The US Supreme Court in Ruan sided with doctors seeking a burden of proof higher than mere negligence in prosecutions for unlawful distribution of controlled substances. The decision represents a significant win for those worried about overcriminalization and the associated risk of losing the criminal law’s critical stigmatic impact, write Perkins Coie attorneys T. Markus
The U.S. Supreme Court is poised to issue what could be a monumental decision in the Court’s Controlled Substances Act (“CSA”) jurisprudence as applied to the nation’s opioid epidemic. At issue in Ruan v. United States is the requisite intent the government must prove to convict a physician under the CSA for the unlawful distribution of controlled substances.
The outcome in Ruan could have significant implications for prescribers, including whether their risk of criminal liability is actually higher than a narcotics trafficker distributing heroin or cocaine. More specifically, to convict a drug trafficker, federal prosecutors must prove beyond a reasonable doubt that the trafficker knowingly and intentionally manufactured, transported, or distributed narcotics. If the government prevails in Ruan, the government would de facto have to show only that a prescribing physician was negligent in misprescribing opioids.
Concerns about ever-expanding prosecutorial discretion and the erosion of the criminal law’s traditional “guilty mind” requirement have focused significant attention on the case.
A Mini Survey of the CSA’s Statutory Scheme
Per the implementing regulations of 21 U.S.C. § 841(a)(1), a physician may lawfully prescribe controlled substances only if they are prescribed for “a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.” Even a first-time offender could face decades in prison for misprescribing a Schedule II controlled substance, such as oxycodone, hydrocodone, hydromorphone, methadone, or fentanyl, in violation of the CSA.
The Government’s Case Against Dr. Ruan
In 2016, a federal grand jury returned an indictment charging Dr. Xiulu Ruan, a Drug Enforcement Administration (“DEA”)-registered pain management physician, with, among other things, “knowingly and unlawfully distribut[ing] and dispens[ing] . . . Schedule II Controlled Substances . . . outside the usual course of professional medical practice and not for a legitimate medical purpose, in violation of Title 21, United States Code, Section 841(a)(1).”
The government at trial presented evidence that Dr. Ruan and his business partner issued nearly 300,000 controlled substance prescriptions in a four-year period. Some of these prescriptions allegedly were signed without Dr. Ruan even seeing the patient. The government also presented evidence that Dr. Ruan increased prescriptions of a biopharma company’s fentanyl drug a hundredfold after he and his business partner invested in it.…
In the largest action brought under the Kleptocracy Asset Recovery Initiative, the DOJ seeks to recover over $1 billion in assets bought with laundered funds misappropriated from 1Malaysia Development Berhad (“1MDB”), a Malaysian sovereign wealth fund. 1MDB was created by the Malaysian government to promote economic development through international partnerships and foreign direct investment. The…
The owner and operator of a Miami home health care company recently was sentenced for her part in a $6.5 million Medicare fraud scheme, after falling into the cross-hairs of the federal government’s Health Care Fraud Prevention and Enforcement Action Team (“HEAT”). Cruz Sonia Collado owned a home health care company, Nestor Home Health, in Miami. According to the DOJ, Collado paid kickbacks and bribes to patient recruiters for referrals to Nestor Home Health for home health and therapy services that were medically unnecessary or were never provided. Over a nearly 4 year period, between March 2009 and January 2014, Medicare paid more than $6.1 million—of the $6.5 million claims submitted—to Nestor Home Health for home health services. Collado was sentenced to 75 months in prison, followed by three years of supervised release. She also was ordered to pay over $6.5 million in restitution. The Department of Justice (“DOJ”) and Department of Health and Human Services (“HHS”) formed HEAT in an effort to help prevent waste and crack down on abuse of Medicare and Medicaid programs. And the group of has been active. …
Continue Reading Can you feel the HEAT? Medicare Fraud Strike Force Strikes Again
It is no secret that whistleblower complaints are on the rise. According to the SEC Office of the Whistleblower’s (OWB) recently released annual report, during the 2013 fiscal year, OWB received more than 3,200 whistleblower complaints, tips, and referrals—up from 3,001 in 2012 and just 334 in 2011 (the year OWB was created). Similarly, in fiscal year 2013, DOJ saw a record 752 qui tam complaints filed under the False Claims Act (FCA) whistleblower provision. Whistleblower awards are also on the rise. In fiscal year 2013, the DOJ recovered $3.8 billion in settlements and judgments based on the FCA. More than three quarters of the DOJ’s recovery—$2.9 billion—was related to whistleblower lawsuits, with whistleblowers receiving $345 million of the recovery. In September 2013, the SEC OWB paid more than $14 million to a single whistleblower. The SEC OWB also recently announced that it paid an additional $150,000 to the recipient of the first whistleblower award, for a total of more than $200,000. But not all whistleblowers receive large payouts, and many face retaliation for their actions. A recent Fourth Circuit decision makes the relatively light burden of proving retaliation more difficult. And an upcoming decision by the Second Circuit could affirm the lower court’s limitations on who can recover whistleblower awards.
