[Federal Register Volume 77, Number 113 (Tuesday, June 12, 2012)]
[Notices]
[Pages 35021-35027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-14319]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 11-44]


Kwan Bo Jin, M.D.; Decision and Order

    On October 13, 2011, an agency Administrative Law Judge issued the 
attached recommended decision. Neither party filed exceptions to the 
decision.
    Having reviewed the entire record, I have decided to adopt the 
ALJ's findings of fact and conclusions of law, except for his 
discussion of the role of community impact evidence in agency 
proceedings, see ALJ, at 14-16; \1\ which is contrary to agency 
precedent.\2\ See Linda Sue Cheek, 76 FR 66972, 66973 (2011); Mark De 
La Lama, 76 FR 20011, 20020 n.20 (2011); Bienvenido Tan, 76 FR 17673, 
17694 n.58 (2011); Gregory D. Owens, 74 FR 36571, 36757 & n.22 (2009). 
Nonetheless, my rejection of the ALJ's discussion of this issue has no 
effect on the outcome of this matter.
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    \1\ All citations to the ALJ's Recommended Decision are to the 
slip opinion as originally issued.
    \2\ I also do not adopt the ALJ's statement at page 7 of the 
slip opinion stating his conclusion ``that the reference in Section 
823(f)(5) to `other conduct which may threaten the public health and 
safety' would as a matter of statutory interpretation logically 
encompass the factors listed in Section 824(a).'' ALJ at 7 (citing 
Kuen H. Chen, M.D., 58 FR 65401, 65402 (1993)).
    To be sure, the Agency decision in Chen stated that ``[t]he 
administrative law judge has concluded here that the reference in 21 
U.S.C. 823(f)(5) to `other conduct which may threaten the public 
health and safety' would as a matter of statutory interpretation 
logically encompass the bases listed in 21 U.S.C. 824(a).'' 58 FR at 
65402. However, whether this constitutes a holding or merely dictum, 
Chen is totally devoid of any indication that the traditional tools 
of statutory construction (i.e, text, structure, statutory purpose, 
and legislative history) were employed in reaching this conclusion. 
Indeed, while factor five focuses on ``other conduct,'' several of 
the grounds for revocation are based on a registrant's status and do 
not require inquiry into the nature of the underlying conduct. See 
21 U.S.C. 824(a)(3) (authorizing revocation where registrant ``has 
had his State license or registration suspended, revoked, or denied 
by competent State authority and is no longer authorized'' to engage 
in controlled substance activities or such sanction has been 
recommended by competent state authority); id. 824(a)(5) 
(authorizing revocation where registrant has been excluded or is 
subject to exclusion from participating in federal healthcare 
programs under mandatory exclusion provisions). In addition, 
construing factor five in this manner renders superfluous factor 
one, which authorizes the Agency to consider the recommendation of 
the state licensing board or disciplinary authority, as well as the 
provision of section 823(f) stating that the ``[t]he Attorney 
General shall register practitioners . . . if the applicant is 
authorized to dispense . . . controlled substances under the laws of 
the State in which he practices.''
     Finally, it should be noted that since shortly after the CSA's 
enactment and years before section 823(f) was amended to include the 
public interest factors, DEA ``has consistently held that where a 
registration can be revoked under section 824, it can, a fortiori, 
be denied under section 823 since the law would not require an 
agency to indulge in the useless act of granting a license on one 
day only to withdraw it on the next.'' Serling Drug Co. v. Detroit 
Prescription Wholesaler, Inc., 40 FR 11918, 11919 (1975). See also 
John R. Amato, 40 FR 22852 (1975) (Denying application where 
practitioner's state license had been revoked, holding that section 
823(f) ``must logically give the Administrator the authority to deny 
a registration if the practitioner is not authorized by the State to 
dispense controlled substances . . . . To hold otherwise would mean 
that all applications would have to be granted only to be revoked 
the next day under 21 U.S.C. 824(a)(3). This [A]gency has 
consistently held that where a registration can be revoked under 
section 824, it can, a fortiori, be denied under section 823.'').
    Indeed, no court has ever questioned the Agency's longstanding 
and consistent interpretation that it has authority to deny an 
application on any of the grounds set forth in section 824(a). Cf. 
National Muffler Dealers Assn., Inc., v. United States, 440 U.S. 
472, 477 (2011) (``A regulation may have particular force if it is a 
substantially contemporaneous construction of the statute by those 
presumed to have been aware of congressional intent.''); EEOC v. 
Associated Dry Goods Corp., 449 U.S. 590, 600 n.17 (1981) (``a 
contemporaneous construction deserves special deference when it has 
remained consistent over a long period of time'').
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    Here, the sole ground for revocation proven on this record was 
Respondent's having been mandatorily excluded from participating in 
federal health care programs pursuant to 42 U.S.C. 1320a-7(a). 
Respondent, however, has credibly accepted responsibility for the 
misconduct which led to his conviction for health care fraud, see 18 
U.S.C. 1347, complied with the terms of his sentence, and also 
demonstrated that he has undertaken remedial measures. Accordingly, I 
have decided to adopt the ALJ's conclusion that his continued 
registration would be ``consistent with the public interest.'' ALJ at 
20. Therefore, the Order to Show Cause will be dismissed.

Order

    Pursuant to the authority vested in me by 21 U.S.C. 824(a), as well 
as 28 CFR 0.100(b), I order that the Order to Show Cause issued to Kwan 
Bo Jin, M.D., be, and it hereby is, dismissed. This Order is effective 
immediately.

    Dated: June 4, 2012.
Michele M. Leonhart,
Administrator.

D. Linden Barber, Esq., and Jonathan P. Novak, Esq., for the Government

Glen D. Crick, Esq., and Lillian Walanka, Esq., for the Respondent.

