[Federal Register Volume 82, Number 87 (Monday, May 8, 2017)]
[Notices]
[Pages 21410-21430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09285]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 15-24]
Roberto Zayas, M.D., Decision and Order
On May 18, 2015, the Deputy Assistant Administrator, of the then-
Office of Diversion Control, issued an Order to Show Cause to Roberto
Zayas, M.D. (hereinafter, Respondent), of Houston, Texas and Dover,
Florida. ALJ Ex. 1. The Show Cause Order proposed the revocation of
Respondent's Certificates of Registration Nos. FZ2249743 and FZ2418401,
the denial of any pending applications to renew or modify these
registrations, and the denial of any applications for new
registrations, on the ground that his ``continued registration is
inconsistent with the public interest.'' Id. at 1 (citing 21 U.S.C.
824(a)(4) and 823(f)).
With respect to the Agency's jurisdiction, the Show Cause Order
alleged that Respondent is the holder of Registration No. FZ2249743,
pursuant to which he is authorized to dispense schedule II through V
controlled substances as a practitioner, at the registered address of
12121 Jones Road, Houston, Texas; the Order alleged that this
registration was due to expire on May 31, 2016. Id. The Show Cause
Order also alleged that Respondent is the holder of Registration No.
FZ22418401, pursuant to which he is authorized to dispense schedule II
through V controlled substances as a practitioner, at the registered
address of 14222 Melouga Preserve Trail, Dover, Florida; the Order
alleged that this registration is due to expire on May 31, 2017. Id.
As grounds for the proposed actions, the Show Cause Order alleged
that on September 20, 2010, Respondent ``signed a Memorandum of
Agreement'' (MOA) which ``imposed requirements . . . regarding [the]
operation, management and supervision of seven different clinics'' he
``own[s] and/or manage[s] and control[s]'' which are located in various
Texas cities. Id. at 1-2. The Show Cause Order alleged that ``pursuant
to paragraph 8 of the MOA, [Respondent] agreed that `[i]f controlled
substances in Schedules II through V are purchased for any clinic, to
be administered and/or dispensed to the clinic patient, [he] shall
cause to be made and maintained all DEA required documents and
information including records, reports, and inventories' '' and that
``[a]ll required documentation shall be maintained as required by
federal and Texas laws and regulations.'' Id. at 2. The Show Cause
Order then alleged that pursuant to another part of paragraph 8,
Respondent ``agreed . . . that `[i]f any controlled substance is
administered or dispensed at any clinic including the [seven clinics he
owns or controls], the health care provider doing the administering
and/or dispensing to the patient shall be registered at the clinic as
required by 21 U.S.C. 822(a)(2) and 21 CFR 1301.12.'' Id. And with
respect to paragraph 9 of the MOA, the Order alleged that Respondent
was required to submit to the DEA Houston Division Office ``on a
quarterly basis, the total number of controlled substances dispensed,
to include the date dispensed, full name of patient, address of
patient, name of controlled substance dispensed, quantity dispensed and
[the] dispenser's initials.'' Id.
The Show Cause Order alleged that ``[b]etween August 28 and
September 13[,] 2013,'' DEA conducted inspections of each of the
clinics and ``determined that [Respondent] repeatedly violated the
terms of paragraphs 8 and 9 of the MOA.'' Id. The Show Cause Order then
alleged that ``controlled substances were dispensed and/or administered
at four of the [clinics] during periods when the individual doing the
dispensing and/or administering was not registered . . . at the''
clinic. Id. at 2.
The Show Cause Order also alleged that Respondent failed to make
and maintain complete and accurate controlled substance inventories at
six of the clinics; that he failed to make and maintain complete and
accurate dispensing records at five of the clinics; and that he failed
to make and maintain complete and accurate receipt records at several
of the clinics. Id. at 3 (citing 21 CFR 1304.11(e)(3); id. Sec.
1304(c); \1\ id. Sec. 1304.22(c); and id. Sec. 1304.22(a)(2)). The
Show Cause Order further alleged that Respondent failed to timely
submit 10 of the required quarterly dispensing reports, that 10 of the
reports that were submitted ``on July 20, 2013, were back-dated and
hence, failed to indicate the true date they were prepared,'' and that
``[a]ll of these reports'' falsely represented that ``neither
[Respondent] nor any of the . . . clinics . . . have dispensed any
controlled substances to their patients for their medical needs.'' Id.
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\1\ While there is no such provision, this appears to be a
mistaken citation to 21 CFR 1304.22(c), which sets forth the records
required to be maintained by dispensers.
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Finally, the Show Cause Order alleged that Respondent ``violated 21
CFR 1306.04(b) by issuing prescriptions `in order for an individual
practitioner to obtain controlled substances for supplying the
individual practitioner for the purpose of general dispensing to
patients.' '' Id. The Order then identified two instances in which
Respondent allegedly issued prescriptions for testosterone products
which listed him (and in one instance, a clinic) as the patient. Id.
Following service of the Show Cause Order, Respondent requested a
hearing on the allegations. The matter was placed on the docket of the
Office of
[[Page 21411]]
Administrative Law Judges and following the departure from the Agency
of the ALJ to whom the case was initially assigned, the matter was re-
assigned to Chief Administrative Law Judge John J. Mulrooney, II
(hereinafter, CALJ). Following pre-hearing procedures, the CALJ
conducted an evidentiary hearing on October 27-28, 2015, in Houston,
Texas. At the hearing, the Government elicited testimony from multiple
witnesses and introduced numerous exhibits into evidence; Respondent
testified on his own behalf and introduced a single exhibit.
On February 19, 2016, the CALJ issued his Recommended Decision.
Therein, the CALJ found proved the allegations that Respondent: (1)
Issued prescriptions to obtain controlled substances for office use in
violation of 21 CFR 1306.04, see R.D. at 54; (2) violated 21 CFR
1304.11 and/or the MOA at six clinics by failing to cause to be made
and maintained compliant inventories, see R.D. at 57-58, 68; (3)
violated 21 CFR 1304.22(c) and/or the MOA by failing to cause to be
made and maintained compliant dispensing records at the six clinics,
see R.D. at 59-60, 70; (4) violated 21 CFR 1304.22(c) and/or the MOA by
failing to cause to be made and maintained compliant receipt records at
the six clinics, see R.D. at 61, 72; (5) violated 21 U.S.C. 822(a)(2)
and 21 CFR 1301.12(a), as well as the MOA, on multiple occasions when
employees of four of the clinics administered testosterone to patients
and there was no practitioner registered at the clinic's location, see
R.D. at 66; and (6) violated the MOA on eight occasions when he failed
to timely submit the quarterly dispensing reports. Id. at 75. Based on
these conclusions, the CALJ found that Respondent has committed such ``
`acts as would render his registration under [21 U.S.C. 823(f)]
inconsistent with the public interest,' '' and that the Government had
``ma[d]e out a prima facie case that maintaining [his registrations]
would be contrary'' to the requirements of 21 U.S.C. 823(f) and 824.''
Id. at 76 (quoting 21 U.S.C. 824(a)(4)).
Turning to whether Respondent had produced sufficient evidence to
rebut the Government's prima facie case, the CALJ found that while
Respondent ``begrudgingly accepted responsibility when his counsel led
him to do so, . . . when left to his own devices, in response to
questions by Government counsel, he approached the topic with a tenor
that bordered on hostile sarcasm.'' Id. at 77. The CALJ thus concluded
that ``[t]his record simply does not support a finding that the
Respondent has accepted responsibility in any meaningful way.'' Id.
While the CALJ noted that Respondent's evidence of subsequent remedial
measures was ``rendered irrelevant in light of his refusal to accept
responsibility,'' he further concluded that his ``purported evidence of
corrective measures as it exists in the . . . record does not advance
his position.'' Id. After noting Respondent's testimony that his
clinics had stopped administering controlled substances as well as that
they had stopped providing their patients with the option of having
their prescriptions shipped to the clinic for pickup, the CALJ
explained that ``[n]one of these practice modifications reflect efforts
to improve compliance with DEA regulations, adhere to terms of present
or future . . . MOAs, or better guard against controlled substance
diversion.'' Id. at 78. Continuing, the CALJ characterized Respondent's
testimony as ``essentially lecturing the Agency that its pesky
regulations and the DEA MOA have proven so bothersome that he will
gratuitously punish his patients because of them, and it is all the
fault of the DEA.'' Id. The CALJ further explained that ``[i]t would be
difficult to divine an enhanced commitment to DEA regulation compliance
from a man who freely admits that he still has not read them.'' Id.
(citing Tr. 473-74).
The CALJ further found that Agency's interests in both specific and
general deterrence ``provide significant support for'' revoking his
registration. Id. With respect to the former, the CALJ found that
``there is little in the record that lends support to the proposition
that the Respondent's future behavior will deviate in any positive
respect from his past behavior,'' noting that ``Respondent blatantly
disregarded his obligations under both the DEA regulations and the DEA
MOA.'' Id. at 78-79. And as for the Agency's interest in general
deterrence, the CALJ found that ``[a] sanction less than revocation in
this case would send a message to the regulated community that
diligence in recordkeeping is not truly required and that agreements
entered into with the Agency may be freely disregarded without
consequence.'' Id. at 80. Finally, the CALJ rejected Respondent's
contention that his conduct involved only ``recordkeeping violations''
which did not warrant revocation, explaining that this case did not
present the situation ``where a small number of modest recordkeeping
errors are acknowledged and remedied promptly,'' and that ``[i]n this
case, the anomalies were plentiful and dangerous'' and ``include
instances where no records were kept.'' Id. The CALJ thus recommended
that Respondent's registrations be revoked and that any pending renewal
applications be denied. Id. at 81.
Respondent filed Exceptions to the Recommended Decision.
Thereafter, the record was forwarded to my Office for final agency
action.
Having considered the record in its entirety, as well as
Respondent's Exceptions, I agree with the CALJ's findings and legal
conclusions as enumerated above. However, I further conclude that by
failing to ensure that all six clinics made and maintained compliant
inventory, dispensing and receipt records, Respondent not only violated
the MOA, he also violated the CSA and DEA regulations. Moreover, while
I agree with the CALJ's legal conclusion that Respondent violated the
MOA by failing to timely submit eight of the required quarterly
reports, I reject the Government's contention that the ``reports
contained false representations'' because ``each report states that
`neither [Respondent] nor any of the IMC clinics . . . have dispensed
any controlled substances to their patients for their medical needs.'
'' ALJ Ex. 1, at 3, ] 5(c).
I also agree with the CALJ's conclusion that Respondent has
committed such ``` acts as would render his registration under [21
U.S.C. 823(f)] inconsistent with the public interest,' '' and that the
Government had ``ma[d]e out a prima facie case that maintaining [his
registrations] would be contrary'' to the requirements of 21 U.S.C.
823(f) and 824.'' R.D. at 76 (quoting 21 U.S.C. 824(a)(4)). I further
agree with the CALJ's conclusions that the ``record simply does not
support a finding that the Respondent has accepted responsibility in
any meaningful way,'' id. at 77, that the Agency's interests in both
specific and general deterrence ``provide significant support for''
revoking his registration, id. at 78-79, and that the egregiousness of
Respondent's misconduct supports the revocation of his registration.
Id. at 80-81. Accordingly, I will adopt the CALJ's recommended order
that his registration be revoked and that any pending application be
denied. I make the following findings.
Findings of Fact
Respondent is a physician licensed in Texas and Florida. He is also
the holder of DEA Certificate of Registration No. FZ2418401, pursuant
to which he is authorized to dispense controlled substances in
schedules II through V, at the registered address of 14222 Melouga
Preserve Trail, Dover, Florida. R.D. at 4. This registration does not
expire until May 31, 2017. Id. Respondent was also
[[Page 21412]]
the holder of DEA Certificate of Registration No. FZ2249743, pursuant
to which he was authorized to dispense controlled substances in
schedules II through V, at the registered address of 12121 Jones Road,
Houston, Texas; this registration was due to expire on May 31, 2016.
Id. However, because as of May 31, 2016, Respondent was under an Order
to Show Cause, and did not submit a renewal application until June 27,
2016, this application was untimely and did not keep his registration
in effect pending the issuance of this Decision and Order. See 5 U.S.C.
558; 21 CFR 1301.36(i). I therefore find that Certificate of
Registration No. FZ2249743 expired on May 31, 2016. I further find,
however, that Respondent's June 27, 2016 application remains pending
before the Agency.
At the time of the events at issue here, Respondent owned
indirectly and controlled seven different clinics through a limited
partnership known as Z Healthcare Management; 99 percent of this entity
is owned by the Zayas Family Trust with the remaining one percent owned
by Z Healthcare Systems, Inc., the latter being 100 percent owned by
Respondent; as of the date of this proceeding, he still owned and
controlled five of these clinics.\2\ RX 1, Tr. 59, 371. These clinics
included: (1) IMC Cy-Fair, which was located at 12121 Jones Road,
Houston, Texas during the relevant time period, see GX 6; (2) IMC FM
1960, which was located at 3648 FM 1960, Houston, Texas, but has since
closed, see GX 16, Tr. 365; (3) IMC Southwest, which was located at
7447 Harwin, Suite 100, Houston, Texas, see GX 22; (4) IMC Oak Hills,
which was located at 4805 Fredericksburgh Road, San Antonio, Texas, see
GX 12; (5) IMC Woodlands, which was located at 25329 I-45 North Suite
B, The Woodlands, but which moved to 314 Sawdust Road, Spring, Texas
during February/March 2013, GX 19; (6) IMC Victoria, which was located
at 3804 John Stockbauer Drive, Suite E, Victoria, Texas, but has since
closed,\3\ GX 25, Tr. 365; and: (7) IMC Corpus Christi, which was
located at 4646 Corona Drive, #280, Corpus Christi, Texas. GXs 33, 34.
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\2\ The clinics were themselves incorporated, with two held by
limited liability corporations and the others held by c-
corporations. RX 1.
\3\ According to Respondent, the IMC 1960 and Victoria clinics
were probably closed in 2014. Tr. 366.
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The MOA
On September 8, 2010, Z Healthcare Systems entered into a
Settlement Agreement with the Office of the United States Attorney for
the Southern District of Texas. GX 4, at 6. According to the agreement,
the Government alleged that between August 2005 and June 2006, three
IMC clinics dispensed controlled substances, in particular phentermine,
``without a valid DEA registration.'' Id. at 8.
While Z Healthcare Systems was not required to admit liability, it
did agree to pay $25,000 to the United States. Id. at 9. It also agreed
that ``each health care provider of each of its facilities including
the [seven clinics] must have a separate DEA registration to
administer, dispense, and prescribe a controlled substance for a
legitimate medical purpose at each facility.'' Id. at 10. It further
agreed that ``[i]f any controlled substance is purchased in order to be
administered or dispensed, each facility is required to comply with the
record-keeping and security requirements under 21 U.S.C. 801 to End and
21 CFR 1300 to End.'' Id. at 10-11. Respondent signed the Agreement as
the President of Z Healthcare Systems. Id. at 13.
Thereafter, on September 20, 2010, Respondent entered into a
Memorandum of Agreement (MOA) with the Agency, which imposed various
conditions which give rise to the allegations at issue in this
proceeding. GX 4, at 5. After noting the investigation that led to the
Settlement Agreement, the MOA stated that it ``establishes the terms
and conditions under which DEA will continue to permit [Respondent] to
administer, dispense and prescribe any [s]chedules II though V
controlled substance'' and for granting his February 2009 application
for registration at the IMC--Woodlands clinic. Id. at 2. Of relevance
here are the terms and conditions imposed under paragraph 8. It
provides that:
If controlled substances in Schedules II through V are purchased
for any clinic, to be administered and/or dispensed to the clinic
patients, [Respondent] shall cause to be made and maintained all DEA
required documents and information including records, reports, and
inventories. All required documentation shall be maintained as
required by federal and Texas laws and regulations, pertaining to
the administering, dispensing, and prescribing of controlled
substances. If any controlled substance is administered or dispensed
at any clinic included the [seven clinics], the health care provider
doing the administering and/or dispensing to the patient shall be
registered at the clinic as required by 21 U.S.C. 822(a)(2) and 21
CFR 1301.12(a) and any administering and/or dispensing of a
controlled substance shall be documented in the patient chart and
made available for inspections as set forth in paragraph . . . 12 of
this MOA.
Id. at 2-3. Also of relevance are the terms and conditions included
in paragraph 9. It provides that Respondent:
shall submit to the DEA Diversion Group Supervisor, DEA Houston
Division Office . . . on a quarterly basis, the total number of
controlled substances dispensed, to include the date dispensed, full
name of patient, address of patient, name of controlled substance
dispensed, quantity dispensed and dispenser's initials.
Id. at 3. Respondent further ``agree[d] that any violation of this
MOA may result in the initiation of proceedings to immediately suspend
or revoke his . . . Certificate of Registration. Id. at 4.
The 2013 Investigation
In April 2013, Respondent submitted an application to renew his
registration, which ``was due to expire at the end of May.'' Tr. 86. On
the application, Respondent was required to answer several questions
including one which asked if his state medical license had been
suspended. Id. at 91. Because Respondent provided a ``yes'' answer to
this question, id., his application was not approved and was flagged
for further review by a Diversion Investigator (DI). Id. at 84-85. The
DI visited the Texas Medical Board's Web site and printed out the
suspension order that Respondent referenced on his application. Id. at
88; see also GX 2, at 1-11. However, the DI also found that the Board's
Web site listed another order which was not mentioned on Respondent's
application and printed it out.\4\ Tr. 88; GX 2 at 12-20. The DI also
queried DEA's databases and determined that Respondent ``was under an
MOA,'' and that the MOA's terms required ``that he had to report
quarterly his dispensing in all [of] his clinics.'' Tr. 88. However,
upon searching the Agency's case file for the previous investigation,
the DI could only find one report, which she believed was dated April
24, 2011. Tr. 107.
