United States v. Hofstetter

80 F.4th 725

UNITED STATES of America, Plaintiff-Appellee, v. Sylvia HOFSTETTER (20-6245); Holli Womack (20-6426);Cynthia Clemons (20-6427); Courtney Newman (20-6428), Defendants-Appellants.

No. 20-6245

No. 20-6426

No. 20-6427

No. 20-6428

United States Court of Appeals, Sixth Circuit

Argued: May 3, 2023

Decided and Filed: August 29, 2023

On Remand from the Supreme Court of the United States.

United States District Court for the Eastern District of Tennessee at Knoxville. No. 3:15-cr-00027—Thomas A. Varlan, District Judge.

ARGUED: Loretta G. Cravens, CRAVENS LEGAL, Knoxville, Tennessee, for Appellant in 20-6245. Karen Savir, OFFICE OF THE FEDERAL PUBLIC DEFENDER, Cincinnati, Ohio, for Appellant in 20-6426. Randall E. Reagan, THE LAW OFFICE OF RANDALL E. REAGAN, Knoxville, Tennessee, for Appellant in 20-6427. Christopher J. Oldham, Knoxville, Tennessee, for Appellant in 20-6428. Brian Samuelson, UNITED STATES ATTORNEY'S OFFICE, Knoxville, Tennessee, for Appellee. ON SUPPLEMENTAL BRIEF: Loretta G. Cravens, CRAVENS LEGAL, Knoxville, Tennessee, for Appellant in 20-6245. Kevin M. Schad, OFFICE OF THE FEDERAL PUBLIC DEFENDER, Cincinnati, Ohio, for Appellant in 20-6426. Randall E. Reagan, THE LAW OFFICE OF RANDALL E. REAGAN, Knoxville, Tennessee, for Appellant in 20-6427. Christopher J. Oldham, Knoxville, Tennessee, for Appellant in 20-6428. Brian Samuelson, Tracy L. Stone, UNITED STATES ATTORNEY'S OFFICE, Knoxville, Tennessee, for Appellee.

Before: SILER, COLE, and NALBANDIAN, Circuit Judges.

SILER, J., delivered the opinion of the court in which COLE and NALBANDIAN, JJ., joined. COLE, J. (pp. 732-34), delivered a separate concurring opinion.

OPINION

SILER, Circuit Judge.

This matter comes before us on remand from the Supreme Court of the United States. All four Defendants were found guilty of maintaining a drug-involved premises. Sylvia Hofstetter was also found guilty of conspiring to distribute controlled substances, distributing controlled substances, and money laundering.

After we affirmed the convictions, the Supreme Court decided Ruan v. United States, — U.S. —, 142 S. Ct. 2370, 2375, 213 L.Ed.2d 706 (2022), clarifying the applicable mens rea for an unlawful distribution charge, and remanded the case. Defendants now argue that the district court erred regarding the jury instructions for the maintaining-a-drug-involved-premises charge, and Hofstetter further argues the district court erred as to the instructions for her distribution-of-a-controlled-substance and conspiracy-to-distribute-and-dispense-controlled-substances charges.

Defendants' arguments are unavailing. The district court's instructions were not plainly erroneous regarding the maintaining-a-drug-involved-premises and conspiracy-to-distribute-and-dispense-controlled-substances charges. Moreover, Hofstetter's argument regarding the instruction for the distribution-of-a-controlled-substance charge is foreclosed by United States v. Anderson, 67 F.4th 755 (6th Cir. 2023) (per curiam). We affirm.

I. BACKGROUND

This case comes on remand from the Supreme Court pursuant to its holding in Ruan, — U.S. —, 142 S. Ct. 2370. The facts and procedural history are known to the parties so we only include the background relevant to the remaining questions before us.

From 2009 to 2015, Hofstetter managed pain clinics in Florida and Tennessee. Hofstetter also co-owned and managed an additional clinic in Tennessee. Cynthia Clemons, Courtney Newman, and Holli Womack were employed as nurse practitioners at these clinics. After suspecting the clinics of illegally prescribing opioids, the government indicted all four Defendants on multiple charges. After a four-month trial, the Defendants were found guilty of maintaining a drug-involved premises. Hofstetter was also found guilty of conspiring to distribute controlled substances, distributing controlled substances, and money laundering.

Hofstetter was sentenced to 400 months in prison, Clemons to 42 months, Newman to 40 months, and Womack to 30 months. We affirmed their convictions and sentences on appeal. United States v. Hofstetter, 31 F.4th 396, 410 (6th Cir. 2022).

After our decision, the Supreme Court ruled on the mens rea required to convict a defendant for distributing controlled substances under 21 U.S.C. § 841. Ruan, 142 S. Ct. at 2375. The Court then vacated and remanded our decision in Hofstetter "for further consideration in light of" the Ruan decision. Thus, the only issues now before us concern whether the jury instructions were proper.

