AMENDMENT 772
Amendment: Section 2B1.1 is amended by inserting before paragraph (9) the following new paragraph:
“(8) (Apply the greater) If—
(A) the offense involved conduct described in 18 U.S.C. § 670, increase by 2 levels; or
(B) the offense involved conduct described in 18 U.S.C. § 670, and the defendant was employed by, or was an agent of, an organization in the supply chain for the pre-retail medical product, increase by 4 levels.”;
The Commentary to §2B1.1 captioned “Application Notes” is amended in Note 1 by inserting after the paragraph that begins “ ‘Personal information’ means” the following:
“ ‘Pre-retail medical product’ has the meaning given that term in 18 U.S.C. § 670(e).”; and by inserting after the paragraph that begins “ ‘Publicly traded company’ means” the following:
“ ‘Supply chain’ has the meaning given that term in 18 U.S.C. § 670(e).”;
in Note 3(F)(i) by striking “Note 9(A)” and inserting “Note 10(A)”; and
by renumbering Notes 7 through 19 as 8 through 20; by inserting after Note 6 the following:
“7. Application of Subsection (b)(8)(B).—If subsection (b)(8)(B) applies, do not apply an adjustment under §3B1.3 (Abuse of Position of Trust or Use of Special Skill).”; and
in Note 20 (as so renumbered) by adding at the end of subparagraph (A)(ii) as the last sentence the following: “Similarly, an upward departure would be warranted in a case involving conduct described in 18 U.S.C. § 670 if the offense resulted in serious bodily injury or death, including serious bodily injury or death resulting from the use of the pre-retail medical product.”.
The Commentary to §2B1.1 captioned “Background” is amended by inserting before the paragraph that begins “Subsection (b)(9)(D)” the following:
“ Subsection (b)(8) implements the directive to the Commission in section 7 of Public Law 112–186.”.
However, if §2B1.1(b) already contains a paragraph (8) because the renumbering of paragraphs by Amendment 771 has not taken effect, renumber the new paragraph inserted into §2B1.1(b) as paragraph (8A) rather than paragraph (8), and revise the Commentary so that the new Note 7 inserted into the Application Notes and the new paragraph inserted into the Background refer to subsection (b)(8A) rather than subsection (b)(8).
Appendix A (Statutory Index) is amended by inserting after the line referenced to 18 U.S.C. § 669 the following:
“18 U.S.C. § 670 2B1.1”.
Reason for Amendment: This amendment responds to the Strengthening and Focusing Enforcement to Deter Organized Stealing and Enhance Safety Act of 2012, Pub. L. 112–186 (enacted October 5, 2012) (the “Act”), which addressed various offenses involving “pre-retail medical products,” defined as “a medical product that has not yet been made available for retail purchase by a consumer.” The Act created a new criminal offense at 18 U.S.C. § 670 for theft of pre-retail medical products, increased statutory penalties for certain related offenses when a pre-retail medical product is involved, and contained a directive to the Commission.
New Offense at 18 U.S.C. § 670
The new offense at section 670 makes it unlawful for any person in (or using any means or facility of) interstate or foreign commerce to—
(1) embezzle, steal, or by fraud or deception obtain, or knowingly and unlawfully take, carry away, or conceal a pre‑retail medical product;
(2) knowingly and falsely make, alter, forge, or counterfeit the labeling or documentation (including documentation relating to origination or shipping) of a pre‑retail medical product;
(3) knowingly possess, transport, or traffic in a pre‑retail medical product that was involved in a violation of paragraph (1) or (2);
(4) with intent to defraud, buy, or otherwise obtain, a pre‑retail medical product that has expired or been stolen;
(5) with intent to defraud, sell, or distribute, a pre‑retail medical product that is expired or stolen; or
(6) attempt or conspire to violate any of paragraphs (1) through (5).
The offense generally carries a statutory maximum term of imprisonment of three years. If the offense is an “aggravated offense,” however, higher statutory maximum terms of imprisonment are provided. The offense is an “aggravated offense” if—
(1) the defendant is employed by, or is an agent of, an organization in the supply chain for the pre‑retail medical product; or
(2) the violation—
(A) involves the use of violence, force, or a threat of violence or force;
(B) involves the use of a deadly weapon;
(C) results in serious bodily injury or death, including serious bodily injury or death resulting from the use of the medical product involved; or
(D) is subsequent to a prior conviction for an offense under section 670.
