United States v. Xiulu Ruan

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[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 17-12653

________________________

D.C. Docket No. 1:15-cr-00088-CG-B-2

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

versus

XIULU RUAN,

JOHN PATRICK COUCH,

Defendants - Appellants.

________________________

Appeals from the United States District Court

for the Southern District of Alabama

________________________

(July 10, 2020)

Before WILSON and NEWSOM, Circuit Judges, and COOGLER, * District Judge.

COOGLER, District Judge:

*

Honorable L. Scott Coogler, United States District Judge for the Northern District of

Alabama, sitting by designation.

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Following a seven-week trial in the United States District Court for the

Southern District of Alabama, pain management physicians Xiulu Ruan (“Ruan”)

and John Patrick Couch (“Couch”) (together, “the appellants”) were convicted by a

jury of conspiring to run a medical practice constituting a racketeering enterprise in

violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18

U.S.C. § 1962(d); conspiring to violate the Controlled Substances Act, 21 U.S.C.

§§ 846 & 841(a)(1), by dispensing Schedule II drugs, fentanyl, and Schedule III

drugs outside the usual course of professional practice and without a legitimate

medical purpose; conspiracies to commit health care fraud and mail or wire fraud

in violation of 18 U.S.C. §§ 1347(a) & 1349; and conspiracies to receive kickbacks

in relation to a Federal health care program in violation of 18 U.S.C. § 371 and 42

U.S.C. § 1320a-7b(b). In addition, Ruan and Couch were individually convicted of

multiple counts of substantive drug distribution in violation of the Controlled

Substances Act, 21 U.S.C. § 841(a)(1). Ruan was further convicted of a money

laundering conspiracy in violation of 18 U.S.C. § 1956(h) and two counts of

substantive money laundering in violation of 18 U.S.C. § 1957. Ruan was

sentenced to 252 months’ imprisonment, to be followed by four years of

supervised release, and ordered to pay over $15 million in restitution. Couch was

sentenced to 240 months’ imprisonment, followed by four years of supervised

release, and ordered to pay over $16 million in restitution.

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In this broad-sweeping appeal, Ruan and Couch challenge their convictions,

various evidentiary rulings at trial, and the district court’s jury instructions. Ruan

also challenges his sentence and the district court’s order of restitution. After

thorough review and having had the benefit of oral argument, we affirm in large

part the decisions of the district court, but we reverse the district court’s ruling that

sufficient evidence supported one of the illegal kickback conspiracy convictions.

We thus remand the cases for resentencing.

I. Background

A. Procedural History

A Southern District of Alabama grand jury indicted Ruan and Couch on

April 30, 2015, charging conspiracy to distribute controlled substances, 21 U.S.C.

§ 846, and conspiracy to commit health care fraud, 18 U.S.C. § 1347(a). After a

raid of their medical clinic and pharmacy by the Federal Bureau of Investigation

(“FBI”), a Superseding Indictment issued on April 28, 2016, charging 22 counts.

The Superseding Indictment alleged that Ruan and Couch’s medical clinic was

essentially a “pill mill,” which prescribed controlled substances for no legitimate

medical purpose or outside the usual course of professional practice. Ruan and

Couch were both charged with one count of conspiracy to commit racketeering, 18

U.S.C. § 1962(d) (Count 1); three counts of conspiracies to violate the Controlled

Substances Act by dispensing Schedule II and III controlled substances and

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fentanyl outside the usual course of professional practice and without a legitimate

medical purpose, 21 U.S.C. §§ 841(a)(1) & 846 (Counts 2–4); one count of

conspiracy to commit health care fraud, 18 U.S.C. § 1347(a) (Count 15); three

counts of conspiracy to violate the Anti-Kickback statute, 18 U.S.C. § 371 (Counts

16–18); and one count of conspiracy to commit wire and mail fraud, 18 U.S.C. §

1349 (Count 19). Couch was charged with five additional counts of illegal drug

distribution involving prescribing controlled substances to named individuals, 18

U.S.C. § 2(a) and 21 U.S.C. § 841(a)(1) (Counts 5–7 and 13–14). Ruan was

charged with five additional counts of illegal drug distribution involving

prescribing controlled substances to named individuals, 21 U.S.C. § 841(a)(1)

(Counts 8–12), and three counts of conspiracy to commit money laundering and

substantive money laundering, 18 U.S.C. §§ 1956(h) & 1957 (Counts 20–22). The

Superseding Indictment also contained numerous forfeiture provisions.

Ruan and Couch pled not guilty. Their joint trial commenced in Mobile,

Alabama, on January 6, 2017, and lasted 31 days. The government called more

than 50 witnesses, including 15 of their former patients or their relatives; 12 of

their former staff members, including nurse practitioners with whom they had

worked closely; four pharmaceutical company employees; seven representatives

from various medical insurance companies; three medical experts; the director of

the Alabama Department of Public Health; and 12 law enforcement agents and

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analysts. The government also introduced numerous charts from insurers and the

Drug Enforcement Administration (“DEA”) reflecting the volume and cost to

insurers of prescriptions for controlled substances that Ruan and Couch had

written, compared to other physicians in Alabama and nationally. Both Ruan and

Couch testified in their defense, and they also called five former patients, 11

additional former employees, and three medical experts of their own. The

government dismissed Count 18 at the close of its case. Ruan and Couch moved

for judgments of acquittal under Federal Rule of Criminal Procedure 29 at the

close of the government’s case, and again at the close of all the evidence, and the

district court denied their motions.

On February 23, 2017, the jury convicted Couch on all counts against him.

Ruan was acquitted on Count 10 but convicted on all other counts. Ruan and

Couch renewed their motions for judgment of acquittal or new trial, and the district

court denied the motions.

On May 25 and 26, 2017, the district court imposed below-guidelines

sentences of 252 (Ruan) and 240 (Couch) months of imprisonment, each to be

followed by four years of supervised release. Ruan was ordered to pay

$15,239,369.93 in restitution and Couch $16,844,569.03. Ruan and Couch are

currently incarcerated. This appeal followed. 1

1

As necessary, additional procedural details are set forth with each issue below.

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B. Trial Evidence2

1. The Appellants’ Clinic and Pharmacy

The appellants were board-certified doctors specializing in pain

management. They co-owned a medical clinic, Physicians Pain Specialists of

Alabama (“PPSA”), and a pharmacy, C&R Pharmacy (“C&R”). PPSA had two

locations in Mobile, Alabama, one on Springhill Avenue and one on Airport

Boulevard. C&R was connected to PPSA’s Airport Boulevard location, and its sole

business was dispensing drugs prescribed at PPSA. The Springhill office contained

an in-office dispensary for workers’ compensation patients. Ruan worked primarily

at the Airport location and Couch primarily at Springhill, but once a week they

would switch locations. In May 2015, when an FBI raid shut down PPSA and

C&R, they had 57 employees and served over 8,000 patients.

The appellants’ medical practice was lucrative. From January 2011 to May

2015, the period covered by the Superseding Indictment, Couch made over $3.7

million from PPSA, and Ruan made over $3.9 million. C&R received a service fee

for each prescription it filled—more than 70,000 during those years—netting Ruan

and Couch each more than $555,000 from their pharmacy.

2. The Controlled Substances Act

2

Because the appellants challenge the sufficiency of the evidence against them at trial, the

following facts have been established by viewing the evidence presented at trial in the light most

favorable to the government. See United States v. Schlei, 122 F.3d 944, 952 (11th Cir. 1997).

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On the first day of trial government witnesses told the jury that the

Controlled Substances Act categorizes controlled substances into five schedules,

based on their abuse potential and medical value. The Act makes it a crime for

anyone to, among other things, dispense a controlled substance, with the exception

that licensed health care professionals may dispense Schedule II, III, and IV

controlled substances with a prescription. See 21 U.S.C. §§ 841(a)(1), 828.

However, such prescriptions are only lawful if they are issued for a legitimate

medical purpose in the usual course of the licensed health care professional’s

professional practice. See 21 C.F.R. § 1306.04.

From January 2011 to May 2015, the appellants wrote nearly 300,000

prescriptions for controlled substances, over half of which were Schedule II drugs.

Schedule II drugs are the most powerful and dangerous drugs that can be lawfully

prescribed, and they include many pharmaceutical opioids such as fentanyl,

hydrocodone, morphine, oxycodone, methadone, hydromorphone, and

oxymorphone. Opioids are dangerous because, while they can help mask pain,

their use can create physical and psychological dependence that can lead to

addiction. Side effects from opioid use include lethargy, confusion, falls, and

depressed breathing.

Opioids can be particularly dangerous when combined with two Schedule IV

controlled substances: benzodiazepines and carisoprodol. Benzodiazepines, such as

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Xanax and Valium, are psychoactive drugs that treat a wide range of conditions

including insomnia or anxiety. Carisoprodol is a muscle relaxant marketed under

the brand name Soma. The combination of these three types of drugs—which the

government referred to as the “Holy Trinity” at trial—is popular among substance

abusers because of its euphoric effect, yet it is highly addictive and can increase

the chances of the user’s death. Together, the appellants prescribed nearly 12.5

million units of Schedule II opioids, and opioid prescriptions accounted for nearly

75% of their total controlled-substance prescriptions. Most of the rest of their

controlled-substance prescriptions were for benzodiazepines and Soma, the other

components of the “Holy Trinity.”

3. Ruan and Couch Prescribed Millions of Doses of Opioids

Based on Their Financial Interests

The government sought to prove that Ruan and Couch prescribed millions of

doses of opioids and other controlled substances outside the usual course of

professional practice and, thus, illegally. Over Ruan and Couch’s objection, the

government used Alabama’s Prescription Database Monitoring Program

(“PDMP”), a database of all controlled substance prescriptions dispensed statewide

that is available to doctors and other health personnel, to pull Ruan and Couch’s

prescribing data. The government focused especially on Ruan and Couch’s

frequent prescribing of a version of fentanyl called transmucosal immediate-release

fentanyl (“TIRF”), which the Food and Drug Administration (“FDA”) had

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approved in 2011 to treat “breakthrough pain in adult cancer patients who are

already receiving and who are tolerant to around-the-clock opioid therapy.” The

two types of TIRFs that Ruan and Couch prescribed were Subsys, manufactured by

Insys Therapeutics (“Insys”), and Abstral, manufactured by Galena Biopharma

(“Galena”). Subsys is an under-the-tongue oral spray, and Abstral is an under-the-

tongue dissolving tablet, but both penetrate the blood-brain barrier more quickly

than medications absorbed digestively, working in five minutes compared to 45

minutes for most other opioids. Not surprisingly, TIRFs are expensive, with

average doses costing anywhere from $3,000 to over $20,000 per month. And

although it is not illegal for a doctor to prescribe TIRFs “off-label” to patients who

do not have cancer, insurers would usually only pay for on-label uses of TIRFs.

From January 2011 to May 2015, Ruan and Couch prescribed more than 475,000

doses of TIRFs to over 1,000 patients. From 2012 to 2014, they sharply increased

both the number of patients receiving TIRF prescriptions and the dosages

prescribed. This practice placed the appellants among the top TIRF prescribers

nationwide: they often surpassed the next highest prescriber by more than double.

Despite these high numbers of TIRF prescriptions, no more than 15% of PPSA

patients had cancer.3

3

For each doctor, the government used prescription records to identify the 25 patients

receiving the most Abstral and Subsys prescriptions. Comparing those lists to PPSA’s medical

records showed that more than half of those patients—14 on each list—did not have cancer and

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One of the ways in which the government sought to prove that Ruan and

Couch’s prescribing of Abstral and Subsys deviated from the usual course of

professional practice was that their prescribing habits tracked financial incentives

rather than their patients’ medical needs. One of the government’s medical experts,

Dr. Tricia Aultman (“Dr. Aultman”), testified that prescribing drugs based on

one’s own financial interest is outside the usual course of professional practice.

i. The Appellants’ Investments in Galena Stock

A DEA agent created a line chart showing the micrograms 4 of Abstral

prescribed by Ruan and Couch each month from January 2011 to May 2015. Ruan

and Couch prescribed very little Abstral until late 2013—the most Couch

prescribed was 76,800 mcg one month, and some months he did not prescribe any,

and Ruan’s prescriptions maxed out at 128,000 mcg per month. However, in April

2013, Galena initiated a study to gather data on how Abstral was working on

patients. As former Galena sales representative David Corin (“Corin”) testified,

Galena offered doctors $500 per patient to enroll in the study but limited it to 25

patients per doctor. Couch negotiated with Galena for an exception to enroll up to

75 of his patients for a fee of $2,500 per patient. Immediately after Galena

were thus receiving TIRFs off-label. For those 28 patients, insurers paid more than $5.5 million

for Abstral and Subsys during the time covered by the Superseding Indictment.

4

Fentanyl is so powerful that, unlike other opioids, it is measured in micrograms (one

millionth of a gram) (“mcg”), not milligrams (“mg”).

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approved that arrangement, Couch began prescribing over 1.5 million mcg of

Abstral per month.

Similarly, in September 2013, Ruan prescribed only 25,600 mcg of Abstral.

But in October 2013, his prescriptions rose to 192,000 mcg. Around that time, a

Galena sales representative visited PPSA in Mobile. Shortly thereafter, Couch and

Ruan began purchasing Galena stock. Between November 2013 and January 2014,

they purchased more than $1.3 million of stock, both individually and through

PPSA. In a February 2, 2014, email to Couch, Ruan wrote that they could “play a

big role” in increasing the value of Galena stock. A few day later Ruan emailed

another doctor, writing that although he had never purchased stock before, he

decided to invest in Galena to help “generate enough profit to pay for [his] divorce

settlement.” And in a February 17, 2014, email between Ruan and a colleague,

Ruan indicated that he suspected Galena would have a “substantial market share

growth at the end of March.” Ruan’s prescribing of Abstral greatly increased

during this time. For example, in January 2014, Ruan prescribed over 1.4 million

mcg; in February he prescribed over 2.3 million mcg; and in March his

prescriptions rose to over 2.6 million mcg. Galena’s stock price increased

dramatically from October 2013 to the start of 2014, more than tripling in price.

However, Corin testified that in January 2014, members of Galena’s board

of directors were given a “blackout period” in which they were briefly permitted to

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sell their stock; they did so—“millions of dollars’ worth”—and the price “dropped

dramatically.” Ruan and Couch “were very upset,” and a Galena representative

flew to Mobile in February 2014 to calm them down because they were “important

individuals for Galena” and the company’s “highest Abstral prescribers.” Ruan and

Couch demanded that Galena fire its CEO and board. Between March and October

2014, their Abstral prescribing plummeted. Ruan reached a low of 624,000 mcg in

August 2014, but that month, Galena fired its CEO, and in November, the new

CEO came to Mobile to meet Ruan and Couch at Ruan’s demand. After that visit,

their Abstral prescriptions again spiked, with Couch prescribing over 2 million

mcg and Ruan prescribing over 1.8 million mcg in November. A similar dip in

Ruan and Couch’s Abstral prescribing in February 2015 matched a significant dip

in Galena’s stock price in February 2015, followed by another visit by the CEO to

Mobile, and a rebound in Ruan and Couch’s prescribing.

Corin also explained that Galena initiated a voucher program in August

2013, where patients could receive up to three vouchers for 32 tablets of Abstral.

