[Federal Register Volume 79, Number 64 (Thursday, April 3, 2014)]
[Notices]
[Pages 18698-18714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-07440]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 12-42]


Fred Samimi, M.D.; Decision and Order

    On February 29, 2012, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Fred Samimi, M.D. (Respondent), of both Roseville and Elk 
Grove, California. ALJ Ex. 1, at 1. The Show Cause Order proposed the 
denial of Respondent's applications for DEA Certificates of 
Registration as a practitioner, with authority to dispense controlled 
substances in schedules II through V, at his proposed registered 
locations in Roseville and Elk Grove, California, on the ground that 
his registrations would be inconsistent with the public interest. Id.
    More specifically, the Show Cause Order alleged that during 
undercover visits that were conducted by the Medical Board of 
California (MBC) in June 2006, June 2008, and December 2009, Respondent 
``allowed [his] medical assistants to dispense controlled substances to 
patients without supervision.'' Id. at 1. The Order also alleged that 
Respondent dispensed controlled substances ``to patients without 
placing instruction for use on [the] labels attached to the 
prescription bottles.'' Id. at 1-2.
    Next, the Show Cause Order alleged that on May 6, 2011, the MBC 
``issued a Stipulated Settlement and Disciplinary Order'' to Respondent 
which made several findings. Id. at 2. First, the Show Cause Order 
alleged that the MBC found that during a December 10, 2009 audit of his 
Gold River, California clinic, the controlled substances were kept in 
an ``unlocked and wide open'' metal cabinet, and that Respondent told 
the MBC Investigator ``that the room where the cabinet was located was 
typically left opened and unlocked during the work day'' and that the 
``room was accessed by [Respondent] and [his] staff and was only locked 
at the conclusion of the work day.'' Id.
    Second, the Show Cause Order alleged that the MBC found that on 
January 28, 2010, ``[d]uring a follow-up . . . inspection'' of the Gold 
River

[[Page 18699]]

clinic, Respondent was dispensing controlled substances ``through the 
use of post office boxes'' that were located in the ``drug room,'' and 
``that any person having the appropriate post office box key was able 
to obtain medication left in the . . . box.'' Id. The Show Cause Order 
further alleged that this practice involved maintaining ``controlled 
substances in an unsecured areas'' and violated 21 CFR 1301.75(b). Id.
    Third, the Show Cause Order alleged that the MBC found that 
Respondent ``failed to properly document [the] transport of controlled 
substances from one medical clinic location to a second clinic location 
and further failed to document medication strengths in [his] drugs 
logs.'' Id. The Show Cause Order then alleged Respondent ``fail[ed] to 
properly document the transport of controlled substances between clinic 
locations'' and violated 21 CFR 1304.11 and 1304.21(a). Id.
    Next, the Show Cause Order alleged that on May 26, 2011, Respondent 
surrendered his DEA registrations, and that while conducting an 
inventory of the controlled substances at his Elk Grove clinic, the 
Government ``learned that [he] continued storing controlled substances 
in an unsecured fashion,'' in that the controlled substances were 
``stored on an open bookshelf inside a closet along with protein bars, 
vitamins, and non-controlled substances.'' Id. The Show Cause Order 
also alleged ``that the controlled substance inventories [Respondent] 
provided to agency investigators contained numerous inaccuracies'' and 
``did not comply with the requirements of 21 CFR 1304.11.'' Id.
    Finally, the Show Cause Order alleged that after Respondent 
surrendered his DEA registrations, he ``phoned in prescriptions for 
controlled substances under the DEA registration number of another DEA 
registered practitioner.'' Id. at 2-3. The Show Cause Order alleged 
that this conduct violated 21 U.S.C. 822(a)(2) and 843(a)(2). Id.
    Following service of the Show Cause Order, Respondent requested a 
hearing on the allegations and the matter was placed on the docket of 
the Office of Administrative Law Judges. Following pre-hearing 
procedures, an ALJ conducted a hearing on August 1-3, 2012, in 
Sacramento, California. At the hearing, both parties called witnesses 
to testify and introduced various exhibits into the record; after the 
hearing, both parties filed briefs containing their proposed findings 
of fact, conclusions of law, and argument.
    On October 17, 2012, the ALJ issued her Recommended Decision 
(hereinafter, R.D.). With respect to factor one--the recommendation of 
the state licensing board--the ALJ found that ``the Board ha[d] not 
made a recommendation concerning the resolution of the Respondent's DEA 
applications.'' R.D. 20. The ALJ also noted that ``Respondent currently 
holds a valid medical license in California, but that [his] license has 
also been the subject of recent disciplinary'' action, including a May 
6, 2011 Stipulated Settlement and Disciplinary Order, which suspended 
his medical license for thirty days and imposed a three-year probation. 
Id. While the ALJ further noted that Respondent had ``one minor 
recordkeeping problem'' in that he failed to ``provid[e] the complete 
address of patients'' in a log of his dispensings and marijuana 
recommendations which he was required keep, the ALJ noted that 
Respondent had not received a non-compliance report for this violation. 
Id. The ALJ, applying Agency precedent, concluded that this factor 
neither ``weighed in favor or against the granting of Respondent's 
applications.'' Id. (citations omitted).
    Similarly, with respect to factor three--Respondent's conviction 
record for offenses relating to the manufacture, distribution or 
dispensing of controlled substances--the ALJ found that there is ``no 
evidence that Respondent has been convicted of'' such an offense. Id. 
However, applying Agency precedent, the ALJ noted that while this 
factor ``weighs against a finding that Respondent's registration would 
be inconsistent with the public interest,'' it was not dispositive. Id. 
(citation omitted).
    The ALJ then addressed factors two and four--Respondent's 
experience in dispensing controlled substances and his compliance with 
applicable laws relating to controlled substances--together. The ALJ 
began by noting that ``[u]nder the Controlled Substances Act and Agency 
regulations, it is fundamental that a practitioner who directly 
dispenses controlled substances maintain an effective recordkeeping 
system,'' including initial and biennial inventories, as well as 
``records of receipts, dispensings and transfers of controlled 
substances.'' Id. at 21 (citations omitted). The ALJ found that ``[t]he 
record demonstrates that . . . Respondent failed to maintain an 
accurate drug inventory'' and that ``[t]his failure made it impossible 
for the DEA, the Board, or the Respondent to conduct a meaningful drug 
audit.'' Id. The ALJ then observed that ``[t]he DEA's attempt to audit 
the Respondent's controlled substances resulted in the finding of 
significant shortages,'' and that ``[t]his inability to account for 
this significant number of dosage units creates a grave risk of 
diversion.'' Id. (citations omitted). The ALJ also noted that 
``Respondent violated multiple provisions of California law in his 
dispensing of controlled substances.'' Id. at 22. The ALJ thus 
concluded that ``Respondent's conduct in dispensing controlled 
substances violated state and federal laws'' and that these 
``violations weigh in favor of a finding that the Respondent's 
registration would be inconsistent with the public interest.'' Id.
    As for factor five--such other conduct which may threaten public 
health and safety--the ALJ found that ``the record contains no evidence 
of other conduct related to controlled substances . . . that would 
threaten the public health and safety,'' concluding that there was ``no 
direct or credible evidence of diversion.'' Id. The ALJ then found that 
``Respondent has accepted responsibility for his past misconduct, and 
he has credibly demonstrated that he has learned from his past 
mistakes.'' Id. at 23. Yet, the ALJ observed that ``the record 
demonstrates that [Respondent] was never able to dispense controlled 
substances and remain in compliance with the Board's and the DEA's 
regulations.'' Id. However, the ALJ then noted various actions 
Respondent took to address several of the violations found by the MBC's 
investigator. Id.
    The ALJ thus concluded ``that the Government has established a 
prima facie case in support of denying Respondent's applications,'' 
explaining that ``[t]here is no doubt that the Respondent has failed 
properly to account for, store, and dispense controlled substances.'' 
Id. at 23-24. However, the ALJ then found that ``Respondent has 
sustained his burden to accept responsibility for his past misconduct 
and has successfully demonstrated that he will not engage in future 
misconduct related to his handling of controlled substances.'' Id. at 
24. The ALJ then concluded that ``outright denial of [Respondent's] 
application is too severe a resolution,'' even though ``his mistakes in 
his dispensing of controlled substances are egregiousness enough to 
warrant the placing of restrictions'' limiting him to prescribing, on 
his registrations. Id.
    Both parties filed exceptions to the Recommended Decision. 
Thereafter, the record was forwarded to me for final agency action.
    Having considered the entire record in this matter, including the 
parties' exceptions, I adopt the ALJ's findings of fact and conclusions 
of law except as

[[Page 18700]]

discussed below. More specifically, I adopt the ALJ's conclusion that 
the Government established a prima facie case for denial of 
Respondent's applications. Moreover, even accepting the ALJ's finding 
that Respondent has credibly accepted responsibility for his 
misconduct, I reject the ALJ's conclusion that he has successfully 
demonstrated that he will not engage in future misconduct related to 
his handling of controlled substances, because as the ALJ herself 
observed, the record demonstrates that he has never been able to 
dispense controlled substances and remain in compliance with the MBC's 
and DEA's regulations. I make the following findings of fact.

Findings

    Respondent is a medical doctor licensed by the Medical Board of 
California. GX 8. While Respondent currently practices neurology, he 
previously owned and operated four weight loss clinics, at which he 
held DEA practitioner registrations. Tr. 22-23, 494, 504. The clinics 
were located in Elk Grove, Roseville, Stockton, and Gold River, 
California. GX 9; Tr. 22-23. On May 25, 2011, after the MBC suspended 
Respondent's medical license for a period of thirty days, GX 8, at 5; 
Respondent voluntarily surrendered each of these registrations. GX 9.
    On June 23, 2011, Respondent applied for a new DEA registration at 
his clinics in Roseville and Elk Grove, California. GX 2, at 1-4. It is 
these applications which are at issue in the proceedings.

The MBC Investigations

    In 2006, the MBC received information that Respondent's Gold River 
clinic was dispensing amphetamine weight-loss medications to patients 
without a physician being present. Tr. 17. In response, on June 2, 
2006, an MBC Investigator (hereinafter, Investigator I) went to the 
Gold River clinic and posed as a prospective patient. Id. at 17-18. 
Upon meeting the receptionist, Investigator I was told that while 
Respondent had recently purchased the clinic, he had worked there ``for 
quite a long time.'' Id. at 18. The receptionist then discussed the 
clinic's weight-loss programs, telling Investigator I that she would 
see the doctor once, and after that, she ``could come back on a weekly 
basis'' and buy the controlled substances from the receptionist. Id. 
The receptionist also told Investigator I that Respondent had a 
schedule where he rotated through the clinics, spending a day at a 
clinic, but that the clinics were open even when Respondent was not 
present and that the patients could obtain their controlled substances 
even when he was not physically present at the clinic. Id. at 23.
    Upon returning to her office, Investigator I determined that 
Respondent was subject to a probationary order based on his having 
falsified his application for a California medical license for failing 
to disclose a since expunged misdemeanor conviction for fraud.\1\ Id. 
at 19; GX 3, at 3. Thereafter, Investigator I conducted an undercover 
visit at the Elk Grove clinic and saw Respondent. Tr. 24. Respondent 
performed what Investigator I characterized as ``a cursory 
examination'' and authorized the dispensing of seven tablets of Tenuate 
(diethylpropion), a weight-loss medication and schedule IV controlled 
substance. Id. Investigator I testified that she observed Respondent 
``exiting out the back door'' and that he had actually ``left the 
premises'' before she was given the medication, which was given to her 
by the clinic's receptionist. Id. at 24-25; see also id. at 140 (``I 
watched him walk out the door before the medication was even handed to 
me by the medical assistant and so he wasn't even physically inside the 
building when that was handed to me.'').
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    \1\ Respondent submitted the application in June 2000; he was 
convicted, following a no contest plea, on December 12, 1985. GX 3, 
at 3. According to the MBC's findings, Respondent had switched the 
price tag from a less expensive to a more expensive item while 
shopping; he was sentenced to one year of probation and to pay a 
fine of $100. Id.
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    At the hearing, Respondent vigorously denied that he had left the 
clinic before the medication was dispensed to Investigator I, stating 
``absolutely not, absolutely not.'' Tr. 507. He then asserted that ``I 
clearly remember my patients, and I remember that Friday we were 
extremely busy'' and ``saw more than 70 patient [sic] that day.'' Id. 
Continuing, Respondent maintained ``[t]hat Friday, definitely didn't 
leave. She [the Investigator] mentioned I may have left to go to lunch, 
but that is not true because we can pull the record for that day. I 
think she came sometimes toward end of the shift. Sometime--it was 4:30 
or 5:00 when she came to be examined.'' Id. at 508.
    While the ALJ did not specifically state that she found 
Investigator I credible, she did find that ``the medication was 
actually given to [her] by an unlicensed member of the Respondent's 
office staff.'' R.D. at 6 (citing Tr. 24-25; 151-52). Moreover, 
Respondent did not pull the record for that day, and in any event, it 
seems most unlikely that Respondent remembered the Investigator's 
undercover visit, which had occurred six years earlier. Accordingly, as 
ultimate factfinder, I find Investigator I's testimony on the issue 
credible and therefore adopt the ALJ's finding that Respondent had left 
the premises when the controlled substances were dispensed to the 
Investigator and that Respondent allowed his unlicensed staff to 
dispense controlled substances.
    Investigator I testified that under California law, Respondent was 
required to offer her the option of obtaining a written prescription 
for the drug, which she could fill at a pharmacy. Id. at 25. However, 
Respondent did not do so. Id.
    Investigator I further testified that the label on the vial which 
contained the medication did not list Respondent's name or directions 
for taking the drug. Id. at 26. She further testified that Respondent 
did not advise her as to how to take the drug, its potential side 
effects, its contraindications and whether to take the drug with food. 
Id.
    During the visit, Investigator I made an appointment for a second 
visit at Respondent's Gold River clinic. Id. at 27. On June 23, 2006, 
Investigator I went to the Gold River clinic. Id. at 28. Investigator I 
met an unlicensed medical assistant, who told her that her chart was 
not at the clinic. Id. The medical assistant weighed Investigator I and 
called Respondent on the phone; the medical assistant then dispensed 
another seven tablets of Tenuate to Investigator I. Id. However, the 
label on the vial neither listed Respondent's name, nor provided the 
correct clinic address; instead, it gave the address for his Elk Grove 
clinic. Id. at 29. At no point during the visit did Investigator I 
either see Respondent or talk with him on the phone. Id. at 30.
    According to Investigator I, Respondent's medical assistant did not 
have authority under state law to dispense a drug to her. Id. at 31. 
Investigator I asserted that Respondent was aiding and abetting the 
unlicensed practice of medicine.\2\ Id. Moreover, once again, 
Investigator I was not offered a written prescription for the drug. Id. 
Investigator I testified that under the terms of Respondent's 
probation, he was required to comply

