Opinion
C14-515 TSZ
08-05-2015
UNITED STATES OF AMERICA, Plaintiff, v. BARTON BUTTERBAUGH, Defendants.
ORDER
THIS MATTER comes before the Court on a motion for summary judgment, docket no. 20, brought by plaintiff United States of America (the "Government"). In this action, the Government seeks a substantial civil penalty from defendant Barton Butterbaugh, M.D. for prescribing controlled substances to individuals in Washington without first obtaining from the Drug Enforcement Administration ("DEA") a registration for Washington. Having reviewed all papers filed in support of, and in opposition to, the Government's motion, including the supplemental briefs submitted upon the Court's request, and having considered the oral arguments of counsel during the hearing held on July 23, 2015, the Court enters the following order. Background
Butterbaugh moved to strike portions of the Government's reply and the materials submitted with it. See Surreply (docket no. 29). The motion to strike was DENIED, see Minute Order (docket no. 31), for the following reasons. First, the Government's discussion concerning the different versions of 21 C.F.R. § 1301.12(b)(3) addressed an issue raised by Butterbaugh in his response to the motion for summary judgment, which is an appropriate use of a reply. Second, the DEA website, which articulates the agency's current policy concerning locum tenens , is publicly available; it is not "new evidence" about which Butterbaugh lacked constructive notice before the Government filed its reply. Butterbaugh has now had an opportunity to respond to the Government's allegedly late submission, and the Court has considered his argument that the obscurity of the relevant page of the DEA website, evidenced by the Government's failure to cite to it in the opening brief, undermines the Government's position that Butterbaugh should have known about and heeded the advice on the website. Third, the travel records that the Government provided with its reply need not be stricken because they do not assist the Government. The flight information does not support any assertion that Butterbaugh misrepresented the frequency of his visits to Seattle, compare Butterbaugh Aff. at ¶ 20 (docket no. 25-2) with Ex. A to Zennan Decl. (docket no. 28-1), but rather contradicts the statement in the Government's motion that, between 2010 and 2012, Butterbaugh "traveled to Washington from Arizona approximately once per month," Mtn. at 1 (docket no. 20). Finally, the excerpt from Butterbaugh's deposition in a case for which he served as an expert witness likewise need not be stricken because it does not serve the Government's purpose of impeaching him. In the 1999 deposition, Butterbaugh explained that two individuals had made complaints against him to the Arizona Board of Medical Examiners; the first was a patient who claimed he had missed a tubal ovarian problem, but no lawsuit was ever filed, and the second was a woman who falsely alleged a romantic relationship in retaliation for his noting on a form that she was on psychotropic medication, which prevented her from getting a job at a hospital. Butterbaugh Dep. at 20-22, Carmack v . Hoelscher , D. Okla. Case No. CJ-97-7074-67, 1999 Depo. Trans. LEXIS 7250, Ex. B to Fogg Decl. (docket no. 27-2 at 4-5). Neither of these complaints contradicts Butterbaugh's representation that, until now, he had never been "accused of an administrative licensing infraction by any medical board and/or the Federal Governmental regulating agencies" and had "never been cited by a State Board of Pharmacy or the DEA." Butterbaugh Aff. at ¶ 3 (docket no. 25-2).
Butterbaugh resides in Arizona. Butterbaugh Aff. at ¶ 1 (docket no. 25-2). He is licensed to practice medicine in Arizona and Washington, and he has a DEA registration for Arizona. Compl. at ¶¶ 3-4 (docket no. 1). He does not have a DEA registration for Washington. Id . at ¶ 4; Butterbaugh Aff. at ¶ 18. During the period from October 2010 to November 2012, Butterbaugh treated individuals in Washington who were patients of eClinicMD, a Florida-based company. Butterbaugh Aff. at ¶¶ 8, 17, & 23. According to Butterbaugh, in August 2010, the physician employed by eClinicMD to service patients in Washington "suddenly moved" to California, leaving approximately 80 individuals without a treatment provider. Id . at ¶ 17. Butterbaugh agreed to "fill in" until eClinicMD hired a permanent local physician. Id .
