Ruan v. United States Analysis of Lower Court Applications

Lower court decisions are mixed for physicians facing Controlled Substance Prosecutions

It’s now been three months since the Supreme Court decision in Ruan v. United States. Physicians facing opiate charges and their federal criminal defense attorneys are eager to see how the districts and circuits are handling this open-ended decision by the Supreme Court. Just as expected, we are seeing wider splits in the courts.

I was sitting in a federal court slyly hitting refresh on my computer as a jury in a seven-week-long physician opiate case was about to get their instructions when the decision came down. Thankfully, that case ended up in a full acquittal. Ruan and the resulting jury instructions provided an immediate benefit to my client. But an analysis of lower court decisions shows mixed application of Ruan.

Ruan has been cited 22 times in Federal courts since it has been decided.

Four of those 22 cases were “GVRs” ordered by the Supreme Court. A “GVR” stands for “grant”, “vacate”, and “reverse”. This is when the Supreme Court issues an order reversing a judgment of the lower court without oral argument and this generally happens when they have decided the ultimate issue in another case. Two GVRs were from cases I had before the Supreme Court- United States v. Naum and United States v. Couch.

Each of these cases now rests with their respective Circuit Court of Appeals.

Appellate Court Applications of Ruan v. United States

Appellate decisions applying Ruan? In short, there aren’t any.

All six cases that went before the Supreme Court during the October 2022 term were remanded back to the circuit courts of appeals: the Tenth, Eleventh, and Fourth Circuits. The appellate courts appear to be taking their time to decide the important issues in Ruan and strike a tone that respects the decision and properly applies the new precedent to the facts of each case.

The circuit courts will issue decisions after assessing the jury instructions given in each case to determine if they were consistent with the Ruan decision. If the defendant was convicted in the face of “objective good faith” instruction i.e. one in which the physician’s conduct was compared to the hypothetical “reasonably prudent physician” – their conviction is likely to get reversed. A new trial will be afforded.

However, where the physician received an instruction akin to a “subjective” good faith analysis i.e. the jury was required to determine if the defendant actually intended to prescribe outside of their “authorization” the conviction may stand.

We must wait and see what the circuit courts do and decisions should be coming out soon.

The remaining important district court decisions mostly deal with physicians who are seeking to withdraw a plea of guilty as a result of the Ruan decision and physicians facing trial jockeying for advantage.

Because many reading this may be interested in its impact on physicians already convicted, lets talk about the standard for withdrawing a guilty plea…

Withdrawing a Federal Guilty Plea

Our federal system is replete with plea bargains. Overcharging, excessive punishments for federal offenses including drugs, and subjective application of federal statutes cause many defendants to cut bait and run to grab a deal. But after the dust settles, courts are unquestionably reluctant to permit defendants to withdraw. The plea colloquy has been expertly tailored in federal court to stifle every avenue of attack leaving most defendants without recourse.

But what happens where there is a change in the law?

Under Federal Rule of Criminal Procedure 32(e), a defendant has an absolute right to withdraw his guilty plea prior to sentencing for “fair and just reasons”. Just as most other vague tests implicated by the rules of criminal procedure – the phrase “fair and just” as been significantly narrowed by caselaw.

To withdraw a plea a defendant carries the heavy burden of meeting a four part balancing test:

(1) whether defendant established fair and just reasons;

(2) whether the defendant asserts his legal innocence to the charge;

(3) the length of time between guilty plea and the motion to withdraw;

(4) whether the government would be prejudiced.

The Supreme Court’s decision in United States v. Ruan is one such change in law that can support “legal innocence”.

The Impact of Ruan v. United States on Prior Plea Agreements

There are two published district court decisions applying Ruan where the defendant sought to withdraw their plea Kraynak and Sachy.

United States v. Kraynak

The first case to address is United States v. Kraynak decided in the Middle District of Pennsylvania.

In September 2021, Dr. Kraynak plead guilty to unlawful distribution three weeks into trial. Obviously this was before the Ruan decision was issued by the Supreme Court. He then filed a motion to withdraw his guilty plea and renewed it shortly after the Ruan decision. The Court held a hearing on the motion and unlike other cases discussed below, the Court had the benefit of three weeks of trial to evaluate the evidence against Dr. Kraynak.

In an incredibly lengthy decision, the trial court denied the motion to withdraw.

The court principally utilized the testimony of Dr. Stephen Thomas (my cross of Dr. Thomas can be found here).

Dr. Thomas has been at this game for a while.

He conflates the standard necessary for a doctor to comply with the controlled substance act and then testifies that the doctor violated that standard because they failed to adhere to Dr. Thomas’s subjective ad hoc standard.

Dr. Thomas even goes so far as to mis-quote the Federation of State Medical Board guidelines for prescribing opiates claiming that adherence to the FSMB standard is required to issue a lawful prescription. The problem with relying on Dr. Thomas’s testimony is that its based on a theory that in order to issue a lawful prescription the prescription must comport with the standard of care.

This is directly in conflict with the Supreme Court’s decision in Ruan v. United States. Hopefully, the Third Circuit will catch this error.

Regrettably, Dr. Kraynak will be sentenced and have to appeal his case to the Third Circuit.

United States v. Sachy

Unlike Dr. Kraynak, Dr. Sachy will receive a new trial.

On August 18th, a federal judge in the Middle District of Georgia permitted the withdrawal of Dr. Sachy’s plea. Dr. Sachy argued that the Supreme Court’s decision in Ruan changed the law and gave the Government a much higher burden in opioid prosecutions.