[[Page 18701]]

with all federal and state laws. Id. at 32; see also GX 3, at 4. 
Thereafter, Investigator I prepared her report and provided it to 
Respondent's probation monitor. Tr. 32. However, the probation monitor 
never communicated to Investigator I what action he took, if any. Id. 
at 32-33. On February 1, 2008, the MBC issued an order restoring 
Respondent medical license ``to clear status and free of probation 
requirements,'' with an effective date of August 13, 2007. GX 4.
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    \2\ Regarding his practice of allowing his receptionist and 
medical assistants to dispense controlled substances, Respondent 
justified doing so on the basis that when he purchased the clinics, 
he had asked the CEO (and principal owner) of the company he 
purchased them from about this practice. According to Respondent, he 
was told ``that's how we've been doing it for 20 years. The medical 
assistants [are] only bag handlers. The medication is in the bag 
pre-prescribed. They don't know what's in it. All they do is just 
hand over the bag to the patient. Your presence may not be 
required.'' Tr. 511.
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    Respondent acknowledged that during a visit by his probation 
monitor, the latter had observed Respondent's practice of allowing his 
unlicensed employees to dispense medications and had discussed the 
issue with him. Tr. 511. According to Respondent, the probation monitor 
told him that he would have to consult with the MBC's attorney and get 
back to him. Id. Respondent admitted, however, that after the probation 
monitor asked the board's attorney, the monitor had told him to stop 
this practice. Id. at 511-12.
    However, in June 2008, the MBC received another anonymous complaint 
regarding Respondent. Tr. 35-36. As before, the complainant alleged 
that a patient only had to see Respondent once, and that after that, 
Respondent's staff would dispense controlled substances to the patient. 
Id. at 36. The investigation was also assigned to Investigator I. Id. 
at 35.
    As part of her investigation, Investigator I reviewed the reports 
that Respondent's probation monitor had filed after the 2006 matter was 
assigned to him. Id. at 36. Investigator I testified that according to 
the reports, Respondent had assured the monitor that he ``was not 
allowing his staff to dispense medications,'' that he was following the 
labeling requirements, and that ``he was keeping the medications under 
lock and key'' and that only he had the key. Id.
    Approximately a year later,\3\ Investigator I again called one of 
the clinics and was told that Respondent had clinics in in Roseville, 
Stockton, Rancho Cordova and Elk Grove, as well as the days of the week 
each clinic was open. GX 6, at 6. She also discussed with the 
receptionist the Respondent's weight-loss program and was told that for 
$50, she would have a consultation and be provided with medications. 
Id. The receptionist further told Investigator I that after the initial 
consultation, the cost was $35, which included medications, and that no 
appointments were needed as she would not ``have to see the doctor 
again.'' Id.
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    \3\ According to her report, Investigator I had also called one 
of the clinics in July 2008 and discussed the two weight-loss 
programs offered by Respondent, including the program which used 
medications. GX 6, at 6. According to the report, Investigator I was 
told that she would see the doctor at the first two visits and get 
medication, but would not need to see the doctor at the third visit 
and would still get medication. Id.
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    Investigator I then obtained approval to conduct more undercover 
visits, and solicited the assistance of another MBC investigator 
(hereinafter, Investigator II) to perform the visits. Tr. 37. 
Subsequently, Investigator II made an appointment, and on December 3, 
2009, went to the Gold River clinic, where after filling out various 
forms, she saw Respondent. GX 6, at 6-7. Respondent dispensed to her 
seven tablets of phentermine 30mg, a schedule IV controlled substance. 
Id. at 7.
    On December 10, 2009, both MBC Investigators returned to the Gold 
River clinic. Investigator II saw a medical assistant named ``Pam,'' 
who asked her about her week, took her weight, and told her to meet her 
at the front desk. GX 6, at 7. The medical assistant then went to 
another room, obtained a vial of seven phentermine 30mg tablets, and 
upon returning to the front desk, provided them to Investigator II. Id. 
Investigator II paid $35 cash for the visit and medication. Id. While 
Respondent arrived at the clinic when Investigator II was paying for 
the medication, he did not speak to the Investigator about the 
medication that was being dispensed to her. GX 8, at 3 & 18.
    Shortly thereafter, Investigator I entered the clinic to perform 
``a drug audit and interview'' Respondent. GX 6, at 7. Investigator I 
observed that the door to Respondent's drug room was open and that the 
drugs were stored in a metal cabinet whose doors were open.\4\ Tr. 43. 
Respondent had on hand diethylpropion, phentermine, and 
phendimetrazine, which were in pre-labeled vials and contained in clear 
plastic bags. Id.
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    \4\ Respondent disputed that the medicine cabinet was open when 
the Inspector asked to see the drug room, testifying that ``when I 
walked into the med room the cabinets were closed.'' Tr. 517. He 
further asserted that ``the door to the med room was closed, and it 
has a sign on the door. It says staff only. We open and walk in and 
she opened the cabinets, she photographs the medication and then 
close[sic] the doors.'' Id. Respondent did, however, admit that the 
door to the medication room was unlocked and that he did not always 
keep the door locked. Id. at 518.
    However, in her Investigation Report, the Investigator wrote: 
``On 12-10-09, I went to the clinic, performed a drug audit, and 
interviewed [Respondent]. I made a digital recording of [the] 
interview which occurred after I had looked at the drug. . . . I 
looked at the room where he was storing his drugs and noticed a 
metal cabinet with the doors open. There were clear plastic bags 
full of medication vials on the shelves.'' GX 6, at 7.
    Moreover, the interview was subsequently transcribed. During the 
interview, Investigator I explained to Respondent that:
    With regards to the secure area of how your prescriptions are 
being store--your medication. It means it has to remain locked; 
okay? It says here . . . that's Business and Professions Code 4170 
and 4172 and the regulations say that an area that is secure--I'm 
going to read this to you--means a locked storage area within a 
physician's office. The area shall be secure at all times--locked 
and secure at all times. The keys to the locked storage shall be 
available only to staff authorized by the physician to have access 
thereto; which means that right now it should be locked. The cabinet 
should be locked or that door should be locked and every time 
someone goes into it, the only person that should have the key 
should be someone who's authorized to have the key.
    Now, if you're seeing the patient and you've authorized . . . 
Pam to go in, she has a key also. You have a key. She goes in and 
gets the medication. You fill out the thing, the instructions and 
everything, and then it gets--you dispense it to the patient. Okay? 
Everything is done under your direct supervision. Okay? That area's 
not locked. Okay? It's been open since this morning obviously. And 
not quite like the front door. That has to be locked all the time; 
okay?
    GX 5, at 58-59. Finally, in the Stipulated Settlement and 
Disciplinary Order, ``Respondent admit[ted] the truth of each and 
every charge and allegation in'' the Accusation which was attached 
to the Order. GX 8, at 3. On point here, the Accusation alleged 
that:
    On or about December 10, 2009, a Board investigator performed a 
drug audit of the Gold River clinic, and noticed that Respondent 
maintained the drugs he dispensed in a metal cabinet which was 
unlocked and wide open. On this date, Respondent stated to the Board 
investigator that his Medical Assistant opens the medication cabinet 
when she opens the office, and that the room where the cabinet is 
located stays open and unlocked from that time on for access by the 
Medical Assistant and Respondent, and that it is locked when they 
finally close for the day.
    GX 8, at 16.
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    Investigator I further testified that Respondent was ``required to 
keep the drugs in a locked, secure area that[] . . . has limited access 
by employees,'' and that while Respondent could designate an employee 
who had access to the room, this had ``to be done formally.'' Id. at 
44. The Investigator then explained that the room ``was wide open and 
could be accessed by anybody in the office, including a patient.'' Id.
    Respondent told Investigator I that his medical assistant was 
opening the medication room upon her arrival at the office, and that 
the room remained open until the clinic closed. GX 6, at 8. Respondent 
stated that the patients' medications were placed in envelopes which 
were labeled with their names, and that when a patient came in, the 
medical assistant would go to the drug room, obtain the vial, and write 
the instructions and patient's name on the label. Id. Respondent 
``admitted [that] he was not present while his [m]edical [a]ssistants 
were getting medications and dispensing them to patients,'' and that he 
allowed them to do this ``with no direct supervision by him even when

[[Page 18702]]

he was in the building.'' Id. Investigator I told Respondent that ``he 
needed to dispense the medications and if he were not present, then 
they [the medications] could not be dispensed.'' Id. at 8-9.
    According to Investigator I, Respondent did not ``have any 
inventory that he could show me for his dispensing.'' Tr. 43. More 
specifically, Investigator I explained that Respondent ``was unable to 
provide an inventory . . . of these medications, how may pills he had 
of each strength and each type of drug.'' Id. at 44. Investigator I 
further testified that ``it was absolutely impossible to tell what his 
inventory should be'' as ``[i]t was an absolute disaster.'' Id. at 
45.\5\ When Investigator I discussed the inventory requirements with 
Respondent, the latter stated that ``he had been doing proper 
inventories after he was . . . educated by his probation monitor, but 
it was difficult, inconvenient, and time consuming, so he stopped.'' GX 
6, at 8. Investigator I told Respondent ``to use a separate log for 
each strength of each mediation showing shipment and dispensing and had 
given him an example.'' Id. at 12; GX 5, at 23-25 (transcript of 
December 10, 2009 interview).
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    \5\ Investigator I further testified that ``[t]o keep an 
accurate record he would have to document when he received a 
shipment of these pills and what the quantity was of that particular 
strength, and then as these were being dispensed to the various 
patients he would have to mark that down, because that's what 
pharmacies do, so he would always have a running total of what his 
current inventory is.'' Tr. 44-45.
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    Investigator I also testified that she observed that some of the 
medication vials had labels which listed Respondent's clinics other 
than the Gold River location. Tr. 46. Investigator I testified that 
while controlled substances were being shipped to a particular 
registered location (and were therefore labeled to reflect that 
location), Respondent acknowledged that he was taking medications from 
the shipments and transferring them to his other clinics. Id. at 47. 
However, Respondent did not document these transfers. Id.
    Investigator I explained to Respondent that the labels on his vials 
were non-compliant, because they did not provide proper dosing 
instructions as they stated only ``1/d.'' GX 6, at 8. She also told 
Respondent that the labels needed to list the correct address of the 
clinic where the drugs were being dispensed and his name as the 
prescribing physician. Id. Finally, she explained that the labels 
needed to contain the manufacturer's name, as well as the color, shape, 
and imprint of the medications. Id.
    In the drug room, Investigator I found several post office boxes. 
Tr. 50. When asked what their purpose was, Respondent said that he had 
bought them with the idea of putting the patients' medication in them; 
the patients would then be given a key, which they would use to open 
the box, and obtain their medication. Id.; GX 6, at 9. Upon hearing 
this, Investigator I told Respondent that this ``was a really bad 
idea.'' Tr. 50; GX 6, at 9. Investigator I also asked Respondent if he 
was offering his patients a written prescription. GX 6, at 9. 
Respondent admitted that he was not. Id.
    On December 15, 2009, Investigator I received two emails from 
Respondent addressing several of the compliance issues. Id. at 11; see 
also RX 9. In the first email, Respondent provided a copy of a 
memorandum he had written to his staff. RX 9, at 1. He also stated that 
he would address any deficiency he discovered ``and make sure we are by 
the book.'' Id. The second email was a copy of an email Respondent sent 
to his distributor, addressing the labeling issues. Id. at 3. 
Investigator I reviewed the labels and told him that they were still 
missing essential information including the manufacturer's name and a 
description of the medication. GX 6, at 11; RX 9, at 4. Thereafter, 
Respondent contacted his distributor and asked that the labels include 
the missing information. RX 9, at 4.
    On some date before January 20, 2010, when Respondent was shot 
during an attempted car-jacking, Respondent called Investigator I and 
told her that he had got[ten] everything squared away'' and to 
``[p]lease come and re-inspect.'' Tr. 87-88. On January 28, 
Investigator I returned to the Gold River clinic to conduct a re-
inspection. GX 6, at 11. Upon arriving at the clinic, Investigator I 
found that a Dr. Mericle was filling in for Respondent while he 
recovered from his injuries.\6\ Tr. 88.
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    \6\ Respondent did not return to the clinic until June 2010, 
when he resumed practicing on a part-time basis. Tr. 542.
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    Investigator I entered the drug room and inspected Respondent's 
drug inventory. Therein, she noted that Respondent still had numerous 
vials of medication which had the older non-compliant labels and was 
told by a clinic employee that Respondent ``was using up the vials with 
the old labels.'' GX 6, at 12. While Investigator I found that 
Respondent had received additional medication since her previous visit, 
she determined that Respondent was still not accounting for the 
shipments in his inventory logs. Id. at 11. Moreover, Respondent had 
not created a separate log for each drug and strength, but rather was 
recording ``all the medications and strengths on one piece of paper.'' 
Id. at 12. See also Tr. 143 (``The dispensing was all on one log, and 
all the medications were included on that same log. . . . It was still 
all jumbled together so I was unable to reconcile the inventory at that 
time . . .'').
    The Investigator further found that Respondent ``had no accounting 
for his inventory'' and that vials of medication had been placed in the 
post office boxes, notwithstanding that she had told him it was a bad 
idea. GX 6, at 12. And while the Investigator was taking an inventory, 
a patient walked into the drug room, used ``a key which was on her 
personal key ring'' to open one of the post office boxes, and retrieved 
medication.\7\ Id.; see also Tr. 51. The Investigator further testified 
that the medication ``looked to be a controlled substance.'' Tr. 51.\8\
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    \8\ Regarding the use of the mailboxes, Respondent testified 
that at the time of the December 10, 2009 MBC inspection, he had not 
started using them. Tr. 527-28. Continuing, Respondent explained 
that the MBC Inspector wanted ``the medication hand carried from me 
to the patient in the clinic'' and did not want the medical 
assistants to ``carry medication in their hand.'' Id. at 528. 
Respondent testified that while he agreed to ``follow [the 
Investigator's] instruction,'' he then thought: ``Why don't I 
implement a mechanism, by which medical assistant do not touch 
medication at all? So I came up with the idea of the mailbox.'' Id. 
at 528-29. Respondent then testified: ``So I installed the mailboxes 
in the med room, I assigned every patient to each mailbox and I gave 
them explicit instruction that they need to come in, go take their 
vital signs, be accompanied by medical assistant, access their 
mailbox,'' sign a card indicating that they received their 
medication, and be escorted back to the front desk by the medical 
assistant. Id. at 529. Respondent explained that ``[t]hat way 
medical assistant had nothing to do with medication. The patient 
comes in supervised, get their meds and they leave.'' Id.
     Respondent then testified that after the MBC Inspector ``point 
out that this is bad idea, it got to go, and we stop using it.'' 
Id.; see also id. at 540 (asserting that on January 28, 2010, the 
p.o. boxes were not being used). He further explained that ``[a]t 
that time when [the Inspector] came back for reinspection, I was in 
ICU fighting for my life.'' Id. at 529. While it is not disputed 
that Respondent was hospitalized at the time of the reinspection, 
the incident in which the patient was observed entering the drug 
room unaccompanied and retrieving medication from the post office 
box occurred seven weeks after the Inspector told Respondent that 
this was a bad idea.
     Moreover, the MBC Inspector testified that when she spoke with 
Dr. Mericle, the latter stated that ``he was running the office . . 
. just how [Respondent] set it up. . . . He was just seeing the 
patients and following the office procedures that [Respondent] had 
put in place.'' Id. at 131. Consistent with Dr. Mericle's statement, 
Respondent testified that ``Dr. Mericle wasn't fond of it [i.e., the 
use of the post office boxes] either.'' Id. at 542. And on cross-
examination, Respondent testified that Dr. Mericle had ``refused to 
refill those boxes,'' even after the staff told Dr. Mericle that the 
boxes were empty and needed to be refilled. Id. at 757.
---------------------------------------------------------------------------

