[Federal Register Volume 78, Number 91 (Friday, May 10, 2013)]
[Notices]
[Pages 27431-27441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-11185]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 12-1]
Jose G. Zavaleta, M.D.; Decision and Order
On May 10, 2012, Administrative Law Judge Gail A. Randall issued
the attached Recommended Decision.\1\ Neither party filed exceptions to
the Recommended Decision.
---------------------------------------------------------------------------
\1\ All citations to the Recommended Decision are to the ALJ's
slip opinion.
---------------------------------------------------------------------------
Having reviewed the record in its entirety, I have decided to adopt
the ALJ's recommended rulings, findings of fact, conclusions of law,
and recommended sanction, except for her discussion that the findings
of a prior agency order denying a previous application filed by
Respondent, see Jose Gonzalo Zavaleta, 76 FR 49506 (2011), were not
entitled to res judicata effect because they were issued in a
proceeding in which Respondent waived his right to a hearing. ALJ at
12-13 (citing Robert M. Golden, 65 FR 5663 (2000)). While the ALJ was
bound by the existing Agency precedent on the issue, I conclude that a
re-examination of the issue is warranted and overrule Golden. However,
because this has no effect on the outcome, I will adopt the ALJ's
recommended sanction and will order that Respondent's application for a
DEA Certificate of Registration as a practitioner be denied.
The ALJ's Ruling on Whether the Prior Agency Order Denying Respondent's
Application Is Entitled to Res Judicata Effect
On February 23, 2009, the Deputy Assistant Administrator, DEA
Office of Diversion Control, issued an Order to Show Cause to
Respondent which proposed the denial of the application for
registration submitted by him on July 28, 2008. See Jose Gonzalo
Zavaleta, 76 FR at 49506. The Show Cause Order was based on allegations
that Respondent had issued multiple controlled-substance prescriptions
to undercover officers (UCs) and that he lacked a legitimate medical
purpose and violated federal law in doing so because he either
performed a cursory medical examination or failed to perform any
medical examination. Id. Respondent failed to request a hearing on the
allegations. Id.
On July 27, 2011, this Agency issued a Decision and Order denying
the application which Respondent submitted on July 28, 2008. Id. at
49508. The Agency's denial of Respondent's application was based on the
evidence submitted by the Government showing that two officers from the
Louisiana State Police had made undercover visits to Respondent on
various occasions, during which they obtained from him prescriptions
for controlled substances including hydrocodone, alprazolam, and
Phenergan with codeine. Id. With respect to UC1, who visited him on
January 23, 2008, the evidence showed that he asked Respondent for
Lortab and initially denied that he was in pain; nonetheless,
Respondent issued him a prescription for Lortab after UC1 stated
(falsely) that he had a sexually transmitted disease, and that
Respondent did so without performing a physical examination. Id. at
49506.
Likewise, with respect to UC2, the Agency found that while she
initially denied being in pain, Respondent prescribed hydrocodone to
her. Id. Moreover, on a subsequent visit, Respondent prescribed
Phenergan, a narcotic cough syrup, even though UC2 had no symptoms of
cough or congestion, as well as more hydrocodone. Id. Finally, at UC2's
third visit, Respondent prescribed hydrocodone as well as Xanax to her.
Id. At no time did Respondent obtain UC2's medical records or perform a
physical examination on her. Id. Rather, Respondent coached UC2 as to
what to say to justify the issuance of the prescriptions. Id.
Based on these findings, the Agency concluded that Respondent had
failed to establish a physician-patient relationship with the UCs and
therefore lacked a legitimate medical purpose and acted outside of the
usual course of professional practice when he prescribed controlled
substances to them. Id. at 49508 (citing 21 U.S.C. 1306.04(a); 21
U.S.C. 841(a)(1); Louisiana v. Moody, 393 So.2d 1212, 1215 (La. 1981)).
During the course of the instant proceeding, the ALJ directed the
parties to address ``whether the doctrine of res judicata applies to
the Final Order'' and ``thus bar[s] Respondent from `relitigat[ing] the
factual findings and conclusions of law of the prior proceeding.' ''
ALJ at 12. (quoting Robert
[[Page 27432]]
L. Dougherty, 76 FR 16823, 16830 (2011)). Both parties filed briefs,
with the Government seeking partial summary disposition on this basis.
The ALJ denied the Government's motion, holding that while ``the
factual findings in DEA final orders are entitled to res judicata[,] .
. . the Agency has also expressly limited the application of res
judicata, refusing to apply the principle when the final order was
issued without an evidentiary hearing.'' ALJ at 12-13 (citing Golden,
65 FR at 5664). Noting that the July 27, 2011 Final Order denying
Respondent's first application was based ``solely on . . . material in
the [Agency's] investigative file and not [issued] following an
evidentiary hearing,'' the ALJ held that ``the factual findings and
legal conclusion contained in the Final Order were not entitled to res
judicata effect in this matter.'' Id. at 13.
In holding that the factual findings and legal conclusions of the
July 2011 Order were not entitled to preclusive effect, the ALJ
properly applied Golden. Indeed, the ALJ was bound by Golden. However,
given Golden's cursory discussion of the issue, I conclude that a re-
examination of its holding is warranted. While there is support for the
rule established in Golden, it is clear that its rule is not
constitutionally required. Moreover, there is a substantial body of
authority which supports the view that as long as the Agency previously
provided a party with a full and fair opportunity to litigate the
allegations which supported the Agency's proposed action (whether the
denial of an application or revocation of a registration), a party's
failure to avail itself of that opportunity does not prohibit the
Agency from giving preclusive effect to the factual findings and
conclusions of law rendered in the prior proceeding.
As the Supreme Court has held, `` `[w]hen an administrative agency
is acting in a judicial capacity and resolves disputed issues of fact
properly before it which the parties have had an adequate opportunity
to litigate, the courts have not hesitated to apply res judicata to
enforce repose.' '' United States v. Utah Constr. & Mining Co., 384
U.S. 394, 421-22 (1966) (as quoted in University of Tennessee v.
Elliot, 478 U.S. 788, 797-98 (1986)). In Elliot, the Court further
explained that ``giving preclusive effect to administrative factfinding
serves the value underlying general principles of collateral
estoppel,'' namely ``avoiding the cost and vexation of repetitive
litigation and the public's interest in conserving judicial
resources.'' Id. at 798 (citations omitted). Thus,
[w]here an administrative forum has the essential procedural
characteristics of a court, its determinations should be accorded
the same finality that is accorded the judgment of a court. The
importance of bringing a legal controversy to conclusion is
generally no less when the tribunal is an administrative tribunal
than when it is a court.
Id. at n.6 (quoting Restatement (Second) of Judgments Sec. 83, p. 269
(1982) [hereinafter, Restatement]).
The Restatement sets forth five requirements which an adjudicative
determination issued by an administrative tribunal must satisfy for it
to be entitled to res judicata effect. These are that the proceeding
provide:
(a) Adequate notice to persons who are to be bound by the
adjudication . . . ;
(b) The right on behalf of a party to present evidence and legal
argument in support of the party's contentions and fair opportunity
to rebut evidence and argument by opposing parties;
(c) A formulation of issues of law and fact in terms of the
application of the rules with respect to specified parties
concerning a specific transaction, situation, or status, or a
specific series thereof;
(d) A rule of finality, specifying a point in the proceeding
when presentations are terminated and a final decision is rendered;
and
(e) Such other procedural elements as may be necessary to
constitute the proceeding a sufficient means of conclusively
determining the matter in question, having regard for the magnitude
and complexity of the matter in question, the urgency with which the
matter must be resolved, and the opportunity of the parties to
obtain evidence and formulate legal contentions.
Restatement, Sec. 83.
DEA's proceedings meet each of these requirements. First, under 21
U.S.C. 824(c), the Agency is required to ``serve upon the applicant or
registrant an order to show cause why registration should not be
denied, revoked, or suspended,'' which ``shall contain a statement of
the basis therefor and shall call upon the applicant or registrant to
appear before the Attorney General at a time and place stated in the
order.'' See also 21 CFR 1301.37(c) (``The order to show cause shall
also contain a statement of the legal basis for such hearing and for
the denial, revocation, or suspension of registration and a summary of
the matters of fact and law asserted.'').
Moreover, ``[p]roceedings to deny, revoke, or suspend shall be
conducted pursuant to this section in accordance with subchapter II of
chapter 5 of Title 5.'' 21 U.S.C. 824(c) (emphasis added). The latter
are the provisions of the Administrative Procedure Act governing the
conduct of adjudicatory proceedings, and which provide, inter alia,
that the hearing be conducted by an administrative law judge, whose
powers include the issuance of subpenas, and that ``[a] party is
entitled to present his case or defense by oral or documentary
evidence, to submit rebuttal evidence, and to conduct such cross-
examination as may be required for a full and true disclosure of the
facts.'' 5 U.S.C. 556(c) & (d). In addition, DEA regulations set forth
additional procedural protections to ensure the fairness of the hearing
and specify the point at which the proceeding becomes final. See 21 CFR
1316. Thus, proceedings conducted under sections 303 and 304 of the
Controlled Substance Act (21 U.S.C. 823 & 824) clearly meet each of
these requirements.