Over the course of the 25 months at issue, Butterbaugh made several trips to Seattle to see patients, and he consulted with patients in Washington via telephone from his office in Arizona. Id . at ¶¶ 20-21. He estimates that approximately 85-90% of the refills for his Washington patients were authorized from his Arizona office. Id . at ¶ 21. Butterbaugh also states that over 60% of the medications he prescribed during the period at issue for individuals in Washington were not controlled substances. See id . & Ex. I to Resp. (docket no. 25-1 at 26). According to data compiled by Washington's Prescription Monitoring Program, Butterbaugh has written over 1,300 prescriptions for controlled substances, spread among over 200 people. See Garrety Decl. at ¶ 7(a) & Ex. A (docket no. 23).
Although Butterbaugh applied for and obtained a medical license in Washington before he began to treat patients in Washington, he did not apply for a Washington DEA registration. Butterbaugh Aff. at ¶ 18. Butterbaugh contends that he relied on advice provided by an employee of the Washington Department of Health, who allegedly indicated that, because he was temporarily substituting for a recently-departed physician ( i .e., operating locum tenens ), Butterbaugh was not required to obtain a separate DEA registration for Washington. Id .; see Ex. F to Resp. (docket no. 25-1 at 18-19).
Locum tenens is a Latin phrase that means "holding the place," and it connotes "a deputy; a substitute; a representative." Black's Law Dictionary 1025 (9th ed. 2009).
The prescriptions Butterbaugh issued to Washington patients contained an address in Seattle, an "866" telephone number, a Washington medical license number, and a DEA registration number for Arizona. See Zennan Decl. at ¶ 4 & Ex. A (docket no. 22). The "866" telephone number on a prescription issued by Butterbaugh made a pharmacist suspicious, and after the pharmacist contacted the DEA, an investigation commenced in February 2011. Id . at ¶ 3. Other pharmacists reported concerns in December 2011 and May 2012, and Alan Zend, DO (an osteopath who treats opiate addiction) called the DEA in July 2012 after a patient who had received prescriptions from Butterbaugh admitted to Zend that he was an addict. See Ex. D to Zennan Decl. (docket no. 22-5).
In late November 2012, Assistant United States Attorney ("AUSA") Christina Fogg (nee Dimock) wrote to Butterbaugh and informed him that the DEA had been monitoring him and found him to be "routinely out of compliance" with the requirement that he have a DEA registration for Washington. Ex. N to Fogg Decl. (docket no. 21-2). Butterbaugh was told that the Government was "considering initiating civil litigation" against him, and that he should contact AUSA Fogg to discuss the possibility of pre-litigation settlement. Id . After receiving AUSA Fogg's letter, Butterbaugh immediately ceased treating patients in Washington and issued no further prescriptions to individuals in Washington. Butterbaugh Aff. at ¶ 23. In April 2014, the Government commenced this action, pleading one claim for relief under 21 U.S.C. § 842(c), see Compl. (docket no. 1), and it has now moved for summary judgment on both liability and the amount of any civil penalty. Discussion
To obtain summary judgment, the Government must demonstrate the absence of any genuine issue of material fact and an entitlement to judgment as a matter of law. See Fed. R. Civ. P. 56(a); see also Celotex Corp . v. Catrett , 477 U.S. 317, 323 (1986). A fact is material if it might affect the outcome of the suit under the governing law. E .g., Anderson v . Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). To survive a motion for summary judgment, the adverse party must present "affirmative evidence," which "is to be believed" and from which all "justifiable inferences" are to be favorably drawn. Id . at 255, 257. When the record, however, taken as a whole, could not lead a rational trier of fact to find for the non-moving party, summary judgment is warranted. See Danner v . Himmelfarb , 858 F.2d 515, 517 (9th Cir. 1988) (citing Matsushita Elec . Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). The Court is satisfied that the questions before it are not factual, but rather legal, in nature. The issues for decision are (i) whether the Government has stated and proven a cognizable claim for a civil penalty; and (ii) if so, what amount of civil penalty is appropriate.