II. ANALYSIS

The district court's instructions were not plainly erroneous regarding the maintaining-a-drug-involved-premises and conspiracy-to-distribute-and-dispense-controlled-substances charges. Moreover, Hofstetter's argument regarding the distribution-of-a-controlled-substance instruction is foreclosed under our precedent in Anderson, 67 F.4th 755.

A. Ruan

In Ruan, the Supreme Court considered the Controlled Substances Act, which makes it unlawful, "[e]xcept as authorized[,] . . . for any person knowingly or intentionally . . . to manufacture, distribute, or dispense . . . a controlled substance[.]" 21 U.S.C. § 841(a)(1). Federal regulations further explain that a prescription is "authorized" only when a practitioner issues the prescription "for a legitimate medical purpose . . . acting in the usual course of his professional practice." 21 C.F.R. § 1306.04(a). The defendants in Ruan argued that the jury instructions were improper because the jury was not required to find that the defendants had knowledge of the illegal acts, i.e., had knowledge that the prescriptions were not authorized. 142 S. Ct. at 2375-76.

The Court held that "§ 841's 'knowingly or intentionally' mens rea applies to the 'except as authorized' clause." Id. at 2376 (emphasis omitted). "This means that once a defendant meets the burden of producing evidence that his or her conduct was 'authorized,' the [g]overnment must prove beyond a reasonable doubt that the defendant knowingly or intentionally acted in an unauthorized manner." Id. As a result of this holding, it is insufficient for the government to prove that a prescription was "in fact" not authorized. Id. at 2375. Instead, the government must prove the defendant subjectively knew or intended that the prescription was unauthorized. Id.

B. The Drug-Involved Premises Instruction

Each Defendant was convicted of maintaining a drug-involved premises in violation of 21 U.S.C. § 856(a)(1). The district court instructed the jury as follows:

Count 13 of the superseding indictment charges that from in or about September 2013 through on or about March 10, 2015 . . . Hofstetter, Newman, Clemons, and Womack, aided and abetted by one another and others, did knowingly and intentionally open, use, and maintain a business . . . for the purpose of illegally distributing Schedule II controlled substances[.]

In order to prove a defendant guilty of opening, using, or maintaining a drug-involved premises, the government must prove each of the following elements beyond a reasonable doubt . . . :

First, that the defendant knowingly opened, used, or maintained a place, whether permanently or temporarily;

And second, that the defendant did so for the purpose of distributing any controlled substance.

The district court also stated that "whether a prescription is made in the usual course of professional practice is to be determined from an objective and not a subjective viewpoint."

The parties agree that the holding in Ruan applies to convictions under § 856(a)(1). Thus, under Ruan, the district court must have instructed the jury that knowledge of illegal distribution is an element of offenses under § 856(a). Defendants argue that the instructions given by the district court were erroneous because "the jury was instructed on an objective, not subjective state of mind as to this offense."

Because none of the Defendants objected during trial to the proposed jury instructions relevant to the § 856 charges, we review for plain error. United States v. Stewart, 729 F.3d 517, 530 (6th Cir. 2013). "To prevail on plain-error review, [a] defendant must show: (1) error, (2) that is clear and obvious, and (3) that affects [her] substantial legal rights." Id. at 528-29. Regarding jury instructions, "plain error requires a finding that, taken as a whole, the jury instructions were so clearly erroneous as to likely produce a grave miscarriage of justice." Id. at 530 (quoting United States v. Morrison, 594 F.3d 543, 546 (6th Cir. 2010)).

The jury instructions for the charges under § 856(a)(1) were not plainly erroneous. The district court's drug-involved premises instruction did not spell out the "knowingly" mens rea standard required under Ruan, 142 S. Ct. at 2375, for the second element. But plain error review requires the court to review jury instructions "as a whole," within context. Dimora v. United States, 973 F.3d 496, 502 (6th Cir. 2020) (per curiam); Stewart, 729 F.3d at 530. Taken as a whole, the jury instructions made clear that the jury had to find that Defendants knowingly opened the clinics for the purpose of illegally distributing Schedule II controlled substances.

Before giving the instructions regarding the two elements required for the jury to convict under § 856(a)(1), the district court provided an overview of the charge. "Count 13 of the superseding indictment charges that . . . Hofstetter, Newman, Clemons, and Womack, aided and abetted by one another and others, did knowingly and intentionally, open, use, and maintain a business . . . for the purpose of illegally distributing Schedule II controlled substances[.]" In addition, the district court summarized Count 13 of the indictment for the jury as "charg[ing] defendants with maintaining drug-involved premises, that is, knowingly and intentionally opening, using, and maintaining businesses for the purpose of illegally distributing controlled substances outside the usual course of professional practice and not for a legitimate medical...