[Federal Register Volume 65, Number 234 (Tuesday, December 5, 2000)]
[Notices]
[Pages 75959-75969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30930]


-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 99-10]


Nicholas A. Sychak, d/b/a Medicap Pharmacy; Revocation of 
Registration

    The Deputy Administrator, Drug Enforcement Administration (DEA), 
issued an Order to Show Cause dated December 14, 1998, to Nicholas A. 
Sychak d/b/a Medicap Pharmacy (Respondent), seeking to revoke the 
Replacement's DEA Certificate of Registration, BM2751736, pursuant to 
21 U.S.C. 824(a)(4); and to deny any pending application for renewal of 
such registration pursuant to 21 U.S.C. 823(f) because the registration 
would be inconsistent with the public interest as defined by 21 U.S.C. 
823(f). Specifically, the Order to Show Cause alleged that: (1) On June 
20, 1996, DEA obtained information that Nicholas A. Sychak, R.Ph., the 
owner and operator of Medicap Pharmacy, ordered large quantities of 
various Schedule II through IV controlled substances and diverted these 
drugs to other individuals for no legitimate medical purpose; (2) Also 
on June 20, 1996, a cooperating individual provided DEA investigators 
with information that Mr. Sychak was a known source of supply for 
illegally diverted controlled substances, and that drug dealers and 
drug dependent individuals traveled to Medicap Pharmacy to purchase 
large quantities of controlled substances for sums ranging from several 
hundred to several thousand dollars per transaction; (3) On August 8, 
1997, a confidential source, posing as a physician, telephoned Mr. 
Sychak and placed a fictitious prescription for sixty dosage units of 
hydrocodone, a Schedule II controlled substance, with no refills. Mr. 
Sychak was aware the individual calling in the prescription was not a 
physician, but nevertheless filled the prescription in exchange for 
cash. Mr. Sychak also authorized two refills for the prescription, even 
though prescriptions for Schedule II controlled substances may not be 
refilled; (4) Also on August 8, 1997, the confidential source placed 
another telephone call to Mr. Sychak, posing as another physician. When 
the confidential source later arrived at Medicap Pharmacy, Mr. Sychak 
directed that individual to exhaust the refills under the first 
physician's name before using a second physician's name to obtain 
additional prescriptions; (5) On August 22, 1997, a confidential 
source, acting in an undercover capacity, obtained the remaining 
unauthorized refill of the August 8, 1997, fraudulent hydrocodone 
prescription from Mr. Sychak, again in exchange for cash; (6) On 
September 5, 1997, a confidential source again posed as a physician and 
telephoned Mr. Sychak for a fictitious prescription for sixty dosage 
units of hydrocodone. The confidential source was also provided with a 
blank prescription bearing fictitious physician information. While on 
Medicap Pharmacy's premises, and within the presence of Mr. Sychak, the 
confidential source wrote out a prescription for sixty tablets of 
Percocet, a Schedule II controlled substance. Mr. Sychak admonished the 
confidential source for filling out the prescription in the pharmacy, 
but filled the prescription and also provided the confidential source 
with sixty hydrocodone tablets; (7) The DEA investigation revealed that 
from June 1995 through October 1997, Mr. Sychak and Medicap Pharmacy 
illegally dispensed more than 5,700 dosage units of Percocet to one 
individual. This individual presented forged prescriptions attributed 
to a physician and used the aliases ``Walter Kaczynski'' and ``Linda 
Kaczynski.'' DEA subsequently verified that the purported prescribing 
physician never issued the prescriptions; (8) The DEA investigation 
further revealed that Mr. Sychak and Medicap Pharmacy unlawfully 
dispensed a total of 5,255 dosage units of controlled substances to 
another individual between July 17, 1997, and December 30, 1997, 
pursuant to prescriptions purportedly issued by two different 
physicians. DEA subsequently verified that neither of these two 
physicians authorized the dispensing of these controlled substances; 
(9) The DEA investigation further revealed that between July 1997 and 
March 1998, Mr. Sychak and Medicap Pharmacy unlawfully dispensed a 
total of 7,225 dosage units of various controlled substances, plus 48 
ounces of Hydromet syrup, to two individuals who utilized eight aliases 
on prescriptions attributed to one physician; (10) On April 24, 1998, a 
confidential source acting in an undercover capacity purchased two 
prescription vials containing seventy-five dosage units of hydrocodone 
each and one prescription vial containing seventy-five dosage units of 
Vicodin, a Schedule III controlled substance, without a prescription, 
from Mr. Sychak and Medicap Pharmacy in exchange for $277.00 in cash. 
These prescription vials listed three different aliases previously used 
by the confidential source. The DEA investigation subsequently revealed 
that Mr. Sychak created fraudulent records of this transaction by 
indicating that these drugs were dispensed to three different 
individuals; (11) On April 24, 1998, an additional confidential source 
illegally obtained from Mr. Sychak and Medicap Pharmacy two 
prescription vials containing seventy-five hydrocodone each and another 
vial containing sixty hydrocodone in exchange for $281.00 in cash. Mr. 
Sychak listed on the vials three different aliases previously used by 
the confidential source and created

[[Page 75960]]

fraudulent dispensing records of this transaction; (12) On April 24, 
1998, DEA agents and investigators executed a search warrant upon Mr. 
Sychak and Medicap Pharmacy. During the search, Mr. Sychak admitted 
that he sold controlled substances without prescriptions. Items seized 
pursuant to the search warrant included $14,906 in cash, eight dosage 
units of various Schedule III controlled substances that were found in 
Mr. Sychak's front pants pocket, and a loaded 9mm handgun; (13) In 
conjunction with the criminal diversion investigation of Medicap 
Pharmacy, DEA also conducted a financial investigation of Mr. Sychak 
and the pharmacy. As a result of this investigation, DEA investigators 
obtained a federal seizure warrant for the business bank account of 
Medicap Pharmacy, and pursuant to that warrant DEA seized $102,650.90; 
(14) On September 3, 1998, an undercover informant obtained 1,120 
dosage units of Schedule III and IV controlled substances from Mr. 
Sychak and Medicap Pharmacy without a prescription and in exchange for 
$2,000.00 cash. On September 22, 1998, the undercover informant again 
obtained 1,120 dosage units of Schedule III and IV controlled 
substances from Mr. Sychak and Medicap Pharmacy without a prescription 
and in exchange for $2,000.00 cash; and (15) On November 5, 1996, Mr. 
Sychak inquired of DEA regarding the DEA registration and medical 
license status of a Pennsylvania medical practitioner. Although DEA 
personnel informed Mr. Sychak that the practitioner was not registered 
with DEA and did not possess a valid Pennsylvania medical license, 
Medicap Pharmacy nevertheless proceeded to fill approximately 111 
controlled substance prescriptions purportedly issued by the physician 
between December 1996 and April 1997. The Order to Show Cause further 
gave notice that Respondent's Certificate of Registration was 
immediately suspended, and the suspension would remain in effect until 
a final determination is reached in these proceedings. The Order 
authorized and directed DEA agents and diversion investigators to place 
under seal and remove all controlled substances possessed by Respondent 
pursuant to his DEA Registration and to take into their possession the 
suspended Certificate of Registration and all unused official DEA order 
forms.
    Respondent, through counsel, timely requested a hearing on the 
issues raised in the Order to Show Cause. The requested hearing was 
held in Pittsburgh, Pennsylvania, on July 12 and 13, 1999. At the 
hearing the Government called witnesses to testify and introduced 
documentary evidence. After the hearing, the Government submitted 
Proposed Findings of Fact, Conclusions of Law, and Argument. In a 
letter dated September 14, 1999, and received September 17, 1999, 
counsel for Respondent advised that, ``without conceding any of the 
facts in the government pleadings or those presented at the 
administrative hearing on July 13 and 14, 1999, Nicholas A. Sychak, 
will not be filing proposed findings of fact, conclusions of law and 
argument.'' On February 23, 2000, Judge Mary Ellen Bittner issued her 
Opinion and Recommended Rulings, Findings of Fact, Conclusions of Law, 
and Decision, recommending that Respondent's registration be revoked, 
and any pending applications for renewal be denied. The record was 
transmitted to the Deputy Administrator for final decision March 27, 
2000.
    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 its entirety the Opinion and 
Recommended Rulings, Findings of Fact, Conclusions of Law, and Decision 
of the Administrative Law Judge (Opinion). His adoption is in no manner 
diminished by any recitation of facts, issues, and conclusions herein, 
or of any failure to mention a fact or matter of law. The Respondent 
did not introduce evidence or call witnesses at the hearing, therefore 
Judge Bittner's Opinion is based on testimony and other evidence 
offered by the Government.
    As a preliminary matter, counsel for Respondent raised two 
evidentiary issues that must be addressed before the merits of these 
proceedings can be fully discussed.
    First, on June 9, 1999, counsel for Respondent filed a Motion to 
Compel Discovery Pursuant to Brady v. Maryland that requested Judge 
Bittner to issue ``an order requiring DEA to preserve and to provide 
defendant, within a time to be specified, any and all actual and 
potential exculpatory evidence relating to the issues of guilt or 
punishment currently known to the Government, its agents, and 
representatives, or which may become known to them by the exercise, on 
their part, of due diligence.'' (Emphasis original). In support of this 
request, counsel for Respondent cites numerous cases applying Brady v. 
Maryland, 373 U.S. 83 (1963) (Brady) in various criminal contexts. 
Counsel for Respondent did not address the issue and cited no authority 
for the proposition that Brady is or should be applicable to civil 
proceedings, much less an administrative proceeding, as is the case 
here. On June 24, 1999, the Government filed an Opposition to 
Respondent's Motion to Compel Discovery Pursuant to Brady v. Maryland, 
arguing that the Administrative Procedure Act (APA) confers no 
independent discovery right; that Brady applies only in the criminal 
context; that DEA regulations govern discovery in these proceedings; 
and that the DEA regulations provide for adequate discovery. On June 
30, 1999, Judge Bittner issued a Ruling and Order, finding Brady 
inapplicable to these proceedings, but further finding that because 
these proceedings are adversarial, ``on the grounds of fairness, * * * 
the Government must disclose any exculpatory information in its 
possession when such information is timely requested by a respondent.'' 
In response, the Government filed on July 7, 1999, an Emergency Request 
For Consent to File Appeal to the June 30, 1999, Ruling of the 
Administrative Law Judge, arguing that neither the APA nor the DEA 
regulations governing the proceedings provide for the disclosure of 
exculpatory information, and further that Judge Bittner's Order 
``constitutes a significant and unprecedented departure from DEA 
regulations and practice.'' The Government also argued that Judge 
Bittner's Order would place a severe burden upon DEA, including the 
potentialities of placing ongoing investigations and the identities of 
confidential informants at risk. Subsequently, on July 8, 1999, Judge 
Bittner issued a Memorandum to Counsel Clarifying Ruling and Order, 
limiting the scope her previous ruling somewhat by requiring the 
Government's counsel only ``to review files available to him and on 
which the Government relied in preparing its prehearing statements for 
information that would clear or tend to clear Respondent from alleged 
fault or guilt as to the allegations of Respondent misconduct made in 
the Government's prehearing statements in this proceeding[.]'' On the 
same day, Judge Bittner issued a Ruling Denying Request for Consent to 
File Appeal, denying the Government's request to file an appeal 
pursuant to the Clarifying Ruling and Order. On July 9, 1999, the 
Government filed a Response and Objection to Ruling Denying Request For 
Consent to File Appeal reiterating its objections and requesting that 
the issue be made

