[Federal Register Volume 83, Number 182 (Wednesday, September 19, 2018)]
[Notices]
[Pages 47352-47369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20383]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 16-22]
Brian Thomas Nichol, M.D., Decision and Order
On March 14, 2016, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration, issued an Order to
Show Cause to Brian Thomas Nichol, M.D. (Respondent), which proposed
the revocation of his DEA Certificate of Registration No. BN4578057,
pursuant to which he is authorized to dispense controlled substances in
schedules II through V as a practitioner, at the registered address of
5106 McLanahan Drive, Suite B, North Little Rock, Arkansas.
Administrative Law Judge Exhibit (ALJ Ex.) 1, at 1. As grounds for the
proposed action, the Show Cause Order alleged that Respondent's
``registration would be inconsistent with the public interest.'' Id.
(citing 21 U.S.C. 823(f), 824(a)(4)). For the same reason, the Order
also proposed the denial of any of Registrant's ``pending applications
for renewal or modification of such registration, and . . . any
applications for any other DEA registrations.'' Id.
More specifically, the Show Cause Order set forth six independent
reasons why the Government alleges that Respondent's registration
should be revoked. Id. at 1-3. The Show Cause Order first charged that
Respondent's ``pre-signing of prescriptions for controlled substances
violated [21] \1\ CFR 1306.05(a).'' Id. at 2. The Order states that
this charge is based on the allegation that in 2006, the Arkansas State
Medical Board found that Respondent violated Arkansas and federal laws
when (1) he ``pre-signed controlled substance prescriptions, which
[his] staff members, who were not authorized by law to issue such
prescriptions, then issued to patients'' and (2) he ``[was] not present
and [was] not consulted by [his] staff when such prescriptions were
issued.'' Id. at 1-2. The Order further alleged that in 2006, as a
result of these findings, the Arkansas Board suspended Respondent's
medical license for six months. Id. at 2.
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\1\ Although the Order erroneously referenced Title 42 of the
Code of Federal Regulations for this violation, Government counsel
corrected the error during his Opening Statement at the
administrative hearing when he made clear that Title 21 was the
title that the Government had intended to allege. See Transcript
(Tr.) 18. Respondent raised no objection based on the erroneous
title reference, and I find that this error was merely a scrivener's
error and that Respondent had adequate notice of the charged
violation.
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The Show Cause Order also set forth five charges of recordkeeping
violations based on DEA's July 4, 2014 ``on-site inspection of
[Respondent's] registered location.'' Id. First, the Order charged that
Respondent ``failed to maintain an initial inventory of all controlled
substances in violation of 21 U.S.C. 827(a)(3) & 842(a)(5) and 21 CFR
1304.11(b).'' Id. Second, the Order charged that he ``failed to
maintain complete and accurate dispensing records in violation of 21
U.S.C. 827(a)(3) & 842(a)(5) and 21 CFR 1304.21(a).'' Id. at 2-3.
Third, the Order charged that, during the on-site inspection,
Respondent ``could not provide a DEA-222 order form dated [January 16,
2014], for an order of oxycodone tablets, in violation of 21 U.S.C.
[842](a)(5) and 21 CFR 1305.17(a).'' \2\ Id. at 3. Fourth, the Order
[[Page 47353]]
charged that Respondent ``failed to properly annotate two DEA-222 order
forms in violation of 21 U.S.C. 842(a)(5) and 21 CFR 1305.13(b).'' Id.
Fifth, the Order charged that Respondent ``failed to maintain [his]
inventory and dispensing records at [his] registered location and these
records were not readily retrievable, in violation of 21 U.S.C.
842(a)(5) and 21 CFR 1304.04.'' Id. Related to this last charge, the
Order alleged that Respondent's ``inventory and dispensing records were
located at Moore Clinical Trials,'' which was not located at his
registered address, and that he ``had not asked for permission to store
controlled substance records at a central location'' in violation of 21
CFR 1304.04(a)(1). Id.
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\2\ Although the Order erroneously referenced an August 28, 2013
DEA 222 form for this charge, the Government corrected the date of
the allegedly missing DEA 222 form to January 16, 2014 in its May
12, 2016 Prehearing Statement and during Government counsel's
Opening Statement at the administrative hearing. See ALJ Ex. 7, at
8; Tr. 15. In addition, although the Order erroneously referenced
Section 821 of Title 21 of the United States Code for this charge,
the Government corrected the error in its May 12, 2016 Prehearing
Statement to Section 842 of Title 21. See ALJ Ex. 7, at 8
(``Respondent's failure to provide the DEA-222 form for this
shipment was in violation of 21 U.S.C. 842(a)(5) and 21 CFR
1305.17(a).''). I find that these errors were merely scrivener's
errors and that Respondent had adequate notice of the charged
violation.
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Although the pending Show Cause Order discussed a prior September
27, 2011 Show Cause Order that DEA issued to revoke Respondent's DEA
registration, as well as the terms of an April 27, 2012 Memorandum of
Agreement (MOA) that was intended to resolve the charges in that prior
Order, the pending Order did not expressly charge Respondent with
violating the MOA. See id. at 2. Instead, the Government charged
Respondent with violating the MOA in its May 12, 2016 Prehearing
Statement, and further alleged that these violations constituted an
independent basis to revoke his registration. See ALJ Ex. 7, at 10-11,
11 n.4.\3\
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\3\ ``[P]leadings in administrative proceedings are not judged
by the standards applied to an indictment at common law.'' Moore
Clinical Trials, L.L.C., 79 FR 40145, 40159 n.34 (quoting Citizens
States Bank of Marshfield v. FDIC, 751 F.2d 209, 213 (8th Cir.
1984)) (internal citations and quotations omitted). ``An agency is
not required to give every [Respondent] a complete bill of
particulars as to every allegation that [he] will confront.'' Id.
(quoting Boston Carrier, Inc. v. ICC, 746 F.2d 1555, 1560 (D.C. Cir.
1984)) (internal citations and quotations omitted). ``Thus, the
failure of the Government to disclose an allegation in the Order to
Show Cause is not dispositive, and an issue can be litigated if the
Government otherwise timely notifies a respondent of its intent to
litigate the issue.'' Id. (quoting George Mathew, M.D., 75 FR 66138,
66146 n.20 (2010)); see also Darrell Risner, D.M.D., 61 FR 728, 730
(1996) (``the parameters of the hearing are determined by the
prehearing statements'').
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After service of the Show Cause Order, Respondent, through his
counsel, made a timely request for hearing. See ALJ Ex. 2. The matter
was placed on the docket of the Office of Administrative Law Judges and
assigned to Administrative Law Judge Charles Wm. Dorman (hereinafter,
ALJ). On May 19, 2016, the parties participated in a telephonic
prehearing conference, which was not transcribed, and the ALJ issued a
Prehearing Ruling and Protective Order (ALJ Ex. 9) memorializing 12
accepted stipulations of fact (set forth more fully infra) as well as
the terms of a protective order. Following other pre-hearing
procedures, the ALJ conducted an evidentiary hearing in Little Rock,
Arkansas on August 16-17, 2016, at which both parties elicited
testimony from witnesses and submitted various exhibits.\4\
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\4\ On August 23, 2016, Respondent filed a Motion to Supplement
the Record requesting that the ALJ accept new exhibits. ALJ Ex. 14.
Specifically, Respondent requested leave to supplement the
administrative record with the back pages of certain DEA 222 forms
entered into evidence at the hearing to rebut a Government witness's
testimony about the instructions contained on those back pages. Id.
at 1-2. Respondent also attached to his motion the affidavit of
Matilda Buchanan, who identified and copied these DEA 222 form back
pages for purposes of the motion and who prepared the proposed
exhibits. See Exhibits 1-2 to ALJ Ex. 14.
On August 29, 2016, the Government filed its ``Opposition to
Respondent's Motion to Supplement the Record and Government's Motion
for Leave to File Responding Affidavit.'' ALJ Ex. 16. As a threshold
matter, the Government contended that Respondent failed to establish
that he had good cause for failing to identify the back pages of the
DEA 222 forms as exhibits by July 26, 2016, when supplemental
prehearing statements were due--even though Respondent knew that the
DEA 222 forms would be introduced and discussed at the hearing. Id.
at 1-2 (citing 21 CFR 1316.57), 5. The Government argued that
Respondent's post-hearing motion was an attempt ``to rectify his
perceived oversights made at the hearing'' for failing to introduce
these back pages as part of his case, during cross-examination of
the Government's witness, or in a rebuttal case. Id. at 3. The
Government also argued that, in any event, Respondent had failed to
establish a proper foundation for these supplemental exhibits, and
that the Government can no longer cross-examine Respondent's
affiant, whose affidavit was submitted in support of these exhibits.