A. Liability
The Government seeks to impose a civil penalty against Butterbaugh under a provision of the Comprehensive Drug Abuse Prevention and Control Act of 1970, also known as the Controlled Substances Act ("CSA"), indicating that "any person who violates this section shall, with respect to any such violation, be subject to a civil penalty of not more than $25,000." 21 U.S.C. § 842(c)(1)(A) (emphasis added). As is clear from the statute, a person is subject to a civil penalty under § 842(c) only if the person violated § 842. Section 842(a) contains 16 subsections defining different unlawful acts. In its Complaint, the Government did not indicate which of these 16 subsections, if any, it alleged Butterbaugh violated. In its motion for summary judgment and its supplemental brief, however, the Government relies solely on § 842(a)(1), which prohibits any person subject to registration requirements from distributing or dispensing a controlled substance in violation of 21 U.S.C. § 829. See 21 U.S.C. § 842(a)(1).
The term "dispense" means "to deliver a controlled substance to an ultimate user . . . by, or pursuant to the lawful order of, a practitioner, including the prescribing and administering of a controlled substance." 21 U.S.C. § 802(10). The term "distribute" means "to deliver (other than by administering or dispensing) a controlled substance or a listed chemical." Id . at § 802(11). The terms "deliver" or "delivery" mean "the actual, constructive, or attempted transfer of a controlled substance or a listed chemical, whether or not there exists an agency relationship." Id . at § 802(8).
To establish a violation of § 842(a)(1), the Government must prove that Butterbaugh (i) was subject to registration requirements, and (ii) either distributed or dispensed controlled substances in violation of § 829. With respect to the latter element, the Government contends that dispensing controlled substances without a "valid" prescription constitutes a violation of § 829. The relevant subsections of § 829, however, do not contain the word "valid," but rather make a distinction between schedule II controlled substances (which may be dispensed by a practitioner directly to an ultimate user or upon a "written" prescription that may not be refilled) and schedule III and IV substances (which may be dispensed directly or upon either a "written" or an "oral" prescription that may be refilled up to five times within six months of the prescription). 21 U.S.C. §§ 829(a) & (b); see also United States v . Moore , 423 U.S. 122, 137 n.13 (1975) ("On its face § 829 addresses only the form that a prescription must take.").
When viewed, however, in the context of the applicable statutes and regulations, the question presented is not whether the prescriptions that Butterbaugh issued were valid, but rather whether they were, in fact, "prescriptions." If the slips of papers that Butterbaugh gave to his patients in Washington were not "prescriptions," then regardless of whether controlled substances were thereby obtained by these individuals, Butterbaugh distributed (as opposed to dispensed) controlled substances without a prescription, which constitutes a violation of § 829, and in turn, a violation of § 842(a)(1). See 21 U.S.C. §§ 802(8) & (11) (together defining "distribute" to mean "the actual, constructive, or attempted transfer of a controlled substance" other than by administering or dispensing it).
The Government does not allege that Butterbaugh dispensed controlled substances by means of the Internet, which is governed by the only subsection of § 829 in which the term "valid" appears. See 21 U.S.C. § 829(e)(1). Dispensing via the Internet requires a "valid" prescription, defined as one issued for "a legitimate medical purpose" and "in the usual course of professional practice" by a practitioner who has conducted at least one in-person medical evaluation of the patient. 21 U.S.C. §§ 829(e)(1) & (2). The Government has offered no evidence that Butterbaugh issued any prescription for other than "a legitimate medical purpose," outside "the usual course of professional practice," or without having first examined the patient. Thus, the Government's contention that the prescriptions written by Butterbaugh were not "valid," as statutorily defined, lacks merit.
