U.S. v. Burzynski Cancer Research Institute

• Decision Date: 25 June 1987
• Docket Number: No. 86-2183,86-2183
• Citation: 819 F.2d 1301
• Parties: UNITED STATES of America, Plaintiff-Counter Defendant-Appellee, v. BURZYNSKI CANCER RESEARCH INSTITUTE, et al., Defendants-Counter Plaintiffs- Appellants and Janice Kuharzyk, and Other Patients of Dr. Stanislaw R. Burzynski, et al., Intervenors-Counter Plaintiffs-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1301

819 F.2d 1301

UNITED STATES of America, Plaintiff-Counter Defendant-Appellee, v. BURZYNSKI CANCER RESEARCH INSTITUTE, et al Defendants-Counter Plaintiffs- Appellants and Janice Kuharzyk, and Other Patients of Dr. Stanislaw R Burzynski, et al., Intervenors-Counter Plaintiffs-Appellants.

No. 86-2183.

United States Court of Appeals Fifth Circuit.

June 25, 1987.

Christian P. Di Ferrante, John T. Johnson, Calvin, Dylewski, Gibbs, Maddox, Russell & Verner, Houston, Tex., for Burzinski Cancer Research Institute.

Margaret A. Harris, Stuart M. Nelkin, Nelkin & Nelkin, Houston, Tex., for Juanice Kuharzyk, etc., et al.

Gerald C. Kell, Atty., U.S. Dept. of Justice, Office of Consumer Lit., Washington, D.C., Linda M. Cipriani, Asst. U.S. Atty., Henry K. Oncken, U.S. Atty., Frank A. Conforti, James R. Gough, Asst. U.S. Attys., Houston, Tex., for the U.S.

Appeals from the United States District Court for the Southern District of Texas.

Before RUBIN, RANDALL, and JOHNSON, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

Armed with a search warrant, the government seized a doctor's patient-treatment records during an investigation to determine whether the doctor had violated criminal fraud statutes and a criminal statute forbidding the interstate shipment of drugs that had not been approved by the Food and Drug Administration. The doctor and some of the patients, as intervenors, sought to have the records returned and to obtain damages and other relief by filing a counterclaim in a previously pending civil action filed by the government to enjoin interstate distribution of the drug. The district court properly held that the doctor and his patients have failed to establish any basis entitling them to a hearing on the validity of the search warrant or any grounds for finding that the seizure of the records was unconstitutional. We therefore affirm its dismissal of all counterclaims regarding the seizure or continued government retention of documents from the doctor's offices. Because, however, in the absence of an opportunity to conduct discovery regarding their contention that the government had provided insurance companies with false and misleading information, the doctor and his patients have not had a chance to develop facts that may entitle them to injunctive relief on that score, we remand that counterclaim for further proceedings.

I.

In 1983, the United States sued Dr. Stanislaw R. Burzynski and the Burzynski Cancer Research Institute (together referred to as Dr. Burzynski) in this civil action seeking to enjoin them from violating the Federal Food, Drug, and Cosmetic Act ¹ by interstate distribution of a product used in cancer chemotherapy, antineoplastons, on the ground that the antineoplastons were "new drugs" within the meaning of the Act, ² and were being distributed without prior approval by the Food and Drug Administration. Dr. Burzynski manufactures the natural type of antineoplastons from urine, and synthetic forms, called antineoplastons 10, from various chemicals. The government also sought to enjoin the manufacture and distribution of antineoplastons on the ground that the drugs were adulterated within the meaning of the Act ³ because Dr. Burzynski's manufacturing methods, facilities, and controls did not comply with the FDA's current good manufacturing practice regulations. A number of Dr. Burzynski's patients were allowed to intervene. After a two-day hearing, the district court issued an injunction granting most of the relief sought by the government. It also directed Dr. Burzynski to bring his research and manufacturing facility into compliance with FDA's current good-manufacturing procedures, ordering the FDA in turn to act promptly on their submission for approval. The order, however, expressly allowed Dr. Burzynski to continue manufacturing and prescribing the drug in Texas. The court expressly retained continuing jurisdiction to enforce or modify its order.