Id. at 3-4. Finally, the Government requested leave to file its own
affidavit in response to Respondent's affidavit in the event the ALJ
granted Respondent's motion. Id. at 5.
On the same day, the ALJ issued an order denying Respondent's
Motion. ALJ Ex. 17. The ALJ found that Respondent did ``not set
forth any reasons in his Motion for failing to submit these
additional exhibits by the July 26, 2016 deadline.'' Id. at 2. The
ALJ also found that ``Respondent had the originals of these exhibits
at the hearing and made no attempt to offer the back side of the 222
Forms into evidence at that time. Therefore, the Respondent has not
established the requisite good cause for failing to submit these
exhibits in a timely manner.'' Id. Finally, the ALJ found that
admitting ``Respondent's proposed exhibits would be unfairly
prejudicial to the Government'' because it ``no longer ha[d] the
opportunity to cross-examine Buchanan on the production of the
Respondent's additional exhibits, or to introduce additional
rebuttal testimony or evidence.'' Id. I agree with the ALJ's ruling.
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The parties submitted briefs of their proposed findings of fact,
conclusions of law, and argument on October 3, 2016, and the ALJ issued
his Recommended Decision (R.D.) on December 5, 2016. The ALJ found that
the Government sustained only two of its charges. First, the ALJ found
that the Government had sustained its first charge that Respondent pre-
signed prescriptions in violation of 21 CFR 1306.05(a). R.D., at 30.
However, the ALJ also found that Respondent ``has presented sufficient
mitigating evidence'' concerning this charge ``to show that he can be
entrusted with a DEA registration.'' Id. at 42. As a result, the ALJ
did not recommend any sanction as a result of this violation. See id.
at 41-46.
Second, with respect to the Government's recordkeeping charges, the
ALJ only sustained the Government's fourth recordkeeping charge ``that
the Respondent failed to properly record the date he returned
controlled substances to [his supplier] and the amount he returned.''
Id. at 45. The ALJ found that, although this recordkeeping violation
also constituted a violation of the MOA, it was not a sufficiently
``significant violation'' of the MOA to warrant revocation. Id. at 40
(emphasis omitted). The ALJ also recommended that I find that this
failure was ``mitigated by the fact that the Government has presented
no evidence that Respondent had been previously cited for this type of
recordkeeping failure or that this recordkeeping failure . . . is in
any way related to the Respondent's day to day treatment of his normal
patients.'' Id. at 45. The ALJ concluded that he ``would be exceeding
the scope of [his] responsi[bil]ities were [he] to recommend that the
Respondent's [registration] be revoked.'' Id. The ALJ added that he
``would reach the same conclusion even if the Government had proven all
of its allegations in this weak case.'' Id. Thus, the ALJ recommended
that I not revoke Respondent's registration and that I approve any
pending application for renewal. Id. The ALJ further recommended that I
find that the testimony of the Government's sole witness was not
sufficiently credible to support any of the Government's remaining
recordkeeping charges. See, e.g., id. at 4, 15 n.17, 19 n.25, 21 n.28,
34.
Nonetheless, the ALJ found that this recordkeeping violation
``merits the imposition of a sanction'' and found that ``Respondent's
recordkeeping violation to be egregious . . . because it prevented the
DEA from being able to use the Respondent's own records to conduct an
accurate audit of the
[[Page 47354]]
controlled substances for which the Respondent was accountable.'' Id.
at 45. As a result, the ALJ recommended that I place the following five
restrictions on Respondent's registration:
1. That he may not participate in any drug studies in which he
is required to order, maintain, store, or dispense controlled
substances for a period of four years.
2. That he may not order, maintain, store, or dispense any
controlled substances at his registered location for a period of
four years.
3. That restrictions one and two, above, will not be lifted,
even after four years, until the Respondent has completed a course
in controlled substance recordkeeping, a course in controlled
substance storage, and a course in the administration of controlled
substances, and provides the DEA with evidence of completion of
these courses. These courses may not be used to meet any continuing
medical education requirement.
4. That prior to renewal of the Respondent's [DEA registration],
he sign a document consenting to inspections by DEA personnel of his
medical practice without the need for DEA personnel to obtain an
administrative inspection warrant prior to conducting an inspection.
By the terms contained in the consent form, the consent shall be
valid for four years from the date his current renewal application
for a [DEA registration] is approved. This consent form is to be
delivered to the Respondent's local DEA Field Office.
5. That prior to renewal of the Respondent's [DEA registration],
he sign a document consenting to the conditions set forth in
Paragraphs one and two above and acknowledging his understanding
that his failure to comply with the terms of those conditions will
constitute an independent basis for administrative enforcement
proceedings by the DEA. This consent and acknowledgement document
shall be delivered to the Respondent's local DEA Field Office.
Id. at 46.
On December 19, 2016, Respondent's counsel filed a ``Notice of
Respondent's Intent to Comply with Recommended Rulings, Findings of
Fact, Conclusions of Law, and Decision'' in which he stated that
Respondent ``intends to immediately comply with the Court's Recommended
Disposition.'' ALJ Ex. 23, at 1. Respondent also stated that he
executed a document attached as Exhibit A to his Notice entitled
``Consent to Conditions and Acknowledgment.'' See id.
On December 23, 2016, the Government filed Exceptions to the
Recommended Decision. ALJ Ex. 24. In its Exceptions, the Government
contended that the ALJ committed error in finding that Respondent was a
more credible witness than the Government's witness, a Diversion Group
Supervisor (GS). Id. at 2. The Government further argued that accepting
the credibility of the testimony of the GS over Respondent's testimony
would require sustaining the Government's remaining recordkeeping
charges because the ALJ's recommendations regarding those charges
``hinge[d] on his evaluation of the credibility of the Government's
investigator and the Respondent.'' Id. at 2 & n.3. Respondent did not
file a response to the Government's Exceptions.
Thereafter, the ALJ forwarded the record to me for final agency
action. Having considered the record in its entirety, including the
Government's Exceptions, I agree with the ALJ's conclusions that the
Government failed to prove its first, second, third, and fifth
recordkeeping charges that Respondent failed to maintain an initial
inventory, maintain complete and accurate dispensing records, provide
the DEA 222 form dated January 16, 2014, and maintain his inventory and
dispensing records at the registered location. I also agree with the
ALJ that the Government sustained the Show Cause Order's first charge
regarding Respondent's pre-signing of prescriptions and the Order's
fourth recordkeeping charge regarding Respondent's failure to properly
annotate two DEA 222 forms. Furthermore, I agree with the ALJ that the
sustained fourth recordkeeping charge also constituted a violation of
the MOA. Finally, I also agree that Respondent has accepted
responsibility for both of these charges.
Most importantly, while I agree with the ALJ that the sum of
Respondent's misconduct does not warrant revocation of Respondent's
registration, I disagree with the ALJ's recommendation that the
sanction in this case should be limited to the ALJ's recommended
restrictions to Respondent's registration. Accordingly, and for reasons
I set forth more fully below, I conclude that the relevant factors
support suspension of Respondent's registration for a period of one
month, in addition to the imposition of the restrictions that the ALJ
recommended following termination of the suspension. As the ultimate
fact finder, I make the following findings of fact.
Findings of Fact
Respondent is the holder of DEA Certificate of Registration
BN4578057, pursuant to which he is authorized to dispense controlled
substances in schedules II through V as a practitioner, at the
registered address of 5106 McLanahan Drive, Suite B, North Little Rock,
Arkansas. See Attachment to ALJ Ex. 7; Respondent's Exhibit
(hereinafter RX) A, at 1. Respondent's registration was due to expire
on October 31, 2016. See id. On September 12, 2016, Respondent
submitted a renewal application.\5\ Government's Proposed Findings of
Fact and Conclusions of Law (ALJ Ex. 20), at 1 n.2. Because Respondent
has submitted a timely renewal application, I find that Respondent's
DEA registration has remained in effect pending the issuance of this
Decision and Final Order. See 5 U.S.C. 558(c); Perry County Food &
Drug, 80 FR 70084, 70089 n.17 (2015).