[[Page 75961]]

part of the official administrative record and forwarded to the Deputy 
Administrator for consideration.
    The Deputy Administrator agrees with the Government, for the 
following reasons:
    First, these proceedings are governed generally by the APA, and 
specifically by the procedures set forth at 21 CFR 1316.41-1316.68. See 
21 CFR 1316.41. What applicable caselaw there is on the issue finds 
that the APA confers no independent discovery right; McClelland v. 
Andrus, 606 F.2d 1278, 1285 (D.C. Cir. 1979); National Labor Relations 
Board v. Valley Mold Co., Inc., 530 F.2d 693 (6th Cir. 1976) (cert. 
denied, 429 U.S. 824 (1976)); and that the extent of discovery in 
administrative proceedings is primarily determined by the agency; 
Mister Discount Stockbrokers, Inc. v. Securities Exchange Commission, 
768 F.2d 875, 878 (7th Cir. 1985) (finding Brady inapplicable to agency 
administrative proceedings). As the Government correctly points out, 
neither the APA, nor the relevant DEA regulations, nor prior published 
DEA precedent, authorize the Government's production of exculpatory 
information.
    Second, the applicable DEA Regulations, supra, supply more than 
sufficient due process, whether Respondent's DEA Registration is viewed 
as a license conferred based on the public interest alone, or whether 
it is also viewed as a property or a liberty interest. The pertinent 
DEA Regulations governing these proceedings authorize a pre-hearing 
conference and written pre-hearing statements for inter alia the 
simplification of the issues, stipulations, identification of 
witnesses, and the advance submission of all documentary evidence and 
affidavits for identification; an administrative hearing, reported 
verbatim; representation by counsel; allow for the introduction of 
evidence and documents; provide for witnesses and documents to be 
subpoenaed; allow for the examination and cross-examination of 
witnesses; allow for the parties to make written proposed corrections 
to the transcript of the hearing; allow for the parties to submit 
proposed findings of fact and conclusions of law; and also allow for 
the parties to file exceptions to the ALJ's recommended decision, 
findings of fact and conclusions of law. Furthermore, the pre-hearing 
conference pursuant to 21 CFR 1316.54 and the prehearing disclosure of 
witness testimony and documentary evidence pursuant to 21 CFR 1316.57 
and 1316.58, set forth in each party's pre-hearing statement, provide 
more than adequate pre-hearing disclosure of the issues and evidence to 
be submitted in these proceedings. In its June 24, 1999, memorandum of 
Opposition, the Government notes that ``[i]n this proceeding, the 
evidentiary items that the Government intends to offer were outlined in 
its March 1, 1999, Prehearing Statement and the May 24, 1999, 
supplement thereto. The Government has provided to the Respondent all 
evidentiary items that it intends to offer during the upcoming 
administrative hearing.'' Thus, the Deputy Administrator finds the 
current DEA regulations provide more than adequate discovery in these 
proceedings, and there was no need for the Government to take the 
unprecedented and extraneous step of disclosing potentially exculpatory 
information.
    Third, in her June 30, 1999, Ruling and Order, Judge Bittner stated 
her belief that the burden said Order placed upon the Government was 
``minimal, for the Government need only review its files to determine 
if such information exists.'' Following the filing of the Government's 
June 24, 1999, Opposition memorandum, Judge Bittner attempted to narrow 
the scope of her Order in her July 8, 1999, Clarifying memorandum by 
limiting the Government's burden to review of those files ``available * 
* * and on which the Government relied in preparing its prehearing 
statements for [exculpatory] information * * * as to the allegations of 
Respondent misconduct made in the Government's prehearing statements in 
the proceeding[.] '' The Deputy Administrator agrees with the 
Government that, even in its more limited form, Judge Bittner's Order 
places a significant burden on the Government. The Order creates a risk 
of disclosure of sensitive information which could reveal the identity 
of confidential informants, compromise the effectiveness of 
investigative techniques, or compromise an ongoing criminal 
investigation concerning the Respondent on third parties. The Order 
will also require the Government to address Privacy Act issues with 
respect to information concerning third parties.
    For the above-stated reasons, the Deputy Administrator finds that 
the Government is not required to disclose potentially exculpatory 
information to Respondent or counsel for Respondent at any phase of 
these proceedings.
    The second evidentiary issue raised by counsel for Respondent is 
his assertion of a continuing objection to the Government's use of 
hearsay evidence at the hearing. It is well established, however, that 
hearsay is admissible in these proceedings. See Arthur Sklar, R.Ph., d/
b/a King Pharmacy, 54 FR 34623, 34627 (DEA 1989). ``Hearsay is both 
admissible, and may, standing by itself, constitute substantial 
evidence in support of an administrative decision.'' Klinestiver v. 
DEA, 606 F.2d 1128 (D.C. Cir. 1979). Judge Bittner addressed this issue 
at the hearing and in her Opinion, and she has indicated that she 
considered the hearsay nature of the evidence when determining the 
evidentiary weight to give it; and she further indicated that, where 
she has relied on hearsay evidence, she did so because she found it 
reliable. See Ramon P. Johnson v. United States,  628 F.2d 187, 190 
(D.C. Cir. 1980). The Deputy Administrator concurs with Judge Bittner's 
analysis and findings of fact with regard to this issue.
    Medicap Pharmacy is located in Murrysville, Pennsylvania. According 
to one of the Government's witnesses, Karen Ruffner, Nicholas A. Sychak 
opened the pharmacy in 1989 or 1990. The pharmacy was first registered 
with DEA on July 2, 1991. On June 20, 1996, a confidential informant 
advised Diversion Investigator John Conlon of the DEA Pittsburgh 
Resident Office that Mr. Sychak was selling controlled substances to 
certain individuals without a valid prescription and for no legitimate 
medical purpose.
    As a result of this information, DEA initiated an investigation of 
the Respondent, and various Pennsylvania State law enforcement agencies 
subsequently joined the investigation. Surveillance and intelligence 
gathering identified Lynette Reffner and Steve and Karen Ruffner as 
frequent visitors to the pharmacy. Investigators also searched the 
pharmacy's dumpster and found computer printouts of purported 
controlled substance dispensings. These printouts listed an 
individual's name, a prescription number, the drug, the date it was 
dispensed, and the name of the physician who purportedly authorized the 
dispensing. Agent Edward Cartwright of the Pennsylvania Bureau of 
Narcotics Investigations and Drug Control (BNIDC) testified that a 
review of these printouts disclosed discrepancies, such as 
prescriptions whose dates were inconsistent with the computer's system 
of numbering prescriptions in chronological order. According to Agent 
Cartwright, these printouts indicated that some prescriptions were 
predated. Investigators subsequently learned from pharmacy employees 
that Mr. Sychak also ``predated'' prescriptions by substituting an old 
ribbon in the pharmacy's printer to make it appear

[[Page 75962]]

that a label was older than the date the drug was actually dispensed.
    As the Order to Show Cause indicates, there are numerous separate 
incidents upon which this proceeding is based. Therefore, the different 
incidents are herein organized by the nine subsequent numbered sections 
which group the relevant facts, though not necessarily in chronological 
order, since the timeframes of many of the events described herein 
overlap.

