[Federal Register Volume 63, Number 160 (Wednesday, August 19, 1998)]
[Notices]
[Pages 44471-44475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22223]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration
[Docket No. 97-8]


Leonard E. Reaves, III, M.D., Revocation of Registration

    On January 29, 1997, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to Leonard E. Reaves, III, M.D., (Respondent) of 
Windsor, North Carolina, notifying him of an opportunity to show cause 
as to why DEA should not revoke his DEA Certificate of Registration, 
AR2127377, and deny any pending applications for renewal of such 
registration as a practitioner under 21 U.S.C. 823(f), for reason that 
his continued registration would be inconsistent with the public 
interest pursuant to 21 U.S.C. 824(a)(4).
    By letter dated March 28, 1997, Respondent, through counsel, filed 
a request for a hearing, and following prehearing procedures, a hearing 
was held in Raleigh, North Carolina on September 10 and 11, 1997, 
before Administrative Law Judge Gail A. Randall. At the hearing, both 
parties called witnesses to testify and the Government introduced 
documentary evidence. After the hearing, counsel for both parties 
submitted proposed findings of fact, conclusions of law and argument. 
On March 11, 1998, Judge Randall issued her Opinion and Recommended 
Ruling, recommending that Respondent's DEA Certificate of Registration 
be revoked. Neither party filed exceptions to her decision, and on 
April 13, 1998, Judge Randall transmitted the record of these 
proceedings to the Acting Deputy Administrator.
    The Acting 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 Acting Deputy Administrator adopts, with noted exceptions, 
the Opinion and Recommended Ruling of the Administrative Law Judge, and 
his adoption is in no manner diminished by any recitation of facts, 
issues and conclusions therein, or of any failure to mention a matter 
of fact or law.
    The Acting Deputy Administrator finds that Respondent graduated 
from medical school in 1961 and became licensed to practice medicine in 
North Carolina. He has continuously maintained his North Carolina 
medical license since that time. In the 1960's, Respondent received 
some advanced

[[Page 44472]]