Recommended Ruling, Findings of Fact, Conclusions of Law and Decision 
of the Administrative Law Judge

Introduction

    This proceeding is an adjudication pursuant to the Administrative 
Procedure Act, 5 U.S.C. 551 et seq., to determine whether the Drug 
Enforcement Administration (``DEA'' or ``Government'') should revoke a 
practitioner's Certificate of Registration (``COR''), and deny any 
pending applications for renewal or modification. Without this 
registration, the practitioner, Kwan Bo Jin, M.D. (``Respondent''), of 
Palatine, Illinois, would be unable to lawfully possess, prescribe, 
dispense or otherwise handle controlled substances in the course of his 
practice.
    On March 29, 2011, the Deputy Assistant Administrator, Office of 
Diversion Control, DEA, issued an Order to Show Cause (``OSC'') to 
Respondent, giving Respondent notice of an opportunity to show cause 
why the DEA should not revoke Respondent's DEA COR BJ1801580, pursuant 
to 21 U.S.C. 823 and 824, and deny Respondent's pending application as 
a practitioner for registration in Schedules II through V, alleging 
that Respondent has been excluded from participation in all federal 
health care programs as defined in 21 U.S.C. 824(a)(5). (ALJ Ex. 1, at 
1.) The OSC alleged in substance: (a) Respondent is currently 
registered with DEA as a practitioner in Schedules II through V under 
DEA registration number BJ1801580, at 950 West Carolyn Drive, Palatine, 
Illinois; (b) Respondent's registration expired on December 31, 2009, 
and Respondent ``submitted a timely renewal on November 6, 2010;'' \1\ 
(c) the United States Department of Health and Human Services (``HHS'') 
by letter dated April 30, 2010, notified Respondent of his exclusion 
from participation in all federal health programs based on his October 
21, 2009 federal conviction for health care fraud pursuant to 18 U.S.C. 
1347; and (d) the exclusion was effective on May 20, 2010, and remains 
in place until at least May 19, 2015.\2\ (Id.)
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    \1\ Upon inquiry at hearing, the Government indicated that the 
date in the OSC was in error and should reflect November 6, 2009.
    \2\ At hearing, the Government raised an additional issue 
involving Respondent's prescribing of the Schedule II controlled 
substance Ritalin to a patient over a two to three month time period 
in or about 1996.
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    Respondent, through counsel, timely requested a hearing, (ALJ Ex. 
2), which

[[Page 35022]]

was held in Chicago, Illinois on August 2, 2011. Both parties called 
one witness to testify and introduced documentary evidence. After the 
hearing, both parties filed proposed findings of fact, conclusions of 
law and argument. All of the evidence and post-hearing submissions have 
been considered, and to the extent the parties' proposed findings of 
fact have been adopted, they are substantively incorporated into those 
set forth below.

Issue

    Whether the record establishes that Respondent's DEA COR BJ1801580 
should be revoked pursuant to 21 U.S.C. 824(a)(5) and any pending 
applications for renewal or modification of that registration should be 
denied on the grounds that Respondent has been excluded from 
participation in a program pursuant to 42 U.S.C. 1320a-7(a).

Evidence and Incorporated Findings of Fact \3\
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    \3\ In addition to the evidence discussed in this Section, 
additional evidence and findings of fact are discussed in later 
sections of this Recommended Decision.
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    I find, by a preponderance of the evidence, the following facts:

I. Background

    Respondent graduated from medical school in Korea and completed his 
residency in psychiatry at the University of Illinois, prior to 
becoming licensed in Illinois in or about 1984. (Tr. 49-50.) Respondent 
is not licensed in any other states. Respondent's DEA registration has 
never been disciplined. (Tr. 53.) Respondent's medical license has been 
the subject of disciplinary action in or about 1996 \4\ and in 2009. 
(Tr. 50, 53.) Respondent has specialized training and experience in 
internal medicine and psychiatry. (Tr. 53.) Respondent is not Board 
certified in psychiatry but is Board eligible. (Id.) Prior to September 
2009, Respondent's practice focused mainly on a geriatric patient 
population, to include covering twelve nursing homes. (Tr. 54.) On 
September 28, 2009, Respondent pled guilty to ``one count of Health 
Care Fraud in violation of 18 U.S.C. 1347, in the United States 
District Court for the Northern District of Illinois, . . . .'' (Resp't 
Ex. B, at 1.) Respondent has not actively practiced medicine since his 
September 2009 conviction. (Tr. 55, 63-64.)
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    \4\ See infra note 18.
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II. The Government's Evidence

    In support of the allegations contained in the OSC, the Government 
presented at hearing the testimony of one witness: DEA Diversion 
Investigator John Pacella (``DI Pacella''). DI Pacella credibly 
testified that he has been a diversion investigator for twenty-two 
years, and was assigned to investigate Respondent in November 2009, 
following receipt of information from the State of Illinois ``regarding 
[Respondent's] conviction for Medicaid fraud back in September of 
2008.'' \5\ (Tr. 21.)
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    \5\ The evidence of record reflects that Respondent signed a 
plea agreement with the United States dated December 9, 2008, and 
entered a plea of guilty on September 28, 2009. (Compare Gov't Ex. 
2, with Gov't Ex. 3.)
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    DI Pacella next testified that Respondent's registration is 
currently active to handle controlled substances in Schedules II 
through V ``[o]n a day to day basis.'' (Tr. 21-22; Gov't Ex. 1.) DI 
Pacella further testified that he received a copy of the judgment in 
Respondent's criminal case from the U.S. Attorney's office. (Tr. 24-25; 
Gov't Exs. 2, 3.) DI Pacella did not consult with the prosecuting 
attorney in Respondent's case at any time and his investigation was 
limited to a review of the records in the case, to include a letter 
dated April 30, 2010, from the HHS notifying Respondent that he was 
excluded from participation in federal health care programs for a five-
year period. (Tr. 27-28; 33; 42; Gov't Ex. 4.)
    During questioning by Respondent's counsel, DI Pacella testified 
that he was aware that Respondent had been reprimanded by the State of 
Illinois for not keeping records for the Schedule II controlled 
substance Ritalin for a particular patient, and overprescribing to that 
patient, resulting in one year of probation. (Tr. 33-34.) \6\
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    \6\ Respondent's counsel did not object to the testimony or 
raise any issue with regard to lack of notice during hearing, but 
instead elicited further explanation of the issue from Respondent 
during Respondent's direct examination.
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    DI Pacella's testimony also included a general explanation of 
diversion, to include Congress' intent to create ``basically a closed 
system of distribution.'' (Tr. 28-29.) DI Pacella further explained 
that a ``small percentage [of doctors] . . . do end up diverting drugs 
for[] monetary benefits . . . or even self addiction . . .'' and 
concluded that ``doctors and/or pharmacies . . . make fraudulent 
documents to cover up diversion.'' (Tr. 30, 31.) DI Pacella 
acknowledged that his testimony regarding what a doctor may do with 
regard to diversion is just speculation insofar as Respondent is 
concerned, since he did not review any of Respondent's prescribing 
information and does not know what Respondent is doing. (Tr. 36-37.)

