US v. Kanner

• Decision Date: 26 April 2010
• Docket Number: No. 09-1260.,09-1260.
• Citation: 603 F.3d 530
• Parties: UNITED STATES of America, Appellee, v. Marshall Neil KANNER, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

603 F.3d 530

UNITED STATES of America, Appellee, v. Marshall Neil KANNER, Appellant.

No. 09-1260.

United States Court of Appeals, Eighth Circuit.

Submitted November 20, 2009.

Filed April 26, 2010.

David Filler, argued, David E. Lancz, on the brief, Miami Beach, FL, for appellant.

Stephanie M. Rose, AUSA, argued, Cedar Rapids, IA, for appellee.

Before WOLLMAN, JOHN R. GIBSON, and SHEPHERD, Circuit Judges.

SHEPHERD, Circuit Judge.

Marshall Neil Kanner conditionally pled guilty to conspiracy to distribute controlled substances, in violation of 21 U.S.C. §§ 841(a)(1), 841(b)(1)(D), 841(b)(1)(D)(2), 846, 856(a)(1), and 861(a)(1), and conspiracy to launder money from the drug conspiracy, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i), 1956(a)(1)(B)(i), 1956(h), and 1957. The district court¹ sentenced Kanner to 32 months imprisonment to be followed by a 2-year term of supervised release. The court also entered a preliminary forfeiture order of $1,875,861.03.² Kanner appeals the denial of his motion to dismiss the indictment as to the drug conspiracy charge, his money laundering conspiracy conviction, and the forfeiture judgment. We affirm.

I.

We incorporate by reference the facts set forth in Kanner's codefendant's case, United States v. Orlando Birbragher, Case No. 08-4004, and also set forth the following, additional facts. Kanner was one of the principal owners and operators of Pharmacom International Corporation ("Pharmacom"), a company that used the internet to distribute prescription drugs, including Schedule III and IV controlled substances, for which a valid prescription is required.³ On November 7, 2007, Kanner, Orlando Birbragher, and others were charged in a 31-count indictment.⁴ Kanner was charged in Counts I and II. Count I alleges a multiple-object drug conspiracy. Count II charges a multiple-object conspiracy to launder money from the drug conspiracy alleged in Count I.

Following the district court's denial of Kanner's motion to dismiss the indictment, Kanner entered a conditional guilty plea to the first two objects of the Count I drug conspiracy⁵ and the third object of the Count II money laundering conspiracy.⁶ The district court sentenced Kanner to 32 months imprisonment followed by a 2-year term of supervised release. The court also entered a preliminary forfeiture order in the net amount of $1,875,861.03. See infra note 2. Kanner appeals.

II.

Kanner appeals the district court's denial of his motion to dismiss Count I on two grounds. First, he asserts that Count I fails to state an offense in violation of the Controlled Substances Act (CSA), 21 U.S.C. §§ 801-971. Second, he argues that Count I is unconstitutionally vague in violation of his due process rights under the Fifth Amendment. Kanner also argues that Count II and the forfeiture judgment must be reversed because both are incorrectly premised on Count I being unlawful activity. We address each of Kanner's arguments in turn.

A.

Kanner first contends that the district court erred in denying his motion to dismiss as to Count I because it fails to allege a violation of the CSA under Gonzales v. Oregon, 546 U.S. 243, 126 S.Ct. 904, 163 L.Ed.2d 748 (2006). We review Kanner's motion to dismiss the indictment de novo. United States v. Williams, 577 F.3d 878, 882 (8th Cir.2009).

In United States v. Moore, 423 U.S. 122, 96 S.Ct. 335, 46 L.Ed.2d 333 (1975), the

Supreme Court discussed the scope of CSA violations and held "that registered physicians can be prosecuted under 21 U.S.C. § 841 when their activities fall outside the usual course of professional practice." Id. at 124, 96 S.Ct. 335; see 21 C.F.R. § 1306.04(a) (requiring that every prescription for a controlled substance "be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice"). Kanner argues that the Supreme Court adopted a new standard for CSA violations in Gonzales such that the CSA only criminalizes "illicit drug dealing and trafficking as conventionally understood," 546 U.S. at 270, 126 S.Ct. 904, a standard that he asserts the allegations in Count I do not satisfy.