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\5\ The parties stipulated that Respondent had previously
renewed his DEA registration on December 9, 2010 and on October 21,
2013. ALJ Ex. 9, at 2.
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Respondent is an allopathic physician who is licensed to practice
medicine in Arkansas. Transcript (Tr.) 137; RX D. His specialty is
anesthesiology, and his current medical practice focuses on pain
management. Tr. 32, 137-38. During the hearing, Respondent submitted
evidence establishing that his Arkansas license to practice medicine
was active and due to expire on April 30, 2017. RX D, at 1. I have
reviewed the official website of the Arkansas State Medical Board
(ASMB), and it shows that his Arkansas medical license is still active
and is now due to expire on April 30, 2019. Thus, I take official
notice that Respondent currently holds an active license to practice
medicine from the ASMB.\6\
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\6\ Under the Administrative Procedure Act (APA), an agency
``may take official notice of facts at any stage in a proceeding--
even in the final decision.'' U.S. Dept. of Justice, Attorney
General's Manual on the Administrative Procedure Act 80 (1947) (Wm.
W. Gaunt & Sons, Inc., Reprint 1979). In accordance with the APA and
DEA's regulations, Respondent is ``entitled on timely request to an
opportunity to show to the contrary.'' 5 U.S.C. 556(e); see also 21
CFR 1316.59(e). To allow Respondent the opportunity to refute the
facts of which I take official notice, Respondent may file a motion
for reconsideration within 15 calendar days of service of this order
which shall commence on the date this order is mailed.
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The Prior Criminal and Administrative Proceedings
The parties agreed to 12 stipulations, most of which relate to
Respondent's prior criminal and administrative proceedings.
Prior State Administrative Proceedings
The parties stipulated that on June 8, 2006, the ASMB issued an
Emergency Order of Suspension suspending Respondent's Arkansas medical
license. ALJ Ex. 9, at 1. The Order alleged that Respondent violated
Ark. Code Ann. Sec. Sec. 17-95-409(a)(2)(e), 17-95-409(A)(2)(g), and
17-95-704(E)(1), (2) and federal laws ``regulating the possession,
distribution, or use of narcotic or controlled drugs'' because ``he
prescribed or administered scheduled drugs intended to manage
[[Page 47355]]
pain for a patient who had chemical dependencies on said controlled
drugs and who was diverting said medication for his addiction.''
Government Exhibit (GX), at 1. This Order also alleged that
more specifically, he has pre-signed prescriptions leaving the name
of the patient, substance and the instructions for taking the
medication blank and permitting his office personnel, who are not
licensed physicians, to fill in the prescription. A prescription
pad, which had all the prescriptions signed by Brian Thomas Nichol,
M.D. with the rest left blank, was found in his office pursuant to a
[federal] search warrant . . . on the 19th of April 2006.''
Id. at 1-2. In the same vein, the Order alleged that Respondent
permitted such office personnel to dispense and administer scheduled
medications to at least three patients, and fraudulently billed one of
these patients for $22,600. Id. at 2-3. The Order further alleged that
Respondent ``performed medical procedures and engaged in the practice
of medicine in the State of Arkansas . . . while not having a valid
Arkansas license'' to do so. Id. at 2. Based on these allegations, the
ASMB found that Respondent's acts ``endanger[ed] the public health,
safety and welfare'' and suspended his state license on an emergency
basis pending a hearing. Id. at 3.
The parties further stipulated that on August 17, 2006, the ASMB
held an administrative hearing based on the allegations set forth in
the ASMB's Emergency Order, and issued its Final Order on the same day.
See ALJ Ex. 9, at 1; GX 2. The parties also stipulated that ``[t]he
ASMB's final order did not include all of the allegations made in the
`Emergency Order.' '' ALJ Ex. 9, at 2. However, the ASMB's Final Order
does state findings that Respondent ``admitted in testimony that he has
violated the laws of the United States and the State of Arkansas
regulating the prescribing of scheduled medication, more specifically,
he has pre-signed prescriptions, and not written on the prescription
the name of the patient, the substance prescribed, and instructions for
taking the medication.'' GX 2, at 1. The ASMB also found that
Respondent admitted that he ``permitted his office personnel, . . . who
are not licensed as physicians, nor authorized to prescribe medication,
to fill in the blanks on the prescription pad and distribute them to
patients, even without Dr. Nichol being present.'' Id.
The parties stipulated that the ASMB found that this conduct
violated Arkansas and federal laws. ALJ Ex. 9, at 1-2; see GX 2, at 3.
As a result of these findings, it is also undisputed that the ASMB
suspended Respondent's Arkansas medical license for six months and that
the ASMB lifted this suspension on February 2, 2007. See ALJ Ex. 9, at
2; GX 2, at 3. I also find that, in its final order, the ASMB fined
Respondent over $10,000 and directed him to complete ``courses in (1)
Office Management, (2) The Prescribing of Scheduled Medication and
[DEA] Laws and Regulations . . ., and (3) a course on boundaries.'' GX
2, at 4.
During the hearing, Respondent testified that he ``did'' what ``was
alleged to have happened'' by the ASMB in 2006. Tr. 162. That is, he
admitted that he improperly pre-signed prescriptions for controlled
substances and that he ``take[s] responsibility'' for it. Id. at 274.
Respondent testified, however, that there were no allegations of
``diversions [sic] resulting from that'' conduct. Id. at 162.
Respondent later testified more broadly that he agreed to the
conditions of the MOA ``even though there was [sic] never any
allegations of diversion.'' Id. at 174. However, the ASMB's earlier
Emergency Order alleged that Respondent ``prescribed or administered
scheduled drugs intended to manage pain for a patient who had chemical
dependencies on said controlled drugs and who was diverting said
medication for his addiction.'' GX 1, at 1 (emphasis added). More
specifically, the ASMB also alleged that Respondent ``prescribed or
administered controlled substances when he knew or should have known
that his patient was utilizing the drugs for non-therapeutic purposes
and was chemically dependent on said drugs.'' Id. at 3. Thus, while I
accept Respondent's testimony that he admitted to improperly pre-
signing prescriptions, I do not accept Respondent's statement that
there were never any allegations of diversion against him.
Based on Respondent's representation in his testimony, the ALJ
found that Respondent has written every prescription himself since the
expiration of the state's suspension. R.D., at 10 (citing Tr. 166). The
Government introduced no evidence contradicting Respondent's testimony.
Thus, I find that there is no evidence that Respondent resumed pre-
signing prescriptions after his suspension by the ASMB.
Prior Federal Criminal Proceedings
The parties stipulated that on January 8, 2008, 11 months after the
reinstatement of his state medical license, Respondent pled guilty in
the United States District Court for the District of Arkansas to a one-
count criminal information charging him with felony health care fraud
under 18 U.S.C. 1347. ALJ Ex. 9, at 2; see also GXs 3-4. That federal
court sentenced Respondent to five years of probation and directed him
to pay $15,400.69 in restitution and criminal penalties. ALJ Ex. 9, at
2; GX 4, at 2, 4. It is also undisputed that the court terminated
Respondent's probation period early on September 20, 2011. R.D., at 6;
Tr. 8.
The parties also stipulated that on October 20, 2008, the U.S.
Department of Health and Human Services (HHS) excluded Respondent from
participation in the Medicare and Medicaid programs for five years
pursuant to 42 U.S.C. 1320a-7(a). ALJ Ex. 9, at 2; see GX 5. The
parties agree that HHS removed this exclusion on August 11, 2014. R.D.,
at 7; Tr. 9.
Prior DEA Administrative Proceedings
The Group Supervisor testified that DEA ``first bec[a]me aware of
Dr. Nichol'' in 2011 after DEA received an application for a
registration as a researcher from Moore Clinical Trials. Tr. 28. ``[I]n
the review of that application, we became aware that Dr. Nichol was
associated with Moore Clinical Trials . . . we saw that there was a
current research study going on[,] and we noticed several violations of
[DEA regulations] and the Controlled Substances Act.'' Id. More
specifically, she testified that DEA conducted an investigation of both
Moore Clinical Trials and Respondent and ``looked at the records and
found that the receiving records and dispensing records weren't up to
the regulations.'' Id. at 28-29. As a result, DEA brought separate
administrative actions against each of them in 2011--one against Moore
Clinical Trials to deny its application for a DEA registration as a
researcher, and the other against Respondent to revoke his DEA
registration as a practitioner. See id. at 28-29; GX 6.