Respondent does not dispute that he was served with an Order to
Show Cause proposing the denial of his first application and that he
failed to respond to the Order and thus waived his right to a hearing.
Resp. Memorandum, at 3. Rather, Respondent asserts that the previous
Final Order denying his application should not be given preclusive
effect because he falls within one of the res judicata doctrine's
recognized exceptions. Id.
More specifically, Respondent argues that ``[t]here is a clear and
convincing need for a new determination of the issue'' for two reasons.
Id. at 2 (quoting Restatement Sec. 28). First, he invokes the
exception which provides for relitigation ``because of the potential
adverse impact of the determination on the public interest or the
interest of persons not themselves parties in the initial action.'' Id.
(quoting Restatement Sec. 28). Second, he invokes the exception which
provides for relitigation where ``the party sought to be precluded, as
a result of the conduct of his adversary or other special
circumstances, did not have an adequate opportunity or incentive to
obtain a full and fair adjudication in the initial action.'' Id. at 3
(quoting Restatement Sec. 28).
With respect to the first exception, Respondent argues that ``[h]e
has been an asset in every community where he has practiced medicine''
and that his ``patients and the public interest, especially in the
community where he practices medicine, have been adversely affected
since he lost his ability to prescribe controlled substances.'' Id. at
5. Respondent thus contends that ``[i]f the doctrine of res judicata is
applied in these proceedings and [his application] is denied, then the
public interest will be affected in that [his] experience as a
physician cannot be properly utilized because many of the employment
opportunities available to him require a . . . registration.'' Id.
[[Page 27433]]
DEA has held, however, that evidence as to the impact on the
community of a practitioner's lack (or loss) of a registration is not
relevant under any of the factors of the public interest standard of 21
U.S.C. 823(f). See Gregory D. Owens, 74 FR 36751, 36756-57 & n.22
(2009).\2\ See also Kwan Bo Jin, 77 FR 35021, 35021 (2012); 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). Because
such evidence is not relevant in assessing whether Respondent's
registration would be ``consistent with the public interest,'' 21
U.S.C. 823(f), this exception cannot support allowing Respondent to
relitigate the issues decided by the July 2011 Order.
---------------------------------------------------------------------------
\2\ In Owens, I rejected the ALJ's reliance, in recommending a
sanction, on evidence that the registrant ``ha[d] 561 patients from
underserved counties, and [that] many of these patients have limited
incomes.'' 74 FR at 36756. In so holding, I noted that section
823(f)'s public interest standard ``is not a freewheeling inquiry
but is guided by the five specific factors which Congress directed
the Attorney General to consider'' and that ``consideration of the
socioeconomic status of a practitioner's patient population is not
mandated by'' the relevant provisions of the Act, ``which focus
primarily on the acts committed by a practitioner.'' Id. at 36757.
In Owens, I further held that such evidence ``has no bearing on
whether [a registrant] has accepted responsibility and undertaken
adequate corrective measures,'' which are two of the showings which
a registrant must make in order to rebut the Government's prima
facie showing that a registrant has committed acts which render his
registration inconsistent with the public interest. Id. In addition,
I further noted the inherent unworkability of the ALJ's proposed
rule, and that it ``would inject a new level of complexity into
already complex proceedings and take the Agency far afield of the
purpose of the CSA's registration provisions, which is to prevent
diversion.'' Id. at n.22.
---------------------------------------------------------------------------
As for the second exception, Respondent asserts that ``he filed
[his first Application] prematurely and did not follow the advice of
his [former] counsel.'' Resp. Memorandum, at 4. He further argues that
while he ``wanted to respond to the Order to Show Cause,'' which was
issued in response to his first application, ``this time he followed
the advice of his counsel which . . . advised him not to respond and
wait until he completed his pretrial intervention program and [the]
requirements placed on him by the Louisiana State Board of Medical
Examiners.'' Id. Respondent thus contends that ``this is a special
circumstance which did not give him an adequate opportunity or
incentive to obtain a full and fair adjudication in the initial
action,'' and that ``[i]f he had been informed by counsel of the
consequences of not responding, [he] would have responded regardless of
the outcome in order to put his evidence into the record.'' Id.
In the civil context, however, courts generally do not overturn
judgments simply because a party complied with legal advice that was
erroneous or ultimately proved to be disadvantageous. Cf. Nelson v. The
Boeing Co., 446 F.3d 1118, 1120 (10th Cir. 2006) (declining to
recognize right to effective assistance of counsel in civil suit
outside of immigration context). And in any event, the Show Cause Order
issued in the first proceeding fully explained that the consequence of
Respondent's failure to request a hearing would include that he would
be deemed to have waived his right to a hearing and that a final order
would be issued ``based upon the investigative file and record of this
proceeding as it may then appear.'' Order to Show Cause (Feb. 23, 2009)
(ALJ Ex. 1, at 5).
Moreover, as the comment to this exception states, while ``the
court in the second proceeding may conclude that issue preclusion
should not apply because the party sought to be bound did not have an
adequate opportunity or incentive to obtain a full and fair
adjudication in the first proceeding[,] [s]uch a refusal to give the
first judgment preclusive effect should not occur without a compelling
showing of unfairness, nor should it be based simply on a conclusion
that the first determination was patently erroneous.'' Restatement
Sec. 28, cmt. j.\3\ Respondent's contention that he did not challenge
the first Show Cause Order because he relied on the disadvantageous
advice of his prior attorney does not make for a ``compelling showing
of unfairness.'' Id.
---------------------------------------------------------------------------
\3\ The circumstance described by Respondent does not remotely
approach any of the circumstances cited by the Restatement as a
ground for invoking this exception, which suggest that it is
extremely narrow in its scope. Specifically, the comment gives as
examples: where ``one party may conceal from the other information
that would materially affect the outcome of the case,'' especially
where ``there is a fiduciary relationship between the parties'';
where ``one of the parties may have been laboring under a mental or
physical disability that impeded effective litigation and that has
since been removed''; and where ``the amount in controversy in the
first action may have been so small in relation to the amount in
controversy in the second that preclusion would be plainly unfair.''
Restatement Sec. 28, cmt. j.
---------------------------------------------------------------------------
The ALJ further rejected as ``illogical'' and contrary to the
Agency's experience under Golden, the Government's argument that
denying res judicata effect to the July 2011 final order ```would allow
registrants to repeatedly litigate the same issues and thus render key
portions of 21 CFR 1301.43 meaningless.''' Memorandum and Order, at 9-
10 (quoting Gov. Mot. at 3-4). She further reasoned that
``[a]pplicants, like [Respondent,] gain no benefit or tactical
advantage by failing to respond to an order to show cause, for during
[the] application period they are without the authority to handle
controlled substances.'' Id. at 10.
Yet, it is within the Agency's experience that registrants,
especially those who are the subject of a criminal investigation or
pending criminal charges (as well as state administrative proceedings),
choose not to contest a Show Cause proceeding. For any number of
reasons, a criminal investigation may ultimately result in the
prosecutor declining to file charges, and even where charges are filed,
a prosecution may result in an acquittal. Moreover, a final disposition
may not occur for several years. So, too, it may take several years for
a state administrative proceeding to come to a conclusion. During that
period, material witnesses may become unavailable, and even where they
remain available, their recollections may become faulty; other evidence
may be discarded. Yet nothing in the CSA or DEA's regulations prevents
a person whose registration has been revoked from reapplying, and this
can occur years after the misconduct which was the basis of the first
proceeding. See Robert L. Dougherty, 76 FR 16823 (2011).
In Dougherty, DEA revoked a physician's registration in 1995. Id.
at 16824-25. More than a decade later, the physician applied for a new
registration. Id. at 16823. While the physician attempted to relitigate
many of the factual findings made in the Agency's 1995 decision and
final order, as well as the factual findings made in a 1997 state board
proceeding, this Agency held that these findings were res judicata. See
id. at 16830-16833.
It is true that in Dougherty, the findings, which were given
preclusive effect, were made in an Order which was issued following a
hearing. Yet, had the physician waived his right to a hearing when the
Agency initially took action, under Golden, the Government would have
been required to prove its case--nearly twenty years after the
underlying misconduct--through witness testimony and other evidence.
This is a ludicrous result.
Thus, while it may be that a former registrant gains no benefit
from failing to respond to an Order to Show Cause because he will
remain unregistered--a proposition which is not free of dispute--Golden
nonetheless creates the wrong incentive and wastes scarce Agency
resources. Where the Agency has proposed the denial of an application,
the applicant should be encouraged to challenge the Agency's
[[Page 27434]]
contention when the evidence is freshest. Indeed, litigation when the
evidence is freshest enhances the accuracy of the public interest
determination and is one of the underlying reasons for the doctrine of
issue preclusion.
Moreover, in response to the increase in the diversion of
prescription controlled substances, the number of Show Cause Orders
issued by the Agency has doubled in recent years. While some of these
matters are resolved by the registrants agreeing to surrender their
registration, many of them are not and require the issuance of a
decision and order, even where the registrant waived his/her right to a
hearing. Allowing an applicant to relitigate issues which he/she had a
full and fair opportunity to litigate in a prior proceeding but chose
not to, mis-allocates the scarce resources of both the Office of
Administrative Law Judges and the Office of the Administrator.\4\ Cf.