III. Respondent's Evidence

    Respondent testified at hearing that in 1996, his Illinois medical 
license was reprimanded as a result of his over prescribing Ritalin to 
a patient. (Tr. 50-51.) Respondent explained that the patient had 
tricked him into prescribing a little more than he intended, but 
admitted that he prescribed more than he intended and should have been 
more attentive. (Tr. 51-52.) Respondent further explained that 
initially his license was revoked because he did not attend the 
scheduled hearing due to lack of notice, but the revocation was 
vacated, and following a hearing with Respondent present, his license 
was reprimanded. (Id.)
    Respondent next testified that his medical license in Illinois had 
recently been subject to discipline due to his September 28, 2009, 
federal health care fraud conviction, and that his medical license was 
currently under probation. (Tr. 53, 55.) Respondent testified that with 
regard to the discipline of his medical license, he has completed a 
four-month suspension, paid a $1,000 fine, and completed a continuing 
medical education requirement. (Tr. 60-61.) Respondent is in compliance 
with the terms of his medical license probation. (Tr. 61.)
    Respondent testified that he pled guilty to health care fraud 
``[b]ecause I did wrong.'' (Tr. 56.) Respondent further explained the 
nature of the misconduct,\7\ stating ``that's what I pled guilty for 
and I feel very bad about it.'' (Tr. 57.) Since his conviction, 
Respondent explained that he has paid a fine of $10,000, a $100 
assessment, and restitution of $28,349. (Tr. 57-58.) Respondent also 
successfully completed a four month period of work release at the 
Salvation Army, along with 250 hours of community service. (Tr. 58-59.) 
Respondent testified that he has completed all of the terms of his 
federal probation and sentencing, and his probation was terminated on 
January 29, 2011, approximately eight months earlier than scheduled. 
(Tr. 59.)
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    \7\ Respondent testified that the offense conduct for which he 
pled guilty related to charging Medicare for patients that he had 
not seen, to include on occasion deceased patients. (Tr. 56-57.) 
There is no evidence of record to indicate that the offense conduct 
related to controlled substances.
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Discussion and Conclusions

I. The Applicable Statutory and Regulatory Provisions

    The Controlled Substances Act (``CSA'') specifies in 21 U.S.C. 
824(a) five factors that the Administrator may consider when suspending 
or revoking

[[Page 35023]]

a DEA registration.\8\ Despite the lack of an explicit provision 
applying these factors to a denial of an application

    \8\ That subsection provides that a DEA registration may be 
revoked upon a finding that the registrant: (1) has materially 
falsified an application for DEA registration; (2) has been 
convicted of a felony under the CSA or any other federal or state 
law relating to any controlled substance; (3) has had a state 
license or registration suspended, revoked or denied and is no 
longer authorized by state law to handle controlled substances; (4) 
has committed such acts as would render registration inconsistent 
with the public interest; or (5) has been excluded from 
participation in a program pursuant to 42 U.S.C. 1320a-7(a). It 
should also be noted that Section 824(a) contains a reciprocal 
reference incorporating the public interest factors from Section 
823(f). See 21 U.S.C. 824(a)(4).
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    [t]he agency has consistently held that the Administrator may also 
apply these bases to the denial of a registration, since the law would 
not require an agency to indulge in the useless act of granting a 
license on one day only to withdraw it on the next.\9\