training in internal medicine in Florida. Initially, Respondent was 
issued a temporary Florida medical license, but subsequently took the 
state licensure examination and was issued a Florida medical license. 
Beyond his training, Respondent never practiced medicine in Florida, 
yet he retained his Florida medical license. Respondent entered into 
private practice in North Carolina in 1967.
    In 1975, Respondent was suspended from participating in the North 
Carolina Medicaid Assistance Program, following a determination that he 
had received an overpayment of over $76,000.00 due to his over-
utilization of extended office visit codes; over-utilization of x-rays; 
alteration of service dates to coincide with medicail eligibility, and 
over-utilization of in-patient hospital admissions for short-term 
stays.
    On or about June 20, 1986, the South Carolina Board of Medical 
Examiners (South Carolina Board) received Respondent's application for 
licensure in that state. Respondent failed to disclose his suspension 
from the North Carolina Medicaid Program on his application. The South 
Carolina Board asked Respondent for a detailed written explanation of 
the findings that led to his suspension. During a hearing on the 
proposed denial of his application, Respondent stated that he had not 
been suspended from the North Carolina Medicaid Program. In October 
1986, the South Carolina Board ordered the denial of Respondent's 
application for medical licensure in that state based upon his ``total 
lack truthful, accurate and complete answers on his written application 
for licensure''; his ``lack of candor when he was given the opportunity 
to be heard before this Board''; and his ``failure to provide, as 
required in this Boards's letter of September 2, 1986, a detailed 
explanation regarding the finding of the North Carolina Medicaid 
audit.'' The South Carolina Board found that the explanation that was 
given by Respondent was ``grossly inadequate and unacceptable * * *.''
    As a result of the South Carolina Board's denial, on April 12, 
1988, the Florida Board of Medicine (Florida Board) revoked 
Respondent's Florida medical license.
    Also in 1988, Respondent's privileges were revoked at a 
Fayetteville, North Carolina hospital because he treated a patient in 
the intensive care unit in violation of an agreement that he had with 
the hospital.
    In 1991, Respondent began practicing medicine at his own clinic in 
Windsor, North Carolina. After several yeas, he joined a medical center 
in Bertie, North Carolina, where he was still practicing as of the date 
of the hearing. This medical center serves a poor rural community.
    In August 1991, Respondent contacted the medical director of the 
North Carolina Physicians Health Program, and was encouraged to seek 
treatment for codependency, a problem where a person is addicted to 
approval from others. Respondent attended a 28-day inpatient treatment 
facility.
    On March 24, 1992, Respondent submitted an application for the 
renewal of his DEA Certificate of Registration in North Carolina. On 
the application, Respondent answered ``No'' to a question (hereinafter 
referred to as the liability question) which asks in relevant part 
whether the applicant has ``ever had a State professional license * * * 
revoked, suspended, denied, restricted or placed on probation.'' 
Respondent provided this response despite the 1986 denial of his 
application for licensure in South Carolina and the 1988 revocation of 
his Florida medical license. Also on this application, Respondent did 
not request registration with DEA in Schedules IIN, III, and IIIN. 
Consequently on April 2, 1992, Respondent's DEA Certificate of 
Registration was renewed in Schedules II, IV and V only.