With respect to Moore Clinical Trials, the GS testified that
``subsequently the application for Moore Clinical Trials was denied.''
Id. at 29. In fact, the Agency issued and published its final decision
and order denying Moore Clinical Trials' application pursuant to an
August 8, 2011 Show Cause Order. Moore Clinical Trials, L.L.C., 79 FR
40145, 40145 (2014). In that decision, the then-Administrator found
that Moore Clinical Trials ``entered into a contract with Dr. Brian
Nichol, an interventional pain management specialist, to perform
clinical research for it pursuant to contracts it might obtain from
CROs [contract research organizations].'' Id. at 40148. The then-
Administrator noted the ALJ's finding that `` `the documents kept by
Dr.
[[Page 47356]]
Nichol,' who was supervising . . . clinical trials on behalf of [Moore
Clinical Trials], `were deficient' and that the order forms for
Schedule II controlled substances (DEA-222) `were lacking.' '' Id. at
40147 (quoting ALJ's Recommended Decision). ``The ALJ also found that
`Dr. Nichol transported controlled substances to [Moore Clinical
Trials'] location,' where he was not registered to dispense them.'' Id.
The then-Administrator also noted that ``the ALJ found that the
evidence is clear that Nichol's records did not comply with the
Controlled Substances Act or DEA regulations'' and `` `Nichol[]
fail[ed] to meet his responsibilities as a registrant.' '' Id.
The then-Administrator made additional specific fact findings in
Moore Clinical Trials regarding Respondent. Specifically, she found
that on March 30, 2011, Moore Clinical Trials and Respondent ``entered
into a Clinical Trial Agreement (CTA) with Quintiles, to participate in
the NKTR-118 \7\ long-term safety study.'' Id. at 40149. She further
found that, during the investigation of Moore Clinical Trials, the DI
in the case ``contacted Mr. Jim Phillips, Dr. Nichol's attorney,'' who
``acknowledged that Nichol was involved in the study and that he was
transporting the controlled substances to [Moore Clinical Trials] and
dispensing them.'' Id. at 40150. ``The DI also requested of Mr.
Phillips that Dr. Nichol provide his records, including the dispensing
records and the schedule II order forms (DEA Form 222).'' Id. The then-
Administrator found that the ``evidence also shows that in response to
the GS's request (through Dr. Nichol's attorney) for Dr. Nichol's
dispensing records, Nichol provided the GS with the records.'' Id. at
40156. The then-Administrator accepted the GS's testimony that the
original DEA 222 forms related to the NKTR-118 study ``were kept at Dr.
Nichol's registered location'' and that ``the forms did not indicate
the date the drugs were received and the quantity received.'' Id. at
40151 (internal quotations and citations omitted), 40156 (adopting GS's
testimony that ``she examined the Schedule II order forms and noted
that they had not been completed by indicating the date the drugs were
received and the quantity received''). Ultimately, the then-
Administrator concluded that ``the record clearly establishes that Dr.
Nichol violated both the separate registration provision and DEA
recordkeeping requirements.'' Id. at 40155.\8\
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\7\ ``NKTR-118'' is the drug Naloxol 6a-methoxyhepta (ethylene
glycol) ether. Id. at 40148. ``The [full] name of the study was: `An
Open-Label 52-week Study to Assess the Long-Term Safety of NKRT-118
in Opioid-Induced Constipation (OIC) in patients with Non-Cancer-
Related Pain.' '' Id. at 40148 n.4.
\8\ The then-Administrator also found that ``it is undisputed
that the dispensing record for each study--which Dr. Nichol
provided--was not created until August 27, 2012, well after all of
the dispensings were made. The CSA requires, however, that a
dispensing record be `maintain[ed], on a current basis.' 21 U.S.C.
827(a)(3).'' Id. at 40156 (internal citations omitted).
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With respect to the instant charges against Respondent, the parties
stipulated that DEA issued a Show Cause Order against Respondent on
September 27, 2011 proposing the revocation of his DEA registration on
the ground that it is ``based, inter alia, on the findings of the ASMB
and respondent's exclusion from Medicare and Medicaid.'' ALJ Ex. 9, at
2; see also GX 6. More specifically, the 2011 Show Cause Order proposed
to revoke his registration as ``inconsistent with the public interest''
based on three allegations. GX 6, at 1 (citing 21 U.S.C. 823(f),
824(a)(4)). First, the 2011 Order alleged that Respondent's pre-signing
of controlled substances prescriptions, as found by the ASMB, warranted
revocation. Id. (citing 21 U.S.C. 824(a)(3), (4)). Second, the 2011
Order alleged that Respondent's registration must be revoked because of
his exclusion for five years from participation in a Medicare and
Medicaid program under 42 U.S.C. 1320a-7(a). Id. at 2 (citing 21 U.S.C.
824(a)(5)). Lastly, the 2011 Order alleged that, ``[o]n or about
September 17, 2010, [Respondent] contracted with a controlled substance
researcher [Moore Clinical Trials] to administer controlled substances
\9\ to research subjects. The owner/operator of this research clinic
has no experience handling controlled substances, and you [Respondent]
and the owner/operator [of Moore Clinical Trials] gave conflicting
information about the operation of this research clinic.'' Id.
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\9\ The Memorandum of Agreement resolving the 2011 Order,
discussed more fully infra, specified that the alleged controlled
substance referenced in that Order's third allegation was NKRT-118.
See GX 7, at 1.
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The parties have further stipulated that Respondent entered into an
MOA with DEA to resolve the allegations in the 2011 Show Cause
Order,\10\ and that the MOA became effective on April 27, 2012.\11\ ALJ
Ex. 9, at 2; GX 7. The GS testified that the MOA was ``an intermediary
step trying to get [Respondent] into compliance.'' Tr. 29.\12\ Both
Respondent and his investigator/assistant, Matilda Buchanan, testified
that the MOA was the product of back-and-forth negotiations by the
parties. Id. at 173-74 (Respondent testifying that ``there was some
negotiation back and forth before we settled on the final agreement''
and ``I think it was the third or fourth [version] that we were both
able to agree to terms on''), 425-26 (Ms. Buchanan testifying that
``drafts were sent back and forth'' and that ``we went over line by
line both what the MOA said and then what does that mean by what it
said'').
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\10\ This stipulation is also consistent with how the then-
Administrator characterized the MOA. Moore Clinical Trials, 79 FR at
40151 n.10 (``Notwithstanding these allegations [in the 2011 Show
Cause Order], the Agency allowed Dr. Nichol to retain his
registration subject to various terms and conditions'' set forth in
a Memorandum of Agreement (MOA)); see also GX 7.
\11\ The Special Agent in Charge for DEA's New Orleans Division
approved and signed the MOA on April 17, 2012, Respondent and his
counsel signed it on April 20, 2012, and DEA's counsel signed it on
April 27, 2012. GX 7, at 4.
\12\ The ALJ questioned this testimony based on his finding that
that the MOA ``does not address any of the alleged violations
contained in the 2011 [Show Cause Order].'' R.D., at 10. The ALJ's
assessment is confusing for at least two reasons. First, the parties
stipulated that the MOA does, in fact, resolve the 2011 Order's
allegations against Respondent, ALJ Ex. 9, at 2, and the ALJ
accepted the parties' stipulation. R.D. at 7. That the parties
repeated the allegations from the 2011 Show Cause Order in the MOA
itself, see GX 7, at 1-2, makes the fact that the parties intended
the MOA to address and to resolve the 2011 Order's allegations
irrefutable. Apart from the parties' agreement, the third allegation
of the 2011 Order (though unartfully worded) clearly references
Respondent's role in the operations of Moore Clinical Trials. As
already noted, Moore Clinical Trials received its own Show Cause
Order in August 2011, less than two months before the September 2011
Show Cause Order that was issued to Respondent.
From there, Respondent and Moore Clinical Trials took two
different procedural paths. Respondent entered into an MOA and
retained his DEA registration subject to the MOA's conditions; Moore
Clinical Trials went to hearing and the Agency issued a final
decision and order denying its application for a DEA registration.
As already noted, Moore Clinical Trials discussed Respondent's
recordkeeping violations (which precede the ones in this case) at
length. When comparing that discussion to the MOA, it is obvious
that the MOA addresses the allegations against Respondent and
reflects the ``intermediary step'' that the GS referenced in her
testimony. See 79 FR at 40151 n.10 (``Notwithstanding these
allegations, the Agency allowed Dr. Nichol to retain his
registration subject to various terms and conditions'' set forth in
the MOA).
