specifically, the court found that Lee had "fail[ed] to identify
any evidence or argument that would not be admissible against her
in a separate trial" and that her allegations of prejudice were
wholly conclusory.
- 80 -
On appeal, Lee traverses the same terrain. Her case
should have been severed, she submits, because she was a stranger
to the IRC portion of the wrongdoing. We review the district
court's denial of her motion for abuse of discretion. See United
States v. Azor, 881 F.3d 1, 12 (1st Cir. 2017).
When — as in this case — an indictment charges a criminal
conspiracy among multiple defendants, the government enjoys the
benefit of a rebuttable presumption that a joint trial is
appropriate. See United States v. Soto-Beníquez, 356 F.3d 1, 29
(1st Cir. 2003) (explaining that "the general rule is that those
indicted together are tried together"); see also Zafiro v. United
States, 506 U.S. 534, 537 (1993) (noting Supreme Court's
"repeated[] . . . approv[al] of joint trials" for coconspirators).
And in cases where joinder is proper, "[w]e must affirm the
district court's denial of a motion to sever unless the defendant
makes a strong and convincing showing of prejudice." United States
v. Richardson, 515 F.3d 74, 81 (1st Cir. 2008) (internal citations
omitted); see Azor, 881 F.3d at 12.
Here, we uphold the district court's refusal to sever
for two reasons. First, the record contains substantial evidence
showing Lee's involvement with the IRC (for instance, evidence
showing that Lee sought to maximize the number of opt-in forms to
be transmitted to the IRC and evidence showing that she supervised
some of Insys's IRC authorization specialists). Second, because
- 81 -
the government charged and proved a single conspiracy and because
Lee was charged and convicted as a coconspirator, virtually all of
the evidence properly admitted against the other defendants
(including evidence showing that the IRC was an integral part of
the single conspiracy) was also admissible against Lee. See
O'Bryant, 998 F.2d at 26; see also Richardson, 515 F.3d at 82("[T]his Court has repeatedly refused to overrule a denial of
severance if substantially the same evidence would have been
admitted in separate trials.").
Straining to show that she did not belong in the case,
Lee identifies 34 witnesses who — she speculates — would not have
been called to testify had she been tried alone. But the unadorned
fact that additional witnesses will be called in a joint trial is
not a cognizable basis for severance. The right to a severance
necessarily entails a showing of prejudice, and Lee offers no
explanation as to why the testimony of these witnesses (who, in
her brief's words, "had nothing relevant or incriminating to say
about Lee") prejudiced her in any way.
B
Lee plucks out of thin air a new assault on the denial
of her motion for a severance. She contends, for the first time
on appeal, that joinder was improper under Federal Rule of Criminal
Procedure 8(b). This misjoinder, she says, independently demanded
severance. Although we normally review the propriety of joinder
- 82 -
de novo, see Azor, 881 F.3d at 12, Lee's unpreserved contention
engenders — at most — plain error review,11 see United States v.
Greenleaf, 692 F.2d 182, 187 n.4 (1st Cir. 1982); see also United
States v. Ackerly, 981 F.3d 70, 74 (1st Cir. 2020).
Whatever the standard of review, a claim of misjoinder
"requires reversal only if the misjoinder results in actual
prejudice." United States v. Lane, 474 U.S. 438, 449 (1986); see
United States v. Bruck, 152 F.3d 40, 44 (1st Cir. 1998). The
movant must show that her joinder had a "substantial and injurious
effect or influence in determining the jury's verdict." Bruck,
152 F.3d at 44 (quoting Kotteakos v. United States, 328 U.S. 750,
776 (1946)). Lee's feeble effort to show that her joinder was
prejudicial falls far short.
Lee starts with the uncontroversial proposition that
prejudicial joinder may entitle a defendant to a severance. See
Natanel, 938 F.2d at 306. Lee has very little to say, though,
about why her joinder was prejudicial. Her only argument seems to
rest on her self-serving conclusion that "the Government misled
the Court into believing that Lee 'dealt extensively' with the
11 In all likelihood, the claim of misjoinder — which was
available before trial but not raised by any pretrial motion — was
waived. See Fed. R. Crim. P. 12(b)(3)(B)(iv). Here, however, the
government has not suggested waiver, and we assume for argument's
sake that the misjoinder claim is subject to appellate review
(albeit only for plain error).
- 83 -
IRC." This conclusion, in turn, circles back to her protest that
she had "no criminal association" with the IRC side of the venture.
As we already have explained, this protest is at odds
with the record. In certain cases, evidence at trial may "serv[e]
as an ex post assurance that joinder was a step founded on a
reasonable, good faith basis in fact." Id. at 307. So it is here,
and we hold unhesitatingly that Lee's joinder was appropriate.
VIII
Lee's employment history was unusual for a
pharmaceutical executive: her most relevant prior work experience
seems to have been as an exotic dancer at a Chicago-area strip
club. Before trial, the government sought leave to introduce
evidence about Lee's past work and her unorthodox professional
behavior with Dr. Madison (the notorious pill mill operator). The
district court ruled, over Lee's objection, that the proffered
evidence was "not admissible to prove the Defendants' character,
but such evidence may be admissible for other purposes, including
to establish the nature of the relationships between the co-
conspirators, duress, or relevant corporate culture." Along the
same lines, the court ruled that Lee's employment history "[was]
not admissible to prove [her] character," but "may be intrinsic to
aspects of the charged offense" and, to that extent, might be
admissible. In the end, the court temporized, stating that the
- 84 -
proffered evidence "will be admitted if it is otherwise admissible"
under the federal rules of evidence.
At trial, the government offered evidence of Lee's
employment history. Burlakoff testified that he first met Lee
while she was working at a strip club, that he invited her to apply
for a sales manager position at Insys, and that he sent her résumé
to Babich. In order to bolster its theory that Kapoor knew of
Lee's lack of credentials in either management or pharmaceutical
sales, the government discussed at sidebar its intention to
introduce an email that suggested that Lee had run an escort
service. The court refused to admit the email but allowed
testimony about whether portions of Lee's résumé were incomplete.
In front of the jury, the prosecutor asked Burlakoff
whether someone had provided Insys with information that Lee was
"running an escort service." The court sustained an objection and
struck the question. But that was not the end of the matter. When
the parties returned to sidebar, the district court ruled that the
email contained "relevant information," but directed the
prosecutor "to keep the salacious aspect to an absolute minimum."
Acceding to a defense request for an instruction that the contents
of the email were not being admitted for the truth of the matter
asserted, the court told the jurors that they would "hear testimony
. . . that the company got some information about Ms. Lee that
suggested that she might not be qualified for the job." Because
- 85 -
"the letter that [Insys] received is anonymized," the court
cautioned:
The letter does not — and I cannot emphasize
this strongly enough — does not come in for
the truth of the matter asserted. . . . [T]he
person that wrote . . . the letter . . . is
certainly not here. They're not testifying.
There may be issues of bias. We don't have
any way to know if what they're saying is true
or not. You're to consider this information
only to the effect that [it] had on the company
and what they did in response to receiving
this information.
Burlakoff then testified that Babich had received an
email about Lee from an "ex-fiancé . . . who had a bone to pick
with her." According to Burlakoff, the email questioned why Insys
would hire someone with Lee's background and listed several
websites. He checked the websites and found topless photos of
Lee. After he informed Babich, Babich consulted with Kapoor, who
"s[aw] no issue with it" but asked that "those pictures come down
immediately." Burlakoff relayed Kapoor's wishes to Lee, who took
the topless photos down.
Separately, two sales representatives testified that
they went to a Chicago nightclub with Lee and Dr. Madison after a
speaker event. One testified that Lee "was sitting on [Dr.
Madison's] lap, kind of bouncing around, and he had his hand sort
of inappropriately all over her on her chest." The other sales
representative testified that he observed "[v]ery inappropriate
contact" between Lee and Dr. Madison, such as Dr. Madison placing
- 86 -
"[h]is hands . . . all over her, her front and her pants, in her
shirt" and "heavily kissing" Lee.
Lee objected to all of this testimony and moved for a
mistrial, which the district court denied. She argues that the
court erred in admitting this evidence because it constituted
"salacious propensity evidence" that should have been excluded
under Federal Rule of Evidence 404(b). She suggests that because
"the jury heard questions that gave an inference that if Lee worked
as an escort or operated an escort service for financial gain in
the past and had topless photos on the internet, it is more likely
that she committed the charged offense for financial gain." In
the alternative, she suggests that the evidence should have been
excluded under Rule 403.
We review the district court's admission of the
challenged evidence for abuse of discretion. See Iacobucci, 193
F.3d at 20. We start with Lee's Rule 404(b) challenge. Rule
404(b)'s propensity bar "excludes only extrinsic evidence —
'evidence of other crimes, wrongs, or acts' — whose probative value
exclusively depends upon a forbidden inference of criminal
propensity." United States v. Manning, 79 F.3d 212, 218 (1st Cir.
1996) (quoting United States v. Hadfield, 918 F.2d 987, 994 n.5
(1st Cir. 1990)). Evidence intrinsic to the crime charged is not
precluded under Rule 404(b). See id.- 87 -
Following these guideposts, we conclude that Rule
404(b)'s proscription of propensity evidence is inapposite here.
The probative value of the challenged evidence does not depend
exclusively on a forbidden inference of propensity but, rather, is
intrinsic to the crime charged. Burlakoff's testimony about Lee's
qualifications (or lack of them) tends to show that neither Kapoor
nor Lee could reasonably think that Lee was hired as a sales
manager due to either her executive excellence or her marketing
skill set. Instead, the evidence suggests that the defendants'
scheme to bribe doctors into prescribing Subsys indiscriminately
offered doctors both money (through the speaker programs) and
sexual favors.