Arizona v. California, 530 U.S. 392, 412 (2000) (doctrine of res
judicata ```is not based solely on the defendant's interest in avoiding
the burdens of twice defending a suit, but is also based on the
avoidance of unnecessary judicial waste''' (quoting United States v.
Sioux Nation, 448 U.S. 371, 432 (1980)); Parklane Hosiery Co., Inc., v.
Shore, 439 U.S. 322, 326 (1979) (``Collateral estoppel, like the
related doctrine of res judicata, has the dual purpose of protecting
litigants from the burden of relitigating an identical issue with the
same party . . . and of promoting judicial economy by preventing
needless litigation.'').
---------------------------------------------------------------------------
\4\ Obviously, if an applicant was not properly served with the
Show Cause Order in the prior proceeding, he/she did not have a full
and fair opportunity to litigate the issues. Respondent, however,
acknowledges that he was served with the first Show Cause Order.
---------------------------------------------------------------------------
To be sure, the Restatement of Judgments provides that an issue is
not entitled to preclusive effect unless it is actually litigated in
the prior proceeding, and that an issue is not actually litigated where
a judgment is entered by default or where an issue is ``raised by a
material allegation of a party's pleading but is admitted . . . by
virtue of a failure to deny [it] in a responsive pleading.''
Restatement Sec. 27, cmt. e. Be that as it may, an increasing number
of jurisdictions reject this view and ``allow findings made in default
proceedings to collaterally estop, provided that the defaulted party
could have appeared and defended if he had wanted to.'' In re Catt, 368
F.3d 789, 791 (7th Cir. 2004) (citing Indiana cases). See also Evans v.
Ottimo, 469 F.3d 278, 282 (2d Cir. 2006) (noting that under New York
law, ```when a party defaults by failure to answer . . . the defaulting
litigant may not further contest the liability issues''') (citation
omitted); In re Cantrell, 329 F.3d 1119, 1123-24 (9th Cir. 2003);
Gottlieb v. Kest, 141 Cal. App. 4th 110, 149 (Cal. Ct. App. 2006) (``A
default judgment conclusively establishes, between the parties so far
as subsequent proceedings on a different cause of action are concerned,
the truth of all material allegations contained in the complaint in the
first action, and every fact necessary to uphold the default
judgment.'') (internal quotations and other citations omitted); In re
Dawson, 338 B.R. 756, 761 (Bankr. N.D. Ohio 2006) (applying collateral
estoppel under Ohio law to preclude relitigation of findings made in
trial on the merits where party failed to appear at earlier trial);
Matter of Latimore, 252 A.D.2d 217, 219-20 (N.Y. App. Div. 1999)
(collaterally estopping attorney in disciplinary proceeding from
relitigating findings made in earlier proceeding in which she
defaulted); TransDulles Center, Inc., v. Sharma, 472 SE.2d 274, 276
(Va. 1996) (applying collateral estoppel to issues essential to default
judgment where ``[t]estimonial and documentary evidence was presented
ex parte in the [trial] court hearing''); Jackson v. R.G. Whipple,
Inc., 627 A.2d 374, 380 (Conn. 1993) (``[H]ad there been a full and
fair opportunity to litigate [the] issues and such issues were
necessary to a default judgment, that judgment should put to rest
subsequent litigation of all issues necessary for the rendering of the
default judgment.''), abrogated on other grounds by Macomber v.
Travelers Property & Cas. Corp., 804 A.2d 180, 195-96 (2002); Heggy v.
Grutzner, 456 NW.2d 845, 849 (Wis. 1990) (precluding relitigation of
factual findings essential to default judgment entered in earlier case
where party ``intentionally evaded service of process''); Masciarelli
v. Maco Supply Corp., 224 So.2d 329, 330 (Fla. 1969) (applying
collateral estoppel to preclude relitigation of issue, where issue was
decided by default judgment in prior litigation, personal service was
accomplished, and party failed to answer complaint).
Moreover, giving preclusive effect to findings made in a default
proceeding does not violate the Due Process Clause, which requires only
``that the party sought to be precluded have had an opportunity for a
hearing.'' In re Catt, 368 F.3d at 792. In any event, notwithstanding
that Respondent did not request a hearing, the findings of the July
2011 order were not rendered in a classic default proceeding as the
Government was required to submit substantial evidence to support its
allegations and extensive findings were made based on that evidence.
Accordingly, I conclude that to the extent that Golden or any other
Agency decision holds that a respondent is entitled to relitigate the
factual findings and legal conclusions of an Agency final order because
he/she waived his/her right to a hearing in the prior proceeding, it is
overruled. Whether the prior agency decision and order was based solely
on the evidence submitted by the Government where an applicant waived
hearing, or on the basis of a record of a hearing conducted pursuant to
21 CFR 1316.41 et seq., the Agency's factual findings and legal
conclusions are entitled to preclusive effect in a subsequent
proceeding.
This is not to say that the applicant is foreclosed from putting on
any evidence in the subsequent proceeding. That evidence, however, is
limited to that which is relevant to, and probative of, ```the critical
issue [of] whether the circumstances, which existed at the time of the
prior proceeding, have changed sufficiently to support [the] conclusion
that' granting the application would be consistent with the public
interest.'' Dougherty, 76 FR at 16830 (quoting Stanley Alan Azen, 61 FR
57893, 57893-94 (1996)). Thus, in the second proceeding, a respondent
can put on evidence of acceptance of responsibility as well as remedial
measures he has undertaken. What he/she cannot do, however, is
relitigate the findings of misconduct made in the earlier Agency
decision and order.\5\
---------------------------------------------------------------------------
\5\ In addition to the 2011 Decision and Order, which denied
Respondent's first application, on October 8, 2012, I issued a
Decision and Order denying Respondent's second and third
applications. See Jose Gonzalo Zavaleta, 77 FR 64128, 64131 (2012).
---------------------------------------------------------------------------
In any event, here, as the ALJ found, Respondent asserted that UC1
complained of back pain when both the recording of the visit and the
officer's testimony establish otherwise. ALJ 24. Likewise, the ALJ
found that Respondent's testimony with respect to UC2 (who credibly
testified that she never told Respondent that she had any pain), lacked
``forthrightness'' and ``candor.'' Id. at 25. Notwithstanding his
evidence that he completed a course on prescribing, Respondent's
failure to testify truthfully about his prescribings to the two
undercover officers demonstrates that he does not accept responsibility
for his misconduct and that the circumstances have not ```changed
sufficiently to support [the] conclusion that' granting [his]
application would be consistent with
[[Page 27435]]
the public interest.'' Dougherty, 76 FR at 16883 (quoting Azen, 61 FR
at 57893-94).
Buttressing this conclusion, the ALJ found that on his December
2010 application, Respondent failed to disclose both the March 2008
voluntary surrender of his registration as well as the suspension of
his state controlled substance registration in September 2010. These
falsifications were clearly capable of influencing the decision of the
Agency and were thus material; the 2008 surrender occurred following an
investigation into his prescribing to the undercover officers without a
legitimate medical purpose, and the loss of his state controlled
substance registration was itself an independent and adequate ground
for denying his application. See Hooper v. Holder, 2012 WL 2020079, *2
(4th Cir. 2012).
Accordingly, I adopt the ALJ's recommended sanction and will order
that Respondent's application be denied.
Order
Pursuant to the authority vested in my by 21 U.S.C. 823(f) and 28
CFR 0.100(b), I order that the application of Jose Gonzalo Zavaleta,
M.D., for a DEA Certificate of Registration as a practitioner, be, and
it hereby is, denied. This Order is effective June 10, 2013.
Dated: May 2, 2013.
Michele M. Leonhart,
Administrator.
Frank Mann, Esq., for the Government
Jonathan D. Goins, Esq., for the Respondent
RECOMMENDED RULINGS, FINDINGS OF FACTS, CONCLUSIONS OF LAW, AND
DECISION OF THE ADMINISTRATIVE LAW JUDGE
Administrative Law Judge Gail A. Randall. This proceeding is an
adjudication governed by the Administrative Procedure Act, 5 U.S.C.
Sec. Sec. 551 et. seq., to determine whether a physician's application
for a DEA certificate of registration should be denied under the
Controlled Substances Act, 21 U.S.C. Sec. Sec. 823(f) (2006).
I. PROCEDURAL BACKGROUND
On September 6, 2011, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration issued an Order to
Show Cause to Jose G. Zavaleta, M.D., (``Respondent'' or ``Dr.
Zavaleta''), seeking to deny his application \1\ for a DEA Certificate
of Registration as a practitioner under 21 U.S.C. Sec. 823(f), because
his registration would be inconsistent with the public interest.
