[Federal Register Volume 60, Number 216 (Wednesday, November 8, 1995)]
[Notices]
[Pages 56354-56356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27676]
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DEPARTMENT OF JUSTICE
[Docket No. 94-27]
Hugh I. Schade, M.D.; Denial of Application
On February 25, 1994, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration (DEA), issued an
Order to Show Cause to Hugh I. Schade, M.D., (Respondent) of San Jose,
California, notifying him of an opportunity to show cause as to why DEA
should not deny his pending application, executed on August 28, 1992,
for registration as a practitioner under 21 U.S.C. 823(f), as being
inconsistent with the public interest. Specifically, the Order to Show
Cause alleged that: (1) In September and October 1987 a DEA inspection
of the Respondent's registered location revealed discrepancies in his
recordkeeping and security, including the storage of controlled
substances at an unregistered location, and an audit revealed overages
and shortages of controlled substances, including a shortage of 4,193
dosage units of Diazepam, a Schedule IV controlled substance; (2)
during the DEA audit, the Respondent and his wife admitted to
personally using acetaminophen with codeine products and Anexsia, a
Schedule III controlled substance, out of office stock, since 1985,
without recording the usage; (3) on September 12, 1989, the Respondent
was arrested on thirty-one counts of violating the California Health
and Safety Code by prescribing controlled substances without a
legitimate medical purpose and not in the usual course of professional
practice; (4) on December 18, 1991, the Respondent was convicted in the
Superior Court of California, Santa Clara County, of thirteen felony
counts of issuing controlled substance prescriptions without medical
cause and one count of manslaughter, arising out of a patient's drug
overdose death.
On March 1, 1994, the Respondent, through counsel, filed a timely
request for a hearing, and following prehearing procedures, a hearing
was held in San Francisco, California, on October 26 and 27, 1994,
before Administrative Law Judge Paul A. Tenney. At the hearing, both
parties called witnesses to testify and introduced documentary
evidence, and after the hearing, counsel for both sides submitted
proposed findings of fact, conclusions of law and argument. On January
12, 1995, Judge Tenney issued his Findings of Fact, Conclusions of Law,
and Recommended Ruling, recommending that the Respondent's application
for registration be denied, and also writing that ``the Respondent is
encouraged to reapply in about one year from the effective date of any
final decision in this case.'' Neither party filed exceptions to his
decision, and on February 15, 1995, Judge Tenney transmitted the record
of these proceedings to the Deputy Administrator.
The Deputy Administrator has considered the record in its entirety,
and pursuant to 21 CFR 1316.67, hereby issues his final order based
upon findings of fact and conclusions of law as hereinafter set forth.
The Deputy Administrator adopts, in full, the Opinion and Recommended
Ruling, Findings of Fact, Conclusions of Law and Decision of the
Administrative Law Judge, and his adoption is in no manner diminished
by any recitation of facts, issues and conclusions herein, or of any
failure to mention a matter of fact or law.
The Deputy Administrator finds that the parties have stipulated to
the following: (1) That Anexsia, a brand name for a product containing
hydrocodone, is a Schedule III narcotic
[[Page 56355]]
controlled substance pursuant to 21 CFR 1308.13(e); (2) that codeine is
a Schedule III narcotic controlled substance pursuant to 21 CFR
1308.13(e); (3) that Tylenol No. 3, Tylenol No. 4, and Empirin with
codeine, brand names for products containing codeine, are Schedule III
narcotic controlled substances pursuant to 21 CFR 1308.13(e); and (4)
that Diazepam is a Schedule IV narcotic controlled substance pursuant
to 21 CFR 1308.14(c).
In October 1986, an investigation was opened by the DEA after a
Diversion Investigator received information that the Respondent had
purchased controlled substances containing codeine and dihydrocodeinone
in quantities in excess of average U.S. and California practitioners.
An administrative inspection warrant was served on the Respondent's Los
Gatos Boulevard location in September 1987. Prior to serving the
warrant, the investigators determined that the Respondent had only one
valid DEA registration, which was for his Los Gatos Boulevard office.
However, investigators discovered that the Respondent was storing
controlled substances at unregistered locations, to include his medical
office on Crown Boulevard in San Jose, and his Almaden Valley
residence. The investigators also discovered that the Respondent had
failed to take a beginning inventory, to conduct a biennial inventory,
and to properly complete DEA Form 222 for Schedule II controlled
substances.
An audit was conducted, and the Respondent was unable to account
for approximately 3,000 dosage units of acetaminophen with codeine.