So, too, the sales representatives' testimony about
Lee's physical interactions with Dr. Madison has independent
probative value: that testimony confirms Lee's willingness to
influence doctors' prescription habits through sexual
interactions. As Burlakoff made clear, the doctors "prescribe[d]
strictly based on their relationship with the sales manager."
Here, the challenged evidence was relevant because it explained
the background and development of the relationship between two of
the coconspirators (Lee and Dr. Madison) inasmuch as it showed
Lee's tactics for getting Dr. Madison "to keep his writing up" and
because it revealed some of the unprofessional motivations
underlying Dr. Madison's prescription habits. See United States
- 88 -
v. Escobar-de-Jesus, 187 F.3d 148, 169 (1st Cir. 1999). As the
district court noted, the evidence is "illustrative of [Lee's]
relationship with [Dr. Madison] and how she's interacting with
him" to motivate the doctor to prescribe more and more Subsys.
We also reject Lee's contention that the jury
necessarily inferred that she was likely to have committed a crime
from evidence that she ran an escort service and that topless
photos of her floated on the internet. The record contains no
indication of the evidence being offered or used for that purpose.
Perhaps more importantly, the district court carefully limited the
ways in which the jury could put that information to use. The
email came in only to show "the effect that [it] had on the company
and what [the company] did in response to receiving this
information." We long have held that courts may presume that
jurors will follow the judge's instructions, United States v.
Spencer, 873 F.3d 1, 16 (1st Cir. 2017), and Lee has provided no
reason for us to deviate from that norm.
Nor did the district court abuse its discretion in
concluding that the probative value of the challenged evidence was
not substantially outweighed by its unfairly prejudicial effects.
We afford district courts appreciable discretion in striking the
balance that Rule 403 demands. See Mehanna, 735 F.3d at 59;
Freeman, 865 F.2d at 1340. The evidence challenged here was
probative of one of the ways in which Lee and her superiors
- 89 -
attempted to influence prescribers, and it was also probative of
the defendants' intent to downplay traditional sales strategies
that focus on patients' needs. Here, moreover, the district court
was sensitive to the potential for prejudice, cautioning the
government to "tone it down" and to avoid the specific details of
Lee's encounter with Dr. Madison. In the same spirit, the court
made certain that the information derived from the email was
presented to the jury as suspect: it told the jurors that there
was no way to find out if the information in the email was true
and instructed them not to take it for the truth of the matter.12
We conclude, therefore, that the district court held the Rule 403
balance steady and true, and that Lee's claim of error is
impuissant.
Lee's appeal from the denial of her motion for a mistrial
is equally unavailing. "Declaring a mistrial is a last resort,
only to be implemented if the taint is ineradicable, that is, only
if the trial judge believes that the jury's exposure to the
evidence is likely to prove beyond realistic hope of repair."
Sepulveda, 15 F.3d at 1184. We review the district court's denial
12Lee argues in passing that the "[a]dmission" of the email
"would offend" the Confrontation Clause. See U.S. Const. amend.
VI. This argument collapses of its own weight: the email was
never admitted into evidence and, in any event, the court told the
jury that it could not consider the contents of the email for the
truth of the matter asserted. Consequently, the right to
confrontation was not implicated. See United States v. Cabrera-
Rivera, 583 F.3d 26, 33 (1st Cir. 2009).
- 90 -
of a mistrial for abuse of discretion. See United States v.
Chisholm, 940 F.3d 119, 126 (1st Cir. 2019).
In the case at hand, the district court supportably found
that a mistrial was not required. Its clear limiting instructions
and prompt striking of extraneous matter, combined with the
presumption that juries follow the trial court's instructions,
leads inexorably to a conclusion that the district court did not
abuse its discretion.
IX
Lee requested a jury instruction on supervisory
condonation. She asked that the jury be instructed that while
"Burlikoff [sic] and Babich's knowledge or condoning of activities
does not by itself constitute a defense or an excuse," evidence of
their "actions or omissions, or evidence of deficiencies in the
manner in which they implemented or enforced [Insys's] policies
and procedures, may be considered . . . to the extent that such
evidence bears on the issue of whether or not defendant Lee formed
the required intent to commit the crimes with which [s]he is
charged." The district court did not give the requested
instruction. Lee preserved her objection and now assigns error.
Our review of the district court's eschewal of this
proposed instruction is for abuse of discretion. See United States
v. De La Cruz, 514 F.3d 121, 139 (1st Cir. 2008). A district court
is, of course, under no obligation to honor a party's word choices
- 91 -
or to parrot proposed language when delivering jury instructions.
See United States v. DeStefano, 59 F.3d 1, 2-3 (1st Cir. 1995).
As a result, we will not second-guess the trial court's rejection
of a proposed instruction unless the proposed instruction is itself
substantively correct, was not covered (at least in substance) in
the charge as given, and touched upon a salient point (such that
the refusal so to instruct seriously undercut the proponent's
ability to mount a particular claim or defense and caused
substantial prejudice). See id.Lee's proposed instruction fails under the second and
third prongs of this formulation. The district court's charge, as
rendered, contained a good-faith instruction, which informed the
jury that "[t]he 'good faith' of a Defendant is a complete defense
to the charge in the indictment because good faith on the part of
the Defendant is, simply, inconsistent with both knowingly and
willfully agreeing to become a member of the alleged conspiracy
and specifically intending that a member of the alleged conspiracy
would commit criminal conduct." The court added that "[a]n honest
mistake in judgment or an honest error in management does not rise
to the level of criminal conduct." So, the court said, "[i]f the
evidence in the case leaves . . . a reasonable doubt as to whether
a Defendant acted with criminal intent or in good faith," the jury
should "find the Defendant not guilty."
- 92 -
This instruction fully permitted Lee to present her
supervisory condonation defense and, thus, forestalled any
cognizable claim of prejudice. Lee demurs, maintaining that the
court's good-faith instruction did not accommodate her two-pronged
argument that she "was lawfully following the instructions of her
employer" and that "Insys condoned her conduct."
Lee's claim of error depends on an unrealistically
cramped reading of the court's good-faith instruction. Under this
instruction, Lee was free to argue that she acted in good faith
because she subjectively believed that her conduct was lawful and
that she based that belief on her employer's orders, its
condonation of her conduct, or both. Because of her employer's
guidance and approval, she might say, her mistake was an honest
one. The court's good-faith instruction focused the jury on Lee's
"actual, subjective beliefs," so the "charge basically did what
[Lee] wanted it to do." United States v. Denson, 689 F.3d 21, 26
(1st Cir. 2012). Because the instruction actually given
accommodated both prongs of Lee's argument, the district court's
refusal to use Lee's proposed language was well within its
discretion.
X
Rowan assigns error to the district court's denial of
his mid-trial motion to compel the disclosure of allegedly
exculpatory information. See Brady v. Maryland, 373 U.S. 83- 93 -
(1963). This claim of error harks back to a prosecutor's comment
to Rowan's counsel, allegedly made during a break in Gurrieri's
testimony, supposedly mentioning that the government had discussed
a recording used as an IRC training tool with Gurrieri. Asserting
that this recording was a critical piece of evidence in the
government's case against him, Rowan moved to compel the government
to produce all communications between Gurrieri and the government
concerning the recording.
In response, the government vouchsafed that it "has
consistently met and exceeded its ethical and legal discovery
obligations in this case." There were no further communications
that were subject to production, the government said, because it
had "fully complied with all of its obligations," including
disclosure of all of its interview reports and rough notes. The
government added that "[i]f [it] was aware of any exculpatory or
Brady information in any form, it would have disclosed that
information in a report, in agent notes, verbally, via email, or
in some other form."
The district court denied Rowan's motion "[b]ased on the
government[']s representations" and its own "understanding of the
issues in the case as a result of a lengthy trial." The court
took the opportunity, though, to remind the government "that its
[Brady] obligations continue through sentencing." Rowan moved for
reconsideration, but to no avail.
- 94 -
We review the district court's denial of a motion to
compel discovery for abuse of discretion. See United States v.
Flete-Garcia, 925 F.3d 17, 33 (1st Cir.), cert. denied, 140 S. Ct.
388 (2019). This standard of review is not one-dimensional. See
Akebia Therapeutics, Inc. v. Azar, 976 F.3d 86, 92 (1st Cir. 2020);
United States v. Lewis, 517 F.3d 20, 24 (1st Cir. 2008). Within
it, we review for clear error the district court's factual finding
that no further document subject to production existed. See United
States v. Padilla-Galarza, 990 F.3d 60, 79-80 (1st Cir. 2021).
Under Brady, the government is obligated "to disclose
evidence in its possession that is favorable to the accused and
material to guilt or punishment." United States v. Prochilo, 629
F.3d 264, 268 (1st Cir. 2011) (citing, inter alia, Brady, 373 U.S.
at 87). Where, as here, a claim of Brady error is advanced, the
defendant bears the burden of showing "a likelihood of prejudice
stemming from the government's nondisclosure." Flete-Garcia, 925
F.3d at 33. To make such a showing, he must "articulate with some
specificity what evidence he hopes to find in the requested
materials, why he thinks the materials contain this evidence, and,
finally, why this evidence would be both favorable to him and
material." Id. (quoting Prochilo, 629 F.3d at 269). And in
determining whether the evidence sought is material, "[t]he
question is not whether the defendant would more likely than not
have received a different verdict with the evidence, but whether
- 95 -
in its absence he received a fair trial, understood as a trial
resulting in a verdict worthy of confidence." United States v.