[Administrative Law Judge Exhibit (``ALJ Exh.'') 1]. Specifically, the
Order to Show Cause alleged that in 2008 the Respondent violated
federal law by issuing prescriptions for schedule III and IV controlled
substances without a legitimate medical purpose, without establishing a
physician-patient relationship, and by acting outside the usual course
of professional practice in prescribing controlled substances to
undercover agents.\2\
---------------------------------------------------------------------------
\1\ In July of 2008, the Respondent filed an application for a
DEA certificate of registration, control number W08092985. The DEA
issued an Order to Show Cause regarding this application on February
23, 2009. The Respondent failed to respond to that Order to Show
Cause, and on July 27, 2011, the DEA Administrator issued a Final
Order denying this application. [ALJ Exh. 1]. In April of 2010, the
Respondent filed another application, control number W10020882, and
in December of 2010, [Govt Exh. 2], the Respondent filed a third
application, control number W10078290. On March 2, 2011, the DEA
Deputy Assistant Administrator issued an Order to Show Cause
proposing to deny these two applications. The Respondent failed to
respond to this Order to Show Cause. The record contains no further
information concerning these two applications. On July 1, 2011, the
Respondent filed application W11043099, and it is this application
which is the subject of this proceeding.
\2\ The Order to Show Cause asserted that the facts supporting
this Order to Show Cause are the same facts contained in the Orders
to Show Cause issued February 23, 2009, and March 2, 2011, and the
Administrator's Final Order, all of which were attached to this
Order to Show Cause and incorporated by reference. For a full
discussion of the res judicata issue raised by these facts, see the
order attached at Appendix A.
---------------------------------------------------------------------------
On September 29, 2011, the Respondent filed a timely request for a
hearing on the allegations raised by the Order to Show Cause dated
September 6, 2011. [ALJ Exh. 2].
The hearing was held in Baton Rouge, Louisiana, on February 28,
2012. [ALJ Exh. 4]. At the hearing, both parties called witnesses to
testify and introduced documentary evidence. [Transcript (``Tr.'')
Volume I]. After the hearing, both parties submitted Proposed Findings
of Fact, Conclusions of Law, and Argument (Govt. Brief and Resp.
Brief).
II. ISSUE
The issue in this case is whether or not the record as a whole
establishes by a preponderance of the evidence that the Drug
Enforcement Administration (``DEA'' or ``Government'') should deny the
application for a DEA Certificate of Registration of Jose G. Zavaleta,
M.D., control number W11043099C, as a practitioner, pursuant to 21
U.S.C. Sec. 823(f), because to grant his application would be
inconsistent with the public interest as that term is defined in 21
U.S.C. Sec. 823(f). [ALJ Exh. 3; Tr. at 6].
III. FINDINGS OF FACT
I find by a preponderance of the evidence, the following facts:
A. The Respondent's Personal and Professional Background
The Respondent has been a physician for twenty-nine years,
practicing emergency room medicine for approximately ten of those
years. [Tr. 115, 117]. He is sixty years old. [Tr. 115]. He received
his medical education at The National University of Trujillo, Peru,
completed his education in Frankfurt Hospital in Philadelphia,
Pennsylvania, and graduated from a residency at the LSU Medical Center
in Shreveport, Louisiana. [Tr. 116]. The Respondent has active medical
licenses in Louisiana and Alabama. [Tr. 117, 153, 155-156, 231-232]. He
also has a current Louisiana Board of Pharmacy Controlled Dangerous
Substance License, which authorizes him to handle controlled
substances. [Tr. 154-155; Resp. Exh. 6]. On March 26, 2008, the
Respondent voluntarily surrendered his DEA registration. [Tr. 158-160;
Govt. Exh. 4].
In August of 2007, the Respondent opened a family practice clinic
in Alexandria, Louisiana. [Tr. 117, 119-120]. There, he also treated
chronic pain patients. [Tr. 122]. He used small signs to advertise his
clinic. [Tr. 76]. At the clinic, Respondent maintained approximately
two hundred and forty medical charts.\3\ [Resp. Exh. 11]. However, as
of the time of this hearing, the Respondent had closed this clinic.
[Tr. 170].
---------------------------------------------------------------------------
\3\ The Government challenged the reliability of this hearsay
document. I find, based upon the Respondent's testimony concerning
the procedure used by his attorney to have this exhibit prepared,
that the record has an adequate indicia of reliability to withstand
the hearsay objection. [Tr. 219-221]. Within those charts, he
prescribed hydrocodone 100 times, or approximately 14.8% of all of
his prescriptions issued between July 2007 and March 2008. He issued
Xanax 17 times, or 2.5% of his total prescriptions of 674 during
this time period. [Resp. Exh. 11]. He also prescribed Phenergan with
codeine 82 times, or approximately 12% of his total prescriptions.
[Resp. Exh. 11; see also Tr. 169-171]. However, I find these
statistics have little weight, given DEA precedent on this issue.
Specifically, the Agency has revoked ``other practitioners'
registrations for committing as few as two acts of diversion.''
Jayam Krishna-Iyer, M.D, 74 Fed. Reg. 459, 463 (DEA 2009) (citing
Alan H. Olefsky, 57 Fed. Reg. 928, 928-29 (DEA 1992)).
---------------------------------------------------------------------------
To determine if a pain patient is addicted to controlled
substances, the Respondent testified that he knows to question the
patient and examine the patient, trying to identify the source of the
pain. [Tr. 122]. The Respondent also testified that he would ask for
prior medical records, which he stated were difficult to obtain. [Id.].
The Respondent
[[Page 27436]]
also would limit any prescribing of controlled substances to twenty
tablets at a time. [Tr. 123]. But the Respondent credibly testified
that he found it difficult to identify patients who were addicted to
controlled substances, and that he did not often identify such patients
in his practice. [Tr. 124]. He testified that he would need to see a
patient multiple times to satisfactorily diagnose a drug addiction
problem. [Id.]. Patients with chronic complaints would be seen every
month. [Tr. 125].
The Respondent further testified that he was remorseful regarding
the issuance of the prescriptions to the undercover agents. [Tr. 173-
174]. He testified that although he ``failed'' when treating the
undercover agents, he learned that he had to become ``more vigilant''
when dealing with patients seeking controlled substances. [Tr. 174]. He
also testified that he made mistakes with his DEA applications and that
he ``should have give(n) [his applications] more careful review.''
[Id.]. Dr. Zavaleta acknowledged the severity of his conduct but
asserted that he ``learned [his] lesson'' and now has ``basically . . .
rehabilitated myself.'' [Tr. 174-175].
B. Treatment of Ricky Harris
On January 23, 2008, Ricky Harris \4\ visited Dr. Zavaleta's
clinic. [Govt. Exh. 12]. During Dr. Zavaleta's examination of Mr.
Harris, he took his blood pressure and temperature. [Id.]. He also
measured and weighed Mr. Harris. [Id.]. Dr. Zavaleta counseled Mr.
Harris about his weight and high blood pressure and urged him to lose
weight. [Id.].
---------------------------------------------------------------------------
\4\ ``Ricky Harris'' is the patient name and alias used by
Master Trooper Richard Horton, Louisiana State Police. For
consistency with the evidence of record, I will refer to him as Mr.
Harris. [See Tr. 11-12, 14].
---------------------------------------------------------------------------
Mr. Harris presented complaints of symptoms from what he claimed
was a sexually transmitted infection. [Tr. 14-15; Govt. Exh. 20]. Dr.
Zavaleta proceeded to question Mr. Harris about his symptoms. [Govt.
Exh. 12]. He inquired about Mr. Harris's sexual history and number of
sexual partners. [Id.]. Mr. Harris reported that he had experienced
these symptoms in the past and that he had been previously treated for
a sexually transmitted infection. [Id.]. When the Respondent sought to
physically examine his genitals, Mr. Harris refused. [Tr. 15, 27, 186].
Likewise, he refused to submit to a blood test to confirm the nature of
the infection. [Tr. 186]. He also refused to provide the Respondent
with a sample of discharge he reported experiencing. [Tr. 127]. The
Respondent agreed to write Mr. Harris a prescription for antibiotics
and left the examination room. [Tr. 16, 127-128; Govt. Exh. 12].
Mr. Harris followed Dr. Zavaleta out into the clinic hallway and
requested a prescription for Lortab, a pain medication and Schedule III
controlled substance. [Tr. 17; Govt. Exh. 20; Govt. Exh. 12]. Dr.
Zavaleta initially refused to write Mr. Harris this prescription.
[Govt. Exh. 12]. Respondent told Mr. Harris that he could only write a
prescription for Lortab if Mr. Harris reported experiencing pain. [Id.;
Tr. 17]. Mr. Harris testified at the hearing that he did not tell Dr.
Zavaleta that he was in pain. [Tr. 15-17, 25, 31-32]. Although the
Respondent testified that Mr. Harris complained of shoulder pain and
back pain, [Tr. 128-130, 179-180, 182], I find more credible Trooper
Horton's testimony as corroborated by the audiovisual recording of the
visit and his contemporaneous report. [Govt. Exh. 12; Govt. Exh. 20;
see also Govt. Exh. 10 (Harris patient file which lacks any mention of
shoulder pain); Tr. 182].
Dr. Zavaleta wrote Mr. Harris a prescription for fifteen Lortab
tablets. [Tr. 24; Govt. Exh. 10 at 3]. The Respondent wrote ``back
pain'' in Mr. Harris' medical chart. [Govt. Exh. 10 at 4-5]. But the
Respondent did not perform any examination on Mr. Harris' back other
than to listen to his breathing. [Tr. 25-26, 183]. When Mr. Harris
requested more Lortabs, the Respondent refused to increase the
prescription for a greater number of tablets. [Govt. Exh. 12]. In
addition, Mr. Harris sought refills on the prescription, but Dr.
