United States v. Rattini, Case No. 1:19-cr-81

CourtUnited States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio
Writing for the CourtJudge Matthew W. McFarland
PartiesUNITED STATES OF AMERICA, Plaintiff, v. ANTHONY RATTINI, et al., Defendants.
Decision Date05 March 2021
Docket NumberCase No. 1:19-cr-81

ANTHONY RATTINI, et al., Defendants.

Case No. 1:19-cr-81


March 5, 2021

Judge Matthew W. McFarland


This case is before the Court on the Motion to Dismiss (Doc. 78) filed by Defendants Anthony Rattini, James Barclay and Miami-Luken (collectively, the "Miami-Luken Defendants"). The Miami-Luken Defendants seek dismissal of the Indictment on the grounds that the Government has unlawfully premised its prosecution on their alleged failure to comply with DEA guidance letters. The Court finds that the Indictment does not premise liability on such non-compliance, but instead on established precedent holding that any person, including registrants, may be held liable for conspiring to violate 21 U.S.C. § 841(a) through the knowing and intentional distribution and dispensing of controlled substances outside the scope professional practice and not for a legitimate medical purpose. Accordingly, the Motion to Dismiss the Indictment is DENIED.

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Miami-Luken is a wholesale pharmaceuticals distributor located in Montgomery County, Ohio. (Doc. 7 at ¶ 1.) Anthony Rattini, Miami-Luken's President, was in charge of ensuring the company's compliance with federal and state drug laws. (Id. at ¶ 3.) James Barclay, the Compliance Officer, supervised Miami-Luken's compliance with federal and state drug laws. (Id. ¶ 4.)

Miami-Luken registered with the Drug Enforcement Administration ("DEA") and was therefore permitted to distribute Schedule II, III, IV, and V controlled substances. (Id. at ¶ 2.) A "controlled substance" means a drug or other substance, or immediate precursor, included in Schedule I, II, III, IV, or V, pursuant to 21 U.S.C. § 802(6). (Id. at ¶ 7.) Controlled substances are categorized under the Controlled Substances Act ("CSA"), 21 U.S.C. § 801, et seq., based primarily on their potential for abuse. (Id. at ¶ 17.) Schedule II means the drug and other substances have a high potential for abuse. (Id.) Additionally, Schedule II controlled substances have stringent restrictions on their accepted medical usages, as abuse of the drug can lead to severe psychological or physical dependence. (Id.) Schedule III means the drug has potential for abuse and could lead to moderate or low psychological or physical dependence. (Id.) Schedule IV means there is a low potential for abuse and a low risk of dependence. (Id.) Lastly, Schedule V means there is a low potential for abuse. (Id.)

Oxycodone is a Schedule II narcotic that can be sold under its generic name, OxyContin, or Percocet. (Id. at ¶ 18.) Oxycodone is one of the strongest pain killers approved in the United States and is highly addictive. (Id.) Hydrocodone is also a

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Schedule II drug. (Id. at ¶ 20.) Previously a Schedule III drug, the DEA changed the status of Hydrocodone due to its high potential for abuse and dependence. (Id.)

The majority of Miami-Luken's profits were from its wholesale distribution of controlled substances. (Id. at ¶ 1.) The DEA maintains certain requirements for its registrants handling controlled substances. For example, Miami-Luken is required to submit reports regarding all transactions related to the acquisition and distribution of Schedule II and III narcotic substances. (Id. at ¶ 10, citing, 21 C.F.R. § 1304.33.) Miami-Luken is also required to maintain "effective controls against diversion of particular controlled substances into other than legitimate medical, scientific, and industrial channels. (Id. at ¶ 8, quoting 21 U.S.C. § 823(b)(1).) Miami-Luken must also report suspicious orders to the DEA. (Id.) Such orders are those which are "of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency." (Id. quoting, 21 C.F.R. § 1301.74(b).) The above information is transmitted to the DEA's Automation of Reports and Consolidated Ordering System on a quarterly basis and maintained in a DEA database. (Id. at ¶ 10, citing, 21 C.F.R. § 1304.33.)

Similar to distributors, pharmacists and physicians who wish to distribute or dispense controlled substances must register with the Attorney General of the United States. (Id. at ¶ 12.) "Dispense" means to deliver a controlled substance to an ultimate user or research subject by a practitioner. (Id. at ¶ 11.) "Distribute" means to deliver, other than by administering or dispensing a controlled substance. (Id.) Once registered, each medical professional is assigned a DEA registration number. (Id. at ¶ 12.) Medical professionals are then permitted to write prescriptions and dispense Schedule II, III, IV,

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and V controlled substances within the limits set under 21 U.S.C. § 822(b). (Id. ¶ 13.) A physician must not prescribe and a pharmacist must not fill a prescription for controlled substances unless it is "issued for a legitimate medical purpose by an individual practitioner in the usual course of his professional practice." (Id. ¶ 14, citing 21 C.F.R. § 1306.04(a).)

