Woods, et al v. United States Drug Enforcement Administration, et al

Filing 32

PRELIMINARY INJUNCTION. Signed by Judge S. Thomas Anderson on 12/12/16. (Anderson, S.)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
EASTERN DIVISION

JOHN WOODS, M.D. and,
TOM MCDONALD, M.D.,
Petitioners,
v.
LORETTA E. LYNCH, United States
Attorney General, et al.,
Respondents.

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No. 1:16-CV-01289-STA-egb

PRELIMINARY INJUNCTION

On December 6, 2016, the parties appeared before the Court for a hearing on Plaintiffs
John Woods, M.D. and Tom McDonald, M.D.’s Motion for Preliminary Injunction (ECF No.
18).

At the outset of the hearing, the United States Attorney reported to the Court that

Defendants would not oppose the preliminary injunction sought by Plaintiffs. The Court granted
Plaintiffs’ Motion for Preliminary Injunction in a short order issued after the hearing and stated
therein that a more detailed order would follow. Pursuant to Federal Rule of Civil Procedure 65,
the Court now issues a preliminary injunction for the reasons and on the specific terms outlined
below.
BACKGROUND
Plaintiffs filed their initial Complaint for Temporary Restraining Order and Preliminary
Injunction (ECF No. 1) on November 10, 2016, and an Amended Complaint (ECF No. 2) the
following day. All of the factual allegations of Plaintiffs’ pleadings are supported with affidavits
from each Plaintiff (ECF No. 1-2 and No. 2-1) and an affidavit from counsel for Plaintiffs (ECF
1

No. 1-3). Plaintiffs have also provided additional affidavits in support of their Motion for
Preliminary Injunctions (ECF Nos. 18-2, 18-3). Defendants did not contest these allegations at
the hearing or in any other filing with the Court. As such, the Court finds them undisputed for
purposes of deciding Plaintiffs’ Motion for a Preliminary Injunction.
According to the Amended Complaint, both Plaintiffs are licensed physicians with
practices at the Henderson County Community Hospital.

Both Plaintiffs are employed by

EmCare, a third-party medical staffing agency which is not a party to this suit. Plaintiffs are the
HCCH’s only hospitalists, meaning they are the only physicians with admitting privileges for
any patient at HCCH and not just their own patients. Dr. McDonald currently serves as HCCH’s
chief of staff and medical director.
Both Plaintiffs have previously surrendered their DEA registrations.

Dr. Woods

surrendered his DEA registration in 2012 as the result of an opiate addiction and resumed his
medical practice with full prescribing authority in 2013. Dr. Woods has practiced continuously
at HCCH since April 2015. Prior to beginning his practice at HCCH, Dr. Woods notified the
DEA that he would begin practicing at HCCH but was never told he needed a waiver to do so.
Dr. McDonald surrendered his DEA registration in 1999 due to a chemical dependency and then
had his full prescribing authority restored in 2002. Dr. McDonald has worked at HCCH since
2002. During that time, the DEA has never required Dr. McDonald to have a waiver to continue
his employment at HCCH. Plaintiffs allege that on November 10, 2016, the DEA advised both
of them they were required to have a waiver from the DEA in order to work at HCCH and that
neither could resume work at HCCH until an application was made for a waiver and the DEA
had granted the waiver.

2

Based on these factual allegations, Plaintiffs seek injunctive relief. Plaintiffs argue that
they have a strong likelihood of success on the merits of their claims for laches, the improper
retroactive application of an administrative regulation, and an arbitrary and capricious
administrative action subject to review under the Administrative Procedures Act. Plaintiffs
contend that Defendants’ actions will cause them irreparable harm because Plaintiffs are barred
from recovering money damages against Defendants. Furthermore, Defendants’ actions will
cause harm to others and undermine the public interest in having practicing hospitalists at
HCCH. Therefore, the Court should enjoin Defendants from stopping Plaintiffs from performing
their regular duties at HCCH.
On November 15, 2016, the United States Magistrate Judge held an ex parte hearing on
Plaintiffs’ request for a temporary restraining order and issued a report and recommendation
(ECF No. 11) later the same day, recommending that the Court grant the TRO. The Court then
granted Plaintiffs’ motion to adopt the report and recommendation immediately and issued a
TRO (ECF No. 13), preventing Defendants from enforcing 21 C.F.R. § 1301.76(a) against Dr.
Woods and Dr. McDonald and thereby precluding Plaintiffs from performing their duties as
physician-hospitalists at the HCCH. The Court set an expedited hearing for November 29, 2016,
and granted Defendants’ motion to continue the hearing to December 6, 2016. The Court
extended the TRO through that date.1 As previously noted, the United States Attorney reported
at the December 6, 2016 hearing that Defendants did not oppose the preliminary injunction.