Josleyn, 206 F.3d 144, 152 (1st Cir. 2000) (quoting Strickler v.
Greene, 527 U.S. 263 (1999)).
Rowan has utterly failed to make the requisite showing.
The most prominent fly in the ointment is that he has failed to
establish that the evidence he seeks actually exists. Although
Rowan conclusorily asserts that "such communications must have
occurred," all three prosecutors (including the prosecutor whom
the defense identified as having mentioned the government's
purported discussion with Gurrieri) signed the pleading in which
the government insisted that it had "withheld nothing." Given the
unequivocal nature of the government's representations and the
experience gleaned by the court in presiding over this case
(including protracted pretrial proceedings, discovery disputes,
and a lengthy trial), we decry no clear error in the court's
determination that the claimed evidence did not exist. A
defendant's naked assertion that a particular communication "must
have occurred," no matter how vociferously expressed, is
insufficient to undermine a reasoned judicial determination that
no such communication actually exists. See United States v. Duval,
496 F.3d 64, 75 (1st Cir. 2007); cf. Padilla-Galarza, 990 F.3d at
80 (holding, in Jencks Act context, that "the government cannot be
- 96 -
expected to produce that which has never existed"). We therefore
reject Rowan's claim of Brady error.13
XI
Following the adverse jury verdicts, Simon — represented
by successor counsel — moved for a new trial. See Fed. R. Crim.
P. 33. Among the grounds asserted in support of this motion, he
averred that his trial counsel had been handicapped by a conflict
of interest. Specifically, he averred that his trial counsel,
Steven Tyrrell, was conflicted because the law firm in which
Tyrrell was a principal — Weil Gotshal & Manges LLP (Weil) — was
representing Insys in a bankruptcy restructuring at the same time
that Tyrrell was representing Simon in this case. The district
court disagreed and refused to order a new trial. Simon appeals
that ruling.
Simon's conflict-of-interest claim has its roots in an
internal investigation that Insys conducted some three years prior
13 We add that Rowan's explanations for why the alleged
evidence would be exculpatory and material are unconvincing: they
are woven with nothing more than wispy threads of speculation and
surmise. Mere conjecture that certain communications "might
contain exculpatory evidence" without "any supporting evidence or
arguments to indicate this was, in fact, the case," is inadequate
to ground a claimed Brady violation. United States v. Brandon, 17
F.3d 409, 456 (1st Cir. 1994); see Flete-Garcia, 925 F.3d at 34
(concluding that "district court's refusal to compel production of
requested information is not an abuse of discretion" when "theory
of materiality is based entirely on conjecture"); Prochilo, 629
F.3d at 269 (explaining that defendant's Brady showing "cannot
consist of mere speculation").
- 97 -
to the start of Tyrrell's representation of Simon. In December of
2013, Insys received a subpoena from the Department of Justice.
Insys immediately retained Skadden, Arps, Slate, Meagher & Flom
LLP (Skadden) to serve as its outside investigations and compliance
counsel. Skadden conducted a thorough investigation, interviewed
numerous Insys employees, reviewed a wide range of company
practices, and offered advice to Insys's board of directors.
Years passed and — in 2017 — Simon retained Tyrrell to
represent him in the case at hand. The following year, Insys
turned to Weil in connection with anticipated chapter 11
proceedings. When Tyrrell became aware of his firm's potential
representation of Insys, he discussed the matter with Simon.
Tyrrell informed Simon that — should his representation of Simon
continue — he would be "walled off" from the Weil team handling
Insys's bankruptcy reorganization. Simon assented to this
arrangement.
In due course, Weil signed an engagement letter with
Insys, which explicitly permitted Tyrrell to act adversely to Insys
in connection with his representation of Simon. Weil quickly
instituted screens to prohibit the two teams from reviewing,
discussing, or sharing information.
We fast-forward to June of 2019. After the jury returned
its verdicts, Simon queried Tyrrell about Weil "representing Insys
in its bankruptcy case." Tyrrell reminded Simon of their earlier
- 98 -
conversation, described the "wall" that was in place, and assured
Simon that "there is no sharing of information or interaction."
Simon renewed his queries the following month, calling Tyrrell's
attention specifically to the internal investigation that Skadden
had overseen. Tyrrell responded that the internal investigation
had ended before the criminal case began and reiterated that Weil's
representation of Insys in the bankruptcy proceedings was
unrelated to the criminal case.
Unassuaged, Simon retained fresh counsel and moved for
a new trial on the ground that Tyrrell had been laboring under a
conflict of interest. He alleged that Weil's representation of
Insys had inhibited Tyrrell and prevented him from seeking to
obtain the findings of Insys's internal investigation into the
marketing and sale of Subsys. Although Insys had consistently
asserted that those materials were shielded by the attorney-client
privilege, Simon argued that a different (conflict-free) attorney
could have pierced the privilege. The government opposed the
motion. The district court denied relief, concluding that Simon's
proffered alternative strategy was not plausible. See Gurry, 427
F. Supp. 3d at 217.
We review the district court's factual findings in
connection with the conflict-of-interest claim for clear error but
afford de novo review to the court's ultimate conclusion. See
Reyes-Vejerano v. United States, 276 F.3d 94, 97 (1st Cir. 2002).
- 99 -
Under the Sixth Amendment, a defendant has a right to conflict-
free counsel. See United States v. Ponzo, 853 F.3d 558, 574 (1st
Cir. 2017); U.S. Const. amend. VI. That right, though, does not
protect a defendant from an attorney's "mere theoretical division
of loyalties." Id. at 575 (quoting Mickens v. Taylor, 535 U.S.
162, 171 (2002)). To prevail on a conflict-of-interest claim, a
defendant must show that "'a conflict of interest actually
affected' the lawyer's 'performance.'" Id. (quoting Mickens, 535
U.S. at 171). Such a showing requires a demonstration "that (1)
the lawyer could have pursued a plausible alternative defense
strategy or tactic and (2) the alternative strategy or tactic was
inherently in conflict with or not undertaken due to the attorney's
other interests or loyalties." Id. (quoting United States v.
Colón-Torres, 382 F.3d 76, 88 (1st Cir. 2004)).
We conclude — as did the court below, see Gurry, 427 F.
Supp. 3d at 217-19 — that no actual conflict of interest existed
because piercing attorney-client privilege to lay bare the
findings of Skadden's internal investigation was not a plausible
defense strategy. According to Simon, this proposed strategy would
have offered "material from Skadden's internal investigation to
substantiate a good-faith defense." This must be so, he muses,
because Skadden "apparently . . . did not advise Insys to shut
down the ISP, to close the IRC, or to fire or discipline Mr.
Simon." Building on this rickety foundation, Simon argues that
- 100 -
the seeming absence of such advice must mean that Skadden concluded
that Insys's operations were beyond reproach. So, Simon's thesis
runs, Skadden's internal investigatory materials "would have
revealed the evidentiary basis — facts, documents, witness
testimony — underlying Skadden's findings and advice, which [his]
defense counsel could have marshaled to use at trial."
This proposed strategy is both substantively and
strategically bankrupt. First and foremost, Simon's allegation
that the findings reached during the investigation must be
favorable to him is anchored on abject speculation. Simon
consistently has acknowledged that he has never been "privy to the
details of [outside counsel's] findings and advice." Skadden's
findings are, he confesses, "unknown to [him]." Knowledge is
essential to the making of value judgments, and saying that
something is "unknown" is tantamount to an admission that its
favorability cannot be ascertained.
Despite this void, Simon self-servingly surmises that
the materials generated during the investigation must bolster his
defense because Skadden interviewed him and — subsequent to that
interview and the completion of Skadden's investigation — "nobody
ever counseled [him] to modify his own practices or imposed any
discipline or punishment on him for wrongdoing." Simon also
suggests that since the IRC did not shut down, an inference is
warranted that Skadden did not advise Insys to cease operations.
- 101 -
Piling inference upon inference, he then suggests that Skadden
must have refrained from giving such advice because it found
Insys's business practices aboveboard. In other words, Simon asks
us to assume that the materials would be exculpatory simply because
the internal investigation neither "resulted in [any] adverse
employment action against [him]" nor brought about any changes in
day-to-day IRC operations. Arriving at that assumption, though,
elevates hope over reason. Given the complicity of so many company
hierarchs in the scheme, the unknown time span covered by the
internal investigation, and the lack of congruity between that
time span and the life of the conspiracy, Insys's failure to either
take adverse action against Simon or to modify the IRC's modus
operandi may well have other more compelling explanations.
In all events, the district court had ample reason to
infer that the findings of the internal investigation were likely
detrimental to Simon's defense. The government and the defendants
engaged in considerable pretrial skirmishing as to whether the
government could elicit testimony from an Insys compliance officer
who coordinated the investigation. See id. at 218. Her testimony
would have focused on her conclusion that the IRC was engaging in
insurance fraud, id. — a conclusion that Simon would just as soon
have the jury not hear. So, too, other evidence in the record
makes it likely that the evidence Simon seeks would not have been
exculpatory. As we already have pointed out, see supra Part
- 102 -
III(C), the record includes substantial evidence of Simon's
knowledge of illegitimate Subsys prescriptions and his attempts to
increase their volume, his knowledge of the IRC's fraudulent
representations to insurers, and the like. Viewing the record in
its entirety, Simon's notion that Insys permitted him to continue
working because his work was legitimate seems far less plausible
than the notion that he was kept in place because his work
furthered the ongoing criminal scheme. Cf. Gurry, 427 F. Supp.