Because TIRFs were so expensive, the purpose of the program was to help patients

afford the drugs while they awaited insurance approval and to allow doctors to

titrate patients onto the medication, with one voucher being issued at a time until

an appropriate dose was found for a full prescription. However, Ruan and Couch

would use all three prescriptions at once. Galena started losing money as a result of

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this practice because Galena would pay for all 96 pills instead of whatever

vouchers were needed to titrate the patients, and Couch and Ruan were the top two

prescribers in the country, accounting for 30% of the total prescriptions for

Abstral. Under the voucher program, the pharmacy filling the prescriptions got

paid the same as if the prescription was fully covered by insurance. And 91% of

the Subsys and Abstral prescriptions Ruan and Couch wrote were filled by their

patients at their own pharmacy, C&R. Galena had to abandon the voucher program

in March 2014, and Ruan and Couch slowed their prescribing of Abstral in

response to the cessation of the voucher program.

When PPSA was shut down in May 2015, national Abstral sales dropped

“significantly.” In fact, Galena was forced to sell its license for Abstral because it

could not make up the lost revenue.

ii. The Appellants’ Participation in Insys’s Speaker

Program

Natalie Perhacs (“Perhacs”), a former sales representative for Insys, testified

that Insys also sought to influence Ruan and Couch’s prescribing with money.

Perhacs first met Ruan and Couch when she was a sales representative for a

respiratory equipment company. Eventually, Ruan recommended Perhacs for a job

at Insys. Perhacs became the Insys drug representative for Ruan and Couch. She

explained that Insys had created a speaker program in August 2012 in which it paid

doctors to talk about Subsys to other doctors, usually over a meal at a restaurant.

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Pharmaceutically-funded speaker programs are lawful, but payments made to

doctors are required to be disclosed to the public. Both Ruan and Couch had been

speakers for Insys since before she started. The stated goal of the speaker program

was to educate doctors and get them to write more prescriptions, but Perhacs stated

that Ruan and Couch would do speaker programs when no other prescribers

showed up. She stated that PPSA was one of the top ten prescribers of Subsys, and

Ruan and Couch were “whales” (the top prescribing doctors). She indicated that

the actual purpose of the speaker program was to influence Ruan and Couch into

continuing to prescribe Subsys, and Ruan and Couch were paid for their

involvement in these dinners. In 2013, Ruan and Couch were each paid to host one

program per week, and although no prescribers, or the same prescribers, would

show up to speaking programs, they were rarely canceled because the point was

not to educate others but to “influence how many prescriptions [the appellants]

write.” If a program was canceled, Perhacs could be fired or face a financial

penalty.

In November 2013, Ruan approached a Galena sales representative about

becoming a speaker for Abstral because of his high-prescribing of TIRF

medications, generally. However, Galena decided it would not make sense to have

Ruan be a speaker because there were no other doctors in the area prescribing

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TIRF medications, and the purpose of the speaker program was to educate other

doctors.

In early 2014, after the appellants started prescribing more Abstral, the

competing TIRF medication, Insys employees grew concerned about losing market

share. On an email including top Insys executives, the Vice President of Sales said

that “Dr. Ruan and Dr. Couch are killing us.” In April 2014, Insys reduced, but did

not stop, the appellants’ speaking programs.

A few months later, in June 2014, Ruan learned that a Michigan doctor, the

top national Subsys prescriber, had been indicted for receiving kickbacks from

Insys in part related to his acceptance of honoraria received from the speaker

program. In that criminal complaint, which Ruan saw, Ruan and Couch are

identified by prescriber number as the number three and five prescribers,

respectively. The next day, Ruan began planning for Insys to donate all of his

subsequent speaker fees to universities, in one case establishing a scholarship in his

name.

Nonetheless, Insys paid Couch more than $100,000 and Ruan over $166,000

for speaking engagements from 2013 until the FBI raided PPSA in May 2015. In

2016, Perhacs pled guilty to conspiracy to violate the Anti-Kickback statute by

paying kickbacks to the appellants to prescribe Subsys through the speaker

program.

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iii. The Appellants Ordered Unnecessary Drug Tests and

Used Their Pharmacy Inappropriately

Prescribing certain drugs when they had a financial self-interest to do so was

not the only example of illegal conduct by Ruan and Couch: the government also

sought to prove that they ordered unnecessary drug tests for patients solely because

they would generate revenue. Government expert Dr. Rahul Vohra (“Dr. Vohra”)

explained that in pain management, drug testing patients can be a valuable clinical

tool because it can tell a doctor whether the patients are not taking the drugs

prescribed or are taking other drugs that they should not be. This testing comes in

two forms: an in-office “cup” screening, which is instantaneous but less accurate,

and an off-site test with gas chromatography and mass spectroscopy (GC-MS),

which takes longer but is more accurate. In 2013, Ruan began ordering off-site

GC-MS testing for every patient because, in his words, off-site testing “generates

revenue,” while in-office urine tests “pays nothing.” Ruan negotiated with the off-

site drug testing company, threatening to work with a competitor unless the

company could start immediately because he was “losing about $8,000 a day from

not testing and . . . cannot just wait.” Later that year, when PPSA switched to an

electronic medical records system, and nurses forgot to order the GS-MS tests in

the system for every patient, Ruan forwarded to Couch a discussion from the

testing company about the missing orders, estimating an annual lost profit of over

$800,000. He told Couch, “[I]f we do not run GC-MS, there is no revenue.”

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Dr. Aultman and Dr. Vohra also explained that the proper way for a doctor

to use drug screening is to counsel patients whose tests are inconsistent, indicating

potential diversion or abuse of drugs, or to eventually “fire” them as patients. Yet

the government presented evidence that Ruan and Couch rarely fired patients

whose drug screens were inconsistent because they would lose the revenue. For

example, a patient who was selling his medications was released from the practice

only after his sixth or seventh inconsistent drug test using his five-year-old son’s

urine. Another patient, a former felon with numerous drug screens not showing

prescribed drugs, was also continuously prescribed more opioids. An email Ruan

wrote to a medical student was introduced, in which Ruan stated that “[i]n private

practice the more you fire, the more revenue you lose.” Instead, he opined, “when

one patient tests positive for street drugs, that gives you more reason to do more

frequent urine drug screens, which pays three times more than an office visit.”

While Ruan and Couch did not often fire patients with inconsistent drug screens,

they did fire patients whose insurance would no longer pay for their TIRFs. For

example, despite a history of drug abuse and three trips to the emergency room

caused by her overusing TIRFs, Ruan dismissed patient Kathleen Burns only after

her insurance stopped covering Subsys.

The government also put on evidence that Ruan and Couch used their

pharmacy, C&R, inappropriately. Insys helped them prescribe more Subsys by

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ensuring it would be in stock at C&R. C&R was “having trouble filling [Subsys] as

often as it was written.” This was even though, in 2014, C&R was ordering from

wholesalers more than 42 times as much Subsys as the average U.S. pharmacy.

Insys’s owner and its CEO came to Mobile, and it was arranged that C&R would

purchase Subsys directly from Insys, cutting out the wholesalers. Ruan and Couch

also asked Galena to cut out the wholesalers and ship Abstral directly to C&R, but

it refused. However, Galena did offer a rebate program under which C&R received

8.75% of the purchase price for all Abstral it dispensed. C&R dispensed nearly $13

million of Abstral, approximately half of which occurred after the rebate

agreement, making its rebate to C&R more than half a million dollars.

Additionally, Ruan and Couch often prescribed medications based solely on

what was in stock at C&R, rather than on the patient’s medical needs. Nurse

practitioners testified that Ruan “strongly encouraged” patients to use C&R and

that staff took patients’ prescriptions directly to C&R. One testified that Ruan

“wanted to know what we [C&R] had in stock” before writing prescriptions. Dr.

Greenberg opined that Ruan and Couch should have disclosed to patients that they

owned C&R, but they rarely did.

4. Ruan and Couch Often Prescribed Opioids Without Seeing

Patients, Obtaining Informed Consent, or Keeping

Accurate Records

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Another way that the government sought to establish that PPSA operated

outside the usual course of professional practice was to show that Ruan and Couch

prescribed powerful opioids without actually seeing patients. The government’s

medical experts testified that before prescribing controlled substances, a doctor

should see the patient, take a medical history, and do an exam. A doctor who

conducts a thorough evaluation of each patient can normally see 20 to 25 patients

per day, but PPSA routinely processed 150 to 200 patients daily, often quadruple-

booking patients for the same time. This worked because many PPSA patients

never saw Couch and rarely saw Ruan. In fact, one patient for whom Couch signed

multiple prescriptions and another patient’s wife who came to half of her

husband’s appointments could not identify Couch in court because they had never

met him. Others said they had met him only once, despite multiple PPSA visits

during which he signed prescriptions for them. Instead, patients were seen by nurse

practitioners who were not doctors, namely Justin Palmer, Stacy Madison,

Bridgette Parker, Matt Bean, and Sharon Noland.

The jury was able to see this practice firsthand as DEA task force officer

Patrick Kelley (“Kelley” or “Officer Kelley”) went undercover to PPSA as a

patient under the alias “Shawn Brennan” in August 2014. Kelley testified, and

undercover videos of his PPSA office visits were played for the jury. The DEA

arranged for a local chiropractor to refer Kelley to Couch with medical records,

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including normal MRI results. Although Kelley was first turned away from PPSA

because he did not have insurance, he was admitted later that same day after the

chiropractor called PPSA to vouch for him. Rather than see Couch, Kelley saw a

nurse practitioner, Stacy Madison (“Madison), who took a brief medical history

from Kelley but did not question him about his pain levels, even though he had

deliberately left that question blank on the new patient form. Kelley was asked to

bend forward as far as he could without pain, and he was able to touch the floor.

Nonetheless, he was asked whether he had previously taken anything that helped

with his pain. Kelley started his answer with the caveat that he was “going to have

to admit to some criminal activity” and said that he had “blue” pills called

“Roxy”— purposefully using street names for Roxicodone 30 mg, an “immediate

release” version of oxycodone that is popular among substance abusers. Couch

made a 42-second appearance at the end of that visit and signed a 90-pill

prescription for Roxicodone 30 mg. Kelley returned for four more visits, never saw

Couch again, and received Roxicodone prescriptions each time. At his third visit,

the nurse practitioner, now Bridgette Parker (“Parker”), increased his dose to 110

pills. Kelley never filled the prescriptions, which a check of Alabama’s PDMP

would have revealed, and urine tests did not show the drugs in his system, but no

one at PPSA ever discussed that with him. Parker also gave Kelley signed

prescriptions, dated for a month later than his visit, although regulations provide

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that physicians must write a separate prescription for each 30-day supply of a

Schedule II drug and prohibit a single prescription with refills. The prescriptions

Kelley received at three of these visits to PPSA were the basis for Couch’s

convictions for illegal drug distribution on Counts 5–7.

Two undercover DEA agents posed as patients of Ruan’s as well, but Ruan

never prescribed either patient opioids. The government moved in limine to

exclude videos of these visits, arguing that they did not show anything illegal and

Ruan was merely trying to prove that he practiced “good medicine.” The district

court agreed, so the jury never saw them.

Nurse practitioner Justin Palmer (“Palmer”) also offered extensive testimony

for the government, particularly about Couch’s practice. Palmer had worked at

PPSA since July 2010, first working with both Couch and Ruan but after about a

year working almost exclusively with Couch. Palmer stated that he would see

roughly 30 patients a day on Couch’s behalf, often starting hours before Couch

arrived at the office. Some patients believed Palmer was a doctor, referring to him

as “Dr. Justin.” Palmer’s visits were billed to insurance as if Couch was the one

seeing the patients. Palmer also wrote prescriptions for opioids under Couch’s

signature, even though Palmer was not authorized to prescribe Schedule II drugs.

When Couch went on vacation, “he would leave prescription pads that were

presigned so [Palmer] could write what [he] needed to.” Couch continued doing

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this even after PPSA’s practice administrator told him it was illegal and risky. In

time, Palmer began forging Couch’s signature on prescriptions. PPSA and C&R

staff knew Palmer was doing this, and nurses and the pharmacist would ask him to

sign Couch’s name on prescriptions and records. At one point, Couch caught

Palmer forging his name on a prescription for Adderall, a Schedule II drug, and

fired him—but only for “10 minutes”—before deciding to give him a second

chance and rehiring him. Palmer stated that he believed that Couch continued to be

aware of his forgery because Palmer was seeing patients when Couch was on

vacation or out of the office. Palmer estimated that, between 2011 and 2012, he

had forged Couch’s signature 15 to 20 times a day.

Palmer also purchased Galena stock when Ruan and Couch did. After that,

he and Couch discussed candidates that they believed could be suitable for Abstral,

and it was suggested that Palmer find people to put on the drug. Palmer also

confirmed that he prescribed TIRF drugs to non-cancer patients for breakthrough

pain, such as migraines that did not respond to other medication.

Palmer testified that, while at PPSA, he observed what he believed to be

drug-seeking behavior from patients, such as patients needing more and more

medication, saying that they had lost medication, coming back early for refills, or

saying that they had new pain. He stated that he would often have to argue with

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patients because he believed that their pain was not as severe as they were

reporting. The government asked:

Q: Did you feel like you were overwriting?

A: I did.

Q: Approximately what percentage of the patients did you feel like

were overwritten?

A: At least—at least half, half to maybe more.

Palmer also stole and abused medications from PPSA while working there.

After a PPSA employee caught Palmer actively injecting drugs while at work,

Couch suspended him with pay for two weeks. According to Palmer, nurse

practitioners Parker and Madison also used drugs while working for Couch. Prior

to trial, Palmer pled guilty in this action to conspiracy to distribute controlled

substances outside the usual course of professional practice and without a

legitimate medical purpose.

Nurse practitioner Sharon Noland (“Noland”) also testified for the

government. She had worked at PPSA since November 2011, working solely for

Ruan until May 2014. She testified that Ruan would prescribe certain drugs—

which Noland called the “flavor of the day”—based on what speaker programs he

was doing and what was being pushed by “drug reps,” even if the patient’s pain

was controlled on an existing regimen. She described that Ruan was “very

involved with the practice,” agreeing with the government’s characterization that

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he tended to “micromanage.” Noland said that she witnessed Palmer signing

prescriptions as Couch.

Nurse practitioner Parker also testified. She had worked at PPSA from

September 2012 to January 2015, working solely for Couch since December 2013.

Parker testified that although TIRF medications were indicated for cancer, Ruan

used it off-label “for anything we could use it on.” Parker also testified that Ruan

would change patients’ medications, adding TIRF medications to their regimen,

when their prior medications were working. Ruan would also change patients from

one TIRF medication to another without explanation. Parker confirmed that Palmer

would sign Couch’s name on prescriptions, and she stated that she believed that

half of the patients at PPSA were overmedicated, basing her opinion on the fact

that the patients “looked . . . overmedicated, wanted more medication.” Parker also

abused prescription drugs while at work, even going into withdrawal, and Couch

agreed to help pay for her treatment. Like Palmer, Parker pled guilty prior to trial

in this case to conspiracy to distribute controlled substances.

Ruan was aware of Couch’s practice of permitting Palmer and others to see

patients and write prescriptions on Couch’s behalf. In July 2014, for example,

Ruan sent an email to Couch asking Couch to “talk to Justin [Palmer] on cutting

down” the amount of Roxicodone 30 mg he prescribed in light of news reports that

Alabama had the most opioid prescriptions in the country, which Ruan feared

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could increase regulatory scrutiny of PPSA. 5 Couch responded that “[w]e,”

meaning he and Palmer, would not “write triple digit dispentions [sic] of short

acting opioids.” And although Ruan usually signed his own prescriptions, he often

did so without seeing patients. Several nurse practitioners testified that they would

line up at Ruan’s office for him to sign prescriptions. One patient testified that he

did not meet Ruan until his “fourth or fifth visit” when Ruan “stuck his head in the

door” to introduce himself.