Zavaleta refused to authorize any refills. [Tr. 27-28; Govt. Exh. 10;
Govt. Exh. 12]. Mr. Harris paid one hundred dollars in cash for that
visit. [Tr. 129].
When he testified at the hearing, the Respondent stated that he
should have insisted that Mr. Harris provide him a sample of the
discharge for testing. [Tr. 132]. He also stated that, given his
suspicions, he should have refused to provide a controlled substance
prescription to Mr. Harris without prior records or a validating test
for pain. [Id.]. Respondent further testified that this prescription
for hydrocodone issued to Mr. Harris apparently lacked a legitimate
medical purpose. [Tr. 188-190].
Although the Respondent stated Mr. Harris made him feel
uncomfortable, he provided him with the prescription. [Tr. 131]. Mr.
Harris testified that he returned to see the Respondent, but that the
Respondent refused to see or treat him. [Tr. 26]. Regarding this second
visit, Respondent testified that he instructed his secretary to inform
Mr. Harris that he would not provide him with any additional treatment
[Tr. 130-131].
C. Treatment of Christy Landry
On January 30, February 8, and February 28, 2008, Respondent
treated Christy Landry.\5\ [Tr. 37; Govt. Exh. 21]. At the first visit,
Ms. Landry told the Respondent that her boyfriend had taken her pills,
and that she needed to get a refill of her medication. [Tr. 37]. The
Respondent took no action to verify this prior prescription. [Tr. 209].
---------------------------------------------------------------------------
\5\ Christy Landry is the patient name used by Detective Heather
Owens of the Louisiana State Police. [Tr. 33; Govt. Exh. 11]. For
the record, I will use the patient name used by Detective Owens.
---------------------------------------------------------------------------
Ms. Landry told the Respondent that while she did not have any
pain, taking hydrocodone made her feel good. [Tr. 38, 67; Govt. Exh.
21].\6\ But she told him in response to his questioning that he could
describe her symptoms as ``withdrawal symptoms.'' [Tr. 38, 68].\7\ The
Respondent referred Ms. Landry to a pain clinic. [Govt. Exh. 11 at 7].
However, in follow-up visits, the pain clinic referral was not
discussed, and there is no mention in the patient chart that Ms. Landry
ever contacted a pain clinic. [Tr. 201-202; Govt. Exh. 11].
---------------------------------------------------------------------------
\6\ Although the Respondent testified that Ms. Landry complained
of left shoulder pain, insomnia, and pain in the legs, [Tr. 134,
138], I find her testimony, as corroborated by the contemporaneous
police report, more credible. [Tr. 38; Govt. Exh. 21]. The
Respondent also acknowledged that such pain complaints were not in
Ms. Landry's medical record. [Tr. 193-194; Govt. Exh. 11].
\7\ The record contains no evidence that the Respondent is
properly registered as a narcotic treatment program participant.
---------------------------------------------------------------------------
At the hearing, the Respondent demonstrated that he examined her
heart, checked her back, and examined her abdomen. [Tr. 136-137].
However, Ms. Landry credibly described this examination as the
Respondent's effort to search her for a recording device. [Tr. 39-42;
Govt. Exh. 21]. Furthermore, he examined her shin and knees, allegedly
checking for swelling. [Tr. 40, 137-138].
The Respondent wrote her a prescription for twenty Lorcet, a
hydrocodone product and Schedule III controlled substance. [Tr. 43-44,
138; Govt. Exh. 11 at 10]. Ms. Landry requested a prescription for her
sister, but the Respondent refused to issue such a prescription. [Tr.
62-63, 70; Govt. Exh. 21 at 1]. Ms. Landry paid one hundred dollars
cash for this office visit. [Tr. 45, 139]. She had informed the
receptionist that she did not have insurance. [Tr. 45].
Ms. Landry next saw the Respondent on February 8, 2008. [Tr. 46;
Govt. Exhs. 11, 21]. He asked her if she had ``generalized pain,'' and
Ms. Landry did not respond. [Tr. 47]. However, Ms.
[[Page 27437]]
Landry credibly testified that she did not indicate that she had any
kind of pain. [Tr. 52]. Rather, Ms. Landry complained of congestion and
requested a prescription for cough syrup with codeine. [Tr. 47]. In his
physical examination, the Respondent notated that her lungs were
``abnormal'' and that she had a diagnosis of ``chronic cough.'' [Govt.
Exh. 11 at 6]. Yet the Respondent could not recall, and did not
document, when the cough began in order to verify the chronic nature of
the cough. [Tr. 204-205, 226; Govt. Exh. 11]. Further, the Respondent
testified that he had not made any medical findings that would
substantiate a medical diagnosis of insomnia. [Tr. 210-211]. The
Respondent cautioned Ms. Landry on the proper way to take her
controlled substance medication. [Tr. 50-51]. She received a
prescription for Lorcet and Phenergan,\8\ both of which are controlled
substances. [Tr. 53; Govt. Exh. 11 at 11]. Ms. Landry paid one hundred
dollars in cash for the office visit. [Tr. 52, 62].
---------------------------------------------------------------------------
\8\ Phenergan is a cough syrup containing a combination of
promethazine and codeine. It is a schedule V controlled substance.
21 C.F.R. 1308.15(c) (2011).
---------------------------------------------------------------------------
Lastly, Ms. Landry visited the Respondent on February 28, 2008.
[Tr. 55]. She told him that she wanted a prescription for hydrocodone
and Soma. [Tr. 56]. The Respondent refused to issue her a prescription
for Soma, but he did issue her a prescription for Xanax,\9\ a
controlled substance, and Lorcet. [Tr. 55, 60; Govt. Exh. 11 at 12]. At
this visit, Ms. Landry did not complain of insomnia or anxiety. [Tr.
60-61]. When asked why she wanted the medication, Ms. Landry laughed
and told the Respondent to write whatever he needed to write. [Tr. 56;
Govt. Exh. 21 at 5]. As on the other two visits, the Respondent behaved
in a flirtatious manner, which Ms. Landry felt was inappropriate. [Tr.
58-59, 68; Govt. Exh. 21]. On the third visit, Ms. Landry admitted that
she did not have any pain.\10\ [Tr. 139].
---------------------------------------------------------------------------
\9\ Xanax is a schedule IV controlled substance. 21 C.F.R.
1308.14(c)(1) (2011).
\10\ Although the Respondent testified that he was ``shocked''
when she denied having any pain, I find his testimony lacked
credibility, given the tenor of the visit. [Tr. 139-140].
---------------------------------------------------------------------------
At the hearing, the Respondent admitted that he had not prescribed
controlled substances to Ms. Landry for legitimate medical reasons.
[Tr. 212]. But he also testified that he thought, at the time he wrote
the prescriptions, that he was justified in issuing these prescriptions
to her. [Tr. 213-214].
D. Interview of the Respondent
Sergeant Roland Mathews, a Louisiana State Trooper, interviewed the
Respondent with the Respondent's attorney present. [Tr. 71, 79; Govt.
Exh. 13]. The Respondent told Sgt. Mathews that he could identify drug-
seeking patients, and he stated he would not treat such a patient, but
that he would help the patient find treatment. [Tr. 81-82; 221-222].
The Respondent also stated that he would need to perform tests and get
prior medical records before prescribing such a patient controlled
substances. [Tr. 85; 222]. During Sgt. Mathews' investigation, he did
not uncover any evidence that the Respondent attempted to obtain prior
medical records for Ricky Harris or Christy Landry. [Tr. 86]. Sgt.
Mathews testified that Respondent was cooperative in the investigation.
[Tr. 90-91].
E. Respondent's Criminal Case
On March 26, 2008, the Respondent was arrested on six counts of
prescribing ``controlled substances beyond his respective prescribing
authority or for a purpose other than accepted medical treatment of a
disease, condition, or illness,'' in violation of La. Rev. Stat. Ann.
Sec. 40:971(C)(1). [Govt. Exh. 5]. The Rapides Parish District
Attorney's Office offered the Respondent the opportunity to participate
in a pretrial intervention program. [Tr. 141]. The pretrial
intervention program required that Respondent visit a parole officer
monthly for a period of twenty-four months, complete one year of
unsupervised probation, pay a seven thousand dollar fine, agree not to
seek a DEA registration for two years, notify the Medical Board of his
participation in the program, and participate in random drug testing.
[Tr. 142; Resp. Exh. 2]. After successfully completing the program in
February of 2011, the Respondent had the charges dismissed and the
arrest expunged. [Tr. 141-142, 144; Resp. Exhs. 4 and 5].
F. The Medical Board Action and State Controlled Substance License
On June 24, 2010, the Respondent entered into a Consent Order with
the Louisiana State Board of Medical Examiners (``Medical Board'')
regarding his criminal charges. [Govt. Exh. 9; Resp. Exh. 8]. The
Medical Board issued a public reprimand, and placed conditions upon his
continued practice of medicine which included: (1) that the Respondent
successfully complete the terms and conditions of the pretrial
intervention program; (2) that the Respondent take continuing medical
education regarding proper prescribing; and (3) that the Respondent pay
a one thousand dollar fine to the Medical Board. [Tr. 146; Govt. Exh. 9
at 4]. The Respondent completed these requirements. [Tr. 148].