1. Michael Ray's 1997 Undercover Purchases from Medicap Pharmacy

    Agent Cartwright had arrested Michael Ray several years prior to 
the investigation of Respondent. Mr. Ray was again arrested in the 
spring of 1997, and the arresting agent asked Agent Cartwright for 
information about Mr. Ray. Consequently, Agent Cartwright spoke to Mr. 
Ray, who said that for the previous two years Mr. Sychak had filled 
forged controlled substance prescriptions for him and that these 
prescriptions listed ``Ed Olson'' as the patient. At some point, Mr. 
Ray agreed to act as an undercover informant; Agent Cartwright 
testified that Mr. Ray was not offered anything in return for his 
cooperation except that Agent Cartwright appeared at Mr. Ray's 
sentencing hearing and advised the court of Mr. Ray's cooperation.
    On August 8, 1997, Mr. Ray telephoned Mr. Sychak, pretending to be 
a Dr. Wigle, a name he had picked out of a telephone directory, and 
asked for sixty hydrocodone 7.5 mg. extra strength, with no refills, 
for ``Ed Olson.'' That same day, Mr. Ray went to Medicap Pharmacy 
wearing a recording device, and carrying funds Agent Cartwright had 
provided him. Mr. Ray paid $37.50 and received the sixty hydrocodone he 
had requested. The memorialization of the oral prescriptions lists one 
refill.
    On August 15, 1997, Mr. Ray again called the pharmacy, pretending 
to be a Dr. Beck, to authorize a prescription for hydrocodone for Ed 
Olson. ``Dr. Beck'' was a fictitious physician invented by DEA for whom 
Mr. Ray provided fictitious telephone and DEA registration numbers. Mr. 
Ray called the pharmacy again to ask if the prescription was ready, and 
spoke with Mr. Sychak's wife. Mr. Ray said that he knew he had refills 
from Dr. Wigle's prescription, and Ms. Sychak said something to the 
effect that there should not be any problem and that she would give him 
a refill of what was on the computer screen. Mr. Ray then visited the 
pharmacy and paid $37.50 for a ``refill'' of the Dr. Wigle 
prescription. Mr. Sychak refused to fill the purported prescription 
from Dr. Beck, telling Mr. Ray that he first wanted to use the refills 
from Dr. Wigle and that the information about Dr. Beck, including his 
physician license number and his DEA number, were not yet in the 
pharmacy's computer system.
    On August 22, 1997, Mr. Ray returned to Medicap Pharmacy and paid 
$37.50 for a second refill of sixty hydrocodone from the Dr. Wigle 
prescription. Mr. Ray also had with him a blank prescription form 
listing the information for Dr. Beck so that Mr. Sychak could enter the 
information into the pharmacy computer. Agent Cartwright testified that 
Mr. Ray gave the form to Mr. Sychak, who said it would be helpful and 
put the form in his pocket.
    On August 29, 1997, Mr. Ray was sent into the pharmacy with a 
recording device. Prior to this visit, a prescription for hydrocodone 
purportedly authorized by Dr. Beck had been called in to the pharmacy. 
During that visit, Mr. Ray also tried to obtain other controlled 
substances using the blank Dr. Beck form, but Mr. Sychak refused to 
provide him any drugs, saying that DEA investigators sometimes 
inspected the pharmacy and might realize that the handwriting on Dr. 
Beck's prescription form was the same as that on other pharmacy 
records. Mr. Sychak returned the blank form to Mr. Ray. Mr. Ray took 
the blank form with him when he left the pharmacy and, in the presence 
of Agent Cartwright, filled it out for sixty Percocet. Mr. Ray then 
took the form back into the pharmacy, paid $39.83 in cash, and received 
sixty Percocet.
    Mr. Ray made another undercover visit to the pharmacy on September 
5, 1997. Mr. Ray asked for the hydrocodone purportedly authorized by 
Dr. Beck for Ed Olson, and presented a written prescription for 
Percocet in some other patient name. Agent Cartwright testified that 
investigators had intentionally made this Percocet prescription 
facially invalid by showing the patient as someone other than the 
person who presented it. Ray paid $37.50 for sixty hydrocodone 7.5 mg. 
with APAP, but Mr. Sychak refused to fill the Percocet prescription. 
Mr. Ray then took from his pocket a blank prescription form purporting 
to be that of Dr. Beck and filled in the requisite information in Mr. 
Sychak's presence. Mr. Sychak said something to the effect that most of 
his customers did not fill out their own prescriptions in front of him, 
but nonetheless filled the prescription, providing Mr. Ray sixty 
Roxicet in exchange for $47.95. On September 12, 1997, Mr. Ray again 
visited Respondent and obtained hydrocodone pursuant to the purported 
authorization of Dr. Beck, paying $37.50 for the drug.
    As noted above, investigators obtained records of purported 
dispensings from Respondent's trash dumpster. Among these was the 
pharmacy's receipt for the Roxicet provided to Mr. Ray on September 5.

2. The Delivery of Controlled Substances to Walter, Linda, and 
James Kaczynski

    Pennsylvania state law requires pharmacists to submit to BNIDC 
monthly a form known as a ``BDC-6'' listing information about all 
dispensings of Schedule II controlled substances. In early 1998 
Investigator Conlon reviewed BDC-6 forms Respondent had submitted for 
the period April 1995 through October 1997. Respondent listed a large 
number of Percocet and Roxicet prescriptions purportedly issued by a 
Dr. Mark Fennema to a Walter Kaczynski, a Linda Kaczynski, and a James 
Kaczynski. Although the BDC-6 reports indicated that Dr. Fennema was an 
emergency room physician at a hospital in south Pittsburgh, when 
investigators subpoenaed the hospital for the Kaczynskis' medical 
records, the hospital responded that it had not treated any patients 
with any of those names.
    In about March 1998 Investigator Conlon telephoned Dr. Fennema, who 
was at that time in upstate New York. Dr. Fennema told Investigator 
Conlon that he generally saw patients only in the emergency room and 
that he would have no reason to continually prescribe medications to 
the same patient. After reviewing a faxed copy of the list of 
prescriptions, Dr. Fennema told Investigator Conlon that he had not 
issued them.

3. The Deliveries to Lynette Reffner and Michael Riley

    Investigator Conlon testified that Medicap Pharmacy records showed 
that it had dispensed controlled substances to a Lynette Reffner 
pursuant to prescriptions purportedly issued by a Dr. Richard Kucera 
between July 17, 1997, and December 23, 1997, and pursuant to 
prescriptions purportedly issued by a Dr. David Blinn between July 17, 
and December 30, 1997. The prescriptions that Dr. Blinn purportedly 
issued totaled 1,620 dosage units of Vicodin, 715 dosage units of 
hydrocodone, 164 dosage units of Hydroment syrup, and 60 dosage units 
of phenobarbital. The prescriptions that Dr. Kucera purportedly issued 
aggregated to 1,390 dosage units of alprazolam, 1,240 dosage units of 
Ap-Oxazepam, 130 dosage units of

