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United States v. Michael

United States District Court, W.D. Kentucky

May 15, 2017



          Charles R. Simpson III, Senior Judge United States District Court

         This matter is before the court on motion of the defendants, Philip E. Michael, II (“Michael”) and Meds 2 Go Express Pharmacy, Inc. (“Meds 2 Go”), to dismiss Count 1 of the Second Superseding Indictment (“SSI”) charging them with knowingly and intentionally conspiring to unlawfully distribute and dispense controlled substances.[1], [2] The defendants have moved to dismiss these counts for insufficiency of the indictment, citing Hamling v. United States, 418 U.S. 87, 177 (1974) and Russell v. United States, 369 U.S. 749, 761 (1962).

         An indictment must provide a “plain, concise, and definite written statement of the essential facts constituting the offense charged.” Fed.R.Crim.P. 7(c). The purpose of an indictment is “to inform the defendant of the nature of the accusation against him.” Russell, 369 U.S. at 767 (quoting United States v. Hess, 124 U.S. 483, 487 (1888)). “The Federal Rules of Criminal Procedure, 18 U.S.C.A., were designed to eliminate technicalities in criminal pleading and are to be construed to secure simplicity in procedure. Rule 2, F.R.Crim.Proc.” United States v. Debrow, 346 U.S. 374, 376 (1953). As explained by the Supreme Court as early as 1895, an indictment need not be a literary work of art:

T]he true test is, not whether it might possibly have been made more certain, but whether it contains every element of the offense intended to be charged, and sufficiently apprises the defendant of what he must be prepared to meet, and, in case any other proceedings are taken against him for a similar offense, whether the record shows with accuracy to what extent he may plead a former acquittal or conviction. Evans v. U.S., 153 U.S. 584, 587, 588, 14 Sup. Ct. 934; Batchelor v. U.S., 156 U.S. 426, 15 Sup. Ct. 446.

Cochran v. United States, 157 U.S. 286, 290, 15 S.Ct. 628, 630, 39 L.Ed. 704 (1895).

         The indictment must be read as a whole, accepting the factual allegations as true, and construing those allegations in a practical sense with all the necessary implications. United States v. Reed, 77 F.3d 139, 140 n. 1 (6th Cir.1996) (en banc). An indictment is to be construed liberally in favor of its sufficiency. United States v. Davis, 306 F.3d 398, 411 (6th Cir.2002).

Count 1 of the SSI alleges that
From at least in or about October 2010 and continuing until at least in or about April 2012, in the Western District of Kentucky, Jefferson County, Kentucky, and elsewhere, PHILIP MICHAEL, EUTON LAING, defendants herein, combined, conspired, confederated, and agreed with one another and others, known and unknown to the Grand Jury, to engage in a scheme to sell distribute, and dispense prescription drugs over the Internet, and to deliver those prescription drugs to customers, without issuance of valid prescriptions.

SSI, ¶ 23. The paragraph then goes on to describe in detail the means by which online drug orders were fulfilled without the issuance of a valid prescription. SSI, ¶ 23(a)-(k). The SSI specifically alleges that Michael billed the website operators for prescriptions which Aracoma and Meds 2 Go pharmacies filled, and funds in payment were wired to Michael's accounts. SSI, ¶¶ 24-27. Additionally, the SSI alleges that Laing and others were paid by the website operators for transmission of (invalid)[3] prescriptions, and alleges that it was an object of the conspiracy that defendants Michael and Laing and others would deliver, distribute, and dispense controlled substances, including Butalbital, a Schedule III controlled substance, by means of the Internet, and aided and abetted each other in doing so, in a manner not authorized by the Controlled Substances Act, Chapter 841 of Title 21 U.S.C. SSI, ¶¶ 24-29.

         As noted herein, the indictment must be read as a whole. The SSI adequately charges a conspiracy to unlawfully distribute and dispense controlled substances inasmuch as Michael, Laing, and Meds 2 Go are alleged to have knowingly and willfully conspired together and with others to engage in a scheme to sell, distribute, and dispense prescription drugs over the Internet without issuance of a valid prescription. SSI, ¶ 23.

         The United States summarily explains that “the factual allegations in the Second Superseding Indictment…describe how [the defendants] schemed to defraud customers of their money, by intentionally misleading customers to believe that the prescription drugs purchased from the RX Limited websites were legally prescribed and dispensed.” The allegations, when read as a whole, support this summary description.