Currently, the Respondent maintains an active Louisiana medical
license. [Tr. 111-112, 153].
Pursuant to the Consent Order with the Medical Board, on June 11-
13, 2008, the Respondent took a three-day course at the University of
South Florida entitled ``Prescribing Controlled Drugs: Critical Issues
and Common Pitfalls of Misprescribing.'' [Resp. Exh. 9]. He credibly
testified that the course taught him how to better perform an
evaluation of patients seeking controlled substances. [Tr. 150].
By agreement with the Louisiana Board of Pharmacy in September
2010, the Respondent's Louisiana controlled substance license was
suspended. [Govt. Exh. 24]. On February 14, 2011, his state controlled
substance license was reinstated, and Dr. Zavaleta's license remains
current and active, with an expiration date of August 1, 2012. [Govt.
Exh. 24; Resp. Exh. 6].
G. Respondent's DEA Application
On July 1, 2011, the Respondent electronically submitted an
application for a DEA certificate of registration. [Tr. 95-96; Govt.
Exh. 1]. The application was certified, using the Respondent's name.
[Tr. 95, 97; Govt. Exh. 1 at 4]. As part of the application for a
certificate or registration, the Agency asks four ``liability''
questions. [Tr. 96-97; Govt. Exh. 1 at 3]. DEA Diversion Investigator
Cheryl Golden testified that the purpose of these liability questions
is to determine if there has been any previous disciplinary action
taken against the applicant prior to deciding whether to approve the
pending application. [Tr. 98].
On this application, the Respondent answered ``Yes'' to the second
question: ``Has the applicant ever surrendered for cause or had a
federal controlled substance registration revoked, suspended,
restricted or denied?'' [Tr. 97; Govt. Exh. 1 at 3]. The third question
asks if the applicant had ``ever surrendered for cause or had a state
professional license for a controlled substance registration revoked,
suspended, denied, restricted or placed on probation,'' and the
Respondent answered ``No,'' to this question. [Tr. 97; Govt. Exh. 1 at
3]. However, on September 2, 2010, the Respondent's Louisiana
controlled substances registration had been suspended. [Govt. Exh. 24;
see also Govt. Exh. 8].
[[Page 27438]]
Subsequently, on February 14, 2011, the Respondent's Louisiana
controlled substances registration was reinstated. [Tr. 100, 155; Govt.
Exh. 24].
On December 8, 2010, the Respondent had also submitted an
electronic application for a DEA registration.\11\ [Govt. Exh. 2]. On
this application, the Respondent answered ``No,'' to all four liability
questions, despite having surrendered his DEA registration number
BZ5998250, in March of 2008, and the suspension of his Louisiana
controlled substance license in September of 2010. [Tr. 104-105; Govt.
Exh. 2 at 1; Govt. Exh. 4, 8, and 24]. The Respondent did not
participate in a hearing regarding this application. [Tr. 158]. He
testified that his incorrect answers to the liability questions on
these applications were a mistake. [Tr. 164-167, 215-218].
---------------------------------------------------------------------------
\11\ Although the record copy of Government Exhibit 2 is not a
certified copy, DI Golden credibly testified that she confirmed that
a certified copy of the registration was on file at DEA. [Tr. 104].
---------------------------------------------------------------------------
The Respondent credibly testified that he needs a DEA certificate
of registration to obtain hospital privileges and to fully practice
medicine. [Tr. 172-173, 175-176]. At the time of the hearing, the
Respondent was employed at Outpatient Medical Clinic in Lisbon,
Louisiana, and at Rapides Primary Healthcare. [Tr. 176-177].
IV. Statement of Law and Discussion
A. Res Judicata
On November 22, 2011, I issued an order, directing the parties to
file briefs, with supporting legal authorities, on whether the doctrine
of res judicata applies to the Final Order entered against Respondent
on July 27, 2011, see Jose Gonzalo Zavaleta, M.D., 76 Fed. Reg. 49,506
(DEA 2011), thus barring Respondent from ``relitigati[ng] the factual
findings and conclusions of law of the prior proceeding.'' Robert L.
Dougherty, M.D., 76 Fed. Reg. 16,823, 16,830 (DEA 2011). On December
16, 2011, the Government and Respondent filed briefs on this issue. See
Government's Motion for Partial Summary Disposition and Respondent's
Memorandum.
Agency precedent has repeatedly held that factual findings in DEA
final orders are entitled to res judicata. See e.g., Robert L.
Dougherty, M.D., 76 Fed. Reg. 16,823, 16,830 (DEA 2011); Stanley Alan
Azen, M.D., 61 Fed. Reg. 57,893, 57,893-94 (1996). But the Agency has
also expressly limited the application of res judicata, refusing to
apply the principle when the final order was issued without an
evidentiary hearing. Robert M. Golden, M.D., 65 Fed. Reg. 5,663, 5,664
(DEA 2000). In this case, the July 27, 2011 Final Order was issued
against Dr. Zavaleta solely on the basis of material in the DEA's
investigative file and not following an evidentiary hearing. Therefore,
I found, consistent with the Agency's holding in Golden, that the
factual findings and legal conclusions contained in the Final Order
were not entitled to res judicata effect in this matter.\12\
---------------------------------------------------------------------------
\12\ I have attached the relevant order and the parties' briefs
as appendix A & B for the Deputy Administrator's consideration.
---------------------------------------------------------------------------
B. Position of the Parties
1. Government's Position
The Government asserts that the Respondent's application should be
denied based upon the Government's preponderating evidence that the
Respondent's registration would be contrary to the public interest.
[Govt. Brief at 22-23]. Specifically, the Government claims that the
Respondent prescribed controlled substances to undercover officers
without a legitimate medical purpose and outside the course of
professional practice. [Govt. Brief at 15]. Further, the Government
argues that by issuing prescriptions to the two undercover officers the
Respondent violated state law because he failed to adequately evaluate
them, document a proper diagnosis, formulate a legitimate treatment
plan, conduct a drug screen for these patients, and maintain adequate
medical records. [Govt. Brief at 16-17].
Next, the Government asserts that the Respondent submitted two
applications for registration to the DEA that contained materially
false information, specifically his responses to the four liability
questions. [Govt. Brief at 18-19]. The Government argues that this
conduct provides an independent basis to deny Respondent's application.
[Id.].
Lastly, the Government argues that the Respondent has not
articulated any persuasive mitigating factors. [Govt. Brief at 21-22].
The Government claims that the Respondent has never ``acknowledge[d]
that he violated Federal or state law or that he assumed complete fault
for his actions.'' [Govt. Brief at 21]. Rather, the Government argues
that the Respondent testified at the hearing that, given the
information he had at the time, he thought he had acted reasonably.
[Id.]. Given this lack of responsibility and remorse, and the
Respondent's failure to testify truthfully about the undercover visits,
the Government asserts that Respondent's conduct ``belies any notion
that he has accepted responsibility for his actions.'' [Govt. Brief at
22].
2. Respondent's Position
The Respondent argues that his registration is in the public
interest and consequently requests that his application be granted. The
Respondent notes that he has been punished by the Louisiana Medical
Board and the Louisiana Board of Pharmacy for his misconduct in the
prescribing of controlled substances to the undercover agents. Although
he acknowledges that it is DEA's responsibility to determine the public
interest in this matter, he asserts that the DEA should consider these
actions when determining the appropriate remedy in this matter. [Resp.
Brief at 7].
Next, the Respondent asserts that the Government did not provide an
expert witness to testify concerning the legitimacy of the
prescriptions written to the undercover officers. [Resp. Brief at 8-9].
He argues that the Government failed to establish that Respondent's
physical examination of the undercover officers or Dr. Zavaleta's
failure to request medical records for those patients was outside the
usual course of professional practice. [Resp. Brief at 10]. The
Respondent further argues that the Government has not alleged or proven
that the Respondent's conduct was outright drug dealing. [Resp. Brief
at 11]. On this point, the Respondent highlights that, although
Detective Owens requested a prescription for her sister, the Respondent
refused her request. [Id.]. Furthermore, the Respondent notes that Dr.
Zavaleta has not been convicted of any offenses under federal or state
law relating to his handling of controlled substances. [Id.].
While Respondent acknowledged that he should not have prescribed
controlled substances to the undercover agents, he asserts that he
offered substantial mitigating evidence ``to show he would not engage
in the same conduct'' in the future. [Resp. Brief at 12]. To this
point, the Respondent notes that Dr. Zavaleta completed a three-day
continuing medical education course in prescribing controlled
substances. [Id.]. The Respondent also points out that Dr. Zavaleta
cooperated with all agencies involved in this matter, and that he
admitted that he made a mistake in prescribing to the undercover
officers. [Id.]. The Respondent claims he demonstrated remorse for his
conduct. [Id.]. He admitted he had failed and that he had learned his
lesson when it came to prescribing controlled substances. [Resp. Brief
at 13].