    When Respondent next applied to renew his DEA Certificate of 
Registration on April 15, 1995, he answered ``Yes'' to the liability 
question, and explained, ``In 1990 or 1991, I made application to the 
Board of Medical Examiners of the State of South Carolina for a medical 
license. Because of the way I presented a dispute with NC Medicaid, the 
license was denied to me. By electronic mail, an earned license in 
Florida was revoked as I did not know how to appeal. A license to 
practice in NC [is] in effect and has never been revoked, suspended, et 
al. I have never had a DEA license revoked, suspended et al.'' On this 
application, Respondent requested registration in Schedules II, III, IV 
and V, but not IIN and IIIN.
    In light of Respondent's affirmative answer to the liability 
question on his 1995 renewal application, DEA initiated an 
investigation of Respondent. A review of Respondent's prior renewal 
applications revealed that in 1988 and 1989, Respondent applied for 
registration in Schedules II, IIN, III, IIIN and IV, but not V. This 
review also revealed the negative answer to the liability question on 
the 1992 renewal application, as well as the fact that Respondent only 
applied for registration in Schedules II, IV and V.
    On August 2, 1995, a DEA investigator contacted three local 
pharmacies and discovered that Respondent had been prescribing 
controlled substances in schedules that were outside the authority 
granted to him by his DEA Certificate of Registration. The DEA 
investigator then contacted Respondent and advised him that he was 
issuing prescriptions for controlled substances that were in schedules 
for which he was not registered. The investigator testified that 
Respondent ``expressed confusion to me about the drug schedules * * * 
he didn't seem to understand the difference in, for instance * * * a 
Schedule III narcotic versus * * * a Schedule II nonnarcotic * * *.''
    As a result of this conversation with the investigator, Respondent 
asked local pharmacists to assist him in ensuring that he only issued 
prescriptions for controlled substances that he was authorized to 
handle. However, there is no evidence in the record to indicate that 
Respondent took any affirmative steps on his own, such as attending a 
continuing medical education course in the proper handling of 
controlled substances, to learn the difference between the schedules 
and what drugs fall within each schedule.
    Subsequently, in October 1995, the investigator obtained printouts 
from the three local pharmacies of Respondent's controlled substance 
prescribing between January 1, 1994 and October 19, 1995. The printouts 
revealed that the pharmacies filled over 450 Schedule III 
prescriptions, including refills, issued by Respondent. In addition, 
one pharmacy's records revealed that Respondent issued a prescription 
for a Schedule IIN controlled substance and one for a Schedule IIIN 
controlled substance after being advised on August 2, 1995, that he was 
only authorized to handle controlled substances in Schedules II, IV and 
V.
    In October 1995, the DEA investigator contacted Respondent again 
and advised him of the discovery of the two unauthorized prescriptions 
and reminded Respondent that he was only authorized to handle 
controlled substances in Schedules II, IV and V. At the hearing, the 
investigator testified that following this second conversation, he had 
not found any unauthorized controlled substance prescriptions issued by 
Respondent.
    At the hearing in this matter, Respondent and the medical director 
of the North Carolina Physicians Health Program testified that 
Respondent's codependency problem resulted in difficulty with 
authority, as well as difficulty in accepting responsibility for his 
actions. The medical director