Second, in any event, even if the MOA had failed to address the
allegations in the 2011 Show Cause Order, as the ALJ suggested, he
failed to explain why that is relevant. What is relevant is the fact
that Respondent and the Government agreed that the MOA resolved the
2011 Show Cause Order.
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The MOA imposed the following conditions, in pertinent part, on
Respondent:
1. Respondent must ``abide by all Federal, State and local
statutes and regulations relating to controlled substances.''
2. Respondent must ``make and keep records of all controlled
substances that he
[[Page 47357]]
prescribes, dispenses and administers at his DEA registered
location. These . . . dispensing records shall include all the
information . . . set forth and required by 21 CFR 1306.05(a) and
1304.21 where applicable. These . . . dispensing records shall be
available for inspection as set forth in paragraph 4 of this
Agreement.''
3. Respondent must ``make and keep a legible log of all Schedule
II-V controlled substances that he prescribes for his patients.''
4. Respondent must ``retain the records of the prescribing,
administering and dispensing records, as described in paragraph 2,
at his DEA registered location and agrees to allow DEA personnel
access to his controlled substance records for [these] records as
described in paragraph 2 for purposes of verifying his compliance
with this Agreement and with all Federal, state and local statutes
and regulations relating to controlled substances.''
5. ``During the duration of the Agreement, Dr. Nichol shall
notify DEA in writing if he will prescribe, dispense, or administer
controlled substances at any other location other than his DEA
registered address or Springhill Surgery Center. . . .''
6. Respondent ``shall not order or receive any controlled
substances except for controlled substances that he orders and
receives at his DEA registered location. . . . As the physician, who
is contracted to administer the FDA approved study drug NKTR-118,
[Respondent] will administer that drug at either his DEA registered
location or at an approved site for the current drug study. . . .
[Respondent] agrees that for the duration of this agreement if he is
asked to participate in additional drug studies involving controlled
substances, he will notify DEA in advance of commencing the study.''
7. Respondent ``understands and agrees that any violations of
the Agreement may result in the initiation of proceedings to revoke
or immediately suspend and revoke his DEA Certificate of
Registration. . . . DEA and [Respondent] agree this is a final
agency action on all matters in dispute. DEA will not seek to revoke
[Respondent's] DEA registration or deny any renewal applications
unless [Respondent] substantially violates this Agreement or unless
[Respondent] commits additional acts that constitute grounds under
21 U.S.C. 823(f) and 824(a).''
GX 7, at 2-4. The MOA also stated that these conditions would remain in
effect for three years. Id. at 4.
The Quintiles Clinical Trial and Study
On July 11, 2012, Respondent, Moore Clinical Trials, and Quintiles,
Inc. entered into a ``Clinical Trial Agreement Effective July 6, 2012''
(hereinafter, CTA) to conduct a study related to opiate induced
constipation. RX N, at 1, 11; Tr. 35. The CTA prescribed a role for
each party. Respondent was the ``principal investigator'' of the study.
Moore Clinical Trials, located at 3508 JFK Blvd., Suite #1, North
Little Rock, Arkansas, was the ``INVESTIGATIVE SITE'' for the study. RX
N, at 1. And Quintiles was an independent contractor acting on behalf
of the ``Sponsor'' of the study (Purdue Pharma, L.P.) and would
``arrange and manage'' the clinical trial. Id.
This study was designed to be a double blind study in which
Respondent would dispense oxycodone, which is a schedule II controlled
substance, to study patients. Tr. 35, 182 (the study was a ``double
blind, double dummy placebo controlled study''). However, because this
was a double blind study, Respondent did not know what other type of
medication a study patient received. Id. at 35, 184. Respondent first
placed an order for controlled substances related to the study on
December 3, 2012, and on December 31, 2012, he notified the GS (by
letter from his attorney) that he was participating in the study. Id.
at 93-94, 120-21; see RX R, at 1. In the letter, Respondent's attorney,
Mr. Phillips, added that ``[t]his trial is to begin in January 2013. .
. . [T]his notice is our compliance with paragraph 6 of the MOA. Dr.
Nichol will only administer the study drugs at his DEA approved
address.'' RX R, at 1.
Although the complete email that the GS sent in response to Mr.
Phillips' December 31, 2012 letter is not in the record, the January
17, 2013 letter that Mr. Phillips sent to the GS in response to that
email was admitted into evidence. See id. at 3. Specifically, the
January 17, 2013 letter states that it is in response to two questions
posed in a January 11, 2013 email that the GS had sent to Mr. Phillips
in response to his earlier letter. Id. The response to the first
question apparently posed by the GS regarded when the study would begin
and how long it would be. See id. Mr. Phillips stated that ``the study
we referred to should begin January 2013. The study length is
approximately 22 weeks for each subject enrolled. . . . Enrollment is
ongoing until the clinical trial end points are met. In all likelihood,
the study will be about a year in length.'' See id. The second response
was to the GS's ``other question'' asking ``What is the location and
your understanding of the `approved' DEA address?'' Id. Mr. Phillips
stated that the address to which he was referring was Respondent's
registered location of ``5106 McLanahan, Suite B, North Little Rock, AR
72116,'' and that ``[a]ll study drugs will be administered at this DEA-
approved address.'' Id.
Mr. Phillips' response to the first question is consistent with
Respondent's testimony at the hearing. Specifically, he testified that
``we expected to start enrolling patients in the study . . . to start
in Januaryish [sic].'' Tr. 401. Respondent testified that enrollment is
when they have ``met all the qualifications for it and are actually
starting to see me as a patient. That's enrolled.'' Id. There is no
evidence in the record contradicting this testimony. Thus, I find that
Respondent began enrolling patients for the Quintiles study in January
2013.
Mr. Phillips' response to the second question is consistent with
the GS's and Respondent's testimony regarding the study. The GS
testified that it was her ``understanding that Dr. Nichol does the
physical evaluations and actual dispensing of the controlled substances
from his registered location.'' Tr. 36. ``[T]he other types of
monitoring and testing is done at Moore Clinical Trials.'' Id. The GS
further testified that it was her understanding that the study
``concluded in June of 2014.'' Id. Respondent testified that he first
saw study patients in February 2013. Id. at 210-211. Respondent's
dispensing log is also consistent with this testimony, showing that the
first time he dispensed a controlled substance (here, oxycodone) to a
patient as part of the study was February 18, 2013. RX U, at 1.\13\
Thus, I find that Respondent first dispensed controlled substances to
study patients on February 18, 2013. Accord R.D., at 13.
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\13\ Respondent testified that he ``had seven or eight'' study
patients who ``actually enrolled in the study and only one patient,
I think, or two patients that completed this study all the way to
the end.'' Tr. 358, 398 (``I had two [patients who] completed it'').
Respondent defined ``completed'' as ``when they've gone through the
full length of the study to . . . where they actually completed the
study at the end.'' Id. at 401.
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During the term of the CTA, Quintiles and the Sponsor reserved the
``right to audit'' Moore Clinical Trials' ``facilities, records and
documentation.'' RX N, at 6. Respondent testified that such audits
included Quintiles inspectors visiting Respondent's office as well to
review his study documentation. Tr. 189-90. Respondent testified that
Quintiles' inspectors or monitors ``would do a complete inventory of
all the narcotics.'' Id. at 190. Respondent also said that the monitors
required him ``to get the inventory down to the serial number of each
individual kit, down to the serial number of each individual bottle.
Any returns that the patient had, they would count each individual one.
They would account for those quantities.'' Id. Finally, Respondent
stated that he would ask the monitor ``when she was wrapping things up
is is [sic] my pill count fine. . . . And every time I had
[[Page 47358]]
full count of the narcotics. So there wasn't any diversion.'' Id. at
191.
Most important, Respondent testified that Quintiles had provided
records that allowed for a calculation of every controlled substance
pill received and that Quintiles accounted for every pill at the end of
the study. Id. at 187, 301. To support this claim, Respondent
introduced a series of documents prepared by others which the ALJ
admitted into the record. For example, Respondent introduced copies of
a series of reports or reviews prepared by Quintiles (and obtained from
Moore Clinical Trials) of Quintiles monitors' site visits to
Respondent's office to ensure he was following the drug study protocol.