As for material falsification, the Respondent acknowledges that he
had failed to answer the liability questions correctly on his two
applications for
[[Page 27439]]
registration. But, the Respondent argues that his error on these
applications was unintentional, because he had ``no reason to hide the
information.'' [Id.]. However, he concedes that ``[n]o matter how
unintentional, his failure [to correctly answer the liability
questions] could have the tendency to affect the outcome of his
application thereby being materially false.'' [Id.].
In conclusion, the Respondent argues that granting his application
would be consistent with the public interest. [Resp. Brief at 13-14].
Although the Respondent engaged in misconduct, he asserts that he ``has
done everything within his control to make sure this does not happen
again.'' [Resp. Brief at 14]. The Respondent ``believes he has
demonstrated to this Court that he is remorseful for his actions and
will not repeat the same behavior.'' [Id.]. Therefore, he requests that
his application be approved. [Id.].
C. Statement of Law
Section 823(f) of the Controlled Substances Act (``CSA'' or ``the
Act'') provides that ``[t]he Attorney General \13\ may deny an
application for [a practitioner's] registration if he determines that
the issuance of such registration would be inconsistent with the public
interest.'' 21 U.S.C. 823(f). In making the public interest
determination, the Act requires the consideration of the following
factors:
---------------------------------------------------------------------------
\13\ The Deputy Administrator has the authority to make such
determinations pursuant to 28 C.F.R. Sec. Sec. 0.100(b) and 0.104
(2011).
---------------------------------------------------------------------------
(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.
21 U.S.C. Sec. 823(f).
These factors are considered in the disjunctive. Robert A. Leslie,
M.D., 68 Fed. Reg. 15,227, 15,230 (DEA 2003). The Deputy Administrator
may rely on any one or a combination of factors, and may give each
factor the weight he deems appropriate in determining whether an
application for a registration should be denied. Id. Moreover, the
Deputy Administrator is ``not required to make findings as to all of
the factors.'' Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); see
also Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005).
The Government bears the burden of proving that the requirements
for registration are not satisfied. 21 C.F.R. Sec. 1301.44(d) (2011).
The burden of proof shifts to the Respondent once the Government has
made its prima facie case. Medicine Shoppe--Jonesborough, 73 Fed. Reg.
364, 380 (DEA 2008). The Agency has recognized that ``past performance
is the best predictor of future performance.'' ALRA Labs, Inc. v. DEA,
54 F.3d 450, 452 (7th Cir. 1995). Further, the Agency has repeatedly
held that ``where a registrant has committed acts inconsistent with the
public interest, the registrant must accept responsibility for (his)
actions and demonstrate that (he) will not engage in future
misconduct.'' Medicine Shoppe, 73 Fed. Reg. at 387; see also Samuel S.
Jackson, D.D.S., 72 Fed. Reg. 23,848, 23,853 (DEA 2007). In short,
after the Government makes its prima facie case, the Respondent must
prove by a preponderance of the evidence that he can be entrusted with
the authority that a registration provides by demonstrating that he
accepts responsibility for his misconduct and that the misconduct will
not re-occur.
Under Section 824(a)(1), a registration may also be revoked or
suspended ``upon a finding that the registrant . . . has materially
falsified any application filed pursuant to or required by this
subchapter.'' 21 U.S.C. Sec. 824(a)(1) (2006). Under Agency precedent,
the various grounds for revocation or suspension of an existing
registration that Congress enumerated in 21 U.S.C. Sec. 824(a), are
also properly considered in deciding whether to grant or deny an
application under section 823. See Anthony D. Funches, 64 Fed. Reg.
14,267, 14,268 (DEA 1999); Alan R. Schankman, M.D., 63 Fed. Reg.
45,260, 45,260 (DEA 1998); Kuen H. Chen, M.D., 58 Fed. Reg. 65,401,
65,402 (DEA 1993).
Although the Government did not assert material falsification in
the Order to Show Cause, the Government did place the Respondent
properly on notice of this allegation in the Government's Supplemental
Prehearing Statement. Thus, the allegation that the Respondent
materially falsified his application is properly considered in this
proceeding. George Mathew, M.D., 75 Fed. Reg. 66,138, 66,146 (DEA 2010)
(``[T]he failure of the Government to disclose an allegation in the
Order to Show Cause is not dispositive, and an issue can be litigated
if the Government otherwise timely notifies a respondent of its intent
to litigate the issue.''); CBS Wholesale Distributors, 74 Fed. Reg.
36,746, 36,750 (DEA 2009). Longstanding Agency precedent has held that
the scope of a DEA administrative hearing is determined not only by the
allegations contained in the OSC, but also by the parties' prehearing
statements. Darrell Risner, D.M.D., 61 Fed. Reg. 728, 730 (DEA 1996);
John Stanford Noell, M.D., 59 Fed. Reg. 47,359, 47,361 (DEA 1994).
1. The Material Falsification Allegation
A false statement is material if it ``has a natural tendency to
influence, or was capable of influencing, the decision of the
decisionmaking body to which it was addressed.'' Kungys v. United
States, 485 U.S. 759, 770 (1988). While the evidence must be ``clear,
unequivocal, and convincing,'' the ultimate finding of materiality
``turns on a substantive interpretation of the law.'' Id. at 772; see
also Craig H. Bammer, D.O., 73 Fed. Reg. 34,327, 34,328 (DEA 2008).
However, `[i]t makes no difference that a specific falsification did
not exert influence so long as it had the capacity to do so.''' United
States v. Alemany Rivera, 781 F.2d 229, 234 (1st Cir. 1985).
The record raises the issue of whether the Respondent's failure to
correctly answer the liability questions on his most recent application
and his application in December of 2010 resulted in a material
falsification of those applications. DEA has previously held that
``[t]he provision of truthful information on applications is absolutely
essential to effectuating [the] statutory purpose'' of determining
whether the granting of an application is consistent with the public
interest. Peter H. Ahles, M.D., 71 Fed. Reg. 50,097, 50,098 (DEA 2006).
In the July 2011 application, the Respondent disclosed his voluntary
surrender of his DEA registration. However, he failed to disclose the
suspension of his Louisiana controlled substance license, which
occurred in September of 2010. Clearly, the Respondent knew or should
have known about this suspension by July of 2011. Likewise, in the
December 2010 application, the Respondent failed to disclose his
voluntary surrender of his DEA registration in March of 2008, or the
suspension of his Louisiana controlled substance license in September
of 2010.
I find these omissions resulted in the material falsification of
the Respondent's applications. Clearly, this information was capable of
influencing the decisionmaker in this matter. Respondent's lack of full
disclosure in these applications weighs heavily in favor of denying his
application for a certificate of registration. See Shannon L.
Gallentine, D.P.M., 76 Fed. Reg. 45,864, 45,866 (DEA 2011).
[[Page 27440]]
2. Factor One: Recommendation of the Appropriate State Licensing Board
While the Medical Board's recommendation is probative, ``DEA
maintains a separate oversight responsibility with respect to the
handling of controlled substances and has a statutory obligation to
make its independent determination as to whether the granting of [a
registration] would be in the public interest.'' Mortimer B. Levin,
D.O., 55 Fed. Reg. 8,209, 8,210 (DEA 1990); see also Jayam Krishna-
Iyer, M.D., 74 Fed. Reg. 459, 461 (DEA 2009). The ultimate
responsibility to determine whether a registration is consistent with
the public interest has been delegated exclusively to the DEA, not to
entities within state government. Edmund Chein, M.D., 72 Fed. Reg.
6,580, 6,590 (DEA 2007), aff'd, 533 F.3d 828 (DC Cir. 2008). Although
not dispositive, state board decisions are relevant on the issue of
granting or denying a DEA application. Gregory D. Owens, D.D.S., 74
Fed. Reg. 36,751, 36,755 (DEA 2009); Martha Hernandez, M.D., 62 Fed.
Reg. 61,145, 61,147 (DEA 1997).
Here, the Medical Board has not made a direct recommendation
concerning the Respondent's DEA application. However, on June 24, 2010,
the Respondent entered into a Consent Order with the Louisiana Medical
Board. Although not admitting to any misconduct, the Respondent agreed
to the Medical Board's action and conditions placed upon his medical
license. Specifically, the Medical Board issued a public reprimand,
and, among other conditions, required the Respondent to take a
continuing medical education course regarding proper prescribing. The
Respondent completed all of the requirements levied by the Medical
Board, and he currently has an unrestricted, active medical license.
Therefore, I find that this factor does not weigh in favor or against
Respondent's application for a DEA certificate of registration.
3. Factors Two and Four: The Applicant's Experience With Controlled
Substances and Compliance With Applicable State, Federal, or Local Laws
Relating To Controlled Substances.
DEA regulation dictates that a prescription, to be valid, must be
issued for a legitimate medical purpose by an individual practitioner
acting in the usual course of his professional practice. 21 C.F.R.
Sec. 1306.04(a) (2011); see also La. Rev. Stat. Ann. Sec. 40:1238.2
(2011).\14\ As the Supreme Court explained, ``the prescription
requirement. . . ensures patients use controlled substances under the
supervision of a doctor so as to prevent addiction and recreational
abuse. As a corollary, [it] also bars doctors from peddling to patients
who crave the drugs for those prohibited uses.'' Gonzales v. Oregon,
546 U.S. 243, 274 (2006) (citing United States v. Moore, 423 U.S. 122,
135 (1975)). Further, a valid prescription under Louisiana law is
defined as a ``a written request for a drug. . . issued by a licensed
physician. . . for a legitimate medical purpose, for the purpose of
correcting a physical, mental, or bodily ailment, and acting in good
faith in the usual course of his professional practice.'' La. Rev.