[[Page 44473]]

testified that Respondent had undergone some treatment for his 
codependency problem and was better about taking responsibility for his 
actions. However, he felt that Respondent would benefit from further 
treatment, but he did not believe that Respondent was still seeking 
treatment at the time of the hearing. Respondent testified that he 
``got the appropriate treatment'' and is ``doing fine now.'' He 
indicated that he was currently seeing a local psychiatrist, ``[a]nd I 
feel good about myself and my practice and my emotional well-being.''
    At the hearing, Respondent did acknowledge that he falsely answered 
the liability question on his 1992 renewal application. When asked why 
he gave a false answer, Respondent replied, ``[p]erhaps the emotional 
pain of trying to put down, yes. That was an error, and that was false. 
And I'm sorry about that. I made mistakes. Something made me do that. I 
don't know. That was not correct.''
    However, it appears that Respondent still has difficulty accepting 
responsibility for his actions. With respect to the Medicaid 
suspension, Respondent testified that he did not think there had been 
an alteration of service dates. Regarding his failure to request 
registration in all schedules on his DEA renewal applications, 
Respondent testified that filling out a renewal application is ``one of 
those things that physicians just really hate to do * * *. And they do 
it in a haphazard way. And they give it to their secretary and say, 
copy this the way it was last year * * *. He doesn't really spend any 
time on it.'' Finally, as to his prescribing outside his authorization, 
Respondent blamed DEA for not sending him documentation regarding what 
controlled substances he was not authorized to handle.
    There was testimony at the hearing by Respondent, the Chief of 
Staff at the hospital where Respondent has privileges, and two 
physician assistants who work with Respondent that Respondent is 
precise in his writing of medical records, in his caring for patients, 
and in his prescribing of controlled substances. There has never been 
any indication that Respondent has a substance abuse problem.
    Pursuant to 21 U.S.C. 823(f) and 824(a)(4), The Deputy 
Administrator may revoke a DEA Certificate of Registration and deny any 
pending applications, if he determines that the continued registration 
would be inconsistent with the public interest. Section 823(f) requires 
that the following factors be considered:
    (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.
    (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 
a registration should be revoked or an application for registration be 
denied. See Henry J. Schwarz, Jr., M.D., Docket No. 88-42, 54 FR 16,422 
(1989).
    Regarding factor one, it is undisputed that the South Carolina 
Board denied Respondent's application for medical licensure in that 
state in 1986, and that his Florida medical license was revoked in 
1988. However, it is also undisputed that North Carolina has not taken 
any action against Respondent's North Carolina medical license.
    Factors two and four, Respondent's experience in dispensing 
controlled substances and his compliance with applicable laws related 
to the handling of controlled substances, clearly are relevant in 
determining the public interest in this case. Pursuant to 21 U.S.C. 
822(b), ``[p]ersons registered by the Attorney General under this 
subchapter to * * * dispense controlled substances * * * are authorized 
to possess * * * or dispense such substances * * * to the extent 
authorized by their registration and in conformity with the other 
provisions of this subchapter.'' In 1992, Respondent applied for 
renewal of his DEA registration in Schedules II, IV and V. Thereafter, 
between 1994 and 1995, Respondent issued over 450 Schedule III and IIIN 
prescriptions. The Acting Deputy Administrator finds that the 
Respondent issued these prescriptions without being authorized by his 
registration to do so.
    The Acting Deputy Administrator further finds that even after being 
advised of the extent of his authorization, Respondent issued two 
prescriptions for substances that he was not registered to handle. 
Judge Randall found that only one of the prescriptions was outside of 
Respondent's authorization. This prescription was for testosterone, a 
Schedule III controlled substance, and Respondent was not authorized to 
handle any Schedule III controlled substance. Judge Randall found 
however, that the other prescription for Dexedrine, a Schedule IIN 
controlled substance did not exceed Respondent's authority, stating 
that there is ``no scheduling distinction between Schedule II and 
Schedule IIN substances * * *. Consequently, a registrant authorized to 
handle Schedule II substances would seem to be authorized to handle 
both narcotic and non-nartotic Schedule II substances, as both are 
designated as `Schedule II' in the Controlled Substances Act and the 
regulations.''
    The Acting Deputy Administrator disagrees with Judge Randall's 
conclusion. While it is true that Schedule II substances, whether 
narcotic or non-narcotic substances, are all considered Schedule II 
substances for recordkeeping and penalty purposes under the Controlled 
Substances Act, DEA has historically differentiated between narcotic 
and non-narcotic substances for registration purposes.\1\ Not all 
registrants wish to be registered to handle narcotic substances, and 
are therefore given the opportunity to apply only those substances that 
they wish to handle. In addition, there are occasions where a 
practitioner is not authorized by the state in which he/she practices 
to handle narcotic substances, and as a result cannot be issued a DEA 
registration to handle those substances. Therefore, the Acting Deputy 
Administrator finds that it is appropriate, as well as prudent, to 
differentiate between narcotic and non-narcotic substances for 
registration purposes. Registrants are on notice as to which substances 
fall within these categories. The term ``narcotic drug'' is defined in 
the Controlled Substances Abuse Act and it is clear in looking at the 
regulations which substances meet this definition. See 21 U.S.C. 
802(17); 21 CFR 1308.12(b) and (c) and 1308.13(e).
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    \1\ The same applies for Schedule III controlled substances.
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    Consequently, the Acting Deputy Administrator finds that Repondent 
issued a prescription for testosterone, and one for Dexedrine, without 
being authorized by his registration to do so. The Acting Deputy 
Administrator recognizes that after being advised of the extent of his 
authorization to handle controlled substances, Respondent substantially 
complied with the law. However, the fact that he issued two 
unauthorized prescriptions indicates that Respondent is still not aware 
of what schedule certain drugs fall within,