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\4\ While the DI testified that this was an order, it was
actually a complaint, which was filed by the Board on September 5,
2012. GX 2, at 19. However, the Board and Respondent settled the
matter, and on February 12, 2014, the complaint was dismissed. Id.
at 21.
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While the DI's initial attempts to contact Respondent were
unsuccessful, on May 23, 2013, she spoke with Respondent and told him
that she ``need[ed] a written statement regarding the board order that
[he] reported.'' Id. at 97. According to the DI, Respondent ``basically
was like, you can go find it yourself. And at some point, he hung up
the phone.'' Id. at 98.
Subsequently, on June 3, 2013, the DI sent Respondent an email
which raised
[[Page 21413]]
three issues; Respondent replied to the email the next day. GX 36, at
1-2. First, the DI asked Respondent to ``[p]lease provide a detailed
explanation relating to the suspension of [his] Texas Medical License
in 2008'' and to ``be specific as to the details as to why [his]
medical clinics were deemed a `danger to the public good.' '' Id. at 2.
Respondent replied that ``[t]his is irrelevant to the renewal of my DEA
certificate. You are welcome to get the one sides [sic] version of the
story on the [TMB] Web site.'' Id.
Second, the DI wrote that ``[r]ecords indicate that you are
currently under a Memorandum of Understanding (MOU) . . . signed on
September 2010, however, there is [a] record of only one (1) required
quarterly reporting [sic] from you. If you have [a] record that you
previously sent the required quarterly reporting [sic] please forward
copies from April 2011 to the present . . . .'' Id. Respondent replied:
``As I said to you on the phone, you are mistaken. I am not, nor have I
ever been under and [sic] MOU.'' Id.
Finally, the DI asked Respondent to ``[p]lease describe your
current medical practice[,] please include all locations and the names
and numbers of any Physician Assistants . . . or Nurse Practitioners .
. . that you currently supervise. Please indicate what changes you have
made in your current medical practice that differentiates it from your
current practice.'' Id. Respondent wrote back: ``Again this is
irrelevant to the renewal of my DEA certificate.'' Id.
However, on June 19, 2013, Respondent wrote to the DEA Houston
Office to ``sincerely apologize for the misunderstanding that I was
under with respect to the agreement we struck in 2010.'' GX 35, at 1.
Respondent offered to answer the DI's questions either by email or in
person. Id. He also enclosed 10 of the quarterly reports which the DI
had previously requested and represented that ``I haven't practiced
much in Texas since 2010, and I certainly haven't dispensed any
medication to patients.'' Id.
Each of these reports was a one-page letter, which was dated on an
approximately quarterly basis beginning with January 29, 2011 and
ending on April 24, 2013. GX 3, at 1-10. Each report contained the
following statement:
This letter is being sent to you as required by the DEA
Memorandum of Agreement which was executed by me and your office. I
am submitting the letter to indicate that since the signing of the
Agreement neither I nor any of the IMC clinics, located in the State
of Texas, have dispensed any controlled substances to their patients
for their medical needs.
GX 3, at 1-10. Subsequently, Respondent submitted two more reports
(dated July 20 and September 25, 2013), which contained the same
statement. Tr. 113; GX 3, at 11-12.
Thereafter, the DI decided to investigate whether Respondent's
clinics were in compliance with both the MOA's recordkeeping and
registration conditions. Tr. 114. The DI proceeded to issue a subpoena
to Respondent requesting the names of the practitioners at each clinic.
Id. at 115. She also decided to conduct inspections of each clinic.\5\
Id.
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\5\ However, several other Investigators were involved in the
inspections.
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The IMC Cy-Fair Inspection
On August 28, 2013, the DI, accompanied by another DI, went to the
IMC Cy-Fair clinic where they presented their credentials to Respondent
and issued a notice of inspection. Tr. 116. The DI asked Respondent if
there were any controlled substances on hand; Respondent answered that
he didn't know because he had just flown in that morning. Id. at 117.
The DI asked the office manager, who told her that clinic did have
controlled substances on hand. Id. The DI then asked Respondent if the
controlled substances were ordered using his registration; he answered
that he had ``no idea.'' Id. The DI also asked Respondent if someone
else had used his registration to order the drugs; Respondent again
answered that he had ``no idea.'' Id. The DI further asked to see the
clinic's receiving records, and after being ``shown the bottle of
testosterone that was in the cabinet in the back area . . . asked to
see the dispensing log,'' which was provided by the office manager. Id.
at 119.
During the inspection, the office manager ``could not produce any
[receiving] records,'' regardless of whether the purchases had been
made before or after he commenced his employment at the clinic. Id. at
119-20. Nor did the clinic have either an initial or biennial
inventory. Id. at 119, 127. While the office manager said he would ``go
to [the] storage area'' and look for the records, he produced no
records other than a dispensing log for testosterone during the
inspection, which lasted two to three hours. Id. at 120, 125. According
to the DI, two days later, she received an email from the office
manager which included a spreadsheet of the clinic's purchases. Id. at
121.
The DI further testified that there was ``[a] vial of
testosterone'' on hand, which according to the clinic's employees, was
``used for administering to patients.'' Id. at 121-22. According to the
DI, the vial of testosterone did not bear a patient's name on its
label.\6\ Id. at 124.
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\6\ According to the inventory conducted by the DIs and
witnessed by Respondent, the vial contained 5 milliliters of the
drug. GX 7.
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With respect to the dispensing log, the DI testified that the
entries were not compliant because they did not list the dosage form of
the testosterone, the patient's address, and in some instances, did not
list the amount.\7\ Id. at 130. There was also an entry which was
missing the initials of the dispenser, and multiple entries appeared to
have the patient's signature or initials but not those of the
dispenser. See id. at 130-31; see also GX 8, at 2, 5.
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\7\ While a number of the entries included the notation of
``.5,'' they did not list the unit of measure. GX 8, at 5.
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As for the clinic's receipt records, see GX 9, they were comprised
of a single sheet which contained 9 line items for purchases occurring
between November 1, 2012 and August 6, 2013. Each entry stated: ``10
Testosterone Cypionate 200MG/ML'' followed by the date and initials. GX
9, at 1. According to the DI, these records were missing multiple items
of required information including the name, address and registration
number of the seller, the date it was shipped and date it was received.
Tr. 132-33. On further questioning, the DI explained that the record
did not list how much of the solution had been received as ``you don't
know if'' the notation of ``10'' is for ``ten vials'' or ``if it's ten
what.'' Id. at 133. Upon review of the receiving record, the DI emailed
the office manager and asked him to clarify whether the initials were
of the person ordering or receiving the drugs and whether the date was
for the date the drugs were ordered or received; the office manager
replied that he assumed that the initials were of the employee who
ordered the drugs and that the date was the date of ordering. Id. at
134-36; GX 38, at 2.
Based on information provided by Respondent in response to the
previously issued subpoena, as well as information obtained during
interviews she conducted of the clinic employees, the DI determined the
names of the practitioners who had worked at the clinic. Tr. 138. She
also conducted a query of the DEA Registration database to determine if
the clinic had a practitioner who was registered at the clinic from the
date the MOA was signed (Sept. 20, 2010) through September 20, 2013.
Id. at 139. According to the DI, ``between March 2,
[[Page 21414]]
2011 and September 26, 2011, there was no practitioner or mid-level
practitioner [who was] registered at'' the clinic. GX 6; Tr. 139-40.
According to the dispensing log, on September 13, 2011, testosterone
was administered to patient C.F. Tr. 145; GX 8, at 5. Moreover, the
dispensing log contains numerous entries showing that controlled
substances were being dispensed at the clinic during the period covered
by the MOA. Tr. 148.
The IMC Woodlands Inspection
On September 11, 2013, the DI, accompanied by two DIs and an
Intelligence Research Specialist, went to the IMC Woodlands clinic and
presented their credentials and a notice of inspection to Nurse
Practitioner Penny Norman. Id. at 150. The DI ``requested inventories,
receiving records, [and] dispensing logs.'' Id. at 150-51. However, the
clinic did not have any inventories or receipt records and was able to
provide only its testosterone shot log, which was a single page, and
which showed that the clinic had administered testosterone on 25
occasions between November 20, 2012 and September 10, 2013. GX 20, at
1; Tr. 155-56. The DI inventoried the controlled substances then on
hand and found that ``[t]here was one bottle of testosterone on site,''
which did not bear a patient's name.\8\ Tr. 152. According to N.P.
Norman, while some patients would obtain prescriptions for
testosterone, the clinic's medical assistants (MAs) would administer
testosterone to patients who ``had trouble giving it to themselves.''
\9\ Id. at 274. The MAs could not, however, ``give an injection unless
[there was] an order from a provider.'' Id. at 279-80.
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\8\ While the DI testified that the results of the closing
inventory were documented on GX 29, this document includes the
notation of ``10 ml'' in the column for ``Bottle Count/ML'' and list
``18 ml'' as the ``Quantity.'' GX 29. While this suggests that the
clinic had more than one bottle of testosterone (as testified to by
the DI), the inventory was signed by N.P. Norman and it is
undisputed that the clinic had some testosterone on the premises on
the date of the inspection.
\9\ Ms. Norman also testified that the clinic ``would do . . .
lab work'' on the patients ``to make sure'' they needed
testosterone. Tr. 276.
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According to the DI, sometime in either February or March 2013,
this clinic moved from the address of 25329 I-45 North, Suite B, The
Woodlands, to 314 Sawdust Road, Suite 119, Spring, Texas. GX 19. While
two practitioners were registered at the clinic's Woodlands location
prior to the move, neither practitioner changed his/her registration to
reflect the clinic's new location until September 13, 2013. Id. Thus,
no practitioner was registered at the clinic from the date it moved
until September 13, 2013. Id. However, the testosterone shot log shows
that testosterone was administered on at least 14 occasions \10\ after
the clinic had moved to its new location and neither practitioner was
registered there. GX 20.
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\10\ As the evidence does not establish the date on which the
clinic moved, the precise number of administrations cannot be
ascertained. However, from April 1, 2013 through the date of the
inspection, the clinic administered testosterone 14 times. GX 20.
---------------------------------------------------------------------------
The IMC Victoria Inspection
On September 12, 2013, the DI, accompanied by another DI, went to
the IMC Victoria clinic, and presented their credentials and a notice
of inspection to Nurse Practitioner Ginger Carver. Tr. 160-61. The DIs
asked for the clinic's ``inventories, receiving records, and
administration . . . or dispensing logs.'' Id. at 161. The DIs also
took a closing inventory and found that the clinic had both
testosterone and phentermine on hand. GX 31. According to the DI, N.P.
Carver told her that some of the testosterone was for ``office use.''
Tr. 161-63; 169 (testimony that the N.P. referred to the office use
testosterone ``as the house bottle''). Moreover, at the bottom of the
cabinet was a crate containing phentermine and testosterone in bags
prepared by a pharmacy located in Houston (Empower Pharmacy) to which
were attached receipts listing the names of patients. Tr. 164-65, 169-
70. According to the DI, the drugs were shipped to the clinic and were
to be picked up by the patients. Id. at 163, 170. However, some of the
testosterone was stored at the clinic for patients who were ``not
comfortable with administering to themselves,'' and the clinic staff
would administer the drugs when these patients ``came in for their
appointment[s].'' Id. at 170.
While Ms. Carver provided the DI with the clinic's testosterone
injection log and its receiving records, she did not provide an
inventory. Id. at 172, 185. The DI further testified that no
practitioner was registered at the clinic between from May 22, 2013 and
August 29, 2013. Id. at 176. The testosterone injection log shows,
however, that the clinic administered testosterone at least 117 times
during this period.\11\ See GX 26, at 1-5, 7, 12-14, 16. According to
the DI, there were instances in which the name of the person
administering the drugs was not identified. Tr. 179; see GX 26, at 3
(Patient L.P.); id. at 4 (multiple patients). There were also entries
that were not dated. Tr. 181; see GX 26, at 2-5, 15.
---------------------------------------------------------------------------
\11\ In some instances, the administration log lists an
administration but does not include the date on which it occurred.
---------------------------------------------------------------------------
As for the receiving records, the DI testified that they did not
comply with the Agency's regulations because they did not have the
supplier's name, address, and DEA number. Tr. 185; see also GX 32. Nor
did the records include the ordering registrant's name, address, and
DEA number. Tr. 185; see also GX 32. Of note, GX 32 is a list of both
controlled and non-controlled prescriptions filled by Empower Pharmacy
on various dates between October 1, 2012 and May 31, 2013, which list a
prescription number, the patient's name, the dates on which the
prescriptions were written and filled, the quantity, drug name and
strength, the ``doctor,'' the pharmacist's initials and price. GX 32.
Some of the pages list a total number of prescriptions and a ``Total
Price.'' See id. at 2, 6-7, 10. According to the DI, this document was
a list of ``every prescription that was shipped to [the] clinic where
the patient paid the clinic, picked up the prescription, and then the
clinic . . . would pay the pharmacy whatever the total was at the end
of the month.'' Tr. 186. The DI further testified that ``[w]ithin these
records, there are purchases of testosterone in the clinic name.'' Id.;
see, e.g. GX 32, at 1(RX# C177831 dispensed on 10/22/12 and listing
patient as ``Victoria Clinic'').
The IMC Corpus Christi Inspection
On September 13, 2013, the DI, accompanied by another DI, went to
the IMC Corpus Christi clinic where they presented their credentials
and a notice of inspection to Nurse Practitioner Allen Ford. Tr. 189.
The DIs ``asked to see what controlled substances they had on hand,''
and after finding that the clinic had testosterone, ``asked for [the
clinic's] inventories, records of receipt, and their dispensing log.''
Id. As the clinic's copier was not working, the clinic emailed various
records to the DIs including its dispensing records and receiving
records. Id. at 190, 196; GX 28. While the DIs along with NP Ford took
an inventory of the controlled substances then on hand, the clinic did
not have a prior inventory. GX 33.
Of note, the clinic had 18 milliliters of testosterone 200 mg/ml on
hand for ``office use,'' as well as 60 phentermine 45mg and 140
testosterone 200 mg/ml that it was storing for patients. Id. According
to the DI, the latter drugs were in sealed bags which had a patient
name on them. Tr. 191.
The DIs testified, however, that some of the dispensing records did
not identify the drug, id. at 197, and even when the records identified
that
[[Page 21415]]
testosterone was the drug being dispensed, the record did not state the
``dosage form'' and the patient's address. Id. at 198. As for its
receipt records, the clinic provided a single page with the title ``Log
of Scripts'' and which was apparently created by Empower Pharmacy and
lists ``[p]rescriptions filled between 8/29/2011 and 8/29/2013'' and
the patient as ``CLINIC CORPUS CHRISTI.'' GX 28. The document shows
that Empower filled 14 prescriptions for testosterone 200 mg/ml and one
prescription for a drug called ``Scream Cream,'' \12\ which also
contains testosterone, for the Corpus Christi clinic. Id.; see also Tr.
410. According to the DI, this record did not comply with DEA's
regulations for receiving records because it did not contain the
clinic's address and registration number, the package size or form,
``and you don't know how many was shipped, when it was shipped, and how
it was shipped [sic].'' Tr. 199.
---------------------------------------------------------------------------
\12\ According to Respondent, scream cream was compounded by a
pharmacy and Super Scream Cream contained testosterone. Id. at 411-
12. Based on the prescription number for the scream cream, which is
prefaced with a ``C'' for controlled, see GX 28, at 62; I find that
this formulation was controlled.
---------------------------------------------------------------------------
The DI also testified that when she asked how the clinic obtained
the drugs for office use, ``the office manager indicated that Mr. Ford
would issue a prescription . . . to actually say[] office use.'' Id. at
193; id. at 194. The Government submitted copies of six prescriptions
which the clinic issued to obtain testosterone ``for clinic use.'' GX
34. Asked why she deemed these documents to be prescriptions rather
than order forms, the DI explained that ``the document says,
prescription, in multiple places''; she also testified that when she
asked the clinic's office manager: ``[h]ow do you obtain the
testosterone for your office use . . . she said, Mr. Ford issues a
prescription.'' Tr. 205. The DI added that when she asked the office
manager if she had ``copies of those prescriptions . . . this is what
she presented.'' Id. The DI also observed that the forms list ``a date
of birth'' for the clinic although she was ``not sure why.'' Id. Of
further note, next to the word ``ALLERGIES'' the forms include the
abbreviation ``NKDA'' (no known drug allergies). See GX 34. The forms
also included the notation: ``This prescription may be filled with a
generically equivalent drug product unless the words ``BRAND MEDICALLY
NECESSARY'' are written in the practitioner's own handwriting on this
prescription form.'' Id. Finally, each of the prescriptions was signed
by a practitioner. GX 34.
The IMC FM 1960 West Inspection
On September 11, 2013, two other DIs went to the IMC FM 1960 West
clinic and conducted an inspection. Tr. 287; GX 14. During the
inspection, the DIs determined that the clinic had controlled
substances ``on hand'' and asked for the clinic's dispensing records,
invoices, and an inventory. Tr. 288. On taking inventory of the
controlled substance on hand, the DIs found that there was one vial of
testosterone that did not bear a patient name. Id. A DI testified that
she was told by clinic employees that the vial ``was used to administer
testosterone [to] the[] male patients that would come in and get
testosterone injections.'' Id. The DIs also found ``several bags of
controlled substances that were . . . like from a pharmacy, that were
already bagged up in patient names,'' id., and ``had a prescription
number.'' Id. at 291. These drugs included progesterone/testosterone
cream and phentermine capsules. GX 14.
