DEA Must Prove “Knowing and Intentional” Violations of the Controlled Substances Act

US Pharm. 2022;47(11):32-25.

In the consolidated case Ruan v. United States and Kahn v. United States (Ruan), the U.S. Supreme Court recently issued a decision clarifying the mental state that the Drug Enforcement Administration (DEA) must establish to convict a healthcare professional of illegal drug distribution under the federal Controlled Substances Act (CSA).^1,2 Ruan ruled that the DEA must prove beyond a reasonable doubt that a physician knew or intended that a prescription was not lawful to subject that physician to criminal penalties under the CSA. 

Ruan has significant implications for all persons and entities subject to the CSA, including pharmacists and pharmacies who are subject to a “corresponding responsibility” to only fill lawful prescriptions issued for a legitimate medical purpose.³ Over recent years, the DEA has aggressively pursued enforcement actions against pharmacies and pharmacists on the legal theory that they did not act in “good faith” because they should have objectively known that the prescriptions were not valid because of unresolved “red flags” that should have given them a “reason to know” that the order for a controlled substance was invalid.^4-6 

Ruan v. United States

In Ruan, Xiulu Ruan, MD, and Shakeel Kahn, MD, were accused and convicted of illegally dispensing and distributing drugs in violation of the CSA.⁷ A physician with a DEA registration can lawfully prescribe a drug if that prescription is “issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice.”⁸ Thus, under the CSA, a physician may be convicted for either prescribing “outside the scope of professional practice” or “for no legitimate medical purpose.”⁹

Dr. Ruan operated a medical clinic and a pharmacy in Alabama and was accused of issuing nearly 300,000 controlled substances prescriptions over an approximate 4-year period, earning more than $4 million over that time frame. Dr. Ruan was one of the top prescribers in the U.S. for two brand-name instant-release fentanyl drugs—Subsys and Abstral—which are FDA-indicated for breakthrough cancer pain in opioid-tolerant adult patients. However, Dr. Ruan prescribed the drugs off-label for neck, back, and joint pain, and the trial court jury determined that Dr. Ruan received illegal kickbacks from the Subsys manufacturer in exchange for prescribing the drugs. Many of Dr. Ruan’s prescriptions allegedly were signed without Dr. Ruan even seeing the patient; however, Dr. Ruan testified that he, at all relevant times, truly and honestly believed that he was prescribing for a legitimate medical purpose.

Dr. Kahn operated pain-management clinics in Arizona and Wyoming, where he routinely prescribed controlled substances, including oxycodone, alprazolam, and carisoprodol. The DEA alleged that Dr. Kahn performed only a perfunctory examination—or no examination at all—before prescribing controlled substances for a patient, and that he falsified notes in medical charts indicating that he had seen patients in person, completed assessments, made referrals, and collected urine samples, when in reality he had taken none of those actions. Dr. Kahn allegedly priced his medical services based on the number of pills he prescribed to a patient and had a cash payment–only policy. The more pills Dr. Kahn prescribed, the more he charged a patient for an office visit, and the per-pill prices tracked the street prices of the drugs, although his minimum charge was $500 for a prescription. One of Dr. Kahn’s patients passed away after consuming controlled substances that he had prescribed; however, Dr. Kahn stated that he believed that all of his prescriptions were issued for a legitimate medical purpose for the discussed prescriptions; he did not know that his patients were abusing or selling their medication, and he would not have issued prescriptions to individuals that he knew to be selling their medication.

At the trials of Drs. Ruan and Kahn, jury instructions on the meaning of the CSA “except as authorized” clause were contested by each party. Neither trial court imposed a mens rea requirement on the “except as authorized” clause. Rather, both Circuits endorsed an “objective standard” of reasonable good-faith (i.e., outside the recognized standards of medical practice) rule that would allow conviction where a prescription was in fact unauthorized, even if the prescribing physician believed that it was for a legitimate medical purpose. Dr. Ruan and Dr. Kahn were convicted, and each was sentenced to more than 20 years imprisonment. The 10th and 11th Circuits affirmed the physicians’ convictions, and the physicians then appealed to the U.S. Supreme Court.¹⁰

