[Federal Register Volume 63, Number 164 (Tuesday, August 25, 1998)]
[Notices]
[Pages 45260-45261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22685]



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DEPARTMENT OF JUSTICE

Drug Enforcement Administration
[Docket No. 97-20]


Alan R. Schankman, M.D.; Grant of Registration

    On June 3, 1997, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to Alan R. Schankman, M.D., (Respondent) of 
California, notifying him of an opportunity to show cause as to why DEA 
should not deny his application for registration as a practitioner 
under 21 U.S.C. 823(f), for reason that such registration would be 
inconsistent with the public interest. Specifically, the Order to Show 
Cause alleged that:

    1. Between June 1988 and August 1989, you submitted numerous 
claims in excess of $56,000 to Medicare, by billing for services 
that were not rendered, and as a result, you obtained fees to which 
you were not entitled.
    2. As a result of your billing practices, on January 28, 1991, 
in the Superior Court of the State of California for the County of 
Los Angeles, you were charged by information with 32 felony counts 
of grand theft, and four felony counts of attempted grand theft. 
Following a jury trial, on December 17, 1991, you were convicted on 
all 36 counts, and subsequently sentenced to 16 months imprisonment, 
a fine of $330,000, a penalty assessment of $264,000, and ordered to 
pay restitution of $56,000 to the United States government. On April 
7, 1994, the Court of Appeals of the State of California, Second 
Appellate District, affirmed your criminal conviction.
    3. As a result of your conviction, on May 8, 1992, you were 
notified by the Department of Health and Human Services of your ten-
year mandatory exclusion from participation in the Medicare program 
pursuant to 42 U.S.C. 1320a-7(a).
    4. On September 20, 1993, the Medical Board (Board) of 
California brought an accusation against your license to practice 
medicine in that State. Following your entering into a stipulation 
with the Board, on June 28, 1995, the Board ordered, inter alia, the 
revocation of your medical license, however, the revocation was 
stayed, and your medical license was suspended for one year followed 
by probation for a period of five years.

    By letter dated July 1, 1997, Respondent requested a hearing on the 
issues raised by the Order to Show Cause and the matter was docketed by 
Administrative Law Judge Gail Randall. On July 10, 1997, Judge Randall 
issued an Order for Prehearing Statements, which cautioned ``that 
failure to file timely a prehearing statement as directed above may be 
considered a waiver of hearing and an implied withdrawal of a request 
for hearing.'' In an Order dated August 26, 1997, Judge Randall advised 
the parties that she had not yet received a prehearing statement from 
Respondent. Respondent was given until September 19, 1997, to file his 
prehearing statement and was again warned that ``[i]f Respondent fails 
to file a prehearing statement by this date, I will consider his 
inaction a waiver of his right to a hearing and a withdrawal of his 
request for hearing.'' On September 22, 1997, Judge Randall terminated 
the proceedings before her, since Respondent failed to file a 
prehearing statement, and was therefore deemed to have waived his right 
to a hearing.
    The Acting Deputy Administrator finds that Respondent has waived 
his right to a hearing and therefore now enters his final order without 
a hearing and based upon the investigative file pursuant to 21 CFR 
1301.43(e) and 1301.46.
    The Acting Deputy Administrator finds that the Department of Health 
and Human Services conducted an investigation of Respondent that 
revealed that Respondent billed Medicare and Medi-Cal for services not 
rendered. As a result, on December 17, 1991, Respondent was convicted 
in the Superior Court of the State of California for the County of Los 
Angeles of 32 felony counts of grand theft and 4 felony counts of 
attempted grand theft. Respondent was sentenced to 16 months 
imprisonment on each count to run concurrently, fined $330,000 and a 
$264,000 penalty assessment, and ordered to make restitution to the 
United States in the amount of $56,000.
    By letter dated May 8, 1992, the Department of Health and Human 
Services (DHHS) notified Respondent that pursuant to 42 U.S.C. 1320a-
7(b) he was being excluded for 10 years from participation in the 
Medicare, Medicaid, Maternal and Child Health Services Block Grant and 
Block Grants to States for Social Services programs.
    In a Decision effective September 21, 1995, the Medical Board of 
California revoked the Physician's and Surgeon's Certificate of 
Respondent, but stayed the revocation and placed him on probation for 
five years. As part of the probation, Respondent was suspended from the 
practice of medicine for one year beginning on December 14, 1994.
    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. In 
determining the public interest, the following factors are considered:

    (1) The recommendation of the appropriation 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 and 
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., 54 FR 16,422 (1989).
    In addition, it is well-settled that the Deputy Administrator may 
deny an application for registration if a basis exists for revocation 
of a registration under 21 U.S.C. 824(a). It would be a useless act to 
grant a registration and then immediately initiate proceedings to 
revoke the registration. See Dinorah Drug Store, Inc., 61 FR 15,972 
(1996); Kuen H. Chen, M.D., 58 FR 65,401 (1993). A registration may be 
revoked by the Deputy Administrator pursuant to 21 U.S.C. 824(a) upon a 
finding that the registrant:

    (1) Has materially falsified any application filed pursuant to 
or required by this subchapter or subchapter II of this chapter;
    (2) Has been convicted of a felony under this subchapter or 
subchapter II of this chapter or any other law of the United States, 
or of any State relating to any substance defined in this subchapter 
as a controlled substance;
    (3) Has had his State license or registration suspended, 
revoked, or denied by competent State authority and is no longer 
authorized by State law to engage in the manufacturing, 
distribution, or dispensing of controlled substances or has had the 
suspension, revocation, or denial of his registration recommended by 
competent State authority;
    (4) Has committed such acts as would render his registration 
under section 823 of this title inconsistent with the public 
interest as determined under such section; or
    (5) Has been excluded (or directed to be excluded) from 
participation in a program pursuant to section 1320a-7(a) of Title 
42.

    The Acting Deputy Administrator first considers whether there is a 
basis pursuant to 21 U.S.C. 824(a) for the denial of Respondent's 
application for registration. There is no evidence in the investigative 
file to support a finding that Respondent has materially falsified an 
application for registration, that he has been convicted of a 
controlled

[[Page 45261]]

substance related offense, or that he is not currently authorized to 
handle controlled substances in the state in which he practices.
    The Order to Show Cause filed in this matter seems to suggest that 
there is a basis for denial of Respondent's application pursuant to 21 
U.S.C. 824(a)(5), which provides for revocation of a registration if a 
registrant has been excluded (or directed to be excluded) from 
participation in a program pursuant to section 1320a-7(a) of Title 42. 
Specifically, the Order to Show Cause alleges that, ``[a]s a result of 
your conviction, on May 8, 1992, you were notified by the Department of 
Health and Human Services of your ten-year mandatory exclusion from 
participation in the Medicare program pursuant to 42 U.S.C. 1320a-
7(a).'' However, a careful review of the May 8, 1992 letter from DHHS 
to Respondent indicates that he was not mandatorily excluded pursuant 
to 42 U.S.C. 1320a-7(a). Instead, Respondent's exclusion from the 
Medicare program was pursuant to 42 U.S.C. 1320a-7(b). Therefore, there 
is no basis for the denial of Respondent's application pursuant to 21 
U.S.C. 824(a)(5).
    Next, the Acting Deputy Administrator considers whether 
Respondent's registration would be inconsistent with the public 
interest pursuant to 21 U.S.C. 823(f) and 824(a)(4). Only factors one 
and five are relevant, since there is no evidence in the investigative 
file regarding Respondent's experience in dispensing controlled 
substances, his conviction record, if any, relating to controlled 
substances or his compliance with controlled substance laws.
    As to factor one, Respondent is currently authorized to practice 
medicine, and therefore handle controlled substances in California, but 
is on probation for approximately two more years. Regarding factor 
five, Respondent's conduct in 1988 and 1989 causes concern as to his 
future conduct if entrusted with a DEA registration. However, the 
Acting Deputy Administrator concludes that it would not be in the 
public interest to deny Respondent's application for registration. 
Respondent's misconduct occurred in 1988 and 1989. His exclusion by 
DHHS from the Medicare program was permissive and not mandatory, and 
the State of California allowed him to continue practicing medicine.
    Accordingly, the Acting Deputy Administrator of the Drug 
Enforcement Administration, pursuant to the authority vested in him 
pursuant to 21 U.S.C. 823 and 824 and 28 CFR 0.100(b) and 0.104, hereby 
orders that the application for registration submitted by Alan R. 
Schankman, M.D., be, and it hereby is granted. This order is effective 
upon issuance of the DEA Certificate of Registration, but not later 
than September 24, 1998.

    Dated: August 14, 1998.
Donnie R. Marshall,
Acting Deputy Administrator.
[FR Doc. 98-22685 Filed 8-24-98; 8:45 am]
BILLING CODE 4410-09-M