    Later, Respondent's wife arrived at the clinic. GX 6, at 13. The 
Investigator

[[Page 18703]]

and Respondent's wife went into Respondent office to discuss the 
ongoing compliance problems. Tr. 126-27. Upon entering the office, the 
Investigator observed that there were three drug vials on Respondent's 
desk. Tr. 55-56. The vials appeared to have been returned by patients 
as their labels bore the names of patients. Id. at 56-57. Most 
significantly, the medications had not been secured. Id. at 57. While 
the Inspector testified that the label on one of the vials indicated 
that it contained phentermine, she conceded that she did not know 
exactly what drugs were in the vials. Id. at 90-91.\9\
---------------------------------------------------------------------------

    \9\ When asked about the vials, Respondent testified that they 
were ``very old'' bottles which used a different labeling format. 
Id. at 527. Respondent then testified that ``[t]he patient brought 
it back saying that I want the kind of medication as I was taking it 
four years ago.'' Id. Respondent did not maintain that the bottles 
had been returned after he was shot. Id.
---------------------------------------------------------------------------

    While Respondent testified that ``we followed every single 
instruction of [the MBC Inspector] to the letter,'' Tr. 530, the MBC 
apparently thought differently. On April 13, 2010, it brought a new 
Accusation against Respondent based on the issues found during the 
December 2009 and January 2010 visits. GX 8, at 19.
    The Accusation alleged five grounds for discipline. First, the 
Board alleged that Respondent had ``fail[ed] to adequately label the 
medication labels as observed by [its] [I]nvestigator on'' December 10, 
2009 and January 28, 2010. Id. at 16. Second, the Board alleged that 
Respondent failed to properly secure controlled substances, noting that 
the medication room and drug cabinet were left open and unlocked 
throughout the day, as well as the incident in which a patient was 
allowed to enter the drug room and retrieve medication from a mailbox. 
Id. at 16. Third, the Board alleged that Respondent ``fail[ed] to 
maintain a current and accurate drug inventory.'' Id. at 17. Fourth, 
the Board alleged that Respondent failed to properly consult with his 
patients when dispensing drugs and that he failed to offer written 
prescriptions. Id. at 17-18. Fifth, the Board alleged that Respondent 
aided and abetted the unlicensed practice of medicine by allowing his 
medical assistants to dispense drugs without his ``direct 
supervision.'' Id. at 18.
    On December 10, 2010, Respondent entered into a Stipulated 
Settlement and Disciplinary Order with the MBC; on April 8, 2011, the 
Board adopted the Order, which became effective on May 6, 2011. Id. at 
1, 10. Therein, ``Respondent admit[ted] the truth of each and every 
charge and allegation in [the] Accusation.'' Id. at 3.
    However, in his testimony, Respondent stated that he signed the 
Stipulation ``[p]artially unwillingly,'' because he ``was told both by 
[the] deputy AG and my attorney that [it was] a good offer.'' Tr. 723. 
Respondent then testified that he felt that ``[s]ome of'' the 
allegations were ``exaggerated'' by the MBC's Investigator, 
particularly those related to his allowing his unlicensed employees to 
dispense drugs when he was not present. Id. Respondent analogized his 
signing of the Stipulation to signing a traffic ticket to avoid being 
arrested and taken to jail. Id. at 731-32.
    The Order suspended Respondent's medical license for thirty days 
and placed him on probation for three years. Id. at 5. The Order's 
probationary terms include that ``Respondent shall maintain a record of 
all controlled substances ordered, prescribed, dispensed, administered, 
or possessed by [him], and any recommendation or approval which enables 
a patient or patient's primary caregiver to possess or cultivate 
marijuana for the personal medical purposes of the patient within the 
meaning of'' California law. Id. The record was required to include the 
patient's name and address, date, ``the character and quantity of 
controlled substance involved,'' and ``the indications and diagnosis 
for which the controlled substances were furnished.'' Id. at 5. The 
Order further required that Respondent ``keep these records in a 
separate file or ledger, in chronological order.'' Id. Respondent was 
also required to take an ethics course, ``prohibited from supervising 
physician assistants,'' and required to obey all federal, state and 
local laws, and rules governing the practice of medicine in California. 
Id.
    On the issue of Respondent's compliance with the 2011 MBC Order, 
the Government called Mr. TW, the probation monitor who had begun 
supervising him on April 25, 2012; Respondent called Ms. VG, his 
probation monitor from the effective date of the order until the case 
was transferred to TW. Ms. VG testified that Respondent had ``been in 
compliance'' with the terms of his probation during the period in which 
she was his monitor. Tr. 447. According to Ms. VG, if there was 
``something that I needed to have him do . . . I gave him a deadline 
and I believe he met them.'' Id. at 448. Ms. VG also testified that any 
such issues did not warrant writing ``a noncompliance report.'' Id. 
However, on cross-examination, Ms. VG stated that Respondent's log of 
his dispensings and marijuana recommendations did not include the 
number and street name of the patients' addresses. Id. at 453; see also 
GX 8, at 5.
    Ms. VG subsequently testified that in ``trying to refresh her 
recollections,'' she had reviewed Respondent's drugs logs and ``noticed 
there was no street number or street name'' and that she ``did not send 
[Respondent] a letter advising him he needed to correct that.'' Tr. 
454. Ms. VG then acknowledged that she did not have ``a good'' reason 
for failing to notify Respondent that he was not in compliance. Id. at 
455.
    Mr. TW testified that on May 24, 2012, he met with Respondent and 
reviewed his marijuana recommendation log. Id. at 176. Mr. TW testified 
that upon reviewing the logs, he noticed that they did not ``have the 
full address of the patient'' and included only ``the city, state and 
zip code.'' Id. According to Mr. TW, Respondent stated that Ms. VG 
``had reviewed'' his log and ``told him that he no longer had to keep 
the address of the patients on the controlled substance log.'' Id. at 
178. When Mr. TW asked Ms. VG about this, she explained that while she 
had notice that the address was not being kept in the log, ``she 
allowed for that to occur in a sense [that] she would not put him out 
of compliance with it, but not that it was okay to not complete the log 
in its entirety.'' \10\ Id. at 179.
---------------------------------------------------------------------------

    \10\ While Ms. VG's statement to Mr. TW was clearly hearsay, 
Respondent called Ms. VG to testify and could have questioned her 
(but did not) about whether she made the statements to which Mr. TW 
testified. Tr. 179.
---------------------------------------------------------------------------

    Mr. TW told Respondent that ``he need[ed] to actually keep the log 
in full as per the wording in the order.'' Id. The next day, Mr. TW 
sent Respondent a letter ``inform[ing] him that he would be considered 
to be out of compliance by not keeping that information up to date.'' 
Id. at 179-80.
    On or about May 30th, Respondent sent Mr. TW an email, to which he 
attached scanned copies of his marijuana logs. Id. at 180. Mr. TW 
testified that upon looking at the logs, ``they still didn't include 
all the information that was necessary'' under the Board's order. Id. 
Mr. TW then sent Respondent an email, in which he ``cited the verbiage 
in the order to let [Respondent] know exactly what we needed to have as 
far as his controlled substance log.'' Id. Mr. TW clarified that the 
missing information was the ``address information for the patient.'' 
Id. at 181. Explaining his continued failure to comply with the order, 
Respondent again cited the information he claimed to have received from 
Ms. VG. Id. He further testified that he did

[[Page 18704]]

not include that information in the log because ``[h]is patients didn't 
really want to release their information to the Medical Board.'' Id. 
However, following an exchange of emails, Respondent stopped working at 
the marijuana facility. Id. at 183.

The DEA Investigation

    On May 23, 2011, the Sacramento DEA field office received a copy of 
the MBC's Order. Tr. 206. After verifying that Respondent's medical 
license had been suspended, on May 25, 2011, two DEA Diversion 
Investigators (hereinafter, DI or DIs) went to Respondent's Roseville 
office. Id. at 210. Upon their arrival, the DIs met Ms. GA, one of 
Respondent's medical assistants. Id. at 210-11. Ms. GA told the DIs 
that Respondent ``was out of the country.'' Id. at 211. The DIs asked 
Ms. GA if there was another doctor with whom they could talk and met 
Dr. Stephen Fisher, who also said that Respondent was out of the 
country. Id. Dr. Fisher then explained that he was working for 
Respondent on a temporary basis and had started on May 16th. Id. The 
DIs then told Ms. GA and Dr. Fisher that they needed to speak with 
Respondent and eventually they spoke to him by phone. Id. at 212.
    One of the DIs told Respondent, who was still in the country, that 
because his state license had been suspended, he did not ``have 
authority to handle controlled substances.'' Id. at 213. Respondent 
agreed to meet the DIs later that day at his Roseville clinic; the DIs 
brought to the meeting four voluntary surrender forms, one for each of 
his registrations. Id. at 214.
    Upon meeting Respondent, the DIs again explained that in order to 
hold a DEA registration, he was required to have state authority to 
handle controlled substances, and because his license had been 
suspended, he did not have current authority. Id. The DIs then told 
Respondent that he could either surrender his registration or they 
would pursue the issuance of an Order to Show Cause to revoke his 
registrations. Id. Respondent agreed to voluntarily surrender his 
registration and signed the four forms manifesting his consent. Id. at 
214-15; see also GX 9.
    The DIs then asked Respondent if he had controlled substances at 
any of his clinics. Id. at 216-17. Respondent acknowledged that he had 
controlled substances at the Roseville and Elk Grove clinics. Id. at 
217. Because controlled substances must be stored at a registered 
location, and following the surrendering of his registrations, the 
clinics were no longer registered locations, the DIs allowed Dr. Fisher 
to transfer his registration to the Roseville clinic and Respondent to 
transfer the controlled substances located at the clinic to Dr. Fisher. 
Id. However, because Respondent was no longer registered at his Elk 
Grove clinic, and had no doctor who could become registered there, the 
DI's told Respondent that they would have to take possession of these 
controlled substances and arranged to meet at the Elk Grove clinic the 
following day. Id.
    The next day, the DIs went to the Elk Grove clinic, met another of 
Respondent's medical assistants, Michelle Garcia, who showed them the 
controlled substances. Id. at 218. The drugs, which included 
phentermine, phendimetrazine,\11\ and diethylpropion, were stored in a 
locked closet, on a seven to eight-foot high bookshelf. Id. at 219. The 
DIs also found that nutritional products such as protein shakes and 
bars were stored in the closet, but they were not intermingled on the 
same shelf with the controlled substances. Id.
---------------------------------------------------------------------------

    \11\ The DI testified that there was also a small amount of 
Bontril, which is a branded form of phendimetrazine. Id. at 219.
---------------------------------------------------------------------------

    According to the DI, the manner in which the controlled substances 
were stored did not comply with the Agency's regulations. First, the 
closet was not a secure and substantially constructed cabinet as 
required by 21 CFR 1301.75(b). Id. at 220. Second, non-controlled 
substances were stored in the closet with the controlled substances. 
Id.
    The DI further testified that while at the Elk Grove clinic, he and 
his partner took a physical inventory of the controlled substances on 
hand, which they then compared to the daily medication log maintained 
by Respondent and which provided a running inventory. Id. at 222. Ms. 
Garcia provided the DIs with the ``inventory sheet'' for the close of 
business on May 21, which was the last day the Elk Grove clinic had 
been open. Id. The DIs counted the drugs on hand, with Ms. Garcia 
witnessing the count, and determined that the numbers ``were not at all 
close'' to those on the inventory sheets. Id. at 223. However, having 
reviewed the data, the counts for two of the drugs were off by only 
four dosage units each, one was off by nine dosage units, one was off 
by thirteen dosage units, and the remaining three were off by twenty-
four, thirty-four and thirty-five dosage units respectively.\12\ GX 10, 
at 3-5.
---------------------------------------------------------------------------

    \12\ The actual count for phentermine 37.5mg (3194) was off by 
only nine dosage units. See GX 10, at 3, 5.
---------------------------------------------------------------------------

    On May 31, the DIs went to the Roseville clinic and counted the 
controlled substances on hand. GX 10. Upon comparing the counts with 
Respondent's daily inventory record, four of the six drugs had 
discrepancies of seven dosage units or less; the remaining two drugs 
had discrepancies of twenty-seven and thirty-three dosage units. Id. at 
6-7.
    While at the Roseville clinic, the DIs also found a box labeled 
``Gold River,'' which contained more controlled substances and were 
told that the drugs had been moved to the Roseville clinic because the 
Gold River clinic had ``recently . . . closed for business.'' Tr. 229. 
There was, however, no documentation for the transfer. Id. at 229-30. 
Upon counting these drugs and comparing them with the daily inventory 
for the last day that the Gold River clinic had been open for business, 
the DIs determined that there were substantial shortages of three 
drugs: 3,000 dosage units of phentermine 37.5mg; 1,011 dosage units of 
phentermine 30mg; and 1,021 dosage units of phendimetrazine 35mg.\13\ 
See Tr. 229, GX 10, at 1-2.
---------------------------------------------------------------------------

    \13\ Two other drugs found in the Gold River box had 
discrepancies of seven and sixteen dosage units; the remaining drug 
had no discrepancy. See GX 10, at 1-2.
---------------------------------------------------------------------------

    Subsequently, the DIs decided to perform an audit of Respondent's 
controlled substance activities at the Elk Grove, Roseville and Gold 
River clinics. The DIs issued a subpoena for two years of Respondent's 
records, obtained his daily inventory logs, his dispensing logs, and 
his receipts from distributors. Tr. 390, 392-93. Using Respondent's 
daily inventory logs for various dates in late November 2010,\14\ a DI 
added the controlled substances Respondent had received from his 
distributor to arrive at the total amount Respondent was accountable 
for of each drug by dosage unit strength at each of his registered 
locations; using the closing inventory figures, the DI added the 
amounts of each drug which Respondent had either dispensed or 
transfered to calculate the total amount he could account for. Tr. 391-
94. The DI then compared the total amounts for each drug Respondent was 
accountable for, with the totals for which he could account, and 
prepared a chart for each of the three clinics. Id. at 387. In 
addition, a senior DI then reviewed the DI's audit. Id. at 391.
---------------------------------------------------------------------------

    \14\ The opening and closing dates of the audits were November 
20, 2010 and May 26, 2011 for the Elk Grove clinic; November 22, 
2010 and May 31, 2010 for the Roseville clinic; and November 23, 
2010 and May 31, 2011 for the Gold River clinic. See GX 11.
---------------------------------------------------------------------------

