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United States v. Keplinger

October 29, 1985

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
MORENO L. KEPLINGER, PAUL L. WRIGHT, AND JAMES B. PLANK, DEFENDANTS-APPELLANTS



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 81 CR 235--John A. Nordberg, Judge.

Author: Cudahy

Before CUMMINGS, Chief Judge, CUDAHY, Circuit Judge, and GRAY, Senior District Judge.*fn*

CUDAHY, Circuit Judge. This criminal litigation involves laboratory studies, using rats as subjects, undertaken to determine the safety of certain products for human use. Alleged falsification of data and irregular procedures created doubts about the validity of the reported study conclusions. After a trial that lasted six months and produced more that 17,000 pages of transcript, several defendants associated with the laboratory were convicted on various counts of mail fraud, wire fraud and making false statements, although there were also acquittals on some of the counts charged. Over-length briefs totaling more than 500 pages were then added to this already voluminous mass of record material.*fn1 The defendants appeal, claiming insufficiency of the evidence, and a multitude of trial errors. We affirm.

Industrial Bio-Test Laboratories, Inc. ("IBT") is a contract research laboratory which conducts animal toxicity studies of various drugs, pesticides and chemicals for manufacturers in order to determine their safety and effectiveness. Defendant Moreno Keplinger was IBT's Manager of Toxicology. Paul Wright was Section Head of Rat and Dog Toxicology at IBT until October 1972, at which time he left IBT to become Manager of Toxicology for Monsanto Corporation and served as liaison to IBT. James Plank served as IBT's Group Leader of the Rat and Dog Toxicology Department and was later Assistant to Keplinger.

The defendants here were convicted of various counts involving fraud and false statements in connection with two studies run by IBT.*fn2 The first animal toxicity study was performed for Monsanto Corporation ("Monsanto") and concerned Trichlorocarbanilide ("TCC"), an ingredient in deodorant soaps. Defendants participated in preparing three allegedly fraudulent written documents, which came out of this research: (1) a final study report submitted by IBT to Monsanto and then by Monsanto to the FDA; (2) a written explanation to the FDA from IBT answering questions about the TCC final report; (3) and an early version (the first draft) of the final report, which was submitted to Monsanto with an explanation of the TCC study. The alleged fraud involved suppression of relevant information or falsification of data in the following categories: a) underreported mortality of research animals and commingling of original and later-started research animals; b) omission of histopathological data on research animals; c) omission of data on post-mortem examination of animals; d) failure to report the original opinion of Dr. Gordon that TCC had a significant effect on research animals at the lowest dose level; e) failure to disclose a pathology report by a Dr. Ribelin with respect to the effect of TCC on the epididymis of research animals.

The second study involving allegations of mail fraud was performed by IBT on Naprosyn, an anti-inflammatory drug used in the treatment of arthritis. The alleged fraud here involved a report sent to Syntex Corporation ("Syntex") including blood and urine data and an Appendix II relating to gross pathology. The blood and urine data was allegedly wholly fabricated and Appendix II was allegedly falsified. A written explanation of the Naprosyn report submitted to the FDA also allegedly contained false statements.

I. Sufficiency of the Evidence

In reviewing a conviction, "the factfinder's role as weigher of the evidence is preserved through a legal conclusion that upon judicial review all of the evidence is to be considered in the light most favorable to the prosecution." Jackson v. Virginia, 443 U.S. 307, 319, 61 L. Ed. 2d 560, 99 S. Ct. 2781 (1979) (footnote omitted) (emphasis in original). Therefore, the decision facing this court is "whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Id. (emphasis in original). Only when the record contains no evidence, regardless of how it is weighed, from which a jury could find guilt beyond a reasonable doubt may an appellate court overturn a verdict. E.g., United States v. Brown, 739 F.2d 1136, 1149 (7th Cir.), cert. denied, 469 U.S. 933, 105 S. Ct. 331, 83 L. Ed. 2d 268 (1984). In applying this standard, the court must leave to the jury the weighing of the evidence, the drawing of reasonable inferences and determinations of credibility.