The parties have not cited any cases directly on point. Although "prescription" is not statutorily defined, a regulation provides that a prescription may be issued only by "an individual practitioner" who is "[a]uthorized to prescribe controlled substances by the jurisdiction in which he [or she] is licensed to practice" and is either registered with the DEA or exempt from registration. See 21 C.F.R. § 1306.03(a); see also 21 U.S.C. § 821 (authorizing the Attorney General to promulgate regulations relating to the registration and control of the distribution and dispensing of controlled substances). A different regulation mandates that every prescription for a controlled substance bear "the name, address and registration number of the practitioner." 21 C.F.R. § 1306.05(a). The crux of the dispute in this case is whether Butterbaugh was "registered" and had inscribed on his forms a "registration number" within the meaning of §§ 1306.03(a) & 1306.05(a).
The Government relies on Advance Pharm ., Inc. v. United States , 391 F.3d 377 (2d Cir. 2004), and United States v . Poulin , 926 F. Supp. 246 (D. Mass. 1996). In Advance Pharm ., a corporation and its president and vice-president unsuccessfully appealed a $2 million civil penalty for violating 21 U.S.C. § 842(a)(10), which renders unlawful the negligent failure to "keep a record or make a report" or "self-certify," as required by 21 U.S.C. § 830. See 391 F.3d at 382-83. A jury found that the defendants had violated § 842(a)(10) by failing to notify the DEA with respect to 141 of their 159 pseudoephedrine shipments to new customers. Id . at 389. In Poulin , the proprietor of a pharmacy was ordered, following a bench trial, to pay civil penalties for multiple violations of 21 U.S.C. § 842(a)(5), which defines as unlawful the refusal or negligent failure to "make, keep, or furnish" a required record. 926 F. Supp. at 252 & 255. The defendant was found to have committed 36 recordkeeping violations, for which he was fined a total of $50,000, representing penalties ranging from $1,000 to $25,000, depending on the type of violation. Id . at 255. In both Advanced Pharm . and Poulin , the sanctioned parties were found in violation of a provision other than the one at issue here, i .e., § 842(a)(1).
The Court concludes that Butterbaugh was required to, but undisputedly failed to, obtain a registration in Washington. The CSA requires every person who dispenses controlled substances to obtain a registration from the Attorney General. 21 U.S.C. § 822(a)(2). A separate registration is required "at each principal place of business or professional practice" where the person dispenses controlled substances. Id . at § 822(e)(1). The DEA has, by regulation, defined various locations that are not places where controlled substances are dispensed, including an office "used by a practitioner (who is registered at another location in the same State or jurisdiction of the United States) where controlled substances are prescribed but neither administered nor otherwise dispensed . . . and where no supplies of controlled substances are maintained." 21 C.F.R. § 1301.12(b)(3). Because Butterbaugh was not registered at any location in Washington, this regulation does not remove the Seattle offices used by Butterbaugh from the ambit of places where controlled substances were dispensed.
This regulation was amended in 2006 to narrow the scope of locations deemed not to be places where controlled substances are dispensed. Section 1301.12(b)(3) previously excluded an office "used by a practitioner (who is registered at another location)." The regulation was modified to exempt only an office "used by a practitioner (who is registered at another location in the same State or jurisdiction of the United States )." (Emphasis added.) This change did not affect the portion of the regulation (or the CSA) requiring a separate registration for only principal places of business or professional practice, and the 2006 revision to § 1301.12(b)(3) has little relevance to the issues before the Court.
Because controlled substances were dispensed in the Seattle offices, Butterbaugh needed a registration in Washington if the Seattle offices were, for him, a "principal place of business or professional practice." See 21 U.S.C. § 822(e)(1). The phrase "principal place of business or professional practice" is not defined by statute or regulation. The DEA has, however, issued a "Dear Applicant" letter indicating that "[a] practitioner who maintains professional practices in multiple states is deemed to have established a principal place of business or professional practice in each state." Ex. H to Resp. (docket no. 25-1 at 24) (emphasis added). According to the DEA, the term "maintains" connotes "a continuing, ongoing place of business or professional practice as opposed to a one-time or temporary one," and "[a]ny location in separate states" at which "a practitioner distributes or dispenses controlled substances is a 'principal place of business or professional practice' requiring separate DEA registration." Id . The DEA, however, has acknowledged that a physician "who occasionally prescribes in another state and who does not maintain a practice there is not required to be registered in that state," allowing for a physician to "work in a locum tenens capacity in multiple states without having to obtain a DEA registration in each state." Id . (emphasis added). The term "occasionally" was understood by the DEA to mean "on occasion," and not "permanent" or "regular." Id .