[[Page 75963]]

diazepam, and 100 dosage units of Darvocet.
    On March 25, 1998, Investigator Conlon and Agent Cartwright 
interviewed Dr. Kucera, who said that he had treated Lynette Reffner 
but had not authorized any of the prescriptions at issue. Investigator 
Conlon, DEA Diversion Investigator Kurt Dittmer of DEA's Pittsburgh 
office, and Agent Cartwright interviewed Dr. Blinn on March 30, 1998, 
and showed him the list of prescriptions. Dr. Blinn advised the 
investigators that he had not authorized any of them.
    On April 29, 1998, Investigators Conlon and Dittmer, Agent 
Cartwright, and Sergeant Stan King of the Murrysville Police Department 
interviewed Ms. Reffner and her paramour, Michael Riley. Subsequently, 
on June 17, 1999, Ms. Reffner executed a declaration in evidence as a 
Government exhibit. In the declaration, Ms. Reffner said she originally 
had valid prescriptions for controlled analgesics filled at Medicap 
Pharmacy, but in 1992 or shortly thereafter Mr. Sychak began giving her 
refills for these medications that were not authorized by her 
physician. Ms. Reffner further stated that by about 1994 she had 
arranged with Mr. Sychak to purchase drugs from him upon presenting 
lists of the controlled substances she wanted. Investigators found some 
of these lists during the searches of Medicap Pharmacy's trash 
dumpster.
    Ms. Reffner stated that every Tuesday she and Mr. Riley purchased 
sixty Vicodin ES, sixty Xanax, fifty Darvocet, fifty Soma, and eight 
ounces of Hydromet syrup, and every Friday they bought the same 
quantities of Xanax, Soma, and Hydromet syrup, along with eighty 
Vicodin ES and sixty Darvocet. Ms. Reffner stated that Mr. Sychak had 
told her and Mr. Riley that Soma in combination with the other drugs 
would ``intensify the high,'' and that they should take a half-tablet 
of Soma at mealtimes. Ms. Reffner stated that the Soma was listed on 
Mr. Riley's patient record at the pharmacy, but that Mr. Sychak said he 
recorded the other drugs as dispensed to her, because she had been 
severely injured some years earlier and her medical history ``would 
cover it.'' Ms. Reffner also stated that at some point Mr. Sychak 
directed Mr. Riley to come to the pharmacy only on Tuesdays and 
Fridays, when Mr. Sychak and his wife were present, because Mr. Sychak 
did not want his relief pharmacist to know about this arrangement. Ms. 
Reffner stated that Mr. Riley and Mr. Sychak also socialized together, 
and that Mr. Riley worked on Mr. Sychak's cars and Mr. Sychak gave him 
``care packages'' of controlled substances, including Lorcet and 
Vicodin.
    Ms. Reffner further stated that in late 1995 she entered a 
methadone treatment program and that Mr. and Ms. Sychak agreed to 
provide her a phenobarbital to lessen potential withdrawal symptoms. 
Ms. Reffner said that both she and Mr. Riley wanted to get help for 
their addiction and that the Sychaks said they would decrease the 
quantity of controlled substances they supplied, but in fact the 
quantity increased. Ms. Reffner also stated that on numerous occasions 
when she presented a legitimate prescription for a non-controlled 
substance, Mr. Sychak told her she would not have to pay for the 
medication, and that he would charge it to some other customer's 
insurance. Finally, Ms. Reffner stated that Mr. Sychak filled some 
drugs to her Medical Assistance card and that she paid cash for the 
rest, that Mr. Sychak always extended her and Mr. Riley credit when 
they did not have enough money to pay for the drugs they purchased, and 
that Mr. Sychak maintained a record of how much they owed in a pink 
notebook.
    Investigator Conlon testified that as of the hearing date Ms. 
Reffner and Mr. Riley were the targets of an ongoing investigation, and 
he anticipated that they would be charged with state narcotics 
violations. Investigator Conlon further testified that Mr. Riley and 
Ms. Reffner agreed to cooperate in the investigation and that 
investigators told them that their cooperation would be made known to 
the proper authorities at the time of sentencing.

4. The Deliveries to Karen and Steven Ruffner

    The previously mentioned trash dumpster searches disclosed receipts 
purportedly showing Dr. Ralph Capone as the authorizing physician for 
numerous controlled substance prescriptions for patients named Daniel 
Frieben, Amy McKluskey, Phyllis Ruffner, Charles Ruffner, Steve 
Ruffner, Grace Ruffner, Ruth Snow, and Deborah McCracken. In November 
1997, Agent Cartwright interviewed Dr. Capone and asked him about these 
individuals. Dr. Capone told Agent Cartwright that although Mr. Frieben 
had been his patient, Dr. Capone had not treated him since about 1993, 
and that Karen Ruffner was his patient during the period at issue but 
that he did not authorize any of the prescriptions shown to him.
    Karen Ruffner testified as a Government witness. Ms. Ruffner's 
mother was Sandra Frieben, who died in 1992. For some period of time 
prior to her death Ms. Frieben worked as a medical assistant to Dr. 
Capone. Ms. Ruffner testified that Ms. Frieben suffered from a number 
of painful conditions for which she took, Soma, Talwin, and Vicodin ES 
and that she abused controlled substances from the end of 1989 until 
her death. Ms. Frieben obtained drugs by calling prescriptions to 
pharmacies for herself, saying that the prescriptions were authorized 
by Dr. Capone, and by writing fake prescriptions for herself on 
prescription pads she took from Dr. Capone's office. Ms. Ruffner 
testified that she saw Ms. Frieben write some of these prescriptions, 
that Ms. Frieben made some of the telephone calls from Ms. Ruffner's 
home, and that Ms. Frieben asked Ms. Ruffner to take fake prescriptions 
to the pharmacy for her. Ms. Ruffner testified that she suggested to 
her mother that she seek treatment for drug abuse, but her mother 
refused to do so because she did not want her husband to learn about 
her problem.
    Ms. Ruffner testified that although initially her mother used 
different pharmacies, eventually she obtained drugs only from Medicap 
Pharmacy. At some point, Ms. Frieben began stealing boxes of drug 
samples from Dr. Capone's office and taking them to Mr. Sychak, who 
gave her medication or discounts on medication in exchange. Ms. Ruffner 
accompanied her mother on these visits to the pharmacy, and testified 
that after she had done so three or four times, Ms. Frieben asked her 
to take the samples to Mr. Sychak and bring back her medication. Ms. 
Ruffner testified that her mother called Medicap Pharmacy both from Dr. 
Capone's office and from Ms. Ruffner's home to authorize prescriptions 
for herself for Vicodin, Talwin, or Soma, and sent Ms. Ruffner to the 
pharmacy to pick up the drugs and to pay for them in cash. Ms. Ruffner 
further testified that her mother instructed her to deal only with Mr. 
Sychak.
    Ms. Ruffner testified that her mother also asked her to call the 
pharmacy and would write down exactly what Ms. Ruffner was to say. Ms. 
Ruffner spoke only to Mr. Sychak, and testified that in these calls she 
told Mr. Sychak that she was ``Beth'' from Dr. Capone's office (as far 
as she knew, a made-up name) and that she was ``calling for Sandra 
Frieben, for Vicodin number 50.'' Ms. Ruffner also testified that the 
price of the controlled substances increased over time so that her 
mother paid cash in addition to providing Mr. Sychak the drug samples. 
Ms. Frieben eventually paid about $89 for 60 Talwin, about $68 for 50 
Vicodin, and $34 for generic hydrocodone.

[[Page 75964]]