The government’s experts also explained to the jury that the usual course of

professional practice is to obtain patients’ informed consent before administering

5

The full email reads as follows:

I noticed you have quite a few [patients] on Roxicodone 30mg . . . and Oxycontin

80mg.

Based on the diversion study done in FL pill mills, these two are the most[] thought

of in South FL, therefore [they are] considered [the] biggest reg [sic] flag[s]. I think

you should talk to Justin [Palmer] on cutting down Roxicodone 30mg usage,

especially [because] we are trying to convince [the] AL board of medical examiners

that we have a great system to keep [patients] satisfied[] and addicts out. We [do

not] want Roxicodone 30mg [to] mess things up, or at least contradict[] . . what we

promote. I believe I have two [patients] on oxycodone 30mg, one of them is a W/C,

cannot handle all others. Also, try to use Oxycontin 60mg instead of 80mg may also

help.

Now, everyone in the nation knows that AL state prescribes the most pain killers in

the nation, [so] we will need to adjust our routine regimen a bit. One of the things

I have done is to wean off on [benzodiazepines], or ask their [primary care

physician] to write their [benzodiazepine], as [benzodiazepine] prescription is also

one of the things they look at and[] [w]e would rather be careful than sorry. Please

remind [Palmer] about this stuff.

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drugs and to have accurate records supporting every prescription. But there was

evidence presented that many patients received no warnings before receiving

prescriptions for powerful opioids. And many PPSA records contained numerous

errors, including not listing all prescriptions written or explaining why a

prescription was changed. Patients testified that exams and tests listed in their

medical records did not occur.

5. Specific Prescriptions Were Illegal

Aside from evidence pertaining to how Ruan and Couch operated PPSA, the

government also put on evidence that Ruan and Couch treated approximately three

dozen specific PPSA patients outside the usual course of professional practice or

prescribed them medications for no legitimate medical purpose. Fourteen patients,

or their family members, testified at trial, criticizing the care they received. The

government’s three medical experts, Dr. Aultman, Dr. Vohra, and Dr. David

Greenberg (“Dr. Greenberg”), reviewed other patients’ files and offered their

opinions that the appellants’ treatment of those individuals did not meet the usual

course of professional practice standard. Evidence was presented that Ruan and

Couch rapidly increased patients’ opioid dosages beyond the minimum necessary

for pain control and failed to refer patients for mental-health treatment, surgery, or

physical therapy that their records indicated would have been appropriate. They

prescribed powerful opioids to people displaying red flags for diversion and abuse,

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like criminal records, inconsistent drug screens, and drug-seeking behavior. Some

patients testified that they were overmedicated on opioids, making their lives

worse.

For example, patient Randall Blackmon (“Blackmon”) testified that he saw

Couch on his first visit to PPSA but only saw Palmer on subsequent visits.

Blackmon was prescribed morphine, methadone, and Subsys, even though he did

not have cancer; a physical examination was never conducted; and no one warned

him that Subsys could interact negatively with his existing medications. He took

1600 mcg of Subsys four times a day for eight months, and he claimed that it made

him lethargic and ruined his quality of life. Towards the end of the eight months,

he presented to his primary care physician in such a dire state on Subsys that he

was taken directly to the emergency room. At that point he learned that Subsys was

only recommended for cancer patients, and his insurance stopped covering it. By

that time his insurance had paid over $21,500 per month for his Subsys.

Similarly, patient Joyce Barber (“Barber”) was never treated by Couch, only

Madison. She was prescribed Subsys with no warnings of the risks, and although

she did not have cancer, PPSA staff reported to her insurer that she had uterine

cancer so that her Subsys prescription would be covered. Barber testified that

Subsys made her feel like she was in a fog, and when Madison increased her

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prescription from 200 mcg to 400 mcg, she became addicted, slept all day, and had

no quality of life.

Patient Tina Goellner never saw Couch as a patient of PPSA. She recounted

that, although she told staff at her first visit that she did not want to be prescribed

narcotics for her pain because she was worried about becoming addicted, she was

prescribed Subsys anyway and told that she should not worry because she did not

have an “addictive personality.” Subsys made her sleepy within two minutes of

taking it, and when her dosage was increased rapidly from 200 mcg four times a

day, to 400 mcg four times a day, to 800 mcg four times a day, she began sleeping

all day.

Patient Tamison Blanks(“Blanks”) testified that she saw Couch once for five

minutes despite going to regular appointments at PPSA for over 11 months.

Although she was already taking Soma and hydrocodone (brand name Norco), she

was prescribed 600 mcg of Subsys to use four times a day on her first visit, with no

warnings. She described her dosage as “very strong” and said that she became a

“monster” on Subsys. She described an instance where the Subsys numbed her to

the point that she lay on a heating pad for so long that it burnt her breast, requiring

a visit to the emergency room. She also said that at one of her appointments at

PPSA, nurse practitioner Parker had abused opioids to the point that she was

talking incoherently and fell asleep for about 10 minutes. Blanks commiserated

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with Parker’s predicament because she had been in the same situation, and left that

appointment and immediately checked in to a rehabilitation center.

In an attempt to contrast testimony like the foregoing, Ruan and Couch

sought to call patients who would have testified that they approved of their

treatment by Ruan and Couch and that their treatment enabled them to have a

better quality of life. However, the district court ruled that because the appellants

were not charged with illegally prescribing medication to all of their patients, and

the government acknowledged that they had many patients to whom they provided

legitimate care,6 this “good patient” evidence was irrelevant to the charges and

would waste time in an already lengthy trial. They were thus prohibited from

calling patients not identified in the Superseding Indictment or otherwise presented

throughout the government’s case, but they were, however, able to call as

witnesses patients whose files were discussed by the government’s experts.

6. The Appellants Engaged in Fraud, Accepted Kickbacks,

and Ruan Laundered the Proceeds

Aside from violating the Controlled Substances Act, the government also

presented evidence that the appellants engaged in fraud. Ruan and Couch lied to

insurers, telling them that some patients had cancer so that insurers would pay for

their TIRF prescriptions. BlueCross BlueShield of Alabama (“BCBS”), which

6

Indeed, despite the Superseding Indictment calling PPSA a “pill mill,” by the time of trial

the government began referring to it as a “money mill” instead.

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insured a large portion of PPSA’s patients, paid less for nurse practitioner visits

than for doctor visits and had a policy requiring a physician to actually see a

patient before billing for services under the physician’s name, yet Ruan and Couch

routinely billed BCBS for office visits conducted entirely by nurse practitioners

under the doctor’s identification number. The appellants also billed for more

complex office visits than they actually conducted, resulting in more revenue.

To support the charges alleging conspiracies involving kickbacks, Perhacs

testified that the fees Ruan and Couch received from the Insys speaking

engagements were solely to induce them to prescribe more Subsys. Separately, the

government sought to prove that the company that managed PPSA’s in-house

workers’ compensation dispensary gave illegal kickbacks to Ruan and Couch in

exchange for referring their patients. Christopher Manfuso (“Manfuso”) testified

that Ruan and Couch treated patients with work-related injuries covered by

workers’ compensation insurance, which most workers get through a state

program. For patients’ convenience, Alabama’s workers’ compensation program

permits doctors to have an in-office dispensary for workers’ compensation patients.

Unlike a pharmacy, a dispensary provides only prepackaged medication. Insurers,

including the workers’ compensation program, “apply a steep discount” to

medication dispensed at a pharmacy and billed electronically. But in a dispensary,

the state sets the prices for medications, and Alabama’s fee schedule is “quite

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generous compared to commercial insurance.” Accordingly, “there’s more money

to be made” with a dispensary than sending workers’ compensation patients to a

pharmacy, even one owned by the doctor; the revenues can be “about a hundred

percent higher.”

The appellants ran such a dispensary at PPSA’s Springhill location to

dispense drugs to patients covered by workers’ compensation insurance. In 2011,

Industrial Pharmacy Management (“IPM”) approached the appellants about taking

over the management of their dispensary. When working with an outside company

like IPM to manage a dispensary, the management company usually fronts the

money to purchase the medications under the doctor’s DEA number and then

reimburses itself from the gross receipts. The management company then deducts

its management fee, usually 30%, and any additional costs, and the doctor is left

with the remaining profit. With their previous management company, Ruan had

been receiving around $40,000 a month in profit from PPSA’s dispensary. To

“induce [the appellants] to sign up with” IPM, Manfuso, an IPM representative,

offered to deviate from the standard payment model and guarantee Ruan $45,000 a

month—regardless of how much or how little the dispensary actually profited—

because it was “the only way [he] could get the business.” Over the next two years,

Ruan executed several variations of this contract with IPM, negotiating on behalf

of both himself and Couch. Ruan’s guarantees fluctuated between $45,000 and

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$53,000 a month. Couch received guaranteed payments in the $15,000-to-$20,000

range. To hide this difference from Couch, Ruan insisted that Manfuso send the

checks to his house, not to PPSA.

After several years, the FBI raided and shut down IPM for paying kickbacks,

and Michael Drobot, Manfuso’s direct boss at IPM, pled guilty to providing

kickbacks in a California prosecution. Manfuso then opened his own company,

Comprehensive RX Management (“CRM”). Ruan demanded even higher

guarantees from CRM, upwards of $80,000 a month at one point. All told, Ruan

received more than $2.4 million and Couch received nearly $1 million from IPM

and CRM.

Manfuso recalled that his interactions with Ruan were “[e]xtremely atypical”

of the hundreds of other doctors with whom Manfuso worked. In determining how

to stock the formulary (the dispensary’s inventory of drugs), Ruan was interested

in the profit margins of various drugs, not clinical information. Manfuso also

ultimately pled guilty to violating the Anti-Kickback statute.

Finally, to support the three money laundering counts, the government

presented evidence that Ruan had 23 different bank accounts and used proceeds

from illegal activities to purchase two luxury cars, worth over $100,000 each.

7. The Defense Case

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Ruan and Couch testified in their defense, both stating that their various

policies and practices were within the usual course of professional practice. Couch

denied ever giving Palmer permission to sign his name on a prescription. On cross-

examination, the government asked Ruan about the email that he sent to Couch

regarding Palmer writing fewer Roxicodone prescriptions. The following exchange

occurred:

Q: Okay. Now, is this one of the things you told [Couch] is: Please

remind [Palmer] about this stuff.

A: That’s what it said.

Q: Because you knew that [Palmer] was writing [prescriptions for

Roxicodone]; correct?

A: He was initiating, I thought, not that he was—he saw the follow

up and he initiated it. Dr. Couch had to approve. So if he

initiated it, Dr. Couch do [sic] not want to turn it down.

Q: But you had knowledge that [Palmer] was—you wanted

[Palmer] to cut down the [Roxicodone]; is that correct?

A: Initially, yes. That’s my intention; that’s right.

Q: And Dr. Couch told you back that he reviewed it with [Palmer]

and it says: We do not write triple digits; is that correct?

A: Yes, that’s what it says.

Q: It says “we?”

A: Right.

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Ruan and Couch also called various PPSA employees and five patients

identified by the government who testified favorably as to their course of treatment

at PPSA. They called three experts, Dr. Carol Warfield (“Dr. Warfield”), Dr.

Christopher George Gharibo, and Dr. Jeffrey A. Gudin. Dr. Warfield opined that

Dr. Couch’s prescribing habits were within the usual course of professional

practice and for a medical purpose. Specifically, Dr. Warfield reviewed files for

five of Couch’s patients, and she testified that the medications Couch prescribed

were in the usual course of medical practice and for a legitimate purpose. The other

experts testified similarly. 7

C. Forfeiture and Ruan’s Sentence

Immediately following the verdict, Ruan signed a forfeiture agreement,

stipulating that he “w[ould] not oppose the entry of a Preliminary Order of

Forfeiture, forfeiting the above-listed assets and sums of money.” He agreed to

forfeit various bank accounts, two real properties, and 18 cars, and to the entry of a

money judgment “for a sum of money of at least $5,000,000.” The following week,

the district court entered a Preliminary Order of Forfeiture pursuant to this

agreement. This order became final at sentencing.

In Ruan’s presentence investigation report (“PSR”), the probation officer

applied a base offense level of 38 under U.S.S.G. § 2S1.1, based on an underlying

7

Where necessary below, additional trial evidence is discussed regarding some issues.

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offense of drug conspiracy for which the government asserted that Ruan was

accountable for the equivalent of 309,872 kilograms of marijuana. Ruan then

received a two-level enhancement under U.S.S.G. § 2S1.1(b)(2)(B) because he had

been convicted of violating 18 U.S.C. § 1956. He received another two-level

enhancement for abusing a position of public trust, pursuant to U.S.S.G. § 3B1.3.

Finally, Ruan received a two-level obstruction-of-justice enhancement for

testifying falsely at trial pursuant to U.S.S.G. § 3C1.1. The PSR calculated the

adjusted offense level as 44, but because the offense level exceeded the maximum

level used in the guidelines, which is 43, the PSR treated Ruan’s total offense level

as 43. Because Ruan had no criminal history, he was attributed a criminal history

category of I.

Based on an offense level of 43 and a criminal history category of I, the PSR

noted that the guideline imprisonment range was simply “life.” However, the

statutorily-authorized maximum sentences for each of the convictions were less

than the applicable range. Specifically, the PSR noted that the maximum term of

imprisonment was: (1) 20 years for each of Counts 1, 2, 4, 8, 9, 11, and 12; (2) 40

years for Count 3; (3) 10 years for each of Counts 15, 18, 19, 20, 21, and 22; and

(4) 5 years for each of Counts 16 and 17. Pursuant to U.S.S.G. § 5G1.2(b), the

probation officer converted the statutory maximum penalties to months and added

them together, arriving at a guideline range of 3,000 months. The probation officer

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also determined that Ruan owed restitution totaling $17,261,859.14 to various

insurance companies that had paid for illegal prescriptions.

Ruan objected to the PSR and filed a sentencing memorandum, and the

government responded to his objections. Ruan first objected that the government’s

drug-quantity calculation grossly overestimated the number of relevant

prescriptions. The government responded that the district court needed only to

approximate the quantity of controlled substances that were within the scope of the

criminal activity that Ruan jointly undertook. The government explained that to

reach that total drug quantity, the government requested data of all controlled

substances that PPSA prescribed during the relevant period, and then reduced the

list to only morphine, oxycodone, methadone, hydromorphone, oxymorphone, and

fentanyl. The government then calculated the total number of grams prescribed of

each individual drug by first multiplying the number of units of the drug prescribed

by its strength and converting that result to grams. Then, the government

calculated the total amount of each drug and converted these totals to their

marijuana equivalents. In determining how many of those prescriptions were

illegal, the government acknowledged that not all prescriptions were illegal.