See RX Y; Tr. 262-63, 378-79, 454-56. Respondent also introduced
accountability logs kept at Moore Clinical Trials for the drug study.
RX Z; Tr. 456-57. Finally, Respondent introduced copies of work records
that Quintiles had created during site inspections and while conducting
their inventories. RX AA; Tr. 457-58. However, none of these documents,
separately or taken together, were sufficient to make an accurate pill
count. Moreover, Respondent failed to introduce any other documentary
evidence or testimony from a Quintiles employee corroborating
Respondent's testimony that Quintiles' records allowed for an accurate
``pill count'' of the pills Respondent had received. Accord R.D., at 18
nn. 22-23. At the same time, the Government offered no documentary
evidence or testimony from a Quintiles employee to rebut Respondent's
testimony. See id.
Indeed, it is equally possible for Quintiles to have done a
``complete inventory'' and found that Respondent's pill count was
``fine,'' and at the same time for Respondent to have nonetheless
failed to maintain complete and accurate dispensing records pursuant to
the CSA and as alleged in the Show Cause Order's second recordkeeping
charge. Respondent's recordkeeping is what is at issue in this case,
not Quintiles' recordkeeping. Without a showing by a preponderance of
the evidence that the recordkeeping requirements of Quintiles and the
CSA are coextensive, I find that Respondent's testimony regarding the
Quintiles audits and documents in the record rests on too thin a reed
for me to accord it meaningful evidentiary weight regarding whether
Respondent's recordkeeping complied with the CSA and DEA's regulations.
The July 9, 2014 On-Site Inspection
Inspection of Respondent's Registered Location
The parties stipulated that on ``July 9, 2014, while the MOA was
still in effect, DEA conducted an on-site inspection of Respondent's
registered location.'' ALJ Ex. 9, at 3. Three DIs participated in the
inspection. See id.; ALJ Ex. 7, at 4 & n.1; ALJ Ex. 11, at 1 n.1. The
DI who had lead responsibility for conducting the inspection was unable
to testify at the hearing for medical reasons. ALJ Ex. 11, at 1 n.1.
Although a third DI accompanied the GS and the lead DI who conducted
the on-site inspection, that third DI also did not testify. Thus, only
the GS testified on behalf of the Government at the hearing. Id.
The GS testified that the DIs ``went to Dr. Nichol's registered
location . . . to ensure that he was in compliance with the MOA.'' Tr.
31. Under the MOA, Respondent had agreed ``to allow DEA personnel
access to his controlled substance records for the prescribing,
administering, and dispensing records . . . for purposes of verifying
his compliance with [the MOA] and with all Federal, state and local
statutes and regulations relating to controlled substances.'' GX 7, at
2. Although the inspection was unannounced, Respondent allowed the DIs
``access onto the premises to review records . . . [a]nd he signed an
actual Notice of Inspection.'' Tr. 99; see also id. at 31-32; July 9,
2014 Notice of Inspection (GX 8). The inspection period was from
December 19, 2012 through July 9, 2014. Tr. 38, 62. The inspection took
one hour, and the GS testified that Respondent's ``assistant Xeroxed
for us the documents we needed.'' Id. at 102.
Initially, the DIs asked Respondent where the ``study drugs'' were
``because at that point in time we didn't know the study had been
completed.'' Tr. 99. Once it became clear that Respondent no longer had
any study drugs and ``that there were no drug destructions during that
time period or theft or losses'' (id. at 39-40), the GS testified that
``we asked for any incoming documents [sic] receipts. We asked for any
inventories. We also asked for any outgoing records which could include
dispensing records, returns, theft and loss reports, drug destruction.
Anything showing the movement of controlled substances in or out of
that registered location.'' Id. at 36-37. The GS stated that ``this is
typical of any inspection.'' Id. at 36. When asked if she could ``be
more specific about what inventories and dispensing records you
specifically asked for,'' she responded that ``[w]e asked for an
initial inventory . . . We asked for receipts. And because these are
Schedule II controlled substances, we asked for DEA order form 222s.''
Id. at 37-38; see also id. at 102 (``We asked for dispensing records,
inventories. . . . we ask for any kind of documents showing receipts or
dispensations.''). She also testified that ``[h]e did not have an
inventory on hand.'' Id. at 52.
Respondent testified that he did not ``recall'' whether the GS had
asked for his DEA 222 forms or dispensing logs and stated that he
``d[id]n't think'' she had asked for his inventory. Tr. 213. Instead,
he stated that the DIs ``wanted my paperwork for the study.'' Id. at
212-13, 214 (``When they found out there weren't any drugs there to
collect, they wanted the paperwork''). In response, Respondent stated
that he made his DEA 222 forms ``available for Agent Barnhill to
review,'' and the GS acknowledged that the DIs reviewed at least some
of these forms. Id. at 39, 214; see also RX S. Respondent also stated
that he ``kept a green binder with all of the computation charts''
(that Respondent stated included an initial inventory) and ``provided''
them and his dispensing log ``to the agents when they came to see me in
my office on July 9th.'' Tr. 224, 226, 236-37; RX U; RX V.\14\
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\14\ The ALJ recommended that I find that ``Respondent provided
the DEA investigators his 222 Forms, his dispensing logs, and an
initial inventory.'' R.D., at 15 (citing Tr. 214). In the testimony
cited by the ALJ, however, Respondent only testified that he made
the DEA 222 forms ``available for [the GS] to review.'' See Tr. 214.
---------------------------------------------------------------------------
The GS acknowledged that Respondent ``did give us some documents''
and that the DIs reviewed these documents ``in his office.'' Tr. 101,
102 (``he showed us some documents''). The GS recalled that Respondent
``produced five DEA 222 order forms for purchase. And he gave us two
DEA order forms for returns back to the supplier.'' Id. at 39; see GX 9
(DEA 222 forms submitted by the Government). During cross-examination,
Respondent's attorney asked the GS:
Q Did [Respondent] show you documents other than the 222 forms?
He did, didn't he?
A I don't recall that.
Q You don't recall that?
A No.
Tr. 102-03. Whatever other documents Respondent may have provided
to the GS, she did not recognize them as an initial inventory or as
dispensing records. See id. at 39 (GS's testimony that Respondent ``was
unable to produce the initial inventory that we requested. And he was
unable to produce dispensing records'').
The GS testified that she did not recall giving Respondent a
``written list
[[Page 47359]]
of items'' that the DIs had requested. Tr. 100. She also testified that
she did not provide Respondent (1) a list of items that the DIs did in
fact receive, (2) a list of items to which she had testified were
missing, or (3) a list of items that the DIs photocopied on the date of
inspection. Id. at 100-01, 112 (``Records can be fabricated. So, no, we
don't leave a list. The records must be onsite when we arrive.'').
Respondent testified that, had the DIs advised him that he was missing
something, he would have provided it to them. Id. at 236.
The GS's use of the phrase ``we'' or ``us'' is significant and
occurs frequently throughout her testimony regarding the inspection. In
these instances, she was either testifying to what she remembered
hearing someone else (presumably, the lead DI) ask Respondent, e.g.,
Tr. 103 (GS testifying that she was ``present when [the lead DI] asked
[Respondent] for documents''), or she was testifying to what she would
typically request from a registrant during an inspection (or to both).
See id. (GS's testimony that she did not ``take notes of what was asked
for'' but noted that ``[i]t's the same things we ask for every
time'').\15\ In any event, the GS did not testify that she herself made
these requests of Respondent, and she did not ``take notes of what was
asked for.'' Id. Thus, while the record is clear that the GS did not
recall reviewing documents that she recognized as an initial inventory
or as dispensing logs at Respondent's office during the inspection (id.
at 39), the record is unclear whether the other two DIs reviewed and
recognized what Respondent submitted were his initial inventory and
dispensing logs.\16\
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\15\ In its Exceptions, the Government argues that the GS's
``use of the term `we' . . . was intended to emphasize that more
than one investigator had requested the needed materials from
Respondent.'' ALJ Ex. 24, at 4. However, the record fails to reflect
this intent.
\16\ I agree with the ALJ that it is possible, if not
``likely,'' that the DIs reviewed but ``may not have recognized
Respondent's Exhibit V as an initial inventory because it contained
far more information than would normally be contained in an initial
inventory.'' R.D., at 17 n.20.
