N.D.Tex.: DEA pharmacy subpoena not overbroad and HIPAA exempt

Two related opinions, same day same case:

DEA administrative subpoena does not need to be based on probable cause to be enforceable. It can be overbroad and burdensome, but the government agreed to limit this one. United States v. Zadeh, 2014 U.S. Dist. LEXIS 181498 (N.D.Tex. December 3, 2014):

In this case, it is clear that the information sought by the DEA is relevant to its investigation, but the question is whether the use of an administrative subpoena to obtain the information sought is reasonable. After thoroughly reviewing the case law set forth above, the Court finds the reasoning set forth in Colorado Board of Pharmacy—holding that properly authorized DEA subpoenas of confidential state pharmacy records in a federal investigation of possible CSA violations by three physicians were per se reasonable, and thus, passed Fourth Amendment muster—more persuasive than the analysis in Oregon Prescription Drug Monitoring Program. To begin with, as noted by the Court in Acklen, 690 F.2d at 75, the pharmaceutical industry is a “pervasively regulated industry” and “virtually every phase of the drug industry is heavily regulated, from packaging, labeling, and certification of expiration dates.” Jamieson-McKames Pharm., Inc., 651 F.2d at 537. While the cases discussed above mainly dealt with pharmacies and pharmacists, the Court concludes that such analysis can easily be applied to physicians, and in turn, their patients. Both have a reduced expectation of privacy in the medical records regarding controlled substances as such records are relevant to the issue of whether there has been compliance with the CSA, a federal law that regulates controlled substances. See 21 U.S.C. §§ 822, 823. Zadeh, a DEA registrant under the CSA, and in turn his patients, cannot reasonably claim that Zadeh was not aware of the CSA and his obligation under such law to dispense and distribute controlled substances in a manner that is authorized by law. Moreover, pursuant to the CSA, the government’s stake in the investigation and the strong public interest in regulating controlled substances outweigh the individual privacy interests asserted herein. See Ferguson v. City of Charleston, 186 F.3d 469, 483 (4th Cir. 1999), cert. granted on other grounds, 528 U.S. 1187, 120 S. Ct. 1239, 146 L. Ed. 2d 98 (2000) (stating that the government has a compelling interest in identifying illegal activity and in deterring future misconduct). Thus, the Court concludes that the Subpoena, as limited by the Government as set forth in July 11, 2014, Joint Status Report, does not violate the Fourth Amendment.

The respondent’s HIPAA argument is moot either because confidentiality does not apply, or, if it does, the subpoena is a valid exception. United States v. Zadeh, United States v. Zadeh, 2015 U.S. Dist. LEXIS 11537 (N.D.Tex. Janary 15, 2015) , R&R 2014 U.S. Dist. LEXIS 181500 (N.D.Tex. December 3, 2014):

Respondent’s objection regarding HIPAA indicated that it is unclear whether HIPAA applied, but that should not affect the outcome of the Court’s decision. See Resp’t’s Objections 8, ECF No. 39. It is unclear whether Respondent is a “covered entity” under HIPAA, but regardless of his status, the outcome remains the same. If Respondent is not a covered entity under HIPAA, he is not subject to its confidentiality requirements and therefore must comply with the Subpoena. If Respondent is a covered entity under HIPAA, the Subpoena falls under the exception in 45 C.F.R. § 164.512(f)(1)(ii), and Respondent must comply with the Subpoena. Accordingly, the Court finds that Respondent’s objection pertaining to HIPAA is MOOT.