United States v. Ruan, No. 17-12653

CourtU.S. Court of Appeals — Eleventh Circuit
Writing for the CourtCOOGLER, District Judge
Citation966 F.3d 1101
Parties UNITED STATES of America, Plaintiff - Appellee, v. Xiulu RUAN, John Patrick Couch, Defendants - Appellants.
Docket NumberNo. 17-12653
Decision Date10 July 2020

966 F.3d 1101

UNITED STATES of America, Plaintiff - Appellee,
v.
Xiulu RUAN, John Patrick Couch, Defendants - Appellants.

No. 17-12653

United States Court of Appeals, Eleventh Circuit.

July 10, 2020


966 F.3d 1119

Sonja Ralston, U.S. Department of Justice, Criminal Division, Appellate Section, Washington, DC, Christopher John Bodnar, Scott Alan Gray, Deborah A. Griffin, U.S. Attorney Service - Southern District of Alabama, U.S. Attorney's Office, Mobile, AL, for Plaintiff - Appellee.

Dennis J. Knizley, Law Office of Dennis J. Knizley, Mobile, AL, Nicholas A. Lotito, Davis Zipperman Kirschenbaum & Lotito, LLP, Atlanta, GA, Gordon Gray Armstrong, III, Gordon G. Armstrong, III, PC, Mobile, AL, Jason Darley, Darley Law Firm, LLC, Mobile, AL, L. Burton Finlayson, Law Office of L. Burton Finlayson, LLC, Atlanta, GA, Steve Martinie, Steve Matinie Law Office, Whitefish Bay, WI, Page Anthony Pate, Pate Johnson & Church, LLC, Atlanta, GA, for Defendant - Appellant XIULU RUAN.

Jackson Roger Sharman, III, Jeffrey Paul Doss, Brandon K. Essig, Robert Jackson Sewell, Benjamin Sanders Willson, Lightfoot Franklin & White, LLC, Birmingham, AL, Arthur T. Powell, III, Arthur T Powell III, PC, Mobile, AL, for Defendant - Appellant John Patrick Couch.

Before WILSON and NEWSOM, Circuit Judges, and COOGLER,* District Judge.

COOGLER, District Judge:

Following a seven-week trial in the United States District Court for the Southern District of Alabama, pain management physicians Xiulu Ruan ("Ruan") and John Patrick Couch ("Couch") (together, "the appellants") were convicted by a jury of conspiring to run a medical practice constituting

966 F.3d 1120

a racketeering enterprise in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(d) ; conspiring to violate the Controlled Substances Act, 21 U.S.C. §§ 846 & 841(a)(1), by dispensing Schedule II drugs, fentanyl, and Schedule III drugs outside the usual course of professional practice and without a legitimate medical purpose; conspiracies to commit health care fraud and mail or wire fraud in violation of 18 U.S.C. §§ 1347(a) & 1349 ; and conspiracies to receive kickbacks in relation to a Federal health care program in violation of 18 U.S.C. § 371 and 42 U.S.C. § 1320a-7b(b). In addition, Ruan and Couch were individually convicted of multiple counts of substantive drug distribution in violation of the Controlled Substances Act, 21 U.S.C. § 841(a)(1). Ruan was further convicted of a money laundering conspiracy in violation of 18 U.S.C. § 1956(h) and two counts of substantive money laundering in violation of 18 U.S.C. § 1957. Ruan was sentenced to 252 months’ imprisonment, to be followed by four years of supervised release, and ordered to pay over $15 million in restitution. Couch was sentenced to 240 months’ imprisonment, followed by four years of supervised release, and ordered to pay over $16 million in restitution.

In this broad-sweeping appeal, Ruan and Couch challenge their convictions, various evidentiary rulings at trial, and the district court's jury instructions. Ruan also challenges his sentence and the district court's order of restitution. After thorough review and having had the benefit of oral argument, we affirm in large part the decisions of the district court, but we reverse the district court's ruling that sufficient evidence supported one of the illegal kickback conspiracy convictions. We thus remand the cases for resentencing.

