Presentation by DuVal & Associates at Medtech Conference 2016. Participants: Mark DuVal, JD, President & CEO – DuVal & Associates Howard Root, CEO – Vascular Solutions Powered by: Healthegy For more healthcare innovation Visit us at Healthegy.com

1. 1
Howard Root, CEO & Defendant
June 1, 2016
5 Lessons in
5 Minutes from a
5 Year Criminal Prosecution

2. For the Full Story . . .
2
Available in
time for
Christmas!

3. First -- Suspend Your Disbelief
3

4. Lesson #1
4
In the eyes of federal prosecutors,
every commercial medical device company
in America and its CEO commits at least one
crime every year punishable by prison.

5. Mechanism = Park Doctrine
5
The law does not require a defendant to know about or have
actively engaged in wrongdoing in order to be held responsible
for his company’s distribution of adulterated or misbranded
devices. All that the law requires is that the defendant held such
a position of responsibility within the company that he had
sufficient authority to prevent or correct the violation.

6. Motivation = HHS Public Comments
6
The government “hand-picked” this case
to go “on the offensive” because it was
“such a strong case.”
October 15, 2015

7. 7
A. That's one of the first things that we
look for in my squad, is we're a small
squad and the cases that we want to
invest our time and resources in are
cases in which the conduct is top down.
What we don't want – we just don't have
the ability to spend our investigative
resources on our cases where we're
talking about a rogue rep . . . .
George Scavdis
FDA Special Agent
Investigator
Motivation = FDA “Investigation”

8. Motivation = FDA “Investigation”
8
Q. You didn’t think it was important to
actually put in front of her the words of
what the FDA has actually cleared and
walk through her understanding?
A. . . . when I’m interviewing these people,
I’m not there to make the defense’s
arguments . . . .
George Scavdis
FDA Special Agent
Investigator

9. Department of Justice Building
9

10. Lesson #2
10
Before making the first sale of a medical device,
a company must have a full compliance program
and a full-time dedicated Compliance Officer.

11. Compliance Programs in the Crosshairs
11
“The grim reality is that it’s almost impossible to
be certain that an institution of any size has not
violated one or more of these laws.”
“The Yates Memorandum makes it clear that . . .
it is in the company’s interest to disclose facts that
implicate an individual in wrongdoing.”
“You’re thinking, ‘But our compliance officer didn’t
do anything wrong.’ . . . It wasn’t what he did;
it was what he didn’t do. He failed to establish
and maintain an effective compliance program.”
Norman Tabler, Esq.
Faegre Baker Daniels
Law360, April 16, 2016

12. Lesson #3
12
You can win easily, but only
if you are able to survive the entire process.
Corollary: If you are unable to fight to the end,
give up right at the start.

13. What Does it Take to Fight to the End?
13
• $25 million in legal expenses to pay 121 lawyers at 14 law firms
to comply with 5 years of a criminal investigation & prosecution
• Prosecutors warning your employee that if she did not change her
testimony, “things will get much worse for you.”
• Prosecutors threatening your employees that if they did not
“cooperate,” they would be “fired and never again work in healthcare.”
• Prosecutors calling your employee “a poor f***er” who needed to
return “on bended knee” to “fix” his testimony.
• Prosecutors telling a female employee: “If you do not deliver us with
the answers we want to hear today, it should be made known that
we have the power to withhold rights and privileges provided to
your natural born son.”

14. DOJ Publicity
14
• This was “a deceptive sales campaign led by the CEO of a
public company . . . that persisted in the face of FDA
warnings, a whistleblower’s complaint to the CEO and a
failed clinical trial” Assistant AG Joyce Branda, Nov. 13, 2014
• Vascular Solutions was a company that “put profits over
patient safety.” Assistant AG Stuart Delery, July 28, 2014
• VSI “knowingly promote[d] medical devices for unapproved
uses.” U.S. Attorney Robert Pitman, July 28, 2014

15. 15
Newspaper Publicity

16. Why Give Up at the Start?
16
“We’ve invested our blood, sweat and tears into this
investigation. At this point we need a body.”
Assistant U.S. Attorney Comments to VSI’s Defense Lawyers

17. Neil Ogden
Winning at Trial, Easily
17
Q: But under the guidance, if there’s any change in the
indications for use statement, the guidance says
“submit a notification,” correct?
A: That’s what it says.
Q: Okay. And that’s FDA’s advice to companies, right”
A: Yes.
Q: So you'll agree that, [just] because a company submits
a premarket notification, it doesn't mean that the
law required them to do it, correct?
A. Correct.