         Paragraph 23 describes the process by which purchases of prescription drugs were made from the RX Limited entities and then were dispensed and shipped by “Filling Pharmacies” such as Meds 2 Go and Aracoma Pharmacy. The SSI states that the prescription websites would provide an online medical questionnaire relating to the drug the customer wished to purchase, often prepopulating certain answers so that the customer would not be disqualified from receiving that drug. Often the website would represent that a “physician consultation” was required prior to the order being filled. However, it is alleged that the customer would complete the transaction, paying on-line with a credit card, and then receive the drug, without the physician consultation having been done. The SSI describes that, unbeknownst to the customer, the website operator would send the completed medical questionnaire to an “Issuing Doctor”[4]who would, without any sort of consultation or contact with the customer or verification of the information provided, issue a prescription which was, thus, invalid. Accordingly, there was a “loss” to the customer, despite the customer's receipt of the drug in the mail. As explained in United States v. Ihenacho, 716 F.3d 266, 277 (1st Cir. 2013), “From the face of it, the consumers had received entirely legally prescribed drugs. But in fact, they had not.” The Ihenacho court quoted from United States v. Bhutanj, 266 F.3d 661, 670 (7th Cir. 2001) which held that “[T]here was indeed loss to consumers because consumers bought drugs under the false belief that they were in full compliance with the law.”

         Additionally, the Ryan Haight Online Pharmacy Consumer Protection Act amended the Controlled Substances Act to require that certain disclosures be made on internet pharmacy websites. The statute requires the posting in a visible and clear manner on the homepage of each online pharmacy or site to which such pharmacy is hyperlinked that “This online pharmacy will only dispense a controlled substance to a person who has a valid prescription issued for a legitimate medical purpose based upon a medical relationship with a prescribing practitioner. This includes at least one prior in-person medical evaluation or medical evaluation via telemedicine, in accordance with applicable requirements of section 309.” 21 U.S.C. § 831(c)(7). Such disclosure informs a prospective customer, among other things, what interaction between doctor and patient is required for the doctor to write a valid prescription for that patient. The disclosure also requires that the website notice unequivocally state that “this online pharmacy will only dispense a controlled substance to a person who has a valid prescription.” The SSI alleges that the filling pharmacy completing the orders in this case omitted this statutorily-required information. SSI, ¶ 23(k). This notice would arguably have provided potential customers with information material to their decision to do business with the online pharmacy.

         The defendants contend that under the facts alleged in the SSI, a pharmacist could unknowingly fill invalid prescriptions issued by a licensed physician. This argument is nothing more than the defense that the defendants were not conspirators. What is required of the indictment, however, is merely a recitation of facts sufficient to inform the defendants of the crime with which they are charged. The United States has alleged the time period, the means, and the objects of the alleged agreement between the defendants. The SSI charges the defendants with knowingly and intentionally conspiring to engage in this scheme, and informs the defendants of the acts which he allegedly engaged in during the existence of the conspiracy. The United States must, of course, prove that the defendants knowingly and intentionally joined in the agreement to engage in unlawful activity. However, the United States need not prove its case in response to a motion to dismiss.

         To obtain a conviction under section 846, the government must prove the existence of an agreement to violate the drug laws and that each conspirator knew of, intended to join and participated in the conspiracy. United States v. Pierce, 912 F.2d 159, 161 (6th Cir. 1990)(citation omitted). As noted in United States v. Blakeney, 942 F.2d 1001, 1010 (6th Cir. 1991),

The government need not prove that the agreement was formal or express. United States v. Ellzey, 874 F.2d 324, 328 (6th Cir.1989). “A conspiracy may be inferred from circumstantial evidence that can reasonably be interpreted as participation in the common plan.” United States v. Bavers, 787 F.2d 1022, 1026 (6th Cir.1985). The existence of a conspiracy to violate federal law may be established by a tacit or mutual understanding among the parties. United States v. Hughes, 891 F.2d 597, 601 (6th Cir.1989). We note, however, that “ ‘mere association with conspirators is not enough to establish participation in a conspiracy.' ” Pearce, 912 F.2d at 162 (citation omitted).

942 F.2d at 1009-10. Our focus here must not be on the defendants' assertion of “mere association” and thus unknowing participation in the scheme, but rather whether the SSI alleges facts sufficient to inform the defendants of the specific conspiracy which they are charged with knowingly and intentionally joining. We find that the SSI sufficiently so informs these defendants.

         The SSI alleges that it was an object of the conspiracy that Michael and Laing would, and that they did, deliver, distribute, and dispense controlled substances by means of the Internet in a manner not authorized by Subchapter I of Chapter 13 of Title 21, United States Code, and thus violated 21 U.S.C. § 841(h)(1)(A)-(B). 21 U.S.C. § 841(h)(1)(A)-(B) states that “It shall be unlawful for any person to knowingly or intentionally (A) deliver, distribute, or dispense a controlled substance by means of the Internet, except as authorized by this subchapter; or (B) aid or abet…any activity described in subparagraph (A) that is not authorized by this subchapter.”

         The Controlled Substances Act (“CSA”) includes as a Schedule III controlled substance, “…any material, compound, mixture, or preparation which contains any quantity of…[a]ny substance which contains any quantity of a derivative of barbituric acid…, ” unless specifically exempted. 21 U.S.C. § 812(c), Schedule III (b)(1). Count 1 alleges that Fioricet, a prescription drug containing Butalbital, was a Schedule ...

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