As for its records, the clinic did not have either an initial or
biennial inventory. Tr. 288, 304-05. The clinic also did not have
receipt records on hand but had Empower Pharmacy fax a two-page
document bearing the caption: ``PATIENT Rx HISTORY REPORT'' and which
also listed the clinic as the patient. Id. at 296, 305; GX 15. As
submitted for the record, the document lists by prescription number and
date various drugs distributed by Empower Pharmacy to the clinic
including such controlled substances as testosterone and Scream Cream
beginning on September 24, 2011 and ending on March 25, 2013. GX 15.
The DI explained that the document did not comply with DEA regulations
for receipt records because it does not contain the dates the drugs
were received by the clinic. Tr. 296.
As for the clinic's dispensing records, the clinic provided a one
page ``Testosterone Shot Log.'' GX 17. The log listed 20 different
instances of testosterone administrations by the patient's name and
date beginning on September 27, 2011 through August 30, 2013. Id. While
the log also listed the initials of a medical assistant, it contained
no information as to the patient's address, the drug strength and the
amount administered. Id.
The DI testified that during the inspection she asked ``who is
registered here?'' Tr. 298. Subsequently, she determined no one was
``registered at the clinic at the time.'' Id. Moreover, the
testosterone shot log and the receipt records show that testosterone
was obtained on May 18, 2012 and administered the next day, and the
lead DI found that ``between April 4, 2012 and July 22, 2012, there was
no practitioner or mid-level practitioner registered at the clinic.''
GX 16. The lead DI also found that there was no practitioner or mid-
level practitioner registered at the clinic between October 5, 2012 and
September 11, 2013. Id. Yet the receipt records show that the clinic
obtained Scream Cream containing testosterone on or about October 20,
2012 and testosterone 200mg/ml on January 28, 2013, and the
testosterone shot log shows that the drug was administered to patients
on November 9 and 29, and December 28, 2012, as well as on January 28,
July 29, and August 30, 2013. See GX 15, at 2; GX 17. Because no
practitioner was registered at the clinic at the time of the
inspection, the DIs seized the clinic's controlled substances. Tr. 298.
The IMC Oak Hills Inspection
On August 28, 2013, several DIs from the San Antonio District
Office conducted an inspection of the IMC Oak Hills clinic. Id. at 308-
09, 314. During the inspection, one of the DIs interviewed N.P. Norman,
who explained that clinic was ``a hormone and weight-loss clinic''
which ``used testosterone and ketamine.'' Id. at 309. According to the
DI, she was told by both N.P. Norman and the clinic's ``chief financial
manager'' that the clinic ordered testosterone ``for office use.'' Id.
at 310-11. Ms. Norman further explained that a prescription would be
sent to Empower Pharmacy and that the testosterone would be ``mailed to
the clinic for dispensation, administration to the patients.'' Id. at
310. Ms. Norman also told the DI that she was a floater who ``cover[ed]
various clinics'' and that ``the same practice is [used] at all
clinics.'' Id. at 311.
According to another DI who participated in the inspection, an
inventory was taken of the controlled substances on hand. GX 11.
According to the document memorializing the results, apparently one
bottle of testosterone 200 mg/ml was on hand; the document, however,
lists the quantity as ``30 mg.'' \13\ Id.
---------------------------------------------------------------------------
\13\ Given that the testosterone was in liquid form, it is not
clear why the quantity was listed in milligrams rather than
milliliters.
---------------------------------------------------------------------------
One of the DIs also ``asked for the inventory records of the
dispensations of the testosterone.'' Tr. 319. Among the records
submitted into evidence is a testosterone log, which like other such
logs, lists various administrations by date, patient name, dose, lot
number of the drug, and the medical assistant's
[[Page 21416]]
initials. GX 13, at 1-3. The log, however, includes only the
administrations between April 3 and August 24, 2013. See id. The clinic
also provided the DIs with a document bearing the caption:
``Testosterone Daily Drug Inventory Log.'' Id. at 4-28. The document
shows the quantity of testosterone on hand on a daily basis beginning
with January 1, 2011 but ending on March 30, 2013 in both the ``AM''
and ``PM,'' as well as the amounts dispensed, added to inventory, and
wasted.\14\ Id.
---------------------------------------------------------------------------
\14\ The Government also submitted an Exhibit showing the
various practitioners who worked at the Oak Hills Clinic and the
locations at which they were registered and the dates on which they
were registered at the various locations. GX 12. According to the
table, Oak Hills did not have a Practitioner or Mid-Level
Practitioner registered at it between December 11 and 20, 2010. Id.
The Government did not, however, produce any evidence the clinic had
controlled substances on hand or that it dispensed any controlled
substances during this period.
---------------------------------------------------------------------------
The IMC Southwest Inspection
On September 11, 2013, DIs went to the IMC Southwest clinic in
Houston, Texas, and conducted an inspection. Tr. 324. The DIs requested
the clinic's inventories, receiving records, . . . transfer records,
any records related to the controlled substances that [were] on hand,''
including dispensing records. Id. at 326. While the clinic provided
dispensing records, it did not provide any inventories or receiving
records. Id.
The DIs took an inventory of the controlled substances on hand and
found that the clinic had testosterone in the 200 mg/ml strength. GX
30, at 1. As for the quantity of testosterone, the closing inventory
simply notes the number ``13''; however, according to the DI, this
represented 13 vials. See id.; Tr. 327 A separate inventory sheet
documents that the clinic had on hand 630 tablets of phentermine 37.5
mg, 90 tablets of phentermine 30 mg, and 90 tablets of phendimetrazine
35 mg. GX 30, Id. at 2. According to the DI, none of the testosterone
vials was labeled with the name of a specific patient. Tr. 327.
However, there were specific patient names on some of the drugs lists
on second page of the inventory. Id. at 327-28.
The clinic did provide the DIs with a ``Testosterone Log,'' showing
the date, the patient's name, the amount administered, and the medical
assistant's initials. GX 23. The log's first entry is dated September
4, 2012; the last is dated September 7, 2013. See id. at 1, 4. However,
none of the entries list the strength of the testosterone or the
patient's address. Tr. 329-30. A DI testified that one of the clinic's
staff members had told him that another clinic had closed and that its
controlled substances were transferred to the Southwest clinic. Id. at
330-31. However, the Southwest clinic did not have any records
documenting the transfer of the controlled substances.\15\ Id. at 331.
---------------------------------------------------------------------------
\15\ In an exhibit showing the registered addresses of various
IMC Southwest practitioners and the dates they were registered at
the particular addresses, the following statements were made: ``The
Dispensing/Administration Log provided during the NOI showed 127
testosterone injections administered to 15 patients by Medical
Assistants (Non-DEA Registrants),'' and that ``[b]etween November 7,
2013 and May 6, 2014[,] there was no Practitioner or Mid-Level
Practitioner registered at IMC Southwest.'' GX 22.
However, the Government produced no evidence showing that this
clinic either possessed or dispensed controlled substances during
the November 7, 2013 through the May 6, 2014 period.
---------------------------------------------------------------------------
Evidence Related to Respondent's Quarterly Reports
In addition to her testimony to the effect that Respondent failed
to comply with the MOA because he did not timely file the required
quarterly reports, the lead DI testified that the statements made in
the reports were untrue. Tr. 213. As to why, the DI explained that
``[b]ased upon the records received at each clinic, there was
dispensing at the clinics during the periods covered in these quarterly
statements.'' Id. The DI further testified that during her interactions
with Respondent, whether in person, by phone or by email, there was no
``discussion about what was meant by dispensing controlled
substances.'' Id. She also testified that there was no ``discussion
about whether the dates'' of the ``reports were accurate.'' Id. at 214.
Later, on cross-examination, the lead DI testified that her
understanding of the term ``dispense'' as used in the MOA ``goes back
to'' the definition in 21 U.S.C. 802, which ``includes administering
and actually physically . . . taking of the medication.'' Id. at 244.
She also testified on cross-examination that Respondent violated the
MOA because there were recordkeeping violations and because ``he was
required to submit quarterly reports'' which he failed to do until ``he
was basically pushed at some level to finally submit them.'' Id. at
249.
Respondent's Evidence
Respondent's case was comprised solely of his testimony and a
single demonstrative exhibit which showed how his various businesses
(including the clinics) were held. Respondent testified that he
graduated with honors from Harvard and attended medical school at Johns
Hopkins. Tr. 346. Thereafter, he ``did a transitional residency'' which
involved rotating through various specialties. Id. at 349. After his
residency, Respondent worked in a private practice for several doctors
in the Cy-Fair section of Houston, Texas on a part-time basis; he also
worked on a locum tenens basis and treated workers compensation
patients. Id. at 349-51. According to Respondent, he has practiced
family medicine throughout the entirety of his medical practice and
considers himself to be a general practitioner. Id. at 350. Respondent
eventually started his own practice and purchased another practice in
the Cy-Fair section from a physician who was retiring. Id. at 353.
While Respondent moved this practice to a new office, it is now known
as the IMC Cy-Fair clinic. Id. Respondent also acquired a third
practice from another physician who was retiring. Id. at 354.
According to Respondent, in late 2004/early 2005, Respondent sold
the practices and moved to Miami, Florida, where he was also licensed,
intending to open some clinics, only to find that the barriers to entry
were greater than in Texas. Id. at 356. Respondent then decided to
concentrate on developing software for electronic medical records and
moved to Washington State. Id. However, ``at the end of 2010,''
Respondent bought back the Texas practices. Id. at 358, 360.
Regarding the MOA, Respondent testified that ``in 2006 . . .
everything went down . . . [but] since I already sold the practices . .
. it didn't matter to me whether I had a registration, because I wasn't
working. I wasn't living in Texas or working in Texas.'' Id. at 359.
However, after he knew that he ``was going to . . . buy the practices
back . . . [he] started the process to finally get these matters
resolved.'' Id. According to Respondent, he was advised by his counsel
at the time that ``the easiest and best way'' to resolve the matters
was to sign the MOA ``because otherwise [he was] going to have this
protracted fight'' and the Agency had ``sat on the paperwork'' from
2006 to 2009.\16\ Id. Respondent further explained that he had to have
his DEA number to get on insurance plans as well as Medicare and
Medicaid. Id. at 360. However, Respondent testified that
[[Page 21417]]
during the period when he did not own the clinics, he was ``involved as
a consultant and [would] occasionally substitute'' for a practitioner.
Id. at 373.
---------------------------------------------------------------------------
\16\ Respondent was, however, allowed to continue to dispense
controlled substances under his old registration and was provided
with a letter to this effect. Id. at 361. While Respondent asserted
that insurance companies and some pharmacies would not accept this
letter, DEA does not control the actions of these entities.
Moreover, given Respondent's testimony that he had moved to
Washington State to concentrate on software development, it is
unclear the extent to which he was even practicing medicine during
this period.
---------------------------------------------------------------------------
Turning to the period after he entered the MOA and repurchased the
clinics (specifically, from late 2010 to 2013), Respondent testified
that ``[e]veryone in the clinics [was] at least a medical assistant,''
and that ``[m]ost of the time, there was a midlevel provider, a
physician assistant or a nurse practitioner, a supervising or
collaborating physician, and myself.'' Id. at 381. Respondent added
that ``[s]ometimes [he] was the collaborating physician or the
supervising doctor,'' and ``[s]ometimes [he] wasn't.'' Id. Asked by the
CALJ whether he was ``involved in the day-to-day operations of these
clinics,'' Respondent explained that he ``wasn't every day, but [that
he] was involved in . . . administration [and] management.'' Id.
Respondent further testified that ``[s]ometimes [he] was involved in
the hiring,'' that he was ``certainly . . . involved in training of the
midlevels and the doctors, because many of the things that [the
clinics] do . . . including bioidentical hormone replacement, are not
taught in medical school or residency.'' Id.
During this time period, Respondent ``was actually living in
Washington State and coming to Texas when [he] had to'' because he was
able to review the patients' electronic medical records from a remote
location through a virtual private network (VPN). Id. at 382, 385.
Respondent stated that on his visits to Texas he would generally visit
each clinic and stay ``[f]rom several hours to days . . . depend[ing]
on the clinic needs'' and ``whether the staff was performing well and
what have you.'' Id. at 384.
Respondent admitted that through the VPN, he could determine what
services the clinics were providing. Id. at 385. While Respondent
asserted that he ``couldn't see the invoices or the ordering'' because
the drugs were ordered ``by fax or . . . calling in,'' through the
electronic medical records he ``could see . . . if somebody . . . had
ordered the administration of testosterone.'' Id. at 386-87.
Continuing, Respondent explained that he ``couldn't see--like the
office manager would call or send a prescription over to the pharmacy
to get filled, so I couldn't see . . . if it was for general office
use.'' Id. at 387.
Respondent asserted that ``this is a common practice,'' maintaining
that ``hospitals don't order anesthesia medications for every
individual patient'' and that ``[t]hey order . . . stock bottles, and
the anesthesiologist will use whatever is appropriate for a particular
patient, because they don't know how long the surgery's going to go.''
Id. at 388. He then added: ``[t]hat happens every single day in every
single hospital in this state, you know. You know, this is not
something that's unique to these practices. And we're not even talking
about that much medicine, for God's sake.'' Id.; see also id. at 450-52
(analogizing the clinics' practice of using office stock to dispense to
the use of standing orders at hospitals).
Respondent maintained that the testosterone shots were administered
pursuant to a standing order in the patients' charts, and that ``just
because [the practitioner] isn't physically on site doesn't mean that
order is not valid.'' Id. at 452; see also id. at 483. Respondent
further testified that under the rules or policy of the Texas State
Board, a standing order can last for ``three months.'' Id. at 453.
Asked by his counsel what he did when he was physically at the
clinics, Respondent testified that he would interview the staff and
``maybe pull some patients aside and ask them . . . if they had a good
experience or whether the staff was taking good care of them and things
like that.'' Id. at 389. He would also do a ``physical inspection and
make sure that everything was the way it should be in each practice,''
by which he meant that he ``would make sure that everything was neat
and clean and in order'' and that ``everyone was just doing their [sic]
job.'' Id. at 389-90.
Respondent was then asked by his counsel, ``what, if anything, [he]
did . . . with respect to ensuring compliance with . . . the controlled
substance issues in this case?'' Id. at 390. Respondent answered:
``first of all . . . we didn't do that many . . . of these injections .
. . . And this is relevant, because . . . we're not talking about that
much. Every clinic had one bottle of testosterone they would use,
one.'' Id. After the CALJ told Respondent that he had not answered his
counsel's question, Respondent testified: ``And, you know, so I would
go, and I would make sure that . . . that everyone's being documented.
Now, we have two forms of records here. One is the electronic records,
and the other one was the physical log. Okay?'' Id. at 390-91.
The CALJ then asked Respondent ``to tell us what steps you were
taking to make sure that your clinics were . . . in compliance with
the'' MOA? Id. at 391. Respondent answered:
Okay. You know, all I did would [sic] glance at the logs. I
would glance at them and make sure that they're being recorded with
the name and the date and the amount that was--of medicine that was
given. I would glance at them. That's just--you know, as part of my
inspection, I would just glance. Like, you know, I wasn't
scrutinizing them and measuring, you know, how much was left and
things like that. I would just, you know--
I think the staff is very honest, in general honest, and--
Id. Finding the answer to ``still [be] going far afield,'' the CALJ
summarized Respondent's testimony to the effect that he would interview
staff members and ``some patients about their care,'' ``do a physical
inspection,'' and ``glance at the logs.'' Id. at 392. The CALJ then
asked Respondent if this was ``the sum total of what [he] did?'' Id.
Respondent answered ``yes,'' and added that he would also train the
``new personnel'' on the protocols and make sure ``that all their
equipment was working,'' such as the fax machines and computers; he
also stated that he would give the staff ``feedback on any comments''
from the patients. Id.
With respect to the testosterone injections, Respondent explained
that he ``would just look through [the physical log] and make sure they
were keeping a log.'' Id. at 394-95. Asked what records the clinics
maintained on ``the ordering side,'' Respondent asserted that ``most
everybody maintained the invoices that, you know--because, you know,
the clinic has to pay their [sic] bills every month and everything like
that. So they maintained invoices. They would file it or scan it and
put it onto . . . one of the servers.'' Id. at 395. Asked whether he
had any information that the invoices from the pharmacy were being
maintained, Respondent testified:
I believe for the most part. I mean, most of the managers are
fairly experienced, and they know that . . . part of their job is to
scan the invoices, and to keep them on servers . . . as a record of
the bills paid and things like that.
They may not keep a physical copy always, but they're supposed
to scan. Now, did I check every single time in all seven clinics?
No. Of course, I mean, that's an incredible amount of work. I can't
be in seven places at once. So I just would occasionally check, and
I would ask, and I trusted my staff.
Id. at 396.
Respondent further asserted that he would ask his office managers:
``Are you making sure you're scanning this? Are you making sure you're
recording that? Are you making sure the medical assistants are doing--.
I would ask the managers . . . and make sure that everything was being
done . . . correctly.'' Id. Respondent then testified that he
``absolutely'' did not ``physically check every single time,'' and
asserted that ``[t]here's no way one person can do
[[Page 21418]]
all that work'' but that he was ``trying [his] best'' and ``trusting
[his] staff . . . to do their job.'' Id. Asked by the CALJ if he
thought this was a valid defense to the allegations that he failed to
comply with the MOA, Respondent testified that he did not ``think it's
a defense'' but that he had ``explanations on . . . things.'' Id. at
397.
The CALJ then asked Respondent if he thought that ``say[ing] that
it's too much work'' was a valid excuse for failing to comply with the
MOA. Id. at 398. Respondent answered: ``Unfortunately, Judge, medicine
is not as good of a business as it used to be.'' Id. Instructed by the
CALJ to ``[s]tick with my question,'' Respondent answered: ``Yes. So
it's not about making money. It's about patient care. You know, the
difference in revenue that doctors make now versus back in the past is
night and day.'' Id. After noting Respondent's testimony to the effect
``that patient care had very little to do with the things that you were
looking at'' and that ``it's too much work to do more than what you're
doing,'' the CALJ asked: ``What if the terms of the MOA required
that?'' Id. at 398-99. Respondent answered:
Yes, sir. The MOA required that, as I understood it, to send in
reports for patients who are--that were dispensed medication. And
because were [sic] not dispensing medication, I agreed to the MOA.
