United States v. Williams
| Decision Date | 14 September 2011 |
| Docket Number | Case No. CR-10-216-HE |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. ZACHARY WILLIAMS, MICHAEL A. FELS, SHARON L. DREW and HSN NETWORK, LLC, Defendants. |
| Court | U.S. District Court — Western District of Oklahoma |
Defendant Health Solutions Network, LLC ("HSN") is charged in a six count superseding indictment with violations of the Controlled Substances Act ("CSA"), 21 U.S.C. §§ 801-904, and the Federal Food, Drug and Cosmetic Act ("FDCA"), 21 U.S.C. §§ 301-397. HSN has filed a motion to suppress, a motion to dismiss Counts 1 and 3-6 of the superseding indictment, a motion to dismiss Count 2 and a motion for a Franks1 hearing. The court concludes the motions should be denied.
The superseding indictment alleges that defendants Williams, Fels and Drew operated White Eagle RX ("White Eagle"), a pharmacy without a valid license, filling prescriptions for internet websites such as defendant HSN.2 Count 1 charges all four defendants with conspiring to deliver, distribute and dispense fioricet, a controlled substance, by means of theinternet in violation of 21 U.S.C. § 841(h)(1)(A) and (4). Count 2 charges all defendants with conspiring to hold misbranded drugs for sale and to introduce misbranded drugs, specifically fioricet, a controlled prescription drug, and soma and tramadol, prescription drugs, into interstate commerce in violation of 12 U.S.C. §§ 331(a), (k) and 333(a)(2). Counts 3-6 charge all defendants with distributing Fioricet, a Schedule III controlled substance.3
HSN's motion challenges what it describes as two searches of White Eagle pharmacy. The first situation occurred on October 14, 2009, when a BIA Special Agent and a BIA police officer entered the pharmacy and photographed its contents.4 The officers also searched two outside dumpsters. The second search took place on November 2, 2009, and was conducted pursuant to a warrant. HSN asserts that documents, materials and equipment, including HSN customer medical information sheets, were improperly seized. Because the premises searched were occupied by White Eagle and not HSN, an understanding of the relationship between the two entities is needed to determine whether HSN's Fourth Amendment rights were violated.
HSN entered into a Pharmacy Provider Agreement ("Agreement") with White Eagle,a pharmacy owned by the Ponca Tribe and managed by Abaci Holdings. The Agreement provided that White Eagle would "provide prescription drugs and pharmaceutical products (collectively the 'Medications'), to those individuals ('customers') who have visited Internet based online sites that market Medications ('Internet Portals') and have obtained a prescription for a Medication from a licensed physician who is an independent contractor of HSN..." HSN's Exhibit 6, p. 1. As explained by HSN, the purchase process began when a customer responded to an online ad. The advertiser then referred that person to HSN and HSN provided the customer with an online questionnaire. HSN then forwarded the completed questionnaire to a physician, who would issue a prescription which HSN would transmit to an online pharmacy, such as White Eagle. The pharmacy then shipped the medication to the customer.
In its motion HSN anticipates the government's defense - that it lacks standing to challenge the searches.5 HSN claims that because it contractually agreed with White Eagle that protected patient information it sent the pharmacy would remain confidential as mandated by HIPPA,6 it "had a legitimate, subjective expectation of privacy in their computer records and in any related documents located within White Eagle RX relating to protected patient health information." HSN's motion, pp. 8-9.
The Fourth Amendment guarantees the "right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures." U.S. Const. amend. IV. To invoke the protection of the Fourth Amendment, a defendant "must demonstrate that [it] personally has an expectation of privacy in the place searched [or items seized] and that [its] expectation is reasonable'" Minnesota v. Carter, 525 U.S. 83, 88 (1998). "While corporations do possess some Fourth Amendment rights against unreasonable searches and seizures, ... the protection is not equal to that afforded to individuals." 810 William Meade Fletcher, Cyclopedia of the Law of Corporations § 4957.10. "'An expectation of privacy in commercial premises ... is different from, and indeed less than, a similar expectation in an individual's home.'" Carter, 525 U.S. at 90 (quoting New York v. Burger, 482 U.S. 691, 700 (1987)).