Stat. Ann. Sec. 40:961(33) (2011).
---------------------------------------------------------------------------
\14\ This statutory provision provides in relevant part: A
prescription, in order to be effective in legalizing the possession
of legend drugs, shall be issued for a legitimate medical purpose by
one authorized to prescribe the use of such legend drugs * * * Any
person who knows or should know that he or she is filling such a
prescription * * * to a drug abuser or habitual user of legend
drugs, as well as the person issuing the prescription, may be
charged with a violation of this Section. La. Rev. Stat. Ann. Sec.
40:1238.2(A) (2011).
---------------------------------------------------------------------------
Under the CSA, it is fundamental that a practitioner must establish
and maintain a bonafide doctor-patient relationship in order to act
``in the usual course of. . . professional practice'' and to issue a
prescription for a ``legitimate medical purpose.'' Laurence T.
McKinney, M.D., 73 Fed. Reg. 43,260, 43,265 (DEA 2008); see also Moore,
423 U.S. 142-43 (noting that evidence established that physician
``exceeded the bounds of ``professional practice,'' when ``he gave
inadequate physical examinations or none at all,'' ``ignored the
results of the tests he did make,'' and ``took no precautions against.
. . misuse and diversion''). The CSA, however, generally looks to state
law to determine whether a doctor and patient have established a
bonafide doctor-patient relationship. Kamir Garces-Mejias, M.D., 72
Fed. Reg. 54,931, 54,935 (DEA 2007); United Prescription Services,
Inc., 72 Fed. Reg. 50,397, 50,407-08 (DEA 2007).
Here, Louisiana law provides that it is unlawful for a physician to
``assist a patient. . . in obtaining a controlled dangerous substance
through misrepresentation, fraud, forgery, deception, or subterfuge.''
La. Rev. Stat. Ann. Sec. 40:971.2(B)(1) (2011). By coaching Mr. Harris
and Ms. Landry to state they were in pain, and by falsely documenting
their medical records to record these pain complaints when neither
patient expressed that they were in pain is a violation of this
provision.
Louisiana law pertaining to the treatment of chronic pain requires
a physician to evaluate the patient to include an ``assessment of the
impact of pain on the patient's physical and psychological functions, a
review of previous diagnostic studies, previously utilized therapies,
an assessment of co-existing illnesses, diseases, or conditions, and an
appropriate physical examination.'' La. Admin. Code tit. 46, Sec.
6921(A)(1) (2011). Here, the Respondent failed to meet this standard,
for he did not perform a physical or psychological functions analysis,
did not review previous diagnostic studies, previously utilized
therapies, or conduct an appropriate physical examination of either Mr.
Harris or Ms. Landry. See Armstrong v. La. State Bd. Of Med. Examiners,
868 So. 2d 830, 840 (La. Ct. App. 2004) (noting that when a physician
prescribes controlled substances for the relief of non-malignant pain
``unaccompanied by appropriate testing, diagnosis, oversight and
monitoring. . . the physician falls below generally accepted standards
of care''). Although the Respondent looked at the patients' backs, such
observation may not be an adequate physical examination. Jack A.
Danton, D.O., 76 Fed. Reg. 60,900, 60,910 (DEA 2011) (noting without
deciding that mere observation may not be an adequate physical
examination).
Further, the Respondent failed to develop an individualized
treatment plan for Mr. Harris and Ms. Landry. Louisiana law requires a
physician to develop such a plan and to document the plan in the
patient's medical records. The plan is to include ``medical
justification for controlled substance therapy. Such plan shall include
documentation that other medically reasonable alternative treatments
for relief of the patient's non-cancer-related chronic or intractable
pain have been considered or attempted without adequate or reasonable
success. Such plan shall specify the intended role of controlled
substance therapy within the overall plan, which therapy shall be
tailored to the individual medical needs of each patient.'' La. Admin.
Code tit. 46, Sec. 6921(A)(3) (2011). The medical records here failed
to reveal such an individualized treatment plan. Especially lacking in
these medical records were any indications that alternative treatments
were attempted prior to issuing prescriptions for controlled
substances. La. Admin. Code tit. 46, Sec. 6921(B)(6)(2011).
In the case of Ms. Landry and her multiple visits to Dr. Zavaleta's
clinic, the Respondent failed to assess the efficacy of her treatment.
Louisiana law requires a physician to ``assure that controlled
substance therapy remains
[[Page 27441]]
indicated, and evaluate the patient's progress toward treatment
objectives.'' La. Admin. Code tit. 46, Sec. 6921(B)(1). Ms. Landry's
chart failed to disclose any treatment objectives, and thus, her
progress towards meeting those objectives was also lacking.
Louisiana law also requires a physician to ``document in the
patient's medical record the medical necessity for the use of more than
one type or schedule of controlled substance employed in the management
of a patient's noncancer-related chronic or intractable pain.'' Id. at
(B)(5). The Respondent violated this provision when he added Xanax to
Ms. Landry's prescriptions without documenting the medical necessity
for this anti-anxiety medication.
Lastly, Louisiana case law establishes that it is a violation of
the legitimate medical purpose provision when a physician provides a
patient with controlled substances based upon their request for the
drug. See Louisiana v. Moody, 393 So. 2d 1212, 1215 (La. 1981). Both
Mr. Harris and Ms. Landry specifically requested hydrocodone products,
and the Respondent provided them with a prescription for this requested
controlled substance. Further, given the statements by both Mr. Harris
and Ms. Landry that they were not experiencing any pain, the Respondent
violated this provision when he prescribed Lorcet or Lortab for their
non-existent pain.
Accordingly, I find that the Government has made a prima facie case
regarding the failure of the Respondent to prescribe controlled
substances for a legitimate medical purpose in the usual course of
professional practice.\15\
---------------------------------------------------------------------------
\15\ Given the overwhelming evidence of the Respondent's failure
to issue controlled substances for a legitimate medical purpose, I
do not address the Government's allegations that the Respondent's
flirtatious behavior with Ms. Landry was outside the usual course of
professional practice.
---------------------------------------------------------------------------
4. Respondent's Remorse and Corrective Action
The critical consideration in this proceeding is whether the
circumstances, which existed at the time of the surrender of his
registration in 2008, have changed sufficiently to support a conclusion
that Respondent's registration would be in the public interest. Ellis
Turk, M.D., 62 Fed. Reg. 19,603, 19,604 (DEA 1997). As this Agency has
repeatedly held, a proceeding under the Act ``is a remedial measure,
based upon the public interest and the necessity to protect the public
from those individuals who have misused. . . their DEA Certificate of
Registration, and who have not presented sufficient mitigating evidence
to assure the Administrator that they can be entrusted with the
responsibility carried by such a registration.'' Jon Karl Dively,
D.D.S., 72 Fed. Reg. 74,332, 74,334 (DEA 2007).
At the hearing, the Respondent acknowledged that he should have
refused to provide Mr. Harris with the Lortab prescription he requested
without prior records or validating tests. He credibly testified that
he agreed that providing Mr. Harris with a prescription for hydrocodone
was not for a legitimate medical purpose. Nevertheless, I remain
concerned about the Respondent's insistence at the hearing that Mr.
Harris had told him that he had back pain. My review of the undercover
recording does not substantiate his assertion, and Mr. Harris credibly
testified that he had not told the Respondent that he had any pain. To
his credit, however, when Mr. Harris returned to his office, the
Respondent refused to treat him.
Likewise, at the hearing the Respondent admitted that he had not
prescribed controlled substances to Ms. Landry for a legitimate medical
purpose. Although Ms. Landry asserted that she needed a refill of her
controlled substance prescription, the Respondent took no action to
verify that her original controlled substance prescription had been
provided for a legitimate medical purpose. To his credit, at the first
visit Ms. Landry had requested a prescription for her sister, and the
Respondent refused to provide her with such a prescription. But despite
Ms. Landry's credible testimony denying that she had told the
Respondent that she had any type of pain, the Respondent testified that
he thought, at the time he wrote the prescriptions, that he was right
in his prescribing to her. The Respondent's lack of forthrightness is
troubling.
Lastly, the Respondent was cooperative with the investigators. He
also took remedial training in the handling of controlled substances,
and he credibly testified that he is more knowledgeable about drug-
seeking behavior.
V. Conclusion and Recommendation
In balance, however, I find that the Respondent's current lack of
candor, his material falsification of his DEA applications, and his
illegal prescribing of controlled substances in 2008 outweigh his
assertions that he can now responsibly handle controlled substance
prescriptions. Accordingly, I recommend that the Respondent's current
application be denied. Should the Respondent file an application
wherein he fully discloses the surrender of his DEA registration for
cause and the suspension of his Louisiana controlled substance license,
then such candor may be favorably considered.
Dated: May 10, 2012.
Gail A. Randall,
Administrative Law Judge.
[FR Doc. 2013-11185 Filed 5-9-13; 8:45 am]
BILLING CODE 4410-09-P