The 11th Circuit Applies SCOTUS Ruling In Recent Alabama Physician Controlled Substances Conviction

By: Jim Hoover with Burr & Forman, LLP

On June 27, 2022, the Supreme Court of the United States (SCOTUS) heard an appeal emanating from a conviction of a local doctor in Mobile, Alabama for violating the Controlled Substances Act (CSA).  The justices specifically examined the convictions of Dr. Xiulu Ruan who is serving a prison sentence of more than 20 years. The Government charged Dr. Ruan with unlawfully dispensing and distributing drugs in violation of the CSA.  Dr. Ruan argued that the drugs were dispensed pursuant to a valid prescription, and were for a legitimate medical purpose by him acting in the usual course of his professional practice.  Dr. Ruan further argued that he did not knowingly or intentionally deviate from this standard.

The SCOTUS opinion heavily scrutinized 21 U.S.C. § 841(a), which makes it a federal crime for any person except as authorized to knowingly or intentionally manufacture, distribute or dispense a controlled substance.  As provided by the regulation, a prescription is only authorized when a doctor issues the prescription “for a legitimate medical purpose…acting in the usual course of his/her professional practice.”  The Department of Justice (“DOJ”) argued “knowingly or intentionally” merely refers to the knowing or intentional distribution of a controlled substance.  The SCOTUS held that once a defendant-doctor meets the burden of producing evidence that his or her conduct was “authorized,” the DOJ “must prove beyond a reasonable doubt that the defendant knowingly or intentionally acted in an unauthorized manner” in order to secure a conviction for improper prescribing.  

The SCOTUS ruled that prosecutors relying on the CSA for excessive prescribing of opioids and other addictive drugs must prove that the doctors knew the prescriptions lacked a legitimate medical purpose.  The SCOTUS vacated the Eleventh Circuit court of appeals opinions and directed it to consider whether the jury instructions given at the conclusion of the trial were consistent with this SCOTUS opinion.  

In an opinion published on January 5, 2023, an Eleventh Circuit panel held that the jury instructions used to convict Dr. Ruan for violating the CSA was inconsistent with the SCOTUS opinion. The Eleventh Circuit panel recognized that in order to obtain a conviction under 21 U.S.C. § 841(a), the government must prove beyond a reasonable doubt that a defendant (1) knowingly or intentionally dispensed a controlled substance, and (2) knowingly or intentionally did so in an unauthorized manner.  “What matters is defendant’s subjective mens rea.”  The Eleventh Circuit panel went on to say that “[W]ithout further qualification, the phrase ‘good faith’ encompasses both subjective and objective good faith. In the context of § 841 though, as the Supreme Court has explicitly held, only the subjective version is appropriate.  The instruction given by the district court did not contain any qualification to make this clear to the jury.”  

The Eleventh Circuit could not conclude that the district court’s error was harmless.  Accordingly, it vacated the defendant-doctor’s substantive drug conviction under 21 U.S.C. § 841(a).  However, the Eleventh Circuit held that the district court’s instructions were proper or any error in the instructions were harmless error as they related to the convictions for (1) conspiracy to violate the CSA, (2) conspiracy to commit health care fraud in violation of 18 U.S.C. §§ 1347 band 1349, (3) violation of the Anti-Kickback Statute, (4) conspiracy to commit mail or wire fraud, (5) conspiracy to violate RICO, and (6) substantive money laundering and conspiracy to commit money laundering.    Thus, the Eleventh Circuit vacated in part and affirmed in part the district court’s ruling and remanded the case to the district court for further proceedings consistent with the Eleventh Circuit’s opinion.

Jim Hoover is a Partner at Burr & Forman LLP practicing exclusively in the firm’s healthcare group. Jim may be reached at (205) 458-5111 or jhoover@burr.com.