[[Page 44474]]

and that he is not diligent in verifying a substance's schedule.
    Like Judge Randall, the Acting Deputy Administrator finds it 
commendable that Respondent sought the assistance of local pharmacists 
to ensure that he did not inadvertently issue prescriptions outside of 
his DEA granted authorization. However, as Judge Randall notes, ``the 
record lacks evidence that the Respondent took any actions to enhance 
his own knowledge about scheduled substances, so that he could be 
responsible for his prescribing conduct.'' The responsibility for the 
proper prescribing of controlled substances is on the practitioner and 
he should not rely on others to ensure his compliance.
    Under 21 U.S.C. 843(a)(4)(A), it is ``unlawful for any person 
knowingly or intentionally--to furnish false or fraudulent material 
information in, or omit any material information from, any application, 
report, record, or other document required to be made, kept, or filed 
under this subchapter or subchapter II of this chapter.'' Answers to 
the renewal application's liability question are material, since DEA 
relies upon such answers to determine whether an investigation is 
needed prior to granting the application. See Ezzat E. Majd Pour, M.D., 
55 FR 47,547 (1990).
    Here, it is undisputed that Respondent materially falsified his 
1992 renewal application by answering ``No'' to the question which asks 
in relevant part whether the applicant has ``ever had a State 
professional license * * * revoked, suspended, denied, restricted or 
placed on probation,'' despite the fact that his application for a 
South Carolina medical license was denied in 1986 and his Florida 
medical license was revoked in 1988. What makes this falsification all 
the more troubling is that a major reason for the denial of his 
application for a medical licenses in South Carolina was that he failed 
to disclose his prior suspension from the North Carolina Medicaid 
Program. If anything, Respondent should have been especially diligent 
in truthfully answering the questions on the DEA application, since his 
failure to disclose information on his South Carolina application 
resulted in his loss of licensure in two states.
    The Acting Deputy Administrator agrees with Judge Randall that 
``[a]lthough the Respondent acted to correct this error in his 1995 
application, the reasons he provided for the adverse state actions are 
disconcerting.'' Respondent indicated that he lost his Florida medical 
license because he ``did not know how to appeal.'' As Judge Randall 
notes, ``[t]his half-hearted attempt at disclosing adverse information 
raises concerns about the Respondent's continuing problem with taking 
responsibility for his own actions, a trait vital in a person 
authorized to handle controlled substances.''
    Regarding factor three, it is undisputed that Respondent has not 
been convicted of any offense relating to the manufacture, distribution 
or dispensing of controlled substances.
    In considering factor five, other conduct threatening to the public 
safety, the Acting Deputy Administrator is concerned by Respondent's 
lack of familiarity with the schedules of drugs. While Respondent 
contends that his problems stem from his codependency, the Medical 
Director of the North Carolina Physicians Health Program testified that 
Respondent's lack of knowledge regarding the scheduling of drugs was 
not a symptom of his codependency. There is no evidence in the record 
that Respondent has made any attempt to educate himself regarding the 
scheduling of drugs. In addition, Respondent's lack of familiarity with 
the concept of controlled substances is further evidenced by his 
response to a question at the hearing about whether he had ever written 
an article regarding the handling of controlled substances. Respondent 
indicated that he had written one such article and ``it had to do with 
alcoholism, concepts of alcoholism.''
    The Acting Deputy Administrator is also troubled by Respondent's 
lack of attention to detail. Respondent indicates that his failure to 
request registration in all schedules on his 1992 application was 
merely an ``oversight.'' However, the Acting Deputy Administrator finds 
this explanation hard to believe, since Respondent had to skip over 
boxes in filling out the application. In addition, Respondent has 
exhibited a pattern of not requesting registration in all schedules on 
his renewal applications. In 1988 and 1989, Respondent sought 
registration in schedules II, IIN, III, IIIN, and IV, but not V. In 
1992, he failed to request registration in Schedules IIN, III and IIIN, 
and in 1995, he checked the boxes for registration in Schedules II, 
III, IV and V, but not IIN or IIIN. The Acting Deputy Administrator 
concludes that at the very least Respondent has a problem with 
attention to detail.
    Further, Respondent's less than candid responses to governmental 
agencies is of concern to the Acting Deputy Administrator. Not only did 
he fail to disclose certain information on his 1992 DEA renewal 
appliction, but the South Carolina Board specifically found that 
Respondent's ``total lack of truthful, accurate and complete answers on 
his written application for licensure`` provided the basis for denial 
of the application.
    Finally, the Acting Deputy Administrator is concerned by 
Respondent`s failure to accept responsibility for his actions. 
Respondent attributes his actions to his codependency problem for which 
he has received treatment. However, the Medical Director of the North 
Carolina Physicians Health Program testified that Respondent ``still 
had some work to do'' in recovering from his codependency problem. Even 
Respondent acknowledged that he was ``still in a state of recovery.'' 
Yet, there is no evidence of Respondent's continuing treatment for his 
codependency problem.
    In determining whether revocation is warranted in this case, Judge 
Randall stated that ``[a]lthough * * * this is a close case, especially 
in light of the time that has elapsed since the 1992 falsification of 
the Respondent's DEA application, the adverse state actions in the 
1980's, and the instances of mishandling of controlled substances in 
1994 and 1995, * * * the totality of the circumstances does justify 
revoking the Respondent's Certificate of Registration.'' Judge Randall 
reached this conclusion in light of Respondent's less than truthful 
dealings with governmental agencies; his lack of ongoing treatment and 
efforts to continue his recovery from his codependency problems; his 
continued lack of knowledge about the scheduling of controlled 
substances; and his failure to take affirmative action to increase his 
knowledge regarding controlled substances.
    Judge Randall noted that ``the record contains ample evidence that 
the Respondent's prescribing practices are otherwise appropriate, that 
his treatment of his patients is well within the community standard, 
and that he is serving an important interest in his rural community.'' 
However, Judge Randall concluded ``that until the Respondent (1) 
submits a complete application to the DEA for a Certificate of 
Registration that accurately discloses his professional licensing 
history and requests authority to handle the scheduled substances he 
needs to effectively treat his patient population, (2) includes with 
that application evidence of his completion of continued medical 
education containing instruction on scheduled drugs, and (3) provides 
the DEA with information concerning his ongoing treatment for his 
codependency problem and a medical problem and a medical prognosis as 
to