However, the government noted that there was testimony from several witnesses,

including nurse practitioners Palmer and Parker, who roughly estimated that 50%

of the patients were illegally prescribed controlled substances. However, the

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government also stated that the ascribed offense level would still have been

appropriate even if only 10.6% of the prescriptions written by Ruan and Couch

were illegal. The government argued that sufficient evidence at trial was presented

for the court to find that at least 10.6% of the prescriptions were written outside the

usual course of professional practice, including: the manner in which Ruan and

Couch prescribed opioids was consistent across time and patients; Couch rarely

saw patients during follow up office visits; prescriptions were written in Couch’s

name by Palmer, which both doctors knew about; 5,793 prescriptions were written

in Couch’s name when he was out of the state or country; patients were seen and

prescribed opioids before Couch would arrive to work at PPSA; and Couch and

Ruan prescribed medication when they had a financial self-interest to do so.

Ruan disagreed, contending that the drug quantity should have been based

on what was proven at trial through expert or patient testimony, and he argued that

any reliance on Palmer’s or Parker’s statements as to 50% of the prescriptions

being unlawful would be improper because (1) there was no established basis for

their opinions, (2) they worked at a different location than Ruan, and (3) they

lacked the ability or expertise to reach their conclusions. Ruan also offered DEA

publications, which he stated showed that the average sentence for cases with

between 1 and 5 distribution counts was 83.4 months.

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Ruan also adopted Couch’s arguments at sentencing, among them that other

circuits followed a more nuanced approach in calculating drug quantities attributed

to physicians because doctors’ prescriptions were presumed to be legal. He also

asserted that courts should exclude any prescriptions that merely breach the civil

malpractice standard because that standard did not establish criminality. He noted

that, despite the government having Palmer on the stand for several hours, the

reference to the 50% figure lasted mere seconds, and the government could have

elicited more details from Palmer, such as explaining whether the term

“overmedicated” referred to a breach of the civil standard of care or to

prescriptions outside the usual course of professional practice.

Ruan’s second objection to the PSR was to the restitution calculation. The

government explained that it calculated restitution by taking the total paid for

medications by insurers BCBS, United Healthcare, Medicare, and Tricare, and first

deducted the payments each made for non-controlled substances and Schedule IV

and V controlled substances. Then, the government deducted 15% of the total each

insurer paid for TIRF prescriptions, based on testimony that no more than 15% of

PPSA patients were cancer patients. The government finally deducted 50% from

the amounts each insurer paid for the remaining Schedule II prescriptions based on

the testimony that 50% of PPSA patients were overmedicated. Ruan responded,

with regard to the illegal TIRF prescription percentage of 85%, that off-label TIRF

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prescriptions were not inherently illegal. He pointed out that insurance companies,

including BCBS, sometimes approved such prescriptions, and that Dr. Aultman

had agreed that prescribing off-label is not illegal. He also argued that the 50%

figure as to the remaining Schedule II drugs was speculative, and the government

should provide specific evidence as to why each prescription paid for by each

insurer was fraudulent.

Ruan’s third objection was to the obstruction-of-justice enhancement. In

response, the government stated that Ruan testified falsely when he stated that he

was unaware that Palmer was forging Couch’s prescriptions. In an email, Ruan

reminded Couch to talk to Palmer about not prescribing “red flag” drugs, and

testimony from other PPSA employees and patients established that nearly

everyone was aware that Palmer was prescribing controlled substances in Couch’s

name. The government pointed out that Ruan had a financial interest in that

activity because prescriptions forged by Palmer could be filled at C&R.

At sentencing, Ruan reiterated these arguments.8 He also argued that: (1) he

prescribed half the number of drugs that Couch did; (2) he exercised greater

oversight over his nurse practitioners than Couch had; (3) he had an excellent

national reputation; and (4) despite some mistakes, he practiced good medicine and

8

The district court ruled on the appellants’ common objections at Couch’s sentencing,

which was the day before Ruan’s. Ruan’s attorney participated in these portions of Couch’s

sentencing.

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legitimately helped patients. The government responded that: (1) Ruan was the

leader of PPSA and that every aspect of the illegal activity was led and directed by

him; (2) he made a variety of decisions in his practice based on whether he would

make money off of them rather than whether it would benefit the patient being

treated; and (3) he had a variety of valuable assets that he attempted to hide.

The district court found that Ruan was the leader of the fraud offenses and

racketeering enterprise. The court noted that Ruan was the “better doctor”—insofar

as he had more board certifications and degrees—but it was his making the

business decisions that necessitated a higher sentence. The district court stated that

it recalled testimony that 50% of the prescriptions written were not for a legitimate

medical purpose and stated that using this testimony was a reasonable way for the

government to calculate the drug-quantity and restitution amounts. The court found

that the government had showed that at least 10.6% of the prescriptions were

written outside the usual course of professional practice, and it concluded that the

appropriate base offense level was 38. The district court also found that the

obstruction-of-justice enhancement was appropriate because it concluded that the

email from Ruan to Couch about Palmer was a clear indication that Ruan was

aware of Palmer forging prescriptions. The court sentenced Ruan to 252 months’

imprisonment, varying downward because Ruan did not have a criminal history

and because the court believed that the sentence reflected the seriousness of the

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offense and the need for punishment, deterrence, and incapacitation. It also ordered

Ruan to make restitution as described in the PSR. Lastly, the district court finalized

a preliminary order of forfeiture as to Ruan.

II. Discussion

A. Sufficiency of the Evidence

Ruan challenges the sufficiency of the evidence on all counts against him.

Couch joins Ruan’s arguments as to their joint convictions—Counts 1–4, 15–17,

and 19. 9

This Court “review[s] the sufficiency of the evidence de novo, viewing the

evidence and all reasonable inferences and credibility choices in favor of the

government and the jury’s verdict.” United States v. Ignasiak, 667 F.3d 1217, 1227

(11th Cir. 2012). “A conviction must be affirmed unless there is no reasonable

construction of the evidence from which the jury could have found the defendant

guilty beyond a reasonable doubt.” Id. As we explain below, we conclude that the

evidence presented at trial was sufficient to convict the appellants on all of the

counts that are challenged, except Count 16 charging both appellants with

9

Couch does not challenge on appeal the sufficiency of the evidence on Counts 5–7,

substantive drug distribution charges based on the prescriptions he wrote for Officer Kelley, or

on Counts 13 and 14, substantive drug distribution charges based on prescriptions he wrote for

his patients Kenneth Daves and Patrick Chausse.

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conspiring to violate the Anti-Kickback statute based on their operation of PPSA’s

in-house workers’ compensation dispensary.

1. Counts 8, 9, 11, and 12: Substantive Drug Distribution

Against Ruan10

Counts 8, 9, 11, and 12 of the Superseding Indictment alleged that Ruan’s

prescribing of opioids to four specific patients violated 21 U.S.C. § 841(a)(1), and

18 U.S.C. § 2. In the medical context, drug distribution in violation of § 841(a)(1)

requires proof that either “1) the prescription was not for a ‘legitimate medical

purpose’ or 2) the prescription was not made in the ‘usual course of professional

practice.’” United States v. Joseph, 709 F.3d 1082, 1102 (11th Cir. 2013) (quoting

United States v. Tobin, 676 F.3d 1264, 1282 (11th Cir. 2012)). “The mens rea

required for a conviction under section 841(a)(1) is ‘knowledge, not willfulness.’”

Id. (quoting Tobin, 676 F.3d at 1279–80). Ruan was charged and convicted as both

a principal, 21 U.S.C. § 841(a)(1), and an aider and abettor, 18 U.S.C. § 2. To

sustain a conviction under 18 U.S.C. § 2, “the prosecution must show that ‘the

defendant associated [him]self with a criminal venture, participated in it as

something [ ]he wished to bring about, and sought by [his] actions to make it

succeed.’” Id. (quoting United States v. Pantoja-Soto, 739 F.2d 1520, 1525 (11th

Cir. 1984)).

10

We discuss the various counts of conviction slightly out of order for ease of analysis.

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i. Count 8: Prescriptions Ruan Wrote on February

26, 2015 for Diane Greathouse

Count 8 charged that six prescriptions Ruan wrote for patient Diane

Greathouse (“Greathouse”) on February 26, 2015—two for 400 mcg each of the

TIRF medications Abstral and Subsys, one for 40 mg of OxyContin (an extended

release oxycodone), and one for 10 mg of Norco—amounted to unlawful drug

distribution. Government expert witness Dr. Greenberg reviewed Greathouse’s file

and testified at trial that those prescriptions were not for any legitimate medical

purpose and that Ruan’s overall treatment of Greathouse, including prescribing

them, was outside the usual course of professional practice. In support, Dr.

Greenberg stated that Ruan prescribed Greathouse Abstral and Subsys, two TIRF

medications that are intended for cancer treatment, although she did not have

cancer. Additionally, in his opinion, Ruan’s choice to prescribe both Abstral and

Subsys, different formulations of the same drug, “makes no sense.” Dr. Greenberg

further explained that Ruan was already prescribing Greathouse such high doses of

opioids that she could be “in a stupor and ready to fall into a coma”, but then had

tried to counteract those effects, not by discontinuing the opioids but by improperly

prescribing Provigil, an amphetamine, to the mixture of drugs. He also noted that

Ruan had previously prescribed Greathouse a naloxone (brand name Narcan)

injector, which is used as an antidote for fentanyl overdoses, without her informed

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consent and without ensuring that her family members, who would be the ones

using it in case of her overdose, had CPR or other relevant training.

Ruan’s principal argument in support of his claim that the evidence was

insufficient to convict him on Count 8—as well as on Counts 9, 11, and 12—is that

Dr. Greenberg’s testimony was unreliable. Ruan draws our attention to the fact that

on the Monday following Dr. Greenberg’s testimony at trial, which had concluded

the previous week, government counsel alerted the district court and defense

counsel, through a motion filed under seal, that Dr. Greenberg had notified them

over the weekend that he thought he had early-onset dementia and was consulting a

neurologist. During a hearing outside the presence of the jury, government counsel

expressed misgivings about some of Dr. Greenberg’s testimony, represented that

he had offered to refund monies and not charge for his trial testimony and that the

government intended to accept his offer, but indicated that the government wanted

to gather more information before deciding whether to ask for a specific jury

instruction on the issue.

Despite this troubling circumstance, Ruan cannot succeed on his

insufficiency of the evidence argument. Neither Ruan nor Couch asked the district

court to provide the jury with the government’s disclosure concerning Dr.

Greenberg’s mental health. Rather, at the in-chambers hearing, Couch’s attorney

noted that the standard for competency is “fairly liberal,” recounted that Dr.

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Greenberg had been cross-examined, and mentioned that “we don’t think that

there’s anything there.” Ruan’s attorney said nothing. The district judge stated, “I

don’t think there’s any question that he was competent to testify,” suggested that

the issue merely related to Dr. Greenberg’s credibility, and decided to await more

information from the government, if any materialized. No further information was

presented by the end of trial.

Considering the foregoing, to the extent Ruan asserts that the jury should

have been made aware that Dr. Greenberg thought he may have a mental health

issue, our review of that claim is limited to plain error because Ruan never

preserved the issue. See Fed. R. Crim. P. 52(b) (“A plain error that affects

substantial rights may be considered even though it was not brought to the court’s

attention.”). And although Dr. Greenberg was the sole government expert witness

relating to the four substantive drug distribution counts charged against Ruan,

defense counsel rigorously cross-examined him, during which time, as discussed in

further detail below, he admitted to several errors and omissions in his testimony

and even changed his opinion on several points. Thus, the jury was aware that Dr.

Greenberg’s testimony was not infallible. We thus cannot say that, even if the

jurors had known of Dr. Greenberg’s disclosure to government counsel, they

“could not have found [Ruan] guilty under any reasonable construction of the

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evidence.” Ignasiak, 667 F.3d at 1229 (quoting United States v. Merrill, 513 F.3d

1293, 1299 (11th Cir. 2008)).

Aside from Dr. Greenberg’s credibility, Ruan also argues that the evidence

was insufficient to convict him on Count 8 because the jury heard during Dr.

Greenberg’s cross-examination that (1) the medications Ruan prescribed

Greathouse alleviated her pain and enabled her to continue working, (2) the

Centers for Disease Control and Prevention recommend Narcan when a patient is

at risk for opioid overdose, and (3) the FDA authorizes the manufacture of larger

doses of Subsys and Abstral than what Ruan prescribed. We are not persuaded that

reasonable jurors could not have found guilt after hearing this evidence. Dr.

Greenberg testified that if Greathouse was able to work it would only be because

of the amphetamines Ruan prescribed her and prescribing those was “simply way

below the rational standard of care for dealing with people who are in a near

overdose state.” He further explained that subsequent studies had shown that

Narcan did not always work as intended when given by a family member instead

of a medical professional and would not help a patient, like Greathouse, who was

also taking other drugs with sedative effects, including benzodiazepines. The jury

was entitled to credit Dr. Greenberg’s testimony. Sufficient evidence supports

Ruan’s conviction on Count 8 for drug distribution.

ii. Count 9: Prescriptions Ruan Wrote on April 27, 2015

for Kim Lowe

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Count 9 was based on three prescriptions Ruan wrote on April 27, 2015, to

patient Kim Lowe (“Lowe”) for 600 mcg of Fentora, which is a fentanyl lozenge,

and 80 mg and 15 mg of the opioids OxyContin and oxycodone, respectively. Dr.

Greenberg reviewed Lowe’s file and testified at trial that those prescriptions were

not for any legitimate medical purpose and that Ruan’s overall treatment of Lowe

since January 2009 was outside the usual course of professional practice. Dr.

Greenberg specifically stated that Ruan acted outside the usual course of

professional practice when he: (1) failed to take down Lowe’s history of illnesses

and medications; (2) failed to refer her for mental health treatment despite her

general complaints of “severe pain over her entire body” lasting more than 20

years, which Dr. Greenberg opined was a “red flag” for a psychiatric problem

given that there are few diseases that can cause such symptoms; (3) failed to obtain

Lowe’s informed consent prior to prescribing her a combination of oxymorphone

(brand name Opana), OxyContin, Xanax, oxycodone (brand name Percocet),

Lunesta sleeping pills, and Soma; (4) prescribed Lowe, who did not have cancer,

the fentanyl lozenge, which Dr. Greenberg described as an “end-of-life drug that is

only approved by the FDA for people who are in the last stages of their lives with

cancer”; (5) failed to counsel her when she ran out of medications prematurely,

which suggested that she was either taking more than what was prescribed or

diverting medications; and (6) ignored positive urine screening test results for

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hydrocodone and fentanyl at a time when Ruan was not prescribing her those

medications.

Ruan points out that on cross-examination, Dr. Greenberg was shown a part

of Lowe’s medical file dating back to 2008 that he had never seen before that

revealed that Ruan did in fact do an initial exam, record Lowe’s medical history,

and review information from her referring physician when he first saw her as a

patient. Dr. Greenberg was also shown where Lowe kept a pain diary and

communicated her perceived levels of pain to Ruan. Additionally, Lowe herself

testified for the defense, stating that Ruan did more than just prescribe opioids; his

treatment of her included a back brace, various nerve and facet blocks, injections,

epidurals, physical therapy, and ointments. Although Lowe believed that the

medications Ruan prescribed medically benefited her, she also had trouble

remembering that she had been a patient of Ruan’s since 2009, believing instead

that she had only seen him for the past three years. The jury was entitled to credit

Dr. Greenberg, a physician, over Lowe, and even if Lowe felt that she benefitted

from the medications Ruan prescribed, a reasonable jury could nonetheless

conclude that the manner in which Ruan prescribed them was outside the usual

course of professional practice. Sufficient evidence supports Ruan’s conviction on

Count 9 for drug distribution.

iii. Count 11: Prescription Ruan Wrote on November 25,

2014 for Deborah Walker

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Count 11 addressed a prescription for the opioid Opana that Ruan wrote for

patient Deborah Walker (“Walker”) on November 25, 2014. Dr. Greenberg

testified that Walker came to Ruan 11 months earlier, in January 2014, seeking

pain medication shortly after completing a 19-month prison sentence. Dr.