3d. at 220 ("The evidence at trial indicated that although Insys
hired compliance personnel and a general counsel after receiving
the subpoena in December 2013, these individuals were largely
viewed as obstacles to the success of the sales force and the
company."). Considering the improbability of Simon's assumption,
his afterthought defense strategy cannot be said to possess even
a patina of plausibility and, thus, cannot be considered a viable
strategy. See United States v. Cardona-Vicenty, 842 F.3d 766, 773
(1st Cir. 2016); see also Ponzo, 853 F.3d at 577 ("[M]ere
speculation does not suffice to show a Sixth Amendment
infraction.")
To complete the picture, we note that the proffered
strategy was not only implausible but also entailed significant
strategic risks. It is hornbook law that forgoing "a strategy
that could inculpate the defendant does not constitute an actual
- 103 -
conflict." Ponzo, 853 F.3d at 576. That is precisely the sort of
strategy that Simon now embraces. We explain briefly.
It is luminously clear that piercing the attorney-client
privilege would have been fraught with peril. Success in that
endeavor would have opened the floodgates for damaging testimony
from Insys's compliance officer, in-house counsel, and others
involved in the internal investigation. The potentially dire
consequences of such a strategy explain why the other defendants
— even though most of them would have had at least as good a chance
as Simon to benefit from the allegedly exculpatory evidence —
chose, through independent and highly skilled counsel, not to buck
Insys's attorney-client privilege. Instead, they banded together
and asked the district court, in their own words, to "preclude the
government from eliciting at trial any testimony regarding
privileged communications between Insys or its Board of Directors
. . . and the company's in-house or outside counsel." To put it
bluntly, they all went to the mat to block the government from
introducing the findings of the internal investigation. The fact
that no other defendant sought to pierce Insys's attorney-client
privilege is a telling indication that this strategy was neither
likely to be helpful to the defendants nor free from significant
risks of further inculpating them. Cf. Brien v. United States,
695 F.2d 10, 16 (1st Cir. 1982) (giving weight to "the fact that
none of [defendant's] other co-defendants, even though they had
- 104 -
independent counsel," sought the particular evidence). This is
far removed from the kind of alternative defense strategy that can
undergird a Sixth Amendment claim. See Ponzo, 853 F.3d at 576.
If more were needed — and we do not think that it is —
Simon also has failed to establish a meaningful relationship
between the findings of the internal investigation and his
proffered good-faith defense. Such a defense asks the jury to
determine what the defendant's "actual, subjective beliefs" may
have been. Denson, 689 F.3d at 26. Because Simon has never been
privy to the findings of the investigation, those findings could
not have informed his subjective beliefs.14 See United States v.
Zayyad, 741 F.3d 452, 461 (4th Cir. 2014); United States v.
Dynalectric Co., 859 F.2d 1559, 1574 n.19 (11th Cir. 1988).
14At trial, attorney Tyrrell did press a condonation defense
on Simon's behalf: he argued that "when [Simon] started, the
actions that he took were in line with the strategies that were
mapped out by the company's leaders and communicated to the entire
sales force, and there's no evidence that [he] knew or understood
that any aspect of those strategies was illegal." Because this
defense substantially covered the defense that Simon now says was
impaired and because the findings of the internal investigation
remain largely shrouded in mystery, it is apparent to us that Simon
has failed to articulate any benefit that his proposed strategy
plausibly might have achieved. Thus, there is no basis to conclude
that Tyrrell's choice to refrain from trying to pierce the
attorney-client privilege "actually affected the adequacy of
[Simon's] representation." Familia-Consoro v. United States, 160
F.3d 761, 764 (1st Cir. 1998) (quoting Cuyler v. Sullivan, 446
U.S. 335, 349 (1980)); cf. Brien, 695 F.2d at 15 (finding no actual
conflict of interest when "the tactics [defendant] suggests that
his attorney could have pursued appear to be merely hypothetical
choices that in reality could not have benefited [him]").
- 105 -
That ends this aspect of the matter. To prevail on a
Sixth Amendment conflict-of-interest claim, "the conflict must be
real." Brien, 695 F.2d at 15. The conflict of interest that Simon
ascribes to his trial counsel is purely theoretical and, thus,
does not come close to supporting a claim of constitutional
dimension. See id. We are not in the business of granting
"undeserved windfall[s]" to defendants who merely point to any
course of action not taken by their attorney and cry foul.
Cardona-Vicenty, 842 F.3d at 774 (internal quotation omitted). It
is exactly that kind of windfall that Simon is seeking. His quest
goes begging because the district court was on solid ground in
denying his conflict-of-interest claim.
XII
Gurry contends that the district court blundered in
denying his motion for a new trial. He argues that the evidence
against him was "remarkably thin" and that the government's case
turned on the "uncorroborated" word of one cooperating witness —
Gurrieri.
Where, as here, a new trial motion is based upon the
weight of the evidence, a district court should not grant a new
trial "unless it is quite clear that the jury has reached a
seriously erroneous result." United States v. Rothrock, 806 F.2d
318, 322 (1st Cir. 1986) (quoting Borras v. Sea-Land Serv., Inc.,
586 F.2d 881, 887 (1st Cir. 1978)). In a nutshell, such a remedy
- 106 -
should be granted sparingly and only when the evidence
preponderates heavily against the jury's verdict or a miscarriage
of justice otherwise looms. See United States v. Merlino, 592
F.3d 22, 32 (1st Cir. 2010). We review a district court's denial
of such a motion solely for abuse of discretion. See United States
v. Ruiz, 105 F.3d 1492, 1501 (1st Cir. 1997).
The record comfortably supports Gurry's convictions on
the mail- and wire-fraud predicates. He advised employees to "ride
the gray line" with insurers and use the "spiel" to obscure the
patients' lack of a cancer diagnosis. In addition, he led
strategic planning for the IRC, attended the daily 8:30 a.m.
management calls as the IRC's "mouthpiece," listened to accounts
of the IRC's deceptive practices during those daily calls, directly
supervised Gurrieri (who instructed employees to report false
medical rationales for prescriptions and bogus lists of tried-and-
failed medications), approved spurious patient-specific reports of
difficulty swallowing, and enforced IRC authorization quotas.
This evidence supports the jury's conclusion that Gurry
deliberately participated in Insys's defrauding of insurers — a
scheme that involved bribing doctors (through the mails) to
generate prescriptions and misrepresenting (through the wires)
patients' medical histories and needs.
In resisting this conclusion, Gurry focuses single-
mindedly on Gurrieri's credibility. Without that testimony, he
- 107 -
suggests, the evidence against him would be weakened to a point
where the adverse jury verdict would topple.
Gurry's single-minded focus means that he has left
himself with a steep uphill climb: "the district court must
generally defer to a jury's credibility assessments" when
evaluating a motion for a new trial. Merlino, 592 F.3d at 32. On
appeal, we may not "second guess the [district] judge's refusal of
a new trial and the jury's willingness to accept the essentials of
[a government witness's] account of the events." United States v.
Pitocchelli, 830 F.2d 401, 403 (1st Cir. 1987) (affirming denial
of new trial when trial court elected to leave "to the jury the
ultimate decision as to whether it believed" disputed testimony).
Even if we set to one side the steepness of this slope,
Gurry has not shown that the jury's verdict was seriously flawed.
He offers nothing that is sufficient to discredit the inference
that he purposefully bought into the IRC's tactics. We briefly
inspect his main contention — that Gurrieri was not to be believed
— and explain why we find that contention wanting.
First, Gurry emphasizes Gurrieri's decision to testify
as a cooperating witness. He rates this as a reason to disbelieve
her testimony. But Gurry's rating system is out of kilter: he
fails to take into account the jury's prerogatives. The district
court appropriately instructed the jury that Gurrieri was
cooperating with the government and that her testimony therefore
- 108 -
ought to be considered "with particular care and caution." Given
this cautionary instruction, it was within the jury's province to
choose whether to believe or disbelieve Gurrieri's testimony. See
United States v. Appolon, 695 F.3d 44, 55 (1st Cir. 2012).
Next, Gurry declares that Gurrieri's testimony was
"uncorroborated." This declaration is specious.15 Other witnesses
and documents substantiated the inference that Gurry both knew of
and supported the IRC's corrupt tactics. For instance, a sales
manager testified that she toured the IRC with Gurry, and that
they listened as an employee used deceptive tactics to obtain
Subsys authorization from an insurer over the telephone. Then,
too, Babich testified that Gurry was part of the "primary group"
of senior executives who participated in the daily 8:30 a.m.
management calls, that Gurry was in charge of communicating to
that group "any highlights both positive and negative that they're
seeing in the IRC," that those highlights were informed by Gurry's
communications with Gurrieri, and that those daily calls discussed
the IRC's deceptive tactics (including the promiscuous use of
15We do not mean to imply that corroboration was a sine que
non to a conviction. It was not. See United States v. Martínez-
Medina, 279 F.3d 105, 115 (1st Cir. 2002) (holding that the
"uncorroborated testimony of a government informant is . . . enough
to convict" because "the law of this circuit . . . leaves in the
hands of the jury decisions about credibility of witnesses 'so
long as the testimony is not incredible or insubstantial on its
face'" (quoting United States v. Andujar, 49 F.3d 16, 21 (1st Cir.
1995))).
- 109 -
"dysphagia" references and the "spiel"). Babich also testified
that the dysphagia gambit was discussed by Gurrieri in front of a
group that included Gurry.