So with respect to, you know, having logs, because the State didn't
want the clinics to dispense, no one was going to dispense anymore,
you know.
Id. at 399. Respondent then insisted that ``[c]omplying with the
MOA wasn't too much work'' and that ``[w]hat [he] meant was . . .
checking all the deposits and all the invoices and all the payments and
reconciling them with the--it wasn't having anything to do with the
MOA.'' Id. After asserting that he was ``involved in patient care as
well,'' Respondent added that he ``didn't mean it was too much to
comply with the MO[A] . . . but I just meant like . . . micromanaging
and checking every single little thing, that was--that's too much work.
I didn't say that, you know--.'' Id. at 400-01.
Subsequently, Respondent's counsel referred to paragraph 5 of the
MOA and its ``reference to administer, dispense and prescribe'' \17\
and asked Respondent what he understood the term ``administer to
mean?'' Id. at 406. Respondent answered: ``Administering means that I
order myself or I physically give a patient a medication in the
office'' by ``[d]irect application, orally or through injection or IV
or what have you.'' Id. Then asked what he understood the term
``dispense'' to mean, Respondent testified: ``Dispense means to give a
patient, physically give a patient medication for self-administration
outside of the office.'' Id. at 407.\18\
---------------------------------------------------------------------------
\17\ This provision states: ``This Memorandum of Agreement
(``MOA'') is between [Respondent] and DEA and establishes the terms
and conditions under which DEA will continue to permit [Respondent]
to administer, dispense and prescribe any Schedules II through V
controlled substances. Respondent and DEA agree to the
following[.]'' GX 4, at 2. The subsequent terms are, however, in
separately numbered paragraphs. See id. at 2-5.
\18\ As for the term ``prescribe,'' Respondent testified that it
``means you're writing prescriptions, sending it to a pharmacy, and
the patient's filling it at a pharmacy.'' Tr. 407.
---------------------------------------------------------------------------
Turning to paragraph 8 of the MOA, Respondent testified that the
clinics never used any schedule II controlled substances and that the
drugs they used were appetite suppressants (phentermine,
phendimetrazine, and diethylpropion \19\) and ``bioidentical
hormones,'' i.e., testosterone. Id. at 407-09. Respondent also
testified that the clinics always administered ``the same
concentration'' of testosterone, 200 mg/ml, and did so ``by
injection.'' Id. at 409-10.
---------------------------------------------------------------------------
\19\ While Respondent testified that each of these three drugs
is in schedule III, this is true only of phendimetrazine, as both
phentermine and diethylpropion are in schedule IV. See 21 CFR
1308.13(b); see also id. Sec. 1308.14(f).
---------------------------------------------------------------------------
Respondent was then asked to explain his understanding of his
obligations under paragraph 8. Id. at 412. As found above, this
provision stated that ``[i]f controlled substances in [s]chedules II
through V are purchased for any clinic, to be administered and/or
dispensed to the clinic patients, [Respondent] shall cause to be made
and maintained all DEA required documents and information including
records, reports, and inventories.'' GX 4, at 2-3.\20\ Respondent
answered: ``That for the patients that I saw and the patients that were
under my care, that I made sure that there were appropriate records
being kept.'' Tr. 413. Asked by the CALJ if this applied to ``all the
patients in all these clinics,'' Respondent answered: ``No, sir. I
wasn't the caregiver for most of these patients. I was the supervising
doctor, but every midlevel has their credentials. Every single doctor
also has their credentials.'' Id.
---------------------------------------------------------------------------
\20\ This paragraph also provided that ``[a]ll required
documentation shall be maintained as required by federal and Texas
laws and regulations, pertaining to the administering, dispensing,
and prescribing of controlled substances.'' GX 4, at 2-3.
---------------------------------------------------------------------------
Upon further questioning by his counsel as to his understanding of
his recordkeeping obligations under the MOA, Respondent testified that
``there was no dispensing done in any of the practices at all.
Administering, making sure that the medical assistants recorded the
administration in the . . . electronic medical record and making sure
they maintained the log that was consistent with the medical record.''
Id. at 418. Respondent also explained that ``every single prescription
is recorded, because when you save the note, it saves the prescriptions
that you wrote as part of the note.'' Id.
Subsequently, Respondent was asked if he fully complied with the
documentation requirements of paragraph 8. Id. at 431. Respondent
answered: ``I feel as though I have, because there were logs kept, both
electronically and written, and there was no diversion.'' Id. at 431-
32. Then asked if he knew ``whether opening inventories were taken . .
. at these clinics,'' Respondent answered: ``There was hardly any
testosterone ordered for any of the practices, and--.'' Id. at 432.
After directing Respondent to answer the question, the CALJ asked:
``Was there [an] opening inventory taken? And what is the answer to
that question?'' Id. Respondent testified: ``My answer to the question
is I don't know what opening inventory means. What does that mean?''
Id.
Respondent was then asked by his counsel what was his
``understanding of the inventory requirements . . . if any, under the
MOA?'' Id. at 433. Respondent answered: ``Whenever medication is--
controlled medication is administered to a patient, that their name be
recorded, the amount of the medication be recorded, the site, the date,
you know, probably the lot number of the medication, the lot number.''
Id.
Moreover, when asked on cross-examination if he ``acknowledge[d]
that none of [the] clinics were [sic] able to produce an initial
inventory,'' Respondent testified: ``No. It's not correct.'' Id. at
471. Asked ``[w]hy is it not correct,'' Respondent answered: ``when you
have people coming in, flashing badges and individually interviewing
staff members, they're scared . . . they're worried, they're like, Oh,
my God, am I going to get fired? . . . It is an incredible intrusion
onto the practice. The staff doesn't even know . . . what an inventory
is.'' Id. at 471-72. When then asked if there were inventories at the
clinics that were not provided to the DIs, Respondent replied: ``Define
inventory. There were logs kept of--.'' Id.
Respondent subsequently admitted that he had neither read the Code
of Federal Regulation's definition of the term inventory, nor the
regulations requiring the keeping of inventories. Id.
[[Page 21419]]
at 473. The Government then asked: ``you don't even know what those
regulations are, do you?'' Id. Respondent testified: ``I assumed that
the logs were the inventory. Okay? I assumed that, foolishly.
Admittedly, if that was my mistake, it's my mistake. I did not go
through the Code and read it, nor did my attorneys or consultant tell
me that that was what was necessary.'' Id. Respondent nonetheless
continued to maintain that ``the way'' he saw it, ``the log served as
the inventory.'' Id. Respondent subsequently maintained that he had not
read the regulations since being served with the Show Cause Order
because ``we're not administering anymore'' and ``there is no
controlled substance at all on the premises,'' and thus, in his view,
``it's not even relevant for me to read [the regulations] anymore.''
Id. at 474.
Respondent was also asked by his counsel if he agreed ``that at
least on some of the . . . [testosterone] logs, there was some missing
information?'' Id. at 433. Respondent agreed, and he also agreed that
he was not in compliance with these sections of paragraph 8. Id. at
433-34. Respondent further testified that he accepted responsibility
for not complying with paragraph 8. Id. at 434.
Paragraph 8 also required, in relevant part, that ``[i]f any
controlled substance is administered or dispensed at any [of the]
clinic[s] . . . the health care provider doing the administering and/or
dispensing to the patient shall be registered at the clinic as required
by 21 U.S.C. 822(a)(2) and 21 CFR 1301.12(a).'' GX 4, at 3. Respondent
explained that he understood his obligation under this provision as to
``[m]ake sure that . . . the provider seeing the patient, unless it was
. . . a temporary or a sub or something, that they changed their [sic]
address on their [sic] DEA certificate to the practice, so they could
administer. You don't have to have your address changed to prescribe,
because you can go anywhere just to prescribe. But to administer . . .
that would be the case.'' Tr. 419.
Later, on cross-examination, Respondent maintained that the
instances in which no practitioner was registered at a clinic and yet
controlled substances were administered to patients ``was an
oversight,'' and that ``[t]here may have been some mid levels who
didn't . . . change their address.'' Id. at 464, 491. However, when
pressed by the Government as to whether he was going to admit that this
had occurred, Respondent answered: ``I don't know whether it's true or
not.'' Id. at 465; see also id. at 490. Respondent nonetheless insisted
that he was accepting responsibility for this misconduct. Id. at 465.
Respondent also testified to the effect that even if there was no DEA-
registered person registered at a specific clinic, there were ``either
mid-levels or doctors . . . and everybody was properly credentialed.''
Id. at 495.
Turning to paragraph 9 of the MOA, as found above, it required the
submission of a quarterly report to the DEA Field Division of ``the
total number of controlled substances dispensed, to include the date
dispensed, full name of patient, address of patient, name of controlled
substance dispensed, quantity dispensed and dispenser's initials.'' GX
4, at 3; Tr. 419-20. On questioning by his counsel, Respondent admitted
that 10 of the reports were not timely submitted and that he violated
paragraph 9. Id. at 420. As for why he backdated the reports when he
did not submit them until June 19, 2013, Respondent testified he did so
``[b]ecause they were required to be filed on a quarterly basis, so I
just dated the correspondence to reflect . . . every particular
quarter.'' Tr. 421-22.
As for why he denied that he was subject to the MOA in his June 4,
2013 email to the DI, see GX 36, Respondent testified that he did so
``[b]ecause all of this was such an unpleasant experience, [so] I
blocked it out of my mind.'' Id. at 426. Continuing, Respondent
maintained:
It was such an unpleasant experience, I literally blocked it out
of my mind, so that I didn't, you know, remember, you know, having
these sorts of things, and I relied on someone to remind me, and
that didn't happen.
And so I just, you know, blocked it out, I mean, because it was
so unpleasant, and it was so humiliating, and it was so degrading,
and it's--not to mention, you know, costing a fortune. And I
literally just blocked it out. I mean, that's the--you know,
athletes do this when they have a bad play. They block out the bad
play, and they move on.
And so that's--you know, that was my mindset. And so once I
realized that, hey, I was wrong and [the DI] was right, I
immediately sent a letter of apology and I sent in the reports.
Id. at 426-27. Respondent further maintained that he ``had buried''
the events surrounding his entering the MOA ``so deep in my psyche,
just so I could stay sane and stay working and productive, just like an
athlete would do, like after a bad play.'' Id. at 427. Respondent then
noted that ``[p]eople who are victims of crimes, people who are--they
block out the bad experience, you know, and that's exactly what I did,
because this was an ordeal, Judge. This was a harrowing, awful,
horrible experience to go through.'' Id. at 428.
Asked by his counsel ``what if any efforts'' he had made to prevent
the recurrence of the issues raised regarding his compliance with the
MOA, Respondent testified that ``there was obviously no dispensing.''
Id. at 436. Continuing, he testified that:
since [the DI's] inspections are so unpleasant and so invasive that
I told everybody that we were not going to administer any medication
to any patient anymore, despite the fact that many patients
appreciated it because they don't feel comfortable self-injecting.
It's actually a lot of work for the clinics to do that . . . It's
very tedious. And we did it as a courtesy to the patients.
Id. at 436-37. Later, Respondent maintained that the clinics have
not ``administered anything for over a year.'' Id. at 448.
As found above, during several of the inspections, the DIs found
controlled substances that the Empower Pharmacy had shipped to the
clinics which bore labels indicating that they had been dispensed for
specific patients. Respondent testified that the clinics engaged in
this practice ``[a]s a convenience to the patients,'' and ``they would
act essentially as a delivery service for some of the patients that
couldn't afford to have the medicines mail-ordered to . . . their
homes,'' because ``it was an extra $15'' to have the prescription
shipped to the patient's home Id. at 438. However, Respondent
acknowledged that the clinics offered this service without regard to
``a patient's financial status.'' Id. at 439. Respondent subsequently
testified that the clinics ``don't do it anymore'' and that ``we're
going to just send it to your home.'' Id. at 446. He also disputed the
Government's suggestion that the clinics ``had to have a registered
person at that clinic'' when the clinics accepted delivery and stored
the prescriptions that were dispensed for specific patients. Id. at
479-80; see also id. at 481 (testifying that in his view, it is
``absolutely'' legal for a clinic to accept prescriptions for patients
when no practitioner is registered at the clinic).\21\
---------------------------------------------------------------------------
\21\ Notwithstanding that it elicited extensive testimony about
this practice, the Government made no argument that it is illegal.
---------------------------------------------------------------------------
Respondent testified that ``[a]t this point,'' the clinics have
``zero'' physical contact with controlled substances, and that their
controlled substance activity is limited to prescribing. Id. at 448. He
also represented that that he does not intend for the clinics to have
any physical contact with controlled substances ``at least for the
duration of [his] license.'' Id. at 449.
Respondent testified that it is permissible to use a prescription
to
[[Page 21420]]
obtain a stock bottle, but maintained that he had never done so. Id. at
454. Asked whether the clinic employees had ever done so, Respondent
asserted that ``they didn't write it but they would order it under the
DEA number of the person who was registered at that address.'' Id.; see
also id. at 455 (testifying ``no' to CALJ's questions: ``Have staff
members in your clinics, have they written prescriptions[?]'').
However, on follow-up questioning by the CALJ, Respondent admitted that
the ``mid levels'' had done so. Id. He also asserted that ``[i]t's
absolutely proper'' for a mid-level practitioner to use a prescription
to order controlled substances for office use because ``[t]hey have
their own DEA certificate, and they have their own medical licenses.''
Id. at 456-57.
Subsequently, Respondent's counsel asked him if there is ``anything
relative to the nature of the investigation that you feel is important
for the Judge to hear about?'' Id. at 457. Respondent replied:
I do have a lot to say. Okay. The only reason we're here, Judge,
the only reason why a senior attorney from the DEA's office flew
down here on taxpayer money over some logs, okay, that may not have
been kept correctly is because when--you mentioned yesterday why did
it take 12 months between the time that you--you know, that you
approved the registration, renewal registration. Right? Remember you
asked that? And the time it happened.
I'll tell you exactly why. I have a friend of mine who's a
federal agent. He told me that I can make a congressional complaint.
Okay.
Id. at 458. Following an objection by the Government which was
overruled, Respondent added:
That I can make a congressional complaint against a federal
agent who I feel has harassed me. And [the DI] has. Not only has she
been ridiculously invasive in all my practices but she has attempted
to vandalize and sabotage my relations with my vendors. Okay. And
tried to ruin my business.
She left me alone for months and months and months and months.
As soon as I made the congressional complaint . . . [m]agically two
months later I'm here with you taking up your time over this
nonsense.
Id. at 459. Respondent then asserted that the proceeding was ``pure
retaliation'' for the ``congressional complaints'' and that ``[w]e made
all the changes.'' Id. He maintained that ``[t]he only reason'' he had
been subjected to this proceeding was because he had ``made the
congressional complaint.'' Id. at 460. And he asserted:
[w]hat is a senior attorney of the DEA flying all the way down here
arguing over logs? Are you kidding? Why wasn't he here in 2006? Why
wasn't he here in in 2008? Why wasn't he here in 2010? Because it
was such a tiny matter; like don't they have better things to do
than this.
I mean literally the reason they're doing it, it's a CYA, Judge.
Okay? It's a CYA, because it's like, oh, my career's on the line, I
might get fired over this, and so now we have to go full steam
against this doctor.
Id. Respondent subsequently testified that he had filed his
complaints to members of Congress in the spring of 2015. Id. at 488.
However, on rebuttal, the Government recalled the lead DI who testified
that she had submitted the documentation requesting the issuance of an
Order to Show Cause to DEA Headquarters in February 2014, well before
Respondent complained to his representatives. Id. at 497, 499.
Respondent further disputed that his clinics had engaged in any
unlawful practices, testifying that ``[t]here's never anything unlawful
being done. I've never been accused of doing anything unlawful.'' Id.
at 476.
Discussion
Under the CSA, ``[a] registration pursuant to section 823 of this
title to manufacture, distribute, or dispense a controlled substance .
. . may be suspended or revoked by the Attorney General upon a finding
that the registrant . . . has committed such acts as would render his
registration under section 823 of this title inconsistent with the
public interest as determined under such section.'' 21 U.S.C.
824(a)(4). So too, ``[t]he Attorney General may deny an application for
[a practitioner's] registration . . . if the Attorney General
determines that the issuance of such registration . . . would be
inconsistent with the public interest.'' Id. Sec. 823(f). In the case
of a practitioner, see id. Sec. 802(21), Congress has directed the
Attorney General to consider the following factors in making the public
interest determination:
(1) The recommendation of the appropriate State licensing board
or professional disciplinary authority.
(2) The applicant's experience in dispensing or conducting
research with respect to controlled substances.
(3) The applicant's conviction record under Federal or State
laws relating to the manufacture, distribution, or dispensing of
controlled substances.
(4) Compliance with applicable State, Federal, or local laws
relating to controlled substances.
(5) Such other conduct which may threaten the public health and
safety.
Id.
``[T]hese factors are . . . considered in the disjunctive.'' Robert
A. Leslie, M.D., 68 FR 15227, 15230 (2003). It is well settled that 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
suspend or revoke an existing registration or deny an application. Id.;
see also MacKay v. DEA, 664 F.3d 808, 816 (10th Cir. 2011); Volkman v.