Messrs. Rattini and Barclay, and through them, Miami-Luken, are alleged to have conspired with pharmacists, including Defendants Devonna Miller-West and Samuel Ballengee, and others to distribute controlled substances outside the scope of legitimate medical purpose and facilitate their diversion for illicit use. (Doc. 7 at ¶ 22, 23.) Miami-Luken distributed controlled substances to over 200 pharmacies in Ohio, West Virginia, Kentucky, Indiana, and Tennessee. (Id. ¶ 1.) This included distribution of millions of dosage units of oxycodone and hydrocodone to doctors and pharmacies in the Southern District of Ohio, Kentucky, and West Virginia. (Id. ¶ 24.)

One such pharmacy was Westside Pharmacy ("Westside"), located in Oceana, West Virginia. (Id. ¶ 5.) Oceana has a population of approximately 1,394 people. (Id. ¶ 34.) Westside was owned and operated by Ms. Miller-West. (Id. ¶ 5.) Ms. Miller-West was a licensed pharmacist in the state of West Virginia. (Id.) Similarly, Miami-Luken distributed to Tug Valley Pharmacy ("Tug Valley") located in Williamson, West Virginia. (Id. ¶ 6.) Mr. Ballengee, as a licensed pharmacist in West Virginia, owned and operated Tug Valley. (Id.)

To further the conspiracy, Miami-Luken allegedly failed to maintain effective controls against diversion of controlled substances, failed to report suspicious orders to

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the DEA, and continued to ship the dangerous addictive drugs to pharmacies in rural Appalachia where the opioid epidemic was at its peak. (Id. ¶ 25.) While Miami-Luken had an internal control policy that monitored distribution threshold limits for its customers, the company routinely exceeded these limits. (Id. at ¶ 36, 39, 41, and 46.)

For example, Westside had an internal threshold limit of 6,000 dosage units of Oxycodone per month. (Id. at ¶ 36.) Yet, in March 2011, Miami-Luken distributed 68,400 dosage units of Oxycodone to Westside. (Id.) In May of 2011, 63,900 dosage units were distributed to Westside. (Id.) Even though Westside's Oxycodone purchases were flagged by Miami-Luken's system, it continued to distribute Oxycodone well past the threshold limit. (Id.) Miami-Luken distributed 50,300 dosage units to Westside in December 2012 and 54,700 units to Westside in January 2014. (Id.)

Miami-Luken is likewise alleged to have disregarded its internal controls for Tug Valley, owned and operated by Mr. Ballengee. Tug Valley began purchasing and receiving controlled substances from Miami-Luken in August 2008. (Id. at ¶ 37.) The internal limit for Tug Valley was 36,000 dosage units of Hydrocodone per month. (Id. at ¶ 39.) In September 2008, however, Mr. Ballengee purchased 120,700 dosage units. (Id. at ¶ 37.) This pattern of exceeding internal limits continued in December 2013 when Miami-Luken distributed 67,200 dosage units of Hydrocodone to Tug Valley. (Id. at ¶ 39.) Between 2008 and 2014, Miami-Luken distributed more than six million dosage units of Hydrocodone to Mr. Ballengee and Tug Valley. (Id. at ¶ 38.)

On July 17, 2019, the Government filed a one-count indictment charging the Miami-Luken Defendants, Ms. Miller-West and Mr. Ballengee with engaging in a

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conspiracy to distribute and dispense controlled substances in violation of 21 U.S.C. § 841, pursuant to 21 U.S.C. § 846. (Id. at ¶ 22.)


The statutory and regulatory framework in which distributors operate is essential to understanding the Miami-Luken Defendants' arguments for dismissal of the Indictment. Below is an overview of the Controlled Substances Act, material regulations promulgated thereunder, guidance issued by DEA Deputy Assistant Administrator Joseph T. Rannazzisi in the so-called "Rannazzisi Letters," and certain DOJ policy memos that inform the Miami-Luken Defendants' view of the Indictment.

A. The Controlled Substances Act ("CSA")

A "main objective" of the Controlled Substances Act is controlling "illegitimate traffic in controlled substances," by placing "substances in one of five schedules based on their potential for abuse or dependence, their accepted medical use, and their accepted safety for use under medical supervision." Gonzales v. Oregon, 546 U.S. 243, 250 (2006). "To prevent diversion of controlled substances with medical uses, the CSA regulates the activity of physicians. To issue lawful prescriptions of Schedule II drugs, physicians must 'obtain from the Attorney General a registration issued in accordance with rules and regulations promulgated by him.'" Id. (quoting 21 U.S.C. § 822(a)(2)). The CSA establishes a fully closed system of distribution of controlled substances, in which everyone from the manufacturer to the physician must register with the DEA.

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1. Registration Requirements

The CSA treats the registration of manufacturers and distributors differently than physicians and pharmacies. See 21 U.S.C. § 823. When a...

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