A. Trichlorocarbanilide (TCC)

We first examine the issue of underreporting of rat mortality in the TCC study. Accurate mortality data is important because it provides evidence of a substance's impact on test animals and also because it can provide evidence of environmental problems which might compromise the validity of a study. Apparently, the TCC study was plagued from the outset by a high death rate, which, the government contended, defendants attempted to conceal.

The government's proof that the mortality rate was falsified included evidence that the first draft of the TCC report and the version eventually forwarded to the FDA reported different mortality data for the same period of time. Another IBT document, an interim status report, contained still another set of mortality data for the same time period. The mortality shown in all of the documents made the subject of the charges in the indictment is lower than that shown in internal IBT documents from which mortality can be calculated. Further, laboratory technician Smith testified that during the first six months of the TCC study, he specifically observed animal deaths which were not accurately recorded. Laboratory technician Penner also testified that he observed deaths which were not reported during the same time period. Particularly when buttressed with contradictions in other data, these facts provide sufficient basis for the jury to find that the mortality data was false.

The defendants argue that these facts do no provide adequate proof of fraud, and that the government must prove the true rate of animal mortality in order to establish that the mortality figures in the TCC final report are false. Defendants argue that there was no testimony which established that the data "substantially underreported" mortality. They contend that the testimony of technicians Smith and Penner did not specifically tie the mortality rate in the problematic animal watering room (the "AWR") to the TCC study and that the witnesses" recollections of deaths were speculative. Defendants attempt to discount the contradictions in the data reported in the first draft, an interim status report and the version supplied to the FDA by focusing on the mortality rate over the entire course of the study, suggesting that there was no substantial intentional underreporting.

The government contends that it does not have to prove the true rate of mortality, but rather only that the reported mortality rate was too low and the defendants' reports must have been false. Holdings in similar cases support the government's position that there is no need to show the "true" figures. See, e.g., Coil v. United States, 343 F.2d 573, 576 (8th Cir.), cert. denied, 382 U.S. 821, 15 L. Ed. 2d 67, 86 S. Ct. 48 (1965). And defendants cite no authority for their proposition that the government must prove the real rate of mortality. The very nature of the allegations suggests the inherent impossibility of showing the "true" rate of mortality, since the accurate underlying data was never recorded. Smith and Penner, who worked on the TCC study, testified that they observed more deaths than were listed in the reports. In challenging the testimony given by Smith and Penner by characterizing it as recollection, impression and speculation, defendants attempt to reweigh credibility determinations that were properly left to the jury. We think that these technicians' testimony supports the inference that the mortality data supplied by the defendants were falsified, even if these witnesses cannot establish the true mortality rate. If totals for some periods were false (6 and 12 month status reports showing no deaths), then the tables including this data are necessarily false, at least in part. At the conclusion of the TCC study, the report included mortality data that was different from the 6 and 12 month status reports. The final report, submitted to the FDA, had still another set of mortality data. All three of these sets of data substantially underreported mortality. This evidence adequately supports a jury determination that the mortality data supplied by the defendants were false.

The high mortality of rats in the TCC study presented concerns going beyond the alleged underreporting of mortality data, however. If an insufficient number of rats survived to the end of the study, IBT would be unable to make any valid evaluation of the safety of the tested substances. Given the unusually high mortality rate, the government charged, defendants therefore chose to commingle with existing research animals new animals which had not been fed the test material for as long a period as the original animals. This obviously is not an acceptable procedure, for it compromises the validity of a study.

In the instant case, adding together the number of animals that were sacrificed during the study and the number of animals that died while the study and the number of animals that died while the study was in progress produced a total of more animals than there were at the start of the study, thereby implying that commingling occurred. Defendants' subsequent knowledge of that commingling was established by both direct and circumstantial evidence, and the commingling was concealed from the FDA. Intent to defraud may be inferred from the totality of the circumstances surrounding the actions of the defendants. E.g., United States v. Brown, 739 F.2d at 1149.