Greenberg considered prison time a “giant red flag” for drug-seeking behavior but

noted that he did not see any indication that Ruan had asked Walker whether she

was incarcerated due to a drug-related crime. He also criticized Ruan’s failure to

refer Walker to a psychiatrist when it was noted in her file that she had bipolar

disorder with schizophrenic features. Dr. Greenberg also opined that Ruan should

have suspected diversion and counseled Walker on such matters when a urine test

performed during that January 2014 visit did not detect Soma and hydrocodone,

drugs that he thought Ruan had recently prescribed her. In Dr. Greenberg’s view, it

was improper for Ruan to have prescribed Opana because it is the “most sought[-

]after prescription drug by people who are heroin addicts or other I.V.-type abusers

of I.V. opioid drugs.” He also condemned Ruan’s addition of prescriptions for

Soma and hydrocodone at subsequent visits.

During a visit to Ruan in April 2014, Walker tested positive for several

drugs, including hydromorphone, that Ruan had not prescribed, which suggested to

Dr. Greenberg that Walker was receiving opioids from other doctors or off the

street. Dr. Greenberg testified that he did not believe that Ruan was checking the

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PDMP, which would have revealed that Walker was indeed receiving pain

medications from 12 or 13 different doctors. Dr. Greenberg opined that the

prescription Ruan wrote for Walker for Opana in November 2014 was merely the

last in a long line of medically illegitimate prescriptions that were written by Ruan

outside the usual course of professional practice.

Dr. Greenberg was subject to extensive cross-examination related to his

review of Walker’s file. He admitted that he had missed that Walker had been a

patient of Ruan’s in 2011, before going to prison, and that Ruan had prescribed the

Soma and hydrocodone before her period of incarceration, which could have

explained why those drugs were not present in the drug screen in January 2014,

after she had been incarcerated for 19 months. Dr. Greenberg was also shown

portions of Walker’s physical file from 2008, before PPSA migrated to electronic

record-keeping, showing that she had been advised about the dangers of

developing a dependency on opioids and mixing opioids with alcohol. Dr.

Greenberg admitted that such warnings and informed consent were within the

scope of professional medical practice.

The jury also heard from Walker’s husband, 11 who testified that his wife had

a drug addiction and served time for burglary and stealing to support her drug

11

By the time of trial, Walker had died. Prior to Walker’s husband’s testimony, the jury

was informed of her death and told that there were no allegations that Ruan or Couch was

responsible.

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habit. He described how Ruan rapidly increased her opioid dosages beyond the

minimum necessary for pain control, stating that her prescribed medications would

put her in an “almost comatose” state, that the dosages were so great that she

would immediately fall asleep after taking the medications, and that she routinely

fell asleep while cooking and he would come home from work to find their home

filled with smoke. Given this testimony, we find that the totality of the evidence

was sufficient for the jury to determine that Ruan dispensed controlled substances

to Walker outside the usual course of professional practice as charged in Count 11.

iv. Count 12: Prescription Ruan Wrote on October 10,

2012 for John Bosarge

Count 12 alleged that a prescription Ruan wrote for morphine sulfate (brand

name MS-Contin) on October 10, 2012, to patient John Bosarge (“Bosarge”) was

for no legitimate medical purpose and outside the usual course of professional

practice. Dr. Greenberg considered Bosarge, who was an opioid-dependent 50-

year-old, a “high risk” patient because he suffered from psychiatric and cardiac

problems as well as high blood pressure. Dr. Greenberg opined that Ruan’s

treatment of Bosarge was outside the usual course of professional practice because,

rather than prescribe the “absolute minimum” dose of opioids that would have

helped his pain yet addressed his opioid dependence, he combined the opioid

prescriptions with prescriptions for Xanax, a “sedative-hypnotic” drug, which

created a risk of an “accidental respiratory arrest,” and butorphanol, an “agonist-

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antagonist” drug, which could cause, if a patient is not detoxed from opioids first,

the patient to go into a painful withdrawal. Dr. Greenberg emphasized that the

warning labels on those medications warned against prescribing them together.

Ruan argues that the charged prescription was merely a continuation of

Bosarge’s prior treatment with his referring physician, but the jury heard evidence

that morphine like Ruan prescribed Bosarge is a stronger opioid than the

hydrocodone he was previously taking before the referral to Ruan. The jury was

entitled to credit Dr. Greenberg’s opinion that Ruan’s treatment of Bosarge fell

outside the usual course of professional practice, and sufficient evidence supports

Count 12.

2. Counts 2, 3, and 4: Drug Distribution Conspiracies Against

Couch and Ruan

Counts 2, 3, and 4 charged the appellants with conspiracies to dispense

Schedule II drugs, fentanyl, and Schedule III drugs, respectively, in violation of 21

U.S.C. §§ 846 and 841(a)(1). “In order to secure a conviction for unlawful

dispensation under § 841(a)(1), the government must prove that the defendant

‘dispensed controlled substances for other than legitimate medical purposes in the

usual course of professional practice, and that he did so knowingly and

intentionally.’” United States v. Azmat, 805 F.3d 1018, 1035 (11th Cir. 2015)

(quoting Ignasiak, 667 F.3d at 1227). “To establish a conspiracy in violation of §

846,” the government must prove that: “(1) there was an agreement between two or

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more people to commit a crime (in this case, unlawfully dispensing controlled

substances in violation of § 841(a)(1)); (2) the defendant knew about the

agreement; and (3) the defendant voluntarily joined the agreement.” Id. (footnote

omitted). “A conspiracy conviction will be upheld if ‘the circumstances

surrounding a person’s presence at the scene of conspiratorial activity are so

obvious that knowledge of its character can fairly be attributed to him.’” Id.

(quoting United States v. Figueroa, 720 F.2d 1239, 1246 (11th Cir. 1983)).

i. Counts 2 and 4: Schedule II and III Drugs

The appellants argue that the prescriptions they wrote for these drugs were

legitimate, but the evidence at trial indicated significant activities by Ruan and

Couch that were outside the course of professional practice. They altered their

prescribing habits where they had a financial interest, like when they increased

their Abstral prescriptions after purchasing stock in the company, decreased their

Abstral prescriptions after a drop in stock price and a change in voucher rules, and

increased them again after C&R entered a rebate agreement with Galena. Insys

maintained Ruan and Couch as weekly speakers in order to influence their

prescription habits. Palmer was forging prescriptions with Couch’s signature, and

he did this for his patients and for those of other PPSA nurses, something that

Ruan was aware of and acquiesced to. Couch and Ruan would leave blank

prescription pads, which sometimes only had the doctors’ signatures on them, for

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use by the nurses when the doctors were out of the office. Additionally, the patient

files examined for trial by the government’s experts suggested that there were

serious gaps in patients’ quality of care, including taking insufficient steps to

safeguard high-risk patients, ignoring signs of potential drug diversion, and failing

to get adequately informed consent before prescribing drugs, including for off-

label use. The jury was free to disbelieve Ruan and Couch and reasonably could

infer that the appellants were participating in a conspiracy to unlawfully distribute

controlled substances.

ii. Count 3: Fentanyl

Count 3 charged a conspiracy to distribute fentanyl, also a Schedule II

drug.12 The jury was asked to find whether the conspiracy involved more than 40

grams, a quantity triggering a 5-year mandatory minimum sentence under 21

U.S.C. § 841(b)(1)(B)(vi). The only argument the appellants raise regarding this

count is that there was insufficient evidence to support the jury’s finding that they

prescribed over 40 grams of fentanyl in a manner outside the usual course of

professional practice or for no legitimate medical purpose.

The government’s chart listing the appellants’ top 28 patients receiving the

most Subsys or Abstral prescriptions without a cancer diagnosis showed that the

12

The Schedule III conspiracy involved hydrocodone, which was reclassified to Schedule II

in 2014.

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appellants prescribed a total of 67.311 grams of fentanyl to those patients off-label.

The appellants claim that the jury could not consider the full 67.311-gram amount

because the government only presented testimony specifically addressing 10 of

those patients, who were prescribed a total of 33 grams. More specifically,

government expert Dr. Greenberg testified about five patients who were prescribed

a total of 14.958 grams, the fentanyl prescribed to the patients who testified was

16.621 grams, and the fentanyl prescribed to patients whose relatives testified was

1.487 grams. However, government experts Dr. Aultman and Dr. Vohra testified

about an additional five patients who were prescribed fentanyl not included in the

chart and testified that the appellants’ treatment of them was outside the usual

course of professional practice. The government points to PDMP data showing that

these five patients received 8.83 grams of fentanyl, which, combined with the 33

grams, surpasses the 40-gram threshold.

While the jury was shown PDMP data throughout the trial, we do not think

that they were sufficiently presented with the specific data showing that these five

patients received 8.83 grams of fentanyl. But even if the jury erred in finding that

over 40 grams was prescribed, the error was harmless because the 5-year

mandatory minimum sentence was well below the sentences the appellants

received. We find no error with the jury’s guilty verdict with regard to Count 3.

3. Count 15: Health Care Fraud Conspiracy Against

Couch and Ruan

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Count 15 alleged that the appellants engaged in a conspiracy to fraudulently

obtain money from a health care benefits program in violation of 18 U.S.C. §

1347(a). A health care fraud conspiracy exists when defendants agree to submit

false claims to health care benefit programs. United States v. Gonzalez, 834 F.3d

1206, 1214 (11th Cir. 2016). The defendants must have known that the claims

submitted were actually false. Id. “A person makes a false claim if the treatments

that were billed were ‘not medically necessary[ ] or were not delivered to the

patients.’” Id. (quoting United States v. Medina, 485 F.3d 1291, 1304 (11th Cir.

2007)). To sustain a conviction, the government “had to establish beyond a

reasonable doubt that: (1) a conspiracy existed to commit health care fraud under

18 U.S.C. § 1347; (2) [the appellants] knew of the conspiracy; and (3) [the

appellants] knowingly and voluntarily joined it.” Id.

The Superseding Indictment alleged and the government sought to prove at

trial that the appellants agreed to commit health care fraud in four ways: (1) falsely

certifying to insurers that some patients had cancer so that the insurers would pay

for their TIRF prescriptions; (2) billing BCBS for office visits conducted by nurse

practitioners using Couch’s physician identification number; (3) billing insurers for

drug tests that were medically unnecessary; and (4) billing insurers for PPSA

office visits at which patients were prescribed medically unnecessary drugs. If

sufficient evidence supports any one of these methods, we must uphold the health

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care fraud conspiracy conviction. See United States v. Ross, 131 F.3d 970, 984

(11th Cir. 1997).

First, the evidence was sufficient to convict the appellants of conspiring to

defraud a health care benefits program by falsely certifying to insurers that some

patients had cancer so that insurers would pay for their TIRF prescriptions. See

Gonzalez, 834 F.3d at 1215–16 (submitting a false claim to an insurer encompasses

lying about a patient’s condition to the insurer). DEA Special Agent Michael Burt

testified that Ruan signed a letter to Cigna confirming that his patient Kathleen

Burns’s prescription for Subsys had been “for breakthrough cancer pain,” when

she did not have cancer. 13 Similarly, Perhacs, the former pharmaceutical sales

representative for Insys, testified that Couch signed a form sent to Insys to get

insurance approval for Abstral, 14 listing patient Ronald Ivy’s diagnosis as bladder

cancer, yet his medical file had no mention of any cancer. Several witnesses,

including DEA Diversion Investigator Michelle Penfold and Couch’s nurse

practitioner Palmer, discussed how a Subsys prescription for Joyce Barber listed a

diagnosis of “[u]terine cancer.” Barber herself testified that when her insurance

company later called her to verify that she had cancer and she told them truthfully

13

Dwight Burns, Kathleen Burns’s husband, confirmed Burt’s testimony. By the time of

trial, Kathleen Burns had died. Prior to her husband’s testimony, the jury was informed of her

death and told that there were no allegations that Ruan or Couch was responsible.

14

Insys had a unit in its home office, called the “Internal Reimbursement Center,” to assist

physicians in obtaining insurance approval for Insys.

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that she did not, they stopped covering Subsys. And Dr. Aultman, when testifying

regarding her review of several patient files, noted that a prescription Couch wrote

for Brenda Ward had “cervical cancer” written on it even though her medical

record contained no verification of that diagnosis.

We also find that the evidence was sufficient to convict the appellants for

conspiring to defraud BCBS. Cindy McKenzie, a BCBS employee who oversees

and manages fraud activities, testified that the appellants routinely billed for office

visits conducted entirely by nurse practitioners, like Palmer, under Couch’s

identification number. This practice is called incident to billing, and while some

insurers allow it,15 BCBS did not. Rather, BCBS paid about 30% less for nurse

practitioner visits than for doctor visits, and it expressly required a physician

working with a nurse practitioner to also “see[] and render[] services to the patient”

to bill BCBS under the doctor’s name. In October 2014, BCBS clarified its policy,

effective January 1, 2015, to permit only the “provider who is physically

conducting or affirming the [patient’s history] and performing an in-person

examination” to submit a bill. BCBS notified providers of this change, and Ken

Cross, PPSA’s practice manager, testified that he told the appellants that they at

least needed to see their patients every visit. Yet Palmer saw dozens of BCBS

15

Medicare, TriCare, and others allowed “incident to billing,” allowing submission of bills

under a doctor’s provider number if the doctor was involved in the treatment, through

participation or oversight.

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patients every day without Couch. BCBS found no records of PPSA visits billed

under Palmer’s name, only those billed under Ruan’s and Couch’s. McKenzie

testified that “[t]hat’s a false claim.”

Although Ruan testified that he personally saw all of his patients, he

acquiesced in Couch’s practice of permitting Palmer and others to see patients

independently. This is evidenced by the July 2014 email in which Ruan asked

Couch to “talk to Justin [Palmer]on cutting down” the amount of Roxicodone 30

mg he prescribed in light of news reports that Alabama had the most opioid

prescriptions in the country. Couch responded that “[w]e,” meaning he and Palmer,

would not “write triple digit dispentions [sic]of short acting opioids.”

We also find that the evidence was sufficient to convict the appellants for

conspiring to defraud a health care benefits program by billing for expensive off-

site urine screen tests that were medically unnecessary. Ruan ordered them for

every patient because they generated more revenue than in-house tests. And the

jury heard from several sources that the appellants rarely discussed inconsistent

test results with patients, whether to counsel them into compliance or fire them as

patients. Ruan himself had stated that “[i]n private practice the more you fire, the

more revenue you lose.” Instead, he opined, “when one patient tests positive for

street drugs, that gives you more reason to do more frequent urine drug screens,

which pays three times more than an office visit.”

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Finally, because we have already found that the evidence is sufficient to

convict the appellants of illegally prescribing drugs, like Abstral and Subsys,

outside the course of professional practice, we find that their billing insurers for

PPSA office visits at which patients were prescribed these drugs that C&R then

dispensed, is an alternative object of the health care fraud conspiracy. Indeed, for

Abstral and Subsys, the appellants were either the top or among the top billers of

BCBS, Medicare, Tricare, and United Healthcare. While not all of these

prescriptions were illegal, some were. In sum, the evidence was sufficient to

convict Ruan and Couch for health care fraud conspiracy.