The Court is satisfied that the DEA's interpretation with respect to the phrase "principal place of business or professional practice" is a reasonable construction of § 822(e) of the CSA. See Chevron , U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837, 843-44 (1984) (if a statute "is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute" and, when a particular question has been implicitly delegated to an agency, "a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency"). Butterbaugh distributed or dispensed controlled substances at the two Seattle offices he used, and each of these locations constituted a "principal place of business or professional practice." Butterbaugh's activities in Washington were conducted far more frequently than "on occasion." Although Butterbaugh might have initially intended merely to temporarily "fill in" for the departed physician, his role became more "permanent." Over the course of 25 months, Butterbaugh engaged in a "continuing, ongoing," and "regular" practice in Washington, which he might to this day still "maintain" but for the November 2012 cease-and-desist letter. The Court rules, as a matter of law, that Butterbaugh did not have the requisite registration in Washington, improperly used his Arizona registration number on the forms he gave to patients in Washington, and distributed controlled substances in Washington, between October 2010 and November 2012, without a prescription, in violation of §§ 829 & 842(a)(1).
United States v . Clinical Leasing Serv., Inc., 930 F.2d 394 (5th Cir. 1991), which was cited by the Government, is not controlling. Contrary to the Government's assertion, Clinical Leasing did not define "principal place of business or professional practice," but rather rejected the individual defendants' argument that the regulation concerning locations "deemed not to be places where controlled substances are . . . dispensed" was unconstitutionally vague. Id . at 395-96. The Fifth Circuit held that the registration regulations, which exempted an office at which inter alia "controlled substances are prescribed but neither administered nor otherwise dispensed as a regular part of the professional practice of the practitioner at such office," id . at 395 (emphasis added), might "in some cases" be "unclear," but they were not "impermissibly vague in all of their applications" or with respect to the individual defendants in the case, id . at 395-96 (emphasis in original). In using the example of a physician who "intends to dispense controlled substances from a particular location several times a week or month," id . at 395, the Fifth Circuit was addressing the meaning of the clause "regular part of the professional practice of the practitioner," which is a similar concept, but is not the statutory phrase at issue in this case.
B. Civil Penalty
Having concluded that the Government has established, as a matter of law, that Butterbaugh violated § 842(a)(1), the Court turns to an assessment of the appropriate amount for a civil penalty. The Ninth Circuit has not yet had occasion to consider how a civil penalty under § 842(c) should be calculated. The cases cited by the Government, however, recite the same four factors for determining the amount of such civil penalty, namely (1) the level of the defendant's culpability; (2) whether and to what extent the defendant profited from the unlawful conduct; (3) the harm to the public; and (4) the defendant's financial capacity to pay a penalty. Advance Pharm ., 391 F.3d at 399; Poulin , 926 F. Supp. at 253. During oral argument, the Government acknowledged that it has no further evidence to present concerning the size of a civil penalty. The Court is persuaded that the factors outlined in Advance Pharm . and Poulin and the current record support only a relatively small civil penalty.
1. Culpability
The Government asserts that Butterbaugh's conduct was willful because (i) he was aware of the "separate registration" requirement, having previously registered in New Mexico, Nevada, and Texas, as well as Arizona, see Zennan Decl. at ¶ 4 (docket no. 22), and (ii) he continued to violate the CSA after receiving AUSA Fogg's cease-and-desist letter. The Government's evidence does not establish any willfulness on Butterbaugh's part. With respect to his previous, now expired, registrations for states other than Arizona, the Government provides no dates or other details. Such registrations might have been for different periods over the course of Butterbaugh's 34-year medical career, demonstrating an awareness that he needed to have a DEA registration for the state in which he resided, as opposed to another state in which he also treated patients.