    According to the DI, at Elk Grove, Respondent had shortages of 
8,410 dosage units of phentermine 37.5mg;

[[Page 18705]]

2,316 dosage units of phentermine 30mg; 6,637 dosage units of 
phendimetrazine 35mg; 252 dosage units of phendimetrazine 105mg; and 
906 dosage units of diethylpropion 25mg. GX 11, at 1.\15\ At Gold 
River, Respondent was short 3,915 dosage units of phentermine 37.5mg; 
1,046 dosage units of phentermine 30mg; 313 dosage units of 
phendimetrazine, and 390 tablets of phendimetrazine 105mg.\16\ GX 11, 
at 1. And at Roseville, Respondent was short 10,740 tablets of 
phentermine 37.5mg; 3,535 tablets of phentermine 30mg; 5,361 tablets of 
phendimetrazine 35mg; 812 tablets of phendimetrazine 105mg, and 595 
tablets of diethylpropion 25mg.\17\ Respondent thus had shortages 
totaling more than 40,000 dosage units.
---------------------------------------------------------------------------

    \15\ At Elk Grove, Respondent had small overages of thirty-five 
dosage units of diethylpropion 75mg and four dosage units of Bontril 
105mg. GX 11, at 1.
    \16\ At Gold River, Respondent also had a shortage of fourteen 
dosage units of diethylpropion 25mg, and seven dosage units of 
dielthylpropion 75mg. GX 11, at 2.
    \17\ At Roseville, Respondent had a small overage of seven 
dosage units of Bontril 105mg. GX 11, at 3.
---------------------------------------------------------------------------

    In his testimony, Respondent challenged the accuracy of the DEA 
audit and offered two charts into evidence.\18\ See RXs 14 & 15. The 
first chart (RX 14), which is labeled ``Dispensing/Inventory Log,'' 
purports to list for each clinic, Respondent's monthly dispensings of 
each drug (by strength), the shipments received (presumably during the 
audit period), and closing inventory.\19\ The second of these exhibits 
(RX 15), lists on a monthly basis for the years 2010 and 2011, the 
quantities for each drug (and strength) that he received from his 
distributor, but does not break down the quantities distributed to each 
clinic. As for the list of Respondent's receipts (RX 15), which only 
lists the month, drug, and quantity, and not the actual date of 
receipt; with respect to several of the drugs (phentermine 37.5, 
phentermine 30, and phendimetrazine 35), the DI's figures actually 
charged him with receiving smaller quantities than are listed on this 
document.\20\
---------------------------------------------------------------------------

    \18\ At the hearing, Government counsel objected to the 
introduction of the charts because they were not disclosed prior to 
the hearing, and thus he had ``no effective way of cross-examining'' 
Respondent on them. Tr. 771. When Respondent's counsel subsequently 
sought to enter the exhibits, Government counsel renewed his 
objection. Id. at 851. The ALJ overruled the Government's objection, 
reasoning that because the Government opened the door, it could not 
claim prejudice. Id.
     I conclude that the ALJ properly overruled the Government's 
objection. A review of the record shows that in response to 
Respondent's testimony that he believed the DEA audit had 
``tremendous inaccuracies,'' Government counsel asked if he had a 
chart and if he had brought it to the hearing. Id. at 760. 
Respondent answered affirmatively, and after the exhibits (RX 14 and 
15) were marked, Government counsel proceeded to ask Respondent 
several questions regarding the charts, including how his figures 
compared with those on two DEA forms, a receipt for seized items (RX 
11), and the closing inventory form (GX 10), before moving on. Tr. 
768-70. Having proceeded to question Respondent regarding these 
exhibits, the Government opened the door to their admission and the 
ALJ properly denied the objection.
    \19\ While the closing inventories were taken after Dr. Fisher 
took over Respondent's Roseville clinic, Respondent testified that 
after his suspension became effective, medication was no longer 
being dispensed at the clinic. See Tr. 569 (``The period where [the 
DI] audited the clinic is to the point that the medication was 
basically last day dispensed, which is prior to my suspension at the 
end of May of 2011. From the time of my suspension thereon to this 
date, they do not carry medication in the office. They issue 
prescription pad to the patient and the patient goes to the 
pharmacy.'').
     Notably, Respondent makes no claim that Dr. Fisher diverted any 
of the drugs at the Roseville clinic and the counts taken during the 
closing inventory were typically off only by a small number of 
tablets from the figures listed in this clinic's Daily Inventory.
    \20\ More specifically, the Government's audit found that 
Respondent received 39,941 dosage units of phentermine 37.5, see GX 
11, while the shipments listed in Respondent's chart for November 
2010 through May 2011, total 42, 821 dosage units. See RX 15. The 
discrepancy may be explained by the fact that according to 
Respondent's chart, 5,995 dosage units of this drug were received in 
November 2010. RX 15, at 2-3. However, Respondent's chart does not 
set forth what quantities may have been received prior to the 
starting date (November 21, 2010) of the Government's audit. See RX 
15.
     With respect to phendimetrazine 35, the shipments listed on RX 
15 for November 2010 through May 2011 total 16,996 dosage units, of 
which 3,996 dosage units were received during the month of November. 
RX 15. By contrast, the Government found that Respondent received 
10,118 dosage units during the audit period.
     With respect to phentermine 30, Respondent's chart lists no 
shipments as having been received in November 2010 and the shipments 
received between December 2010 and May 2011 total 13,997 dosage 
units. RX 15. By contrast, the Government's audit found that 
Respondent received 11,997 dosage units. See GX 11.
     With respect to phendimetrazine 105 and diethylpropion 25, the 
Government's figures match the shipments listed on RX 15.
---------------------------------------------------------------------------

    In his testimony, Respondent disputed the accuracy of the 
Government's figures for the amounts of the various drugs he dispensed. 
Tr. 808-09. Regarding the Elk Grove clinic, Respondent maintained that 
he had dispensed 11,207 dosage units of phentermine 37.5, and that this 
was based on his dispensing records. Id. at 809. By contrast, the 
Government's audit found that he had dispensed only 2,754 dosage units. 
GX 11, at 1. Regarding the discrepancy, Respondent testified:

    I mean, how could in six months in such a busy office only 2,754 
pills be dispensed? That's only two bags of medication in six months 
while I in that same office handed over 11,207 pills. Not only are 
[sic] patient charts and logs show that, also the expense log in the 
patient's chart where the patient paid for it, and it matches with 
that, our revenue matched with that. So we did sell that many pills.

Tr. 842. Indeed, for many of the drugs, Respondent's figures for the 
amounts dispensed (which are listed on his ``Dispensing/Inventory 
Log'') were three to five times greater (and sometimes more) than the 
Government's.\21\ Compare GX 11 with RX 14.
---------------------------------------------------------------------------

    \21\ As other examples, Respondent asserted that at his Elk 
Grove clinic, he dispensed 3,990 dosage units of phentermine 30 and 
4,872 dosage units of phendimetrazine 35; the DI found that he 
dispensed only 850 dosage units of phentermine 30 and 213 dosage 
units of phendimetrazine 35. Compare GX 11, at 1, with RX 14. At the 
Roseville clinic, Respondent asserted that he dispensed 17,500 
dosage units of phentermine 37.5; 4,956 dosage units of phentermine 
30; and 5,397 dosage units of phendimetrazine 35 mg . RX 14. By 
contrast, the Government's audit found that he dispensed only 4,965 
dosage units of phentermine 37.5; 909 dosage units of phentermine 30 
mg; and 377 dosage units of phendimetrazine 35mg. GX 11.
    At Gold River, Respondent assert that he dispensed 7,630 dosage 
units of phentermine 37.5; 2,590 dosage units of phentermine 30; and 
3,339 dosage units of phendimetrazine 35. RX 14. By contrast, the 
Government's audit found that he dispensed only 2,103 dosage units 
of phentermine 37.5; 822 dosage units of phentermine 30mg; and 355 
dosage units of phendimetrazine. GX 11.
---------------------------------------------------------------------------

    Moreover, on the Dispensing/Inventory log, Respondent listed the 
shipments he had received during the audit period for each of the 
drugs, including the total he had received for all three clinics.\22\ 
With respect phentermine 37.5, Respondent listed his total receipts as 
5547 dosage units. RX 14. Yet even subtracting out all of the 5,995 
dosage units Respondent received in November 2010, RX 15 still lists 
shipments totaling 36,826 dosage units. See RX 15. As for phentermine 
30, Respondent listed his total receipts as 1,852 dosage units. See RX 
14. Yet, according to RX 15, Respondent received a total of 13,997 
dosage units during the audit period. RX 15.
---------------------------------------------------------------------------

    \22\ Respondent testified that the ``[s]hipment in'' lines on RX 
14 reflects ``the amount of shipment they [Calvin Scott, his 
distributor] made to the office,'' and that these figures were 
``based on'' RX 15. Tr. 805.
---------------------------------------------------------------------------

    With respect to phendimetrazine 35, on the Dispensing/Inventory 
log, Respondent listed his total receipts as 664 dosage units. See RX 
14. Here again, even subtracting out all of the 3,996 dosage units 
Respondent received in November 2010, he still received a total of 
13,000 dosage units during the audit period. RX 15. And as for 
phendimetrazine 105, Respondent listed his total receipts as 390 dosage 
units. See RX 14. Yet, according to RX 15, Respondent received a total 
of 3,000 dosage units during the audit period. See RX 15.

[[Page 18706]]

    While, on cross-examination, Respondent admitted that he had never 
previously conducted an audit, he nonetheless maintained that ``my math 
is good.'' Tr. 807. However, the disparities between the total of 
quantities of the monthly shipments listed on RX 15 and the quantities 
Respondent listed on the Dispensing/Inventory log (RX 14) as his 
incoming shipments suggest the opposite. Indeed, the inconsistencies 
between these figures are of such a magnitude as to call into question 
the reliability of any of the data contained in Respondent's 
Dispensing/Inventory logs. RX 14. I therefore decline to give any 
weight to the dispensing data offered by Respondent and adopt the 
findings of the audit performed by the DI.
    As found above, upon the suspension of his medical license, 
Respondent initially hired Dr. Stephen Fisher to cover his practice. 
However, according to Respondent, following the MBC's adoption of the 
Stipulated Settlement and Disciplinary Order, the MBC Probation Monitor 
(Ms. VG) met with him to discuss the ``dos and don'ts'' while his 
medical license was suspended. Tr. 552. For whatever reason, Ms. VG 
only allowed Dr. Fisher to work at the clinic for ``three days . . . 
from [the] beginning of [Respondent's] suspension'' after which 
Respondent was required to find ``a bona fide locum tenens company.'' 
Tr. 553.\23\ Respondent then contracted with a company known as Staff 
Care to provide a locum tenens physician for the remainder of his 
suspension. Id.
---------------------------------------------------------------------------

    \23\ There was testimony suggesting that Dr. Fisher was on 
probation at the time of Respondent's suspension, and that because a 
probationer cannot supervise another probationer, the former could 
not work for Respondent, who remained the owner of the clinic. Tr. 
365, 370. However, according to Ms. VG, she ``advised Dr. Fisher 
that a non[-]licensed physician cannot pay, cannot hire a licensed 
physician, and during the time of [Respondent's] suspension, Dr. 
Fisher could not work for him hourly.'' Id. at 458.
---------------------------------------------------------------------------

    On June 22, 2011, after the suspension of his state license ended, 
Respondent resumed practicing medicine. Id. at 576. On that day, 
Respondent ``saw almost [thirty-six] patient[s].'' Id. at 577. Having 
surrendered his DEA registrations, Respondent could not lawfully either 
dispense or prescribe controlled substances to his patients. GX 1, at 
1.
    The Government introduced into evidence copies of thirteen 
phentermine prescriptions for Respondent's patients which were called 
in to pharmacies on that day. See GX 12; Tr. 373, 385. Each of the 
prescriptions listed Dr. Fisher as the prescriber. See GX 12. All but 
two of the prescriptions, however, listed the name of one of 
Respondent's employees as the person who had called in the 
prescription; each prescription also listed the phone number of one of 
Respondent's clinics.\24\ See id.; see also Tr. 413-14.
---------------------------------------------------------------------------

    \24\ The DI subsequently testified that to his knowledge, 
Respondent did not ``call in any prescriptions himself.'' Tr. 415.
---------------------------------------------------------------------------

    The next day, the DI received a phone call from Dr. Fisher. Id. at 
364. After reporting that his prescription pad had been stolen, Dr. 
Fisher explained that Respondent had seen the patients and that 
prescriptions had been called in under his (Dr. Fisher's) DEA 
registration; Fisher then ``asked if this was legal.'' Id. The DI told 
him to ``stop immediately.'' Id.
    The DI further testified that he had received a phone call that 
same morning from Ms. VG, who was then also Respondent's probation 
monitor.\25\ Id. at 366. VG told the DI that ``she had also gotten a 
call from Dr. Fisher stating that [Respondent] had used his . . . DEA 
registration'' without his authorization. Id.
---------------------------------------------------------------------------

    \25\ The DI testified that he received the phone call on June 
22, before he received a visit from Respondent. Tr. 366. However, 
all of the prescriptions were dated June 22. GX 12.
---------------------------------------------------------------------------

