White Collar Criminal and Regulatory Lawyer Blog

Alicia Mundy of the Wall Street Journal reported that a panel of federal lawmakers pelted the owner of Wright County Eggs with questions regarding the outbreak of Salmonella poisoning that sickened at least 1,600 people in at least 22 states. At the center of the questioning was the sanitation problems discovered by federal regulators at the farm. The company had maintained a public silence since they announced a recall of 380 million eggs. Wright County Egg's owner Austin "Jack" DeCoster expressed regret to the panel for allowing the tainted eggs to be sold to consumers. Many of the most difficult questions DeCoster faced were directed by his to his son, Peter DeCoster. Peter DeCoster said the company had "extensive...reduction programs" aimed at salmonella enteritis bacteria and he was "stunned" when the Food and Drug Administration informed the company that its products may be tainted.

One lawmaker spoke harshly about sanitation problems at the company's farm and its feed mill and criticized the DeCosters for suggesting that outside feed supplies might be to blame for the outbreak after federal regulators found significant sanitary problems at the company's farm including piles of manure being improperly stored. These harsh remarks were in response to Peter DeCoster's assertion that the farm, which mixes its own chicken feed, get ingredients from outside sources that may have been tainted prior to arriving at the farm.

Wright Farms is not the only company being investigated for its role in the outbreak. Hillandale, another company which recalled 170 million eggs, is cutting a marketing relationship and some other business ties to Wright. Hillsdale's president, Orland Bethel, has invoked his Fifth Amendment privilege against self-incrimination. The FDA's criminal division and the U.S. Department of Justice is investigating the outbreak.

Hillsdale's president may invoke his Fifth Amendment privilege against self-incrimination because the criminal division of the FDA and DOJ are investigating. He would not be able to invoke the Fifth Amendment privilege if the investigation was being conducted by the civil division of the FDA and/or DOJ. The Fifth Amendment privilege may only be invoked in response to a criminal investigation or charges.

The Government has the choice of pursuing a criminal and or civil investigation. Strategically, the Government may at times begin their investigation in the civil context so that a target of an investigation has no right to invoke the Fifth Amendment privilege. This allows them to legally side-step the privilege at the outset of their investigation. Any information gathered during the civil investigation may be used by the Government in subsequent criminal proceedings. Before speaking with any governmental agency, one must know their rights and how any information provided to the agency may be used.

On October 26, 2010, Alicia Mundy of the Wall Street Journal reported that International drug maker Amphastar Pharmaceuticals, Inc. filed a lawsuit in the U.S. District Court in Washington, D.C. alleging that the FDA unlawfully detained two shipment of "raw materials" needed to make Amphastar's generic version of Heparin.

The Complaint further alleges that the unlawful detention of the materials directly caused Amphastar to lose the race to have its version of the generic drug approved by the FDA. On July 23, 2010, the FDA approved a generic from a rival company, which according to Amphastar, illustrates a "broad pattern of arbitrary, capricious and vindictive behavior" by the FDA that includes more than a dozen inspections "designed to harass Amphastar." Amphastar bases this allegation on the fact that, on July 22 and the day before the rival's generic was approved, a necessary shipment of Amphastar's materials was unexpectedly and unlawfully detained by the FDA prior to entering the country. Without the materials, Amphastar was unable to continue its bid to pioneer the generic drug in the U.S. The FDA denies any wrongdoing.

Ms. Mundy also reports that the FDA, has "been applying tighter standards to heparin-related imports since the crisis in 2008, when contaminated Chinese heparin products were linked to more than 80 U.S. deaths and hundreds of other serious complications." If Amphastar prevails on its claims it is likely to receive significant damages resulting from, among other things, lost profits for the sales of the generic drug that it may have realized absent the wrongful conduct of the FDA.