    Ms. Ruffner further testified that her own health had been ``fairly 
poor'' all her life, that she had suffered from chronic pain since she 
was twelve years old, and that various physicians had prescribed her 
controlled substances including Vicodin, Vicodin ES, and Soma. Ms. 
Ruffner started sharing her mother's medications in 1989, when she was 
nineteen years old, but testified that she never took her mother's 
drugs without the latter's knowledge.
    Ms. Ruffner testified that from 1992 until 1994 she received 
legitimate prescriptions for Valium and Vicodin, and that she filled 
all these prescriptions at Medicap Pharmacy. Ms. Ruffner further 
testified that frequently the vial she received from the pharmacy 
indicated more authorized refills than the prescription did, but she 
never asked Mr. Sychak why refills were added. In 1994 Ms. Ruffner's 
physician stopped prescribing her Vicodin, but Ms. Ruffner continued to 
receive drugs from Mr. Sychak because he gave her more refills than 
were authorized by the written prescription. As an example, Ms. Ruffner 
testified that if a written prescription for 80 Vicodin ES showed one 
refill, the vial might show four refills. Ms. Ruffner admitted, 
however, that she did not know whether Mr. Sychak obtained the 
physician's oral authorization for additional refills.
    Ms. Ruffner further testified that at some point ``the refills just 
stopped,'' and Mr. Sychak told her to call and ask for a prescription 
for a named person because ``I have to be able to say that I received a 
phone call from somebody.'' Consequently, according to Ms. Ruffner, she 
called the pharmacy pretending to be ``Beth'' from Dr. Capone's office, 
told Mr. Sychak she was authorizing a prescription for Vicodin ES, and 
gave the patient's name variously as Amy McKluskey, Dan Frieben, Tina 
Pavolik, Ruth Snow, Debbie McCracken, or Charles, Steve, Phyllis, or 
Grace Ruffner. All of these names were those of individuals who were 
either friends or family members of Ms. Ruffner or of her husband, 
Steven Ruffner. According to Ms. Ruffner, between 1994 and 1998 she 
made ``hundreds'' of such telephone calls to the pharmacy.
    Ms. Ruffner testified that sometimes Mr. Sychak would fill 
``prescriptions'' without requiring her to telephone him, but other 
times he would tell her to call him so that he could say there had been 
a telephone call. According to Ms. Ruffner, she usually handed Mr. 
Sychak a piece of paper with a list of names and the controlled 
substance to be attributed to each name, and sometimes she handed the 
list to one of the women who worked at the pharmacy. (Agent Cartwright 
testified that he found such lists during the searches of Medicap's 
trash dumpster.)
    Ms. Ruffner testified that she paid cash for the drugs and that in 
1994 she paid about $89 for sixty Vicodin, but that almost every month 
Mr. Sychak increased the price, telling her that the manufacturer had 
increased its price. Ms. Ruffner also testified that she initially 
obtained drugs from Respondent once per month and shared them with her 
husband, and beginning in about 1996 she and her husband began selling 
Lorcet and Vicodin in quantities of ten to fifty dosage units. 
According to Ms. Ruffner, she and her husband used the proceeds of 
their drug sales to purchase more drugs from Mr. Sychak for their own 
use and to sell. Eventually, according to Ms. Ruffner, she was paying 
Mr. Sychak a thousand dollars once or twice per week for drugs; she and 
her husband would take ``what we needed, and we would sell the rest.'' 
Ms. Ruffner also testified that when she was in the pharmacy and other 
people were present in addition to Mr. Sychak, she signaled to him that 
she wanted Vicodin, Lorcet, or Lortab by referring to Vicodin as 
``whites,'' and Lorcet or Lortab as ``blues.''
    In early 1998 local police arrested Ms. Ruffner's husband for 
possession of controlled substances. Ms. Ruffner testified that when 
she told Mr. Sychak about the arrest he expressed concern about whether 
any vials from Medicap Pharmacy would be found in Mr. Ruffner's car. 
Ms. Ruffner further testified that a few days after the arrest she and 
her husband asked Mr. Sychak for a prescription vial with a legitimate-
looking label on it so Mr. Ruffner could say that he had drugs legally. 
Mr. Sychak complied with Ms. Ruffner's request, and provided him with a 
legitimate-appearing prescription vial. At some point Mr. Sychak also 
warned Mr. Ruffner to be sure that he did not leave pill bottles in his 
car and to destroy the bottles when he had gotten rid of the contents.
    On April 24, 1998, Investigator Conlon and three other law 
enforcement officers visited Ms. Ruffner at her father's home, where 
she was staying. Investigator Conlon asked Ms. Ruffner to go to the 
local police station, and she agreed to do so. At the Murrysville 
police station, Ms. Ruffner agreed to cooperate in the investigation 
and Agent Cartwright asked her to make a controlled buy from Respondent 
that same day. Investigators fitted Ms. Ruffner with a recording device 
and gave her $400 to make the purchase. They also asked her to follow 
the procedure she normally used to obtain drugs, and consequently she 
prepared a note with the words, ``Karen's Vicodin (brand),'' ``Daniel's 
Vicodin (generic),'' ``Tina's Lorcet (generic),'' and ``Amy's Lorcet 
(generic).'' Next to the reference to ``brand,'' Ms. Ruffner drew an 
arrow to the comment, ``I only have $400. However you can help me out. 
Thanks.'' Ms. Ruffner went to Medicap Pharmacy and gave the list to Mr. 
Sychak, who filled vials with the drugs listed. The total cost of the 
drugs was $415; Ms. Ruffner asked Mr. Sychak if she could take the 
drugs and return with the additional $15, but Mr. Sychak refused. 
Consequently, Mr. Sychak retained the Vicodin, and Ms. Ruffner left the 
store with the other drugs and gave them to Agent Cartwright. Agent 
Cartwright testified that although the cash register receipts for Ms. 
Ruffner's undercover purchase showed a small amount, such as $3 or $6, 
she actually was spending about $300 to $365. Agent Cartwright further 
testified that Mr. Ruffner also paid substantially more for the 
controlled substances he was purchasing from Respondent than the amount 
reflected on the cash register receipt.
    As of the hearing date, Ms. Ruffner had not been charged with any 
criminal conduct. She testified, however, that Agent Cartwright had 
told her that she would be charged but had not told her what the 
charges would be. Investigator Conlon testified that both Mr. and Ms. 
Ruffner agreed to cooperate in the investigation and that the only 
statements investigators made to them were that their cooperation would 
be made known to the proper authorities at the time of sentencing.
    Counsel for Respondent contended at the hearing that Ms. Ruffner, 
the only informant to testify in this proceeding, is not credible. In 
her Opinion, Judge Bittner recognizes that Ms. Ruffner is not a totally 
disinterested participant in this proceeding in light of her own status 
as a target of an investigation. Nonetheless, Judge Bittner found that 
Ms. Ruffner appeared candid and forthright, and on the basis of her 
demeanor Judge Bittner found her to be believable. In addition, Judge 
Bittner found, and the Deputy Administrator agrees, that much of Ms. 
Ruffner's testimony was consistent with documentary and other evidence 
and, as noted above, Respondent adduced no evidence and thus Ms. 
Ruffner's testimony is uncontradicted. See Singers-Andreini Pharmacy, 
63 Fed. Reg. 4668, 4672 (DEA 1998).

5. The April 24, 1998, Search

    On April 23, 1998, a United States Magistrate Judge issued a search 
warrant

[[Page 75965]]

for the premises of Medicap Pharmacy. The warrant was executed on April 
24, 1998. As part of the search, investigators received a ``dump'' of 
Mr. Sychak's computer, and found that ``Walter Kaczynski'' was an alias 
used by a Larry Stepinski.
    The search disclosed substantial amounts of cash, specifically, 
$11,394 in Mr. Sychak's briefcase, $2,306 in daily deposit envelopes, 
$706 in a cash register, and $150 from a shelf in a work area. 
Investigators also retrieved a ledger listing various persons, 
including targets of investigations, and a running balance of what they 
owed the pharmacy. In addition, investigators recovered $520 and a 
small quantity of loose controlled substance tablets from Mr. Sychak's 
pants pockets. This cash was the State funds that Agent Cartwright had 
supplied to Karen and Steve Ruffner earlier in the day and that they 
had used to make an undercover purchase of controlled substances at the 
pharmacy. Investigator Dittmer testified that the currency was 
photocopied before it was provided to the Ruffners and that the serial 
numbers on the photocopies matched those on the bills found in Mr. 
Sychak's pockets.
    Investigator Dittmer also testified that he asked Mr. Sychak if he 
had any rifles or handguns on the premises and that Mr. Sychak said he 
did not have any weapons. The search disclosed a loaded 9mm 
semiautomatic handgun in a plastic grocery bag, however, that also 
contained cash. The weapon was registered to Mr. Sychak.
    During the search, investigators also conducted an inventory of 
several products containing hydrocodone. Respondent had on hand 18,000 
dosage units of Vicodin, 13,000 dosage units of Lorcet, 1,500 dosage 
units of Didrex, 5,200 dosage units of Darvocet, 3,000 dosage units of 
Soma, and 10,500 dosage units of alprazolam. Although Soma is not 
controlled under federal law, Investigator Dittmer testified that he 
included it in his inventory because it is sometimes used to boost the 
``high'' provided by hydrocodone.
    Investigator Dittmer and Agent Cartwright interviewed Mr. Sychak 
during the search and asked him if he ever dispensed a drug without a 
legitimate prescription. Mr. Sychak responded affirmatively and said 
that he sold drugs to people who were nagging him, naming Karen and 
Steven Ruffner. The investigators also asked Mr. Sychak about the ``Dr. 
Beck prescriptions,'' and Mr. Sychak said that he had spoken personally 
with Dr. Beck about those prescriptions. When informed that Dr. Beck 
was fictitious, Mr. Sychak did not respond.

