## Facts

- Dr. Maria‑Carmen Palazzo, a physician and clinical investigator in New Orleans, participated in clinical studies evaluating Paxil (paroxetine) in children and adolescents with obsessive‑compulsive disorder.
- Federal law allows the FDA to regulate investigational use of new drugs and to require recordkeeping as part of that regulatory program.
- A federal grand jury returned a superseding indictment charging Palazzo with, among other offenses, **40 counts of health‑care fraud** (18 U.S.C. § 1347) and **15 counts** alleging violations of FDA investigational‑drug recordkeeping requirements.
- The 15 challenged counts alleged that Palazzo failed to prepare and maintain adequate and accurate case histories and related records required for each study subject, in violation of **21 U.S.C. § 355(i)** and **21 C.F.R. § 312.62(b)**, and that she did so **with intent to defraud and mislead**.
- Palazzo moved to dismiss the 15 § 355(i)/§ 312.62(b) counts, arguing that (1) § 355(i) unconstitutionally delegated legislative power by allowing the FDA to define conduct carrying criminal penalties, and (2) even if valid, § 355(i) and the regulations did not authorize criminal liability for **clinical investigators**, limiting such liability to sponsors or manufacturers.
- The district court (E.D. La.) dismissed the 15 counts based on the nondelegation doctrine and on its reading that the statute/regulations did not clearly reach investigators.
- The United States appealed the dismissal; the appeal concerned only the 15 recordkeeping counts.

## Issues

1. Whether 21 U.S.C. § 355(i) violates the nondelegation doctrine by authorizing FDA regulations that can be enforced criminally.
2. Whether § 355(i), together with the FDCA’s enforcement provisions and 21 C.F.R. § 312.62(b), permits criminal prosecution of a **clinical investigator** who intentionally fails to maintain required investigational‑drug records.

## Decision

- The Fifth Circuit **reversed** the dismissal of the 15 counts and **remanded** for further proceedings.
- The court held that **§ 355(i) is a valid delegation** because Congress supplied a sufficient standard to guide the agency’s regulation of investigational drug use.
- The court held that the FDCA’s text and structure allow criminal enforcement against **any person** who violates valid regulations issued under § 355(i), and that Part 312 imposes recordkeeping duties directly on **investigators**.
- The court rejected arguments that the statutory and regulatory scheme failed to give fair notice or required narrowing through the rule of lenity, given the statute’s enforcement provisions and the regulations’ express assignment of duties to investigators.

## Legal Principles

- A congressional delegation to an agency is constitutional if Congress supplies an **intelligible principle** guiding the agency’s action, even when regulations issued under that authority may be enforced through criminal penalties set by Congress.
- Congress may impose criminal penalties for violating regulations when Congress identifies the field of regulation and links penalties to violations of properly issued rules; the agency supplies operational detail, while Congress supplies the punishment.
- Under the FDCA enforcement scheme, violations of required recordkeeping duties can be prosecuted criminally when the government alleges the mens rea required for the charged penalty provision, including **intent to defraud or mislead** under 21 U.S.C. § 333(a)(2).
- FDA’s IND regulations in 21 C.F.R. Part 312 assign obligations not only to sponsors but also to **investigators**, including the duty in **21 C.F.R. § 312.62(b)** to prepare and maintain adequate and accurate case histories and related records for each individual in the investigation.
- The rule of lenity applies only when, after standard tools of interpretation are used, there remains grievous ambiguity; where the statutory text and regulations identify regulated parties and duties, lenity does not bar prosecution.

## Conclusion

United States v. Palazzo holds that § 355(i) does not violate the nondelegation doctrine and that clinical investigators, not just sponsors or manufacturers, may face criminal prosecution for intentional violations of FDA investigational‑drug recordkeeping rules such as 21 C.F.R. § 312.62(b); the Fifth Circuit therefore reversed the district court’s dismissal of the 15 recordkeeping counts and remanded.


United States v. Palazzo, 558 F.3d 400 (2009)