There was also documentary corroboration. More than one
piece of this corroboration originated with Gurry, who (for
example) sent himself an email reminder about employee training on
the difference between breakthrough cancer pain and breakthrough
pain. Similarly, he sent a detailed email to sales managers
enumerating strategies that were crafted to prompt unwarranted
insurer approvals. Additionally, he was copied on several
inculpatory emails, including emails about "the issue that arose
with Dr. Chun's pharmacy" and the direct shipments of Subsys to
Dr. Ruan's pharmacy for the purpose of ensuring "uninterrupted
delivery to patients." Corroboration may come in various forms
and shapes, and we find significant corroboration for Gurrieri's
testimony in this record.
Gurry presses his attack on Gurrieri's credibility in
other ways as well. For instance, he makes a frontal assault on
Gurrieri's testimony that he maintained an office near hers at the
IRC. In this regard, he notes that two witnesses testified
otherwise. That may be so, but it is up to the jury to decide who
to believe — and that is especially true when witnesses offer
inconsistent versions of the facts. See United States v. Patel,
370 F.3d 108, 112 (1st Cir. 2004). And to tie a bow on it, even
- 110 -
if we assume, for argument's sake, that Gurrieri's recollection
was inaccurate on this one point, the jury was still entitled to
credit other aspects of her testimony that were unfavorable to
Gurry. Because a witness's testimony is not a monolith, it was
within the jury's purview to "credit some parts of [Gurrieri's]
testimony and disregard other potentially contradictory portions."
United States v. Sabean, 885 F.3d 27, 37 (1st Cir. 2018) (quoting
United States v. Alicea, 205 F.3d 480, 483 (1st Cir. 2000)).
Gurry also posits that Gurrieri's testimony that she was
following Gurry's directions is contradicted by her "eagerness to
take credit for the IRC's success" in the moment. Gurry's argument
rests on a kernel of truth: Gurrieri did claim credit for the
"creat[ion] [of] the IRC." But nothing about that claim undercuts
her testimony that she consulted with Gurry on key decisions, that
he sanctioned the IRC's deceptive tactics, and that he directed
her to undertake specific acts of fraud (including the submission
of authorization requests containing fictious medication lists).
Gurry has one last shot in his sling. He complains that
only Gurrieri characterized him as dishonest. Other witnesses, he
says, described him as disciplined, quiet, polite, respectful,
supportive, and stiff. These traits, he tells us, are inconsistent
with the government's attempted depiction of him as a racketeer.
- 111 -
We are not so sanguine. A quiet, polite, and respectful
demeanor is simply not a warranty of good behavior.16 Choir boys
and curmudgeons alike can commit conspicuously corrupt crimes. It
was the jury's task to weigh the salience, if any, of Gurry's
positive traits against the specific evidence of his less-than-
savory actions. Given the deference that we afford juries in
regard to credibility calls, we cannot say that the jury in this
case either misweighed the evidence or reached a seriously
erroneous result.
This door is shut. The jury was entitled to credit
Gurrieri's testimony, and the district court did not err in denying
Gurry's motion for a new trial.
XIII
The defendants sought a new trial on the ground that
prosecutorial misconduct infected the government's closing
argument. The district court denied their motion, and all of them
— Gurry directly, and the rest by adoption — now appeal.
We set the stage. During the rebuttal portion of his
closing argument, the prosecutor sought to establish that the
defendants specifically intended physicians to prescribe Subsys
This verity has been part and parcel of the human experience
16
from time immemorial. Over four centuries ago, the Bard of Avon
famously wrote "To beguile the time, look like the time — bear
welcome in your eye, your hand, your tongue. Look like the
innocent flower, but be the serpent under't." William Shakespeare,
Macbeth, act 1, sc. 5 (circa 1606).
- 112 -
outside the usual course of professional practice. He told the
jury:
People intend [the] reasonably foreseeable
consequences of their actions. It is as
though, if I took a gun and fired it into the
audience, which I'm not going to do, I don't
intend to shoot any particular individual, but
I know somebody's going to get hit. And when
the defendants arm these doctors with all
these bribes and all these incentives, they
were creating a loaded gun.
None of the defendants interposed a contemporaneous objection.
In the same phase of his closing argument, the prosecutor
referred to evidence that defendants had hired a compliance
officer. He noted that the defendants "had no interest in
compliance prior to that" and that the compliance officer "told
you, when she was hired in April of 2014, that she was being
frustrated in her efforts." The prosecutor then stated, "regarding
Mr. Gurry, who was running the IRC, who is responsible for the
IRC, that's his job. As a corporate officer, he bears the
responsibility." This time, the defendants objected.
The prosecutor also stated:
After nine weeks of trial, there should be no
doubt, in anybody's mind here, that there was
a massive insurance fraud here, happened
every day, day in and day out. And there was
a massive bribery scheme involved. I think
the defendants concede as much, but what they
want to sit here and say to you is that these
men and women who ran this company, who were
the managers, had no idea what was going on.
Sort of like that scene from Casablanca, I'm
- 113 -
shocked to find out there's illegal gambling
in this place.
Along this same line, the prosecutor argued that the defendants
"incentivized these doctors" to prescribe Subsys frequently and at
high doses, "and they can't sit here and tell you, now, that they
didn't intend for that to happen." The defendants did not
contemporaneously object to either of these comments.
At the conclusion of the government's rebuttal, the
district court gave a curative instruction in response to the
objection relating to Gurry's corporate-officer status. It told
the jury that "the corporation, Insys, is not on trial here. The
individuals are on trial and your verdict must turn on your
assessment of the culpability of them as individuals and not as
corporate officers." Neither side objected to this instruction.
Several days later — but before jury deliberations began
— the defendants sought additional curative instructions or in the
alternative, a mistrial. In support, they identified several
instances of alleged prosecutorial misconduct:
• They alluded to the comment about Gurry's
corporate-officer status and argued that they could
not be held criminally liable merely for the
wrongdoing of subordinates.
• They calumnized the prosecutor's "loaded gun"
analogy and asserted that the statement that
- 114 -
"[p]eople intend [the] reasonably foreseeable
consequences of their actions" deviated materially
from the specific-intent element of a RICO
conspiracy charge.
• Observing that none of them had elected to testify,
the defendants raised the specter that the
prosecutor's rebuttal argument had "made veiled
reference to the fact that Defendants had pressed
various factual arguments at trial without taking
the witness stand."
The district court responded with an offer to give additional
curative instructions. The court then circulated draft
instructions; defense counsel proposed revisions; and the court
accepted all but one of the proposed revisions.17 The court read
its prepared charge to the jury and followed up by reading the
supplemental instructions. In pertinent part, the supplemental
instructions admonished:
At least some of the defendants were at
relevant times corporate officers or managers
with responsibility for their departments
and/or subordinates. The fact that a
defendant had an executive or managerial
position at Insys is not alone enough to
convict the defendant of the RICO conspiracy
charge in the indictment.
17 Rowan requested that the court tell the jury that the
challenged comment "was not a correct statement of the law." The
court declined that request.
- 115 -
A healthcare company executive's or manager's
failure to correct or prevent misconduct at
the company does not alone constitute a
violation of the RICO statute. In other
words, even if you think that a defendant
should have known about certain conduct,
should have done more to correct or prevent
such conduct or should be responsible for the
conduct of company employees, you cannot
convict the defendant on this basis.
As I already told you bribes and kickbacks
alone are insufficient to convict in this
case. For you to find an agreement regarding
the racketeering act of illegal distribution
of a controlled substance, honest services
mail fraud or honest services wire fraud, you
must find that defendants agreed to and
specifically intended for healthcare
practitioners to write Subsys prescriptions
outside of the usual course of professional
practice and without legitimate medical
purpose. Under the law, knowledge of
foreseeable consequences without more is not
enough to establish that someone specifically
intended certain conduct. Rather, the
government must prove that the defendant acted
with a bad purpose or with the object of
committing a prohibited act, here, for the
controlled substance and honest services
predicates, having healthcare practitioners
prescribe Subsys outside of the usual course
of professional practice and without
legitimate medical purpose.
. . .
Finally, you should not interpret anything
that was said in this case as a comment on the
fact that defendants chose not to testify. As
I've already instructed you, defendants have
an absolute constitutional right not to
testify. And you cannot draw any inference
from the fact that they exercised their
rights. You cannot consider or discuss
defendants' choices not to testify during your
deliberations.
- 116 -
After giving these supplemental instructions, the district court
asked if any party wanted to be heard at sidebar. Receiving no
affirmative response, the court instructed the jury to start its
deliberations.
Following the adverse jury verdicts, the defendants
renewed their prosecutorial misconduct claims in their new-trial
motions. Those motions were uniformly denied. See Gurry, 427 F.
Supp. 3d at 201.
Although we review the district court's order denying a
new trial for abuse of discretion, see Merlino, 592 F.3d at 32
n.5, we evaluate de novo their claims of error involving the
propriety of the government's closing argument, see United States
v. Kuljko, 1 F.4th 87, 94 (1st Cir. 2021); United States v.
Carpenter, 736 F.3d 619, 626 (1st Cir. 2013). We start with the
claims of error arising out of the government's comments about
Gurry's corporate-officer status and the alleged allusions to the
defendants' failure to testify. Those claims of error share a
common characteristic: the defendants do not assert that the
challenged comments were so toxic that no cautionary instructions
could have saved the day but, rather, assert only that the
cautionary instructions given by the district court were
insufficient.
- 117 -
The architecture of the defendants' assertions shapes
the contours of our inquiry. This architecture places waiver
principles front and center. We have explained that "when the
'subject matter [is] unmistakably on the table, and the defense's
silence is reasonably understood only as signifying agreement that
there was nothing objectionable,' the issue is waived on appeal."
