Korangy v. U.S. F.D.A.

• Decision Date: 17 August 2007
• Docket Number: No. 06-1860.,No. 05-2300.,05-2300.,06-1860.
• Citation: 498 F.3d 272
• Parties: Amile A. KORANGY, M.D.; Korangy Radiology Associates, P.A., Petitioners, v. UNITED STATES FOOD AND DRUG ADMINISTRATION, Respondent. Amile A. Korangy, M.D.; Korangy Radiology Associates, P.A., Petitioners, v. United States Food and Drug Administration, Respondent.
• Court: U.S. Court of Appeals — Fourth Circuit

498 F.3d 272

Amile A. KORANGY, M.D.; Korangy Radiology Associates, P.A., Petitioners, v. UNITED STATES FOOD AND DRUG ADMINISTRATION, Respondent.

Amile A. Korangy, M.D.; Korangy Radiology Associates, P.A., Petitioners, v. United States Food and Drug Administration, Respondent.

No. 05-2300.

No. 06-1860.

United States Court of Appeals, Fourth Circuit.

Argued May 24, 2007.

Decided August 17, 2007.

ARGUED: Timothy Cronin Lynch, Offit & Kurman, Maple Lawn, Maryland, for Petitioners. Anne Lobell Murphy, United States Department of Justice, Appellate Staff, Civil Division, Washington, DC, for Respondent. ON BRIEF: Alex M. Allman, Offit & Kurman, Maple Lawn, Maryland, for Petitioners. Daniel Meron, General, Sheldon T. Bradshaw, Chief Counsel, Food and Drug Division, Eric M. Blumberg,

Deputy Chief Counsel, Litigation, Marci B. Norton, Associate Chief for Enforcement, United States Department of Health And Human Services, Washington, DC; Peter D. Keisler, Assistant Attorney General, Douglas N. Letter, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, for Respondent.

Before WILKINSON, MOTZ, and TRAXLER, Circuit Judges.

Petition for review denied by published opinion. Judge TRAXLER wrote the opinion, in which Judge WILKINSON and Judge MOTZ joined.

OPINION

TRAXLER, Circuit Judge:

Dr. Amile Korangy and Korangy Radiology Associates ("KRA") petition this court for review of an order of the Food and Drug Administration imposing monetary sanctions on Korangy and KRA for allowing a statutorily-required certification to lapse and for performing mammograms after the certification expired. For the reasons that follow, we deny the petition for review.

I.

Under the Mammography Quality Standards Act ("MQSA"), facilities that provide mammographies must be certified by the FDA. See 42 U.S.C.A. § 263b(b) (West Supp.2007). In accordance with the MQSA, the FDA in 1999 issued a certificate for the operation of a mammography facility, known as "Baltimore Imaging Center," in Catonsville, Maryland. The 1999 certificate issued by the FDA was set to expire on May 6, 2002, and the expiration date was noted on the certificate itself. By 1999, Baltimore Imaging Center was operated by KRA, which is wholly owned by Korangy.

The American College of Radiology ("ACR") is an FDA-approved accreditation body that inspects mammography equipment to determine compliance with the MQSA. ACR inspected Korangy's equipment and informed Korangy by letter in April 2002 that his mammography equipment failed the quality standards for clinical image and that he should immediately stop using the equipment. ACR's letter explained to Korangy that the failure would be reported to the FDA and that the FDA would "officially notify" Korangy to stop using the equipment. See J.A. 32.

Notwithstanding his knowledge that his mammography produced images of unacceptable quality, Korangy continued to use the machine. He bought a new mammography unit that was provisionally certified for use on July 25, 2002. From May 7 (the day after his original certificate expired) until July 25 (the day before the new unit was certified), Korangy was operating without the required certification. During that uncertified period, he performed 192 mammograms at the Catonsville facility.

The FDA learned that Korangy was performing mammograms without the proper certification, and it filed a complaint in September 2003 seeking civil penalties against Korangy and KRA. An administrative law judge granted partial summary judgment in favor of the FDA, concluding that KRA and Korangy were each liable for one penalty for failing to obtain the required certificate. See 42 U.S.C.A. § 263b(h)(3)(A) (West Supp. 2007). Because the Act prohibits conducting an examination or procedure without a certificate, the ALJ also concluded that Korangy and KRA each had committed an additional 192 separate violations by performing mammograms during the certification lapse. In a separate proceeding the ALJ determined the appropriate amount of the sanctions. The FDA initially sought $10,000 (the statutory maximum) for each violation by Korangy and KRA. Korangy contended, however, that he lacked the ability to pay sanctions in that amount. Although the FDA could not verify Korangy's claim because he did not come forward with all of the relevant financial information, the FDA nonetheless reduced its sanctions request from $10,000 per violation to $3,000 per violation. The ALJ assessed penalties in the amount sought by the FDA. The total amount of sanctions imposed was more than one million dollars — $579,000 separately assessed against both KRA and Korangy.