DEA, 567 F.3d 215, 222 (6th Cir. 2009); Hoxie v. DEA, 419 F.3d 477, 482
(6th Cir. 2005). Moreover, while I am required to consider each of the
factors, I ``need not make explicit findings as to each one.'' MacKay,
664 F.3d at 816 (quoting Volkman, 567 F.3d at 222); see also Hoxie, 419
F.3d at 482.\22\
---------------------------------------------------------------------------
\22\ In short, this is not a contest in which score is kept; the
Agency is not required to mechanically count up the factors and
determine how many favor the Government and how many favor the
registrant/applicant. Rather, it is an inquiry which focuses on
protecting the public interest; what matters is the seriousness of
the registrant's or applicant's misconduct. Jayam Krishna-Iyer, 74
FR 459, 462 (2009). Accordingly, as the Tenth Circuit has
recognized, findings under a single factor can support the
revocation of a registration. MacKay, 664 F.3d at 821. Likewise,
findings under a single factor can support the denial of an
application.
---------------------------------------------------------------------------
Under the Agency's regulation, ``[a]t any hearing for the
revocation or suspension of a registration, the Administration shall
have the burden of proving that the requirements for such revocation or
suspension pursuant to . . . 21 U.S.C. [Sec. ] 824(a) . . . are
satisfied.'' 21 CFR 1301.44(e). In this matter, while I have considered
all of the factors, I conclude that the Government's evidence with
respect to Factors Two, Four, and Five \23\ supports
[[Page 21421]]
the conclusion that Respondent and the entities he controlled violated
both provisions of the CSA and DEA regulations, as well as provisions
of the MOA, which although they do not constitute violations of law or
regulation, nonetheless constitute actionable misconduct which render
his continued ``registration inconsistent with the public interest.''
21 U.S.C. 823(f), 824(a)(4). Because I further agree with the ALJ's
finding that Respondent has not accepted responsibility for his
misconduct, I also agree with the ALJ that he has not rebutted the
Government's prima facie showing. Because I find that Respondent's
misconduct is egregious, I will order that Respondent's registration be
revoked and that any pending application be denied.
---------------------------------------------------------------------------
\23\ As to factor one, the Government introduced into evidence
the Texas Medical Board's 2008 Order Granting Temporary Suspension
of his Texas medical license and the Board's subsequent Termination
of Temporary Suspension and Entry of Agreed Order. GX 2, at 1-11.
Moreover, in September 2012, the Board filed a complaint alleging
various violations with respect to the prescribing of drugs
including progesterone, testosterone, and phentermine by Respondent
and mid-level practitioners he supervised. Id. at 13-16. However,
the complaint was eventually dismissed on the Board's motion after
the parties resolved the matter. Id. at 21. Thus, Respondent
currently possesses authority under Texas law to dispense controlled
substances. Moreover, there is no evidence that the Texas Medical
Board has made a recommendation to the Agency with respect to
Respondent. See 21 U.S.C. 823(f)(1). While Respondent is also
registered in Florida, there is no evidence as to the status of his
Florida medical license and the Florida Board has likewise made no
recommendation to the Agency with respect to Respondent.
In any event, the Government does not rely on factor one at
all. See Gov. Proposed Findings of Fact, Conclusions of Law, and
Argument 20-29. However, even assuming that Respondent currently
possesses authority to dispense controlled substances under Texas
law and thus meets a prerequisite for maintaining his registration,
this finding is not dispositive of the public interest inquiry. See
Mortimer Levin, 57 FR 8680, 8681 (1992) (``[T]he 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.''). Accordingly, this factor is not dispositive
either for, or against, the revocation of Respondent's registration.
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)).
As to factor three, I acknowledge that there is no evidence
that Respondent has been convicted of an offense under either
federal or state law ``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
criminal 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.
---------------------------------------------------------------------------
Factor Two--Respondent's Experience in Dispensing Controlled Substances
The evidence shows that Respondent was previously the subject of an
agency investigation of several IMC clinics which were allegedly
``dispensing controlled substances to their patients without a valid
registration.'' GX 4, at 1. While Respondent was not required to admit
to liability for any violation of federal law, the Agency agreed to
grant his renewal application subject to his entering the MOA. The MOA
specifically states that it ``establishes the terms and conditions
under which DEA . . . continues to permit [him] to administer, dispense
and prescribe any [s]chedules II through V controlled substance.'' Id.
at 2. The MOA also states that Respondent's ``new registration will
remain subject to applicable law and the terms and condition of this
Memorandum of Agreement.'' Id. (emphasis added).
The CALJ acknowledged that a registrant's conduct that violates the
terms imposed by an MOA can constitute acts rendering a registration
``inconsistent with the public interest,'' even when the violations do
not amount to a violation of the CSA or its implementing regulations.
R.D. at 45 (citing, inter alia, Fredal Pharmacy, 55 FR 53592, 53593
(1990)). The CALJ, however, asserted that ``[a]gency precedent has been
less sure-footed about where among the public interest factors an MOA
violation should be considered.'' Id. The CALJ then discussed several
agency decisions that considered MOA violations under Factor Two and
asserted that ``the analyses employed by the Agency in'' these cases--
which he characterized as ``lumping together activities which have no
direct bearing on dispensing into Factor [Two]'' and as ``analytically
infirm''--``should be abandoned.'' Id. at 46 (discussing Mark De La
Lama, 76 FR 20011, 20018 (2011); Erwin E. Feldman, 76 FR 16835, 16838
(2011); Michael J. Septer, 61 FR 53762, 53765 (1996)).
I disagree that Factor Two requires that an activity have a
``direct bearing on dispensing.'' Here, as in previous cases, the MOA
``established the terms and conditions under which [the Agency] will
continue to permit [Respondent] to administer, dispense and prescribe
and [s]chedules II through V controlled substances'' and his new
registration is subject to the MOA's ``terms and conditions.'' Because
that registration provides the authority by which Respondent may
dispense controlled substances, any violation of it is properly
considered as relevant in assessing his ``experience in dispensing . .
. controlled substances.'' Indeed, even the various MOA violations
discussed in other cases, which, in the CALJ's view, do not have a
``direct bearing on dispensing,'' were indisputably relevant in
assessing the registrant's experience in dispensing controlled
substances.
Discussing Septer, the CALJ asserts that the registrant's violation
of an MOA provision requiring ``daily audits . . . clearly involve[d]
no `experience in dispensing.' '' R.D. 46. Quite the contrary, the MOA
provision at issue in Septer was imposed after both DEA and state-level
investigators conducted an accountability audit at the practitioner's
office and found ``a shortage of approximately 190,000 to 203,000
dosage units of [s]chedule III and IV controlled substances.'' 61 FR at
53762. Whether these drugs were ordered by Dr. Septer or one of his
employees, the drugs were ordered under his practitioner's
registration, pursuant to which he was authorized to dispense
controlled substances, and thus, his inability to account for the drugs
was part of his ``experience in dispensing.'' As the MOA's provision
was clearly intended to prevent a recurrence of this experience, and
the Agency had an obviously compelling interest in ensuring that his
more recent experience did not repeat his earlier experience, the MOA
violation was clearly relevant under Factor Two.\24\
---------------------------------------------------------------------------
\24\ DEA has long interpreted Factor Two to encompass not only
those activities that are included in the statutory definition of
dispensing but also those that are ancillary to those activities
such as handling or possessing controlled substances.
---------------------------------------------------------------------------
The CALJ suggests that in Mark De La Lama, 76 FR 20011, the Agency
improperly considered MOA violations under Factor Two that included the
respondent's failure to maintain a prescription log and failure to
notify the local DEA office that he was transferring his registration
to another address, asserting that ``neither activity involves
`experience in dispensing.' '' \25\ R.D. 46. While the MOA's condition
that the respondent maintain a prescription log exceeded the
requirements of the CSA and DEA regulations, the respondent's failure
to comply was clearly relevant in assessing his experience in
dispensing controlled substances. As for his failure to notify the
local DEA office when he changed his practice location, the whole point
of the MOA was to ensure that the Agency ``would be able to monitor
Respondent's handling [which includes the dispensing] of controlled
substances.'' 76 FR 20014. As during the period following the issuance
of the registration which was conditioned on his entering the MOA, the
respondent would accrue experience in dispensing controlled
substances--which the Agency had a heightened interest in monitoring
given his history of controlled substance offenses--Respondent's
violations of both MOA conditions clearly involved conduct relevant in
assessing his experience in dispensing controlled substances.
---------------------------------------------------------------------------
\25\ These conditions were imposed based on the respondent's
conviction for drug distribution offenses. 76 FR at 20018.
---------------------------------------------------------------------------
The CALJ also suggests that in Erwin E. Feldman, 76 FR 16835
(2011), the Agency improperly considered certain violations under
Factor Two even though they did not involve prescribing. According to
the CALJ, such violations as failing to maintain a prescription log,
failing to ``maintain[] specified patient charts for specified periods
of time,'' failing to ``maintain[ ] state prescription monitoring
program reports for a specified period of time,'' and not ``notifying
the DEA about the initiation of any state administrative proceedings''
do not involve prescribing and thus ``have no direct bearing on
dispensing'' under Factor Two. R.D. 46.
[[Page 21422]]
However, a careful reading of the Agency's findings in Feldman
shows that the Agency did not even find that the physician violated the
MOA by failing to maintain patient charts or prescription monitoring
reports. See 76 FR at 16837-88. However, even if it had, each of the
MOA's provisions was a condition placed on the physician's authority to
dispense controlled substances, and thus, subsequent allegations that
he violated the MOA were clearly relevant in assessing his experience
in dispensing controlled substances. Moreover, while in general terms
the MOA's requirement that he notify DEA about the initiation of any
state administrative proceedings may not have necessarily involved the
dispensing of controlled substances, the physician was accused by the
State of both ``prescribing drugs without a lawful diagnostic or
therapeutic purpose'' and ``prescribing Suboxone to treat opioid
dependence without having obtained the necessary certification.'' Id.
at 16837 (int. quotations and citations omitted). Thus, even aside from
the fact that it was a condition on his registration, the physician's
violation of this provision was clearly relevant in assessing his
experience in dispensing controlled substances.
In any event, misconduct is misconduct whether it is relevant under
Factor Two, Factor Four,\26\ or Factor Five, or multiple factors. And
although the CALJ asserts that ``[a]s agency precedent now stands, the
distinction between the considerations of Factor [Two] are nearly
imperceptible in this case from those considered under Factor [Four]''
and that ``[t]he risk of this approach is that evidence offered against
the Respondent is considered and weighted twice,'' R.D. 43, the Agency
has repeatedly explained that it does not mechanically count up the
factors and determine how many favor the Government versus how many
favor the respondent. See Krishna-Iyer, 74 FR at 459, 462. Rather, the
inquiry focuses on protecting the public interest; what matters is the
seriousness of the registrant's or applicant's misconduct.\27\Id.
---------------------------------------------------------------------------
\26\ The CALJ opines that ``several of the violations in Feldman
were also likely violations of applicable state, federal, and/or
local laws, but there was no mention of Factor 4, even though in an
earlier case, OTC Distribution Co., 68 FR 70538, 70542 (2003), the
Agency considered the respondent's failure to comply with the terms
of the MOA as a failure to comply with applicable law, despite the
fact that the conduct was not unlawful, but merely a violation of
the MOA in that case.'' R.D. 46 (footnotes omitted). With respect to
Feldman, the CALJ speculated that the respondent's ``multiple-
refills scrips most likely violated'' 21 CFR 1306.12, which allows
practitioners to issue multiple prescriptions to provide up to a 90-
day supply of a schedule II controlled substance. Id. n.106.
However, in Feldman, the Government made no such allegation and the
Agency made no such finding. Indeed, with respect to the physician's
violation of the MOA's condition which limited him to authorizing
only one refill, the refills were for only schedule III and IV
controlled substances. 76 FR at 16836-37. Indeed, none of the
Decision's findings involved schedule II drugs. See id.
As for the CALJ's discussion of OTC Distribution, I agree that
the mere failure to comply with the term of an MOA does not
necessarily establish a violation of an ``applicable . . . law[ ]
related to controlled substances.'' 21 U.S.C. 823(f). While this
factor has long been interpreted as encompassing both laws and duly
enacted regulations, most MOA terms are the product of negotiation
between the Agency and an applicant/registrant and do not arise from
either the legislative or rulemaking process. Even where an MOA term
imposes the same requirements as a law or regulation, a violation of
that term falls under Factor Four because it is also a violation of
a duly enacted law or regulation.
\27\ The CALJ also opines that under Agency precedent, ``where
the Government produces no evidence of other misconduct over the
course of a lengthy career as a registrant, it will assume it to be
benign and not consider under Factor [Two] (as Congress intended),
but rather, as a matter of sanction discretion.'' R.D. 43. However,
while the Agency's decisions typically set forth the specific public
interest factors in discussing the evidence offered by the
Government in support of its prima facie case, this does not mean
that a respondent's evidence of a lengthy history of compliance is
given no weight in the public interest determination. In a
revocation proceeding, the statute specifically directs the Agency
to determine whether the registrant ``has committed such acts as
would render his registration . . . inconsistent with the public
interest.'' 21 U.S.C. 824(a)(4) (emphasis added). The public
interest factors of section 823(f) simply shape the scope of the
relevant evidence in the proceeding, and given the nature of this
inquiry, the Agency properly considers a respondent's evidence of a
lengthy history of compliance after the Government makes out its
prima facie case, as determining what sanction is necessary to
protect the public interest is the ultimate purpose of these
provisions.
As for the CALJ's discussion of Krishna-Iyer v. DEA, 249 Fed.
App'x 159 (11th Cir. 2007), in which he asserts that this Agency
failed to follow the Eleventh Circuit's order on remand, as well as
his assertion that while the Tenth Circuit in MacKay v. DEA ``upheld
an Agency final order that included the Krishna-Iyer analysis, but
the Agency's view of Factor [Two] was not a focus of the Court's
decision,'' R.D. 41, these mistaken contentions have been thoroughly
addressed and rejected. See Wesley Pope, M.D., 82 FR 14944, 14981-82
(2017). I therefore decline to re-address the CALJ's discussion.
---------------------------------------------------------------------------
The Show Cause Order also alleged that Respondent violated various
provisions of the MOA which do not themselves rise to the level of
violations of the CSA or DEA regulations. These include the allegation
that Respondent violated paragraph 8 of the MOA because controlled
substances ``were dispensed and/or administered'' to patients at
various clinics when the clinics did not have a practitioner who was
registered at the clinic. ALJ Ex. 1, at 2. They also include the
allegation that Respondent violated paragraph 9 of the MOA by failing
to submit quarterly reports of his controlled substance dispensings to
the DEA Houston Office.
Failure To Ensure That if Controlled Substances Were Administered or
Dispensed at a Clinic, the Provider Doing the Administration or
Dispensing Was Registered at the Clinic
Under the CSA's registration provisions, ``[a] separate
registration shall be required at each principal place of business or
professional practice where the applicant . . . dispenses controlled
substances.'' 21 U.S.C. 822(e). See also 21 CFR 1301.12(a) (``A
separate registration is required for each principal place of business
or professional practice at one general physical location where
controlled substances are . . . dispensed by a person.''). While by
regulation DEA has exempted from the separate registration provision
``[a]n office used by a practitioner (who is registered at another
location in the State . . .) where controlled substances are prescribed
but neither administered nor otherwise dispensed as a regular part of
the professional practice of the practitioner at such office and where
no supplies of controlled substances are maintained,'' id.
1301.12(b)(2) (emphasis added), this provision makes plain that if
controlled substances are administered at a clinic, the practitioner
must be registered at that location.
As found above, in paragraph 8 of the MOA, Respondent agreed that
``[i]f any controlled substance is administered or dispensed at any
clinic . . . the health care provider doing the administering and/or
dispensing to the patient shall be registered at the clinic as required
by 21 U.S.C. 822(a)(2) \28\ and 21 CFR 1301.12(a).'' While the
Government does not argue that Respondent personally violated the CSA's
separate registration provision, the evidence is clear that several of
the clinics administered testosterone to patients during various time
periods when there was no practitioner registered at the particular
clinic.
---------------------------------------------------------------------------
\28\ Under this provision, ``[e]very person who dispenses, or
who proposes to dispense, any controlled substance, shall obtain
from the Attorney General a registration issued in accordance with
the rules and regulations promulgated by him.'' 21 U.S.C. 822(a)(2).
---------------------------------------------------------------------------
With respect to the Cy-Fair clinic, the evidence shows that one
testosterone shot was administered when no practitioner was registered
at the clinic. GX 6, at 1; GX 8, at 5. As for the FM 1960 clinic, the
evidence shows that one testosterone shot was administered on May 19,
2012, on which date no practitioner was registered at the clinic and
five testosterone shots were administered between October 5, 2012 and
September 11, 2013, during which
[[Page 21423]]
period no practitioner was registered at the clinic. GXs 16, 17.
With respect to the Woodlands clinic, the evidence shows that no
practitioner was registered at the clinic from the date it moved (in
either February or March 2013) to its new location until two days after
the inspection and that during this period, testosterone was
administered to patients at least 14 times. GXs 19 & 20. Yet the
evidence also shows that the two practitioners who worked at the clinic
had been registered at its previous location, and thus the evidence
suggests that the practitioners simply forgot to change their
registered address.
While these are relatively minor violations, the evidence with
respect to the Victoria clinic is of considerably greater concern.
There, testosterone was administered at least 117 times during a more
than three-month period when no practitioner was registered at the
clinic.\29\ See GX 26, at 1-5, 7, 12-14, 16; GX 25. Given the scope of
the controlled substance activities being engaged in by the Victoria
clinic, Respondent failure to ensure that clinic was in compliance with
the CSA is an egregious violation of the MOA.
---------------------------------------------------------------------------
\29\ In some instances, the log entry was missing the date of
the administration. See, e.g., GX 26, at 4. However, where the
entries before and after such an entry were dated and those dates
were within the period in which no practitioner was registered at
the clinic, those administrations are deemed to have occurred on or
between the entries which were dated and within the period.