The government proved four incidents of commingling in two ways: 1) through the accumulated testimony about the acts of individual lab technicians, and 2) by a documentary review of the number of animals used in the study. The first incident of commingling was established by technician Garrett who testified that early in the study he filled up empty cages with fresh rats. Defendants assert that this early instance of commingling of "control" rats was not significant since the indictment focuses on the alleged commingling of late-started research animals. But this argument overlooks the fact that the control commingling alone establishes the falsity of assertions in the final report about the length of time animals were on the study. Additionally, this first incident, specifically ordered by defendant Plank, establishes his knowledge that at least some commingling was occurring and evidences a scheme to respond to high mortality by commingling new animals. Further, this early commingling rebuts defendants' claims that technicians later in the study could have distinguished still newer animals from purportedly older ones already in the cages.

A second incident of commingling took place about March 1972 when technician Penner added new animals to the gang cages. Subsequently, other technicians under the direction of technician Thompson placed some of those animals into the individual cages to fill vacancies cause by deaths. No starting study dates were entered on the relevant cage cards, a fact which partially accounts for the fact that the technicians seemed to have been unaware of the commingling. In August 1972 Thompson observed the addition of more animals to the study. The starting dates were in this case marked on the cage cards of this group of research rats. Records of animals on the study about March 1972 also established that Garrett commingled the animals and other technicians commingled animals added by Penner.

A third instance of commingling involved the necropsy log and blood data, which were used by pathologists and toxicologists to draw conclusions about the effect of TCC. Among other things, after August 1972 Thompson sent dead animals to the laboratory for analysis without distinguishing between animals that started in August and those that had started earlier.

The first instance of commingling involved the final sacrifice when all the animals were killed. For the study to have validity, a required number of male and female rats en each study group had to be available for examination at the end of the study. As it turned out, precisely the right number of male rats were available in each group. Either this was a remarkable coincidence or late-started animals were added to the group cages when necessary to provide the requisite number of males. The third and fourth cited instances of commingling suggest that the data from animals started in August 1972 found its way into the final version of the TCC report submitted in 1976 by IBT to Monsanto. The commingling evidence is sufficient to support the jury's determination that the TCC final report was false.

Defendants challenge the validity of the commingling evidence by noting that each of the technicians denied intentional commingling. They dismiss Garrett's testimony about the first instance of commingling as irrelevant to the alleged commingling of late-started animals. Additionally, by attempting to characterize Garrett's testimony as uncorroborated, defendants essentially argue that the jury's credibility determinations may be reweighed. Of course, this is incorrect. See United States v. Grabiec, 563 F.2d 313, 316 (7th Cir. 1977). The mere fact that technician Thompson, for example, did not know that "control" animals were being commingled does not preclude his having played an unwitting role in the process.

Defendants also argue that the technicians would have easily identified late-started animals because those animals would have been younger and smaller. But, as noted, this is an inaccurate assumption since Plank was attempting to obtain older and more mature rats and Garrett had introduced new animals into the study before Penner. That the technicians' commingling was inadvertent appears from their own testimony and from the omission of starting dates on cage cards.

Dr. Lijinsky (an animal testing expert) analyzed documents from the study and concluded that commingling had occurred, because the total number of animals sacrificed during the study and those that died while the study was in progress exceeded the number that originally started. This evaluation was based on an interpretation of notations in the animal weight books (for example, interpreting dashes as meaning deaths) which was supported by the technicians' testimony that when an animal died a dash appeared where its weight would ordinarily be entered. The defendants attack Dr. Lijinsky's findings on various bases, including the fact that he placed the great bulk of the deaths and replacements in the first eight months of the study where their significance was diminished. Defendants also claim that there were errors in weighing and substitution procedures, and that Dr. Lijinsky misinterpreted the significance of various notations. But the evidence suggests that, if anything, Dr. Lijinsky under estimated deaths. For example, in at least one treatment group, the number of animals used exceeded the number of animals that started the study by 30%. We think the evidence of commingling is more than sufficient.