4. Counts 16 and 17: Conspiracies to Receive Kickbacks

Against Couch and Ruan

Counts 16 and 17 charged the appellants with conspiring, in violation of 18

U.S.C. § 371, 16 to violate the Anti-Kickback statute in two different ways. The

statute provides in part that:

Whoever knowingly and willfully solicits or receives any remuneration

(including any kickback, bribe, or rebate) directly or indirectly, overtly

or covertly, in cash or in kind . . . in return for referring an individual

16

That statute provides:

If “two or more persons conspire either to commit any offense against the United

States, or to defraud the United States, or any agency thereof in any manner or for

any purpose, and one or more of such persons do any act to effect the object of the

conspiracy, each shall be fined under this title or imprisoned not more than five

years, or both.”

18 U.S.C. § 371.

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to a person for the furnishing or arranging for the furnishing of any item

or service for which payment may be made in whole or in part under a

Federal health care program . . . shall be guilty of a felony and upon

conviction thereof, shall be fined not more than $100,000 or imprisoned

for not more than 10 years, or both.

42 U.S.C. § 1320a-7b(b)(1).

i. Count 16: PPSA’s Workers’ Compensation

Dispensary

Count 16 charged the appellants with violating the Anti-Kickback statute by

conspiring together and with Michael Drobot and Manfuso to accept kickbacks in

exchange for letting IPM and CRM run their in-office workers’ compensation

dispensary. The appellants argue that their convictions on Count 16 must be

vacated because there was no “Federal health care program” associated with

PPSA’s workers’ compensation dispensary. As we explain below, we agree.

As noted, to prove a violation of the Anti-Kickback statute, the government

needed to prove that the appellants (1) knowingly and willfully (2) received

remuneration (3) in return for referring individuals to a person for the furnishing of

medication (4) paid for by a “Federal health care program.” See 42 U.S.C. §

1320a-7b(b)(1). The statute defines a “Federal health care program”—Medicaid

and Medicare are common examples—as “any plan or program that provides

health benefits, whether directly, through insurance, or otherwise, which is funded

directly in whole or in part, by the United States Government.” 42 U.S.C. § 1320a-

7b(f) (emphasis added). Because the 42 U.S.C. § 1320a-7b(b) offense was alleged

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as an 18 U.S.C. § 371 conspiracy, federal jurisdiction was premised on the

existence of a “Federal health care program,” in addition to that also being an

element of the substantive crime. In short, the government had to show that federal

funds passed through PPSA’s workers’ compensation dispensary.

In determining whether federal jurisdiction exists, the court examines

the sufficiency of the evidence offered by the government. United States v. Key, 76

F.3d 350, 353 (11th Cir. 1996) (“Whether the government proved the jurisdictional

element is measured as a challenge to the sufficiency of the evidence.”). “All

evidence and inferences therefrom are viewed in the light most favorable to the

verdict.” Id. The relevant inquiry in making this determination is whether a

reasonable jury could have found the jurisdictional element to have been satisfied

beyond a reasonable doubt. Id.

In United States v. Dennis, 237 F.3d 1295 (11th Cir. 2001), this Court

examined at length the amount of evidence sufficient to prove federally-insured

status in a bank-fraud prosecution. In that case, a government agent testified that

the two banks involved were federally insured. Id. at 1304. However, this Court

found the testimony “equivocal,” and although the jurisdictional nexus was

established for one of the banks through an official bank document containing the

phrase “MEMBER FDIC,” there was no such evidence relating to the other bank.

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Id. Regarding the second bank, this Court found the agent’s testimony alone

insufficient to establish the element:

The agent’s conclusion that the bank was federally insured appears to

be premised upon his belief that because a bank is a ‘national bank,’ it

is necessarily a ‘federally insured bank.’ This reasoning lacks legal

support. A ‘national bank’ is not necessarily ‘federally insured.’ As

demonstrated by pertinent statutory provisions, the two concepts are

distinct and not synonymous.

Id. at 1305. This Court held that the evidence was insufficient to prove beyond a

reasonable doubt that the bank in question was federally insured and vacated the

conviction for bank fraud. Id.

The evidence here is similarly equivocal. The government relied on two

items to satisfy the requirement that the kickbacks must have been paid in

exchange for referring individuals for services paid for by federal funds. First, the

government relied on exhibits showing that the U.S. Department of Labor paid for

office visits for several workers’ compensation patients. But the exhibits showed

that the U.S. Department of Labor paid for physician services, not prescriptions.

Second, the government put on evidence that, while most of PPSA’s

workers’ compensation patients were covered by state-funded insurance, at least

some patients who received medications from PPSA’s workers’ compensation

dispensary were longshoremen who were covered by an insurance provider by the

name of “FARA.” FBI Special Agent Amy White read into evidence a July 2012

email from Manfuso, in which he told Ruan:

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FARA is a federal longshoreman insurance program that has requested

that you no longer dispense to their patients. Since they are a federal

program, and not an Alabama workers’ comp state program, the laws

and regulations that apply to their patients are different. . . . Alabama

workers’ comp law supports that the patient has the right to choose

where to get their medications. Alabama work comp insurance

companies cannot legally tell you not to dispense to their patients.

Federal law unfortunately does not state that the patient has the right to

choose where to get their medication. The insurance company that

covers an injured federal worker—in this case that’s FARA—has the

ability to direct the patient to a certain pharmacy service to get their

medication. In other words, FARA is allowed to tell you that they don’t

want you to dispense to their patients and they would like you to send

their patients to an outside pharmacy.

There were other subsequent emails from Manfuso to Ruan where Manfuso

repeatedly instructed Ruan to “immediately stop dispensing to FARA patients”

because FARA was refusing to cover their medications. The government claimed

that FARA was a “Federal health care program.” However, none of the documents

offered by the government at trial contained any indication that federal monies

actually passed through the dispensary. The appellants argue that FARA is merely

an insurance program administrator that covered several patients at the dispensary.

The only evidence at trial relating to FARA are the emails from Manfuso to Ruan,

which do nothing more than note that FARA is an insurance company. Moreover,

FARA is not named in 42 U.S.C. § 14402(d), the statute listing Federal health care

funding programs, like Medicare and Medicaid. We find that this evidence was

insufficient to establish beyond a reasonable doubt that FARA paid for

prescriptions with federal funds or that federal monies otherwise passed through

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PPSA’s workers’ compensation dispensary. Because this element of the offense

was not proven, the appellants’ convictions for conspiracy to violate the Anti-

Kickback statute charged in Count 16 cannot stand. Accordingly, we reverse and

vacate the appellants’ convictions on Count 16, and we vacate their sentences as to

this count.

ii. Count 17: Insys’s Speaker Program

Count 17 alleged that the appellants conspired with each other, Perhacs, and

others to violate the Anti-Kickback statute through their participation in Insys’s

speaker program. The evidence clearly showed that Insys was using its program as

a cover to funnel money to its top prescribers—Couch and Ruan. In the words of

Perhacs, Insys selected the appellants to speak because they were “whale[s]”—“in

[Insys’s] top 10 list”—and that the entire point of the speakers’ program was “[t]o

influence [the appellants] to keep prescribing a lot of Subsys.” People outside of

PPSA office staff rarely attended these dinners, and the ones who did were

sometimes “the same prescriber, time and time again.” In contrast, a representative

for Galena, the pharmaceutical company manufacturing Subys’s competitor,

Abstral, testified that when Ruan requested to be a speaker for Abstral, Galena

declined because “he was treating all of the patients in the area, it didn’t make

sense for him to be a speaker because there would be nobody to speak to.”

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The appellants contend that the government failed to prove that they acted

willfully to violate the Anti-Kickback statute. “Willfully” means that the act was

committed voluntarily and purposely, with the intent to do something the law

forbids. See United States v. Starks, 157 F.3d 833, 837–38 (11th Cir. 1998). Ruan

points to testimony by Perhacs that Insys selected him as a speaker because he was

a respected pain management physician. He also argues that Perhacs testified

against him in hopes of receiving a sentence reduction. But there was sufficient

evidence for the jury to believe that the speaking program was a sham, and Insys

only reduced them after the appellants had been prescribing more and more of the

competitor product, Abstral, for months. Additionally, Ruan showed consciousness

of guilt when he began to direct Insys to dispose of the money by donating his

speaking fees to various universities. Sufficient evidence supports the conviction

on Count 17.

5. Count 19: Mail or Wire Fraud Conspiracy Against

Couch and Ruan

Count 19 charged the appellants with conspiring with Perhacs, Palmer, and

Parker to commit mail or wire fraud in violation of 18 U.S.C. § 1349. To prove

such a conspiracy, “the government need not demonstrate an agreement

specifically to use the interstate wires to further the scheme to defraud.” United

States v. Hasson, 333 F.3d 1264, 1270 (11th Cir. 2003). Instead, “it is enough to

prove that the defendant knowingly and voluntarily agreed to participate in a

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scheme to defraud and that the use of the interstate wires in furtherance of the

scheme was reasonably foreseeable.” Id. “A scheme to defraud requires proof of

material misrepresentations, or the omission or concealment of material facts . . . .”

Id. at 1270–71.

The Superseding Indictment charged, and the government sought to prove at

trial, that the appellants conspired to make three types of misrepresentations to

insurers. The first misrepresentation was that they routinely billed BCBS for more

expensive doctor visits when only a nurse practitioner saw the patient. As

discussed in the previous section devoted to Count 15, the evidence was sufficient

to convict the appellants of health care fraud conspiracy for these actions. And

since the government established that PPSA submitted these bills electronically,

the use of the mails or wires element is met. The second misrepresentation, also

discussed in the section regarding Count 15 above, was that they lied to insurers

about patients being diagnosed with cancer to induce those companies to pay for

TIRF prescriptions. The jury saw that PPSA and the insurers sent forms and letters

related to coverage via fax and mail. The third misrepresentation was that Ruan

selected the most lucrative controlled substances to stock at PPSA’s workers’

compensation dispensary, and then he and Couch prescribed those drugs, making

their medical decisions based on profit, not the needs of patients. As discussed in

the section devoted to Count 16 above, Manfuso testified that while he and Ruan

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frequently discussed the profit margin of various drugs for the formulary, Ruan

never talked with him about the drugs’ clinical aspects. Because the evidence

showed that these discussions occurred over email between Ruan in Alabama and

Manfuso in Maryland, the element of the use of interstate mail in furtherance of the

scheme was satisfied.

6. Count 1: RICO Conspiracy Against Couch and Ruan

Count 1 charged the appellants with conspiring to violate RICO based on

predicate acts of drug distribution and mail or wire fraud. To establish a conspiracy

to violate RICO under 18 U.S.C. § 1962(d), “the government must prove that the

defendants ‘objectively manifested, through words or actions, an agreement to

participate in the conduct of the affairs of the enterprise through the commission of

two or more predicate crimes.’” United States v. Starrett, 55 F.3d 1525, 1543 (11th

Cir. 1995) (quoting United States v. Russo, 796 F.2d 1443, 1455 (11th Cir. 1986)).

“A RICO conspiracy differs from an ordinary conspiracy in two respects: it need

not embrace an overt act, and it is broader and may encompass a great variety of

conduct.” Id. (quoting United States v. Pepe, 747 F.2d 632, 659 (11th Cir. 1984)).

The appellants first contend that the jury could not have reasonably found

that PPSA was a RICO “enterprise” because they operated it as separate medical

practices at two different locations. We disagree. Ken Cross, the appellants’ former

practice manager, testified that PPSA, as well as C&R, were legal entities jointly

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owned by the appellants. The RICO definition of an “enterprise” is broad,

including “any individual, partnership, corporation, association, or other legal

entity, and any union or group of individuals associated in fact although not a legal

entity.” 18 U.S.C. § 1961(4). While Ruan and Couch generally saw their own

patients and divided their income proportionate to revenues generated from

patients that each treated, they also made financial and business decisions together,

such as buying Galena stock with PPSA funds. Ruan also negotiated with IPM and

CRM on behalf of himself and Couch to manage the PPSA workers’ compensation

dispensary. They discussed practice-management issues, such as Palmer’s

prescribing habits, via email, shared in the profits of C&R, and even worked at

each other’s primary location once a week. The jury had abundant evidence to

conclude that the appellants were members of an “enterprise” as RICO defines the

term because not only were PPSA and C&R jointly owned but Ruan and Couch

were also associated in fact.

There was also sufficient evidence presented to establish the commission of

two or more predicate crimes. As detailed in the previous sections, the jury

reasonably concluded that the appellants committed least two of the 13 drug

distribution and mail or wire fraud counts charged. We thus conclude that the jury

reasonably determined that RICO’s predicate acts requirement was satisfied.

7. Counts 20, 21, and 22: Money Laundering Conspiracy

and Substantive Money Laundering Against Ruan

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Count 20 charged Ruan with conspiring with Manfuso and others to commit

money laundering in violation of 18 U.S.C. § 1956(h). “That section makes it a

crime to conspire to commit money laundering in violation of 18 U.S.C. § 1956 or

§ 1957.” United States v. Moran, 778 F.3d 942, 962 (11th Cir. 2015). “Under §

1956(h), ‘only two elements of conspiracy need be proven: (1) an agreement

between two or more persons to commit a money-laundering offense; and (2)

knowing and voluntary participation in that agreement by the defendant.’” Id.

(quoting United States v. Broughton, 689 F.3d 1260, 1280 (11th Cir. 2012)). Here,

the government alleged that the object of the 18 U.S.C. § 1956(h) conspiracy

charged in Count 20 was 18 U.S.C. § 1957 money laundering. That section

prohibits “knowingly engag[ing] or attempt[ing] to engage in a monetary

transaction in criminally derived property of a value greater than $10,000 and is

derived from specified unlawful activity.” 18 U.S.C. § 1957(a). Additionally,

Counts 21 and 22 charged Ruan with substantive money laundering in violation of

18 U.S.C. § 1957(a). For these counts, the “monetary transaction[s] in criminally

derived property” were alleged to be Ruan’s purchase of two expensive

automobiles. The “specified unlawful activity” underlying all three counts was

alleged to be health care fraud conspiracy in violation of 18 U.S.C. § 1347(a),

conspiracy to violate the Anti-Kickback statute in violation of 18 U.S.C. § 371, and

conspiracy to distribute controlled substances in violation of 21 U.S.C. § 846.

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In support of these counts, evidence was submitted that Ruan had 23

different bank accounts, some under his own name and others in the names of

various companies he controlled, such as XLR Exotic Autos, LLC. Ruan received

millions in profits from PPSA and C&R as well as speaker payments from Insys.

Some of this money made its way into XLR Exotic Autos’ bank account. In

August and September 2014, Ruan used Erin Bauer, his personal assistant, to

arrange two car purchases for him. Ruan wired $124,355.87 from XLR Exotic

Autos’ bank account to an auto dealer in Dallas to purchase a 2011 Audi R8

Spyder. The following month, he wired $110,000 to a different dealer in San Diego

as partial payment for a 1994 Lamborghini Diablo.