Soto, 799 F.3d at 96 (quoting United States v. Christi, 682 F.3d
138, 142 (1st Cir. 2012)). One application of this rule occurs
when "the district court informed the [parties] exactly how it was
planning to instruct the jury" and "sought their feedback," with
the result that a party's counsel "affirmatively stated there was
no objection" or "remained silent." Soto, 799 F.3d at 96. In
that circumstance, an appellate court is free to consider the
instructions approved by that party. See id. Any claim that the
instructions are inadequate is deemed waived. See id.
With respect to the corporate-officer comment and the
alleged references to the defendants' failure to testify, this is
such a case. The defendants sought curative instructions
addressing specific components of the government's rebuttal
argument and the district court obliged by circulating proposed
instructions. The court invited edits and — in so far as the
proposed instructions pertained to the corporate-officer comment
and the comments allegedly touching upon the defendants' failure
to testify — accepted all the proposed edits. The court then read
- 118 -
the edited instructions to the jury. After doing so, the court
invited counsel to approach sidebar, yet counsel declined the
invitation. That declination unambiguously signified approval of
the supplemental instructions as given and constituted a waiver of
the defendants' arguments on those points. See id.
To be sure, the defendants now argue that waiver
principles apply only to "the court's instruction-in-chief, [but]
not to curative instructions." This is so, they say, because only
the former "result[s] from an iterative process of give and take
between the parties and the court." Here, however, the transcript
shows beyond hope of contradiction that such an iterative process
took place with respect to the curative instructions. In addition,
we previously have found that waiver principles apply with
undiminished force to claims of error targeting curative
instructions. See, e.g., United States v. Charriez-Rolón, 923
F.3d 45, 53 (1st Cir. 2019). We hold, therefore, that the
defendants' claims of error regarding the corporate-officer
comment and the alleged comments on the defendants' failure to
testify are unavailing.
This leaves the claim of error relating to the
prosecutor's use of the "loaded gun" metaphor. The government
concedes that this metaphor was inconsistent with the specific-
intent element of a RICO conspiracy offense and, thus, improper.
Given this concession, we are left to determine whether the
- 119 -
impropriety was harmless. For that purpose, "[t]he bottom-line
question is whether the impropriety 'so poisoned the well that the
trial's outcome was likely affected.'" Kuljko, 1 F.4th at 94
(quoting United States v. Mejia-Lozano, 829 F.2d 268, 274 (1st
Cir. 1987)).
"In this context, harmless error review takes into
account a multiplicity of factors." Id. Those factors include
"the severity of the impropriety, the nature of the impropriety
(that is, whether or not it was deliberate, whether or not it was
isolated, and the like), the strength of the government's case
against the defendant, and how the district court responded to the
impropriety (especially the timing, nature, and force of any
curative instructions)." Id. The district court, looking at the
"loaded gun" metaphor through this prism, concluded that each of
the pertinent factors "counsel[ed] against a finding that the
Government's misstatement 'so poisoned the well' as to warrant a
new trial." Gurry, 427 F. Supp. 3d at 201. We agree.
This inquiry is, of course, case-specific. As we already
have explained, see supra Parts III(A)-(D), the evidence of the
defendants' guilt was copious. The unseemly metaphor itself played
only a bit part in the case: the prosecutor used it only once in
a rebuttal that lasted around thirty minutes and in a trial that
lasted for over seven weeks. Importantly, the prosecutor made no
attempt to weave the metaphor into other portions of either his
- 120 -
closing argument or the trial as a whole. Considering that the
"loaded gun" imagery occupies only a few lines in a compendious
transcript, the infelicitous comment can fairly be described as
"isolated." United States v. Alcantara, 837 F.3d 102, 110 (1st
Cir. 2016).
The defendants disagree. They argue that the
prosecutor's improper metaphor was a deliberate effort to portray
them "as indiscriminate drug dealers." In support, they rely on
United States v. Carpenter, 494 F.3d 13 (1st Cir. 2007) — a case
in which the defendant was convicted of defrauding investors by
misrepresenting his investment strategy, id. at 16. The prosecutor
used "some permutation of the word 'gamble'" in "eighteen
instances" during closing argument, as well as "numerous
references to other gambling terms" like "cashing in chips,"
"doubling down," and "river boat gambler." Id. at 23. The
district court granted the defendant a new trial, concluding that
these persistent references reflected a deliberate (and ultimately
successful) attempt to inflame the jury, and we affirmed. See id.
at 22.
Except, perhaps, to the extent that it illustrates the
wide margins of the district court's discretion with respect to
the granting of a new trial based on an out-of-bounds closing
argument, Carpenter is not a fair congener. That case involved a
series of improper references and a pattern of abuse. In contrast,
- 121 -
the prosecutor in this case used the "loaded gun" metaphor once,
and the district court supportably found that it was an isolated
instance and not a continuing theme. Moreover, the district court
in Carpenter found that the prosecutor's misconduct was
prejudicial, whereas in this case the district court found that
the misconduct, in light of the curative instructions, was
harmless. Given these significant discrepancies, comparing this
case to Carpenter is like comparing cabbages to cantaloupes.
Here, moreover, the district court's curative
instructions were carefully crafted and went to the heart of the
matter. The content and timing of those instructions argue
persuasively against a finding that the government's misstatement
irretrievably poisoned the well. Importantly, the instructions
unambiguously debunked the prosecutor's mistaken view of the
specific-intent element of the charged offense. The prosecutor
had told the jury that people intend the reasonably foreseeable
consequences of their actions. To ensure that the jurors did not
get the wrong impression, the court told them that this proposition
had nothing to do with the case at hand. Furthermore, the court
told them in no uncertain terms that "knowledge of foreseeable
consequences without more is not enough to establish that someone
specifically intended certain conduct." These pointed
instructions cleared the air and kept the jurors focused on the
real issues in the case.
- 122 -
Grasping at straws, the defendants say that the curative
instructions were insufficient because they failed to tell the
jury that the prosecutor's argument was improper. But a trial
court is not required to use magic words in framing curative
instructions: it is only required to convey, in clear language,
a message adequate to redress the perceived harm. See United
States v. Riccio, 529 F.3d 40, 45 (1st Cir. 2008) ("This court has
repeatedly held that a strong, explicit and thorough curative
instruction to disregard improper comments by the prosecutor is
sufficient to cure any prejudice from prosecutorial misconduct.").
The curative instructions given by the court below satisfied this
standard, and the court — exercising its discretion — determined
that adding a specific indictment of the prosecutor's misstatement
was unnecessary. The substantial deference that we afford trial
courts in matters of this sort reflects an awareness that the
"trial judge . . . listened to the tone of the argument as it was
delivered," had an opportunity to "observe[] the apparent reaction
of the jurors," and was "more conversant with the factors relevant
to the determination." Carpenter, 494 F.3d at 24. We think that
the district court's determination that its curative instructions
would set the jury straight, without any need to place a scarlet
letter on the prosecutor, was within the broad compass of its
discretion.
- 123 -
One further observation should be made. Although the
district court's curative instructions are adequate on their face,
the record also offers an external validation of their efficacy.
As the district court noted, the "loaded gun" metaphor "related
primarily" to the intent element of the CSA and honest-services
predicates. Gurry, 427 F. Supp. 3d at 199 n.94. Thus, Gurry's
acquittal on these two predicates lends considerable credence to
the conclusion that the district court's curative instructions
ensured that any damage done by the prosecutor's improper metaphor
did not affect the outcome of the trial. See Kuljko, 1 F.4th at
95.
We summarize succinctly. In view of the isolated nature
of the gun metaphor, the timely and effective curative instructions
given by the district court, the government's independently strong
case against the defendants, and the jury's acquittal of Gurry on
the CSA and honest-services predicates, we hold that the
prosecutor's comment, though unacceptable, was harmless. See
Kuljko, 1 F.4th at 95.
XIV
The penultimate leg of our odyssey brings us to the
defendants' challenges to the district court's restitution orders.
They argue that the district court's calculation of the restitution
amounts reflected only "a kind of rough justice," unsupported by
- 124 -
the record. The government defends the district court's
calculations.
We paint the backdrop. In the wake of the jury verdicts,
the government sought $306,000,000 in restitution. This figure
reflected the value of all Subsys prescriptions written during the
racketeering period (2012-2015). The defendants objected,
challenging the government's method of computation and asserting
that the government's suggested price tag was exorbitant. The
district court found a middle ground, ordering restitution in
lesser amounts. See United States v. Babich, No. 16-CR-10343,
2020 WL 759380, at *6 (D. Mass. Feb. 14, 2020); see also supra
note 3 (listing inter alia per-defendant restitution amounts).
En route the court made five specific rulings. First,
the court awarded restitution to six patient victims. See Babich,
2020 WL 759380, at *3-4. Second, the court declined the
government's invitation to base restitution on the totality of
Subsys prescriptions written during the life of the conspiracy.
See id. at *6. Even so, the court acknowledged that sifting the
legitimate prescriptions from the fraudulent ones would "be too
complicated and unduly prolong and burden the sentencing process."
Id. With that in mind, the court made its third ruling, limiting
restitution to losses traceable to prescriptions written solely by
thirteen bribed coconspirator doctors identified by the
government. See id.- 125 -
Fourth, the court awarded as restitution 100 percent of
the insurers' paid claims for Subsys prescriptions written by those
thirteen coconspirator-prescribers. See id. In making these
awards, the court refused to apply two reductions urged by the
defendants. See id. One requested reduction was "to account for
only those claims that passed through the IRC." Id. The other
was "to account for only those prescriptions made for non-cancer
patients." Id. Figures reported by the government for these two
categories, the defendants argued, should be deemed a cap for
permissible restitution.18 The district court rejected this two-
pronged argument, stating that "[a]lthough the Court finds the
amount of restitution owed beyond the thirteen co-conspirator
doctors to be too complicated to calculate, it is clear that the
amount that would be owed is at least equal to the total value of
prescriptions written by the bribed doctors." Id.Fifth, the court apportioned restitution. It held
Kapoor fully responsible for the total amount of restitution owed
— $59,755,362.45 — and capped the restitution obligations of the
18 According to a government expert, "approximately 80.9% of
all Subsys prescriptions" were processed by the IRC. And according
to a second government expert, prescriptions written for non-
cancer patients accounted for approximately 73 percent of Subsys
prescriptions written by the thirteen coconspirator-prescribers.