    In her testimony, Ms. VG corroborated that she had received a phone 
call from Dr. Fisher ``the day after [Respondent's] suspension was 
lifted.'' Id. at 457. VG further testified that Fisher told her that 
Respondent ``had come into his office with some drug logs of patients, 
that he had used Dr. Fisher's DEA . . . number to prescribe for them, 
and he asked me if that was okay.'' Id. VG then ``asked Dr. Fisher if 
she had seen those patients that day''; Fisher ``said no'' and that he 
had been at the 420 clinic ``that whole day.'' Id. at 458. Moreover, 
Fisher told VG ``that the first he had . . . heard of it was when'' 
Respondent apparently brought the drug logs to Fisher's office and 
``told him he'' had ``used his number.'' Id. When asked how she 
interpreted Fisher's statement, VG testified that ``[i]t seemed he was 
unaware.'' Id.; see also id. at 463 (``I feel that he [Fisher] was 
unaware. I would testify to that.'').
    Later that morning, Respondent showed up at the DEA office. Id. at 
360. According to the DI, while initially Respondent asked whether the 
DIs ``could expedite his DEA registration,'' he then told the DIs that 
the day before, ``he had seen patients at his Roseville clinic and that 
Dr. Fisher had called in the prescriptions under Dr. Fisher's DEA 
number.'' Id.; see also id. at 398. However, later in the conversation, 
Respondent stated that the prescriptions were called in by both his 
medical assistants and Dr. Fisher. Id. at 361.
    During the meeting, Respondent mentioned that physician assistants 
and nurse practitioners can ``see patients on behalf of a doctor and 
write prescriptions.'' Tr. 403. The DI testified that while physician 
assistants and nurse practitioners can do this, ``they have to be an 
agent of the practitioner,'' as well as have their own DEA registration 
and be ``authorized to handle controlled substances.'' Id. The DI then 
maintained that Respondent could not act in this manner as he was not 
registered and because he owned the clinics, ``he was not an agent of 
Dr. Fisher.'' Id. at 405.
    The DIs then went to interview Dr. Fisher, who was working at an 
entity (Sacramento 420 Evaluations), which provided medical marijuana 
evaluations. Id. at 408. Upon their arrival, Fisher told the DIs that 
he had just spoke with Respondent, and that Respondent had told him 
that he had talked to the DIs and ``that it was okay to continue using 
his DEA number.'' According to the DI, when they initially ``asked Dr. 
Fisher if he had personally called in all the prescriptions,'' Fisher 
denied having called in any of them and said that Respondent's medical 
assistant did so. Id. at 366-67. Fisher further told the DIs that while 
he may have previously treated some of the patients, the day before he 
was working at the 420 clinic and not at Respondent's Roseville clinic. 
Id. at 367. However, the DI did not determine whether Dr. Fisher had 
ever actually seen these patients. Id. at 420-21.
    The DI testified, however, that subsequently, Dr. Fisher's story as 
to whether he had authorized the prescriptions changed ``back and 
forth.'' Id. at 368; see also id. at 415 (testimony of DI that Fisher 
changed his story ``multiple times'').\26\ Moreover, during the 
interview, VG called and was placed on the speaker phone. Id. at 368-
69. However, Fisher then stated that ``he did authorize'' the 
prescriptions the day before, ``but from that point on, they were no 
longer authorized.'' Id. at 369. The DI--in response to the 
Government's question--then acknowledged that Fisher had changed his 
story. Id. Moreover, when asked by the Government whether Fisher 
appeared coherent, the DI replied ``No'' and explained that when Fisher 
was asked about the prescriptions, he could

[[Page 18707]]

not recall whether this incident had occurred the day before or several 
days earlier. Id. The DI also testified that there were ``other things 
that happened . . . that had given us the impression that he [Fisher] 
wasn't completely aware of what was going on.'' Id.
---------------------------------------------------------------------------

    \26\ Regarding the interview, the DI further testified that ``it 
was pretty obvious that he was being deceptive, as in he was trying 
to change [his story] based on whatever we wanted to hear or 
whatever wouldn't get him in trouble. Just being honest, it seemed 
like he was making up a story.'' Tr. 416.
---------------------------------------------------------------------------

    Regarding this allegation, Respondent testified that upon arriving 
at his clinic on the morning of June 22, he called Dr. Fisher and asked 
him if he could come in and cover the clinic. Tr. 576. However, Dr. 
Fisher told Respondent that he could only cover the clinic until 11 
a.m. because his shift at the 420 clinic started at 11:30. Id. After 
Fisher suggested that Respondent cover the clinic himself, Respondent 
stated that that would not work. Id. Respondent then proposed that he 
would see the patients, and that while he could not ``prescribe 
appetite suppressants to them,'' Fisher had ``seen some of'' them; 
Respondent would then report the patients' conditions to Fisher, and if 
the latter agreed, ``then [Fisher would] authorize [Respondent's 
clinic] to call [a prescription] in for [Fisher] or [Fisher could] call 
it in'' himself. Id. at 576-77.
    According to Respondent, Dr. Fisher ``agreed'' to the arrangement. 
Id. at 577. Respondent told Fisher that when he was ``done seeing these 
patient[s],'' he would call Fisher and report the patient's condition 
and ``have the staff run the vital sign of the patient with you, and 
then you authorize them to call it in for you.'' Id. Respondent 
testified that when they were done with the patients, he called Fisher 
and ``informed [him] of these patients'' and Fisher then spoke with 
Genevieve, one of the medical assistants, and told her that because he 
was ``on probation, a log of these patients must be made'' and ``must 
be done on the board probationary unit forms.'' Id. Respondent then 
testified that his medical assistants ``reported the patients to'' 
Fisher, id. at 578, that Fisher ``recalled some of them,'' id.. at 577, 
and Fisher ``authorized them to call in the'' prescriptions. Id. at 
578. Respondent also testified that his staff created a log of the 
prescriptions on probation unit forms and gave them to VG the following 
day. Id. at 579.
    When asked whether he was trying to circumvent his lack of a DEA 
registration, Respondent testified that he ``deeply'' regretted his 
actions and that it ``was a big mistake done that day by me.'' Id. He 
added that ``[i]t should not have ever have happened, and it is not 
going to happen.'' Id.

Additional Testimony of Respondent

    Regarding the MBC Investigations, Respondent acknowledged that 
prior to the December 10, 2009 visit, sometimes he was not onsite when 
medication were dispensed. Tr. 535. He further stated that after that 
visit, he changed that practice so that at ``lunchtime the clinic's 
completely closed . . . and nobody would see any patients because the 
doctor . . . would not be in the premises.'' Id. at 536. Regarding his 
recordkeeping, Respondent testified ``that we should have had the daily 
inventory of what is in and what [was] going out,'' and that ``we were 
in error or it was not complete enough.'' Id. Respondent further stated 
that he began to implement this change ``immediately after'' the 
inspection and that he kept the logs ``in the office'' where ``the 
staff did not have access to it [sic] because I was afraid [of] any 
tampering or loss of logs.'' Id. at 536-37.
    Respondent testified that when the MBC Inspector returned on 
January 28, 2010, the staff did not have the logs ``because I had them 
with me.'' Id. at 537. However, he then testified that implementing 
everything ``was work in progress.'' Id. Subsequently, Respondent 
testified that the inventory sheets were ``sitting on top of the 
cabinet in the med room'' and that ``it's easy for anybody who wants to 
inspect [to] walk in there and see those inventory sheets.'' Id. at 
845.
    Later in his testimony, Respondent denied that he bore 
responsibility for the MBC's finding that on January 28, 2010, his logs 
did not indicate the different drug strengths. Id. at 824; GX 8, at 17. 
Respondent asserted that ``[w]homever covers the shift that day is 
responsible, and by that time Dr. Mericle was covering the shift for 
almost a week.'' Tr. 824-25.
    Respondent also asserted that upon returning to practice, he 
``reimplemented the strict inventory control [of] scheduled substances 
shipped to us, logging it side by side with the medication dispensed, 
and keep [sic] track of daily inventory to make sure we are balanced 
and in compliance.'' Id. at 544. He also apologized for having 
medications, which were labeled for clinics other than the clinic where 
they were to be dispensed, explaining that when they ``were short in 
one office . . . we brought medication from another office.'' Id. 
Respondent further testified that while he complied with the 
Inspector's labeling recommendation, he ``still had existing 
medications with the label from another clinic.'' Id. at 545. While 
Respondent testified that the Inspector told him to print new labels 
and place them on the bottles, he then acknowledged that this 
``probably'' did not happen until ``after [he] resume[d] working'' and 
``the bottles were dispensed.'' Id. at 546-47. Respondent explained 
that he ``noticed that that's what they're doing, but as long as it was 
labeled, I didn't see anything wrong with that.'' Id. at 547. And when 
asked whether, ``[i]n hindsight, [he saw] anything wrong with that,'' 
Respondent answered:

    I think . . . if the inspection is taking place, anybody coming 
to inspect the med room and look at those drugs and don't have label 
on it, it may relay impression that we still have this big mess 
going on, you know? Should not have been there. They should be 
properly labeled and in there.

Id.

    More generally regarding his compliance issues, Respondent 
testified that he had ``learned quite a bit'' and that ``this is a very 
humbling experience.'' Id. at 584-85. He further stated that ``I 
definitely ask question first and then commit to an action, and until I 
don't have a clear answer, I don't have clear path that is in accords 
with the laws of the land . . . I would not commit to it.'' Id. at 585. 
Respondent added that he was ``still learning and I'm going to commit 
myself to a better process.'' Id.
    When asked if he had trouble understanding the statutes, and what 
he would do to aid in himself in this regard, Respondent bemoaned that 
``[i]t is very difficult'' and that ``legal language or all these 
quotes are not easy to understand[]'' and ``need[ed] little further 
elaboration and explanation.'' Id. He then stated that this was ``not 
the excuse,'' and that if he did not ``understand,'' he would ``have to 
refer to sources that . . . do know it.'' Id. at 585-86. When asked 
what other changes he would make, Respondent testified that he ``will 
not be doing weight management anymore'' and ``will not have local 
pharmacy,'' meaning that he would not have ``scheduled drug[s] in the 
office'' because there is ``too much paperwork'' and ``too much 
responsibility.'' Id. at 586. Respondent then stated that he only 
wanted authority to write prescriptions. Id. at 587.
    Respondent further testified that he was ``uninformed'' about the 
rules, but that it was his own ``fault.'' Id. at 592. He then asserted 
that he will ``take every measure to make sure I'm in compliance with'' 
the MBC and DEA's rules, and that ``there is a time that one has to 
admit to his guilt and move on, you know?'' Id.
    On cross-examination, Respondent admitted that in 2006, his then-
probation monitor had discussed with him his use of unlicensed 
personnel to dispense controlled substances. Id. at

[[Page 18708]]

716-17. He further admitted that he told the first probation monitor 
that he would change his clinics' days and hours of operation to ensure 
that the clinics were open only when a physician was present and that 
he would no longer allow his staff to dispense medications. Id. at 718. 
Later, he answered ``yes'' when asked whether he had assured his first 
probation monitor that he would supervise the dispensing of 
medications. Id. at 782. However, he subsequently testified that while 
he understood the probation monitor's advice to mean that he must be 
physically ``present in the office,'' this did not mean the same as 
``direct supervision'' of the medical assistant. Id. at 815-16. 
Respondent then maintained that the probation monitor had never told 
him that he needed to be in the same room or watch his assistants as 
they dispensed medications. Id. at 816. Respondent asserted that he 
``made sure that [he was] in the office,'' but that in 2009, there 
were, in the words of his counsel, ``a couple of occasions that slipped 
through in Gold River.'' Id. at 817. Respondent also denied telling his 
first probation monitor that he had the only key to the drug room. Id. 
at 719.
    As for the allegations that gave rise to the second MBC 
investigation (that Respondent was allowing his unlicensed staff to 
dispense medication when he was not present), Respondent only 
``partially'' agreed with them. Id. at 720. More specifically, he 
asserted that the unlicensed staff was not free to dispense medication 
and that he had pre-dispensed the medication by placing it a manila 
envelope which was sealed, and that there was a notation written on the 
back. Id. He also disputed the testimony of the MBC Investigator that 
he was not present when medication was dispensed to Investigator II on 
December 10, 2009 visit, testifying that he was in the clinic when she 
received the medication. Id. at 721-22. According to Respondent, the 
allegation was exaggerated, id. at 723, and that he directed his 
receptionist to ask the patient to count the medications and had 
``video to show'' this.\27\ Id. at 780. While Respondent eventually, 
but reluctantly, admitted that his clinics were dispensing drugs when 
he was not present, id. at 727, he continued to deny that he was not 
present when the MBC Investigator obtained controlled substances on 
December 10, 2009. Id. at 780.
---------------------------------------------------------------------------

    \27\ Respondent did not, however, produce any such video. Tr. 
780.
---------------------------------------------------------------------------

    Respondent also disputed the MBC's findings that he failed to 
properly secure controlled substances. Id. at 735. Indeed, Respondent 
asserted that MBC Investigator had ``opened the [drug] cabinet, 
photographed it . . . and later she presented to the board that this is 
how she found it.'' Id. at 736. Respondent then asserted that ``the 
door to the hallway is always closed,'' and that ``[w]e never leave the 
door to the med room wide open, the cabinet wide open.'' Id.
    Respondent also denied that at the time of the May 2011 inspection, 
he was still violating regulations that required him to store his 
controlled substances in a substantially constructed and securely 
locked cabinet. Id. And when asked by the Government whether he was 
familiar with the Code of Federal Regulations, Respondent answered 
``[n]o.'' Id. at 737.
    Regarding whether he had discussed with the MBC Investigator the 
use of the mail boxes and her having told him that it was a bad idea, 
Respondent testified that he did not recall the conversation. Tr. 752. 
Moreover, he did not recall whether he told anyone about the boxes. Id. 
at 753. Regarding the January 28, 2010 incident, in which a patient 
entered the drug room unescorted and retrieved medication from one of 
the boxes, Respondent initially testified that the patient ``was never 
left alone,'' and that to his knowledge the boxes were not being used 
when he was not present. Id. at 756. However, he then acknowledged that 
he had set up the practice and that it was still in place when he was 
shot. Id. And still later, Respondent testified that he ``knew from the 
staff . . . that the patient went to the boxes and there was nothing 
there because those things need to be replenished after each visit.'' 
Id. at 833.
    While Respondent admitted that he failed to maintain accurate drug 
inventories as alleged in the 2010 MBC Accusation, he denied that the 
problem was still ongoing at the time of the May 2011 DEA inspections. 
Id. at 759. Moreover, even though he was not physically present when 
the DEA Investigator took a physical inventory, which was witnessed by 
one of his employees, Respondent asserted that the DEA counts were 
inaccurate, id. at 762, and that ``my inventory is much more accurate 
than what [the DI] did.'' Id. at 787. However, he then admitted that 
one of his employees had verified the DEA counts. Id. at 762.
    Respondent further denied that he had ever told the MBC Inspector 
that maintaining inventories was difficult, inconvenient and time 
consuming. Id. at 773-74. When confronted with his having stipulated to 
the truth of the allegation in the MBC Order, Respondent stated that 
agreed to sign the Order because as part of a ``package offer'' and 
that this ``was minor compared to the big picture.'' Id. at 774. 
However, Respondent then acknowledged that inventories must be done 
``accurately,'' that he ``made a mistake'' and asserted that he was 
``willing to take any action'' to ``remedy . . . the oversight.'' Id. 
at 775.
    Respondent testified that he had not taken any courses on the 
proper handling of controlled substances, stating that ``[i]t was not 
required.'' Id. at 796-97. He also stated that he had never inquired as 
to whether there were any such courses available. Id. at 797.

Discussion

    Section 303(f) of the Controlled Substances Act (CSA) provides that 
``[t]he Attorney General 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 CSA 
directs that the following factors be considered:

    (1) The recommendation of the appropriate State licensing board 
or professional disciplinary authority.
    (2) The applicant's experience in dispensing . . . 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.

Id.

    ``[T]hese factors are . . . considered in the disjunctive.'' Robert 
A. Leslie, 68 FR 15227, 15230 (2003). I may rely on any one or a 
combination of factors and may give each factor the weight I deem 
appropriate in determining whether to deny an application for a 
registration. Id. Moreover, I am ``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).
    Where the Government has met its prima facie burden of showing that 
issuing a new registration to the applicant would be inconsistent with 
the public interest, the burden then shifts to the applicant to 
``present sufficient mitigating evidence'' to show why he can be 
entrusted with a new registration. Medicine Shoppe-Jonesborough, 73 FR 
364, 387 (2008) (quoting Samuel S. Jackson, 72 FR 23848, 23853 (2007) 
(quoting Leo R. Miller, 53 FR 21931, 21932 (1988))).