Ruan asserts that there was insufficient evidence to convict him of

conspiring to commit money laundering because PPSA and C&R had legitimate

income and the purpose of purchasing the vehicles was not to funnel money back

into a criminal venture. He relies largely on United States v. Miles, 360 F.3d 472

(5th Cir. 2004), but that case is distinguishable because it involved money

laundering promotion under 18 U.S.C. § 1956(a)(1)(A)(i), which criminalizes

financial transactions involving funds that are derived from specified illegal

activity, where the “transactions are intentionally aimed at promoting specified

unlawful activity.” Id. at 476. Here, the object of the money laundering conspiracy

was 18 U.S.C. § 1957(a), which the Fifth Circuit in Miles recognized is different: it

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allows prosecutions for the “mere expenditure of unlawfully obtained funds” as

long as the expenditure is more than $10,000. Id. at 477–78 (citing United States v.

Brown, 186 F.3d 661, 670–71 (5th Cir. 1999) (explaining that in § 1957(a),

“Congress established a $10,000 per transaction threshold for convictions for

simply spending dirty money”)). This Court has similarly noted that because there

is no need to establish the intent to conceal or promote, and in light of the $10,000

threshold, 18 U.S.C. § 1957 “prohibits a wider range of activity than money

‘laundering,’ as traditionally understood.” Moran, 778 F.3d at 963 (quoting United

States v. Wetherald, 636 F.3d 1315, 1325 n.2 (11th Cir. 2011)).

Thus, all that was required of the government as to Counts 21 and 22 was to

prove two elements: (1) Ruan knowingly engaged in a financial transaction greater

than $10,000 and (2) at least $10,000 of that money came from a “specified

unlawful activity.” Ruan argues that there was insufficient evidence that he used

funds from specified unlawful activity to purchase the cars. But to the extent that

Ruan is guilty of conspiracy to commit health care fraud, conspiracy to receive

kickbacks, and distribution of controlled substances, his challenge to his money

laundering convictions also fails. As detailed above, Ruan made millions from

health care fraud and distribution of controlled substances. The government traced

those proceeds to the XLR Exotic Autos bank account used to purchase the cars.

No more was required.

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Having concluded that the evidence was sufficient to convict the appellants

on all of the counts challenged, except Count 16, we now turn to the appellants’

challenges to various evidentiary rulings at trial.

B. Evidentiary Challenges

1. Admission of PDMP Data

The appellants challenge the government’s use of prescribing data pulled

from Alabama’s PDMP and similar databases from Florida and Mississippi. The

PDMP is a database of all controlled substance prescriptions dispensed—dispensed

meaning that the patient actually receives the medication—in Alabama. The

Alabama Department of Public Health (“ADPH”) maintains the PDMP database,

and the government called state pharmacy director Nancy Bishop, who oversees

the PDMP, to explain the system and offer the records.

Alabama law established the PDMP to “materially assist state regulators and

practitioners authorized to prescribe and dispense controlled substances in the

prevention of diversion, abuse, and misuse of controlled substances prescription

medication.” Ala. Code § 20-2-210; see also Miss. Code Ann. § 73-21-127; Fla.

Stat. § 893.055(2)(a). Each doctor or pharmacist who dispenses controlled

substances is required by law to report the following information to the PDMP

database: the patient’s name, the prescriber’s name, the medication prescribed, the

dosage amount, the quantity of medication dispensed, the date the provider wrote

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the prescription, and the date the pharmacy filled the prescription. Ala. Code § 20-

2-213(d). Similarly, federal law requires pharmacies to keep copies of filled

controlled substances prescriptions for at least two years. 21 C.F.R. § 1304.04(a),

(h)(2), (h)(4); see 21 U.S.C. § 828.

Access to the PDMP database is limited. Ala. Code § 20-2-214. Pharmacists

and doctors can see information on their own dispensing and prescribing as well as

their patients’ information; state and local law enforcement may access the

database for investigation; and federal law enforcement may do so on a showing of

probable cause. Additionally, data may be shared with other states’ monitoring

programs.

Bishop explained that pharmacists enter the prescription information into the

database either directly or via software that automatically transmits it to the PDMP

as they dispense the medication. The ADPH includes a disclaimer on each page of

the printed PDMP report stating that it “does not warrant the above information to

be accurate or complete” because the report is “based on the search criteria and the

data provided by the dispensing entities.” Addressing this disclaimer, Bishop

agreed that she could not guarantee that each pharmacist input the data correctly.

But she testified that doctors and pharmacists throughout the state access the

database on a daily basis. The appellants themselves accessed it in their practice.

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Bishop described the PDMP as a “tool for the prescribers and the dispensers to use

to make the best clinical decision for their patient.”

Bishop queried the database for all controlled substance prescriptions written

by the appellants from January 2011 through May 2015 and for the top prescribers

of Abstral and Subsys in the state. The PDMP data was also used to create the

summary exhibits showing the number of the appellants’ patients receiving certain

other drugs, the percentage of prescriptions by drug schedule, the number of

prescriptions written on dates the appellants were out of the office, and their

prescribing of various drugs over time.

At trial, the appellants objected to the admission of the PDMP data on the

grounds that it contained multiple levels of hearsay and violated their

Confrontation Clause rights because it was based on testimonial evidence. The

district court overruled those objections. The appellants reassert those arguments

on appeal.

i. Hearsay

We address the appellants’ hearsay objections first. This Court reviews

evidentiary rulings for abuse of discretion. See United States v. Todd, 108 F.3d

1329, 1331 (11th Cir. 1997). Hearsay is an out of court statement offered for its

truth. Fed. R. Evid. 801(c). Hearsay is inadmissible unless it falls within an

enumerated exception. Fed. R. Evid. 802. When evidence contains multiple levels

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of hearsay, each statement must meet a hearsay exception to be admissible. Fed. R.

Evid. 805.

The appellants argue that the PDMP reports contain three types of out of

court “statements” that were offered for their truth: (1) the prescriptions written by

doctors for controlled substances, which are transmitted to pharmacies; (2) the

information about the prescriptions that the dispensing pharmacists put into the

PDMP database; and (3) the reports that PDMP users can create from the data.

However, the prescriptions that were written by Ruan and Couch—or in some

cases Palmer, a co-conspirator—are not hearsay because they constitute an

opposing party’s statement. See Fed. R. Evid. 801(d)(2)(D) & (E). Additionally,

the PDMP reports themselves are not hearsay because they are a “data

compilation” pursuant to Federal Rule of Evidence 803(6). See United States v.

Glasser, 773 F.2d 1553, 1558–59 (11th Cir. 1985) (computer printouts containing

compilations of various mortgage account transactions which were the basis of the

prosecution are admissible under the business records exception); United States v.

Fujii, 301 F.3d 535, 539 (7th Cir. 2002) (“Computer data compiled and presented

in computer printouts prepared specifically for trial is admissible under Rule

803(6), even though the printouts themselves are not kept in the ordinary course of

business.”); United States v. Arias-Izquierdo, 449 F.3d 1168, 1184 (11th Cir. 2006)

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(citing Fujii for the proposition that a mere printout of “electronically stored

information” is not an additional statement for hearsay purposes). 17

That leaves the pharmacists’ statements that they filled the prescriptions

written by the doctors. We agree with the district court that these statements are the

business records of the reporting pharmacies and are thus admissible under the

business records exception to the hearsay rule. See Fed. R. Evid. 803(6). The

business records exception provides, in pertinent part:

A record of an act, event, condition, opinion, or diagnosis [is

admissible] if:

(A) the record was made at or near the time by—or from information

transmitted by—someone with knowledge;

(B) the record was kept in the course of a regularly conducted activity

of a business, organization, occupation, or calling, whether or not for

profit;

(C) making the record was a regular practice of that activity;

(D) all these conditions are shown by the testimony of the custodian or

another qualified witness, or by a certification that complies with Rule

902(11) or (12) or with a statute permitting certification; and

(E) the opponent does not show that the source of information or the

method or circumstances of preparation indicate a lack of

trustworthiness.

17

Rule 803(6), as amended effective December 1, 2011, no longer lists a “data

compilation” as an example of a business record. See Fed. R. Evid. 803(6). The December 1,

2011, amendments to the Federal Rules of Evidence were stylistic changes to simplify the rule

language, with “no intent to change any result in any ruling on evidence admissibility.” Fed. R.

Evid. 803 advisory committee’s notes 2011 Amendments. Thus, case law construing former Rule

803(6) remains viable and is applicable here. And, Rule 101(b)(4) defines “record” as including

a “data compilation.” Fed. R. Evid. 101(b)(4).

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Fed. R. Evid. 803(6). This Court has recognized that “[t]he touchstone of

admissibility under the business records exception to the hearsay rule is reliability,

and a trial judge has broad discretion to determine the admissibility of such

evidence.” United States v. Bueno-Sierra, 99 F.3d 375, 378 (11th Cir. 1996) (per

curiam).

The appellants argue that the requirement found in subsection (D) of the

business records exception is not met because the custodian of the records—

Bishop, an ADPH employee—did not actually enter any data into the PDMP and

admitted that she could not vouch for the data’s reliability. They contend that the

government should have offered witnesses from each of the pharmacies across

Alabama, Florida, and Mississippi who actually entered prescription data into the

database. But this Court has held that “the proponent of a document ordinarily

need not be the entity whose first-hand knowledge was the basis of the facts sought

to be proved.” Bueno-Sierra, 99 F.3d at 379. The proponent must merely “establish

that it was the business practice of the recording entity to obtain such information

from persons with personal knowledge and the business practice of the proponent

to maintain the records produced by the recording entity.” Id. We are satisfied that

Bishop did that here. She testified that the pharmacists, who have knowledge of the

prescriptions, enter the data in the database at the same time they dispense the

controlled substances. Thus, subsection (A)’s requirement that “the record[s were]

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made at or near the time by—or from information transmitted by—someone with

knowledge,” is met. Bishop further explained that federal law and regulations

require keeping prescription records, and state law requires submitting the data to

the PDMP. This makes keeping the records part of the pharmacies’ “regularly

conducted activity” as well as a “regular practice” of their business, as required by

subsections (B) and (C) of the business records exception. See also United States v.

Towns, 718 F.3d 404, 407–10 (5th Cir. 2013) (finding that logs and records a

business keeps because it is required to do so by state or federal regulations meet

this standard). Bishop further testified that the ADPH considered the PDMP

reports its “business records” and relies on the records through its “daily”

assistance to doctors and pharmacists in accessing the database as “a tool for the

prescribers and the dispensers . . . to make the best clinical decision for their

patient.” She thus established that it was the ADPH’s “business practice” to obtain

and maintain the records. See Bueno-Sierra, 99 F.3d at 379.

Finally, the PDMP report itself does not lack trustworthiness under

subsection (E). The appellants point to the disclaimer the ADPH lists on each page

of the report stating that it “does not warrant the above information to be accurate

or complete” because the report is “based on the search criteria and the data

provided by the dispensing entities.” While we understand that the prescription

data is only as reliable as the individual putting it into the system, pharmacists have

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every incentive to ensure the data they enter is accurate. Inaccurate data could lead

to dangerous drug interactions and overdoses as well as giving drugs to addicts or

to those who might sell them on a secondary market. Doctors and pharmacists use

the system every day to look up patients’ medication histories. The appellants

themselves accessed it thousands of times in their practice. The appellants have

failed to demonstrate the untrustworthiness of the pharmacists’ out of court

statements that they filled the prescriptions reported in the PDMP.

Because the PDMP reports comprised records of regularly conducted

activity made by persons with knowledge whose job duties entailed making those

records, and Bishop, as custodian, certified that information and there was no

evidence of untrustworthiness, we find that the district court properly admitted the

PDMP data under the business records exception to the hearsay rule. 18

ii. Confrontation Clause

We now turn to the appellants’ claim that the admission of the PDMP data

violated their Sixth Amendment rights under the Confrontation Clause.19 A

defendant’s claim that an evidentiary ruling deprived him of a constitutional right

is reviewed de novo. Ignasiak, 667 F.3d at 1227. “In Crawford v. Washington[, 541

18

We need not address the government’s arguments that the PDMP data was also

admissible under the public records and residual exceptions to the hearsay rule. See Fed. R. Evid.

803(8) & 807.

19

A criminal defendant has the right “to be confronted with the witnesses against him.”

U.S. Const. amend.VI.

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U.S. 36, 53–54 (2004)], the Supreme Court held that the Confrontation Clause bars

the admission of the testimonial statements of a witness who did not appear at trial

unless the witness was unavailable and the defendant had a prior opportunity to

cross-examine him or her.” United States v. Caraballo, 595 F.3d 1214, 1227 (11th

Cir. 2010). “Testimonial statements are ones ‘that declarants would reasonably

expect to be used prosecutorially.’” United States v. Wilson, 788 F.3d 1298, 1316

(11th Cir. 2015) (quoting Crawford, 541 U.S. at 51). The appellants contend the

reports are “testimonial” because the PDMP may assist law enforcement in

prosecuting violators of controlled substance laws.

We disagree for several reasons. First, a statement is testimonial when its

“primary purpose . . . is to establish or prove past events potentially relevant to

later criminal prosecution,” Davis v. Washington, 547 U.S. 813, 822 (2006), and

when the statement is “formal,” akin to “affidavits, depositions, prior testimony, or

confessions,” Caraballo, 595 F.3d at 1228 (internal quotation marks omitted). On

the other hand, “[c]ertain statements ‘by their nature [are] not testimonial—for

example, business records or statements in furtherance of a conspiracy.’” Wilson,

788 F.3d at 1316 (quoting Crawford, 541 U.S at 56). Because the PDMP reports

are business records as explained above, they are not testimonial and do not violate

the Confrontation Clause. See United States v. Naranjo, 634 F.3d 1198, 1213–14

(11th Cir. 2011) (bank records and checks not testimonial).

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Second, even if the reports were not business records, they are nonetheless

not testimonial. Pharmacists are required by law to enter the PDMP data for the

primary purpose of aiding physicians in treating patients, such as combating

addiction. See Ala. Code §§ 20-2-210, 213(d). In United States v. Barker, the Fifth

Circuit found a nurse’s report about a sexual assault non-testimonial, even though

she knew at the time she wrote it that it would be given to police and could be used

in a prosecution, because her primary purpose in writing the report was to

“medically evaluate and treat” the victim. 820 F.3d 167, 171–72 (5th Cir. 2016).

Similarly, here, the fact that the pharmacists may be aware when they input the

data that law enforcement also has access to the database if needed during an

investigation does not transform the data entry into the type of formal statement

required for testimonial evidence. The district court’s admission of the PDMP data

did not violate the appellants’ Confrontation Clause rights.

2. Exclusion of Other Evidence

Next, the appellants argue that the district court erroneously excluded three

additional categories of evidence: (1) information about patients who received

legitimate medical care by Ruan and Couch (hereinafter “good patient” evidence);

(2) relatedly, videos of undercover agents posing as patients attempting to obtain

opioids from Ruan and being denied; and (3) the testimony of Debi Phillips

(“Phillips”), PPSA’s former operations manager, on various issues. Rather than

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contend that the district court abused its discretion in deeming this evidence

irrelevant under Federal Rule of Evidence 401,20 the appellants argue that its

exclusion violated their Fifth and Sixth Amendment rights to present a complete

defense. 21

“Whether the exclusion of evidence violated a constitutional guarantee is a

legal question reviewed de novo.” United States v. Sarras, 575 F.3d 1191, 1209

n.24 (11th Cir. 2009). “[T]he Constitution guarantees criminal defendants a

meaningful opportunity to present a complete defense.” United States v. Mitrovic,

890 F.3d 1217, 1221 (11th Cir. 2018) (quoting Nevada v. Jackson, 569 U.S. 505,

509 (2013)). However, this Court has recognized that this right “is not absolute,

and is subject to reasonable restrictions.” Id. (citing United States v. Scheffer, 523

U.S. 303, 308 (1998)). “[S]tate and federal rulemakers have broad latitude under

the Constitution to establish rules excluding evidence from criminal trials. Such

rules do not abridge an accused’s right to present a defense so long as they are not

‘arbitrary’ or ‘disproportionate to the purposes they are designed to serve.’” Id.

