Bae v. Shalala

• Decision Date: 04 January 1995
• Docket Number: No. 94-1373,94-1373
• Citation: 44 F.3d 489
• Parties: Kun Chae BAE, Petitioner, v. Donna E. SHALALA, Secretary of the United States Department of Health and Human Services and David Kessler, Commissioner of the United States Food and Drug Administration, Respondents.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 489

44 F.3d 489

Kun Chae BAE, Petitioner, v. Donna E. SHALALA, Secretary of the United States Department of Health and Human Services and David Kessler Commissioner of the United States Food and Drug Administration, Respondents.

No. 94-1373.

United States Court of Appeals Seventh Circuit.

Argued Sept. 8, 1994.

Decided Jan. 4, 1995.

Ann C. Tighe, Cotsirilos, Stephenson, Tighe & Streicker, Steven M. Kowal (argued), Burditt & Radzius, Chicago, IL, for petitioner.

Donna Morros Weinstein, Dept. of Health and Human Services, Region V, Office of the Gen. Counsel, Chicago, IL, Douglas Letter, Dept. of Justice, Civ. Div., Appellate Section, Washington, DC, Eric M. Blumberg, Federal Drug Admin., Rockville, MD, Donna E. Shalala, Dept. of Health and Human Services, Washington, DC, Margaret Porter, Annamarie Kempic, Andrew Clark, Lawrence G. McDade (argued), Dept. of Health & Human Services, Chief Counsel, Food & Drug Div., Rockville, MD, for Donna E. Shalala.

Douglas Letter, Dept. of Justice, Civ. Div., Appellate Section, Washington, DC, Eric M. Blumberg, David Kessler, Federal Drug Admin., Rockville, MD, Margaret Porter, Annamarie Kempic, Andrew Clark, Lawrence G. McDade, Dept. of Health & Human Services, Chief Counsel, Food & Drug Div., Rockville, MD, for David Kessler.

Before COFFEY and ROVNER, Circuit Judges, and FOREMAN, District Judge. ^*

COFFEY, Circuit Judge.

Petitioner Kun Chae Bae, the former president of a generic drug manufacturing company, appeals the final order of the Food and Drug Administration ("FDA") under the Generic Drug Enforcement Act of 1992 ("GDEA"), 21 U.S.C. Secs. 335a-335c, permanently debarring him from "providing services in any capacity to a person that has an approved or pending drug product application." The GDEA mandates permanent debarment for any individual "convicted of a felony under [f]ederal law for conduct ... relating to the development or approval, ... or ... [other] regulation of any drug product" under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Secs. 301-395. ¹ The FDA debarred Bae because of his 1990 felony conviction for aiding and abetting interstate travel in aid of racketeering, which arose from allegations that, in 1987, Bae provided an FDA official with an "unlawful gratuity" in exchange for "official acts performed and to be performed" by the FDA official. This case presents the question of whether and under what circumstances a civil debarment penalty may constitute retroactive punishment prohibited by the Ex Post Facto Clause of the United States Constitution. ² We affirm.

I. BACKGROUND

From 1973 through 1988, Bae was the president of My-K Laboratories, Inc., a generic drug manufacturing company located in suburban Chicago, Illinois. My-K Laboratories, like other generic drug manufacturers, sought FDA approval to market generic copies of previously approved drugs through the submission of abbreviated new drug applications. The 1984 amendments to the Federal Food, Drug, and Cosmetic Act authorized generic drug manufacturers, through the submission of abbreviated new drug applications, to rely on the FDA's prior determination of the safety and effectiveness of an innovator's drug, provided that the manufacturer demonstrated that the generic copy was fundamentally identical or "bioequivalent" to the innovator's pharmaceutical product. See 21 U.S.C. Sec. 355(j).

While president of My-K Laboratories, Bae submitted several abbreviated new drug applications to the FDA's Division of Generic Drugs. This division was composed of four chemistry review branches responsible for determining whether the manufacturing procedures and analytical controls described in the abbreviated new drug applications were adequate to assure the identity, strength, quality and purity of the drug products. Charles Y. Chang, the Branch Chief of the FDA's chemistry review branch in Maryland, was responsible for supervising the chemists who evaluated My-K Laboratories' abbreviated new drug applications. Bae frequently consulted with Chang concerning the status of My-K Laboratories' new drug applications and sought advice from Chang on how to resolve various problems as they arose.

On two occasions, once in the summer of 1986 and once in the summer of 1987, Bae invited Chang to visit Bae's country home in Illinois. On each of these visits, Bae gave Chang $10,000 in United States currency.