    \9\ Kuen H. Chen, M.D., 58 FR 65,401, 65,402 (DEA 1993) (citing 
Serling Drug Co. & Detroit Prescription Wholesaler, Inc., 40 FR 
11918, 11,919 (DEA 1975)); accord Scott J. Loman, D.D.S., 50 FR 
18,941 (DEA 1985); Roger Lee Palmer, D.M.D., 49 FR 950 (DEA 1984).
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In addition, I conclude that the reference in Section 823(f)(5) to 
``other conduct which may threaten the public health and safety'' would 
as a matter of statutory interpretation logically encompass the factors 
listed in Section 824(a).\10\
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    \10\ See Chen, 58 FR at 65,402.
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    In an action to revoke a DEA COR, the Government has the burden of 
proving that the requirements for such revocation are satisfied.\11\ 
Similarly, in an action to deny an application for registration, the 
Government bears the burden of proving that the requirements for 
granting such registration are not satisfied.\12\ The burden of proof 
shifts to the respondent once the Government has made its prima facie 
case.\13\
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    \11\ 21 CFR 1301.44(e) (2011).
    \12\ 21 CFR 1301.44(d) (2011).
    \13\ Medicine Shoppe--Jonesborough, 73 FR 364, 380 (DEA 2008); 
see also Thomas Johnston, 45 FR 72,311, 72,311 (DEA 1980).
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    The CSA, 21 U.S.C. 824(a)(5), provides, insofar as pertinent to 
this proceeding, that the Administrator may revoke or deny a 
registration if an applicant has been excluded from participation in a 
program pursuant to 42 U.S.C. 1320a-7(a).
    Under Section 1320a-7(a), the Secretary of the HHS is required to 
exclude from participation in any federal health care program any 
individual convicted of a criminal offense ``related to the delivery of 
an item or service under [42 U.S.C. 1395 et. seq.] or under any State 
health care program,'' 1320a-7(a)(1), as well as any individual 
convicted ``in connection with the delivery of a health care item or 
service or with respect to any act or omission in a health care program 
. . . of a criminal offense consisting of a felony relating to fraud, 
theft, embezzlement, breach of fiduciary responsibility, or other 
financial misconduct,'' 1320a-7(a)(3).
    I find that Respondent's 2009 health care fraud conviction and 
subsequent exclusion from all federal health care programs are 
supported by substantial evidence. The evidence at hearing includes a 
plea agreement and judgment pertaining to Respondent's conviction for 
health care fraud, pursuant to 18 U.S.C. 1347. (Gov't Exs. 2, 3.) 
Additionally, the evidence includes a letter from the HHS dated April 
30, 2010, excluding Respondent from all federal health care programs 
for the minimum statutory period of five years. (Gov't Ex. 4.) 
Consequently, exclusion from participation in any federal health care 
programs pursuant to 42 U.S.C. 1320a-7(a) is an independent ground for 
denying or revoking Respondent's DEA registration. See Johnnie Melvin 
Turner, M.D., 67 FR 71,203, 71,204 (DEA 2002).
    Respondent does not dispute the evidence of conviction or 
exclusion, but argues, correctly, that revocation of a COR and denial 
of a pending application for renewal of registration on this ground is 
a matter of discretion. See Dinorah Drug Store, Inc., 61 FR 15,972, 
15,973 (DEA 1996) (denial of registration under Section 824(a)(5) 
discretionary so long as granting registration not inconsistent with 
public interest).
    Accordingly, on these facts, the Government has met its burden of 
proving its Section 824(a)(5) claim, see 21 CFR 1301.44(d) and (e), 
placing the burden on Respondent to show that despite his conviction, 
granting him a COR would not be contrary to the public interest. See 
Medicine Shoppe--Jonesborough, 73 FR at 380 (burden of proof shifts to 
the respondent once the Government puts on prima facie case); see also 
Thomas Johnston, 45 FR at 72,311 (same).

II. The Public Interest Standard

    Pursuant to 21 U.S.C. 823(f), the Administrator may deny an 
application for a DEA registration if she determines that such 
registration would be inconsistent with the public interest. In 
determining the public interest, the Administrator is required to 
consider the following factors:
    (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 Administrator may properly 
rely on any one or a combination of those factors, and give each factor 
the weight she deems appropriate, in determining whether a registration 
should be revoked or an application for registration denied. See David 
H. Gillis, M.D., 58 FR 37,507, 37,508 (DEA 1993); see also D & S Sales, 
71 FR 37,607, 37,610 (DEA 2006); Joy's Ideas, 70 FR 33,195, 33,197 (DEA 
2005); Henry J. Schwarz, Jr., M.D., 54 FR 16,422, 16,424 (DEA 1989).

III. The Factors to Be Considered

Factors 1 and 3: The Recommendation of the Appropriate State Licensing 
Board or Professional Disciplinary Authority and Conviction Record 
under Federal or State Laws Relating to the Manufacture, Distribution 
or Dispensing of Controlled Substances

    As described in the Evidence and Incorporated Findings of Fact 
Section of this Recommended Decision, Respondent holds a valid state 
medical license in the State of Illinois, but Respondent's state 
medical license has been the subject of discipline in the past. In or 
about 1996, Respondent's medical license was reprimanded for conduct 
related to prescribing Ritalin, a Schedule II controlled substance.\14\ 
Additionally, as a result of Respondent's September 28, 2009 federal 
conviction for health care fraud, and pursuant to state law,\15\ the 
State of Illinois suspended Respondent's medical license for a period 
of four months,\16\ imposed a fine of $1,000, and placed Respondent on 
conditional probation

[[Page 35024]]

for an indefinite period of not less than two years. (Resp't Ex. B.)
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    \14\ See discussion infra.
    \15\ Disciplinary action against an Illinois licensee may be 
imposed upon: ``(3) The conviction of a felony in this or any other 
jurisdiction . . . . (5) Engaging in dishonorable, unethical or 
unprofessional conduct of a character likely to deceive, defraud or 
harm the public.'' 225 Ill. Comp. Stat. 60//222(A)(3), (5).
    \16\ Respondent's medical license was suspended for four 
continuous months beginning on December 3, 2009.
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    The most recent action by the State of Illinois reflects a 
determination that Respondent, notwithstanding findings of 
unprofessional conduct, can be entrusted with a medical license subject 
to probationary terms and conditions. While not dispositive,\17\ this 
action by the State of Illinois does weigh against a finding that 
Respondent's continued registration would be inconsistent with the 
public interest under Factor One. Cf. Robert A. Leslie, M.D., 68 FR 
15,227, 15,230 (DEA 2003) (under Factor One, prior suspension of 
respondent's state medical license held not dispositive where state 
license currently under no restrictions).
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    \17\ Mortimer B. Levin, D.O., 55 FR 8,209, 8,210 (DEA 1990) 
(finding DEA maintains separate oversight responsibility and 
statutory obligation to make independent determination whether to 
grant registration).
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    Regarding Factor Three, there is no evidence that Respondent has 
ever been convicted under any federal or state law relating to the 
manufacture, distribution or dispensing of controlled substances. I 
therefore find that this factor, although not dispositive, see Leslie, 
68 FR at 15,230, weighs against a finding that Respondent's 
registration would be inconsistent with the public interest.