More specifically, he argued that prior to Ruan in the 11th Circuit the government arguably must prove that the Defendant violated an “objective standard of practice”. However, after the Ruan decision, the Supreme Court made clear that the test was not an objective test but rather whether the physician subjectively believed that he or she wrote a prescription that was “unauthorized”. Under this test, lack of authorization means knowingly prescribing a medication for “other than a legitimate medical purpose outside the usual course of professional practice”. While the government has argued vehemently that this standard relates to the physician’s compliance with objective standards of practice, this is no longer the case.

The difference between Kraynak and Sachy is that Kraynak proceeded to trial and sought to withdraw the guilty plea after the trial judge heard a volume of one-sided evidence which he used to determine whether Dr. Kraynak was actually innocent.

Full disclosure, United States v. Sachy is a case my colleague Meggan Sullivan and I (Ron Chapman) are currently litigating.

Other Post- Ruan applications

Other defendants who are awaiting trial or who were previously convicted have attempted to leverage the Ruan decision to secure release, dismissal or in one case – grand jury transcripts.

United States v. Blume (Grand Jury Transcripts)

In a very interesting development, a defendant who was previously convicted for unlawful distribution related to the operation of the hope clinic filed a motion to require the district court to produce grand jury transcripts to determine if the grand jury was properly instructed on the elements of 21 U.S.C. 841(a) consistent with Ruan v. United States. Judge Aboulhosn agreed with the defendant and ordered the transcripts released to determine if the indictment was proper.

Unfortunately for the Defendant, Judge Volk, the U.S. District Judge disagreed with the magistrate and prevented the release of the transcripts.

United States v. Taylor (Motion to Dismiss)

Robert Taylor attempted to get his indictment dismissed and added a Ruan argument after the Supreme Court’s decision in United States v. Ruan. The District Court Judge in the Eastern District of Kentucky denied the vagueness challenge just as all other vagueness challenges have been denied despite the explicit wording of two Supreme Court Decisions (Ruan and Gonzalez) that specifically indicate that the statute is vague. The District Court found the vagueness challenge and the argument that the “intent” component of the statute is unclear in the wake of Ruan to be unavailing. However, Mr. Taylor certainly did preserve these arguments and if an appeal is necessary he can certainly enjoy a better burden before the Sixth Circuit. Perhaps the decision in several cases waiting before the Sixth Circuit will aid his case – namely United States v. Anderson.

United States v. Spayd (Motion to Dismiss)

In a rare unlawful prescribing case set in Alaska, Ms. Spayd, a nurse practitioner, moved to dismiss the indictment arguing that Ruan fundamentally changed the landscape. Ms. Spayd argued, among other things, that Ruan made “lack of authorization” a required element of the offense. The Government responded saying that Ruan conformed to circuit precedent already established in the Ninth Circuit. The Court rejected Ms. Spayd’s argument and reasoned that including a section in the indictment that the defendant “knowingly prescribed outside the usual course of professional practice and for other than a legitimate medical purpose” is sufficient.

United States v. Suetholz (Relevance of Prior Board Actions)

In this case the Defendant attempted to prevent his board action before the Kentucky Board of Medical Licensure from being introduced into evidence. Judge Bunning in the Eastern District of Kentucky determined that the Ruan decision made this information more relevant because the Government is required to prove the defendant’s intent to unlawfully distribute (which was always the case). Dr. Suetholz was ultimately convicted on September 15th, 2022 and will likely appeal the conviction to the Sixth Circuit.

Post Ruan Strategy

Here's what we know so far.

Vagueness challenges will likely get denied until the right challenge trickles up to the Supreme Court. We all know the Supreme Court likes to move slowly and not make large changes that tip the scales of justice too far. It's going to take many more mis-applications of the standard in 21 U.S.C. 841(a) to get the right vagueness challenge. The issue with a vagueness challenge to 21 U.S.C. 841(a) as applied to physicians is that the application of the standard “outside the usual course of professional practice and for other than a legitimate medical purpose” is only made by a judge through his instructions and by experts through their testimony.

Post-trial 2255 motions filed well after the deadline and successive 2255 motions are likely going to be denied. I am aware of two of such cases where defendants argued that Ruan was a fundamental change in the law and attempted to get relief for convictions entered prior to Ruan

While I personally believe these cases have merit, especially where the jury was instructed on an “objective standard” they aren’t getting traction at the district court level. However, if the appellate courts determine that “objective good faith” instructions are unsatisfactory – these petitions will start getting traction. If you have a challenge that is ripe for a 2255, take it and wait and see what the appellate courts do.

Broad motions to dismiss based on the sufficiency of the indictment will be denied. Nearly every indictment against a prescriber or pharmacist contains the phrase “knowingly distributed controlled substances outside the usual course of professional practice and for other than a legitimate medical purpose”. Courts are unanimous that this is sufficient to satisfy a motion to dismiss. I tend to agree that the proper post Ruan challenge is not to the indictment but rather the jury instructions unless the indictment plainly fails to include this wording.

Post trial motions. This is where it gets interesting. The Ruan decision turns the inquiry from an “objective” inquiry into a subjective inquiry. At least one motion to unseal grand jury transcripts was granted and other post-trial motions may be granted where the standard utilized at trial was plainly objective. In short, the “objective good faith” standard is dead and should be challenged post-trial. Experts that opine on “good faith” or conflate the standard to be an objective one should be challenged.

Post Ruan decisions are going to come out at a cyclical rate. I’ll do my best to update this article and this blog as relevant decisions hit Pacer.

In the meantime, keep up the fight and if you enjoy the blog consider reading my book Unraveling Federal Criminal Investigations.