Parrino v. Sebelius, CIVIL ACTION NO. 3:14-CV-38-TBR

• Decision Date: 17 December 2015
• Docket Number: CIVIL ACTION NO. 3:14-CV-38-TBR
• Citation: 155 F.Supp.3d 714
• Court: U.S. District Court — Western District of Kentucky
• Parties: Leo Parrino, Plaintiff v. Kathleen Sebelius, Sec'y, Dept. of Health & Human Servs. and Daniel R. Levinson, Inspector General, Defendants

155 F.Supp.3d 714

Leo Parrino, Plaintiff

v.Kathleen Sebelius, Sec'y, Dept. of Health & Human Servs. and Daniel R. Levinson, Inspector General, Defendants

CIVIL ACTION NO. 3:14-CV-38-TBR

United States District Court, W.D. Kentucky, Louisville Division .

Signed December 17, 2015

C. Thomas Hectus, Hectus Walsh Buchenberger PLLC, Louisville, KY, for Plaintiff.

Benjamin Seth Schecter, Michael D. Ekman, U.S. Attorney Office, Louisville, KY, for Defendants.

MEMORANDUM OPINION AND ORDER

Thomas B. Russell, Senior Judge, United States District Court

At the request of the parties, the Court will determine whether or not Mr. Parrino has a Fifth Amendment Due Process claim as a matter of law. (Docket No. 38.) The Plaintiff, Leo Parrino, has submitted a brief on the matter. (Docket No. 24.) The Defendants, Kathleen Sebelius, Secretary of the Department of Health and Human Services and Daniel R. Levinson, Inspector General, have also filed a brief on the matter. (Docket No. 25.) As the Court has given the parties an opportunity to submit additional briefs and neither party filed a brief, this matter is ripe for adjudication. For the reasons enumerated below, it is hereby ORDERED that the Plaintiff does not have a Fifth Amendment Due Process claim as a matter of law.

Background

This action concerns the decision of the Department of Health and Human Services (“HHS”) acting through the Office of the Inspector General (“OIG”) to exclude Mr. Parrino from participation as a provider in all federal health care programs.

Mr. Parrino is a licensed pharmacist. (Docket No. 1 at 1.) In his capacity as a pharmacist, Mr. Parrino worked for National Respiratory Services, LLC (“NRS”) and was involved in the preparation of inhaler medication. (Docket No. 1 at 3-4.) After leaving NRS, agents from the FDA and FBI contacted Mr. Parrino regarding medications prepared during his employment at NRS. (Docket No. 1 at 4-5.) Mr. Parrino eventually learned that he was a target of the FDA and FBI's investigation. (Docket No. 1 at 5.) As a result of the investigation, Mr. Parrino pled guilty to the misdemeanor offense of introducing and delivering for introduction into interstate commerce inhalation drugs that were misbranded in violation of 21 U.S.C. §§ 331(a), 333(a)(1), and 352(a) and 18 U.S.C. § 2. (Docket Nos. 1 at 5; 24 at 1.) On May 10, 2013, Mr. Parrino was sentenced in conformity with his plea agreement and received one (1) year of probation and ordered to pay restitution. (Docket No. 1 at 6.)

Following his guilty plea, HHS acting through the OIG notified Mr. Parrino that he was excluded from participation as a provider in all federal health care programs including Medicare and Medicaid for the minimum statutory period of five years. (Docket No. 1 at 6.) In its letter to Mr. Parrino, the OIG informed him that its basis for his exclusion was 42 U.S.C. § 1320a–7(a) which is the mandatory exclusion provision. (Docket No. 8-9 at 1.) Mr. Parrino claims that the Defendants violated his due process rights in their application of the mandatory exclusionary provision under 42 U.S.C. § 1320a–7(a) because the “underlying conviction [to a strict liability offense] did not require proof of [Parrino's] knowledge that the drug was misbranded; or, that [Parrino] had any culpable mental state, or mens rea , in regard to introducing the drug into the stream of commerce.” (Docket No. 1 at 7.) Mr. Parrino contends that:

[T]he Government's reliance upon his plea to a misdemeanor involving the particular facts of the strict liability offense at issue violates his constitutional rights to due process, both as a result of substantially increasing the penalties constitutionally permitted resulting from a strict liability offense, and because the statute itself must constitutionally be read to prohibit the Defendants from seizing upon the general provisions of subsection (a) [the mandatory provision], which are much more onerous when applied to [Mr. Parrino], instead of proceeding under the permissive sections under subsection (b).

(Docket No. 13 at 6-7.)