[[Page 18709]]

``Moreover, because `past performance is the best predictor of future 
performance,' ALRA Labs, Inc. v. DEA, 54 F.3d 450, 452 (7th Cir.1995), 
[DEA] 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 FR at 387; see also 
Jackson, 72 FR at 23853; John H. Kennedy, 71 FR 35705, 35709 (2006); 
Cuong Tron Tran, 63 FR 64280, 64283 (1998); Prince George Daniels, 60 
FR 62884, 62887 (1995). Because of the authority conveyed by a 
registration and the extraordinary potential for harm caused by those 
who misuse their registrations, DEA places significant weight on an 
applicant/registrant's candor in the proceeding. See Hoxie v. DEA, 419 
F.3d at 483 (``admitting fault'' is ``properly consider[ed]'' by DEA to 
be an ``important factor[]'' in the public interest determination).
    Having considered all of the factors, I hold that the Government 
has met is prima facie burden of showing that Respondent has committed 
acts which render his registration ``inconsistent with the public 
interest.'' 21 U.S.C. 823(f). I further hold that Respondent has not 
rebutted the Government's prima facie case and reject the ALJ's 
recommendation that I grant Respondent a restricted registration. 
Accordingly, Respondent's applications will be denied.

Factor One--The Recommendation of the State Licensing Authority

    While not specifically citing this factor, the Government argues 
that it ``has established a basis for the denial of Respondent's 
pending applications . . . under [21 U.S.C.] 824(a) based upon . . . 
the previous suspension of his state medical license.'' Gov. Post-Hrng. 
Br. 28. The Government is mistaken, because to exercise the authority 
granted under section 824(a)(3), the Agency must find not only that a 
registrant or applicant ``has had his State license or registration 
suspended, revoked, or denied by competent State authority,'' but also 
that the registrant/applicant ``is no longer authorized by State law to 
engage in the . . . distribution[] or dispensing of controlled 
substances.'' 21 U.S.C. 824(a)(3). As the Government subsequently 
acknowledges, Respondent's state license has been reinstated, and while 
he is subject to various probationary terms, none of those terms either 
prohibit or limit his authority to dispense controlled substances in 
the course of professional practice. Gov. Post-Hrng. Br. 28. Respondent 
therefore meets the CSA's prerequisite for obtaining a practitioner's 
registration. See 21 U.S.C. 823(f) (``The Attorney General shall 
register practitioners . . . to dispense . . . controlled substances . 
. . if the applicant is authorized to dispense . . . controlled 
substances under the laws of the State in which he practices.'' 21 
U.S.C. 823(f).
    However, while Respondent now satisfies the condition that he hold 
authority under state law to dispense controlled substances, this 
conclusion ```is not dispositive of the public interest inquiry.''' 
George Mathew, 75 FR 66138, 66145 (2010), pet. for rev. denied Mathew 
v. DEA, No. 10-73480, slip op. at 5 (9th Cir., Mar. 16, 2012); see also 
Patrick W. Stodola, 74 FR 20727, 20730 n.16 (2009). As the Agency has 
long held, ``the Controlled Substances Act requires that the 
Administrator . . . make an independent determination [from that made 
by state officials] as to whether the granting of controlled substance 
privileges would be in the public interest.'' Mortimer Levin, 57 FR 
8680, 8681 (1992). Accordingly, this factor is not dispositive either 
for, or against, the granting of Respondent's applications. Paul Weir 
Battershell, 76 FR 44359, 44366 (2011) (citing Edmund Chein, 72 FR 
6580, 6590 (2007), pet. for rev. denied Chein v. DEA, 533 F.3d 828 
(D.C. Cir. 2008)).\28\
---------------------------------------------------------------------------

    \28\ As for factor three, there is no evidence that Respondent 
has been convicted of an offense ``relating to the manufacture, 
distribution or dispensing of controlled substances.'' 21 U.S.C. 
823(f)(3). However, there are a number of reasons why even a person 
who has engaged in misconduct may never have been convicted of an 
offense under this factor, let alone prosecuted for one. Dewey C. 
MacKay, 75 FR 49956, 49973 (2010), pet. for rev. denied MacKay v. 
DEA, 664 F.3d 808 (10th Cir. 2011). The Agency has therefore held 
that ``the absence of such a conviction is of considerably less 
consequence in the public interest inquiry'' and is therefore not 
dispositive. Id.
---------------------------------------------------------------------------

Factors Two and Four--Respondent's Experience in Dispensing Controlled 
Substances and Compliance With Applicable Laws Relating to Controlled 
Substances

    In support of its contention that Respondent's registration would 
be inconsistent with the public interest, the Government points to the 
multitude of violations found during both the MBC and DEA 
investigations. With respect to the state violations, the Government 
cites to the testimony and findings of the MBC that: (1) Respondent 
failed to offer written prescriptions to the undercover officers; (2) 
allowed his unlicensed staff to dispense medications to his patients; 
(3) failed to properly label the controlled substances; (4) failed to 
provide proper security for his controlled substances; and (5) failed 
to maintain accurate drug inventories. Gov. Post-Hrng. Br. 29-31 
(citations omitted). With respect to the federal violations, the 
Government points to the testimony of the DI regarding the May and June 
2011 investigation, which found that Respondent was still failing to 
properly secure controlled substances, that he was still not properly 
documenting the receipt and transfer of controlled substances, and that 
he failed to maintain accurate drug inventories. Id. at 30-31. The 
Government also argues that the results of the DEA audit ``weigh[] 
against'' granting Respondent's application. Id. Finally, the 
Government argues that Respondent engaged in the unauthorized use of 
Dr. Fisher's registration, when he ``caused controlled substance 
prescriptions to issue'' under the latter's registration and that these 
prescriptions violated 21 CFR 1306.04 because Dr. Fisher never saw any 
of the patients that day. Id. at 32.
    With respect to the state violations, each of these is established 
by the MBC's 2011 disciplinary order, in which Respondent admitted the 
truth of each and every allegation contained in the accusation filed by 
the Board. See GX 8, at 3; id. at 11-19. Respondent's admissions to the 
Board's allegations constitute substantial evidence that he committed 
the respective violations. That being said, this does not mean that 
each of the underlying violations established by the MBC's order is 
properly considered under these factors.
    As originally enacted, the Controlled Substances Act did not 
authorize the denial of an application for a practitioner's 
registration (nor revocation of an existing practitioner's 
registration) on public interest grounds, but was limited to those 
instances in which a practitioner had materially falsified an 
application, had been convicted of a state or federal felony relating 
to controlled substances, or did not possess state authority to 
dispense controlled substances. See Comprehensive Drug Abuse Prevention 
and Control Act of 1970, Public Law 91-513, Sec. Sec.  303(f), 304(a), 
84 Stat. 1254 (1970). Over time, Congress came to recognize that the 
``[i]mproper diversion of controlled substances by practitioners is one 
of the most serious aspects of the drug abuse problem. However, 
effective Federal action against practitioners ha[d] been severely 
inhibited by the limited authority in [the then] current law to deny or 
revoke practitioner registrations.'' H.R. Rep. No. 98-1030, at 266 
(1984), reprinted in 1984

[[Page 18710]]

U.S.C.C.A.N. 3182, 3448. Continuing, the House Report explained that:

    The current limited grounds for revoking or denying a 
practitioner's registration have been cited as contributing to the 
problem of diversion of dangerous drugs. In addition, because of a 
variety of legal, organizational, and resource problems, many States 
are unable to take effective or prompt action against violating 
registrants. Since State revocation of a practitioner's license or 
registration is a primary basis on which Federal registration may be 
revoked or denied, problems at the State regulatory level have had a 
severe adverse impact on Federal anti-diversion efforts. The 
criteria of prior felony drug conviction for denial or revocation of 
registration has proven too limited in certain cases as well, for 
many violations involving controlled substances which are 
prescription drugs are not punishable as felonies under State law. 
Moreover, delays in obtaining conviction allow practitioners to 
continue to dispense drugs with a high abuse potential even where 
there is strong evidence that they have significantly abused their 
authority to dispense controlled substances.
    Clearly, the overly limited bases in current law for denial or 
revocation of a practitioner's registration do not operate in the 
public interest.

Id.
    Accordingly, Congress amended section 823(f) ``to expand the 
authority of the Attorney General to deny a practitioner's registration 
application.'' Id. Thus, ``[u]nder 21 U.S.C. [823](f), as amended, . . 
. the Attorney General would be required to register a practitioner 
authorized under State law to dispense or conduct research with 
controlled substances unless he made a specific find[ing] that 
registration would be `inconsistent with the public interest.' '' Id. 
After noting the five public interest factors, the House Report then 
explained that while ``[t]he amendment . . . will continue to allow the 
Attorney General to routinely register most practitioner applicants, . 
. . in those case in which registration is clearly contrary to the 
public interest, the amendment would allow a swift and sure response to 
the danger posed to the public health and safety by the registration of 
the practitioner in question.'' Id. at 267, 1984 U.S.C.C.A.N. at 3449.
    The House Report thus makes clear that Congress's primary purpose 
in authorizing the denial of an application based on the public 
interest was to provide an additional means for the Attorney General to 
address diversion by practitioners. However, the mere fact that a 
violation of a state rule occurs in the context of the dispensing of 
controlled substances does not necessarily mean that the violation has 
a sufficient nexus to the CSA's core purpose of preventing the 
diversion and abuse of controlled substances.
    As noted above, the Government contends that Respondent's 
violations of Cal. Bus. & Prof. Code Sec.  4170(a)(6) & (7) are 
properly considered in assessing his experience in dispensing 
controlled substances or his compliance with applicable laws related to 
controlled substances. See Gov. Post-Hrng. Br. 29. Notably, these 
provisions apply to all prescription drugs (and not just controlled 
substances) which a prescriber dispenses to his patients. See Cal. Bus. 
& Prof. Code Sec. Sec.  4022, 4170(a). As the MBC Investigator 
testified, these provisions require that: (1) A prescriber, who 
dispenses drugs in his practice, offer to his patient the option of 
obtaining a written prescription ``that the patient may elect to have 
filled by the prescriber or by any pharmacy,'' and (2) provide a 
``written disclosure that the patient has a choice between obtaining 
the prescription from the dispensing prescriber or obtaining the 
prescription at a pharmacy of the patient's choice.'' Cal. Bus. & Prof. 
Code Sec.  4170(a)(6) & (7). In short, these provisions are not 
directed at preventing diversion, but rather at protecting consumers. 
As such, Respondent's violations of them have little to no probative 
value in assessing his experience in dispensing controlled substances 
and compliance with applicable laws related to controlled substances.
    Next, the Government points to Respondent's practice of allowing 
his office staff, who were unlicensed, to dispense controlled 
substances without being directly supervised by him. Gov. Post-Hrng. 
Br. 30. The MBC found that Respondent's conduct constituted the aiding 
and abetting of the unlicensed practice of medicine. GX 8, at 19 
(citing Cal. Bus. & Prof. Code Sec.  2238, 2264, and 4170(a)). While 
these provisions apply to the practice of medicine generally and are 
not restricted to the dispensing of controlled substances,\29\ there is 
a sufficient nexus between the CSA's purpose of preventing diversion to 
consider this conduct under factor two.
---------------------------------------------------------------------------

    \29\ See Bus. & Prof. Code Sec.  2264 (``The employing, directly 
or indirectly, the aiding, or the abetting of any unlicensed person 
or any suspended, revoked, or unlicensed practitioner to engage in 
the practice of medicine or any other mode of treating the sick or 
afflicted which requires a license to practice constitutes 
unprofessional conduct.''); id. Sec.  4170(a)(1) (``No prescriber 
shall dispense drugs . . . to patients in his . . . office or place 
of practice unless all of the following conditions are met: . . . 
The dangerous drugs . . . are dispensed to the prescriber's own 
patient, and the drugs . . . are not furnished by a nurse or 
physician's attendant.'').
    By contrast, section 4170(a) (8) provides, inter alia, that ``a 
nurse practitioner who functions pursuant to a standardized 
procedure described in Section 2836.1 or protocol,'' and ``a 
physician assistant who functions pursuant to Section 3502.1 . . . 
may hand to a patient of the supervising physician and surgeon a 
properly labeled prescription drug prepackaged by a physician and 
surgeon, a manufacturer . . . or a pharmacist.''
---------------------------------------------------------------------------

    More specifically, the unsupervised dispensing of controlled 
substances by unlicensed individuals creates a heightened risk that 
those individuals will divert the drugs. See Margy Temponeras, 77 FR 
45675, 45677-78 (2012) (considering physician's practice of allowing 
unlicensed individuals to dispense controlled substances in violation 
of state law under factor two). So too, allowing unlicensed persons, 
who likely have no training in identifying persons engaged in drug 
abuse or diversion, to dispense controlled substances without 
supervision, increases the opportunity for those persons who are self-
abusing or engaged in diversion to obtain controlled substances. Cf. 
Gonzales v. Oregon, 546 U.S. 243, 274 (2006) (citing United States v. 
Moore, 423 U.S. 122, 135, 143 (1975)) (``the [CSA's] prescription 
requirement . . . ensures patients use controlled substances under the 
supervision of a doctor so as to prevent addiction and recreational 
abuse).
    Most disturbingly, Respondent admitted that following the 2006 
incidents, his probation monitor had observed his practice of allowing 
unlicensed personnel to dispense controlled substances. Tr. 511-12. 
While according to Respondent, the monitor stated that he would have to 
consult the MBC's attorney, after the monitor consulted the attorney, 
he told Respondent to stop this practice. Id. at 512. Yet, during the 
2009 investigation, Respondent was still allowing his unlicensed 
medical assistants to dispense controlled substance without being 
supervised by him.\30\ And as further evidence that Respondent had 
failed to discontinue the practice, Investigator I testified that when 
she called one of Respondent's clinics and discussed his weight loss 
program with the clinic's receptionist, she was told that after the 
initial consultation, she would be able to get medication without 
``hav[ing] to see the doctor again \31\'' and

[[Page 18711]]

that no appointments were needed. GX 6, at 6.
---------------------------------------------------------------------------

    \30\ While there is evidence that during the MBC's December 10, 
2009 undercover visit, Respondent arrived at the clinic while the 
Investigator was paying for the medication, the drugs had already 
been furnished to the Investigator and Respondent did not discuss 
the medication with the Investigator. GX 8, at 18.
    \31\ Indeed, the receptionist's statement was corroborated by 
the MBC's December 10, 2009 undercover visit, where Investigator II 
saw a medical assistant, who after asking her about her week and 
weighing her, told her to meet her at the front desk, and then 
provided a vial containing seven tablets of phentermine 30mg to the 
Investigator. GX 6, at 7. I thus conclude that Respondent had 
resumed his practice of allowing his unlicensed employees to 
dispense controlled substances.
---------------------------------------------------------------------------