Moreover, even if I ignored entirely the undated entries, the
evidence would still support a finding that there were 110
administrations which occurred during the period in which a
practitioner was not registered at the clinic.
---------------------------------------------------------------------------
Failure To Timely File Accurate Quarterly Dispensing Reports
As found above, in the MOA, Respondent also agreed to submit to the
Houston DEA Field Division Office a report, ``on a quarterly basis,
[of] the total number of controlled substances dispensed, to include
the date dispensed, full name of patient, address of patient, name of
controlled substance dispensed, quantity dispensed and dispenser's
initials.'' The Government alleged that Respondent violated this
provision for two reasons: (1) He submitted untimely reports, and (2)
the reports he submitted contained ``false statements'' because he
denied ``that controlled substances had been dispensed from his
clinics.'' Govt. Post-Hrng. Br. 23.
Neither the Act nor the Agency's regulations require a practitioner
to file quarterly reports of their dispensings. Nonetheless, the Agency
has held that a violation of an MOA provision constitutes actionable
misconduct under the public interest standard even if does not amount
to a violation of the Act or an agency regulation. See Erwin E.
Feldman, 76 FR 16835, 16838 (2011) (citing Fredal Pharmacy, 55 FR
53592, 53593 (1990)).
Here, Respondent admitted that he did not timely file 10 of the
reports and that he violated paragraph 9 of the MOA by failing to
timely file the reports. Tr. 4209. While the CALJ found that the
evidence only supports a finding that Respondent did not timely file
eight of the reports, either way, the evidence supports the conclusion
that Respondent repeatedly violated the MOA by failing to timely file
the reports.
I reject, however, the Government's contention that Respondent also
violated the MOA because the reports falsely stated that the clinics
had dispensed no controlled substances during the various quarterly
periods when the clinics were administering testosterone injections to
various patients. ALJ Ex. 1, at 3, ] 5(c); Gov. Post-Hrng. Br. 21. In
support of its contention, the Government invokes the CSA's definitions
of the terms ``dispense'' and ``dispenser.'' Gov. Post-Hrng. Br. 23
(citing 21 U.S.C. 802(10)). Notably, the CSA defines the term
``dispense'' to ``mean[ ] to deliver a controlled substance to an
ultimate user . . . by, or pursuant to the lawful order of, a
practitioner, including the prescribing and administering of a
controlled substance,'' and it defines ``[t]he term `dispenser' [to]
mean[ ] a practitioner who so delivers a controlled substance to an
ultimate user.'' 21 U.S.C. 802(10).
The argument is nonetheless unavailing because the Government
ignores that numerous provisions of the MOA differentiate the terms
``dispense'' (and ``dispensing'') from the terms ``administer'' (and
``administering'') and ``prescribe'' (and ``prescribing''). For
example, paragraph two states that ``DEA continued to allow
[Respondent] to administer, dispense, and prescribe controlled
substances,'' GX 4, at 1, ] 2 (emphasis added); and paragraph five
states that ``[t]his Memorandum of Agreement . . . is between
[Respondent] and DEA and establishes the terms and conditions under
which DEA will continue to permit [Respondent] to administer, dispense
and prescribe any Schedules II through V controlled substance.'' Id. at
2, ] 5 (emphasis added).
So too, in paragraph seven, Respondent ``agree[d] to abide by all
federal and Texas laws and regulations including statutes and
regulations related to the administering, dispensing and prescribing of
controlled substances.'' Id. at 2, ] 7 (emphasis added). Likewise,
paragraph 8 provides that:
If controlled substances in Schedules II though V are purchased
for any clinic, to be administered and/or dispensed to clinic
patients, [Respondent] shall cause to be made and maintained all DEA
required documents and information including records, reports, and
inventories. . . . . If any controlled substance is administered or
dispensed at any clinic . . . the health care provider doing the
administering and/or dispensing to the patient shall be registered
at the clinic as required by 21 U.S.C. 822 (a)(2) and 21 CFR
1301.12(a) and any administering and/or dispensing of a controlled
substance shall be documented in the patient chart . . . .
Id. at 2-3, ] 8 (emphasis added). And finally, paragraph 11 states
that Respondent ``will not administer, dispense, or prescribe a
controlled substance to any individual without a doctor-patient
relationship and a treatment plan outlining the purpose for
administering, dispensing or prescribing a controlled substance for a
legitimate medical purpose.'' Id. at 3, ] 11 (emphasis added).
By contrast, the reporting obligation of paragraph 9 makes
reference only to ``the total number of controlled substances
dispensed, to include the date dispensed . . . name of controlled
substances dispensed, quantity dispensed and dispenser's initials.''
Id. at 3, ] 9 (emphasis added). While the Government points to the
statutory definition of the term ``dispense,'' the argument fails
because the MOA contains no provision which explicitly defines the term
``dispense'' as encompassing the administration of a controlled
substance or which incorporates by reference the CSA's definition of
term.\30\ Thus, given the
[[Page 21424]]
numerous instances, both before and after paragraph 9, in which the MOA
differentiates between the terms ``dispense'' and ``administer'' (even
though the latter is expressly included in the CSA's definition of the
former), the Government cannot persuasively argue that the MOA clearly
imposed on Respondent the obligation to file a quarterly report of the
clinic's administrations.
---------------------------------------------------------------------------
\30\ In its post-hearing brief, the Government notes
Respondent's testimony to the effect that ``[t]he state and the
federal definition[s] of . . . administering [ ] and dispensing are
different.'' Gov. Post-Hrng. Br. 17. Correctly noting that the Texas
Health and Safety Code defines the term ``dispense'' to `` `include[
] the prescribing, administering, packaging, labeling, or
compounding necessary to prepare the substance for delivery,' '' the
Government argues that Respondent's claim that he relied on the
state definition is without merit. Id. at 24 (quoting Tex. Health &
Safety code Sec. 481.001(12)).
The Government ignores, however, that the Rules of the Texas
Medical Board define the term ``[d]ispense'' as only the
``[p]repairing, packing, compounding, or labeling for delivery a
prescription drug . . . in the course of professional practice to an
ultimate user . . . by or pursuant to the lawful order of a
physician,'' as well as the term ``[a]dminister'' as only ``[t]he
direct application of a drug by injection, inhalation, ingestion, or
any other means to the body of a physician's patient.'' Tex. Admin
Code Sec. 169.2(2) & (4). Other provisions of the Board's rules
distinguish between the ``[a]dministration of [d]rugs,'' id. Sec.
169.3, and ``[p]roviding, [d]ispensing, or [d]istributing [d]rugs.''
Id. Sec. 169.4. As to the former provision, it states, in part,
that ``[a] physician may personally administer those drugs to his or
her patients, which are, in the physician's medical judgment,
therapeutically beneficial or necessary for the patient's
treatment.'' Id. Sec. 169.3. As to the latter, it states, in part,
that ``a physician may provide, dispense, or distribute drugs for
use or consumption by the patient away from the physician's office
or after the conclusion of the physician-patient encounter.'' Id.
Sec. 169.4. Thus, the Board's rules provide some support to
Respondent's contention.
---------------------------------------------------------------------------
At most, the Government's reliance on the CSA's definition creates
an ambiguity as to the meaning of the term as used in the MOA.\31\ Even
so, ambiguities in contracts are generally resolved against the
drafter. Here, while there is no direct evidence as to which party
drafted the MOA or this particular term, the MOA does contain a
provision pursuant to which Respondent ``waive[d] all rights to seek
judicial review or to challenge or contest the validity of any terms or
conditions of'' the MOA, thus suggesting that the Government wrote the
MOA. Id. at 4. See Restatement (Second) of Contracts Sec. 206, at 105
cmt. a (1981) (``Where one party chooses the terms of a contract, he is
likely to provide more carefully for the protection of his own
interests than for those of the other party.''). Moreover, while there
may be some negotiation over the specific wording of MOA provisions,
MOAs are customarily drafted by the Government and the Government has
produced no evidence that Respondent drafted paragraph nine.
---------------------------------------------------------------------------
\31\ Indeed, under the Government's broader interpretation,
Respondent was also required to include each controlled substance
prescription he wrote. Yet the Government never took issue with
Respondent's failure to include on the reports the prescriptions
that were issued at the various clinics.
---------------------------------------------------------------------------
Thus, I conclude that the Government created the ambiguity as to
whether the term ``dispense'' as used in paragraph nine was intended to
include the full scope of the statutory definition which also
encompasses administering and prescribing or the narrower meaning which
encompasses only the physical delivery of a controlled substance to an
ultimate user. Because paragraph 9 does not effectuate compliance with
any provision of the CSA or DEA regulations, I apply settled principles
of contract law and resolve the ambiguity against the Government.\32\
See Restatement (Second) of Contracts Sec. 206, at 105 (``In choosing
among the reasonable meanings of a promise or agreement or a term
thereof, that meaning is generally preferred which operates against the
party who supplies the words or from whom a writing otherwise
proceeds.'').
---------------------------------------------------------------------------
\32\ The Government also alleged that the ``reports submitted .
. . on July 20, 2012, were back-dated and hence, failed to indicate
the true date they were prepared.'' ALJ Ex. 1, at 3 ] 5(c). However,
the Government was well aware of the fact that the reports had not
been timely submitted, and the Government has offered no evidence
explaining why Respondent's back dating of the reports was capable
of influencing the outcome of its investigation given that
Respondent never represented that he had previously submitted the
reports. See Roy S. Schwartz, 79 FR 34360, 34363 n.6 (2014).
---------------------------------------------------------------------------
Factor Four--Respondent's Compliance With Applicable Laws Related to
Controlled Substances
In the Show Cause Order, the Government alleged that with respect
to various clinics, Respondent violated both paragraph 8 of the MOA and
DEA recordkeeping regulations, including the requirements to: (1) Make
and maintain inventories as required by 21 CFR 1304.11(e)(3); (2) make
and maintain complete and accurate dispensings records as required by
21 CFR 1304.22(c); and (3) make and maintain complete and accurate
records of the receipts of the controlled substances as required by 21
CFR 1304.22(c) and 1304.22(a)(2). ALJ Ex. 1, at 3. The Show Cause Order
also alleged that Respondent violated 21 CFR 1306.04(b), by authorizing
prescriptions to obtained controlled substances ``for the purpose of
general dispensing to patients.'' Id.
The Alleged Violations at Cy-Fair
The evidence clearly establishes that Respondent was registered at
the Cy-Fair clinic and that the clinic was in possession of
testosterone and engaged in the administration of the drug to patients.
The evidence also shows that the clinic did not have either an initial
or biennial inventory at the time of the inspection. Respondent thus
violated the CSA and DEA regulations. See 21 U.S.C. 827(a) (1) (``every
registrant under this subchapter shall . . . as soon . . . as such
registrant first engaged in the . . . dispensing of controlled
substances, and every second year thereafter, make a complete and
accurate record of all stocks thereof on hand''). See also 21 CFR
1304.11(b) (``every person required to keep records shall take an
inventory of all stocks of controlled substances on hand on the date
he/she first engaged in the . . . dispensing of controlled
substances''); id. Sec. 1304.11(c) (requiring that ``[a]fter the
initial inventory is taken, the registrant shall take a new inventory
of all stocks of controlled substances on hand at least every two
years'').
The evidence also shows that while the Cy Fair office manager
provided the DIs with a log showing its administrations of
testosterone, the log was missing required information including the
address of the patient and the name of the finished form dispensed
(i.e., the strength of the testosterone per ml). This too was a
violation of the CSA and DEA regulations. See 21 U.S.C. 827(a)(3)
(``every registrant under this subchapter . . . dispensing a controlled
substance or substances shall maintain, on a current basis, a complete
and accurate record of each such substance manufactured, received,
sold, delivered, or otherwise disposed of by him''); see also 21 CFR
1304.22(c) (``records shall be maintained of the number of units or
volume of such finished form dispensed, including the name and address
of the person to whom it was dispensed, the date of the dispensing, the
number of units or volume dispensed, and the written or typewritten
name or initials of the individual who dispensed or administered the
substance on behalf of the dispenser'').\33\
---------------------------------------------------------------------------
\33\ See also id. (requiring dispensers to ``maintain records
with the same information required of manufacturers pursuant to
paragraph (a)(2)(i), (ii), (iv), (vii), and (ix) of this section.''
As relevant to the administration log, this information includes,
``the name of the substance'' and ``[e]ach finished form (e.g., . .
. 10-milligram concentration per fluid ounce or milliliter) and the
number of units or volume of finished form in each commercial
container (e.g., . . . 3 milliliter vial'').
---------------------------------------------------------------------------
As for Cy Fair's receipt records, the clinic provided but a single
page listing nine instances in which it had acquired ``10 Testosterone
Cypionate 200 mg/ml'' by date. GX 9, at 1. However, this document was
not ``a complete and accurate record of each such substance . . .
received . . . by'' the clinic. 21 U.S.C. 827(a)(3). Specifically,
while the document included the number ``10'' before the drug name, it
does not indicate whether this number refers to the quantity of the
drug in the vials or the number of vials. See 21 CFR 1304.22(c)
(incorporating by reference 21 CFR 1304.22(a)(2)(ii) & (iv) (requiring
that records list ``each finished form'' and ``the number of units of
finished forms . . . acquired from other persons''). Moreover, the
record does not include ``the name, address, and registration number of
the person from whom the units were acquired.'' 21 CFR
1304.22(a)(2)(iv). Thus, Respondent
[[Page 21425]]
violated 21 U.S.C. 827(a)(3) for this reason as well.
The Government further alleged Respondent violated 21 CFR
1306.04(b), which prohibits the use of ``[a] prescription . . . in
order for an individual practitioner to obtain controlled substances
for supplying the individual practitioner for the purpose of general
dispensing to patients.'' ALJ Ex. 1, at 3, ] 6. As support for the
allegation that Respondent used prescriptions to order the testosterone
from the Empower Pharmacy, the Government produced a document created
by the pharmacy which lists testosterone ``[p]rescriptions filled
between 8/29/2011 and 8/29/2013'' and the patient as ``CLINIC,
CYFAIR.'' GX 37, at 2. The document includes an Rx Number for each
dispensing, the date of the dispensing and the date written, the number
of refills, and lists both Respondent and several nurse practitioners
as the ``Doctor.'' Id. The Government also submitted copies of six
testosterone prescriptions, several of which included Respondent's name
on the signature line as well as that of one of the mid-level
practitioners. See id. at 74-79.
The DI who obtained these documents from the Empower Pharmacy
testified, however, that the prescription documents were ``generated by
the pharmacy'' and not the clinic. She further characterized one of the
documents as ``on a blank--what is commonly used as a call-in
prescription form.'' Tr. 226. While these documents were created by the
pharmacy, and standing alone would not have been sufficient to sustain
the allegation, on direct examination, Respondent admitted that ``the
office managers would call or send a prescription over to the pharmacy
to get filled'' for general office use and asserted that ``this is a
common practice'' in hospitals. Id. at 387-88. See also id. at 311
(testimony of DI that nurse practitioner who floated between various
clinics told him that ``the same practice'' was used ``at all
clinics'').
Moreover, in his testimony, Respondent never asserted that his
employees were simply ordering the drugs without issuing prescriptions
and that it was actually Empower Pharmacy's decision to use a call-in
prescription form to document the transaction. Id. at 455-56. Indeed,
he repeatedly defended the practice, asserting that it was ``absolutely
proper'' for his office staff to use a prescription to obtain a
controlled substance for office use. Id. at 456-57. Thus, Respondent
was clearly aware that his various office managers engaged in this
practice including those at Cy-Fair.
In his post-hearing brief, Respondent asserts that ``there is no
evidence that he wrote the prescriptions, knew about them, or
`authorized' them as the term is commonly understood.'' Resp. Closing
Argument, at 6. The argument is counterfactual. Respondent clearly knew
that his clinics (and in particular, the Cy-Fair clinic) were
administering testosterone to patients and he also knew how his clinics
were obtaining the drug. Moreover, even if Respondent did not
personally authorize the Cy-Fair prescriptions, the mid-level
practitioners who authorized the prescriptions were only able to do so
because Respondent delegated prescribing authority to them. See Tex.
Occupations Code Sec. 157.0511 (authorizing a physician to delegate
prescribing authority for schedule III through V controlled
substances); id. Sec. 157.0512 (requiring a prescriptive authority
agreement by which a physician delegates prescribing authority to
advance practice registered nurses and physician assistants and setting
rules for such agreements). Thus, with respect to the prescriptions
issued by Cy-Fair to obtain testosterone, I conclude that Respondent
violated 21 CFR 1306.04(b).\34\
---------------------------------------------------------------------------
\34\ As for Respondent's assertion that it is common practice
that hospitals do not order anesthesia medications for every patient
and order stock bottles, undoubtedly that is true. While there is no
evidence in the record as to how hospitals order the drugs they
administer or dispense to patients, what a hospital cannot do is use
a prescription to order the drugs for general dispensing. Indeed,
hospitals typically order the stock from a registered distributor,
and with respect to the schedule II drugs which are invariably used
for anesthesia, they must use an Order Form as required under 21
U.S.C. 828(a) & (c)(2). See also 21 CFR Pt. 1305.
---------------------------------------------------------------------------
Nor were Respondent's violations of 21 CFR 1306.04(b) confined to
the Cy-Fair clinic as the Government produced two other testosterone
prescriptions which were authorized under his registration which were
for the use of the Oak Hills and FM--1960 clinics. See GX 37, at 70,
85. Specifically, the Government produced a prescription dated October
19, 2012 for Scream Cream \35\ ``#5 ml'' which lists Respondent as the
prescriber and the patient as ``1960--R Zayas.'' GX 37, at 85. The
Government also produced a prescription dated February 6, 2013 for one
10 ml bottle of testosterone which again lists Respondent as the
prescriber and the patient as ``Oak Hills--Dr. R. Zayas.'' Id. at 70.