(quoting Scheffer, 523 U.S. at 308). Indeed, the “trial judge’s role as gatekeeper is

20

See Todd, 108 F.3d at 1331 (a district court’s evidentiary rulings are reviewed for an

abuse of discretion).

21

The Sixth Amendment to the United States Constitution guarantees defendants the right

to have “compulsory process for obtaining witnesses in his favor.” U.S. Const. amend. VI; see

also United States v. Ramos, 933 F.2d 968, 974 (11th Cir. 1991) (“A criminal defendant’s right

to present witnesses in his own defense during a criminal trial lies at the core of the fifth and

fourteenth amendment guarantees of due process.”).

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to ensure that the factfinder bases its decision only on relevant and reliable

information.” Id. at 1222 (citing United States v. Frazier, 387 F.3d 1244, 1272

(11th Cir. 2004)). Thus, “[w]hile a criminal defendant must be given every

meaningful opportunity to present a complete defense, in doing so he must comply

with the procedural and evidentiary rules designed to facilitate a search for the

truth.” Id. (quoting Frazier, 387 F.3d at 1272).

The appellants rely largely on United States v. Hurn, 368 F.3d 1359 (11th

Cir. 2004), for their position that, even if a particular rule of evidence would

normally bar the admission of certain evidence, there may sometimes be

compelling reasons to grant an exception to evidentiary rules. See id. at 1363 n.2

(“[T]he fact that a particular rule of evidence requires the exclusion of certain

evidence is not dispositive, as particular applications of a generally valid rule may

unconstitutionally deny a defendant his rights under the Compulsory Process or

Due Process Clauses.”). In Hurn, this Court pointed to four circumstances in which

a district court’s exclusion of a criminal defendant’s evidence might violate the

Constitution:

First, a defendant must generally be permitted to introduce evidence

directly pertaining to any of the actual elements of the charged offense

or an affirmative defense. Second, a defendant must generally be

permitted to introduce evidence pertaining to collateral matters that,

through a reasonable chain of inferences, could make the existence of

one or more of the elements of the charged offense or an affirmative

defense more or less certain. Third, a defendant generally has the right

to introduce evidence that is not itself tied to any of the elements of the

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crime or affirmative defense, but that could have a substantial impact

on the credibility of an important government witness. Finally, a

defendant must generally be permitted to introduce evidence that, while

not directly or indirectly relevant to any of the elements of the charged

events, nevertheless tends to place the story presented by the

prosecution in a significantly different light, such that a reasonable jury

might receive it differently.

Id. at 1363 (footnotes omitted). The Court explained that two considerations are

appropriate in analyzing a defendant’s claim that his constitutional right to present

a defense was violated: (1) whether the right was actually violated, and (2) if so,

whether that error was harmless beyond a reasonable doubt. Id. at 1362–63.

Keeping these principles in mind, we address each of the appellants’

categories of excluded evidence in turn.

i. “Good Patient” Evidence and Undercover Videos

The government’s case against the appellants was built upon several dozen

PPSA patients whose treatment was alleged to be illegal out of the roughly 8,000

patients PPSA had in 2015. Specifically, the government presented live testimony

of 14 patients—or family members of deceased patients—who criticized the

appellants’ prescription of opioids and other medications to them. The government

also created a list of the appellants’ “top 28” patients who received Subsys or

Abstral and whose medical records did not indicate a diagnosis of cancer. Experts

reviewed these patients’ files and gave their opinions that Ruan and Couch’s care

of these patients did not meet minimum standards.

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The appellants wished to present evidence about patients not identified by

the government and whose treatment was not alleged to be illegal. These “good

patients” would have testified about how their quality of life improved through the

care they received at PPSA. The district court concluded that this evidence was

irrelevant and would waste time in an already lengthy trial because the government

did not allege that PPSA was entirely a sham practice or that all of the appellants’

prescriptions were illegal. 22 The appellants could, however, put on evidence

favorable to them from any patients identified or called by the government in its

case in chief. Indeed, Couch called five patients and Ruan called three.

The appellants argue that the district court impaired their right to present a

complete defense by excluding this “good patient” evidence, particularly the

testimony of Michael Tiller, one of Couch’s patients. Tiller intended to testify that

he believed that Subsys was beneficial to him, despite the off-label use; he

generally approved of Couch’s treatment of him and trusted him as his physician;

and his experiences at PPSA were consistent with his experiences at other

22

Federal Rule of Evidence 401 defines relevant evidence as that which “has any tendency

to make a fact [of consequence] more or less probable than it would be without the evidence.”

Even if evidence is relevant, Rule 403 nonetheless vests district courts with wide discretion to

exclude evidence if “its probative value is substantially outweighed by a danger of . . . unfair

prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly

presenting cumulative evidence.”

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physicians’ facilities. 23 The appellants contend that Tiller’s proposed testimony

satisfies the first, second, and fourth categories of evidence summarized in Hurn.

The first Hurn circumstance is implicated when evidence is excluded that

directly pertains to a formal element of a charged offense. See 368 F.3d at 1363.

The appellants contend that Tiller’s testimony would have helped disprove Counts

2, 3, and 4—conspiracies to knowingly or intentionally prescribe controlled

substances outside the usual course of professional practice or without a legitimate

medical purpose. We disagree. The appellants were not charged with illegally

prescribing medicine to all their patients, and the jury was aware that they had

thousands of patients to whom they may have provided legitimate care. However, a

finding that even one prescription was illegal—or for the RICO count, at least two

acts of racketeering activity—sufficed to convict for the Controlled Substances Act

violations. Thus, whether Tiller approved of his treatment by Couch does not

“directly pertain” to whether the appellants’ treatment of the many other patients

identified by the government was outside the course of professional practice. See

Hurn, 368 F.3d at 1363.

The second category of Hurn evidence is that which, though not directly

bearing on an element of the offense charged, tends to prove collateral matters

23

Couch submitted a written proffer to the district court regarding only Tiller’s proposed

testimony but contends that he would have called additional “good patients” if the court had

permitted him to do so.

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relating to the defense. See 368 F.3d at 1364. The appellants argue that Tiller’s

testimony would have tended to prove that Couch was operating a legitimate

practice, a collateral matter. In discussing this category, the Hurn court addressed

the introduction of evidence that tends to negate the mens rea of an offense. Id. at

1364–65. Hurn cited as an example United States v. Sheffield, 992 F.2d 1164 (11th

Cir. 1993), in which the defendant, an Air Force employee, was convicted of

embezzling Air Force property by ordering subordinates to make fishing lures with

base property and on government time. Id. at 1165. This Court held that evidence

should have been admitted of a legitimate custom on an Air Force base of making

retirement presents for high-ranking officials using base materials because it would

have rebutted the mens rea element of the offense of embezzlement. Id. If the

defendant was acting pursuant to a legitimate custom when he ordered the

production of the lures, he did not possess the state of mind necessary for the

offense of embezzlement. Id. at 1170.

Here, however, Tiller’s testimony does not tend to negate the mens rea

element of the Controlled Substances Act offenses— knowingly or intentionally

prescribing controlled substances outside the usual course of professional practice

or without a legitimate medical purpose. Nowhere did the government allege that

Couch’s treatment of Tiller was outside the usual course of professional practice,

and nothing Tiller would have testified about would have been probative of

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Couch’s actions towards the patients that the government asserted were provided

with illegal prescriptions, like Officer Kelley, who received powerful opioids from

Couch after only a cursory visit with him and without a showing of medical need.

Nor have the appellants established that the fourth type of evidence in Hurn

is implicated in this case—that which “complete[s] the picture” of the charged

crimes and presents the government’s evidence in a more favorable or different

light that might influence a reasonable juror. See 368 F.3d at 1367. This

circumstance recognizes that defendants have a right to combat “the government’s

selective presentation of entirely truthful evidence [that] cast[s] a defendant in an

inaccurate, unfavorable light” or that makes “entirely legitimate, normal, or

accepted acts appear unusual or suspicious.” Id. at 1366–67. The Hurn court held

that a defendant should be allowed “to introduce additional evidence to dispel this

unjustified taint, even if that evidence does not directly or indirectly bear on a

particular element of an offense.” Id. at 1367. For instance, in Todd, 108 F.3d at

1333, the defendant was convicted of embezzling from his company’s employee

retirement fund plan. The government used evidence that the defendant and his

family members who worked at the company all received extremely high salaries

to prove the defendant’s greed and motive to steal. Id. This Court reversed the

defendant’s conviction because he was not permitted to introduce evidence that all

employees who worked at his company, not just his family members, received

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large salaries and benefits. Id. at 1334. Such evidence would have “complete[d] the

picture,” see Hurn, 368 F.3d at 1367, by putting “a different spin” on the

defendant’s intent, see Todd, 108 F.3d at 1334. Similarly in Sheffield, this Court

noted that the retirement gift evidence, aside from being probative of the

defendant’s intent or lack thereof to embezzle, also should have been admitted to

“put the charges against Mr. Sheffield in context, ‘to complete the story of the

crime on trial.’” 992 F.2d at 1170 (quoting United States v. Mills, 704 F.2d 1553,

1559 (11th Cir. 1983)).

But here, the “good patient” evidence was not necessary to “complete the

picture,” because it was undisputed that the appellants treated thousands of patients

and there was no allegation that they mistreated them all. Indeed, the government

told the jury in its opening:

[T]here were definitely some [patients] that were treated very

appropriately in this office. There is no question about that, that there

were certainly instances where Dr. Ruan and Dr. Couch did a really

good job for their patients. We’re not here because of that. We’re here

for the times that they were prescribing these drugs outside the usual

course of professional practice.

The admonition was repeated in closing: “By and large their patients were

legitimate patients. And I told you right from the very start and it has always been

our contention that a majority of the patients that went there had legitimate pain

needs and were in need of legitimate pain treatment.” Thus, there was no need to

dispel the “taint” that PPSA was a sham practice. PPSA only accepted patients

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with insurance and refused patients paying cash. Diagnostic tools such as nerve

conduction tests, fluoroscopes, electromyographs, and MRIs were frequently used

to discover the source of patient pain. Ken Cross, PPSA’s former manager and a

government witness, described PPSA in 2014 as “one of the best, well-rounded

pain centers in this area.” In sum, Tiller’s testimony “was not necessary to correct

any misleading impressions that may have been created by the government’s

evidence.” See Hurn, 368 F.3d at 1367.

For the same reasons, Ruan was not prejudiced by the district court’s

exclusion of undercover videos of DEA agents acting as “patients” seeking opioids

from him but being denied. As noted, the government introduced videos at trial

from Officer Kelley’s appointments with Couch at PPSA, which comprised Counts

5–7 against him for illegal drug distribution. The DEA had also sent two

undercover patients to see Ruan, but neither received opioid prescriptions. A nurse

practitioner examined each patient, and each was then seen by Ruan, who told

them that it was not appropriate to prescribe controlled substances because of

better alternatives. One was referred for surgery, and the other given an anti-

inflammatory ointment. At a pretrial conference, the government successfully

moved to prevent Ruan from introducing these videos at trial. Akin to Tiller’s

testimony, these videos do not refute the inculpatory evidence against Ruan

demonstrating that at other times, Ruan did prescribe opioids to patients outside the

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usual course of professional practice or without a legitimate medical purpose, such

as in the four patient files reviewed by Dr. Greenberg comprising Counts 8, 9, 11,

and 12.

Before concluding that there was no theory under which the appellants’

constitutional rights were violated by the district court’s evidentiary rulings, we

emphasize that we have carefully considered the appellants’ contention that the

government’s closing arguments compounded the prejudice they suffered from the

inability to present “good patient” evidence. Specifically, the appellants point to

three statements made by the prosecutor in rebuttal closing: “The defendants had

the same subpoena power as the United States of America. That means they can

subpoena anybody they want to come in this courtroom, just like the United States

can.”; “The[ appellants] could call anybody they wanted to in connection with this

case.”; and later, “We called for you 14 patients in comparison to the few patients

the defense called . . . .”. The appellants contend that these statements implied that

Ruan and Couch could not find witnesses who benefitted from their treatment to

rebut the many witnesses that testified for the government, even though the

government had obtained a motion in limine prohibiting evidence of “good

patients.” They raised this issue in their motion for a new trial, which the district

court denied.

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However, when viewed in context, at least the first two statements are not

as egregious as they first appear. The prosecutor was not discussing the ability of

the appellants to call patient-witnesses in their favor but was instead addressing the

adequacy of the government’s own charts, specifically the appellants’ ability to

call statisticians or other experts to critique those charts:

Now, both attorneys told you that all this is is [sic] numbers, that the

government just put up all these charts, pie charts, picture charts. The

defendants had the same subpoena power as the United States of

America. That means they can subpoena anybody they want to come in

this courtroom, just like the United States can. If those charts aren’t

accurate, if those charts weren’t what was happening, don’t you think

they would have brought you somebody to tell you that this chart is not

right?

This isn’t what the facts showed. This isn’t what the numbers are. And

they want to tell you that numbers don’t mean anything. But numbers

control. You can’t wait to be 16. You can’t wait to be 21, you can’t wait

to make a 100 on a test. Most everything we do has to do with numbers.

And if these numbers weren’t correct, these charts weren’t correct,

they’d be the first one to show you and tell you with evidence and with

witnesses.

In connection with that, they could also have called doctors who would

have said that they referred people to these doctors. That didn’t happen.

They could call anybody they wanted to call in connection with this

case.

The third remark, however, gives us pause. The prosecutor argued that “[i]t doesn’t

have to be 50, it doesn’t have to be 1000” inappropriate prescriptions; one

prescription outside the usual course of professional practice “is breaking the law.”

She then recounted several of the patients the government had called and, in

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transitioning to discuss one called by the defense, commented that “[w]e called for

you 14 patients in comparison to the few patients the defense called.” This

statement is troubling because the government knew that the appellants were

prevented from having patients testify that their quality of life had improved

through care received by Ruan and Couch.

“[A] prosecutor must refrain from improper methods calculated to produce a

wrongful conviction.” United States v. Rodriguez, 765 F.2d 1546, 1559 (11th Cir.

1985). For example, a prosecutor may not make “improper suggestions,

insinuations and assertions calculated to mislead the jury.” Id. (quoting United

States v. Phillips, 664 F.2d 971, 1030 (5th Cir. Unit B 1981)). To establish

prosecutorial misconduct, a defendant must establish that the remarks were

improper and that they prejudicially affected his substantial rights. United States v.

Lopez, 590 F.3d 1238, 1256 (11th Cir. 2009). “A defendant’s substantial rights are

prejudicially affected when a reasonable probability arises that, but for the

remarks, the outcome of the trial would have been different. When the record

contains sufficient independent evidence of guilt, any error is harmless.” Id.

(quoting United States v. Eckhardt, 466 F.3d 938, 947 (11th Cir. 2006)). In

determining whether a prosecutor’

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