Factors 2, 4 and 5: Respondent's Experience in Dispensing Controlled 
Substances; Compliance with Applicable State, Federal or Local Laws 
Relating to Controlled Substances; and Such Other Conduct Which May 
Threaten the Public Health and Safety

    In this case, there is evidence that Respondent has committed acts 
inconsistent with the public interest by prescribing a Schedule II 
controlled substance, Ritalin, to one patient over a two to three month 
time period in or about 1996.\18\ As an initial matter, the issue of 
Respondent's prescribing was not specifically noticed by the Government 
in the OSC or prehearing statement, nor was it referenced in any 
Government exhibits prior to hearing. The issue was first introduced 
during Respondent's cross-examination of DI Pacella, without objection, 
and further explained by Respondent during his direct and cross 
examination. (Tr. 50-53, 68-72.)
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    \18\ Respondent recalls 1996 or 1997, which was consistent with 
DI Pacella's limited testimony on the issue. (Compare Tr. 33-34, 
with Tr. 68.)
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    To comport with due process requirements, the DEA must ``provide a 
Respondent with notice of those acts which the Agency intends to rely 
on in seeking the revocation of [his] registration so as to provide a 
full and fair opportunity to challenge the factual and legal basis for 
the Agency's action.'' CBS Wholesale Distribs., 74 FR 36,746, 36,749 
(DEA 2009) (citing NLRB v. I.W.G., Inc., 144 F.3d 685, 688-89 (10th 
Cir. 1998); Pergament United Sales, Inc., v. NLRB, 920 F.2d 130, 134 
(2d Cir. 1990)). An issue cannot be the basis for a sanction when the 
Government has failed to ``disclose `in its prehearing statements or 
indicate at any time prior to the hearing' that an issue will be 
litigated.'' Id. at 36,750 (citing Darrell Risner, D.M.D., 61 FR 728, 
730 (DEA 1996)). The DEA has also previously found, however, that a 
respondent may waive objection to the admission of evidence not noticed 
by the Government prior to the hearing when the respondent does not 
timely object and when the respondent also raises the issue. Gregory D. 
Owens, D.D.S., 74 FR 36,751, 36,755 (DEA 2009).
    In accordance with agency precedent, I find in this case that the 
issue of Respondent's 1996 prescribing of Ritalin to one patient may 
properly be considered under factors one, two, four, and five, as well 
as on the issue of sanction, notwithstanding the lack of prehearing 
notice. Respondent's lack of timely objection to the evidence of the 
1996 incident and introduction of additional testimony on the subject 
effectively waived any notice issue.
    The Government did not substantively address the lack of notice in 
its post-hearing brief, but argues that ``Respondent's version of his 
prescribing of a schedule II controlled substance to a nurse is similar 
to the facts that the Supreme Court recounted in . . . '' United States 
v. Moore, 423 U.S. 122 (1975). (Gov't Br., at 5 (emphasis added)). The 
issue before the Court in Moore involved whether a registered physician 
can be prosecuted under the CSA when the physician's activities fall 
outside the usual course of professional practice, which was answered 
in the affirmative. Moore, 423 U.S. at 124. Notably, the facts in Moore 
involved a practitioner's issuance of 11,169 prescriptions for ``some 
800,000 methadone tablets,'' which were acknowledged by the 
practitioner to have been issued without observing ``generally accepted 
medical practices.'' Id. at 126. I find the Government's argument that 
Respondent's prescribing conduct was similar to Moore to be glaringly 
at odds with the facts.
    Additionally, the Government's argument that there ``was no 
evidence that a physical examination was performed . . . '' by 
Respondent, to include lack of diagnostic tests or records kept, (Gov't 
Br., at 6), is wholly unpersuasive. As an initial matter, in an action 
to revoke a registrant's COR, the DEA has the burden of proving that 
the requirements for revocation are satisfied.\19\ The Government's 
sole witness first introduced the 1996 issue of Respondent's record-
keeping and prescribing misconduct, arguably in response to a question 
posed by Respondent's counsel, clearly demonstrating the Government was 
aware of the issue in advance of hearing. Once raised at hearing, the 
Government did not offer any other relevant evidence, to include such 
things as the findings of a state regulatory authority or patient 
records, nor did the Government pursue the matter with DI Pacella or 
Respondent in any meaningful way. (Tr. 42-47, 70-71.) In fact, 
Respondent's limited testimony on the topic was consistent with him 
seeing the patient and making chart entries. ``[O]nce I write the 
prescription in my chart, you know, on such day that I, I prescribe 
this, those and this amount and then she comes in after three, four 
days that oh, I had a problem at home[,]'' further explaining how the 
patient had misled him to issue another prescription. (Tr. 71.) The 
only evidence in the record of misconduct due to record-keeping is DI 
Pacella's testimony that ``[w]e did receive information that back in 
1997, 96-97, he was actually reprimanded from the State of Illinois for 
not keeping records for Schedule II Ritalin for a particular patient, . 
. . .'' (Tr. 33-34.) The record is otherwise devoid of any information 
about Respondent's physical examination of the patient, diagnostic 
tests, or lack thereof.
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    \19\ 21 CFR 1301.44(e) (2011).
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    In Calhoun v. Bailar, 626 F.2d 145 (9th Cir. 1980), the court found 
that to constitute substantial evidence, the probative value and 
reliability of hearsay evidence may be analyzed using many factors, 
such as: a consideration regarding the independence or possible bias of 
the declarant; the type of hearsay material presented; whether the 
statements are signed and sworn or anonymous, oral or unsworn; whether 
the statements are contradicted by direct testimony; whether the 
declarant is available to testify and, if so, whether the objecting 
party subpoenas the declarant or whether the declarant is unavailable 
and no other evidence is available; the credibility of the witness 
testifying to the hearsay; and whether or not the hearsay is 
corroborated. Id. at 149; see also Richardson v. Perales, 402 U.S. 389, 
402-06 (1971). The evidence offered by DI Pacella regarding ``not 
keeping records for Schedule II Ritalin for a particular patient'' is 
so lacking in