18. Neil Ogden
Winning at Trial, Easily
18
Q. [T]he indications for use statement that was
cleared . . . [i]t refers to varicose veins, correct?
A. Yes.
Q. [V]aricose veins can include the great saphenous
vein, right?
A. Yes.
Q. Short saphenous vein, correct?
A. Yes.
Q. And perforator veins, correct?
A. It could, yes.

19. 19
The Court:
Winning at Trial, Easily

20. Jury Verdict
20

21. Juror Email Post-Verdict
21
I turned 52 years old yesterday and in all my life I have never feared
the government. As a law abiding, tax contributing citizen one
should not have to fear our federal government. Unfortunately, I will
never feel that way again. What the federal government did to you,
your company and your employees is nothing short of criminal.

22. 22
Newspaper (15 Months After Indictment)

23. Lesson #4
23
If you get accused of a “crime,”
almost no one will publicly support you.

24. 24
Medical Device Industry Public Comments

25. My 1986 Party
25
Future U.S. Senator
Amy Klobuchar
Future Assistant
U.S. Attorney
Greg Brooker
Future CEO
Howard Root

26. 26
Response from Staff of Sen. Klobuchar
Thanks for reaching out, and I will be sure to pass this along.
Have a great day.
August 14, 2015

27. VSI’s Criminal Defense Motto
27

28. Lesson #5
28
Criminalization is the #1 issue in our industry,
which everyone needs to publicize and fight, or else.

29. Hedge Fund Manager Nelson Obus
29
• SEC accusations of insider trading
• 10 years + $9 million = not guilty on May 30, 2014
• “What I see happening here is a totally
unaccountable organization – run by a group of
anonymous legal underperformers probably
incentivized simply by putting scalps on the wall,
with no concerns about getting to the truth –
being able to attack the growth fountain of our
whole economy, which is small business.”

30. Bank Push-Back on “Criminalization”
30
“The largest, most well-capitalized lenders in
the country have been systematically targeted
by the DOJ. And they go in and take a look and
threaten and they shame... and try to put
pressure on people to settle.”
“For us, that’s not something we can even begin
to stomach.”
Bill Emerson
Quicken Loans CEO
CNBC May 9, 2016

31. Bank Push-Back on “Criminalization”
31
“Overlapping efforts by U.S. regulators place
banks under assault.”
“You should all ask the question about how
American that is. And how fair that is. And
how complex that is for companies.”
Jamie Dimon
JP Morgan CEO
Q4 2014 Call

32. Why Does This Matter?
32
0%
5%
10%
15%
20%
25%
1978 1988 1995 1997 2005
% of Patients Who Die . . .
From a Heart Attack From a Stroke

33. Why Does This Matter?
33
VSI Device for Blood Clot Extraction
In development for removal of
massive intravascular clot
My Friend Steve Worts
Hemorrhagic Stroke – Feb. 12, 2016

34. VSI’s Freeze-Dried Plasma
34
“From one old, retired Army physician and
Colonel, thank you for your interest in freeze
dried plasma and your agreement with the
Army Medical Department to bring FDP to our
military forces.”
“After 34 years of service, I cannot identify a
more important medical product needed by
our military today.”
Unsolicited email received from
Colonel (Retired), Medical Corps, United States Army, M.D.

35. 35
. . . or Else

36. 36
Howard Root, CEO and Defendant
June 1, 2016
5 Lessons in
5 Minutes from a
5 Year Criminal Prosecution

37. Means = Explosion of Federal “Crimes”
37
• Originally, 3 federal crimes = treason, counterfeiting, piracy
• In 2008, >4,500 federal crimes by statute
• In 2015, >81,000 new pages of federal regulations added
• 25% of new federal “crimes” have no mens rea requirement

38. Motivation = Prosecutors’ Incentive
38
Attorney General Loretta E. Lynch recognized
279 department employees for their
distinguished public service today at the 63rd
Annual Attorney General’s Awards Ceremony.

39. FCPA New Pilot Program - April 5, 2016
39
• 50% increase in number of FCPA prosecutors, with
“three new squads of special agents devoted to FCPA”
• Declination of criminal charges against a corporation only if
it provides “full cooperation” and “remediation”
• “Cooperation comes in many forms”
• “[T]his pilot program is intended to encourage companies
to disclose FCPA misconduct to permit the prosecution of
individuals whose criminal wrongdoing might otherwise
never be uncovered by or disclosed to law enforcement.”

40. “The GuideLiner allows me to
successfully complete previously
unimaginable interventions.”*
* Unsolicited physician comments
“The GuideLiner makes
impossible cases possible.”*