- 126 -
other defendants at lesser levels.19 See Babich, 2020 WL 1235536,
at *10.
The central restitution-related issue on appeal revolves
around the district court's decision to award insurers 100 percent
of paid claims for Subsys prescriptions written by the thirteen
coconspirator-prescribers. "We review restitution orders for
abuse of discretion, examining the court's subsidiary factual
findings for clear error and its answers to abstract legal
questions de novo." United States v. Chiaradio, 684 F.3d 265, 283
(1st Cir. 2012); see Padilla-Galarza, 990 F.3d at 92.
A defendant convicted of certain federal crimes
(including, as relevant here, crimes "committed by fraud or
deceit," 18 U.S.C. § 3663A(c)(1)(A)(ii), "must make restitution to
victims commensurate with the victims' actual losses," United
States v. Naphaeng, 906 F.3d 173, 179 (1st Cir. 2018).
"[R]estitution is designed to compensate the victim, not to punish
the offender." Id. In awarding restitution, the court's goal is
"to make the victim whole again." United States v. Innarelli, 524
F.3d 286, 293 (1st Cir. 2008). Thus, a restitution order should
19Of course, liability for restitution under federal law may
be joint and several and may be apportioned by the court among the
responsible parties. See 18 U.S.C. § 3664(h). In this instance,
the court apportioned that liability among the defendants who went
to trial and those that pleaded guilty before trial (Burlakoff and
Babich).
- 127 -
"not confer a windfall upon [the] victim." Naphaeng, 906 F.3d at
179.
For the purpose of calculating restitution, actual loss
is the beacon by which federal courts must steer. See id. In
this context, actual loss is "limited to [the] pecuniary harm that
would not have occurred but for the defendant's criminal activity."
Id. (quoting United States v. Alphas, 785 F.3d 775, 786 (1st Cir.
2015)). This standard obligates the government to show both that
the particular loss would not have occurred but for the conduct
undergirding the offense of conviction and that a causal nexus
exists between the loss and the conduct — a nexus that is neither
too remote factually nor too remote temporally. See United States
v. Cutter, 313 F.3d 1, 7 (1st Cir. 2002).
Restitution is serious business, but hearings to
quantify restitution amounts should not be allowed to spawn mini-
trials. As we previously have explained, we do not expect a
sentencing court to "undertake a full-blown trial" in order to
arrive at an appropriate restitution amount. Naphaeng, 906 F.3d
at 179. Nor do we hold a sentencing court to a standard of
"absolute precision" when fashioning restitution orders. Id.
(quoting United States v. Mahone, 453 F.3d 68, 74 (1st Cir. 2006));
see United States v. Sánchez-Maldonado, 737 F.3d 826, 828 (1st
Cir. 2013). In the end, we will uphold a sentencing court's
restitution award "[a]s long as the court's order reasonably
- 128 -
responds to some reliable evidence." Sánchez-Maldonado, 737 F.3d
at 828; see Naphaeng, 906 F.3d at 179 ("[A] restitution award
requires only 'a modicum of reliable evidence.'" (quoting United
States v. Vaknin, 112 F.3d 579, 587 (1st Cir. 1997))).
Although this standard is "relatively modest in
application," Padilla-Galarza, 990 F.3d 60 at 92, it has some
teeth. A sentencing court's "[m]ere guesswork will not suffice."
Naphaeng, 906 F.3d at 179; see Vaknin, 112 F.3d at 587. Similarly,
"rough approximation[s]" that do not "sufficiently
reflect[] . . . the losses" of the victims are not appropriate
grist for the restitution mill. Innarelli, 524 F.3d at 294. The
court must resolve any genuine and material disputes about "the
fact, cause, or amount of the loss" by a preponderance of the
evidence. Vaknin, 112 F.3d at 582-83; see 18 U.S.C. § 3664(d).
Given this framework, we conclude that the district
court's determination to award as restitution 100 percent of Subsys
claims linked to the thirteen coconspirator-prescribers is
insupportable. To be specific, the court's determination that all
of the claims traceable to the thirteen coconspirator-prescribers
constituted actual losses caused by the defendants' fraudulent
conduct was not borne out by the preponderance of the evidence.
For one thing, no party offered evidence that supported the 100-
percent figure. In fact, a government expert opined, without
contradiction, that "approximately 80.9% percent of all Subsys
- 129 -
prescriptions passed through the IRC." 80.9 percent is not 100
percent, and the government represented to the court that the
expert's figure was "a fair and consistent, reasonable approach
for the court to use." According this figure due weight, it is
evident that the government did not establish but-for causation
for all of the claims traceable to the thirteen coconspirator-
prescribers. Indeed, the government's steadfast reliance on the
expert's calculations is functionally equivalent to an admission
that not every Subsys prescription written by these doctors
received prior authorization as a result of IRC fraud.
For another thing, the district court appears to have
taken a shortcut to compensate for the difficulty of calculating
restitution with respect to Subsys prescriptions written by
unbribed physicians. See Babich, 2020 WL 759380, at *6. In
justifying its finding of actual loss generated through
coconspirator-prescribers, the district court pointedly referred
to the incalculable losses caused by non-bribed doctors. See id.This reference, though, was out of step with the court's earlier
determination that restitution would take account only of the
losses caused by the coconspirator-prescribers. See id. To this
extent, then, the court's award was internally inconsistent: on
the one hand, the court appears to have found that the losses
generated by non-bribed doctors were incalculable but, on the other
- 130 -
hand, to have found that those losses nonetheless justified more
munificent restitution awards.
These infirmities doom the restitution orders. Every
loss that factors into the restitutionary amount must "have an
adequate causal link to the defendant[s'] criminal conduct."
Alphas, 785 F.3d at 786. The blending of two distinct sets of
losses, one of which was incalculable, fails to satisfy the
causality requirement. Consequently, the challenged restitution
orders must be vacated. On remand, the district court should
recalculate the amounts of restitution consistent with its earlier
determination that restitution should be limited to prescriptions
written by the coconspirator-prescribers. What remains is for the
court to "tak[e] into account the extent (if at all) to which the
[coconspirator-prescribers'] claims encompassed legitimate
losses" not processed through the IRC, id., and to refashion the
restitution orders accordingly. Although the court's "reasoning
and the calculations leading to the amounts ordered" must be clear,
Innarelli, 524 F.3d at 295, its bottom-line determination need
only amount to a reasonable response to reliable evidence in the
record, see Sánchez-Maldonado, 737 F.3d at 828.
XV
The finish line is in sight. The district court ordered
monetary forfeitures in varying amounts, see supra note 3, and the
affected parties (including the government) ask us to resolve
- 131 -
dueling claims of error pertaining to these forfeiture orders. In
evaluating forfeiture orders, we assay the court's legal
conclusions de novo and examine its factual findings for clear
error. See United States v. George, 886 F.3d 31, 39 (1st Cir.
2018).
The baseline rule is uncontroversial. A defendant who
has been convicted of RICO conspiracy is liable to forfeit "any
property constituting, or derived from, any proceeds which the
person obtained, directly or indirectly, from racketeering
activity." 18 U.S.C. § 1963(a)(3). Following the defendants'
convictions, the government sought forfeitures equaling the gross
proceeds obtained by Lee, Simon, Gurry, and Rowan, respectively,
during the racketeering period. Ruling that "any proceeds obtained
from Insys during the time of the conspiracy are forfeitable," the
district court obliged. Babich, 2020 WL 1235536, at *5. The court
went on to hold that "the Defendants' salaries and exercised stock
options constitute 'proceeds' that were obtained 'directly or
indirectly' from the RICO conspiracy."20 Id. As an offset, though,
the court held that the income taxes that each defendant had paid
were not "proceeds" under section 1963(a)(3) because those amounts
never "ended up in the Defendants' pockets for them to spend in
20 Insofar as the forfeiture orders are based upon the
monetization of exercised stock options, neither side has
challenged the district court's calculations.
- 132 -
the way in which they wanted." Id. at *7 (alterations omitted).
Accordingly, the court — in shaping its forfeiture orders as to
Lee, Simon, Gurry, and Rowan — deducted from their respective gross
incomes "the amount of the tax withheld" during the racketeering
period. Id.Gurry lands the first blow. He contends that the
district court erred as a matter of law because "it declined to
determine what portion of [his] income was tainted by racketeering
activity." The government counterpunches. In a cross-appeal, it
contends that the tax offsets were erroneous as a matter of law.21
We deal with each contention in turn.
A
A defendant's proceeds from racketeering activity are
"subject to a rule of proportionality." Cadden, 965 F.3d at 37
(quoting United States v. Angiulo, 897 F.2d 1169, 1211 (1st Cir.
1990)). This guardrail ensures that proceeds are subject to
forfeiture only to "the extent they are tainted by the racketeering
activity." Id. (quoting Angiulo, 897 F.2d at 1212). It follows
that a district court's forfeiture order must determine "the
portion of [the defendant's] earnings . . . over the relevant time
21 Due to his unique compensation package, Kapoor neither
sought nor received a tax offset. See Babich, 2020 WL 1235536, at
*6 n.6. As a result, the government's cross-appeal does not
implicate his forfeiture order.