6. The Interviews of Respondent's Employees

    During the April 24, 1998, search investigators interviewed Sylvia 
Macerelli, a pharmacy technician/clerk employed at Medicap Pharmacy. 
Ms. Macerelli later provided a declaration, in evidence as a Government 
exhibit. Ms. Macerelli stated that she, pharmacy technician/clerk Amy 
Meyers, and relief pharmacist Fred Werl believed that Mr. Sychak was 
committing fraud and distributing drugs illegally. More specifically, 
Ms. Macerelli said that Mr. Sychak was the only pharmacy employee who 
waited on the Ruffners and Ms. Reffner. Ms. Macerelli stated that the 
Ruffners never presented prescriptions, but gave Mr. Sychak lists of 
controlled substances on scraps of paper, and that they usually 
received Vicodin and Lorcet. Ms. Macerelli stated that Ms. Reffner 
similarly presented lists of controlled substances she wished to 
purchase, that she received drugs in her own name and Mr. Riley's, and 
that she received Vicodin, Darvocet, Xanax, and hydrocodone products. 
Ms. Macerelli further stated that Mr. Sychak allowed Ms. Reffner to run 
a tab, and as of the date of the search she owed approximately $1,000.
    Ms. Macerelli also said that Mr. Sychak frequently directed her and 
Ms. Meyers to add unauthorized refills to prescriptions, telling them 
that he had checked with the prescribing physician for authorization, 
but that she never observed Mr. Sychak telephone a physician for such 
authorization until a few weeks before the search. Ms. Macerelli 
further stated that she and Ms. Meyers recognized Ms. Ruffner's voice 
on the telephone when she telephoned the pharmacy and pretended to be 
calling from a doctor's office. Ms. Macerelli further stated that in 
the summer of 1997 an assistant in a doctor's office across the street 
from the pharmacy complained to Mr. Sychak that medicines that she 
never received were fraudulently billed to her insurance company. 
According to Ms. Macerelli, she and Ms. Myers would note that although 
they indicated on the log sheet the last customer of the day to receive 
drugs billed to insurance plans, the next day there would be additional 
entries added to the log.
    Investigators interviewed Amy Meyers on May 7, 1998. On May 25, 
1999, Ms. Meyers executed a declaration, in evidence as a Government 
exhibit, in which she corroborated many of Ms. Macerelli's statements. 
Ms. Myers corroborated the information that the Ruffners, Ms. Reffner, 
and Mr. Riley, obtained controlled substances from Medicap Pharmacy 
after presenting handwritten notes listing drug names, numbers of 
dosage units, and the names of persons for whom the drugs were 
purportedly prescribed, and stated that Walter Kaczynski, Craig 
Smilack, Linda Nader, Grace Seigworth, Scott Hoyle, Gary Harpis, Tom 
Farrah, Steve Cuccaro, and Camille Maggio-Palmiere also received 
controlled substances in a similar fashion. Ms. Meyers stated that all 
these individuals either paid cash, ran a tab, or used a Medical 
Assistance card. Ms. Meyers also stated that she checked her own 
personal prescription profile at the pharmacy in the spring of 1998 and 
discovered numerous prescriptions listed as billed to her insurance 
carrier that were allegedly issued to her by various physicians she had 
never seen for drugs she had never received. Ms. Myers stated that when 
she confronted Mr. Sychak about these prescriptions he said, ``How do 
you think I pay for your health insurance?''
    On June 8, 1998, investigators interviewed Mr. Fred Werl. Mr. Werl 
said that he had discovered that the prescriptions issued to the 
Kaczynskis were forgeries when he called the hospital to verify a 
prescription and was told that Dr. Fennema was no longer associated 
with the hospital. Mr. Werl also told the investigators that he told 
Mr. Sychak about these fraudulent prescriptions and Mr. Sychak said he 
would take care of the matter, but that Mr. Sychak in fact continued to 
fill these prescriptions. Mr. Werl said that ``Walter Kaczynski'' came 
to the pharmacy and gave Mr. Sychak gifts, but that he did not know 
whether these were in exchange for drugs. Mr. Werl told investigators 
that at some point he was present when a commercial auditing firm 
confronted Mr. Sychak and told him that some of the pharmacy documents 
and records were fraudulent. Mr. Werl also told investigators about the 
insurance log, and noted that one day he counted 65 entries added after 
closing hours.

7. The Controlled Buys by Arthur Glaser

    On July 27, 1998, Detective Michael Garlecki of the Allegheny 
County Police Department Narcotics Unit advised Investigator Dittmer 
that an Arthur Glaser was in custody and that a search of Mr. Glaser's 
home had revealed some loose pills of controlled substances. Detective 
Garlecki further advised Investigator Dittmer that Mr. Glaser said that 
he had obtained these drugs from Medicap Pharmacy. Consequently, 
Investigator Dittmer interviewed Mr. Glaser, who said that on either 
July 17

[[Page 75966]]

or July 20, 1998, he had purchased four bottles of Lorcet, one bottle 
of Vicodin, one bottle of Xanax, 200 Valium, and some ``speed'' from 
Mr. Sychak without a prescription. Mr. Glaser said that he obtained 
controlled substances in his own name and in the names of his brother 
and sister, Joseph Glaser and Nanette Glaser, respectively.
    Mr. Glaser further stated that he could make undercover purchases 
from Mr. Sychak under the direction of law enforcement personnel. On 
September 2, 1998, Mr. Glaser made a recorded telephone call to Mr. 
Sychak and said he would go to the pharmacy the next day to pick up 
refills on his inhaler medication and what Investigator Dittmer 
described as ``other stuff.''
    On September 3, 1998, Mr. Glaser, fitted with a recording device 
and a transmitter and provided with $2,000 in DEA funds, went to the 
pharmacy. Mr. Glaser obtained from Mr. Sychak 120 Vicodin ES, 500 
alprazolam, and 500 Lorcet, in exchange for the $2,000 in cash. While 
Mr. Glaser was in the pharmacy, Mr. Sychak asked Ms. Sychak, ``What's 
you intuition?'' and she said, ``I don't know. I think it's okay. Art, 
you're not being--everything's okay with you, right?'' to which Mr. 
Glaser replied, ``No, my line is good. My lines are clear. I'm 
okay.''According to Investigator Dittmer, Mr. Glaser understood Ms. 
Sychak to ask if his telephone was being tapped.
    When Mr. Glaser left the pharmacy, Mr. Sychak followed him out and 
told Mr. Glaser to telephone the pharmacy when he got home and ask 
whether it was open on Sundays. Mr. Glaser agreed to do so, and 
explained to investigators that he routinely called the pharmacy after 
he arrived home and used a code phrase to let Mr. Sychak know that he 
had not been stopped by law enforcement personnel who would find the 
controlled substances.
    Mr. Glaser returned to Medicap Pharmacy on September 22, 1998, 
pursuant to an arrangement he made with Mr. Sychak the day before by 
telephone. Mr. Glaser was fitted with a recording device and a 
transmitter and provided with $2,000 in Government funds. Mr. Glaser 
gave Mr. Sychak the $2,000 and some sports trading cards for Mr. 
Sychak's son and received in exchange 120 Vicodin ES tablets, 500 
alprazolam tablets, and 500 Lorcet tablets. Investigator Dittmer 
testified that at some point during the visit, Mr. Sychak told Mr. 
Glaser to ``put the word out on the street that Amy is doing--is 
selling all these controlled substances.''
    On February 16, 1999, Mr. Glaser executed a declaration in evidence 
as a Government exhibit. In his declaration Mr. Glaser described his 
arrangement with law enforcement authorities and the undercover visits 
discussed above. He also stated, among other things, that he and Mr. 
Sychak had agreed that Mr. Glaser would purchase Lorcet in 500-tablet 
quantities in the original manufacturer's bottles for $1,500 per 
bottle. Mr. Glaser further stated that he sold the pills for $4 each to 
individuals who would then sell them for $8 each on the street, and 
that he also paid Mr. Sychak $5,000 in cash at unstated intervals in 
exchange for a shopping bag of Schedule III controlled substances. Mr. 
Glaser stated that as of sometime in 1993 he routinely paid Mr. Sychak 
$12,000 to $15,000 per transaction and that sometimes Mr. Sychak kept 
the pharmacy open late so that Mr. Glaser could make these purchases.

8. The December 16, 1998, Search

    As a result of the undercover purchases, investigators obtained a 
second search warrant for Medicap Pharmacy and executed it on December 
16, 1998. Investigators Conlon and Dittmer and ten to fifteen other law 
enforcement officers conducted the search and seized, among other 
things, the pharmacy computer's hard drive. That same day, the Deputy 
Administrator issued the Order to Show Cause and Immediate Suspension 
of Registration that gave rise to the instant proceeding.