[[Page 35025]]

factual basis, that it simply cannot constitute substantial evidence. 
Accordingly, I do not find the Government's cited authority to be 
similar in any material respect to the instant case, nor has the 
Government sustained its burden with regard to the issue of 
Respondent's lack of physical examination, diagnostic tests, or record-
keeping.
    In addition to the foregoing, the Government also elicited opinion 
testimony, without objection, from DI Pacella to the effect that a 
small percentage of practitioners divert drugs for monetary gain or 
self use, to include fraudulent documentation. (Tr. 31.) DI Pacella 
acknowledged that the foregoing testimony was only speculation insofar 
as Respondent's past or future prescribing conduct was concerned, since 
he had no independent evidence of such conduct by Respondent. (Tr. 36-
37.) ``Speculation is, of course, no substitute for evidence, and a 
decision based on speculation is not supported by substantial 
evidence.'' White ex rel. Smith v. Apfel, 167 F.3d 369, 375 (7th Cir. 
1999) (citing Erhardt v. Sec'y, DHS, 969 F.2d 534, 538 (7th Cir. 
1992)). Accordingly, I give absolutely no weight to DI Pacella's 
opinion testimony pertaining to diversion of controlled substances for 
monetary gain or related document fraud, since at best it is mere 
speculation as to what Respondent may or may not do in the future.
    While I have carefully considered Respondent's admitted prior 
conduct with regard to prescribing Ritalin to one patient in or about 
1996, I do not find that this single incident, which occurred 
approximately fifteen years ago, and Respondent's otherwise unblemished 
prescribing record both before and after, to weigh appreciably against 
Respondent under any public interest factor. Respondent was fully 
credible and candid in his explanation of this event and there is no 
evidence of record to indicate any similar conduct before or after. 
Moreover, Respondent admitted his misconduct at the time of the 
incident, explaining that ``I admitted that, you know, I prescribed 
more than I intended for her.'' (Tr. 51.) In reaching a negotiated 
reprimand, Respondent further testified that he acknowledged he had 
done something wrong. ``I should be more attentive . . . I admit, at 
that time, that I prescribed more than I intended for that particular 
patient.'' (Tr. 52-53.). The lack of any recurrence for the past 
fifteen years amply demonstrates that Respondent will not engage in 
similar misconduct in the future. Patrick W. Stodola, M.D., 74 FR 
20,727 (DEA 2009).
    Accordingly, I find that Respondent's past experience in dispensing 
controlled substances, compliance with applicable laws relating to 
controlled substances and absence of any other conduct relating to 
controlled substances\20\ that may threaten the public interest weighs 
heavily in favor of finding that Respondent's registration would be 
fully consistent with the public interest.
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    \20\ See Terese, Inc., D/B/A Peach Orchard Drugs, Admonition of 
Registrant, 76 FR 46,843, 46,848 n.11 (DEA 2011) (with respect to 
factor five, DEA's case law has generally recognized that misconduct 
must relate to controlled substances).
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IV. Community Impact Evidence

    Respondent testified consistent with his prehearing statement, and 
without objection or rebuttal, that to his knowledge he is the only 
Korean speaking psychiatrist in the Chicago, Illinois area at this 
time. (Tr. 55.) Respondent further testified that prior to his 
conviction in September 2009, his practice focused on twelve nursing 
homes, six of which were ``small nursing homes'' with geriatric Korean 
populations. (Tr. 54.) Respondent argues that his plan ``to return to 
work as a psychiatrist for the underserved geriatric Korean community 
in the Chicago area'' weighs in favor of registration. (Resp't Br., at 
13.)
    As a threshold matter, there is some question as to whether this 
issue is relevant at all in a DEA administrative proceeding regarding 
the registration of a practitioner. Agency precedent has found 
community impact testimony and evidence relevant with regard to 
pharmacies but has also rejected community impact evidence altogether 
in more recent cases. For example, the Agency has considered and 
credited a respondent's argument that loss of registration would 
severely and adversely impact the local community by eliminating one of 
two pharmacies serving the poor. Pettigrew Rexall Drugs, 64 FR 8855, 
8859-60 (DEA 1999). In recent cases, the Agency held that ``DEA has 
never applied [the Pettigrew] rule in a subsequent case . . . it would 
be ill-advised to extend it to the case of a prescribing 
practitioner.'' Gregory Owens, D.D.S., 74 FR 36,751, 36,757 (DEA 2009); 
see also Steven M. Abbadessa, D.O., 74 FR 10,077, 10,078 (DEA 2009) 
(rejecting community impact evidence).
    Although not discussed in Owens, there are cases since Pettigrew 
that have considered and given weight to community impact evidence, 
without specifically citing Pettigrew. For example, in a 2004 decision 
the Deputy Administrator explained that ``regardless of any demographic 
showing as to what proportion of Louisiana's population is medically 
underserved[,] such information does not detract from the fact that 
Respondent provides needed medical services to such an area . . . 
[W]hile this provides some support for maintaining registration under 
the facts of this case, it also has a negative implication for 
continued registration.'' Imran I. Chaudry, M.D., 69 FR 62,081, 62,083-
84 (DEA 2004).
    There are also cases prior to Pettigrew that have considered 
community impact evidence on facts similar to the instant case. For 
example, the Agency specifically considered community impact in a 1996 
decision finding that ``given the needs of the community in which he 
practices and the action already taken by the [state and HHS] . . . 
revocation of [respondent's] DEA registration is not appropriate.'' 
Anibal P. Herrera, M.D., 61 FR 65,075, 65,078 (DEA 1996); see also 
Marta I. Blesa, M.D., 60 FR 53,434, 53,436 (DEA 1995) (finding relevant 
to continuing registration practitioner's ``continued contributions to 
that community'' and community impact). In light of this precedent, I 
find that community impact evidence as a threshold matter is not an 
entirely irrelevant evidentiary consideration, to include on the issue 
of sanction.
    Respondent testified that he has not actively practiced medicine 
since his conviction, explaining that his decision to return to 
practice will depend on the outcome of the DEA registration decision. 
(Tr. 63-64.) Respondent further testified that although he is not 
prohibited from practicing medicine in Illinois, and generally does not 
prescribe controlled substances, a DEA registration, as a practical 
matter, is necessary in order to ``work with a hospital or a 
pharmacy.'' (Tr. 64.) Respondent explained: ``My Illinois license is 
active and Illinois substance license is also active. So, I can 
practice if I want, but because of the DEA situation that I cannot 
maintain the relationship with the hospital that I've been working with 
before and the pharmacies.'' (Tr. 78.)
    Respondent's testimony regarding his future intentions was 
equivocal, initially testifying that he intends to return to work with 
six nursing homes he has experience with that currently have a lot of 
geriatric Korean patients who are not being served now ``because 
there's no psychiatrist dealing with their mental difficulties.'' (Tr. 
65.) On cross-examination, Respondent equivocated on whether he 
actually intends to return to practice, regardless of the outcome of 
his DEA registration hearing. (Tr. 74-