    Respondent also admitted that he failed to properly label the 
controlled substances that he dispensed. GX 8, at 3 & 15-16. The 
evidence shows that some of the medication vials did not list 
Respondent's name as the dispenser, did not have the correct clinic 
address, did not provide adequate directions for taking the medication, 
and were missing other essential items of information such as the 
manufacturer's name, as well as the color, shape and identification 
code of the medication. Id.; Tr. 46-47. See Cal. Bus. & Prof. Code 
Sec.  4076 (setting forth labeling requirements for prescriptions); id. 
Sec.  4170(a)(4) (requiring a prescriber who dispenses drugs to 
``fulfill[] all of the labeling requirements imposed upon pharmacists 
by Section 4076''). Here again, while the state's labeling requirements 
apply to the dispensing of all prescription drugs and not just 
controlled substances, providing accurate directions for taking a 
controlled substance has a clear nexus to the CSA's purpose of 
preventing drug abuse and diversion.\32\ Cf. 21 CFR 1306.24(a) (``The 
pharmacist filling a prescription for a controlled substance listed in 
Schedule III, IV, or V shall affix to the package a label showing the 
pharmacy name and address, the serial number and date of initial 
filling, the name of the patient, the name of the practitioner issuing 
the prescription, and directions for use and cautionary statements, if 
any, contained in such prescription as required by law.'').\33\
---------------------------------------------------------------------------

    \32\ So too, the requirement that the label contain the 
dispenser's name and address provides information that can be used 
to determine the source of the drugs and whether the drugs were 
lawfully dispensed or have been diverted.
    \33\ Pursuant to the Food, Drug, and Cosmetic Act, ``[a]ny drug 
dispensed by filling or refilling a written or oral prescription of 
a practitioner licensed by law to administer such drug shall be 
exempt from the requirements of section 352 of this title [the 
misbranding provisions], except paragraphs (a), (i)(2) and (3) . . . 
if the drug bears a label containing the name and address of the 
dispenser, the serial number and date of the prescription or of its 
filling, the name of the prescriber, and, if stated in the 
prescription, the name of the patient, and the directions for use 
and cautionary statements, if any, contained in such prescription.'' 
21 U.S.C. 353(b)(2).
---------------------------------------------------------------------------

    Here again, the evidence shows that while Respondent was fully 
advised as to the State's labeling requirements, and assured the MBC 
Investigator that he had come into compliance, during the January 28, 
2010 re-inspection, the Investigator found that Respondent still had 
numerous vials of medication which bore the older, non-compliant 
labels. Tr. 88-89. Indeed, one of Respondent's employees told the 
Investigator that Respondent ``was using up the vials with the old 
labels.'' \34\ GX 6, at 12.
---------------------------------------------------------------------------

    \34\ The ALJ found that ``when informed about the labeling 
violations, the Respondent took prompt action to remedy the 
problem.'' R.D. at 23. The ALJ's finding ignores that during the re-
inspection, the Investigator found that Respondent had continued to 
dispense his older and improperly labeled stock of controlled 
substances.
---------------------------------------------------------------------------

    The MBC also found that Respondent failed to properly secure his 
controlled substances, noting that during the December 10, 2009 
inspection at the Roseville clinic, the Investigator found that the 
drug room was unlocked and that the drug cabinet was unlocked and wide 
open. GX 8, at 16. The Investigator further found that Respondent's 
staff unlocked the drug room at the beginning of the day and that the 
room was kept unlocked until the clinic closed for the day. Id. 
Moreover, the MBC found that during the January 28, 2010 re-inspection, 
a patient was allowed to enter the drug room unaccompanied and retrieve 
medication from one of the post-office boxes. Id. While Respondent was 
then in the hospital, and the clinic was being overseen by Dr. Mericle, 
a locum tenens physician, Respondent testified that Dr. Mericle had 
``refused to refill those boxes'' even after the clinic's staff had 
told him that the boxes were empty and needed to be refilled. Tr. 757. 
Moreover, Respondent admitted that the MBC Investigator had told him 
the boxes were a really bad idea. The evidence thus supports a finding 
that Respondent disregarded the MBI Investigator's advice and commenced 
using the boxes.
    Under California law, ``[a] prescriber who dispenses drugs pursuant 
to Section 4170 shall store all drugs to be dispensed in an area that 
is secure.'' Cal. Bus. & Prof. Code Sec.  4172. By regulation, the MBC 
has defined ``the phrase `area which is secure' [to] mean[] a locked 
storage area within a physician's office. The area shall be secure at 
all times. The keys to the locked storage areas shall be available only 
to staff authorized by the physician to have access thereto.'' Cal. 
Code Regs. Tit.16, Sec.  1356.3. The MBC thus found that Respondent 
violated Cal. Bus. & Prof. Code Sec. Sec.  2238 and 4172, as well as 
the afore-cited regulation. GX 8, at 3, 16.
    Finally, the MBC found that Respondent violated California law by 
failing to maintain accurate drug inventories. See id. at 17 (citing 
Cal. Bus. & Prof. Code Sec. Sec.  2238 and 4081). More specifically, 
the Board found that Respondent did not record the drugs that he 
transferred from one clinic to another of his clinics, as well as the 
incoming shipments, and that he only kept a log of what he dispensed 
each day. Id. Moreover, during the 2009 inspection, Respondent admitted 
that in 2006, his probation monitor had instructed him as to how to do 
proper inventories. Id. Respondent then admitted that he had stopped 
maintaining proper inventories because he found doing so to be ``too 
difficult, inconvenient, and time consuming.'' Id.\35\ Also, Respondent 
was not creating a separate log for each medication by its strength, 
but rather, he was recording all of the dispensings on a single piece 
of paper.
---------------------------------------------------------------------------

    \35\ While in his testimony, Respondent disputed that he ever 
made this admission, Tr. 773-74, he had previously stipulated to the 
MBC's finding that he did. GX 8, at 17.
---------------------------------------------------------------------------

    Here again, while the MBC Investigator instructed Respondent that 
he had to maintain a separate log for each strength of each medication 
and record the shipments, GX 5, at 23-25; during the January 2010 re-
inspection, she found that notwithstanding his assurance that ``he had 
got[ten] everything squared away,'' he was still not accounting for the 
incoming shipments in his inventory logs and still recording all of the 
dispensings in a single log, rather than creating a separate log for 
each strength of a medication. GX 6, at 12; Tr. 143.
    The evidence does show that at the time of the May 2011 DEA 
inspection, Respondent was maintaining a daily inventory log which 
listed each drug by its strength. See GX 10, at 2, 5, 7. As found 
above, the DEA Investigators took an inventory of the controlled 
substances on hand at the three clinics and compared their counts with 
Respondent's daily inventory logs. While the discrepancies between the 
counts and the daily inventory logs for the Elk Grove and Roseville 
clinics were relatively small, the DIs found substantial discrepancies 
when they counted the drugs which had been transferred from the Gold 
River clinic (and which were counted separately) and compared the 
counts with the daily inventory sheet for the last day that clinic had 
been open. More specifically, Respondent was short 3,000 dosage units 
of phentermine 37.5mg; 1,011 dosage units of phentermine 30mg; and 
1,021 dosage units of phendimetrazine 35mg.\36\ See GX 10, at 1-2; Tr. 
229.
---------------------------------------------------------------------------

    \36\ Based on this evidence, the Government argues that 
``Respondent's failure to maintain an accurate drug inventory'' was 
a violation of both state and federal law. Gov. Post-Hrng. Br. 31 
(citing Cal. Bus. & Prof. Code Sec. Sec.  2238 and 4081; 21 CFR 
1304.11). However, federal law explicitly provides that a registrant 
is not required to maintain ``a perpetual inventory.'' 21 U.S.C. 
827(a)(3). Accordingly, I note this evidence only to show 
Respondent's continuing failure to comply with the State's 
requirements.
    Federal law does, however, require that a registrant maintain 
``a complete and accurate record of all stocks . . . on hand'' upon 
a registrant's ``first engag[ing] in the . . . dispensing of 
controlled substances, and every second year thereafter.'' 21 U.S.C. 
827(a)(1). As for whether the inventory logs that were used for the 
opening dates of the audits were ``complete and accurate,'' short of 
having actually counted the drugs on those days, there is no way of 
knowing. The Government is not, however, required to establish which 
of the specific records (initial/biennial inventories, receipts, 
dispensing/disposals) were incomplete or inaccurate. Rather, it 
suffices to show that upon auditing all of the required records, 
Respondent could not account for a material portion of the 
controlled substances he handled during the audit period.
     As for the ALJ's reasoning that Respondent's failure ``to 
maintain an accurate drug inventory . . . made it impossible for the 
DEA . . . to conduct a meaningful drug audit,'' R.D. at 21, as 
explained above, short of performing an actual count of the drugs on 
the opening date of the audit period, there is no way of determining 
whether the data provided in the daily inventory logs for the 
opening date of the audits were inaccurate, and the evidence showed 
that the DI used the figures obtained during the actual counts at 
each clinic for the closing inventories. In any event, the fact that 
a registrant fails to maintain accurate records does not render it 
``impossible'' to do a ``meaningful'' audit, whatever that means. 
Indeed, it is not uncommon that DEA Investigators will find that a 
particular registrant is entirely missing required records.

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

[[Page 18712]]

    Also, Respondent had no documentation for the transfer of the 
controlled substances from the recently closed Gold River clinic to his 
Roseville clinic. Tr. 229-30. This was also a violation of federal law, 
which requires that ``every registrant . . . maintain, on a current 
basis, a complete and accurate record of each such substance . . . 
received, sold, delivered, or otherwise disposed of by him.'' 21 U.S.C. 
827(a)(3). Moreover, pursuant to DEA regulations, ``[s]eparate records 
shall be maintained by a registrant for each registered location.'' 21 
CFR 1304.21(b). Thus, I also conclude that Respondent violated Federal 
law by failing to document the transfer of controlled substances 
between his various clinics.\37\
---------------------------------------------------------------------------

    \37\ The Government also maintains that during the June 2011 DEA 
inspection of Respondent's Roseville clinic, he was failing to 
properly secure the controlled substances. Gov. Post-Hrng. Br. at 
30. The evidence cited by the Government as support for this 
contention actually involved the Elk Grove clinic, where Respondent 
was storing the controlled substances in a locked closet, rather 
than a substantially constructed cabinet as required by 21 CFR 
1301.75(b). See id. at 17 (citing Tr. 218-19). While I find this to 
also be a violation, I give it only nominal weight given the absence 
of evidence that the closet was not secure.
---------------------------------------------------------------------------

    As found above, the DI performed an audit of Respondent's handling 
of controlled substances at the three clinics for the period beginning 
on November 20, 2010 through May 26, 2011 for the Elk Grove clinic; 
November 22, 2010 through May 31, 2011 for the Roseville clinic; and 
November 23, 2010 through May 31, 2011 for the Gold River clinic. At 
Elk Grove, Respondent had shortages of 8,410 dosage units of 
phentermine 37.5mg; 2,316 dosage units of phentermine 30mg; 6,637 
dosage units of phendimetrazine 35mg; 252 dosage units of 
phendimetrazine 105mg; and 906 dosage units of diethylpropion 25mg. GX 
11, at 1. At Gold River, Respondent was short 3,915 dosage units of 
phentermine 37.5mg; 1,046 dosage units of phentermine 30mg; 313 dosage 
units of phendimetrazine 35mg, and 390 tablets of phendimetrazine 
105mg. Id. at 2. And at Roseville, Respondent was short 10,740 tablets 
of phentermine 37.5mg; 3,535 tablets of phentermine 30mg; 5,361 tablets 
of phendimetrazine 35mg; 812 tablets of phendimetrazine 105mg, and 595 
tablets of diethylpropion 25mg. Id. at 3. Thus, between the three 
clinics, Respondent had shortages totaling more than 40,000 dosage 
units.
    These are material shortages and at a minimum, they support the 
conclusion that Respondent violated federal law by failing to maintain 
``complete and accurate record[s]'' of the controlled substances he 
handled. 21 U.S.C. 827(a)(1)-(3). As the ALJ correctly noted, 
Respondent's ``inability to account for this significant number of 
dosage units creates a grave risk of diversion.'' R.D. at 21. Indeed, 
even were there no other proven violations, the audit results alone are 
sufficient to satisfy the Government's prima facie burden of 
establishing that Respondent's registrations would be ``inconsistent 
with the public interest.'' 21 U.S.C. 823(f). See Medicine Shoppe--
Jonesborough, 73 FR 364, 386 (2008).
    The Government also argues that Respondent violated federal law 
because, upon the restoration of his state license, he impermissibly 
used Dr. Fisher's DEA registration to issue controlled substance 
prescriptions. Gov. Post-Hrng. Br. 32. It further argues that these 
prescriptions were unlawful because Dr. Fisher was working at a 
different clinic the day the prescriptions were issued and never saw 
the patients. Id. (citing 21 CFR 1306.04(a)).
    As for the contention that Respondent impermissibly used Dr. 
Fisher's DEA number, the Government's proof rested entirely on the 
testimony of a Diversion Investigator and an MBC Probation Monitor 
regarding the hearsay statements of Dr. Fisher. While hearsay 
statements are admissible in administrative proceedings, and can even 
constitute substantial evidence under certain circumstances, to do so 
the statements must bear sufficient indicia of reliability. See Hoska 
v. United States Dep't of the Army, 677 F.2d 131, 138 (D.C. Cir. 1982); 
Calhoun v. Bailar, 626 F.2d 145 (9th Cir. 1980). The factors to be 
considered include the independence or possible bias of the declarant, 
whether the statements are signed and sworn or oral and unsworn, 
whether the statements are consistent, whether they are contradicted by 
direct testimony, whether the declarant is available to testify, and 
whether the statements are corroborated. See Hoska, 677 F.3d at 139; 
Calhoun, 626 F.2d at149.
    Here, in an order denying Respondent's motion to exclude the 
proposed testimony regarding Dr. Fisher's hearsay statements, the ALJ 
explained that the admissibility of the evidence would be assessed 
based on various judicially-created standards, including the Ninth 
Circuit's Calhoun decision. See Order Denying In Part Respondent's 
Motion to Exclude a Portion of the Government's Proposed Testimony and 
Exhibits, at 6-7. Nonetheless, the Government produced no evidence to 
demonstrate that Dr. Fisher's statements are sufficiently reliable to 
constitute substantial evidence of the material fact for which they 
were offered--namely, that Respondent used Fisher's registration to 
call in prescriptions without Fisher's permission. To the contrary, 
through the DI's testimony, the Government made clear that Fisher's 
statements are inherently unreliable.
    More specifically, the DI testified that when he and his supervisor 
interviewed Fisher, the latter's story as to whether he had authorized 
the prescriptions changed ``back and forth'' and ``multiple times.'' 
Tr. 368, 415. Later during the interview (with the MBC's Probation 
Monitor having called-in and been placed on the speaker phone), Fisher 
stated that ``he did authorize'' the prescriptions the day before, but 
henceforth, ``they were no longer authorized.'' Id. at 369. The DI 
further testified that ``it was pretty obvious that [Dr. Fisher] was 
being deceptive'' and ``trying to his change [his story] based on 
whatever we wanted to hear or whatever wouldn't get him in trouble.'' 
Id. at 416. And earlier in his testimony, the DI explained that Fisher 
did not appear to be coherent and gave ``the impression that he wasn't 
completely aware of what was going on.'' Id. at 369.
    When evaluated under the applicable factors, Fisher's statement 
implicating Respondent in the unauthorized use of