9. The Interview of Larry Stepinski

    Also on December 16, 1998, Investigators Conlon and Dittmer and 
Sergeant Stan King of the Murrysville Police Department interviewed Mr. 
Stepinski and videotaped the interview. During the interview, Mr. 
Stepinski said that about four years earlier a Robert Mrvos had written 
fake prescriptions for Percocet and Didrex, gave them to Mr. Stepinski, 
and told him to take them to Medicap Pharmacy to be filled. Mr. 
Stepinski said that he told Mr. Mrvos that the prescriptions were for 
diametrically opposed drugs, but Mr. Mrvos assured him that Mr. Sychak 
would fill both. Mr Stepinski further said that Mr. Sychak filled both 
prescriptions.
    Mr. Stepinski stated that Mr. Mrvos sent various drug addicts to 
Medicap Pharmacy with fake prescriptions; these individuals had the 
prescriptions filled and then turned the drugs over to Mr. Mrvos in 
exchange for money. According to Mr. Stepinski, however, at some point 
Mr. Mrvos was arrested, and Mr. Stepinski obtained the blank 
prescription forms that Mr. Mrvos had used. Mr. Stepinski stated that 
he wrote the prescriptions for various fictitious people with the last 
name Kaczynski, his late uncle's name, because he thought such a name 
would be believable inasmuch as it was hard to spell. Mr. Stepinski 
also stated that Mr. Sychak filled prescriptions for him for two people 
with fictitious last names other than Kaczynski; according to Mr. 
Stepinski, he told Mr. Sychak ``they were my neighbors and could you 
fill these for me?'' Mr. Stepinski believed, Mr. Sychak knew that these 
names were fictitious.
    Mr. Stepinski further stated that he forged prescriptions for 
Didrex and Percocet using blanks from three different physicians, and 
that from time to time Mr. Sychak told him, ``you're going to have to 
find a new doctor,'' which Mr. Stepinski interpreted as an instruction 
to use a different physican's prescription blank. Mr. Stepinski further 
said that Mr. Sychak told him not to present his ``prescriptions'' to 
Mr. Werl, because Mr. Werl would call the physician to verify them.
    Mr. Stepinski said that he went to the pharmacy every two weeks 
with two prescriptions, apparently one for Walter Kaczynski and one for 
Linda Kaczynski, and that he obtained Percocet every two weeks and 
Didrex once per month. Mr. Stepinski said that about a year after he 
started taking the Kaczynski prescriptions to the pharmacy he explained 
to Mr. Sychak that many people, himself among them, were using 
fictitious names on prescriptions filled at the pharmacy. Mr. Stepinski 
further said that as a result of this warning, Mr. Sychak stopped 
providing drugs to the people Mr. Stepinski identified, but not to Mr. 
Stepinski himself.
    Mr. Stepinski said that at one point he used five different 
fictitious names on the false prescriptions, but that Mr. Sychak told 
him to cut back to two names. Mr. Stepinski further stated that after 
the investigation and arrest of a pharmacist at another pharmacy, Mr. 
Sychak took him outside the pharmacy building and told him that 
Percocet was ``too hot,'' and suggested he obtain Lorcet instead. Mr. 
Stepinski said that he told Mr. Sychak he could not switch because he 
did not know what instructions to write on a Lorcet prescription, and 
Mr. Sychak went back into the building, returned with Mr. Stepinski's 
receipt, and wrote the instructions for use for Lorcet on the back. Mr. 
Stepinski said that after that conversation he wrote ``prescriptions'' 
for Lorcet instead of Percocet. Apparently, these were standard 
preprinted forms on which Mr. Mrvos forged the physician's signature. 
Mr. Stepinski said that he spent about $280 per month for Percocet and 
about the

[[Page 75967]]

same amount for Didrex, and that he always paid cash for the drugs.
    Counsel for Respondent objected to the introduction into evidence 
of the videotape of Mr. Stepinski's interview, asserting that Mr. 
Stepinski was not subject to cross examination, and that Mr. Stepinski 
may have had reason to cast Mr. Sychak in an unfavorable light. Judge 
Bittner found, however, and the Deputy Administrator agrees, there is 
other credible evidence from the hospital where Dr. Fennema had worked 
and also Investigator Conlon's report of his conversation with Dr. 
Fennema, that the Kaczynskis were fictitious. In these circumstances, 
the inference is warranted, which Judge Bittner made, and with which 
the Deputy Administrator concurs, that none of the deliveries to them 
were authorized. Judge Bittner also noted that Respondent adduced no 
evidence that Mr. Sychak made any attempt to verify any of the 
purported prescriptions to them.
    The Deputy Administrator may revoke a DEA Certificate of 
Registration and deny any pending applications for such a certificate 
``if he determines that the issuance of such registration would be 
inconsistent with the public interest'' as determined pursuant to 21 
U.S.C. 824(a)(4) an 823(f). 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 and 
safety.
    As a threshold matter, the factors specified in section 823(f) are 
to be considered in the disjunctive: the Deputy Administrator may 
properly rely on any one or a combination of those factors, and give 
each factor the weight he deems appropriate, in determining whether a 
registration should be revoked or an application for registration 
denied. Henry J. Schwarz, Jr., M.D., 54 FR 16,422 (DEA) 1989).
    The Controlled Substances Act further prohibits dispensing a 
Schedule II controlled substance without the written prescription of a 
practitioner, with certain exceptions not pertinent here. 21 U.S.C. 
829(a) (1996).
    The Act also prohibits dispensing a Schedule III or IV controlled 
substance ``without a written or oral prescription in conformity with 
[the Federal Food, Drug and Cosmetic Act,'' 21 U.S.C. 829(b) (1996).
    Furthermore, the relevant regulations governing prescriptions and 
implementing the Controlled Substances Act, 21 CFR 1306.03 through 
1306.06 (1999) provide, in relevant part, that: (1) Prescriptions for 
controlled substances may be issued only by an individual practitioner 
who is authorized to prescribe these medications by the jurisdiction in 
which he is licensed to practice his profession and is registered by 
DEA or exempt from such registrations; (2) a prescription for a 
controlled substance must be issued for a legitimate medical purpose by 
an individual practitioner acting in the usual course of his 
professional practice; (3) although a prescribing practitioner is 
responsible for the proper prescribing and dispensing of controlled 
substances, ``a corresponding responsibility rests with the pharmacist 
who fills the prescription,'' (4) prescriptions for controlled 
substances must be rated as of and signed on the day issued and must 
bear the full name and address of the patient, the drug name, strength, 
dosage form, quantity prescribed, and directions for use, as well as 
the name, address, and DEA registration number of the practitioner; and 
(5) prescriptions for controlled substances may be filled only by a 
pharmacist acting in the usual course of his professional practice.
    The Government argues, in substance, that Mr. Sychak filled 
fictitious and fraudulent prescriptions, delivered controlled 
substances without a prescription, provided controlled substances in 
exchange for stolen drug samples, added unauthorized refills to 
prescriptions, encouraged drug abusers to place fraudulent telephone 
calls purportedly authorizing dispensings, falsified insurance records, 
and made misrepresentations to investigators. The Government further 
argues that even if Mr. Sychak and Medicap Pharmacy could be considered 
the victims on occasion of stratagems by drug-seeking individuals who 
presented fraudulent prescriptions or posed as physicians, the pharmacy 
abrogated its obligation to ensure that it filled only lawful 
prescriptions.
    As noted above, Respondent did not file proposed findings of fact, 
conclusions of law or argument in this proceeding. In his closing 
argument at the hearing, counsel for Respondent asserted, in substance, 
that much of Ms. Ruffner's testimony was hearsay and she had reason to 
fabricate her testimony; the Government did not offer into evidence the 
tape recordings of the undercover visits; Respondent was not afforded 
the opportunity to cross-examine Mr. Stepinski or the other informants; 
and the Government did not conduct a full audit of the pharmacy. In 
sum, Respondent argues that the Government has not met its burden of 
proof in this proceeding.
    With regard to factor one of the public interest analysis pursuant 
to 21 U.S.C. 824(a)(4) and 823(f), the recommendation of the State 
licensing board, it is undisputed that at the time of the hearing 
Respondent was authorized by the Commonwealth of Pennsylvania to handle 
controlled substances. Inasmuch as State licensing is a necessary but 
not sufficient condition for DEA registration, however, Judge Bittner 
found, and the Deputy Administrator concurs, that this factor is not 
determinative.
    With regard to factor two, Respondent's experience in handling 
controlled substances, Judge Bittner made the following factual 
findings, with which the Deputy Administrator concurs. The stated 
quantities of illicitly dispensed controlled substances are based upon 
the evidence of the record as a whole. The Deputy Administrator 
recognizes that Respondent's computer logs may not have been entirely 
accurate. Testimony and other evidence, however, such as the fraudulent 
prescriptions themselves, paint a fairly complete picture of the 
magnitude of illicit activity encouraged and abetted by Respondent. It 
is highly doubtful, moreover, that Respondent would have overstated in 
his computer logs the quantities of controlled substances he was 
illegally dispensing.