[[Page 35026]]

75.) On re-direct, Respondent clarified, stating that if the DEA 
situation can be cleared up, ``I'd like to go back to work. . . . I 
consider myself as a resource for my community in Chicago, Korean 
community. And I'd like to do the work no matter whether it's being 
compensated or not.'' (Tr. 78.)
    In light of Respondent's equivocation on future intentions, I give 
the evidence related to potential community impact little if any weight 
for purposes of this recommended decision, other than to find that it 
is not inconsistent with the public interest.

V. Sanction

    I find the Government has established by substantial evidence a 
prima facie case in support of revoking Respondent's DEA COR and 
denying any pending applications for renewal or modification for 
registration pursuant to 21 U.S.C. 824(a)(5), which forms the sole 
basis for the Government's request for revocation of Respondent's 
registration and denial of any pending applications for renewal. While 
mandatory exclusion can provide an independent basis for 
revocation,\21\ DEA has often reserved that sanction to cases where 
``there were serious questions as to the integrity of the registrant.'' 
Anibal P. Herrera, M.D., 61 FR 65,075, 65,078 (DEA 1996) (continuation 
of registration with restriction where respondent fully accepts 
responsibility and has paid restitution).
---------------------------------------------------------------------------

    \21\ ``[M]andatory exclusion from participation in the Medicare 
program constitutes an independent ground for revocation pursuant to 
21 U.S.C. [ ]824(a)(5).'' Gilbert L. Franklin, D.D.S., 57 FR 3,441, 
3,441 (DEA 1992).
---------------------------------------------------------------------------

    The Government cites several cases in its post-hearing brief in 
support of revocation,\22\ although each case is significantly 
distinguishable from the facts presented in the instant case. Orlando 
Ortega-Ortiz, M.D., 70 FR 15,122 (DEA 2005) (respondent waived 
hearing); Daniel Ortiz-Vargas, M.D., 69 FR 62,095 (DEA 2004) 
(respondent waived hearing); \23\ Johnnie-Melvin Turner, M.D., 67 FR 
71,203 (DEA 2002) (respondent waived hearing and offense conduct 
involved fraudulent claims in excess of $100,000 and order to pay 
restitution of $106,132); KK Pharmacy, 64 FR 49,507, 49,510 (DEA 1999) 
(respondent waived hearing and ``[n]o evidence of explanation or 
mitigating circumstances was offered'' by interested party on 
revocation grounds under 21 U.S.C 824(a)(1), (4), and (5)); Stanley 
Dubin, D.D.S., 61 FR 60,727, 60,728 (DEA 1996) (respondent's testimony 
at hearing not credited in part and respondent found to have directly 
violated termination letter, casting substantial doubt on respondent's 
integrity).
---------------------------------------------------------------------------

    \22\ Gov't Br., at 6.
    \23\ The Government's citation to this case is incorrect.
---------------------------------------------------------------------------

    There is other Agency precedent, in addition to Herrara, 61 FR at 
65,078, refraining from imposing a revocation sanction on facts similar 
to the instant case where the respondent has fully accepted 
responsibility, demonstrated remorse, among other positive factors, and 
in the absence of other evidence that continued registration would be 
contrary to the public interest. For example, in Melvin N. Seglin, 
M.D., 63 FR 70,431 (DEA 1998), the respondent's COR was renewed and 
continued based on a finding that respondent had accepted 
responsibility for his misconduct which was not likely to recur. Id. at 
70,433.
    Turning to the evidence in this case, the Government's evidence 
essentially consists of the court records relating to Respondent's 
federal health care fraud conviction, to include an exclusion letter 
from HHS. DI Pacella testified that his investigation was limited 
essentially to a review of those records.\24\ (Tr. 33.)
---------------------------------------------------------------------------