Further, the evidence moved that, when commingling was discovered, it was brought to the defendants' attention before they made their reports and submissions. IBT employees Smith, Garrett and Reyna, who worked on the TCC study, knew about the excessive mortality rate and discussed the bad AWR conditions causing that problem with Plank and Wright, which at least implied that these defendants knew they had a potentially serious problem threatening the validity of the study. Further, there is testimony that Plank explicitly directed Garrett to commingle late-started animals. In addition, Keplinger and Wright made the decision to begin a late-started group of animals. All three defendants attended a February 1975 meeting that revealed, if they did not know it before, that commingling had occurred. At another meeting in December 1976, commingling was again confirmed through inconsistencies shown to Keplinger and Plank in the numbering systems that Phil Smith had used to record animals data. Defendants also knew that that study data included histopathology from commingled animals. The data presented in the 1976 version of the final report was asserted to have come from animals that had been on the study for the full 24 months. Keplinger was well aware of the falsity of this statement. Knowledge of this falsity alone is sufficient. See United States v. Outpost Development company, 552 F.2d 868, 869-70 (9th Cir.), cert. denied, 434 U.S. 965, 98 S. Ct. 503, 54 L. Ed. 2d 450 (1977).

The next issue of concern is the misstatement of Dr. Gordon's conclusions. Dr. Gordon was responsible for microscopic examination of tissues from the study animals to determine whether ingestion of TCC had any toxic effects at certain dosage levels including the lowest ("T-1").*fn3 This examination initially focused on the organ that toxicologists believed would be affected first, in this case the testis.

Gordon conducted histopathological examinations (by microscope) of tissues taken from animals sacrificed at the end of the study and of those from treatment group animals, as well as control animals, that died earlier. Based on these examinations, Gordon concluded that there were treatment-related changes (which he called degeneration) in the control animals. According to Dr. Gordon, TCC damaged the testis and T-1 was an "effect level." The defendants for obvious reasons resisted these conclusions. They directed Gordon to examine more slides; but in order to do so, he had to look at tissues from late-started animals because there were no more rats available from the original study. Examination of these late-started animals supported his original conclusion that T-1 was an effect level.

Still dissatisfied with these results, Wright sent selected slides, omitting post-mortem and late-started animals, to Dr. Ribelin, an independent consultant. After reviewing the slides, Ribelin also found that a no-effect level had not been reached and that there were treatment-related effects from TCC. Ribelin, however, discovered degeneration in the epididymis, the excretory duct of the testes, and not in the testes themselves. Defendants presented a great deal of evidence to show that the testes and the epididymis are different and that since the testes were the target organs of the study, a finding of an effect level in the epididymis did not support a conclusion that T-1 was an effect level for the testes. But the jury was entitled to accept the government's alternative view of that if treatment-related effects were found in any part of the rat, a safe level of dosage had not been established, and so Ribelin's conclusion was not consistent with the position that T-1 was a safe level for TCC. The jury was entitled to find that the defendants' suppression of this report denied the FDA important information about the safety of TCC.*fn4

Despite the evidence that both Gordon and Ribelin believed T-1 to be an effect level (although they perceived different types of effect), the defendants argue that these researchers agreed that T-1 was no-effect level. The government contends that Gordon was pressured into approving a change in his opinion, exonerating TCC, but the defendants argue this change was voluntary. The jury decided this question, and we will not reconsider it.

The government also contends there was fraud in the revisions made in the final report to the FDA. That report stated that post-mortem autolysis (deterioration of tissue after death) precluded meaningful evaluation of the testes of animals that died during the study. Yet defendants do not deny that Gordon was in fact able to examine these animals, did so, and made histopathologic findings regarding these animals. Those findings were omitted from the report, implying that the animals were not examined at all. There was testimony that Keplinger told Wright that there were animals available for post-mortem evaluation but Wright edited the final report to indicate that decay made such animals unavailable. Although defendants offered testimony that there was a valid reason for omitting the data, the jury could reasonably have concluded instead that Gordon's findings were omitted because they were adverse to the conclusions defendants wanted to draw. Additionally, the government presented evidence to show that data collected from gross pathology examinations (opening the animals and examining tissue without a microscope) was changed so that the T-1 level would appear to be a ...


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