Two years later, in July 1985, as part of a criminal investigation based on a referral from the FDA to the Department of Justice, the government applied for and obtained a warrant to search an office complex that, as the warrant stated, housed the administrative offices of Dr. Burzynski and the Burzynski Research Institute, Incorporated, a separate legal entity from Burzynski Cancer Research Institute, which had been a defendant in the civil action. The application for the warrant was supported by the affidavit of FDA Compliance Officer, Kenneth P. Ewing. Ewing stated that the application was based on FDA inspections and investigations of Dr. Burzynski and the Institute, information supplied by insurance companies that had received claims from Dr. Burzynski, information supplied by the surviving spouse of one of Dr. Burzynski's patients, and information supplied by confidential informants.

In terms set forth in full in the footnote, ⁴ the warrant authorized a search for and seizure of records and other property that reflected distribution of antineoplastons outside the State of Texas and other records that would show the antineoplastons had been and were being distributed in interstate commerce in violation of Title 21, United States Code 331(d), the court injunction, and Title 18, United States Code, Sections 286, 287, 371, 401, 1001, 1341, and 1505. During the search Dr. Burzynski's employees were allowed to take records to a commercial copying center to make copies. On the advice of his employees, Dr. Burzynski himself "decided to give away filing cabinets along with the records" in order to protect the records. Since the execution of the search warrant, Dr. Burzynski has been allowed to install a copying machine in the FDA offices in Houston where the seized patient treatment records are being held and has made copies of those treatment records that he desires.

After the warrant had been executed, Dr. Burzynski and the Burzynski Research Institute, Inc. filed a counterclaim in this civil action seeking damages, injunctive relief, and contempt orders against the government and certain FDA employees, including the FDA Compliance Officer Ewing, Sharyn Miller, an investigator who had assisted Ewing in executing the warrant, and other unknown agents of the FDA and the United States. Certain named patients of Dr. Burzynski were given leave to file their own counterclaim as intervenors and sought a temporary restraining order commanding return of the records and other emergency relief.

During a twelve-day hearing on the motion for a temporary restraining order and contempt ruling, Dr. Burzynski testified that he had continued to treat patients in Texas. Based on what some of them told him, he suspected that antineoplastons were supplied from the Institute to patients in other states, but he testified that he did not believe it would be possible to detect such shipments with certainty unless every one of the Institute's employees had "a spy on his back." After the hearing was completed, the district court denied all of the motions.

The government then responded to the counterclaims by moving for their dismissal for failure to state a claim for which relief could be granted or, in the alternative, for summary judgment. In a brief order, which referred to the evidence adduced in the earlier hearing on the motion for a temporary restraining order, the court dismissed the counterclaims.

II.

Dr. Burzynski and the patients contend that the district court impermissibly consolidated the hearing on the motions for TRO, return of property, and contempt (the preliminary motions) with trial on the merits of their counterclaims. The simple fact is that no such consolidation occurred. At the close of the hearing on the preliminary motions, the district court orally denied those motions. Thereafter, the court entered a nine-page order setting forth its findings with respect to the preliminary motions and its legal basis for denying those motions. Subsequent to the hearing on the preliminary motions, the government filed its motion to dismiss for failure to state a claim or, alternatively, for summary judgment on all of the counterclaims. In an order separate from the order denying the preliminary motions, the district court dismissed the counterclaims.

The district court did state in the later order that, because the issues raised in the counterclaims "raise legal questions which were decided against the Defendants and Intervenors [Dr. Burzynski and the patients] in the hearing of October 23, 1985" (the hearing on the preliminary motions), it would not repeat its discussion of those issues. In other words, the district court simply elected not to restate in its dismissal order legal analysis it had already set forth in its denial of the preliminary motions. In deciding, based on that legal analysis, to dismiss the counterclaims, the district court did not conduct a trial on the merits, much less impermissibly consolidate trial with the hearing on the preliminary motions.

The patients also attack the dismissal order as being "pithy to the point of being incomplete" and ask this court to vacate it and remand the case for further consideration. In support of that request, they rely on Myers v. Gulf Oil Corporation, ⁵ in which we held that a district court's explanation that the defendant should be granted summary judgment "because the Plaintiff has failed to state a claim on which relief can be granted" was insufficient to explain that court's reasoning. The patients' argument focuses on the length of the district court's dismissal order rather than on its content. Taken together, the two orders adequately present for our review both the actions taken by the district court and its reasons.

III. Claims for Monetary Relief

Dr. Burzynski and the patients seek monetary damages from the United States, FDA, FDA employees Ewing and Miller (both individually and in their official capacities), and unknown agents of the United States and the...