Indeed, in his affidavit, Butterbaugh indicates that, from 1983 until 1986, he was an Army Medical Corps Officer stationed in El Paso, Texas, see Butterbaugh Aff. at ¶ 2 (docket no. 25-2), and his defunct registration in Texas might have related to his duties for the Army, before he established a practice in Arizona. In 1986, Butterbaugh practiced emergency medicine in Grants, New Mexico, which would explain why he once had a DEA registration for New Mexico. See Butterbaugh Dep. at 23, Ex. B to Fogg Decl. (docket no. 27-2 at 5). Thus, contrary to the Government's suggestion, any "justifiable inferences" from Butterbaugh's prior registrations in New Mexico, Nevada, and Texas do not support a finding of willfulness.
For the proposition that Butterbaugh's unlawful conduct persisted after receipt of AUSA Fogg's letter, the Government cites only an announcement apparently posted on eClinicMD's website in January 2013, stating that Butterbaugh "will no longer travel to Seattle" and "will focus on his Arizona and Texas practices." Ex. C to Zennan Decl. (docket no. 22-5). Because Butterbaugh did not at that time have a registration in Texas, the Government contends that Butterbaugh continued to issue prescriptions for controlled substances without having the requisite registration. The Government, however, has provided no evidence that Butterbaugh wrote any prescriptions for controlled substances after November 2012 in either Washington or Texas. In contrast, Butterbaugh has averred that he restricted his practice to Arizona and "did not so much as set foot in the State of Texas" after receiving AUSA Fogg's letter. Butterbaugh Aff. at ¶ 24 (docket no. 25-2).
The Government has offered no evidence that Butterbaugh manifested a belief in, adopted, or authorized the eClinicMD announcement, so as to render it non-hearsay. See Fed. R. Evid. 801(d)(2). The Government also has not demonstrated that the eClinicMD notice would be admissible under any exception to the hearsay rule. See Fed. R. Civ. P. 56(c)(4). The eClinicMD announcement was received by a DEA investigator in an e-mail from an unidentified undercover agent, see Zennan Decl. at ¶ 7 (docket no. 22), and it is therefore not a business record, see Fed. R. Evid. 803(6), but rather is the type of unreliable evidence that the hearsay rule was designed to exclude. The statement by eClinicMD with respect to a "Texas practice" might simply have been erroneous, and it does not support the Government's assertion that Butterbaugh continued to engage in offending conduct after November 2012.
Not only has the Government failed to present evidence of willfulness, but Butterbaugh has also raised doubts about his level of culpability. Butterbaugh has essentially invoked the defense of entrapment by estoppel, which requires a showing that (1) an authorized government official empowered to render the advice at issue, (2) who was made aware of all the relevant historical facts, (3) affirmatively told Butterbaugh the allegedly proscribed conduct was permissible, (4) he relied on the advice, and (5) his reliance was reasonable. See United States v . Schafer , 625 F.3d 629, 637 (9th Cir. 2010); United States v . Batterjee , 361 F.3d 1210, 1216 (9th Cir. 2004). Reliance is reasonable when a person "sincerely desirous of obeying the law would have accepted the information as true, and would not have been put on notice to make further inquiries." Batterjee , 361 F.3d at 1216-17.
Butterbaugh did not plead entrapment by estoppel as an affirmative defense in his answer. See Answer at ¶¶ 19-22 (docket no. 8). Even if Butterbaugh were deemed to have waived this defense, see Fed. R. Civ. P. 8(c)(1) (requiring that affirmative defenses be affirmatively pleaded), the elements of entrapment by estoppel would still be relevant to Butterbaugh's level of culpability, which is a factor in the penalty, as opposed to the liability, stage.