Korangy and KRA appealed to the Departmental Appeals Board of the Department of Health and Human Services, and the Board affirmed the ALJ's decision. Korangy and KRA then filed this petition for review.

II.

As noted above, the MQSA requires mammography facilities to be certified by the FDA, see 42 U.S.C.A. § 263b(b), and authorizes the imposition of civil monetary penalties for the "failure to obtain a certificate as required by subsection (b) of this section." 42 U.S.C.A. § 263b(h)(3)(A). A $3,000 penalty was imposed on KRA and on Korangy for violation of this requirement. Neither KRA nor Korangy challenge that penalty on appeal. KRA (but not Korangy), however, does challenge the imposition of separate penalties for each of the 192 mammograms performed during the certification lapse.

The penalties for each of the mammograms performed were imposed under § 263b(h)(3)(D), which authorizes penalties for "each violation, or for each aiding and abetting in a violation of, any provision of, or regulation promulgated under, this section by an owner, operator, or any employee of a facility required to have a certificate." 42 U.S.C.A. § 263b(h)(3)(D). KRA contends that it is the facility,¹ and not the owner or operator of the facility, and that the penalties were therefore not authorized under § 263b(h)(3)(D).

We agree with KRA's construction of the statute. Section 263b(h)(3)(D) unambiguously authorizes penalties to be imposed on owners, operators, and employees of the mammography facility, but it does not authorize penalties to be imposed on the facility itself. KRA's argument falters at the next step, however, because KRA's claim that it is the facility, as opposed to the owner or operator of the facility, is foreclosed, both as a matter of fact and of procedure.

The issue is foreclosed to KRA as a factual matter because it admitted in the proceedings below that it was the owner of the mammography facility. KRA's status as the owner of mammogram facility is a question of fact, and KRA cannot now be heard to challenge the ownership that it previously admitted. See, e.g., Lucas v. Burnley, 879 F.2d 1240, 1242 (4th Cir. 1989) ("The general rule is that a party is bound by the admissions of his pleadings." (internal quotation marks omitted)); cf. Zinkand v. Brown, 478 F.3d 634, 638 (4th Cir.2007) ("Judicial estoppel is a principle developed to prevent a party from taking a position in a judicial proceeding that is inconsistent with a stance previously taken in court.").

The argument KRA seeks to raise on appeal is also barred as a procedural matter because KRA never argued below that penalties could not be imposed on it under § 263b(h)(3)(D) because it was the facility and not the owner of the facility. "[I]ssues raised for the first time on appeal are generally not considered absent exceptional circumstances. The underlying rationales for this rule are respect for the lower court, an avoidance of unfair surprise to the other party, and the need for finality in litigation and conservation of judicial resources." Holly Hill Farm Corp. v. United States, 447 F.3d 258, 267 (4th Cir.2006) (internal quotation marks and alterations omitted). There are no exceptional circumstances in this case that would warrant our departure from this general rule. The language of § 263b(h)(3)(D) is abundantly clear and should have put KRA on notice from the beginning of these proceedings that the FDA was seeking to impose penalties on it in its capacity as the owner of the mammography facility. If there were doubt about KRA's ownership, it was incumbent upon KRA to raise the issue in a timely manner, when it could have been resolved by the agency charged with enforcing the MQSA. See Lane Hollow Coal Co. v. Director, Office of Workers' Comp. Programs, 137 F.3d 799, 806 (4th Cir. 1998) ("Simple fairness to those who are engaged in the tasks of administration, and to litigants, requires as a general rule that courts should not topple over administrative decisions unless the administrative body not only has erred but has erred against objection made at the time appropriate under its practice." (internal quotation marks omitted)). Accordingly, we reject KRA's contention that the civil penalties assessed against it for the 192 mammograms performed during the certification lapse were not authorized under § 263b(h)(3)(D).

III.

Korangy argues that an FDA guidance manual requires the FDA to give a facility, after a certification lapse, specific notice that performing mammograms could result in the imposition of civil penalties. Korangy contends that there is a factual dispute about whether he actually received the required notice. Because the ALJ expressly did not resolve the dispute, Korangy contends that the order must be vacated and the case remanded to the ALJ for resolution of the factual dispute.

The factual dispute identified by Korangy involves two letters sent by the FDA. On April 1, 2002, the FDA sent Korangy a letter informing him that his certificate was about to expire and that it would violate the statute to perform mammograms after its expiration. On May 1, 2002, the FDA sent a second letter to Korangy directing him to stop performing mammograms and stating that he would be subject to civil penalties if he continued to perform them. Korangy denied...