Hidden among its flurry of end-of-term blockbusters, on June 27, 2022, the U.S. Supreme Court issued a long-awaited opinion in Ruan v. United States. In Ruan, the Supreme Court addressed the issue of what mens rea a physician must possess to be guilty of illegally distributing controlled substances through the use of allegedly improper prescriptions. The Supreme Court held that physicians must subjectively know that the prescriptions they write are not for a legitimate medical purpose; it is not enough that they write prescriptions that were objectively unreasonable. The decision will likely have implications for a wide range of white-collar cases, which so often turn on issues of knowledge and intent.
Ruan is actually a pair of cases, one from the Tenth Circuit and one from the Eleventh Circuit, in which licensed physicians had been charged with dispensing or distributing controlled substances in violation of 21 U.S.C. § 841 based on their prescriptions. Section 841 makes it a federal crime "except as authorized... for any person knowingly or intentionally... to manufacture, distribute, or dispense... a controlled substance." A prescription is "authorized" only if it is issued for a "legitimate medical purpose." In each of these cases, the trial court's instructions eliminated any requirement that the government prove that the doctor knew or intended that the prescriptions were not for a legitimate medical purpose. The circuits have long been split as to how to define the mens rea requirement in such cases, and the Court finally took up the issue.
In reversing the convictions, Justice Breyer, writing for a six-member majority, emphasized the criminal law's general requirement of a "vicious will" or "conscious wrongdoing." Relying on analogous precedent addressing other statutes, the Court held that "knowingly and intentionally" in section 841 modifies not only the act of dispensing or distributing the drug but also of acting other than "as authorized." The Court soundly rejected the government's argument and the view adopted by the lower courts that the mens rea requirement could be satisfied by a showing that the defendant's conduct was "objectively unreasonable." At the same time, however, the Court muddied the waters by pointing out that the objective unreasonableness of the conduct could be used as circumstantial evidence to prove intent.
The Court also rejected a suggestion from both the government and the three-member concurrence (Justices Alito, Thomas, and Barrett) that the defendant bears the burden of proving authorization (and therefore any mens rea) because it is an affirmative defense, not an element. Instead, the majority adopted what the concurrence calls a "hybrid" approach, placing the initial burden of production on the defendant to assert the applicability of the "authorization" exception, but placing the ultimate burden of persuasion on the government to prove that the defendant knew that the conduct went beyond the authorization.
The case provides welcome relief to physicians, pharmacists, and pharmaceutical executives facing drug charges. But the ramifications of Ruan are far broader than that. The Court's strengthened resolve to preserve the mens rea requirement will likely also be significant in a wide range of white-collar cases, which often turn on questions of knowledge and intent. Did the individual or company management know about the conduct and did they intend to act illegally? Ruan drives home that these questions generally must be answered in the affirmative to impose criminal sanctions.
Where the opinion may become particularly relevant is in imposing corporate officer liability. This week's decision strongly suggests that mere negligence in failing to detect or prevent criminal conduct will not be enough to hold corporate officers responsible. As the Department of Justice aims to hold more individuals accountable for corporate misconduct, the government will likely be held to its burden to prove that each of those individuals affirmatively knew about and intended to participate in criminal conduct. Lest anyone become too sanguine in light of Ruan, however, it is important for corporate officers to remember that objectively unreasonable conduct may still be used as evidence of criminal intent and that strict adherence to strong compliance programs is still the best defense against being caught in the cross-hairs of a government investigation.
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