Also, each of these prescriptions bears Respondent's registration
number for his Houston registered address. Thus, the evidence is clear
that prescriptions were authorized pursuant to Respondent's
registration, and even if he did not personally call in the
prescriptions, he is strictly liable for the misuse of his registration
by any person to whom he entrusted his registration. See Rosemary
Jacinta Lewis, 72 FR 4035, 4041 (2007).
---------------------------------------------------------------------------
\35\ Notwithstanding that there was a non-controlled version of
Scream Cream, the pharmacy assigned a prescription number for this
dispensing which begins with a C, thus evidencing that this was for
a product which contained testosterone.
---------------------------------------------------------------------------
Alleged Violations at the Other Clinics
As discussed above, Respondent was registered only at the Cy-Fair
clinic at the time of the inspection. Thus, with respect to the
recordkeeping allegations, Respondent argues that he was ``the DEA
registered supervising physician at [only] one of'' the clinics (i.e.,
Cy Fair), and that ``the Government is attempting to turn a contractual
violation into a violation of a statute or regulation which is
unjustified, unsupported by existing case law, or might be beyond the
DEA's statutory authority.'' Resp.'s Closing Argument, at 5. Respondent
further maintains that:
The case against him is based on [the] unstated (and as yet
unsupported) assumption that the DEA has authority to sanction a
registrant for a breach of contract where the contract seeks to
impose the obligations of a . . . registrant for which [he] was not
the . . . registrant, on the theory that because he owns the entity
which has a controlling interest in the operating company which owns
and manages the clinics, that somehow establishes a violation of
federal law.
Id.
The CALJ found Respondent's argument persuasive to the extent it
involved his contention that he cannot be held liable for violating the
CSA and Agency regulations pertaining to recordkeeping at the clinics
where he was not registered. See R.D. 62. The CALJ explained that:
Although each dispensing registrant is required to maintain a
[registration] at the place[s] where administering/dispensing
occurs, these alleged (and established) administering/dispensing
events pertained to other individuals, not to the Respondent. The
same can be said of those portions of the [Show Cause Order] ]5(b)
allegations pertaining to dispensing, receiving, and inventory
records at the non-Cy-Fair clinics that dispensers are required to
create and maintain . . . . Evaluated in a world without the DEA
MOA, these allegations do not raise evidence within the purview of
the public interest factors in relation to the Respondent.
Id. The CALJ did, however, consider the evidence as to the
recordkeeping violations by the non-Cy Fair clinics as constituting
``such other conduct which
[[Page 21426]]
may threaten public health and safety.'' See id. at 66-72.\36\
---------------------------------------------------------------------------
\36\ While I agree with the CALJ that violating a provision of
an MOA does not necessarily establish a violation of an applicable
law related to controlled substances which is actionable under
factor four (``[c]ompliance applicable . . . States, Federal or
local laws related to controlled substances''), see R.D. 46 (citing
OTC Distribution Co., 68 FR 70538, 70542 (2003)), for reasons
explained above, under federal law, Respondent is also liable for
failing to maintain complete and accurate records at the non Cy-Fair
clinics. Thus, this conduct is clearly actionable under Factor Four.
---------------------------------------------------------------------------
I reject Respondent's and the CALJ's conclusion that Respondent is
not liable for violating the CSA's recordkeeping provisions because he
was not the registrant at the six other clinics.\37\ Indeed, this
Agency has previously noted that liability can be imposed on a non-
registrant for failing to keep required records even though that
conduct is also properly chargeable to a registered practitioner. See
Moore Clinic Trials, L.L.C., 79 FR 40145, 40156 (2014) (holding non-
registrant clinic owner liable for failure of physician to maintain
required records). Indeed, in Moore, the Agency explained that under
the CSA, if controlled substances are dispensed at a clinic, both the
clinic's owner and the physician it employs or contracts with to
perform services on the clinic's behalf are responsible for maintaining
complete and accurate records. See 79 FR at 40156 (citing United States
v. Clinical Leasing Serv., Inc., 759 F. Supp. 310, 313 (E.D. La. 1990),
aff'd 925 F.2d 120, 123 (5th Cir. 1991)). As the court explained in
Clinical Leasing Services:
\37\ While the Government does not appear to have relied on the
theory that Respondent, as the owner of the clinics, is liable for
the recordkeeping violations committed at the non-Cy Fair clinics, I
conclude that Respondent has raised the issue. See Resp. Closing
Argument, at 5. And even if I concluded that Respondent did not
raise the issue of whether he is personally liable under the CSA for
the record-keeping violations committed at the clinics where he was
not registered, this would not change the outcome of this matter
because he still violated the MOA by failing to ``cause to be made
and maintained all DEA required documents and information including
records, reports, and inventories.'' GX 4, at 2.
The clinic is charged with failure to maintain proper records.
The law clearly requires every ``person'' (including a corporation)
to maintain proper records if that person dispenses controlled
substances. By employing physicians to dispense drugs in connection
with its operation, the clinic is a dispenser of controlled
substances. Therefore, the clinic, as well as the physicians it
---------------------------------------------------------------------------
employs, must maintain the proper records required by law.
759 F. Supp. at 312 (emphasis added).
The court expressly rejected the clinic's contention that ``it was
not required to maintain records,'' because ``the record keeping
requirements pertain only to `registrants,''' noting that 21 U.S.C.
842(a)(5) ``does not require that one who refuses or fails to make,
keep, or furnish records be a `registrant,''' but applies to ``any
person,'' including ```an individual, corporation . . . business trust,
partnership, association, or other legal entity.''' Id. at 313 (quoting
21 CFR 1301.02(j)).
Multiple federal courts have likewise rejected the contention that
the CSA's recordkeeping requirements do not apply to non-registrant
owners of clinics that dispense controlled substances. See United
States v. Robinson, 2012 WL 3984786, *6-7 (S.D. Fla., Sept. 11, 2012)
(holding non-registrant owner of cosmetic surgery clinic liable for
recordkeeping violations under section 842(a)(5); statute ``includes
the broader term of `any person' and does not limit application of the
subsection to registrants''); id. at * 7 (``Where corporate officers
have been in a position to prevent or correct the violations at issue,
courts have found that there is individual liability under the
subsection, which plainly applies to all `persons.'''). See also United
States v. Stidham, 938 F.Supp. 808, 813-15 (S.D. Ala. 1996) (holding
non-registrant owner of methadone clinic liable for recordkeeping
violations); United States v. Poulin, 926 F.Supp. 246, 250-51 (D. Mass.
1996) (``The recordkeeping provisions of the [CSA] apply to all persons
who dispense drugs, even if they have not registered as required under
the Act'' and holding both pharmacy's owner/proprietor and corporate
entity liable for recordkeeping violations); see also 21 U.S.C.
842(a)(5).
Notwithstanding the various arrangements and entities used by
Respondent to hold the clinics, the record clearly establishes that
Respondent was the real owner and operator of the clinics. See GX 4, at
13 (settlement agreement with United States Attorney signed by
Respondent as President of Z Healthcare Systems, Inc.); see also Tr.
381-82, 384-87, 392, 394-96 (Respondent's testimony discussing his role
in overseeing the clinics). Thus, with respect to the six other
clinics, he is also a ``person'' within the meaning of 21 U.S.C.
842(a)(5) and 21 CFR 1301.02(j), and as such, he is liable for any
recordkeeping violations committed by the other clinics even if those
clinics had a practitioner who was registered at the clinic.\38\
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\38\ As found above, nearly every clinic had a substantial
period in which it did not have a practitioner who was registered at
it. Respondent does not explain who, but him, was responsible for
the respective clinic's recordkeeping violations in these periods.
---------------------------------------------------------------------------
As for the other six clinics, the evidence shows that each of these
clinics was either entirely missing certain records or failed to
maintain complete and accurate records as required by the CSA and DEA
regulations. With respect to the Woodlands clinic, the clinic did not
have any inventories and receipt records. Tr. 155-56. Thus, Respondent
is liable for violating 21 U.S.C. 827(a)(1) (requiring inventories) and
Sec. 827(a)(3) (requiring records of receipts) with respect to this
clinic. Moreover, while the clinic presented the DI with its
Testosterone Shot Log, the log was missing various items of required
information including the patients' addresses, the finished form of the
substance (e.g., the concentration per milliliter), and the volume
administered to the patient. Thus, Respondent is liable for failing to
``maintain a complete and accurate record'' of its testosterone
administrations at this clinic. See 21 U.S.C. 827(a)(3) and 21 CFR
1304.22(c).
As for the Victoria clinic, it did not have an initial or biennial
inventory. Thus, Respondent is liable for violating 21 U.S.C.
827(a)(1). While the clinic provided its testosterone injection log to
the DIs, none of the entries included the patient's address and a
number of entries were not dated. See GX 26. And while the entries on
some pages of the log did include both the concentration of the
finished form (``200 mg'') and the dose, nearly all of the other
entries were missing the drug's concentration. Compare GX 26, at 2-5,
15, with id. at 1, 6-14, 16. Thus, Respondent is liable for failing to
``maintain a complete and accurate record'' of the Victoria clinic's
testosterone administrations. See 21 U.S.C. 827(a)(3) and 21 CFR
1304.22(c).
While the Victoria clinic provided receipt records, which appears
to be a printout from a pharmacy, the records are illegible with
respect to the name of the supplier, its address, and its DEA
registration. GX 32; see 21 CFR 1304.22(c) (incorporating by reference
21 CFR 1304.22(a)(2)(iv)). Thus, Respondent is also liable for the
clinic's failure to ``maintain a complete and accurate record'' of its
testosterone receipts. 21 U.S.C. 827(a)(3).
The Corpus Christi clinic also did not have an initial or biennial
inventory. Tr. 194. Thus, Respondent is liable for violating 21 U.S.C.
827(a)(1). And while the clinic produced records of its
administrations, with a separate log sheet for each patient, none of
the records included the patient's address
[[Page 21427]]
and most of the records did not even list the name of the controlled
substance. See GX 28; 21 CFR 1304.22(c); id. Sec. 1304.22(a)(2)(ii).
Moreover, while some of the log sheets bore the heading of
``TESTOSTERONE,'' the sheets did not list the drug concentration. See
id. (incorporating by reference 21 CFR 1304.22(a)(2)(ii)). Thus,
Respondent is liable for the clinic's failure to ``maintain a complete
and accurate record'' of the controlled substances it dispensed. 21
U.S.C. 827(a)(3).
As for the Corpus Christi clinic's receipt records, these consisted
of a ``Log of Scripts'' which appears to have been created and provided
by the Empower Pharmacy. GX 28, at 62. This record was also missing
required information in that while it listed the drug and finished form
(200 mg/ml injectable), as well as a quantity, it did not list the
volume of the finished form and the record does not specify whether the
quantity figure referred to the number of vials or the number of
milliliters shipped by the pharmacy. Id.; 21 CFR 1304.22(c)
(incorporating by reference 21 CFR 1304.22(a)(2)(ii) & (iv)). Moreover,
while the Log indicates the date the drugs were ``dispensed'' by
Empower, the clinic did not record on the document ``the date on which
the controlled substances are actually received.'' 21 CFR
1304.21(d).\39\ Thus, Respondent is liable for the clinic's failure to
``maintain a complete and accurate record'' of the controlled
substances it dispensed. 21 U.S.C. 827(a)(3).
---------------------------------------------------------------------------
\39\ Indeed, the record states that it was ``[p]rinted'' on
August 29, 2013, three weeks after the date on which the last
prescription listed was dispensed by Empower Pharmacy, and lists 15
prescriptions going back February 14, 2012. GX 28, at 62. However,
both the CSA and DEA regulations require that receiving records be
maintained ``on a current basis.'' 21 U.S.C. 827(a)(3); 21 CFR
1304.21(a). This record clearly did not comply with this
requirement.
---------------------------------------------------------------------------
Similarly, the FM 1960 West clinic also did not have either an
initial or biennial inventory. Tr. 288, 305. Thus, Respondent is liable
for the clinic's failure to comply with 21 U.S.C. 827(a)(1). The clinic
also did not have receipt records on hand; instead, it had Empower
Pharmacy fax a report which listed the clinic as the patient and the
``dispensings'' to it. GX 15. As before, the report was not ``a
complete and accurate record'' because it did not list the number of
units or volume of the testosterone products (both injectables and the
Scream Cream) the clinic received and did not document the date the
drugs were received. 21 CFR 1304.21(d); 1304.22(c). Moreover, given
that the clinic did not have the receipt records on hand, it clearly
violated 21 U.S.C. 827(a)(3) and 21 CFR 1304.21(a) by failing to
maintain these ``on a current basis.'' Respondent is thus liable for
these violations.
As for the testosterone shot log, each entry was missing the
patient's address, the dosage form, and the volume administered. GX 17.
Thus, this record was not ``a complete and accurate record'' as
required under 21 U.S.C. 827(a)(3). See 21 CFR 1304.22(c); see also id.
Sec. 1304.22(a)(2)(ii). Respondent is therefore liable for these
violations as well.
The Oak Hills clinic provided the Investigators with its
``Testosterone Daily Drug Inventory Log.'' This document did include
the required information including the dosage form (on some but not all
of the log's pages) and quantity on hand; the log also included counts
that had been taken within the last two years. GX 13, at 4-28. Thus,
this record largely complied with 21 U.S.C. 827(a)(1).
The clinic also provided a testosterone log, which listed
administrations. The log did not, however, include the patients'
addresses or the dosage form (concentration) of the testosterone. Id.
at 1-3. Moreover, the administration log only included administrations
between April 3, 2013 and August 24, 2013, id., even though the daily
drug inventory shows that testosterone was dispensed on numerous
occasions within the two-year period preceding the inspection. Id. at
12-22. Thus, Respondent is liable for the clinic's failure to maintain
``a complete and accurate record'' of the administrations. 21 U.S.C.
827(a)(3); see also 21 CFR 1304.22(c); id. Sec. 1304.22(a)(2)(ii); 21
U.S.C. 827(b) (``Every . . . record required under this section . . .
shall be kept and be available, for at least two years, for inspection
and copying by officers or employees of the United States . . . .'').
Upon the request of the Investigators, the Southwest Clinic did not
provide either inventory records or receipt records. Tr. 326. Moreover,
while a clinic employee told an Investigator that controlled substances
had been transferred to the clinic from another clinic that had closed,
Southwest had no record documenting the transfer. Id. at 331. Thus,
Respondent is liable for the clinic's failure to take initial or
biennial inventories, see 21 U.S.C. 827(a)(1), as well as the clinic's
failure to ``maintain, on a current basis, a complete and accurate
record of each [controlled] substance . . . received . . . by'' it. Id.
Sec. 827(a)(3).
As for the testosterone log, it was also missing the patients'
addresses and the dosage form (concentration) of the testosterone. See
21 CFR 1304.22(c); id. 1304.22(a)(2)(ii). Moreover, the earliest
dispensing record in the testosterone log was dated September 4, 2012.
GX 23, at 4. Yet a prescription report obtained from Empower Pharmacy
shows that injectable testosterone was ``dispensed'' to the clinic (as
the ``patient'') on April 24, 2012, June 5, 2012, July 19, 2012, August
18, 2012 and September 1, 2012, thus supporting the inference that the
clinic was regularly administering testosterone prior to the first
entry in its testosterone log without documenting the administrations.
See GX 37, at 3. I therefore conclude that Respondent is liable for the
clinic's failure to ``maintain, on a current basis, a complete and
accurate record of each [controlled] substance . . . delivered by'' it.
21 U.S.C. 827(a)(3); 21 CFR 1304.22(c).
Factor Five--Such Other Conduct Which May Threaten the Public Health
and Safety
The Government also argues that Respondent has engaged in other
conduct which is actionable under Factor Five.\40\ Of specific
relevance here, the Government argues that ``Respondent's false
statement and obstructionist behavior towards [the DI] are also
applicable under Factor Five insofar as they constitute the failure to
maintain effective controls against diversion.'' Id. (citing Island
Wholesale, Inc., 68 FR 17406, 17407 (2003) \41\ and Leonel Tano, 62 FR
22968, 22971 (1997)).
---------------------------------------------------------------------------
\40\ The Government also argues that ``[t]o the extent
Respondent's multiple failures to comply with the . . . MOA is [sic]
not actionable under Factor Four, it would be actionable under
Factor Five.'' Gov. Post-Hrng. Br. at 25. It then points to the
allegations regarding the quarterly dispensing reports, the failure
to ensure that the clinic practitioners were properly registered,
and that the clinics were not maintaining proper records. Id. at 26.
As each of these allegations has been addressed under either Factor
Two or Factor Four, they do not constitute ``other conduct.''
\41\ This case did not, however, involve a practitioner, but
rather a list I chemical distributor. See 68 FR 17407. The ``catch-
all'' factor for list I distributor only requires a showing that the
factor is ``relevant to and consistent with the public health and
safety.'' 21 U.S.C. 823(h)(5). This is a considerably lower bar than
``such other conduct which may threaten the public health and
safety.'' Id. Sec. 823(f)(5).
---------------------------------------------------------------------------
Here, the evidence shows that Respondent made a false statement and
obstructed the DI who was assigned to review his renewal application.