After Bae sold his interest in My-K Laboratories in 1988, he became the subject of an investigation of irregularities concerning the FDA's drug approval process. In 1990, Bae was charged with and pleaded guilty to one felony count of aiding and abetting interstate travel in aid of racketeering, in violation of 18 U.S.C. Secs. 1952 and 2. The Information ³ alleged that on or about August 21, 1987, Bae caused FDA Branch Chief Charles Y. Chang to travel from Maryland to Illinois with the intent to provide Chang with an "unlawful gratuity." The Information further alleged that during Chang's visit to Illinois, Bae gave Chang $10,000 "for and because of official acts performed and to be performed" by Chang. The statement of facts accompanying the Information asserted that Chang provided Bae "with several formulations for generic drugs which Chang had gleaned from other companies' [applications]."

By certified letter dated March 30, 1993, the FDA notified Bae that it proposed to debar him from participation in the generic drug industry pursuant to 21 U.S.C. Sec. 335a(a)(2) based on his prior felony conviction for conduct relating to the development or approval of a generic drug product. The FDA notified Bae that he would have the opportunity for an evidentiary hearing, should he desire to contest his debarment, if he presented specific facts, in writing, demonstrating a genuine and substantial issue of fact relevant to his debarment. Bae requested a hearing, but submitted no specific facts, and instead raised the argument that the GDEA's debarment provision was punitive in nature, and that its retroactive application to him violated the constitutional prohibition against ex post facto laws. The FDA, after reviewing Bae's request for a hearing, denied the request, finding that Bae had failed to raise any genuine or substantial issue of fact relevant to his debarment. On December 30, 1993, the FDA issued a final order permanently debarring Bae from providing services in any capacity to a person with a pending or approved drug product application. 58 Fed.Reg. 69,368 (Food & Drug Admin.1993).

II. DISCUSSION

The Administrative Procedure Act, 5 U.S.C. Secs. 701-706, governs our review of an action taken by an administrative agency. Bae's challenge to the FDA's debarment order raises a pure question of law: whether the retroactive application of the debarment penalty of the GDEA violates the Constitution's prohibition against ex post facto laws. Our review of this question is de novo. See 5 U.S.C. Sec. 706; Director, Office of Workers' Compensation Programs v. Ball, 826 F.2d 603, 604 (7th Cir.1987).

The Ex Post Facto Clause of the United States Constitution, Article I, Sec. 9, clause 3, prohibits the enactment of any law "which imposes a punishment for an act which was not punishable at the time it was committed; or imposes additional punishment to that then prescribed." Cummings v. Missouri, 71 U.S. (4 Wall.) 277, 325-26, 18 L.Ed. 356 (1867); Dehainaut v. Pena, 32 F.3d 1066, 1073 (7th Cir.1994) (quoting Inglese v. United States Parole Comm'n, 768 F.2d 932, 934 (7th Cir.1985)). "[F]or a criminal or penal law to be ex post facto ... it must be retrospective, that is, it must apply to events occurring before its enactment, and it must disadvantage the offender affected by it." Weaver v. Graham, 450 U.S. 24, 28, 101 S.Ct. 960, 964, 67 L.Ed.2d 17 (1981).

A civil sanction, like the debarment provision of the GDEA, will implicate ex post facto concerns only if it can fairly be characterized as punishment. United States v. Halper, 490 U.S. 435, 447-48, 109 S.Ct. 1892, 1901-02, 104 L.Ed.2d 487 (1989); see In re Kurth Ranch, 986 F.2d 1308, 1309 (9th Cir.1993), aff'd sub nom. Department of Revenue v. Kurth Ranch, --- U.S. ----, 114 S.Ct. 1937, 128 L.Ed.2d 767 (1994) ("a criminal penalty by any other name is still a criminal penalty").

The mark of an ex post facto law is the imposition of what can fairly be designated punishment for past acts. The question in each case where unpleasant consequences are brought to bear upon an individual for prior conduct, is whether the legislative aim was to punish that individual for past activity, or whether the restriction of the individual comes about as a relevant incident to a regulation of a present situation, such as the proper qualifications for a profession.

DeVeau v. Braisted, 363 U.S. 144, 160, 80 S.Ct. 1146, 1155, 4 L.Ed.2d 1109 (1960).

In Halper, the Supreme Court described the proper analysis to determine whether a given civil sanction constitutes punishment in the constitutional sense:

It is commonly understood that civil proceedings may advance punitive as well as remedial goals, and, conversely, that both punitive and remedial goals may be served by criminal penalties.... The notion of punishment, as we commonly understand it, cuts across the division between the civil and the criminal law, and for the purposes of assessing whether a given sanction constitutes multiple punishment barred by the Double Jeopardy Clause, we must follow the notion where it leads.... To that end, the determination whether a given civil sanction constitutes punishment in the relevant sense requires a particularized assessment of the penalty imposed and the purposes that the penalty may fairly be said to serve. Simply put, a civil as well as a criminal sanction constitutes punishment when the sanction as applied in the individual case serves the goals of punishment.

....

We have recognized in other contexts that punishment serves the twin aims of retribution and...