1

Plaintiffs filed a Second Amended Complaint (ECF No. 22) on December 2, 2016. The
new pleading does not appear to contain any new factual allegations. However, Plaintiffs have
included in the new pleading a prayer for declaratory relief and a request for a permanent
injunction.
3

STANDARD OF REVIEW
Rule 65(d) of Federal Rules of Civil Procedure requires that every order granting an
injunction must “(A) state the reasons why it issued; (B) state the terms specifically; and (C)
describe in reasonable detail—and not by referring to the complaint or other document—the act
restrained . . . .”2 “Judges have authority to enter injunctions against a party—to change the
party’s behavior through the power of the federal courts—when they have done something
wrong, and even then that will not always suffice by itself.”3 A preliminary injunction is “one of
the most drastic tools in the arsenal of judicial remedies.”4

In deciding a motion for a

preliminary injunction, courts consider the following factors: (1) whether the movant has shown
a strong likelihood of success on the merits; (2) whether the movant will suffer irreparable harm
if the injunction is not issued; (3) whether the issuance of the injunction would cause substantial
harm to others; and (4) whether the public interest would be served by issuing the injunction.5
Although no one of the four factors controls, “a finding that there is simply no likelihood of
success on the merits is usually fatal.”6
Rule 65(a) provides that a “court may issue a preliminary injunction only on notice to the
adverse party.”7 The Sixth Circuit has interpreted the notice requirement to “impl[y] a hearing in

2

Fed. R. Civ. P. 65(d).

3

Hearring v. Sliwowski, 806 F.3d 864, 867 (6th Cir. 2015) (citing Winter v. Nat. Res.
Def. Council, Inc., 555 U.S. 7, 32 (2008)).
4

Farnsworth v. Nationstar Mortg., LLC, 569 F. App’x 421, 425–26 (6th Cir. 2014)
(quoting Bonnell v. Lorenzo, 241 F.3d 800, 808 (6th Cir. 2001)).
5

Wilson v. Gordon, 822 F.3d 934, 952 (6th Cir. 2016) (citing City of Pontiac Retired
Emps. Ass’n v. Schimmel, 751 F.3d 427, 430 (6th Cir. 2014) (en banc)).
6

Gonzales v. Nat'l Bd. of Med. Exam’rs, 225 F.3d 620, 625 (6th Cir. 2000).
4

which the defendant is given a fair opportunity to oppose the application and to prepare for such
opposition.”8 Because of the extraordinary nature of injunctive relief, 9 “the proof required . . . is
much more stringent than the proof required to survive a summary judgment motion.”10
Nevertheless, “a hearing is only required when there are disputed factual issues, and not when
the issues are primarily questions of law.”11 Where there are no material facts in dispute, the
Court need not convene a full evidentiary hearing.12
ANALYSIS
The Court finds that all of the factors weigh in favor of issuing a preliminary injunction.
First, Plaintiffs have shown a likelihood of success on the merits of at least one of their claims.
Plaintiffs proceed on three separate theories: laches, the improper retroactive application of an
administrative regulation, and an arbitrary and capricious administrative action subject to review
under the Administrative Procedures Act. Plaintiffs specifically challenge the DEA’s application
of the regulations implementing the Controlled Substances Act. “Under 21 U.S.C. § 823(b),
distributors of controlled substances must be registered by the Attorney General.”13

7

The

Fed.R.Civ.P. 65(a)(1).