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For this reason, I disagree with the ALJ's statement that ``[t]here
is a conflict in testimony concerning what the DEA investigators
specifically asked for'' during the inspection because both the GS's
and Respondent's testimony could be accurate. R.D., at 15 n.6. That is,
the GS may be correct that DIs conducting inspections (``we'')
typically ask registrants for DEA 222 forms, inventories, and
dispensing logs. Tr. 103 (``[i]t's the same things we ask for every
time''). Indeed, the GS has conducted over 400 audits in her more than
28 years with the DEA and had been a Group Supervisor for over six of
those years, so she should know how DIs typically conduct audits. See
id. at 25, 59; ALJ Ex. 24, at 4-5. Likewise, Respondent may also be
correct in his recollection that, for his particular inspection, the
DIs asked more generally for ``paperwork'' related to the Quintiles
study. E.g., Tr. 212-13. Moreover, the same could be true for whether
Respondent provided an initial inventory and dispensing log. Thus, the
fact that the GS herself did not see or recognize these documents does
not preclude the possibility that Respondent provided them to one of
the other DIs at the inspection.
Rather than reflecting a conflict, this testimony highlights a gap
in the Government's evidence. The GS's testimony that DIs conducting
inspections typically ask for DEA 222 forms, inventories, and
dispensing records is insufficient to establish by a preponderance of
the evidence that the lead DI asked for these documents in this
particular case. The lead DI who the GS testified had made the requests
for this paperwork (and who was most likely to have received the
response) during the inspection did not testify at the hearing.
Moreover, the Government did not offer as a witness the third DI
present during the inspection to corroborate the GS's testimony.\17\
For these reasons, the record created by the Government is insufficient
to establish by a preponderance of the evidence that Respondent failed
to provide the DIs with what Respondent characterized as his initial
inventory \18\ and dispensing logs during the July 9, 2014 inspection.
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\17\ The Government stated in its Exceptions that ``[t]he third
investigator had been reassigned to another DEA field office.'' ALJ
Ex. 24, at 4 n.4. However, nothing in the record explains why this
reassignment precluded the third DI from testifying at the hearing.
\18\ As discussed more fully infra, I also dismiss the
Government's first recordkeeping charge regarding Respondent's
initial inventory for legal reasons.
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And for the same reasons, I need not reach the credibility issue
raised by the ALJ and the Government in its Exceptions of whether the
GS's testimony was more credible than Respondent's testimony regarding
the paperwork that the DIs requested and received from Respondent
during the inspection. The ALJ found that the GS's testimony in this
context (and others) lacked credibility because the ALJ found the GS's
testimony in conflict with Respondent's testimony. R.D., at 3-4, 15
n.17, 17 n.20, 19 n.25, 21 n.28, 34. In its Exceptions, the Government
disagreed with the ALJ's credibility findings and stated that,
``[a]ssuming the DEA investigator's testimony is accepted over
Respondent's testimony, then it would be established that the initial
inventory, dispensing records, and missing DEA-222 form were not
provided to the investigators at the time of DEA's on-site visit and
therefore DEA's allegations in the Order to Show Cause would be
sustained.'' ALJ Ex. 24, at 2 n.3. However, and for the reasons already
noted, even assuming arguendo that the GS's testimony was credible, it
would be insufficient to establish by a preponderance of the evidence
that Respondent failed to provide the DIs with an initial inventory or
dispensing logs during their July 9, 2014 inspection.
Inspection of Moore Clinical Trials
Later the same say, after conducting their inspection of
Respondent's registered location, the DIs went to Moore Clinical
Trials. See Tr. 56. Although the GS and Respondent provide conflicting
testimony regarding why Respondent directed the DIs to Moore Clinical
Trials,\19\ the Government
[[Page 47360]]
offered the GS's testimony regarding the DIs visit there to establish
the Show Cause Order's allegation that Respondent had improperly
maintained his inventory or dispensing records at a location other than
his registered location. Upon arriving at Moore Clinical Trials, the
DIs spoke with Kianna Marshall, who was an assistant to Moore Clinical
Trials owner Greta Moore. Id. at 56-57. The GS testified that the DIs
asked Ms. Marshall for the inventory and dispensing log for the study
so DEA ``could complete an accountability audit. And Kianna gave us a
folder that had the dispensing records in it. However, she did not have
any inventory.'' Id. at 57; see GX 11.
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\19\ The GS testified that Respondent directed the DIs to Moore
Clinical Trials because that was where they could find records
related to the study. Tr. 478-79. This testimony is consistent with
Respondent's testimony that the DIs ``wanted my paperwork for the
study.'' Id. at 213. After this point, however, the clarity ends.
Respondent testified that the question of patient names and
addresses came up and that he therefore referred the DIs to Moore
Clinical Trials for paperwork more specifically related to patient
names and addresses (the Quintiles Study precluded Respondent from
knowing the patients' names). See id. at 279, 374. On rebuttal, the
GS testified that the DIs went to Moore Clinical Trials because
Respondent advised that he did not have in his office the records
related to the study that they cared about--i.e., an initial
inventory and dispensing records--at his registered location because
they were at Moore Clinical Trials. Id. at 56 (``Upon learning that
the dispensing records were at Moore Clinical Trials . . . [and
a]fter our onsite inspection completed at Dr. Nichols, we went
straight to Moore Clinical Trials . . . that same day . . . [T]he
purpose of going to Moore Clinical Trials'' was ``to obtain the
documents that Dr. Nichol told us was there, which would be
inventory and the dispensing records''); see also id. at 478. The GS
also rejected the notion that the DIs had any interest in the
patients' names and addresses because the inspection was focused on
drugs, not people. Id. at 478.
The ALJ rejected the GS's explanation and found Respondent's
``more credible'' because (1) the stated purpose of the inspection
was to ensure compliance with the MOA; (2) the inspection pursuant
to the MOA focused on recordkeeping, not drugs; (3) Respondent had
advised DEA by letter (to which DEA did not respond) in August 2012
that he could not provide patient names for a double blind study;
and (4) the ALJ accepted that Respondent provided the DIs with
Respondent's Exhibit U, which Respondent represented to be his
dispensing log. R.D., at 15 n.16.
Assuming that the purpose of the inspection was to determine
whether Respondent's recordkeeping was in compliance with the MOA,
the CSA, and DEA regulations, that purpose is consistent with the
GS's explanation that the DIs' focus was on drugs and not patient
names. The relevant recordkeeping requirements focus on tracking the
movement of controlled substances (inventory, dispensing logs, DEA
222 forms), not the identity of patients. Moreover, as already
noted, the more recent January 11, 2013 correspondence from DEA to
Respondent prior to the inspection asked when the Quintiles study
would commence and where the study drugs would be located (both of
which relate to MOA requirements) and not the identity or addresses
of Respondent's study patients. See RX R, at 3.
Most importantly, I need not reach the question of whether the
GS's explanation of why the DIs visited Moore Clinical Trials was
more or less credible than Respondent's because, as discussed more
fully infra, I reject the Government's charge that Respondent failed
to maintain his inventory and dispensing records at his registered
location.
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Respondent denied that he failed to maintain his inventory and
dispensing records in his office because he represented that he kept
them in his office and presented them to the DIs during the inspection.
See Tr. 278-79; RX U; RX V. As already noted, the GS did not recall
seeing (or saw but failed to recognize) the documents in Respondent's
office as his inventory or dispensing records (RX U and RX V), and it
is unclear what the other DIs understood because they did not testify.
Importantly, the fact that Ms. Marshall provided the DIs with documents
that she believed were responsive to the DIs' requests does not mean
that those documents were, in fact, Respondent's dispensing records nor
that Respondent intended to maintain his dispensing records at Moore
Clinical Trials. Accord R.D., at 19 n.25 (``there is no credible
evidence before me that [what Ms. Marshall provided to the DIs] is in
fact, the Respondent's dispensing records'').