Although he maintained that he did not know what happened to these
dosage units, the Respondent admitted to the investigator that he and
his wife had personally used this substance out of office stock without
recording the usage. There were also overages and shortages of other
controlled substances. Police reports reflected that in late 1983 and
early 1984, controlled substances were stolen from the Respondent's
office, but such thefts had not been reported to DEA, as required.
However, the Respondent had a theft and loss of controlled substances
in 1976 and reported that loss to both the local police and the DEA.
Also, he testified that he was aware of the requirement to report such
incidents to the DEA.
The investigators also examined the physical security provided for
the storage of controlled substances, noting that the storage room door
was left ajar more than once, and since no staff members controlled
access to the area, patients could enter and leave the room undetected.
Investigators also learned from the Respondent that storage cabinets
containing controlled substances were accessible to drug company
representatives as well as patients, without staff supervision.
Following the investigation, the Respondent was charged and
convicted in a California Superior Court of involuntary manslaughter
and 13 counts of unlawfully prescribing controlled substances. The
Respondent appealed the conviction, and the appellate court affirmed
the involuntary manslaughter conviction, and, with one judge
dissenting, reversed the conviction for unlawfully prescribing
controlled substances, finding that the trial court's failure to
instruct sua sponte on the definition of the term ``addict'' was
reversible error. See People versus Schade, 25 Cal. App. 4th 1605 (Cal.
Ct. App. 1994).
The manslaughter conviction stemmed from the Respondent's treatment
of John Barker from December 11, 1985, until his suicide by means of an
overdose of Tylenol and Darvon on September 17, 1987. The Report of the
Respondent's Probation Officer, made of record, contained factual
details concerning the manslaughter conviction. Specifically, in
treating Mr. Barker, the Respondent prescribed codeine and depressants
such as Restoril, Soridol, Soma, and Ativan. On September 9, 1986, the
Respondent began prescribing Darvon or Darvocet to Mr. Barker, as well
as Dalmane and Halcion. The Physicians' Desk Reference indicates a
warning that Darvon should be prescribed with caution when the patient
is also taking tranquilizers such as Halcion, Restoril, or Ativan.
On August 21, 1987, Mr. Barker was hospitalized after a suicide
attempt in which he took an overdose of multiple medications. The
Respondent noted on Mr. Barker's record on August 24, 1987, that he was
extremely depressed and had stated that he did intend to take his own
life. On September 3, 1987, the Respondent prescribed a depressant,
Xanax, and on September 11, 1987, the Respondent prescribed 100 tablets
of Darvocet. After Mr. Barker's suicide attempt, relatives confronted
the Respondent regarding the prescribed medications and their fear that
Mr. Barker again would attempt suicide. The relatives were also
concerned that the Respondent had released Mr. Barker too soon after
his admission for the suicide attempt, for he was released from the
hospital in less than 24 hours after his admission. On September 17,
1987, Mr. Barker was found in his car with the engine running, and the
initial impression of the coroner was death by carbon monoxide
poisoning. However, results of an autopsy indicated a blood-alcohol
level of 0.13 percent and toxic levels of Darvocet, while his carbon
monoxide level was a low two percent.
At the trial, Dr. Drottar, an emergency room physician, testified,
among other observations, that the Respondent's dispensing of 100
Darvocet tablets three days after a serious suicide attempt was
criminal negligence. Psychiatrist Dr. Keins, who evaluated Mr. Barker
at the Emergency Psychiatric Services on September 4, 1987, testified
that giving Mr. Barker 100 Darvocet tablets at that time would be
``like handing him a loaded gun,'' given his mental status and his
depression.
At the hearing before Judge Tenney, the Respondent testified that
he had given no specific warnings to Mr. Barker concerning the use of
Darvocet with alcohol. He also testified that at the time of his last
visit with Mr. Barker, he did not seem depressed and was not
threatening suicide. However, the Respondent also testified that, at
that time, he did not know about the earlier emergency room overdose
treatment.
The Respondent has practiced medicine since 1962 and has a current
California license to practice medicine. There are no current actions
pending against him before the Medical Board of California. Several of
the Respondent's patients testified on his behalf, recounting their
friendship with him and his skill as a physician. The Respondent also
testified, stating the corrective actions taken after DEA investigators
informed him of the need for a DEA Certificate of Registration for each
location where he dispensed controlled substances.
Pursuant to 21 U.S.C. 823(f), the Deputy Administrator may deny an
application for a DEA Certificate of Registration if he determines that
such registration would be inconsistent with the public interest.