a. The Deliveries to Mr. Ray

    On August 8, 1997, Mr. Sychak delivered sixty hydrocodone 7.5 mg to 
Mr. Ray pursuant to the fictitious oral authorization of Dr. Wigle. 
Although that ``authorization'' specified no refills, Respondent's 
memorialization of it lists one refill. Mr. Sychak in fact treated that 
``authorization'' as if it provided for two refills, delivering 
hydrocodone to Mr. Ray on August 15, and August 22, 1997. On August 29, 
1997, Mr. Sychak refused to provide drugs based on the blank 
prescription from the fictitious Dr. Beck, but based that refusal on 
his concern that DEA investigators might notice that the handwriting on 
the filled-out prescription was the same as that on other pharmacy 
records. When Mr. Ray returned to the pharmacy shortly thereafter with 
the same form filled out

[[Page 75968]]

for sixty Percocet, however, Mr. Sychak honored it.
    On September 5, 1997, Mr. Sychak delivered Percocet to Mr. Ray 
after he filled out the ``prescription'' in Mr. Sychak's presence, and 
also provided Mr. Ray with sixty hydrocodone pursuant to another 
fictitious authorization from Dr. Beck. A week later, Mr. Sychak again 
provided hydrocodone to Mr. Ray pursuant to a fictitious authorization 
from Dr. Beck.

b. The Deliveries to Mr. Stepinski

    The record establishes that between January 2, 1997, and April 14, 
1998, Mr. Sychak delivered 2,870 Percocet, 60 Roxicet, 4,310 Didrex 50 
mg., and 360 Lorcet 10/650 to Mr. Stepinski using the names of various 
Kacyznskis as aliases. The record also establishes that these 
deliveries were made pursuant to fictitious ``prescriptions'' and that 
Mr. Sychak was aware that these were not bona fide dispensings.

c. The Deliveries to Lynette Reffner and Michael Riley

    Between July 17, 1997, and December 30, 1997, Respondent delivered 
to Ms. Reffner a total of 1,620 dosage units of Vicodin; 715 dosage 
units of hydrocodone; 164 dosage units of Hydromet syrup; 60 dosage 
units of phenobarbital; 1,390 dosage units of alprazolam; 1,240 dosage 
unit of Ap-Oxazepam; 130 dosage units of diazepam; and 100 dosage units 
of Darvocet. From 1994 until 1998 Ms. Reffner and Mr. Riley regularly 
purchased Vicodin ES, Xanax, Darvocet, Soma, and Hydromet syrup from 
Mr. Sychak without a prescription or any other form of physician 
authorization.

d. The Deliveries to the Ruffners

    The record establishes that Mr. Sychak provided controlled 
substances to Ms. Ruffner's mother in exchange for physician samples of 
other drugs, delivered drugs to Ms. Ruffner and to her mother pursuant 
to purported telephone authorizations he knew to be fictitious, 
provided Ms. Ruffner more refills than the written legitimate 
prescriptions authorized, and sold controlled substances to Ms. Ruffner 
on the basis of lists she gave him containing names of persons and 
drugs, without any physician authorization. Mr. Sychak also provided 
Mr. Ruffner a fraudulent prescription vial at the latter's request. 
Respondent unlawfully delivered controlled substances to the Ruffners 
for several years. Between July 1996 and April 1998, Respondent 
delivered to the Ruffners 18,031 Vicodin ES 7.5; 9,165 hydrocodone with 
APAP 7.5; 8,425 hydrocodone 10 with APAP 650; 2,990 Lorcet 10/650; 
2,640 diazepam 10 mg.; 330 Fioricet with codeine No. 3; 90 Lomotil and 
Lonox; 4,080 milliliters of Hydromet syrup, and 390 Prelu-2 105 mg. 
There is no indication that any of these deliveries were pursuant to 
legitimate prescriptions or other physician authorizations. Karen 
Ruffner additionally received 60 dosage units of Vicodin ES in March 
and April of 1993 pursuant to a purported prescription issued by Dr. 
Dzialowski. Finally, during Ms. Ruffner's undercover visit on April 24, 
1998, Mr. Sychak sold her generic hydrocodone, without a prescription 
and upon her giving him a list of people and drug names.

e. The Deliveries to Mr. Glaser

    Mr. Glaser stated in his February 1999 declaration that he had 
purchased Lorcet and other Schedule III controlled substances from Mr. 
Sychak since 1993, and that he paid $3.00 per pill for Lorcet. The 
record establishes that between November 1993, and March 1997 
Respondent delivered to Mr. Glaser a total of 12,030 dosage units of 
alprazolam 2 mg.; 360 dosage units of diazepam 10 mg.; 13,980 dosage 
units of Lorcet; 420 dosage units of Vicodin ES 7.5; 60 hydrocodone 7.5 
with APAP; 12,080 milliliters of Tussionex Pennkinetic suspension; 60 
phentermine 37.5 mg.; and 240 Xanax 2 mg. It is also noteworthy that 
Respondent delivered to Mr. Glaser 300 Vicodin in a six-week period in 
1994, and 240 Xanax in a three-week period in 1995. Furthermore, as 
described above, in the course of the two undercover visits in 
September 1998, less than five months after execution of the April 24 
search warrant, Mr. Sychak sold Mr. Glaser 1,000 alprazolam; 140 
Vicodin; 1,000 Lorcet; and 60 generic hydrocodone, for a total of 
$4,000.
    Judge Bittner found, and the Deputy Administrator concurs, that the 
record establishes that over a period of about six years Mr. Sychak 
sold tens of thousands of dosage units of controlled substances without 
a physician's authorization. The record further establishes that Mr. 
Sychak knew or should have known that he was delivering these 
medications to persons who were drug abusers themselves and/or who were 
providing the controlled substances to others who were. Judge Bittner 
found, and the Deputy Administrator concurs, that this factor weighs in 
favor of a finding that Respondent's continued registration would be 
inconsistent with the public interest.
    With regard to factor three, Respondent's conviction record 
relating to controlled substances, there is no evidence that either 
Medicap Pharmacy or Mr. Sychak has been convicted of violating any laws 
relating to controlled substances at the time of the hearing.
    With regard to factor four, Respondent's compliance with applicable 
laws relating to controlled substances, the record establishes that Mr. 
Sychak delivered tens of thousands of dosage units of controlled 
substances without complying with the statutory and regulatory 
provisions discussed above. Judge Bittner therefore found, and the 
Deputy Administrator concurs, that this factor weighs in favor of a 
finding that Respondent's continued registration would be inconsistent 
with the public interest.
    Finally, with regard to the fifth factor, other conduct that may 
threaten the public health and safety, Judge Bittner found, and the 
Deputy Administrator concurs, that Mr. Sychak (1) acquiesced to Mr. 
Ruffner's request to provide a fraudulent prescription vial; (2) 
provided Percocet to Mr. Ray pursuant to a fictitious prescription that 
Mr. Ray filled out in front of him; (3) offered to bill Ms. Reffner's 
phenobarbital to another patient's medical insurance; (4) exchanged 
controlled substances for stolen physician samples of other drugs; (5) 
continued to fill false prescriptions after Mr. Werl warned him that 
they were fraudulent; (6) misrepresented to investigators that he had 
contacted Dr. Beck to verify a prescription; and (7) billed insurance 
carriers for drugs the policyholders did not receive. Judge Bittner 
therefore found, and the Deputy Administrator concurs, that this factor 
weighs in favors of a finding that Respondent's continued registration 
would be inconsistent with the public interest.
    Judge Bittner found, and the Deputy Administrator concurs, that it 
is abundantly clear that Mr. Sychak has egregiously abused his 
privilege to handle controlled substances. It appears from the record 
that Mr. Sychak was purposefully attempting to engender addiction 
through his unauthorized dispensing of refills, apparently hoping to 
profit from the illicit market for controlled substances he thereby 
created. There is no exculpatory evidence to explain why Mr. Sychak 
acted as he did, that he regrets his actions, or that he will not 
repeat them in the future. In these circumstances the conclusion is 
appropriate that Respondent's continued registration with DEA would be 
inconsistent with the public interest. See Singers-Andreini Pharmacy, 
Inc., 53 FR 4668, 4672 (DEA 1998); Gerald M. Bluestone, R.Ph., d/b/a 
Bluestone Drug Store, 56 FR

[[Page 75969]]

16114, 16116 (DEA 1991); Arthur Sklar, R.Ph., d/b/a King Pharmacy, 54 
FR 34623 (DEA 1989).
    Accordingly, the 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 the DEA 
Certificate of Registration BM2751736, issued to Medicap Pharmacy, be, 
and hereby is, revoked, and any pending applications for renewal of 
such registration be denied. This order is effective January 4, 2001.

    Dated: November 21, 2000.
Julio F. Mercado,
Deputy Administrator.
[FR Doc. 00-30930 Filed 12-4-00; 8:45 am]
BILLING CODE 4410-09-M