The primary issue before the U.S. Supreme Court was the proper trial court mens rea jury instructions.¹¹ Ruan resolved the issue, ruling that the statutory language “knowing or intentionally” applies to the “except as authorized” clause under the CSA, meaning that if the physician was otherwise authorized to issue the prescription (e.g., appropriately licensed, etc.), the DEA must prove beyond a reasonable doubt that the prescriber knowingly or intentionally issued a prescription that he or she knew or intended was not for a legitimate medical purpose, and therefore, criminal liability should be based on the “mental state of the doctor” himself or herself, rather than on a “reasonable doctor” standard.¹² The Ruan court stated, “Once a defendant meets the burden of producing evidence that his or her conduct was ‘authorized’ and was prescribed in the usual course of professional practice, the burden of proving lack of ‘usual course of professional practice’ shifts back to the DEA, which must prove beyond a reasonable doubt that he/she knowingly or intentionally prescribed controlled substances in an unauthorized manner.”¹³ The Court ruled that the “knowingly or intentionally” requirement was necessary because the mens rea can tell whether the alleged conduct was “innocent” (without knowledge or intent) or “wrongful.” Ruan vacated the convictions of Dr. Ruan and Dr. Kahn and sent each case back to their respective trial courts for reconsideration.

The New DEA Standard

After Ruan, for the DEA to criminally convict physicians for improper prescribing under the CSA, the DEA must (1) prove beyond a reasonable doubt that a physician knowingly or intentionally dispensed or distributed a controlled substance and that the dispensing or distributing was not authorized and (2) prove beyond a reasonable doubt that the physician dispensed or distributed controlled substances and knew that in dispensing or distributing the controlled substance in question they were not authorized to do so. DEA prosecutors may continue to utilize circumstantial evidence to prove a medical professional’s subjective intent in controlled substances cases, such as quantities prescribed, patient characteristics, examination time, medical records (or lack thereof), medical necessity, adherence to distributor agreements, the disregard of patient “red flags,” and the prescriber’s financial practices; however, Ruan places the burden of proof on the DEA to establish that the defendant’s prescribing practices fell short of professional standards and the defendant intended to prescribe without any legitimate medical purpose.

Impact of Ruan on Pharmacy and Pharmacist Responsibilities

DEA regulations state that “[a]n order purporting to be a prescription issued not in the usual course of professional treatment or in legitimate and authorized research is not a prescription within the meaning and intent of section 309 of the Act (21 U.S.C. § 829) and the person knowingly filling such a purported prescription, as well as the person issuing it, shall be subject to the penalties provided for violations of the provisions of law relating to controlled substances.”¹⁴ Thus, a pharmacy/pharmacist may only be held liable if the pharmacist “knowingly fill[s]” an unauthorized or invalid prescription.

Although the responsibility for the proper prescribing and dispensing of controlled substances lies with the prescribing practitioner, “a corresponding responsibility rests with the pharmacist who dispenses the prescription.” Historically, the DEA has interpreted the above-referenced “knowledge” requirement as “knew or had reason to know” when bringing enforcement actions against pharmacists and has cited pharmacists’ “corresponding responsibility” for the proper prescribing and dispensing of controlled substances. The DEA has taken the position that pharmacists are liable for filling prescriptions that allegedly present “red flags”—warning factors that do not necessarily bear on a prescription’s facial validity but that, in DEA’s opinion, suggest the prescriber may have written it for an illegitimate purpose. Under DEA’s theory, the presence of one or more “red flags” proves that a prescription is illegitimate and indicates that a pharmacist who fills it must be doing so “knowingly.” The Ruan court ruled that the objective, negligence-like “red flag” theory of liability applied in the Ruan trial courts was erroneous because it did not require the DEA to show that the physician knew or intended to issue unauthorized prescriptions. 

The DEA takes the position that that the usual course of professional practice requires a pharmacist to investigate and resolve red flags before dispensing a controlled substance.¹⁵ The DEA’s historical interpretation of 21 C.F.R. § 1306.04(a) to not require evidence of a prescription’s illegitimacy before deciding it was dispensed in violation of the regulation is inconsistent with Ruan, and the DEA must now determine that a prescription is actually “illegitimate” before seeking to discipline a pharmacist or pharmacy for filling the prescription.^16,17 Based on Ruan, the DEA cannot determine that a pharmacist has violated his corresponding responsibility unless it first establishes that the prescription lacked a legitimate medical purpose and that the issuing physician acted outside of the usual course of professional practice. Neither the fact of a pharmacist’s corresponding responsibility nor the pharmacist’s performance of his corresponding responsibility affects whether the prescription was, in the first place, issued to the patient for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice. Therefore, for a pharmacist to fail to comply with his/her corresponding responsibility, the DEA must produce evidence to support its position that the prescriptions at issue were written for other than a legitimate medical purpose.¹⁸