Butterbaugh contends he was told by an employee of Washington's Department of Health that he qualified for the locum tenens "exception" to the requirement of separate registrations for each state in which a practice is maintained. The Government replies that a state employee's interpretation of a federal regulation has no legal impact, but it cites no authority for such proposition. Individuals who are not even government employees can have the requisite authority for purposes of the entrapment-by-estoppel doctrine, and whether the state employee at issue was authorized or empowered to advise Butterbaugh that a DEA registration for Washington was not required cannot be determined on this record. For purposes of the Government's motion for summary judgment, the Court draws all reasonable inferences in favor of Butterbaugh and concludes that the Government has not proven that his violations of §§ 829 and 842(a)(1) were willful.
See Batterjee , 361 F.3d at 1217 (recognizing that licensed firearms dealers are the equivalent of federal agents with regard to the dissemination of information concerning whether a person is eligible to purchase a firearm); United States v . Tallmadge , 829 F.2d 767, 774 (9th Cir. 1987) ("a buyer has the right to rely on the representations of a licensed firearms dealer" concerning eligibility to "receive and possess a weapon" after a "felony conviction has been reduced to a misdemeanor").
See United States v . Washington , 2012 WL 4602838 at *3 (D. Mont. Oct. 2, 2012) (holding that whether a drug investigator with the Flathead Tribal Police, who was a member of the Northwest Drug Task Force, a multi-jurisdictional entity, was acting as an authorized federal agent when he provided erroneous advice about federal law was an issue for the trier of fact); see also United States v . Christie , 2013 WL 6860835 at *5 (D. Haw. Dec. 30, 2013) (requiring defendants to make a proffer concerning their entrapment-by-estoppel defense premised on statements made by state and county officials concerning the manufacturing and distribution of marijuana for religious purposes); cf . United States v . Shinderman , 2006 WL 522105 at *29 (D. Me. Mar. 2, 2006) (concluding that an estoppel-by-entrapment defense premised on the DEA's "allegedly confusing regulation," namely the pre-amendment version of 21 C.F.R. § 1301.12(b)(3), could not be dispositively addressed in connection with the defendant's motion to dismiss a 68-count indictment), adopted in part and modified in part on other grounds , 432 F. Supp. 2d 149 (D. Me. 2006).
2. Profit
The Government asserts Butterbaugh's profit from his activities in Washington was at least $81,170. The Government has computed this figure from the following information. Butterbaugh received from eClinicMD $125 for each initial face-to-face examination, $90 for each follow-up examination, and $45 for each telephonic consultation. Ex. G to Fogg Decl. (docket no. 21-1 at 65). The Government estimates that Butterbaugh saw at least 136 patients in Washington. Mtn. at 8 (docket no. 20) (citing Ex. A to Zennan Decl. (docket nos. 22-1, 22-2, 22-3, & 22-4), which contains photocopies of 152 prescriptions). The Government arrives at a sum of $17,000 in connection with initial visits ($125 x 136) and a sum of $64,170 for subsequent services (assuming all other prescriptions were issued after telephonic consultations), for a total of $81,170. The Government contends that Butterbaugh's expenses need not be considered, stating without proof that airline tickets and hotel expenses were covered by eClinicMD, but the Court is not persuaded that it can simply ignore Butterbaugh's overhead, including telephone bills, and it does not, in any event, view the estimated profit as justifying the substantially higher civil penalty that the Government requests.
Butterbaugh contends that any wages he earned from telephonic consultations were necessarily related to activities he conducted in Arizona, not Washington.