- 133 -
period that were tainted by the racketeering activity and therefore
subject to forfeiture." Id. at 38.
Gurry advances three arguments as to why certain
portions of his work at Insys cannot be linked to the racketeering
activity and as to why, as a result, the forfeiture of his entire
salary was in error. Lee, Simon, and Rowan adopt these arguments.
Gurry first notes that although he was an Insys employee
until 2016, his work at the IRC ended in May of 2014. Because
"[t]here is no evidence that his job responsibilities after May
2014 included any racketeering activity," he posits, any
subsequent proceeds are not subject to forfeiture. This is too
crabbed a view of the facts: Gurry's relinquishment of the
responsibility for supervising the IRC did not end his furtherance
of, participation in, and profiting from the racketeering scheme.
By 2014, Gurry had negotiated with insurance companies to add
Subsys to their compendia of approved drugs. Those efforts helped
the IRC to continue its fraudulent scheme and garner additional
revenue for Insys even after Gurry's responsibilities changed. To
the extent that Gurry's racketeering activities on behalf of the
IRC generated profits for him after his departure from the IRC,
that revenue constitutes proceeds "obtained from the racketeering
activity . . . that formed the basis of [his] convictions." Id.
at 37. Those proceeds were, therefore, forfeitable. See id. And
in any event, "[m]ere cessation of activity in furtherance of the
- 134 -
conspiracy does not constitute withdrawal" from the conspiracy.
United States v. Leoner-Aguirre, 939 F.3d 310, 319 (1st Cir. 2019)
(quoting United States v. Ciresi, 697 F.3d 19, 27 (1st Cir. 2012)).
Next, Gurry maintains that his work for the IRC comprised
only 20 percent of his job responsibilities. But he cites no
authority to support a reduction in his forfeiture amount based on
the percentage of his time devoted to the scheme. It would be
perverse to provide an incentive for racketeering efficiency, and
we do not think that a racketeer can limit his forfeiture liability
by the simple expedient of devoting some of his time to legitimate
work. Forfeiture calculations depend on the proceeds gained
directly or indirectly from racketeering activity, see 18 U.S.C.
§ 1963(a)(3), not on the percentage of a defendant's time devoted
to the conspiracy.22
Gurry also contends that his forfeiture order should
reflect only the percentage of fraudulent Subsys sales during the
racketeering period, not all Subsys sales during that period. The
government confesses error and agrees that a remand on this ground
is appropriate. That confession is premised upon our opinion in
22 At any rate, Gurry has not established whether the 80
percent of his work allegedly unrelated to the racketeering
activity generated earnings for him that were independent of
fraudulent Subsys sales. What counts is that the record supports
the conclusion that Gurry knowingly joined and furthered the
insurance-fraud scheme and that his earnings during that time for
the "non-IRC work" flowed at least indirectly from his IRC efforts.
- 135 -
Cadden, 965 F.3d at 37-38, which was decided while these appeals
were pending. There, we vacated a forfeiture order because "the
government failed to prove that all [drug] sales over the period
in question were generated by fraud." Id. Profits from non-
fraudulent sales, we said, are not proceeds obtained (directly or
indirectly) from the racketeering activity. See id. at 37-38.
We ordered the district court, on remand, "to assess . . . the
portion of [the defendant's] earnings . . . that were tainted by
racketeering activity." Id. at 38.
The same instruction is warranted here. As a matter of
law, any Subsys prescription processed independently of the IRC
falls outside the scope of the fraudulent scheme. And since the
IRC did not seek prior authorization for every Subsys prescription,
the district court must determine the percentage of Subsys prior
authorizations that were successful through the IRC's efforts.
Forfeiture of the whole of Gurry's earnings was, therefore, in
error. The forfeiture orders pertaining to Lee, Simon, and Rowan
suffer from the same defect, and those orders also must be
revisited.
Gurry is barking up the wrong tree, however, when he
tries to convince us that "the IRC did not lie about every
prescription it processed." The defendants agreed below that 73
percent of the IRC's authorizations involved prescriptions for
non-cancer patients and the district court found that the IRC
- 136 -
"misled insurers in a number of ways," even when the patients had
cancer. Babich, 2020 WL 1235536, at *6. The IRC's deceptions
included dissembling about patients experiencing breakthrough
cancer pain, having a history of cancer, having tried-and-failed
other medications, and having difficulty swallowing. See id.These tactics were systematically employed by the IRC and did not
become honest or accurate by virtue of a patient having cancer.
See id. Mendacity was a hallmark of the IRC's operations — a
hallmark that permeated its prior authorization efforts.
We agree with the district court that "the fact that a
prescription was requested for a cancer patient is insufficient to
establish that it was not fraudulent." Id. Based on the
overwhelming evidence that these sleazy tactics were business as
usual at the IRC, we find that the district court's determination
that each prescription processed by the IRC during the racketeering
period was tainted by fraud is grounded upon reasonable inferences
drawn from adequately established facts. The district court's
determination was not clearly erroneous.
B
We turn next to the government's cross-appeal. We
conclude that the district court's decision to offset the
defendants' forfeiture obligations based on the income taxes they
paid on those earnings constituted error. Two recent cases inform
this conclusion.
- 137 -
In Cadden, the defendant argued that "the District Court
erred in calculating the forfeiture amount without deducting the
amount in taxes that he paid on those proceeds." 965 F.3d at 38.
We disagreed, holding that "the word 'proceeds' in the forfeiture
statute refers to gross proceeds, not net profits." Id. (quoting
United States v. Hurley, 63 F.3d 1, 21 (1st Cir. 1995)). Because
the defendant "clearly 'obtained' the amount of funds subject to
forfeiture before they were subject to taxation," that amount was
"subject to forfeiture, even though the amount he obtained was
itself taxable." Id.Our decision in United States v. Chin, 965 F.3d 41 (1st
Cir. 2020), is to like effect. There, we concluded that "the fact
that the offender is required to pay a certain portion of his
salary to the federal government as taxes does not affect the fact
that he 'obtained' that portion," id. at 57. Taken together,
Cadden and Chin resolve the issue. The defendants in this case
were taxed on the proceeds subject to forfeiture precisely because
they had "obtained" those proceeds.
C
Consistent with these rulings, we vacate the district
court's forfeiture orders as to Lee, Simon, Gurry, and Rowan. The
district court must assess what percentage of Subsys prior
authorizations were successful independently of the IRC, and
reduce the forfeiture amounts of each defendant by that percentage.
- 138 -
See Cadden, 965 F.3d at 38. It should not, however, apply any tax
offset. We remand for the purpose of recalculating these
forfeiture amounts.
XVI
We need go no further.23 Insys and Kapoor deserve great
credit for developing Subsys — a medication which, appropriately
dispensed, would have been an important weapon in society's
continuing battle to alleviate breakthrough cancer pain. But
Subsys was not appropriately dispensed. Instead, the defendants
— driven by unalloyed greed — marketed the medication through a
pattern of racketeering activity and conspired to ensure that it
would be dispensed outside the usual course of medical practice
and without a legitimate medical purpose. "Pill mills for us meant
dollar signs" and — from the defendants' coign of vantage — Subsys
prescriptions, like snake oil on the frontier, became above all
else a means of generating revenue. In taking this cynical
approach, the defendants turned what should have been a blessing
into a curse.
The jury, after a protracted trial presided over with
great care and circumspection by a no-nonsense judge, heard
23To the extent, if at all, that particular defendants have
alluded to other potential claims of error in their extensive
briefing, those claims are either insufficiently developed or
patently meritless. Thus, we reject them without further
elaboration.
- 139 -
detailed evidence with respect to the defendants' pernicious
practices regarding the marketing of Subsys. The jury found the
evidence sufficient to hold the defendants guilty beyond a
reasonable doubt on virtually all of the charges lodged in the
indictment. The jury's findings and verdicts are, we think, fully
supportable, and the defendants' multifaceted challenges to them,
though skillfully presented, are without force. We conclude,
therefore, that the findings and verdicts must stand.
We reach a different result with respect to certain
monetary awards made by the district court ancillary to sentencing.
Although the defendants do not challenge their sentences as such
(and those sentences must remain intact), the restitution and
forfeiture orders are attacked (some by the defendants, some by
the government, and some by both). We find that the challenged
amounts were not properly calculated in certain respects. Thus,
certain restitution and forfeiture orders, identified above, must
be vacated, and the case must be remanded for further proceedings
consistent with this opinion.
To summarize, we set aside the district court's vacation
of certain of the jury's special findings regarding the guilt of
Kapoor, Lee, Simon, and Rowan vis-à-vis the CSA and honest-services
predicates and order reinstatement of those findings. We affirm
the jury's special findings and verdicts as to all defendants. We
also affirm the district court's denial of the defendants' sundry
- 140 -
motions for judgments of acquittal and/or new trials. So, too, we
affirm the district court's orders with respect to challenged
pretrial and mid-trial rulings. Finally, we affirm the defendants'
sentences,24 but vacate the district court's restitution and
forfeiture orders (except for the forfeiture order regarding
Kapoor) and remand for recalculation of the appropriate
restitution and forfeiture amounts.
Affirmed in part, reversed in part, vacated in part, and remanded.
24The government has not requested that, upon reinstatement
of the special findings concerning the CSA and honest-services
predicate, see supra Part III, we remand for resentencing of the
four affected defendants (Kapoor, Lee, Simon, and Rowan). In the
absence of such a request, we see no need to do so.
- 141 -