[[Page 44475]]

the impact of his condition upon his ability to accept the 
responsibilities inherent in a DEA registrant, it is in the public 
interest to revoke his DEA Certificate of Registration.''
    The Acting Deputy Administrator agrees with Judge Randall that this 
is a close case. Respondent's lack of attention to detail, knowledge 
regarding the scheduling of controlled substances, and evidence of 
ongoing treatment for his codependency problems all justify revocation 
of his DEA Certificate of Registration as inconsistent with the public 
interest. However, the Acting Deputy Administrator also recognizes that 
Respondent practices in a poor rural community, that he is conservative 
in his prescribing of controlled substances and that he correctly 
answered the liability question on his 1995 renewal application. As a 
result, the Acting Deputy Administrator concludes that the public 
interest would be served by giving Respondent an opportunity to become 
educated regarding controlled substances and to receive continued 
treatment for his codependency problems while still being permitted to 
handle controlled substances.
    Therefore, the Acting Deputy Administrator will stay the revocation 
for six months, during which time Respondent must present evidence to 
the Acting Deputy Administrator of his completion of a training course 
regarding controlled substances, and of his ongoing treatment for his 
codependency problems. In addition, Respondent must request 
modification, if necessary, of his 1995 renewal application to 
accurately reflect what schedules he wishes to be registered in to 
effectively treat his patient population. If Respondent does not submit 
this information within six months of the effective date of this order, 
a subsequent order will be issued lifting the stay and Respondent's DEA 
Certificate of Registration will be revoked. If Respondent does submit 
the information in a timely manner, the Acting Deputy Administrator 
will issue a subsequent order indicating that the conditions have been 
met, that the DEA Certificate of Registration is reinstated and renewed 
without limitations, and that Respondent shall acknowledge the 
revocation in response to the liability question on any future 
applications.
    Accordingly, the Acting Deputy Administrator of the Drug 
Enforcement Administration, pursuant to the authority vested in him by 
21 U.S.C. 823 and 824 and 28 CFR 0.100(b) and 0.104, hereby orders that 
DEA Certificate of Registration AR2127377, issued to Leonard E. Reaves, 
III, M.D., be, and it hereby is, revoked, and any pending applications 
for renewal of such registration, be, and they hereby are, denied. It 
is further ordered that this order will be stayed for a period of six 
months from its effective date. If during the six month period, 
Respondent fails to provide the Acting Deputy Administrator with 
evidence of the completion of a course regarding controlled substances 
or of his ongoing treatment for his codependency problems, the stay 
will be removed and Respondent's DEA Certificate of Registration will 
be revoked and any pending application for renewal will be denied. This 
order is effective September 18, 1998.

    Dated: August 13, 1998.
Donnie R. Marshall,
Acting Deputy Administrator.
[FR Doc. 98-22223 Filed 8-18-98; 8:45 am]
BILLING CODE 4410-09-M