HSN bases its Fourth Amendment claim on "protected patient health information" included in certain documents it sent White Eagle.7 HSN does not claim to have any possessory or other connection to the place searched, did not purport to have any control over the documents, and does not even appear to assert a possessory interest in the documents themselves that included the patient data. The mere fact that HSN and White Eagle contractually agreed to protect the medical information of third parties, as mandated by federal law, does not demonstrate that HSN has an expectation of privacy in the records that society would consider reasonable.
HSN did not cite any case recognizing a privacy interest in a similar situation and the court has found none. As the customers, whose personal information HSN sent to White Eagle, would not be allowed to challenge the search, the court is not persuaded HSN should be found to have an expectation of privacy in the same information just because they contractually agreed, and are required by law, to protect it.
HSN has failed to demonstrate more than a tenuous connection with the place searched or items seized. It has not met its burden of showing that it had a legitimate expectation of privacy in documents seized from the premises of another business entity and its motion to suppress will be denied.8
Motion for Franks hearing
HSN has filed a motion requesting a Franks evidentiary hearing. As the court has concluded the defendant lacks the required privacy interest to challenge the pharmacy searches, its motion will be denied. See United States v. Mastromatteo, 538 F.3d 535, 544 (6th Cir. 2008) ()
In its first proposition, HSN contends that the superseding indictment should be dismissed because White Eagle was a properly licensed tribal health care facility and, as such, was exempt from the in-person medical evaluation requirement of the Ryan HaightOnline Pharmacy Consumer Protection Act of 2008, 21 U.S.C. § 829(e). This argument merits no detailed discussion as HSN has not met its initial burden of showing that White Eagle was an "Indian healthcare facility," as defined by 21 U.S.C. § 802(52)(B)(iv).9 HSN offered no evidence that would plausibly support the conclusion that White Eagle was" a health care facility owned or operated by an Indian tribe or tribal organization ... carrying out a contract or compact under the Indian Self-Determination and Education Assistance Act." Id.
In its second proposition, HSN contends it is shielded from prosecution essentially because, as an agent of White Eagle, it is entitled to share in the Ponca Tribe's sovereign immunity. HSN relies on a recent Tenth Circuit decision, Breakthrough Mgmt. Group, Inc. v. Chukchansi Gold Casino & Resort, 629 F.3d 1173 (10th Cir 2010).
HSN is not charged under any statute that is directed to Indian country, Indian tribes, or individual Indians or to situations or status unique to those circumstances. Rather, it is charged under various federal statutes of general applicability which, by their terms, apply to all persons coming within their scope. The statutes underlying the conspiracy and distributions charges are silent regarding their application to Indians or tribal entities.
As the court has noted in its orders relating to similar claims by other defendants, when a federal law of general applicability is silent on the issue of its applicability to an Indian tribe or to individual Indians, the law applies equally to Indians except where (1) thelaw touches "exclusive rights of self-governance in purely intramural-matters", (2) the application of the law to the tribe would "abrogate rights guaranteed by Indian treaties", or (3) there is proof "by legislative history or some other means that Congress intended [the law] not to apply to Indians on their reservations...." United States v. Fox, 573 F.3d 1050, 1052 (10th Cir. 2009), quoting Nero v. Cherokee Nation of Oklahoma, 892 F.2d 1457, 1462-63 (10th Cir. 1989), cert. denied, ____U.S._____ (2009). See generally United States. v. Bruce, 394 F.3d 1215, 1220 (9th Cir. 2005) (). Here, none of the grounds for exception are present. The licensing or operation of an internet pharmacy is not a matter of internal self-governance. There is no suggestion that a treaty gives the Ponca Tribe the authority to operate an internet pharmacy outside the application of the general criminal laws.10 And no plausible basis has been suggested for a conclusion that Congress did not intend for these statutes to apply to Indians or Indian tribes. Indeed, the various provisions of Title 21 plainly suggest the contrary. 21 U.S.C. § 841(h) prohibits the distribution of controlled substances "except as authorized by this subchapter..." The subchapter does not include anything that suggests a general exception for Indian tribes or their agents. The subchapter does, however, include 21 U.S.C. § 831,...
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