Specifically, when asked by the DI in an email to forward to her copies
of the quarterly reports of his dispensings which were required under
the MOA, Respondent denied that he was even under an MOA. Respondent's
statement was clearly false and while the DI
[[Page 21428]]
obviously knew that the statement was false, the statement nonetheless
had the capacity to influence the Agency's decision as to whether to
grant his renewal application and was made with fraudulent intent as
Respondent obviously knew that his registration was subject to the MOA
and that he had failed to comply with the requirement that he submit
the quarterly reports. See United States v. Alemany Rivera, 781 F.2d
229, 234 (1st Cir. 1985) (``It makes no difference that a specific
falsification did not exert influence so long as it had the capacity to
do so.''); United States v. Norris, 749 F.2d 1116, 1121 (4th Cir. 1984)
(``There is no requirement that the false statement influence or effect
the decisionmaking process of a department of the United States
Government.''). This is actionable misconduct under Factor Five. See
Shannon L. Gallentine, 76 FR 45864, 45866 (2011); see also Hoxie v.
DEA, 419 F.3d at 483 (``The DEA properly considers the candor of the
physician and his forthrightness in assisting in the investigation . .
. important factors in determining whether the physician's registration
should be revoked.'').
So too, in response to the DI's request to ``describe [his] current
medical practice'' and to ``please include all locations and the names
and DEA numbers of any Physician Assistants . . . or Nurse
Practitioners that [he] currently supervise[d],'' he replied that
``this is irrelevant to the renewal of my DEA certificate.'' GX 36, at
2. The information requested by the DI was, however, relevant to the
renewal of his registration because it was fully within the
Government's authority to investigate whether Respondent had complied
with the MOA. See Hoxie, 419 F.3d at 483.
Moreover, at the hearing, Respondent offered the excuse that he had
``blocked'' the events surrounding his entering into the MOA out of his
mind because it was such an ``unpleasant'' and ``humiliating''
experience. Tr. 426-27. The CALJ did not find his testimony credible,
characterizing his testimony as a ``dubious account of a variety of
amnesia that deprived him of any memory of even the existence of the
highly-detailed . . . MOA'' that ``was simply implausible.'' R.D. 33.
The CALJ further noted that Respondent's ``memory lapse commenced and
ended at points that were conveniently tailored to his narrative and
[was] entirely unsupported by any medical diagnosis.'' Id. As the CALJ
concluded, ``it is clear that he made it up.'' R.D. 33. I agree with
the CALJ's assessment that Respondent's testimony regarding his failure
to comply with the MOA was false; his provision of false testimony also
constitutes actionable misconduct under Factor Five. Thus, I conclude
that an adverse finding is warranted under Factor Five.
Summary of the Government's Prima Facie Case
As found above, the Government's evidence with respect to Factors
Two and Four establishes that Respondent has committed multiple
violations of the CSA and DEA regulations, as well as the MOA. The
Government's evidence shows that Respondent repeatedly failed to comply
with the MOA's provision which required that any clinic that either
administered or dispensed controlled substances have a practitioner who
was registered at the clinic, as well as the provision that he timely
file quarterly reports of the clinics' dispensings.
The Government's evidence further shows that Respondent violated
various recordkeeping requirements under the CSA and DEA regulations,
including the requirements that he: (1) Make and maintain initial and
biennial inventories, (2) make and maintain complete and accurate
dispensing records, and (3) make and maintain completed and accurate
records of receipts of controlled substances. See, e.g., 21 U.S.C.
827(a) & (c). Moreover, as the real owner of the clinics, Respondent is
liable for these violations of the CSA and DEA regulations,
notwithstanding that he was registered at only the Cy-Fair clinic.
Also, the evidence shows that Respondent violated 21 CFR 1304.22(c), by
authorizing prescriptions to obtain controlled substances for ``general
dispensing to patients.''
The evidence further shows that Respondent made a materially false
statement to the DI and attempted to obstruct her investigation. And
finally, the evidence shows that Respondent gave false testimony in the
proceeding.
I therefore conclude that the Government has satisfied its prima
facie burden of showing that Respondent ``has committed such acts as
would render his registration . . . inconsistent with the public
interest.'' 21 U.S.C. 824(a)(4), and which support the revocation of
his Florida registration and the denial of his pending application for
his Texas registration. See id. Sec. 823(f).
Sanction
Where, as here, the Government has established grounds to revoke a
registration or deny an application, a respondent must then ``present[
] sufficient mitigating evidence'' to show why he can be entrusted with
a new registration. 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.'' Jayam Krishna-Iyer, 74 FR 459, 463
(2009) (citing Medicine Shoppe, 73 FR 364, 387 (2008)); 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).
However, while an applicant must accept responsibility for his
misconduct and demonstrate that he will not engage in future misconduct
in order to establish that his registration is consistent with the
public interest, DEA has repeatedly held that these are not the only
factors that are relevant in determining the appropriate disposition of
the matter. 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 Paul Weir
Battershell, 76 FR 44359, 44369 (2011) (imposing six-month suspension,
noting that the evidence was not limited to security and recordkeeping
violations found at first inspection and ``manifested a disturbing
pattern of indifference on the part of [r]espondent to his obligations
as a registrant''); Gregory D. Owens, 74 FR 36751, 36757 n.22 (2009).
So too, the Agency can consider the need to deter similar acts,
both with respect to the respondent in a particular case and the
community of registrants. See Gaudio, 74 FR at 10095 (quoting
Southwood, 71 FR at 36503). Cf. McCarthy v. SEC, 406 F.3d 179, 188-89
(2d Cir. 2005) (upholding SEC's express adoption of ``deterrence, both
specific and general, as a component in analyzing the remedial efficacy
of sanctions'').
The CALJ found that Respondent's acceptance of responsibility ``was
[[Page 21429]]
equivocal, at best, and was entirely self-serving.'' R.D. 77. The CALJ
further found that ``[h]e begrudgingly accepted responsibility when his
counsel led him to do so, but . . . in response to questions by
Government's counsel, he approached the topic with a tenor that
bordered on hostile sarcasm.'' Id. The CALJ specifically noted
Respondent's testimony that the proceeding was ``nonsense,'' that it
was ``arguing over logs,'' and that this ``we're not even talking about
that much medicine.'' Id. Moreover, Respondent continued to insist that
it is ``absolutely proper'' for his employees to use prescriptions to
order controlled substances for office use. Tr. 456. And when asked
whether he was going to admit to violating the MOA provision which
required that if any clinic dispensed or administered a controlled
substance, the dispensing/administering was to be done by a
practitioner who was registered at the clinic, he asserted that he did
not ``know whether it's true or not'' while nonetheless insisting that
he was accepting responsibility for this misconduct. Id. at 465.
In his Exceptions, Respondent points to his testimony that he
``changed the business of his clinics such that they no longer handled
controlled substances, thus avoiding the recordkeeping and inventory
problems which led to the MOA violations.'' Resp. Exceptions, at 5. He
argues that ``there is DEA precedent that in some conditions,
acceptance of responsibility is not absolutely required.'' Id. (citing
Rosalind A. Cropper, 66 FR 41040 (2001)). He correctly notes that in
Cropper, the Agency granted the respondent's application
notwithstanding her failure to admit to any of the proven misconduct,
which involved treating patients for opiate addiction with methadone
for more than three days without being registered as a narcotic
treatment program. 66 FR at 41048. Respondent argues ``[t]he Cropper
case appears [to] show[ ] that there are exceptions to the acceptance
of responsibility requirement in cases like this one where the
Respondent has changed his circumstance and business to avoid a
recurrence of the problems which are the subject of the DEA action.''
Exceptions, at 5-6.
Relying on Cropper, Respondent argues that even if I agree with the
CALJ that ``there was not complete acceptance of responsibility by the
Respondent . . . revocation is not required because of the changed
circumstance.'' Id. Addressing the CALJ's statement that ``[t]he tenor
of the Respondent's declaration that his clinics will no longer
directly handle controlled substances strikes less as a remedial step
than it does as a tantrum,.'' R.D. 77 n.197, he argues that the CALJ
``is reading . . . an intentionality element which does not exist in
the case law'' and that ``[a]ll that is required is that a registrant
take actions to ensure that the violative conduct does not recur.'' Id.
at 6. He further argues that ``[t]he important point'' to be taken from
Cropper ``was that [Dr. Cropper's] job didn't put her near the drug
[methadone] and that was enough . . . to conclude that remedial efforts
were adequate.'' Id. And Respondent argues that regardless of what the
CALJ ``feels is his motivation for the change'' in his practice, ``it
should be enough that [he] had made sure that the recordkeeping and
inventory problems/violations which are at the heart of this case will
not recur.'' Id. at 6-7. Finally, he maintains that his change in the
clinics' practices ``can be viewed as a manifestation of his
acceptance; for even in an acceptance of responsibility analysis,
actions should speak louder than words.'' Id. at 7.
I reject Respondent's contentions. While it true that there are
some cases besides Cropper in which the Agency imposed a sanction less
than revocation or outright denial notwithstanding the respondent's
less than unequivocal acceptance of responsibility, those cases have
generally involved less egregious misconduct than that engaged in by
Respondent. For example, in Gregory Owens, 74 FR 36751 (2009), the
Agency imposed a three-month suspension, notwithstanding the
respondent's equivocal evidence as to his acceptance of responsibility.
Id. at 36757-78. However, the proven misconduct was limited to failing
to report a state board disciplinary order and failing to submit a
quarterly drug activity log during a four-month period.\42\ Id. at
36757.
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\42\ To be sure, there are also cases predating the Agency's
decision in Jayam Krishna-Iyer, 74 FR 459, 464 (2009), in which even
a respondent who knowingly diverted controlled substances and who
failed to accept responsibility for his misconduct was granted a new
registration. See, e.g., Anant N. Mauskar, 63 FR 13687, 13689
(1998). However, in Krishna-Iyer, the Agency explicitly overruled
any case which suggests that a physician who has engaged in knowing
diversion is entitled to remain registered absence a credible
acceptance of responsibility. See Krishna-Iyer, 74 FR at 464 n.9.
---------------------------------------------------------------------------
To be sure, in Jeffrey Martin Ford, 68 FR 10750 (2003), the Agency
granted a new registration to a dentist who had been convicted of four
felony counts of violating the Controlled Substances Act including
conspiracy to possess with intent to distribute cocaine, possession
with intent to distribute cocaine and marijuana, and the use of the
mail to facilitate a narcotics transaction. Id. at 10751. Moreover, the
Agency granted the respondent a new registration, notwithstanding that
it found perplexing ``the [r]espondent's apparent willingness to accept
responsibility for past actions on the one hand . . . and his seeming
refusal to acknowledge wrong doing in other respects,'' as well as its
concern ``that the [r]espondent has apparently failed to learn from the
negative experiences surrounding his drug use.'' 68 FR at 10753. While
the decision apparently excused the respondent's failure to
unequivocally accept responsibility based on his having attended drug
rehabilitation and remained sober for more than 10 years, as well his
having satisfied the conditions for reinstatement of his state license,
the decision does not even address whether he accepted responsibility
for his criminal conduct. Because I find the reasoning of this case
unpersuasive, were a case with similarly egregious misconduct presented
to me, I would not grant a registration absent a clear and unequivocal
acceptance of responsibility for all of misconduct that was proven on
the record.
In sum, while there may be some instances in which the proven
misconduct is not so egregious as to warrant revocation or a lengthy
suspension (see, e.g., Owens), and a respondent, while offering a less
than unequivocal acceptance of responsibility nonetheless offers
sufficient evidence of adequate remedial measures to rebut the
Government's proposed sanction, this is not such a case. Here,
Respondent agreed to abide by all federal laws and regulations related
to the administering, dispensing and prescribing of controlled
substances, as well as that he ``shall cause to be made and maintained
all DEA required . . . records, reports, and inventories'' at any
clinic that administered or dispensed controlled substances''; he also
agreed to ``abide by [the MOA's] contents in good faith.''
The evidence, however, suggests that Respondent had no intention of
abiding by the MOA in good faith but rather entered the agreement
simply to get the Government off his back. Tr. 359 (Respondent's
testimony that he entered the MOA because it was ``the easiest and best
way'' to keep his registration'' and avoid a ``protracted fight''). For
example, notwithstanding that he promised to ensure that his clinics
would maintain proper inventories (which he was legally obligated to do
even in the absence of the MOA), Respondent testified that he had not
even read the applicable regulations which require the keeping of
inventories. Tr. 473. Indeed, even as of the hearing, he still had not
read the
[[Page 21430]]
regulations. Id. at 474. While he attempted to shift the blame to his
attorneys and consultant for failing to tell him what was required
under the MOA, Respondent offered no testimony that he asked either his
attorneys or consultant to explain what was required. Id. at 473-74. So
too, while Respondent submitted the first two quarterly reports in a
timely fashion, thereafter, he blew off this requirement until he was
confronted by the DI.
So too, even acknowledging that the absolute amounts of the
testosterone being handled by the various clinics were not especially
large, it is notable that six of the clinics had recordkeeping
violations including missing inventories, missing receipt records, and
missing required information related to the clinics' administration of
the drug. And notwithstanding his legally erroneous contention that he
cannot be held to have violated the CSA's recordkeeping requirements at
the non-Cy Fair clinics because he was not the registrant at those
clinics, there were recordkeeping violations even at the Cy-Fair
clinic, where he was registered.
Likewise, while he agreed that if his clinics engaged in
administration or dispensing, the provider would be registered at the
clinic, here again, Respondent breached the agreement. Particularly
egregious is his failure to ensure that there was a registered provider
at the Victoria clinic, where testosterone was administered at least
117 times during a three-month period when no practitioner was
registered at the clinic.
I thus conclude that Respondent's misconduct was egregious (a
conclusion which is buttressed by my findings with respect to Factor
Five), and given his failure to offer a credible and meaningful
acceptance of responsibility, I hold that he has not refuted the
conclusion that his continued registration ``is inconsistent with the
public interest'' and that both the revocation of his Florida
registration and the denial of his Texas renewal application are
warranted.\43\
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\43\ I have also considered Respondent's argument that
``[r]evocation is too severe and [is] not required.'' Resp.
Exceptions, at 7. Therein, Respondent maintains that ``it seems
clear that recordkeeping violations of the type found in this case
are rarely if ever a reasons [sic] to revoke a provider's DEA
registration.'' Id. He also contends ``that the conduct proven in
this case seems far less egregious than any of the 2015 cases
including the two (Corbett and Zina), which did not result in . . .
revocation.'' Id. at 7-8.
Contrary to Respondent's understanding, recordkeeping violations
alone can support the revocation of a registration or the denial of
an application, and in this case, there were violations of multiple
requirements at nearly every one of the clinics. See Keith Ky Ly, 80
FR 29025, 29035 (2015) (citing Paul H. Volkman, 73 FR 30630, 30644
(2008)). Nor is the evidence in this matter confined to the
recordkeeping violations, as it also includes his failure to file
the required quarterly reports, his failure to ensure that there was
a provider who was registered at the clinics which were dispensing
or administering controlled substances, his use of prescriptions to
obtain controlled substances for general dispensing to patients, his
false statement in denying that he was subject to the MOA, his
obstructionist behavior when the DI requested certain information,
and his giving false testimony as to the reason why he denied to the
DI that he was under the MOA.
As for Respondent's reference to the ``Corbett'' case,
Respondent did not provide a citation and I am unaware of any case
involving a respondent with this name. As for his reference to the
``Zina'' case, even assuming that this was typographical error and
that Respondent was referring to Abbas E. Sina, 80 FR 53191 (2015),
a self-abuse case, the case provides no comfort to Respondent
because Dr. Sina fully admitted to his misconduct. Id. at 53201.
(Dr. Sina also offered credible evidence of his rehabilitation,
including four years of compliance with his monitoring contract with
no failed drug tests, as well as the testimony of two physicians who
attested to his commitment to his recovery and compliance with his
monitoring contract. See id. at 53201-202). I thus reject's
Respondent's contention.
Finally, while Respondent also invokes Morall v. DEA, he ignores
that, in that case, there were findings that the respondent's
recordkeeping violations ``occurred over a fairly short period of
time'' and that the respondent ``appeared to regret'' her
misconduct. 412 F.2d at 166; see also id. at 183. Here, by contrast,
Respondent's recordkeeping violations are not confined to a fairly
short period and involve multiple clinics, and as the CALJ
concluded, Respondent has not offered a credible acceptance of
responsibility.
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I further agree with the CALJ that the Agency's interests in both
specific and general deterrence support the revocation of his Florida
registration and the denial of his Texas application. As for the
Agency's interest in specific deterrence, Respondent is not barred from
reapplying in the future, and were Respondent to do so and offer a
credible acknowledgement of his misconduct (to go along with his
remedial measures) and be granted a new registration, the sanctions I
impose in this Decision and Order would hopefully deter him from
engaging in future misconduct. As for the Agency's interest in general
deterrence, not only does the Agency have an obvious and manifest
interest in deterring violations of the CSA and regulations by members
of the regulated community, the Agency also has a manifest interest in
ensuring that those members to whom it extends the forbearance of an
MOA will comply with the terms of those agreements.
I therefore conclude that Respondent has not refuted the
Government's prima facie showing that his registrations are not
consistent with the public interest. 21 U.S.C. 823(f), 824(a) (4).
Accordingly, I will order that Respondent's Florida registration be
revoked and that his application to renew his expired Texas
registration be denied.
Order
Pursuant to the authority vested in me by 21 U.S.C. 823(f) and
824(a)(4), as well as 28 CFR 0.100(b), I order that DEA Certificate of
Registration FZ2418401 issued to Roberto Zayas, M.D., be, and it hereby
is, revoked. I also order that any pending application of Roberto
Zayas, M.D., to renew or modify this registration, be, and it hereby
is, denied.
I further order that that the pending application of Roberto Zayas,
M.D., to renew DEA Certificate of Registration FZ2249743, be, and it
hereby is, denied. I further order that any other pending application
of Roberto Zayas, M.D., for a DEA Certificate of Registration, be, and
it hereby is, denied. This Order is effective June 7, 2017.
Dated: April 28, 2017.
Chuck Rosenberg,
Acting Administrator.
[FR Doc. 2017-09285 Filed 5-5-17; 8:45 am]
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