United States v. Zadeh

• Decision Date: 21 April 2016
• Docket Number: No. 15–10195.,15–10195.
• Citation: 820 F.3d 746
• Parties: UNITED STATES of America, Plaintiff–Appellee v. Joseph ZADEH, D.O., Defendant–Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

820 F.3d 746

UNITED STATES of America, Plaintiff–Appellee

v.Joseph ZADEH, D.O., Defendant–Appellant.

No. 15–10195.

United States Court of Appeals, Fifth Circuit.

April 21, 2016.

Karen Schoen (argued), U.S. Department of Justice, Washington, DC, Clayton R. Mahaffey, U.S. Attorney's Office, Fort Worth, TX, Clayton R. Mahaffey, U.S. Attorney's Office, Dallas, TX, for Plaintiff–Appellee.

William D. Taylor (argued), Taylor & Taylor Law, P.C., Arlington, TX, Delonia Anita Watson, Law Office of Delonia A. Watson, Fort Worth, TX, for Defendant–Appellant.

Andrew Layton Schlafly, Far Hills, NJ, for Amicus Curiae.

Appeal from the United States District Court for the Northern District of Texas.

Before HIGGINBOTHAM, OWEN, and ELROD, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

The Drug Enforcement Agency sought the medical records of 67 of Dr. Joseph Zadeh's patients in an investigation into violations of the Controlled Substances Act. The district court granted its petition for enforcement. Dr. Zadeh appeals that order, arguing that enforcing the subpoena would violate the Fourth Amendment and Texas law. We AFFIRM the order of enforcement with instruction.

I.

On October 22, 2013, investigators from the Texas Medical Board and the DEA visited the office of Dr. Zadeh in Euless, Texas. After the investigators submitted to office employees an administrative subpoena from the Texas Medical Board, the employees supplied the investigators with information and documents covered by the subpoena. While the Medical Board investigators scanned and copied documents, the DEA agents conducted interviews with neighboring businesses and visited a local pharmacy, where they looked at Dr. Zadeh's prescriptions. Dr. Zadeh's attorney arrived and asked the investigators for identification and to cease the search. The DEA agents presented identification and departed the scene.

About a month later, on November 25, 2013, the DEA issued a second subpoena to Dr. Zadeh through certified mail, seeking the medical records of 67 individuals who had received prescriptions associated with the doctor's DEA registration number. The subpoena defined “medical records” to include “diagnosis, intake, prescriptions, laboratory work, referrals, cop[ies] of identification, insurance and method of payment.” It had a nondisclosure provision, instructing the doctor to “suspend notice” to affected patients for one year.

Dr. Zadeh refused to comply with the subpoena. In February 2014, the government petitioned the federal district court for enforcement under 21 U.S.C. § 876(c), which permits the Attorney General to “invoke the aid” of the federal courts to “issue an order” enforcing a subpoena “[i]n the case of contumacy.” The government included a declaration by a DEA investigator, describing the nature of the ongoing investigation and explaining that the records sought were “limited in scope to information relevant to the investigation.”

The district court judge referred the government's petition to a magistrate judge. Dr. Zadeh moved to dismiss under Rule 12(b)(6), urging that probable cause was required but wanting, that enforcement would violate the Fourth Amendment, and in any event, that the Texas Occupations Code barred disclosure of patient medical records.

The magistrate judge ordered the parties to consider “narrowing the scope of the ... subpoena” and to “make a good-faith effort to resolve this dispute” without court intervention. As described in the Joint Status Report, the government proposed limiting the scope of the subpoena to: (1) information sufficient to identify the patient, including the patient's full name, date of birth, and address; (2) limited intake information necessary to identify the patient and the condition for which a controlled substance was prescribed; (3) information related to a diagnosis for which a controlled substance was prescribed; (4) the results of any laboratory work because of which a controlled substance was prescribed; and (5) information pertaining to the prescription of a controlled substance, including dates of prescriptions, types of prescriptions, and quantities prescribed. Dr. Zadeh did not agree to these terms.

After a joint hearing, the magistrate judge issued a report recommending the enforcement of the subpoena, subject to the terms of the government's settlement proposal. The magistrate judge also concluded that the nondisclosure provision of the subpoena should not be enforced; that is, Dr. Zadeh should not be prohibited from providing his patients with notice of the investigation.

Over Dr. Zadeh's objections, the district court accepted the magistrate judge's recommendations, granted the government's petition for enforcement, and denied motions for reconsideration and to stay enforcement. This Court granted a stay pending appeal.

