United States Court of Appeals
`For the First Circuit
`
`
`
`
`Nos. 20-1368
` 20-1412
`
`
`
`Nos. 20-1369
` 20-1411
`
`UNITED STATES OF AMERICA,
`
`Appellee/Cross-Appellant,
`
`v.
`
`RICHARD M. SIMON,
`
`Defendant, Appellant/Cross-Appellee.
`
`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.
`
`
`
`
`
`
`
`
`
`For the First Circuit
`
`
`
`
`Nos. 20-1368
` 20-1412
`
`
`
`Nos. 20-1369
` 20-1411
`
`UNITED STATES OF AMERICA,
`
`Appellee/Cross-Appellant,
`
`v.
`
`RICHARD M. SIMON,
`
`Defendant, Appellant/Cross-Appellee.
`
`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
`
`
`
`
`Nos. 20-1410
` 20-1457
`
`
`UNITED STATES OF AMERICA,
`
`Appellee/Cross-Appellant,
`
`v.
`
`JOHN KAPOOR,
`
`Defendant, Appellant/Cross-Appellee.
`
`
`
`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
`
`
`2 Babich 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
`
`
`4 At 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 an
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