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In re National Prescription Opiate Litigation

United States District Court, N.D. Ohio, Eastern Division

August 29, 2019




         Before the Court is Defendants'[1] Motion to Strike the Opinions of Seth B. Whitelaw (“Whitelaw Motion”) (Doc. #: 1918). The Court has carefully considered the Whitelaw Motion, Plaintiffs' Response (Doc. #: 2114), and Defendants' Reply (Doc. #: 2517) and GRANTS the Whitelaw Motion.

         I. Legal Standards.

         The Court incorporates the general legal standards set forth in the Court's Opinion and Order regarding Defendants' motion to exclude the opinion and testimony of Prof. Meredith Rosenthal. See Doc. #: 2495.

         II. Introduction.

         Plaintiffs designated Whitelaw as an expert on: (1) the relevant standards applicable to the design, implementation, and operation of corporate and controlled substance compliance programs for pharmaceutical manufacturers and distributors; (2) application of these standards to controlled substance manufacturers and distributors; and (3) the effectiveness of Defendants' opioid product compliance programs from 1996 until 2018. See Whitelaw Report at 2 (Doc. #: 1999-25).[2]According to Plaintiffs, “Whitelaw offers opinions concerning the proper elements of a compliance program for a reasonable pharmaceutical manufacturer and distributor and offers an assessment of Defendants' compliance programs based upon those elements.” Pls. Opp. Resp. re Whitelaw at 13 (Doc. #: 2114).

         Whitelaw is a lawyer with experience in corporate compliance, including pharmaceutical industry compliance. Defendants seek to exclude Whitelaw's opinions, arguing: (1) he lacks the qualifications to serve as a suspicious order monitoring system (“SOMS”) program expert; (2) his model SOMS program is unreliable because it was created solely for this litigation and employs a methodology that draws heavily from the Federal Sentencing Guidelines (“FSG”), which are not used by either the DEA or industry participants for this purpose; and (3) he invades the province of the jury by opining on an ultimate issue. Each of these arguments will be addressed below. First, however, the Court provides an overview of Whitelaw's opinions and analysis.

         III. Whitelaw's Opinions.

         A. Overview of Whitelaw's methodology.

         Whitelaw's opinions and analysis have, at their core, a SOMS program he developed for purposes of this litigation. Whitelaw characterizes his SOMS program as “what good looks like.” Whitelaw Report at 23-42 (Doc. #: 1999-25). Whitelaw then assesses whether the SOMS programs of each Defendant meet the criteria of his program, and then measures each Defendant's performance by a compliance maturity and program effectiveness model. See, e.g., id. at 43-48. Whitelaw assesses whether each company “worked to establish a suspicious order monitoring system, as well as controlled substances and corporate compliance systems;” and, if so, whether the company “met its three-prong program effectiveness requirement by (a) having a program that prevents and detects criminal conduct by an organization's employees and (b) maintaining effective controls against diversion, including (c) maintaining and operating an effective system to identify, hold, investigate and report suspicious orders of controlled substances.” Id. at 43-44.

         B. Standards reviewed by Whitelaw.

         Whitelaw summarizes an assortment of sources he considers relevant to controlled substance compliance. Some relate to SOMS and controlled substances. Some do not. See Whitelaw Report at 4, 23 (Doc. #: 1999-25). Whitelaw first provides a narrative summarizing what he contends are general corporate compliance standards, including the standards found in the FSG. The FSG apply when an organization is convicted of a felony or class A misdemeanor. See U.S. Sentencing Commission, Guidelines Manual (Nov. 1991) at Introductory Comments and § 8A.1.1) (Doc. #: 1918-8). They are neither part of the CSA nor part of DEA regulations applicable to the CSA. They are “not pharmaceutical-specific but rather, apply to corporations across all industries.” Whitelaw Report at 93 (Doc. #: 1999-25).