At issue in Gonzales was the validity of a 2001 Interpretative Rule "prohibiting doctors from prescribing regulated drugs for use in physician-assisted suicide, notwithstanding the Oregon Death With Dignity Act (ODWDA) permitting the procedure." Id. at 248-49, 126 S.Ct. 904. The Supreme Court held that "the CSA's prescription requirement does not authorize the Attorney General to bar dispensing controlled substances for assisted suicide in the face of a state medical regime permitting such conduct." Id. at 274-75, 126 S.Ct. 904. In so holding, the Court observed, "The statute and our case law amply support the conclusion that Congress regulates medical practice insofar as it bars doctors from using their prescription-writing powers as a means to engage in illicit drug dealing and trafficking as conventionally understood." Id. at 269-70, 126 S.Ct. 904. Kanner seizes on the phrase "illicit drug dealing and trafficking as conventionally understood," id. at 270, 126 S.Ct. 904, and argues that Gonzales adopted this as the new standard for violations of the CSA. Kanner argues that this standard was not met because "Pharmacom's approach does not remotely resemble `illicit drug dealing and trafficking as conventionally understood'" in that:

Pharmacom customers were required to fill out medical questionnaires that were reviewed by physicians contractually obligated to maintain any necessary licenses and to exercise their professional judgment in deciding whether to prescribe the medication. The specific prescriptions identified in the Indictment generally involved a month's supply of medication. Prescriptions were filled by pharmacies registered with the Attorney General. Detailed records were kept of these transactions.

(Appellant Br. 10.)

The Tenth Circuit considered a similar argument in United States v. Lovern, 590 F.3d 1095 (10th Cir.2009). There, Jerry Lovern, the principal pharmacist at Red Mesa Pharmacy ("Red Mesa"), challenged his convictions on one count of conspiracy to distribute controlled substances, in violation of § 841(a)(1), and three counts of distribution of controlled substances, in violation of § 841(a)(1) and 18 U.S.C. § 2. Id. at 1097, 1099. Red Mesa "secured customers exclusively through websites run by two companies, SafeTrust Processing ("SafeTrust") and IntegraRx. . . ." Id. at 1098.

Through these web-based businesses, customers across the nation received prescription drugs simply by filling out an online questionnaire. Physicians in the United States and Puerto Rico contracted with SafeTrust and IntegraRx to log into their websites, review customer questionnaires, and either approve or disapprove the customers' requested prescriptions. Physicians did not examine their putative patients; they did not verify any of the personal information provided in the questionnaires; in fact, they did not have any dealings at all with the subjects of their prescriptions. Yet, the doctors approved the vast majority of the requested prescriptions. SafeTrust and IntegraRx took these approved prescriptions and placed them online for access by participating pharmacies, including Red Mesa, to fill and ship.

Id. There was no dispute that Lovern filled the "prescriptions" for controlled substances. Id.

On appeal, Lovern asserted that his convictions should be reversed because "there was no evidence at trial and . . . no law that a prescription received via the Internet is illegal." Id. at 1100 (alterations in original) (quotation omitted). The Tenth Circuit observed:

This is a red herring: the government has disclaimed any interest in trying to prove that using the Internet to transmit a lawful prescription is unlawful under the CSA. Rather, to show that Mr. Lovern violated the CSA, the government has argued before us that the issuance of a prescription based solely on an online questionnaire, without anything more-without any existing doctor-patient relationship, without a physical exam, without any confirmation of the questionnaire's contents, without any further contact of any sort-falls outside the usual course of contemporary medical practice. And, the government contends, Mr. Lovern knew this is exactly how IntegraRx and SafeTrust physicians operated, yet he still filled their prescriptions for controlled substances. It is this theory of CSA liability that the government has pursued against Mr. Lovern, and that Mr. Lovern must address to avoid his conviction.

Id.

The court then addressed Gonzales, stating:

Gonzales does not apply to our case. Unlike Gonzales, we have before us no interpretive rule seeking to define a practice as lacking any legitimate medical purpose, let alone a rule that conflicts with a state's assessment of the legitimacy of that practice. Instead, in this case the government sought to establish that the conduct of the SafeTrust and IntegraRx physicians was inconsistent with the usual course of professional practice the old-fashioned way: through witnesses and documentary proof at trial focused on the contemporary norms of the medical profession.. . . In this case, then, "the government made no attempt, as in Gonzales, to unilaterally define which practices fall outside the scope of professional practice; rather, it intended to leave that question where it has been for over 30 years-with the jury."

Id. (quoting United States v. Quinones, 536 F.Supp.2d 267, 271 (E.D.N.Y.2008)). Several federal district courts have also rejected arguments that Gonzales signaled a major shift in what constitutes a violation of the CSA. See United States v. Prejean, 429 F.Supp.2d 782, 801-03 (E.D.La.2006) ("At the outset, it should be noted that the Supreme Court cites Moore with approval in Gonzales. The Supreme Court does not display the intention to upset its holding in Moore or to question the case law in the lower c...