    \24\ Contrary to the Government's prehearing statement, DI 
Pacella offered no testimony factually related to Respondent's 
criminal conduct, to include an allegation that he ``delivered 
apparently fictitious medical records in response to a grand jury 
subpoena.'' (ALJ Ex. 4, at 2.) In fact, DI Pacella's testimony made 
clear that his investigation was limited solely to a review of court 
records offered at hearing. (Tr. 32-33.) DI Pacella testified that 
he did not review or request any of Respondent's state or federal 
prescribing practice records . (Tr. 35-36.) Nor did he interview 
Respondent about the details of his criminal conviction. (Tr. 38.) 
DI Pacella also testified that he did not participate in or consult 
with the prosecutor at any time during the criminal case, apparently 
having no role or independent knowledge of Respondent's criminal 
case. (Tr. 42-44.) Not surprisingly, DI Pacella credibly 
acknowledged during cross-examination that all of his testimony 
pertaining to whether a practitioner might improperly profit from 
prescribing controlled substances was pure speculation, as he had no 
knowledge of any such conduct by Respondent. (Tr. 37, 41-42.)
---------------------------------------------------------------------------

    Respondent's evidence included two Consent Orders from the Illinois 
Department of Financial and Professional Regulation, the most recent 
bearing an effective date of July 2, 2010, placing Respondent on 
indefinite probation for a minimum period of two years, effective April 
3, 2010, with various conditions of probation. (Resp't Ex. C.) 
Additionally, Respondent's evidence included a completion certificate 
documenting his participation in an ``educational activity titled 
Intensive Course in Medical Ethics, Boundaries & Professionalism . . . 
on 9/2/2010-9/3/2010 . . . .'' (Resp't Ex. D.)
    Respondent also credibly testified at length during hearing, 
explaining his educational and professional background, along with the 
circumstances surrounding the allegations in the OSC. Respondent's 
manner throughout his testimony was serious and deliberate. Respondent 
testified without reference to notes or other written material, unless 
specifically directed by counsel, and he was accurately able to recall 
events with a reasonable level of certainty. Respondent did not display 
hostility during testimony or other visible mannerisms that adversely 
impacted his credibility, and unhesitatingly acknowledged and admitted 
past instances of misconduct. I find Respondent's testimony to be fully 
credible in that it was internally consistent and consistent with other 
objective evidence of record.
    Standing alone, Respondent's criminal conviction for a federal 
health care fraud offense, and mandatory exclusion from participation 
in the Medicare program pursuant to 42 U.S.C. 1320a-7(a) could 
certainly support a revocation sanction. But that is not the case here. 
Respondent' s testimony at hearing, which I find to be sincere and 
credible, demonstrates that revocation is not an appropriate sanction 
given Respondent's full acceptance of responsibility for past 
misconduct, demonstration of remorse, and tangible efforts at 
rehabilitation following conviction. The un-rebutted evidence of record 
reflects that Respondent timely admitted full responsibility for his 
criminal conduct,\25\ pursuant to a plea agreement, for which he was 
sentenced to two years' probation, with the first four months ``to be 
served in [a] work release program with the Salvation Army.'' (Gov't 
Ex. 2, at 2.) Respondent testified that he pled guilty because he knew 
he was wrong and expressed remorse for his misconduct. (Tr. 56-57.) 
Respondent has also met all of the terms and conditions of his 
sentence, to include payment of a $10,000 fine, a $100 assessment, and 
restitution of $28,349. (Tr. 57-58; Gov't Ex. 3.) Additionally, 
Respondent has completed his four-month period of work release with the 
Salvation Army, along with 250 hours of community service. (Tr. 58-59.) 
Of significance, Respondent's fully successful completion of the terms 
of his federal probation resulted in early termination

[[Page 35027]]

on January 29, 2011, eight months earlier than scheduled. (Tr. 41, 59.)
---------------------------------------------------------------------------

    \25\ ``Defendant has clearly demonstrated a recognition and 
affirmative acceptance of personal responsibility for his criminal 
conduct.'' (Gov't Ex. 3 at 7.)
---------------------------------------------------------------------------

    In addition to the foregoing, there is no other credible evidence 
of record that Respondent's registration would be inconsistent with the 
public interest, to include issues with his prescribing practices, 
making unnecessary any recommendation that the registration be subject 
to conditions. The Government's argument that ``Respondent cannot be 
trusted to tell the truth'' because of his fraud conviction, (Gov't 
Br., at 6), is inconsistent with the evidence of record. Such an 
argument might be persuasive in a case where a respondent does not 
testify at all or testifies untruthfully, but Respondent did credibly 
testify at length. There is also no evidence that Respondent impeded 
the criminal investigation or was untruthful at any stage of the 
sentencing process, which was required by Respondent's plea agreement 
with the United States. (Gov't Ex. 3 at 10-11.) This is not to minimize 
the seriousness of Respondent's criminal misconduct, but the 
Government's argument that Respondent cannot be trusted to tell the 
truth based solely on his fraud conviction ignores the significant 
recent positive evidence to the contrary. I find by substantial 
evidence of record that Respondent's post-offense conduct and testimony 
at hearing demonstrate that he has been truthful, and can continue to 
be entrusted to tell the truth.
    Respondent has also fulfilled the requirements of discipline 
related to his Illinois medical license, to include serving a four-
month suspension, payment of a $1,000 fine, and completion of a 
continuing medical education requirement. (Tr. 60-61; Resp't Ex. D.) 
Respondent is also in compliance with the terms of his medical license 
probation. (Tr. 61.) In light of the foregoing, and consistent with DEA 
precedent, I find that revocation of Respondent's registration is not 
an appropriate sanction in this case.

Conclusion And Recommendation

    I recommend continuation of Respondent's DEA COR and approval of 
any pending applications for renewal or modification on the grounds 
that Respondent's continued registration would be fully consistent with 
the public interest as that term is used in 21 U.S.C. 823(f).
Dated: October 13, 2011.

 Timothy D. Wing
 Administrative Law Judge
[FR Doc. 2012-14319 Filed 6-11-12; 8:45 am]
BILLING CODE 4410-09-P