         Several FSG provisions refer to the need for organizations to have an “effective program” to pre vent and detect violations of law. See, e.g., U.S. Sentencing Commission, Guidelines Manual (Nov. 1991) at § 8C2.5 (f). (Doc. #: 1918-8). Having an “effective program” can result in a lesser punishment. See id. The FSG definition of an “effective program to prevent and detect violations of law” sets forth seven steps which an organization must demonstrate to establish the requisite due diligence in detecting and preventing criminal conduct to qualify for a sentence reduction. See id. at § 8A.1.2 Comment 3(k). The most recent revisions to the FSG add an eighth step, expanding their scope beyond detecting and preventing criminal conduct to promoting “‘an organizational culture that encourages ethical conduct and a commitment to compliance with the law.'”[3]Whitelaw Report at 10 (Doc. #: 1999-25) (quoting U.S. Sentencing Commission, Guidelines Manual (Nov. 2004) at § 8B 2.1); see also Whitelaw Report at 27. See id.

         To support his reliance on the FSG, Whitelaw refers to standards generated by the Office of Inspector General (“OIG”) for Health and Human Services. These standards are directed only to pharmaceutical manufacturers; however, Whitelaw believes they should also apply to distributors. See Whitelaw Report at 11-12 (Doc. #: 1999-25). The OIG standards are not specific to the CSA, SOMS programs, or controlled substances. See Def. Mot. to Excl. Whitelaw at 11 (Doc. #: 1918-1). Whitelaw also references standards in the Affordable Care Act, [4] and general guidance from the DOJ and OIG on compliance program effectiveness.[5] See Whitelaw Report at 7-13 (Doc. #: 1999-25). These provisions are also not CSA- or DEA-specific.

         Whitelaw next transitions to a pharmaceutical-centered analysis, summarizing the CSA and DEA regulations, as well as DEA guidance on controlled substances from the Controlled Substances Security Manual & Suspicious Order Task Force, the Chemical Handler's Manual, the DEA Industry Initiative, DEA letters to registrants, and Master's Pharmaceuticals, Inc. v. DEA, 861 F.3d 206 (D.C. Cir. 2017). Whitelaw also discusses industry guidance. See id. at 13-22.

         C. Whitelaw's SOMS program and his Compliance Maturity and Program Effectiveness Model.

         After analyzing these applicable standards, Whitelaw describes his own SOMS program, which is based on the FSG and his interpretation of the eight steps described above. Whitelaw distills the eight FSG steps to eight elements[6] and then boils these elements down to three general categories: (a) Company Commitment; (b) Program Core; and (c) Accountability. Whitelaw Report at 24 (Doc. #: 1999-25). For each prong of his compliance program, Whitelaw discusses the “attributes” he would “expect to see” in a reasonable program. See, e.g., Id. at 28, 30, 34, 36, 38 (Doc. #: 1999-25). Although he applies his program to each Defendant, Whitelaw acknowledges the FSG rely on each organization to determine “[t]he precise actions necessary for an effective program to prevent and detect violations of law” and that there are a “number of factors” that go into this decision. Whitelaw Report at 9 (Doc. #: 1999-25) (quoting U.S. Sentencing Commission, Guidelines Manual, § 8A.1.2, comment (n. 3k) (Nov. 1991)).

         Whitelaw next describes his Compliance Maturity and Program Effectiveness Model for measuring compliance with his program. In Whitelaw's words: “After defining ‘what good looks like' the next step is to measure it.” Whitelaw Report at 43 (Doc. #: 1999-25). Whitelaw's model is premised on a general maturity model;[7] into which he incorporates certain elements of his compliance program. See Whitelaw Report at 43-44 (Doc. #: 1999-25). The majority of Whitelaw's report is devoted to his analysis of Defendants' documents and activities and his interpretation of whether each Defendant complied with the elements of his own SOMS program and whether they rank on his model. See id. at 48-278. Whitelaw's general opinions include observations that one or more Defendants:

failed to make necessary changes to achieve a robust and effective compliance function in accordance with the values, principles and societal expectations for those involved in distributing prescription opioids;
studiously avoided having to address customer behaviors known, or which should have been known, to be inappropriate and likely diversionary;
failed to act responsibly to undertake reasoned, prudent and careful measures expected of those handling prescription opioid products, even while acknowledging the exponential increase in opioid usage;
failed to manifest good corporate responsibility by not undertaking the reasoned, prudent and careful measures expected of those manufacturing and selling opioid products;
failed to make the necessary changes to anti-diversion practices to achieve a robust and effective compliance function in accordance with the values, principles and societal expectations for those ...

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