8

Certified Restoration Dry Cleaning Network, LLC v. Tenke Corp., 511 F.3d 535, 552
(6th Cir. 2007) (quoting County Sec. Agency v. Ohio Dept. of Commerce, 296 F.3d 477, 484 (6th
Cir. 2002)).
9

Am. Civil Liberties Union Fund of Mich. v. Livingston Cnty., 796 F.3d 636, 642 (6th
Cir. 2015) (describing preliminary injunctions as “extraordinary and drastic remedies”).
10

Leary v. Daeschner, 228 F.3d 729, 739 (6th Cir. 2000).

11

Tenke Corp., 511 F.3d at 552 (citing See Lexington–Fayette Urban County Gov't v.
BellSouth Telecomm., Inc., 14 F. App’x 636, 639 (6th Cir. 2001)).
12

Id. at 553.

13

Bzdzuich v. U.S. Drug Enforcement Admin., 76 F.3d 738, 741 (6th Cir. 1996).
5

Controlled Substances Act’s implementing regulations at 21 C.F.R. § 1301.76(a) prohibit a
controlled substances registrant from employing “as an agent or employee who has access to
controlled substances, any person who has . . . surrendered a DEA registration for cause.”14
DEA has discretion to allow exceptions when a person makes a written request to DEA for an
exception to 21 C.F.R. § 1301.76(a), or any other regulation promulgated under the Controlled
Substances Act, “stating the reasons for such exception.”.15 Plaintiffs have shown through their
affidavits that each of them voluntarily surrendered their DEA registrations while undergoing
treatment for addiction or chemical dependence. Plaintiffs have further shown that each of them
subsequently petitioned DEA to restore their DEA registrations with full prescribing authority.
DEA granted those petitions and was at all times aware of each physician’s practice at HCCH.
Plaintiffs now allege that Defendants should not be able to deprive them of the opportunity to
practice at HCCH pending the disposition of Plaintiffs’ and./or HCCH’s application for an an
employment waiver from the DEA.
The Court finds that Plaintiffs’ proof shows a likelihood of success on the merits as to
their laches claim. 16 “Laches is the negligent and unintentional failure to protect one’s rights.”17
14

21 C.F.R. § 1301.76(a). The regulation defines “for cause” to mean “a surrender in
lieu of, or as a consequence of, any federal or state administrative, civil or criminal action
resulting from an investigation of the individual’s handling of controlled substances.” Plaintiffs
allege that DEA has advised them that Plaintiffs are within the class of registrants described in §
1301.76(a). However, there is no evidence before the Court to show that Dr. Woods or Dr.
McDonald previously surrendered their DEA registrations “for cause,” as the regulation defines
the term.
15

21 C.F.R. § 1307.03.

16

It appears that HCCH has applied for an appropriate waiver from DEA, though it is not
clear whether Plaintiffs have also made requested a waiver. Without some proof that Plaintiffs
have made their own individual petitions for waivers, the Court has some doubt as to Plaintiffs’
standing to pursue claims under the APA for the DEA’s interpretation or application of 21 C.F.R.
§ 1301.76(a) in the context of Plaintiffs’ employment at HCCH. See Bzdzuich, 76 F.3d at 742
(holding that a pharmacy owner, and not the pharmacist, had standing to challenge the DEA’s
6

Generally, a party asserting laches must show “(1) lack of diligence by the party against whom
the defense is asserted, and (2) prejudice to the party asserting it.” 18 In this case Plaintiffs’
laches theory appears to be that DEA failed to act with diligence to enforce 21 C.F.R. §
1301.76(a) against Plaintiffs, even though DEA had granted Plaintiffs DEA registrations with
full prescribing authority and had knowledge of Plaintiffs’ medical practices at HCCH. As a
result, the DEA should not be allowed to take administrative action against them now to deprive
Plaintiffs of their ability to work at HCCH. Plaintiffs have shown that each of them had
practiced at HCCH for some time, in Dr. McDonald’s case for over 14 years, and were only
advised in November 2016 that they could not practice at the hospital without a waiver from
DEA. Other evidence shows that DEA only began in 2014 to require employment waivers for
registrants who had surrendered their DEA registrations for cause, 19 at a time when both
Plaintiffs were practicing with full prescribing authority and with no prior notice of the need to
seek a waiver.