[[Page 18713]]

his registration is clearly unreliable. Fisher, whose statements were 
oral and unsworn, clearly admitted that he had authorized the 
prescriptions, only to change his story and tell the DIs whatever he 
thought they wanted to hear to keep himself out of trouble. Thus, to 
the extent Fisher was even aware of what was going, he was in no way an 
unbiased observer, but rather a clearly interested participant, and one 
who provided contradictory statements. In short, Fisher's statement 
implicating Respondent is so inherently unreliable that the allegation 
must be rejected.
    As for the Government's further contention that these prescriptions 
violated 21 CFR 1306.04(a)\38\ because Dr. Fisher did not see the 
patients that day, in neither the Show Cause Order nor either of its 
pre-hearing statements did the Government provide notice that it 
intended to litigate the issue. See ALJ Ex. 1 (Show Cause Order); Gov. 
Pre-Hrng. Statement, at 5-6 (discussing DI's proposed testimony), Gov. 
Supp. Pre-Hrng. Statement, at 6 (discussing DI's proposed testimony). 
Indeed, the Government did not even raise the contention that the 
prescriptions lacked a legitimate medical purpose and were issued 
outside of the usual course of professional practice until its post-
hearing brief. See Gov. Post-Hrng. Br. 32. Thus, even if Respondent 
could have been be charged with violating this regulation under a 
conspiracy theory, raising the issue for the first time in a post-
hearing brief is simply too late to provide fair notice.\39\ See Margy 
Temponeras, 77 FR 45675, 45677 (2012) (discussing cases). I therefore 
reject the contention.
---------------------------------------------------------------------------

    \38\ Pursuant to 21 CFR 1306.04(a), ``[a] prescription for a 
controlled substance to be effective must be issued for a legitimate 
medical purpose by an individual acting in the usual course of his 
professional practice.''
    \39\ Even had I concluded otherwise on the issue of notice, and 
assuming that Respondent and Fisher entered into an agreement, the 
Government produced no evidence establishing that Fisher had never 
seen, or established a valid doctor-patient relationship with, the 
patients whose prescriptions were entered into evidence. Nor did it 
produce any evidence that it was outside the scope of professional 
practice for Fisher to issue prescriptions to the patients.
---------------------------------------------------------------------------

    However, as explained above, the audit results, which establish 
that Respondent failed to maintain complete and accurate records, are, 
by themselves, sufficient to satisfy the Government's prima facie 
burden of showing that Respondent's registrations would be inconsistent 
with the public interest. This conclusion is buttressed by the numerous 
other violations proven on the record, including the state violations 
of allowing his unlicensed staff to dispense medications to his 
patients; failing to properly label the controlled substances; failing 
to provide proper security for his controlled substances; and failing 
to maintain accurate drug inventories, as well as the federal 
violations of failing to document the transfers of controlled 
substances between his clinics.

Sanction

    Under Agency precedent, where, as here, ``the Government has proved 
that [an applicant] has committed acts inconsistent with the public 
interest, [the applicant] must ` ``present sufficient mitigating 
evidence to assure the Administrator that [he] can be entrusted with 
the responsibility carried by such a registration.'' ' '' Medicine 
Shoppe-Jonesborough, 73 FR 364, 387 (2008) (quoting Samuel S. Jackson, 
72 FR 23848, 23853 (2007) (quoting Leo R. Miller, 53 FR 21931, 21932 
(1988))). ``Moreover, because `past performance is the best predictor 
of future performance,' ALRA Labs, Inc. v. DEA, 54 F.3d 450, 452 (7th 
Cir.1995), [DEA] has repeatedly held that where [an applicant] has 
committed acts inconsistent with the public interest, the [applicant] 
must accept responsibility for [his] actions and demonstrate that [he] 
will not engage in future misconduct.'' Medicine Shoppe, 73 FR 387; see 
also Jackson, 72 FR 23853; John H. Kennedy, 71 FR 35705, 35709 (2006); 
Prince George Daniels, 60 FR 62884, 62887 (1995). See also Hoxie v. 
DEA, 419 F.3d at 483 (``admitting fault'' is ``properly consider[ed]'' 
by DEA to be an ``important factor[]'' in the public interest 
determination). So too, in making the public interest determination, 
``this Agency places great weight on an [applicant's] candor, both 
during an investigation and in [a] subsequent proceeding.'' Robert F. 
Hunt, 75 FR 49995, 50004 (2010) (citing The Lawsons, Inc., t/a The 
Medicine Shoppe Pharmacy, 72 FR 74334, 74338 (2007) quoting Hoxie, 419 
F.3d at 483 (``Candor during DEA investigations properly is considered 
by the DEA to be an important factor when assessing whether a . . . 
registration is consistent with the public interest.'')).
    While an applicant must accept responsibility and demonstrate that 
he will not engage in future misconduct in order to establish that his/
her continued registration is consistent with the public interest, DEA 
has repeatedly held these are not the only factors that are relevant in 
determining the appropriate sanction. See, e.g., Joseph Gaudio, 74 FR 
10083, 10094 (2009); Southwood Pharmaceuticals, Inc., 72 FR 36487, 
36504 (2007). Obviously, the egregiousness and extent of an applicant's 
misconduct are significant factors in determining the appropriate 
sanction. See Jacobo Dreszer, 76 FR 19386, 19387-88 (2011) (explaining 
that a respondent can ``argue that even though the Government has made 
out a prima facie case, his conduct was not so egregious as to warrant 
revocation''); Paul H. Volkman, 73 FR 30630, 30644 (2008); see also 
Gregory D. Owens, 74 FR 36751, 36757 n.22 (2009).
    Moreover, as I have noted in several cases, `` `[n]either Jackson, 
nor any other agency decision, holds . . . that the Agency cannot 
consider the deterrent value of a sanction in deciding whether a 
registration should be revoked' '' or an application should be denied. 
Gaudio, 74 FR 10094 (quoting Southwood, 72 FR 36504 (2007)); see also 
Robert Raymond Reppy, 76 FR 61154, 61158 (2011); Michael S. Moore, 76 
FR 45867, 45868 (2011). This is so, both with respect to the respondent 
in a particular case and the community of registrants. See Gaudio, 74 
FR 10095 (quoting Southwood, 71 FR at 36504). Cf. McCarthy v. SEC, 406 
F.3d 179, 188-89 (2d Cir. 2005) (upholding SEC's express adoptions of 
``deterrence, both specific and general, as a component in analyzing 
the remedial efficacy of sanctions'').\40\
---------------------------------------------------------------------------

    \40\ Thus, in Gaudio, ``I explained that `even when a proceeding 
serves a remedial purpose, an administrative agency can properly 
consider the need to deter others from engaging in similar acts.' '' 
74 FR 10094 (quoting Southwood, 72 FR 36504) (citing Butz v. Glover 
Livestock Commission Co., Inc., 411 U.S. 182, 187-88 (1973)); cf. 
McCarthy, 406 F.3d at 189 (``Although general deterrence is not, by 
itself, sufficient justification for expulsion or suspension, we 
recognize that it may be considered as part of the overall remedial 
inquiry.''); Paz Securities, Inc., et al. v. SEC, 494 F.3d 1059, 
1066 (D.C. Cir. 2007) (agreeing with McCarthy). In Gaudio, I further 
noted that the ``[c]onsideration of the deterrent effect of a 
potential sanction is supported by the CSA's purpose of protecting 
the public interest, see 21 U.S.C. 801, and the broad grant of 
authority conveyed in the statutory text, which authorizes the 
[suspension or] revocation of a registration when a registrant `has 
committed such acts as would render [his] registration . . . 
inconsistent with the public interest,' id. Sec.  824(a)(4), and 
[which] specifically directs the Attorney General to consider [`such 
other conduct which may threaten public health and safety,' id. 
Sec.  823(f)].'' 74 FR 10094 (quoting Southwood, 72 FR 36504).
    Unlike factors two (``[t]he applicant's experience in 
dispensing'') and three (``[t]he applicant's conviction record''), 
neither factor four (``Compliance with applicable laws related to 
controlled substances'') nor factor five (``Such other conduct which 
may threaten public health and safety'') contain the limiting words 
of ``[t]he applicant.'' As the Supreme Court has held, ``[w]here 
Congress includes particular language in one section of a statute 
but omits it in another section of the same Act, it is generally 
presumed that Congress acts intentionally and purposely in the 
disparate inclusion or exclusion.'' Russello v. United States, 464 
U.S. 16, 23 (1983). Thus, the text of factors four and five suggest 
that these factors are not limited to assessing the applicant's 
compliance with applicable laws and whether he has engaged in ``such 
other conduct,'' but rather authorizes the Agency to also consider 
the effect of a sanction on inducing compliance with federal law by 
other practitioners.

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

[[Page 18714]]

    The ALJ found that ``respondent took prompt action to remedy'' the 
labeling violations, that he ``implemented new security procedures'' 
and that ``he also began a procedure whereby he kept a daily running 
inventory log of his controlled substances on hand.'' R.D. at 23. She 
also found that ``Respondent credibly expressed his remorse for his 
past misconduct.'' Id.
    Yet the ALJ also found that ``the record demonstrates that he was 
never able to dispense controlled substances and remain in compliance 
with the Board's and the DEA's regulations.'' Id. Remarkably, the ALJ 
then concluded that ``Respondent has sustained his burden to accept 
responsibility for his past misconduct and has successfully 
demonstrated that he will not engage in future misconduct related to 
his handling of controlled substances.'' Id. at 24. While 
characterizing Respondent's various violations as ``mistakes in his 
dispensing of controlled substances,'' which she nonetheless deemed to 
be sufficiently ``egregious'' to warrant placing restrictions on his 
registration, the ALJ concluded ``that the outright denial of his 
application is too severe a resolution.'' Id. She therefore recommended 
that I grant Respondent a restricted registration, pursuant to which he 
would be authorized only to prescribe controlled substances. Id.
    I reject the ALJ's recommended sanction, because even assuming, 
without deciding, that Respondent has credibly accepted responsibility 
for his misconduct, this is a case where actions speak louder than 
words. Indeed, as the ALJ herself noted, ``the record demonstrates that 
[Respondent] was never able to dispense controlled substances and 
remain in compliance with the Board's and [this Agency's] 
regulations.'' R.D. at 23 (emphasis added). As the Seventh Circuit has 
noted, ``past performance is the best predictor of future 
performance,'' ALRA Labs, Inc. v. DEA, 54 F.3d at 452, and the evidence 
here shows that even when Respondent was provided information--on the 
proverbial silver platter--as to how to comply with various state 
requirements (i.e., by not allowing unlicensed employees to dispense, 
by correcting all improperly labeled controlled-substance vials, by 
properly securing controlled substances, and by maintaining a daily 
inventory log which listed the drugs by their strengths), he still 
frequently failed to comply. Moreover, even when he did eventually 
start maintaining a daily inventory log which listed each drug by its 
strength, the DI found major discrepancies between the amounts which 
the logs stated as his inventories and the actual amounts Respondent 
had on hand.
    Most significantly, the DI's audit found that Respondent had 
shortages of 40,000 dosage units over a six-month period. While there 
is no evidence in the record that the controlled substances were being 
diverted, as the ALJ also noted, Respondent's ``inability to account 
for this significant number of dosage units creates a grave risk of 
diversion.'' R.D. at 21. And even if the shortages are only 
attributable to Respondent's poor recordkeeping, `` `[r]ecordkeeping is 
one of the CSA's central features; a registrant's accurate and diligent 
adherence to this obligation is absolutely essential to protect against 
the diversion of controlled substances.' '' Ideal Pharmacy Care, Inc., 
d/b/a Esplanade Pharmacy, 76 FR 51415, 51416 (2011) (quoting Paul H. 
Volkman, 73 FR 30630, 30644 (2008)).
    These shortages are substantial and reflect a massive failure on 
Respondent's part to comply with the CSA's requirements that he 
maintain complete and accurate records of the controlled substances he 
received and dispensed in his practice. See 21 U.S.C. 827(a). And while 
Respondent maintained that ``it is very difficult'' for him to 
understand the various statutes, the CSA's recordkeeping provisions 
clearly provided Respondent with fair notice that he was required to 
maintain complete and accurate records of the controlled substances he 
handled. See id. Indeed, no court has ever held that the CSA's 
recordkeeping provisions fail to provide clear notice as to what 
records must be maintained and that those records must be complete and 
accurate.
    Thus, while Respondent testified that this proceeding had been ``a 
very humbling experience'' and promised he was ``going to commit myself 
to a better process,'' that he was ``uninformed'' about the rules but 
that he was at fault, and that he would ``take every measure to make 
sure [he is] in compliance'' with the MBC's and DEA's rules, this is a 
refrain which he previously sung for the MBC's Investigators. See Tr. 
584-85, 592; see also GX 3, at 4 & 6 (agreeing to comply with the terms 
of the MBC's 2003 Order, including that he ``obey all federal, state 
and local laws, [and] all rules governing the practice of medicine in 
California''); GX 8, at 6 & 10 (May 2011 order).\41\ And when asked if 
he had taken any courses on the proper handling of controlled 
substances, Respondent answered that he had not because ``it was not 
required.'' Tr. 796-97.
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    \41\ While the MBC did not adopt the Stipulated Settlement and 
Disciplinary Order until April 8, 2011, notably, Respondent agreed 
to the Order's terms and conditions on December 10, 2010. GX 8, at 1 
& 10. Yet as found during the May 2011 DEA Inspection, Respondent 
was still failing to comply with the State's recordkeeping rules.
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    Accordingly, notwithstanding his expressions of remorse, I conclude 
that Respondent's record of substantial non-compliance with both State 
and Federal laws and regulations related to the dispensing of 
controlled substances, (along with his failure to take any courses on 
the handling of controlled substances) leaves me with no confidence 
that he will responsibly handle controlled substances in the future. 
See ALRA Labs, 54 F.3d at 452. As for the ALJ's recommended sanction 
that I grant Respondent a registration which restricts his activities 
to prescribing, while there is no evidence establishing that Respondent 
issued prescriptions which violated 21 CFR 1306.04(a), his conduct is 
sufficiently egregious as to warrant the outright denial of his 
applications. Moreover, the ALJ's recommendation fails to consider the 
Agency's need to deter similar misconduct on the part of other 
registrants. Accordingly, I reject the ALJ's recommended sanction and 
will deny Respondent's applications.

Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(f), as well 
as 28 CFR 0.100(b), I order that the applications of Fred Samimi, M.D., 
for DEA Certificates of Registration as a practitioner be, and they 
hereby are, denied. This Order is effective immediately.

    Dated: March 25, 2014.
Michele M. Leonhart,
Administrator.
[FR Doc. 2014-07440 Filed 4-2-14; 8:45 am]
BILLING CODE 4410-09-P