Section 823(f) requires that the following factors be considered in
determining the public interest:
(1) The recommendation of the appropriate State licensing board or
professional disciplinary authority.
(2) The applicant's experience in dispensing or conducting research
with respect to controlled substances.
(3) The applicant's conviction record under Federal or State laws
relating to the manufacture, distribution, or dispensing of controlled
substances.
(4) Compliance with applicable State, Federal, or local laws
relating to controlled substances.
[[Page 56356]]
(5) Such other conduct which may threaten the public health or
safety.
These factors are to be considered in the disjunctive; the Deputy
Administrator may rely on any one or a combination of factors and may
give each factor the weight he deems appropriate in determining whether
an application for registration should be denied. See Henry J. Schwarz,
Jr., M.D., Docket No. 88-42, 54 FR 16422 (1989).
In this case, all five factors are relevant. As to factor one, the
Respondent has a current California license to practice medicine, and
there are no current actions pending before the State medical board.
Regarding factors two, ``experience in dispensing * * * controlled
substances,'' and four, ``compliance with applicable State, Federal, or
local laws,'' 21 U.S.C. 827(a)(3) and 21 CFR 1304.21 and 1304.24
require a registrant who dispenses a controlled substance to maintain a
current, complete, and accurate record of every such dispensing of the
substance. Also sections 1304.11 to 1304.13, and 1305.06 of the Code of
Federal Regulations establish requirements for inventory procedures and
for completing DEA Form 222. Yet, the record contains evidence that the
Respondent failed to conduct required inventories, was unable to
account for about 3,000 dosage units of acetaminophen with codeine,
incurred other shortages and overages of controlled substances
relegated to his care, and failed to completely and accurately fill out
the DEA Form 222. Additionally, both the Respondent and his wife
personally used acetaminophen with codeine out of the office supply
without recording their personal usage. Such disregard of recordkeeping
requirements exemplify the basis for concern about potential diversion
of controlled substances resulting from such improper accountability;
concerns properly addressed under factors two and four.
Also, 21 CFR 1301.23 requires a separate registration for each
location in which controlled substances are to be dispensed, and 21 CFR
1301.71 establish security requirements. Yet the Respondent stored
controlled substances at his Crown Boulevard location and at his home,
despite the lack of a valid DEA registration for either of those
locations. Such actions demonstrate a disregard for these regulatory
requirements. Further, the lax security procedures resulting in
patients and drug company representatives having access to drug storage
areas further demonstrate a disregard for security regulations.
Finally, concerning factor five, the Respondent was convicted in
State court of one count of involuntary manslaughter arising out of a
patient's drug-overdose death in September 1987. The conviction was
affirmed upon appeal. The Deputy Administrator assigns substantial
weight to the pattern of behavior exhibited by the Respondent in his
prescribing practices to this patient. The threat to the public health
and safety of such practices directly impacts upon the public interest.
Although the Deputy Administrator has taken into account the length
of time the Respondent has practiced medicine, the lack of prior
convictions or adverse State board action, and the testimony of the
Respondent's witnesses concerning his contribution to his community and
their opinion of his professional care, he also notes the lack of any
evidence which provides assurances that the Respondent's future
practice will include closer monitoring of patient symptoms and
treatment, as well as compliance with Federal and State laws and
regulations concerning the dispensing and storage of controlled
substances. Such lack of mitigating evidence, coupled with the severity
of the circumstances surrounding the involuntary manslaughter death of
Mr. Barker, result in a conclusion that the granting of the
Respondent's application for a DEA Certificate of Registration at this
time would be inconsistent with the ``public interest'' under 21 U.S.C.
823(f). Therefore, the Deputy Administrator finds that the public
interest is best served by denying the Respondent's application for a
DEA Certificate of Registration. If the Respondent reapplies and
submits evidence showing corrective actions taken to bring his practice
into conformance with DEA regulations, his application may receive more
favorable consideration.
Accordingly, the Deputy Administrator of the Drug Enforcement
Administration, pursuant to the authority vested in him by 21 U.S.C.
823, and 21 CFR 0.100(b) and 0.104, hereby orders that the Respondent's
Application for a DEA Certificate of Registration be, and it hereby is,
denied. This order is effective December 8, 1995.
Dated: November 2, 1995.
Stephen H. Greene,
Deputy Administrator.
[FR Doc. 95-27676 Filed 11-7-95; 8:45 am]
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