While Ruan addressed the conduct of two physicians, the decision applies to criminal liability against any person or entity subject to the CSA. With the added mens rea element to prove, DEA enforcement actions against physicians, pharmacies, pharmacists, drug wholesale distributors, pharmaceutical manufacturers, and other controlled-substances prescribers for wrongfully distributing or dispensing opioids and other controlled substances under various fact patterns may be less likely to occur and/or less likely to result in convictions.

Impact on DEA Enforcement Actions

The Ruan court noted that the DEA’s prior criteria requiring conformance with professional standards (as defined by expert witnesses) could “criminalize a broad range of apparently innocent conduct” and risk deterring physicians from using their best judgment in prescribing controlled substances to benefit patients.¹⁹ The Ruan decision increases the DEA’s elements-of-proof threshold for CSA violation convictions; however, it is not expected to be a significant obstacle for future DEA enforcement actions.

While it is not clear whether the Ruan case will materially impact U.S. Department of Justice (DOJ) enforcement actions going forward, it is important to note that the DEA recently dropped charges against a drug wholesale distributor, Miami-Luken, two of its executives, and two pharmacists who were charged with conspiracy to distribute a controlled substance. While the DOJ did not expressly state that the reason it was dismissing the charges was due to the heightened mens rea requirement articulated in Ruan, it was discussed during a status conference prior to dismissal of the DEA case.²⁰

REFERENCES

1. Ruan v. United States, No. 20-1410, 597 U.S. ____ (2022).
2. Ruan v. United States, No. 21-5261, 597 U.S. ____ (2022)
3. 21 U.S.C. § 841; 21 C.F.R. § 1301.74.
4. Beware: DEA and Wholesalers are Cracking Down on Controlled Substance Dispensing, Pharmacy Audit Assistance Service.
5. DEA “Red Flags” have not been codified, but the California Board of Pharmacy put together the following list of Red Flags: irregularities on the face of the prescription itself; nervous patient demeanor; age or presentation of patient (e.g., youthful patients seeking chronic pain medications); multiple patients all with the same address; multiple prescribers for the same patient for duplicate therapy; cash payments; requests for early refills of prescriptions; prescriptions written for an unusually large quantity of drugs; prescriptions written for duplicative drug therapy; initial prescriptions written for strong opiates; long distances traveled from the patient’s home to the prescriber’s office or to the pharmacy; irregularities in the prescriber’s qualifications in relation to the type of medication(s) prescribed; prescriptions that are written outside of the prescriber’s medical specialty; and prescriptions for medications with no logical connection to an illness or condition.
6. U.S. Department of Justice Drug Enforcement Administration Diversion Control Division Drug Enforcement Administration Pharmacist’s Manual (2022).  (A pharmacist has a corresponding responsibility for the proper dispensing of controlled substances.)
7. Id.
8. 21 CFR § 1306.04(a). 
9. 21 U.S.C. § 841; See United States v. Nelson, 383 F.3d 1227 (10th Cir. 2004)
10. Notes 1 and 2 supra.
11. Id. at *3-4.
12. Id. at *12-13.
13. Id. at *2, 11.
14. 21 CFR § 1306.04.
15. Id.
16. See Holiday CVS, LLC, d/b/a CVS/Pharmacy Nos. 219 and 5195, 77 Fed. Reg. 62316, 62341 (October 12, 2012) (declaring the “DEA has interpreted the “legitimate medical purpose” feature of the corresponding responsibility duty “as prohibiting a pharmacist from filling a prescription for a controlled substance when he either knows or has reason to know that the prescription was not written for a legitimate medical purpose . . . ””)
17. Note 17, supra.
18. Id.
19. The Supreme Court Decision on Federal Prescribing Rules for Controlled Substances, Matt Lamkin, JD, JAMA. Published online October 3, 2022. doi:10.1001/jama.2022.18308.
20. Appalachia Opioid Charges Dropped After High Court Ruling, Law360 (August 12, 2022).

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