II.

“[W]hen reviewing an administrative subpoena, the court plays a ‘strictly limited’ role.”¹ As a general rule, on appeal “[a] subpoena enforcement order is reviewed for abuse of discretion.”² We review the district court's conclusions of law underlying its decision to enforce the subpoena de novo, and its factual findings for clear error.³

III.

Dr. Zadeh makes several arguments against enforcement. We consider each in turn.

A.

First, Dr. Zadeh argues that the Texas Occupations Code prohibits him from providing the subpoenaed records.⁴ The Code prevents disclosure of “communication[s] between a physician and a patient” or “record[s] of the identity, diagnosis, evaluation, or treatment of a patient by a physician,” unless the patient consents or the information is subject to an exception.⁵ The issue on appeal is whether federal law—the Controlled Substances Act—preempts the Texas Occupations Code. Because we conclude that it does, state law affords Dr. Zadeh no defense against enforcement of the subpoena.

Under the doctrine of federal preemption, a federal law supersedes or supplants an inconsistent state law or regulation.⁶ The canon embraces three distinct types of preemption: express, field, and conflict.⁷ Express preemption requires Congress to explicitly state its intent to preempt relevant state laws.⁸ Field preemption occurs when Congress intends to “occupy the field,” taking over a field of law to the exclusion of state or local authority.⁹ Finally, conflict preemption takes two forms: (i) when compliance with both state and federal law is impossible,¹⁰ and (ii) when a state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”¹¹

Dr. Zadeh points to the preemption provision of the Controlled Substances Act, disclaiming Congressional purpose to “occupy the field” and deprive states of the authority to regulate controlled substances on their own.¹² Yet the Act explicitly retains preemptive effect over state regulations when “there is a positive conflict between ... this subchapter and ... State law so that the two cannot consistently stand together.”¹³ Dr. Zadeh argues that there is no such conflict here.¹⁴ We disagree.

“What is a sufficient obstacle [to give rise to conflict preemption] is a matter of judgment, to be informed by examining the federal statute as a whole and identifying its purpose and intended effects.”¹⁵ Here, Congress intended in the Controlled Substances Act to “provide meaningful regulation over legitimate sources of drugs to prevent diversion into illegal channels.”¹⁶ The Act states that “[f]ederal control” in this area is “essential to the effective control of the interstate incidents of ... traffic in controlled substances,”¹⁷ and it grants the DEA broad enforcement power to prevent, detect, and investigate such diversion.¹⁸ As part of its investigative authority, the government may subpoena records “in any investigation relating to [its] functions ... with respect to controlled substances.”¹⁹ The Act also authorizes the government to “invoke the aid” of the federal courts “to compel compliance with the subpoena.”²⁰

The DEA here issued its subpoena in its investigation of the diversion of controlled substances pursuant to the Controlled Substances Act. According to Dr. Zadeh, the Texas Occupations Code prevents the DEA from obtaining the records it seeks. Put another way, the Occupations Code “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”²¹ Under the doctrine of preemption, the Controlled Substances Act must prevail.

B.

Because this case raises the preemption doctrine, Dr. Zadeh argues that the Texas Attorney General should have been given notice and an opportunity to intervene under 28 U.S.C. § 2403(b). The statute provides that,

(b) In any action, suit, or proceeding in a court of the United States to which a State or any agency, officer, or employee thereof is not a party, wherein the constitutionality of any statute of that State affecting the public interest is drawn in question, the court shall certify such fact to the attorney general of the State, and shall permit the State to intervene ...

This rule is restated and expanded in Federal Rule of Civil Procedure 5.1, which obligates the party bringing the challenge to notify the state attorney general.²²

Dr. Zadeh's argument turns on whether the constitutionality of the Texas Occupations Code is “drawn in question” such that the requirements of § 2403(b) are triggered. Preemption doctrine is, of course, rooted in the Supremacy Clause of the Constitution;²³ in this sense, a claim that state law is preempted by federal law is a constitutional claim.²⁴ But there remains “a question whether section 2403(b) is meant to apply to cases where the only constitutional challenge is under the supremacy clause.”²⁵

As the DEA points out, the Supreme Court considered a similar question concerning 28 U.S.C. § 2281, the statute that preceded § 2403.²⁶ Section 2281 required the convening of a three-judge court in any case in which a party sought to enjoin the operation of a state or federal statute ...