3. Harm to the Public
The Government describes two types of public harm allegedly stemming from Butterbaugh's failure to obtain a Washington registration: (i) the DEA's ability to monitor and investigate Butterbaugh's activities was impeded; and (ii) controlled substances with a "street value" of at least $1.7 million were dispensed. The Government contends that Butterbaugh's conduct is consistent with the operation of a "pill mill." See Zennan Decl. at ¶ 13 (docket no. 22). Butterbaugh used temporary or "pop-up" locations, namely an acupuncture clinic and a chiropractor's office, relied on eClinicMD to provide him with medical records about his own patients, required patients to pay for visits in advance, did not accept insurance, listed eClinicMD's telephone number on his prescription forms, and serviced individuals who traveled hundreds of miles to see him rather than seeking treatment in their local area. Id . According to the Government, these behaviors are indicia of running a "pill mill."
Butterbaugh responds that his Arizona DEA registration number, Washington medical license number, and Washington address were on each form that he gave a patient, rendering the Government's accusation that he somehow evaded DEA oversight "preposterous," Resp. at 17 (docket no. 25), particularly when the Government itself waited for over a year and nine months after initiating its investigation to send him a cease-and-desist letter. Butterbaugh also calls the "street value" of the controlled substances he distributed "irrelevant," id ., because the Government has provided no evidence that any of these medications made their way to the street, and he points out that, despite having the names and contact information for Butterbaugh's patients, the Government has not even alleged, let alone proven, that the controlled substances at issue were distributed or dispensed for other than legitimate medical purposes. Butterbaugh acknowledges that "pill mills" and prescription drug abuse are harmful to the public, but he denies being responsible for these general societal ills. The Court concludes that the "public harm" factor does not weigh in favor of a high penalty.
Butterbaugh has explained that he treats patients with chronic pain, many of whom are elderly and unable to obtain appropriate medications because of "the current climate of fear in the medical profession." Butterbaugh Aff. at ¶ 29 (docket no. 25-2). Butterbaugh indicates that he "did what [he] could, and what was medically sound, to weed" out individuals who abuse drugs. Id . According to Butterbaugh, "[i]f some doctors have prescribed controlled medications irresponsibly, I am not one of them." Id .
4. Financial Capacity
Rather than providing evidence concerning Butterbaugh's assets, the Government asks the Court to ignore the jurisprudence concerning motions for summary judgment and to draw adverse inferences against the non-moving party for declining to answer certain discovery requests. The Government, however, neither moved to compel discovery nor deposed Butterbaugh, and it concedes that no further discovery may be conducted in this case. See Minute Order (docket no. 10) (setting a discovery deadline of April 13, 2015). The Government may not shift the burden to Butterbaugh to establish that he is unable to pay a penalty, and it has not proven that Butterbaugh has the financial capacity to pay a substantial civil penalty.
In contrast, Butterbaugh has provided a financial statement indicating that his home is worth $1,133,500, but has a mortgage of $1,247,596, and that he has six motor vehicles, two of which have outstanding loan balances exceeding their fair market value, a recreational vehicle on which more is owed than it is worth, retirement accounts holding in the aggregate approximately $420,000, and a time share valued at $17,500 on which $16,490 remains due. Ex. G to Resp. (docket no. 25-1 at 20-21). He also has over $45,000 in credit card and medical equipment debts. Id . Butterbaugh is not currently working, having recently had surgery to address the symptoms of spinal disease, and his wife is also in poor health. Butterbaugh Aff. at ¶¶ 27-28 (docket no. 25-2). The Court concludes that the appropriate amount of a civil penalty is $7,500, which constitutes a manageable debt in light of Butterbaugh's limited assets and substantial financial liabilities. This sum also represents a fair civil penalty given Butterbaugh's low level of culpability, his meager profits, and the absence in the record of any concrete or particularized harm to the public. Conclusion
For the foregoing reasons, the Government's motion for summary judgment, docket no. 20, is GRANTED in part and DENIED in part. The Clerk is DIRECTED to enter judgment in favor of the Government and against Butterbaugh in the amount of $7,500 and otherwise consistent with this Order. The Clerk is further DIRECTED to send a copy of this Order to all counsel of record and to CLOSE this case.
IT IS SO ORDERED.
Dated this 5th day of August, 2015.
/s/_________
Thomas S. Zilly
United States District Judge