Supreme Court Emphasizes Importance of Strong Scienter Requirement for Criminal Defendants

The Supreme Court handed a victory to white-collar criminal defendants in its recent decision of Ruan v. United States. At issue was whether the government in prosecutions under the Controlled Substances Act could secure a conviction merely by establishing that the defendant acted outside of "standard" medical practice in prescribing opiates or if the government needed to prove that the specific defendant knew he or she was acting in an impermissible manner. The Supreme Court held that the focus must be on the mental state of the individual defendant.

Background

The Ruan decision involved a pair of doctors convicted in separate cases of running "pill mills." The courts below allowed the juries to render a guilty verdict based on whether the doctors' practices were "outside the usual course of professional medical practice" or "in accordance with generally recognized and accepted standards of practice." Those objective standards focused on a "hypothetical 'reasonable' doctor, not on the mental state of the defendant himself or herself," with the result that a defendant could be convicted despite legitimately believing that he or she was not acting unlawfully. The Supreme Court rejected that approach as inconsistent with the fundamental underpinnings of our legal system.

Analysis

The Court adopted a reading of the statute that ran counter to a plain textual interpretation, placing on the government the burden of proving beyond a reasonable doubt that a doctor "knowingly or intentionally acted in an unauthorized manner" in prescribing a controlled substance. In arriving in that conclusion, the Court grounded its analysis on the "longstanding presumption" of the importance of the mens rea requirement in American criminal law. The criminal law, the Court emphasized, "seeks to punish the 'vicious will'" and that "wrongdoing must be conscious to be criminal."

From this premise, the Court listed several reasons why the government must prove an individual defendant knowingly acted in a wrongful manner. First, the statute expressly included a "knowingly or willfully" requirement in the text. Second, criminal law seeks to separate "innocent conduct" and "socially beneficial conduct . . . from wrongful conduct." Third, particularly in light of an "ambigous" regulatory regime often written in "generalities," a "strong scienter requirement helps diminish the risk of 'overdeterrence,' i.e., punishing acceptable and beneficial conduct that lies close to, but on the permissible side of, the criminal line." Fourth, "severe penalties counsel in favor of a strong scienter requirement."

In rejecting the government's arguments for a more lenient standard of prosecution - and in casting aside the government's fear that a contrary decision would allow defendants with "idiosyncratic views" to escape liability - the Court centered focus on the jury as the ultimate arbiter of criminal violations, observing that "the more unreasonable a defendant's asserted beliefs or misunderstandings are," then the more likely it is the government will convince the jury of its position.

Takeaways

Notably, the "without authorization" prong of the Controlled Substances Act interpreted by the Court is not a substantive element of the underlying crime. The concurrence focused extensively on this point, and it remains unclear the limitations of the majority holding and whether other statutes similarly will be construed to impose additional proof obligations on the government. In a prosecution against doctors under the Controlled Substances Act, for example, virtually every defendant will be able to establish that he or she was "authorized" to issue prescriptions by virtue of being a medical professional, and so the government in those cases will be faced with proving an additional criminal prong beyond the underlying substantive aspects of the offense.

More broadly, the Ruan decision provides a good grounding for defendants facing prosecutions under other statutes to emphasize the importance of a strong mens rea requirement. After all, a great number of white-collar prosecutions in the healthcare field involve cases where a "knowingly" or "willfully" intent requirement appears somewhere in the text, there is a vast and "ambiguous" regulatory background, the line between permissible and impermissible conduct often is unclear, and the potential penalties are high, which are the four justifications upon which the Court relied in reaching the outcome in Ruan.