Continue Reading Whistleblowers: Boom or Bust?
The U.S. Supreme Court is set to decide the circumstances in which police may constitutionally search an arrestee’s cell phone without a warrant. On April 29, 2014, the Court heard arguments in two companion cases—Riley v. California and United States v. Wurie—which occasion the Court to define the scope of the Fourth Amendment in the digital age and strike a balance between an individual’s interest in the privacy of his cell phone contents and law enforcement’s interests in police safety and preservation of evidence. In Riley, police seized David Leon Riley’s smart phone during a traffic stop for an expired licensed plate. Using photos, videos, and call logs obtained through a warrantless search of his phone, along with two hand guns found during a search of his car, police identified Riley as a member of a gang and placed him near the scene of a gang-related shooting that occurred a couple of weeks before his arrest. At trial, although no witness positively identified Riley as a participant in the shooting, the circumstantial evidence from the phone gave the jury enough evidence to convict him of shooting at an occupied vehicle, attempted murder, and assault with a semi-automatic weapon. In Wurie, police arrested Brima Wurie near the scene of a drug transaction and took him to the police station. While there, police seized two cell phones from Wurie. Police observed that one of the cell phones—a flip phone—was repeatedly receiving calls from “my house.” Without a warrant, the officers flipped open the phone, reviewed the call log, and traced the phone number to Wurie’s apartment. Police obtained a warrant to search Wurie’s apartment, where they found crack, marijuana, and other evidence of a drug crime. Wurie was convicted of distribution and possession with intent to distribute crack, and being a felon in possession of a firearm and ammunition. …
Continue Reading SCOTUS Hears Arguments in Warrantless Cell Phone Search Cases
In the 1987 film “Wall Street,” Gordon Gecko gives a memorable speech in which he declares “that greed, for lack of a better word, is good. Greed is right, greed works.” On Wall Street today, one might say that speed is good. Milliseconds (1/1,000th of a second) and microseconds (1/1,000,000th of a second) matter. Traders relentlessly pursue methods to access the most current information from Wall Street, employing fiber-optic cable, microwave dishes, and even laser beams. But is acting upon this virtually-instant data, which may arrive at a high-speed trader’s computer mere milliseconds before the average trader, insider trading? Some are claiming, “yes.” After the publication of Michael Lewis’s book Flash Boys: A Wall Street Revolt, allegations are circulating that a speed advantage allows high-speed traders to effectively “front run” other traders.
Continue Reading Speed is Good: But Is High-Speed Trading A Crime?
Enforcement officials from the U.S. SEC’s Chicago Regional Office and the U.S. Attorney’s Office for the Northern District of Illinois gathered to discuss their enforcement initiatives at the “SEC & DOJ Hot Topics 2014” program on February 11, 2014. Local regulators reinforced the theme that in 2014, the SEC will continue to adopt enforcement tools that historically have been used by their counterparts in criminal law enforcement.
The program was among the first public speaking engagements by David Glockner in his new role as director of the SEC’s Chicago Regional Office. Mr. Glockner was appointed as the Chicago Regional director in November 2013, following an impressive, decades-long career in the Chicago U.S. Attorney’s Office, including 11 years as the criminal division chief. Joining Mr. Glockner on the panel were regulators Thomas Dunn, a Financial Economist in the SEC’s Division of Economic and Risk Analysis, and Julie Porter, Chief of the Financial Crimes Division at the Chicago U.S. Attorney’s Office.
In discussing the SEC’s 2014 enforcement priorities, Mr. Glockner noted that the economy seems to be “between major financial crises” at the moment, which presents an opportunity for the SEC to set its own agenda – rather than reacting to various market failures. In setting this agenda, Mr. Glockner warned that companies should expect the SEC to be present in as many of its different areas of regulatory responsibility as possible. He noted that even activities that have not garnered much attention from the SEC in the recent past may now fall under scrutiny, especially if there is a high potential for misconduct in a previously overlooked area. He specified that current areas of interest include: (1) accuracy of books and records, earnings reports and investor communications; (2) municipal securities / public pensions; and (3) utilizing staff exams to conduct targeted reviews of risk-based areas.
Continue Reading New Regime at SEC Takes a Page From the Prosecutors’ Playbook