I. Background

A. Procedural History

A Southern District of Alabama grand jury indicted Ruan and Couch on April 30, 2015, charging conspiracy to distribute controlled substances, 21 U.S.C. § 846, and conspiracy to commit health care fraud, 18 U.S.C. § 1347(a). After a raid of their medical clinic and pharmacy by the Federal Bureau of Investigation ("FBI"), a Superseding Indictment issued on April 28, 2016, charging 22 counts. The Superseding Indictment alleged that Ruan and Couch's medical clinic was essentially a "pill mill," which prescribed controlled substances for no legitimate medical purpose or outside the usual course of professional practice. Ruan and Couch were both charged with one count of conspiracy to commit racketeering, 18 U.S.C. § 1962(d) (Count 1); three counts of conspiracies to violate the Controlled Substances Act by dispensing Schedule II and III controlled substances and fentanyl outside the usual course of professional practice and without a legitimate medical purpose, 21 U.S.C. §§ 841(a)(1) & 846 (Counts 2–4); one count of conspiracy to commit health care fraud, 18 U.S.C. § 1347(a) (Count 15); three counts of conspiracy to violate the Anti-Kickback statute, 18 U.S.C. § 371 (Counts 16–18); and one count of conspiracy to commit wire and mail fraud, 18 U.S.C. § 1349 (Count 19). Couch was charged with five additional counts of illegal drug distribution involving prescribing controlled substances to named individuals, 18 U.S.C. § 2(a) and 21 U.S.C. § 841(a)(1) (Counts 5–7 and 13–14). Ruan was charged with five additional counts of illegal drug distribution involving prescribing controlled substances to named individuals, 21 U.S.C. § 841(a)(1) (Counts 8–12), and three counts of conspiracy to commit money laundering and substantive money laundering, 18 U.S.C. §§ 1956(h) & 1957 (Counts 20–22).

966 F.3d 1121

The Superseding Indictment also contained numerous forfeiture provisions.

Ruan and Couch pled not guilty. Their joint trial commenced in Mobile, Alabama, on January 6, 2017, and lasted 31 days. The government called more than 50 witnesses, including 15 of their former patients or their relatives; 12 of their former staff members, including nurse practitioners with whom they had worked closely; four pharmaceutical company employees; seven representatives from various medical insurance companies; three medical experts; the director of the Alabama Department of Public Health; and 12 law enforcement agents and analysts. The government also introduced numerous charts from insurers and the Drug Enforcement Administration ("DEA") reflecting the volume and cost to insurers of prescriptions for controlled substances that Ruan and Couch had written, compared to other physicians in Alabama and nationally. Both Ruan and Couch testified in their defense, and they also called five former patients, 11 additional former employees, and three medical experts of their own. The government dismissed Count 18 at the close of its case. Ruan and Couch moved for judgments of acquittal under Federal Rule of Criminal Procedure 29 at the close of the government's case, and again at the close of all the evidence, and the district court denied their motions.

On February 23, 2017, the jury convicted Couch on all counts against him. Ruan was acquitted on Count 10 but convicted on all other counts. Ruan and Couch renewed their motions for judgment of acquittal or new trial, and the district court denied the motions.

On May 25 and 26, 2017, the district court imposed below-guidelines sentences of 252 (Ruan) and 240 (Couch) months of imprisonment, each to be followed by four years of supervised release. Ruan was ordered to pay $15,239,369.93 in restitution and Couch $16,844,569.03. Ruan and Couch are currently incarcerated. This appeal followed.1

B. Trial Evidence2

1. The Appellants’ Clinic and Pharmacy

The appellants were board-certified doctors specializing in pain management. They co-owned a medical clinic, Physicians Pain Specialists of Alabama ("PPSA"), and a pharmacy, C&R Pharmacy ("C&R"). PPSA had two locations in Mobile, Alabama, one on Springhill Avenue and one on Airport Boulevard. C&R was connected to PPSA's Airport Boulevard location, and its sole business was dispensing drugs prescribed at PPSA. The Springhill office contained an in-office dispensary for workers’ compensation patients. Ruan worked primarily at the Airport location and Couch primarily at Springhill, but once a week they would switch locations. In May 2015, when an FBI raid shut down PPSA and C&R, they had 57 employees and served over 8,000 patients.