Discussion

The Due Process Clause of the Fifth Amendment declares that “[n]o person shall ... be deprived of life, liberty, or property, without due process of law.”¹ The Due Process Clause “clothes individuals with the right to both substantive and procedural due process.” Prater v. City of Burnside, Ky. , 289 F.3d 417, 431 (6th Cir.2002) (citing United States v. Salerno , 481 U.S. 739, 746, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987) ). Here, Mr. Parrino appears to claim that the Defendants violated only his right to substantive due process. (See Docket Nos. 1 at 7-10; 24 at 3-8.) Therefore, the Court will address the merits of Mr. Parrino's substantive due process claim below.²

Substantive due process is “[t]he doctrine that governmental deprivations of life, liberty or property are subject to limitations regardless of the adequacy of the procedures employed.” Bowers v. City of Flint , 325 F.3d 758, 763 (6th Cir.2003) (citing Pearson v. City of Grand Blanc , 961 F.2d 1211, 1216 (6th Cir.1992) ). It protects the individual from “the exercise of power without any reasonable justification in the service of a legitimate governmental objective.” Cty. of Sacramento v. Lewis , 523 U.S. 833, 845, 118 S.Ct. 1708, 140 L.Ed.2d 1043 (1998) (citing Daniels v. Williams , 474 U.S. 327, 331, 106 S.Ct. 662, 88 L.Ed.2d 662 (1986) ). In particular, substantive due process “protects a narrow class of interests, including those enumerated in the Constitution, those so rooted in the traditions of the people as to be ranked fundamental, and the interest in freedom from government actions that “shock the conscience.” Range v. Douglas , 763 F.3d 573, 588 (6th Cir.2014) (citing Bell v. Ohio State Univ. , 351 F.3d 240, 249–50 (6th Cir.2003) ). Substantive due process also protects an individual's “right to be free from ‘arbitrary and capricious' governmental actions, which is another formulation of the right to be free from conscience-shocking actions. Id. (first citing Bowers , 325 F.3d at 763 ; then citing Pearson , 961 F.2d at 1216–17 ). “In other words, the ‘arbitrary and capricious' standard ... is simply another formulation of, but is no less stringent than, the more traditional ‘shocks the conscience’ standard.” Bowers , 325 F.3d at 763.

A plaintiff's claim alleging that the government has violated his or her substantive due process right may be presented in two forms. The first form is as a challenge to a law or regulation and the second is as a challenge to a discretionary action by a government official. Stroder v. Kentucky Cabinet for Health & Family Servs. , No. 3:09–CV–00947–H, 2012 WL 967599, at *1 (W.D.Ky. Mar. 21, 2012). Here, Mr. Parrino does not challenge the constitutionality of the statute at issue, 42 U.S.C. § 1320a–7. (Docket No. 24 at 2, 6.) Instead, Mr. Parrino challenges the OIG and HHS's discretionary application of the statute in their decision to exclude him from participation as a provider in all federal health care programs for a period of five years following his plea to a misdemeanor. (Docket Nos. 1 at 7-10; 24 at 1-3.)

In order for a plaintiff to state a claim alleging a violation of his or her substantive due process rights by a government official's discretionary actions, the Sixth Circuit Court of Appeals generally requires that he or she “must demonstrate a deprivation of a constitutionally protected liberty or property interest.” Am. Exp. Travel Related Servs. Co. v. Kentucky , 641 F.3d 685, 688 (6th Cir.2011) (citing Prater v. City of Burnside, Ky. , 289 F.3d 417, 431–32 (6th Cir.2002) ). However, the court has recently acknowledged that the Sixth Circuit's “case law on substantive due process is somewhat conflicted as to whether an underlying constitutionally-protected right must be established in order for a government action to violate one's rights by shocking the conscience.” Range , 763 F.3d at 589 (citing EJS Props., LLC v. City of Toledo , 698 F.3d 845, 855 (6th Cir.2012) ). The court went on to caution that “substantive due process is not a rigid conception, nor does it offer recourse for every wrongful action taken by the government ... [as] the ‘shocks the conscience’ standard sets a high bar.” Id. (quoting EJS Props. , 698 F.3d at 862 ). Recently, a fellow Western District of Kentucky district court articulated the standard for a substantive due process claim challenging a discretionary action by a government official as follows:

In order for a plaintiff to state a claim alleging a violation of substantive due process rights by the actions of a government official, “he must first demonstrate he has a property and/or liberty interest recognized by the United States Constitution....” United States v. Green , No. 5:06CR–19–R, 2008 WL 4000868, at *5 (W.D.Ky. Aug. 26, 2008) ; see also Prater v. City of Burnside, Ky. , 289 F.3d 417, 431 (6th Cir.2002). Next, he “must show that the government entity took an ‘arbitrary and capricious action in the strict sense.’ ” Id. at *5 (quoting Pearson v. City of Grand Blanc , 961 F.2d 1211, 1221 (6th Cir.1992) ).

Stroder , 2012 WL 967599, at *1. Given the Sixth Circuit's recent articulation of a non-rigid standard regarding whether or not a plaintiff must first establish an underlying constitutionally-protected right, this Court will continue its analysis and consider whether or not the government's alleged action was “arbitrary and capricious” even if Mr. Parrino is unable to show that he has a property and/or liberty interest recognized by the United States Constitution.

1. Existence of a Property or Liberty Interest Recognized by the Constitution

A. Property Interest

In order to have a property interest in a benefit, a person must “have a legitimate claim of entitlement to it.” Bd. of Regents of State Colleges v. Roth , 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). According to the United States Supreme Court, “[p]roperty interests, of course, are not created by ...