decision to deny a waiver of 21 C.F.R. § 1301.76(a)); see also Bonds v. Tandy, 457 F.3d 409,
415 (5th Cir. 2006) (holding that a pharmacist lacked prudential standing to seek judicial review
of the DEA’s administrative decision to deny the pharmacist’s employer a waiver of §
1301.76(a)).
At this early stage of the proceedings, neither party has raised the issue of standing. Even
though the Court has an independent obligation to consider a party’s standing, the Court need not
reach Plaintiffs’ standing to decide whether a preliminary injunction should issue. Therefore, the
Court declines to address it further at this time.
17

Kehoe Component Sales Inc. v. Best Lighting Prods., Inc., 796 F.3d 576, 584 (6th Cir.
2015) (quoting Nartron Corp. v. STMicroelectronics, Inc., 305 F.3d 397, 408 (6th Cir. 2002)).
18

Id.

19

The Controlled Substances Act’s implementing regulations at 21 C.F.R. § 1307.03
permit “any person” to apply for a waiver from DEA. The regulation was listed in the Code of
Federal Regulations long before 2014. Plaintiffs allege, however, that DEA advised them the
agency only began in 2014 to enforce the regulation against registrants who had surrendered
their DEA registration for cause.
7

The Court finds that this proof establishes Defendants’ lack of diligence in taking
administrative action against Plaintiffs. Plaintiffs have also shown that the interruption in their
medical practice will cause Plaintiffs prejudice in the form of loss of income. This evidence
satisfies Plaintiffs’ burden to prove the elements of laches.

Having concluded that Plaintiffs

have established a likelihood of success on the merits of their laches claim, the Court need not
decide whether Plaintiffs could also establish their related claims based on improper retroactivity
or the APA.
Second, Plaintiffs have shown that they will suffer irreparable injury if the Court denies
them injunctive relief.

According the United States Attorney, HCCH has applied for the

necessary waivers with DEA, and the agency is likely to grant the waivers. Defendants believe
that Dr. Woods’s waiver will be granted on an expedited basis; Dr. McDonald’s waiver may take
additional time simply because of the length of his tenure at HCCH. Should the Court allow
Defendants to deny Plaintiffs the right to practice at HCCH pending the outcome of the waiver
process, Plaintiffs will lose the opportunity to work and earn income during the interim. As the
Magistrate Judge noted in his report and recommendation, harm of this nature under the
circumstances is irreparable.20 Therefore, this factor also weighs in favor of a preliminary
injunction.
The remaining equitable factors likewise weigh in favor of injunctive relief to preserve
the status quo. Plaintiffs argue that the injunction will not harm others and that if Defendants can
deny Plaintiffs the opportunity to work as HCCH’s only hospitalists until DEA acts on the
20

Feinerman v. Bernardi, 558 F. Supp.2d 36, 51 (D.D.C. 2008) (“But where, as here, the
plaintiff in question cannot recover damages from the defendant due to the defendant’s sovereign
immunity, any loss of income suffered by the plaintiff is irreparable per se.”); Caspar v. Snyder,
77 F. Supp.3d 616, 641 (E.D. Mich. 2015) (“Where the availability of a money damage remedy
is significantly in doubt because of an immunity defense, money damages are not deemed an
adequate remedy, rendering the harm irreparable.”).
8

waiver application, then the people served by HCCH, including Plaintiffs’ current patients, will
suffer harm.

The Court also finds no evidence that a preliminary injunction will cause

substantial harm to others. But without an injunction, Plaintiffs’ patients at HCCH and others
who depend on access to HCCH for their health care will likely suffer. Therefore, all of the
equitable factors weigh in favor of granting Plaintiffs a preliminary injunction.
For all of these reasons, Defendants are hereby enjoined from taking any action to
prohibit either Plaintiff from performing their duties at Henderson County Community Hospital
in Lexington, Tennessee, during the pendency of this action.
IT IS SO ORDERED.
s/ S. Thomas Anderson
S. THOMAS ANDERSON
UNITED STATES DISTRICT JUDGE
Date: December 12, 2016.

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