Specifically, the higher statutory maximum terms of imprisonment are:
(1) Five years, if—
(A) the defendant is employed by, or is an agent of, an organization in the supply chain for the pre-retail medical product; or
(B) the violation (i) involves the use of violence, force, or a threat of violence or force, (ii) involves the use of a deadly weapon, or (iii) is subsequent to a prior conviction for an offense under section 670.
(2) 15 years, if the value of the medical products involved in the offense is $5,000 or greater.
(3) 20 years, if both (1) and (2) apply.
(4) 30 years, if the offense results in serious bodily injury or death, including serious bodily injury or death resulting from the use of the medical product involved.
The amendment amends Appendix A (Statutory Index) to reference the new offense at 18 U.S.C. § 670 to §2B1.1 (Theft, Property Destruction, and Fraud). The Commission concluded that §2B1.1 is the appropriate guideline because the elements of the new offense include theft or fraud.
Response to Directive
Section 7 of the Act directs the Commission to “review and, if appropriate, amend” the federal sentencing guidelines and policy statements applicable to the new offense and the related offenses “to reflect the intent of Congress that penalties for such offenses be sufficient to deter and punish such offenses, and appropriately account for the actual harm to the public from these offenses.” The amendment amends §2B1.1 to address offenses involving pre-retail medical products in two ways.
First, the amendment adds a new specific offense characteristic at §2B1.1(b)(8) that provides a two-pronged enhancement with an instruction to apply the greater. Prong (A) provides a 2-level enhancement if the offense involved conduct described in 18 U.S.C. § 670. Prong (B) provides a 4-level enhancement if the offense involved conduct described in 18 U.S.C. § 670 and the defendant was employed by, or an agent of, an organization in the supply chain for the pre-retail product. Accompanying this new specific offense characteristic is new Commentary providing that, if prong (B) applies, “do not apply an adjustment under §3B1.3 (Abuse of Position of Trust or Use of Special Skill).”
Based on public comment, testimony and sentencing data, the Commission concluded that an enhancement differentiating fraud and theft offenses involving medical products from those involving other products is warranted by the additional risk such offenses pose to public health and safety. In addition, such offenses undermine the public’s confidence in the medical regulatory and distribution system. The Commission also concluded that the risks and harms it identified would be present in any theft or fraud offense involving a pre-retail medical product, regardless of the offense of conviction. Therefore application of the new specific offense characteristic is not limited to offenses charged under 18 U.S.C. § 670.
The amendment provides a 4-level enhancement for defendants who commit such offenses while employed in the supply chain for the pre-retail medical product. Such defendants are subject to an increased statutory maximum and the Commission determined that a heightened enhancement should apply to reflect the likelihood that the defendant’s position in the supply chain facilitated the commission or concealment of the offense. Defendants who receive the 4-level enhancement are not subject to the adjustment at §3B1.3 because the new enhancement adequately accounts for the concerns covered by §3B1.3. The Commission determined that existing specific offense characteristics generally account for other aggravating factors included in the Act, such as loss, use or threat of force, risk of death or serious bodily injury, and weapon involvement, and therefore additional new specific offense characteristics are not necessary. See, e.g., §§2B1.1(b)(1), (b)(3), and (b)(15) (as redesignated by the amendment).
Second, it amends the upward departure provisions in the Commentary to §2B1.1 at Application Note 19(A) to provide — as an example of a case in which an upward departure would be warranted — a case “involving conduct described in 18 U.S.C. § 670 if the offense resulted in serious bodily injury or death, including serious bodily injury or death resulting from the use of the pre-retail medical product.” Public comment and testimony indicated that §2B1.1 may not adequately account for the harm created by theft or fraud offenses involving pre-retail medical products when such serious bodily injury or death actually occurs as a result of the offense. For example, some pre-retail medical products are stolen as part of a scheme to re-sell them into the supply chain, but if the products have not been properly stored in the interim, their subsequent use can seriously injure the individual consumers who buy and use them. Thus, the amendment expands the scope of the existing upward departure provision to address such harms and to clarify that an upward departure is appropriate in such cases not only if serious bodily injury or death occurred during the theft or fraud, but also if such serious bodily injury or death resulted from the victim’s use of a pre-retail medical product that had previously been obtained by theft or fraud.
Finally, the amendment amends the Commentary to §2B1.1 to provide relevant definitions and make other conforming changes.
Effective Date: The effective date of this amendment is November 1, 2013.