The appellants’ medical practice was lucrative. From January 2011 to May 2015, the period covered by the Superseding Indictment, Couch made over $3.7 million from PPSA, and Ruan made over $3.9 million. C&R received a service fee for each prescription it filled—more than 70,000 during those years—netting Ruan and

966 F.3d 1122

Couch each more than $555,000 from their pharmacy.

2. The Controlled Substances Act

On the first day of trial government witnesses told the jury that the Controlled Substances Act categorizes controlled substances into five schedules, based on their abuse potential and medical value. The Act makes it a crime for anyone to, among other things, dispense a controlled substance, with the exception that licensed health care professionals may dispense Schedule II, III, and IV controlled substances with a prescription. See 21 U.S.C. §§ 841(a)(1), 828. However, such prescriptions are only lawful if they are issued for a legitimate medical purpose in the usual course...

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28 practice notes
  • Walmart Inc. v. U.S. Dep't of Justice, CIVIL NO. 4:20-CV-817-SDJ
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • February 4, 2021
    ...prescribed" and include "many pharmaceutical opioids" such as hydrocodone, morphine, oxycodone, and methadone. United States v. Ruan, 966 F.3d 1101, 1122 (11th Cir. 2020). To prevent the diversion of controlled substances, the CSA imposes requirements for the distributing and dispensing of ......
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    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • February 4, 2021
    ...prescribed" and include "many pharmaceutical opioids" such as hydrocodone, morphine, oxycodone, and methadone. United States v. Ruan , 966 F.3d 1101, 1122 (11th Cir. 2020). To prevent the diversion of controlled substances, the CSA imposes requirements for the distributing and dispensing of......
  • United States v. Howard, 18-11602
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • March 7, 2022
    ...kickbacks, and money laundering," all of which were related to Tricare payments for compounded prescriptions); United States v. Ruan , 966 F.3d 1101, 1120 (11th Cir. 2020) (medical doctors convicted of numerous crimes, including conspiracies to commit health care fraud and mail or wire frau......
  • United States v. Nunez, No. 19-14181
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • June 17, 2021
    ...(11th Cir. 2020). We also review de novo whether the exclusion of evidence violated a constitutional guarantee. United States v. Ruan , 966 F.3d 1101, 1154 (11th Cir. 2020). If it did, we will reverse unless the error was "harmless beyond a reasonable doubt." United States v. Hurn , 368 F.3......
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26 cases
  • Walmart Inc. v. U.S. Dep't of Justice, CIVIL NO. 4:20-CV-817-SDJ
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • February 4, 2021
    ...prescribed" and include "many pharmaceutical opioids" such as hydrocodone, morphine, oxycodone, and methadone. United States v. Ruan, 966 F.3d 1101, 1122 (11th Cir. 2020). To prevent the diversion of controlled substances, the CSA imposes requirements for the distributing and dispensing of ......
  • Walmart Inc. v. U.S. Dep't of Justice, Civil No. 4:20-CV-817-SDJ
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • February 4, 2021
    ...prescribed" and include "many pharmaceutical opioids" such as hydrocodone, morphine, oxycodone, and methadone. United States v. Ruan , 966 F.3d 1101, 1122 (11th Cir. 2020). To prevent the diversion of controlled substances, the CSA imposes requirements for the distributing and dispensing of......
  • United States v. Howard, No. 18-11602
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • March 7, 2022
    ...kickbacks, and money laundering," all of which were related to Tricare payments for compounded prescriptions); United States v. Ruan , 966 F.3d 1101, 1120 (11th Cir. 2020) (medical doctors convicted of numerous crimes, including conspiracies to commit health care fraud and mail or wire frau......
  • United States v. Nunez, No. 19-14181
    • United States
    • U.S. Court of Appeals — Eleventh Circuit
    • June 17, 2021
    ...(11th Cir. 2020). We also review de novo whether the exclusion of evidence violated a constitutional guarantee. United States v. Ruan , 966 F.3d 1101, 1154 (11th Cir. 2020). If it did, we will reverse unless the error was "harmless beyond a reasonable doubt." United States v. Hurn , 368 F.3......
  • Request a trial to view additional results
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