Likewise, the fact that the GS believed that these documents could
qualify as Respondent's dispensing records, or that Ms. Marshall may
have advised the DIs that they were Respondent's dispensing records, is
not dispositive of whether they were, in fact, what Respondent
maintained as his dispensing records under the CSA and DEA's
regulations. Accord id. Instead, I agree with the ALJ that the records
provided by Ms. Marshall were more likely worksheets used as part of
the Quintiles study to reconcile differences between what the study
patients entered into their electronic monitors and the actual pill
count. Id. at 20. Although the worksheets include all of the data in
Respondent's dispensing log maintained in his office, the worksheets
contain additional information not included in Respondent's dispensing
log. Compare GX 11 with RX U.\20\
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\20\ For this reason, the Government's claim that it could not
complete an accountability audit at Respondent's registered address
is unavailing. The worksheets obtained from Moore Clinical Trials
included everything contained in the dispensing logs maintained in
Respondent's office, which was sufficient to complete the audit. See
Tr. 484. The GS testified that the DIs had difficulty using the
worksheets because ``[t]here are numerous cross-outs and circles and
initials and changing of dates . . . it's very hard to determine
what's coming in and what's going out.'' Tr. 59. However, the GS
conceded that having cross-outs or even confusing records does not
violate DEA regulations, and they ultimately did not preclude the
DIs from completing their audit. Id. at 69-70.
---------------------------------------------------------------------------
Neither the Government nor Respondent called Ms. Marshall as a
witness to establish what Respondent may have told her about
maintaining his dispensing records at Moore Clinical Trials or what she
believed she had provided to the DIs. Thus, I find that the Government
has provided insufficient evidence for me to find by a preponderance of
the evidence that Respondent, in fact, failed to maintain inventory and
dispensing records at his registered location.
Respondent's DEA 222 Forms
The GS testified that DEA 222 forms are three-part forms that DEA
registrants use to order controlled substances. See Tr. 38, 42.
Registrants request a book of DEA 222 forms in advance of ordering
controlled substances, and then DEA sends back a book of DEA 222
forms--each one preprinted with the registrant's name, DEA registration
number, the date he or she ordered the forms, and the schedules for
which he or she is authorized to prescribe. See id. at 43-44. These
forms have carbon paper in between each copy so three parties can each
get a copy. Id. at 38, 42. ``One is the purchaser's copy, one is the
supplier's copy, and the third copy goes to DEA once the order is
completed.'' Id. at 44-45. The GS testified that ``[Respondent] or his
representatives fills out the supplier name, the date, and the
requested drugs. And he tears off that first copy, the purchaser's
copy. He holds onto that. And then the second two copies, the DEA copy
and the supplier copy, get sent to the supplier.'' Id. at 45.
When Respondent is placing an order, he retains the copy that
states ``PURCHASER'S Copy 3.'' Id.; e.g., GX 9; RX S, at 5, 9-12, 16.
For example, the DEA 222 forms that Respondent provided to the DIs
during their inspection show that Fisher Clinical Services (FCS) was
the supplier of the drugs Respondent used in the study. Id. When
Respondent ``is shipping drugs back to his supplier, Fisher [Clinical]
Services,'' then his name would appear on the DEA 222 form as the
supplier, FCS would be the registrant, and Respondent would retain
``SUPPLIER'S Copy 1.'' Tr. 48-50; GX 10; RX S, at 13-14. When filling
out a supplier's copy, the supplier must fill out several fields on the
form, including the number of packages, the size of the packages, the
packages shipped, and the date when they were shipped. Tr. 50; GX 10;
RX S, at 13-14.
Respondent's Annotation of DEA 222 Forms
In this case, Respondent provided DEA with two DEA 222 forms in
which he was the ``supplier'' and FCS was the registrant because he was
returning unused drugs from the clinical trial back to FCS. Tr. 48-50,
253-54; see also GX 10; RX S, at 13-14. FCS had provided Respondent
with a packing list that included instructions on how to fill out the
DEA 222 forms as the supplier, including instructions that he should
enter the number of kits shipped and the date shipped. RX S, at 15; Tr.
376-77. However, Respondent left the ``Packages Shipped'' and ``Date
Shipped'' boxes next to the identified kits blank in both DEA 222 forms
in which Respondent was the supplier. RX S, at 15; Tr. 50. As a result,
the GS testified that when these boxes are left blank, DEA ``do[es] not
know if th[e kits are] indeed what Dr. Nichol shipped back.'' Tr. 50.
This negatively impacts DEA's ability to conduct an audit of a
registrant, according to the GS, ``because the DEA 222 order form is a
primary record . . . as far as auditing purposes, these are the only
documents we are supposed to look at.'' Id. at 51.
In his testimony, Respondent admitted that he failed to properly
annotate the ``Packages Shipped'' and Date Shipped'' boxes:
Q . . . Now, as you're sitting here today, do you realize that
you completed this [first 222] form that you left off a date and the
packets that were shipped back?
A Yes sir, I did. . . .
Q . . . So at least what [the GS] said about the return of this
222 form, that was correct, what she said; is that right?
[[Page 47361]]
A Yes. . . . I did not fill out the date and I did not fill out
the package quantity.
Tr. 256-57; see also id. at 258 (``Q Okay. And again you made the same
clerical error on that [second 222] form? A I did.''). Accordingly, I
find that Respondent failed to properly annotate two DEA 222 supplier's
copy forms set forth in Government's Exhibit 10 because he failed to
complete the ``Packaged Shipped'' and Date Shipped'' entries. GX 10; RX
S, at 13-14.\21\
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\21\ During the hearing, the GS also testified to recordkeeping
errors made by Respondent in filling out the purchaser's copies of
the DEA 222 forms. See, e.g., Tr. 47-48 (Respondent improperly used
three lines to order one drug when ``[t]he regulations state that
when you are ordering a drug, it's one drug per line''). She stated
that Respondent's failure to accurately complete the initial DEA 222
forms caused accountability errors in the audit. Id. at 488. The
Government did not, however, allege these errors in its Show Cause
Order or Prehearing Statements. Thus, I agree with the ALJ's
recommendation not to consider this evidence in determining the
sanction in this case. R.D., at 3 n.2.
---------------------------------------------------------------------------
Respondent's Allegedly Missing DEA 222 Form
In its Show Cause Order, the Government alleged that Respondent
failed during the onsite inspection to provide a January 16, 2014 DEA
222 form.\22\ ALJ Ex. 1, at 3. On the first day of the hearing, the GS
testified that Respondent ``produced for . . . inspection'' ``five DEA
222 order forms for purchase'' and ``two DEA order forms for returns
back to the supplier,'' and that Government Exhibits 9 and 10 included
copies of these seven forms. See Tr. 39, 40-41, 52, 56 (``the only
thing we received were a grand total of seven completed DEA form
222s''); GXs 9-10. These exhibits did not include Respondent's
purchaser's copy of the January 16, 2014 DEA 222 form. In addition, the
GS testified that they did not ask Respondent why there were only five
purchaser DEA 222 forms and not six such forms--even though the DIs
knew that Respondent had made six orders of controlled substances when
they arrived for the onsite inspection. Tr. 76, 505-06. Respondent
testified that, had the DIs advised him that he was missing any
records, he would have endeavored to find and to provide them to the
DIs. Id. at 236.
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\22\ As noted supra in footnote 2, the Show Cause Order
erroneously referenced an August 28, 2013 DEA 222 form. The
Government corrected the date of the allegedly missing DEA 222 form
to January 16, 2014 in its May 12, 2016 Prehearing Statement and
during Government counsel's Opening Statement at the administrative
hearing. See ALJ Ex. 7, at 8; Tr. 15. I further note that January
16, 2014 represents the shipping date, not the January 13, 2014 date
on which Respondent actually ordered the controlled substances. See
GX 13, at 1; RX S, at 16.
---------------------------------------------------------------------------
Although her testimony was not always clear on this subject, the GS
ultimately testified on rebuttal that Respondent (or someone in his
office) ``presented'' to the DIs ``a folder with all of the 222s.'' Tr.
507; see also id. at 290-91 (Respondent testified that ``[t]he DEA 222s
were kept in a hanging file folder in a safe next to my office--or in
my office in a safe next to my desk. . . . [Respondent] provide[d] that
folder to the DEA investigators on the date of the onsite
inspection.''). Also during rebuttal, the GS acknowledged that
Respondent had provided a folder to the DIs that not only included
completed DEA 222 forms reflected in Government Exhibits 9 and 10 but
also included ``voided and unused DEA 222s.'' Id. at 475. The GS stated
that she was uninterested in the ``voided out and unused DEA 222s'' and
therefore only obtained ``copies of the [completed] 222 order forms
that were within our audit'' period. Id.
Respondent introduced Respondent's Exhibit S, which the ALJ
accepted into evidence as the contents of the entire folder of DEA 222
forms (22 pages) that Respondent provided to the DIs during the onsite
inspection. See Tr. 214-15; RX S. The exhibit included unused, voided,
and completed DEA 222 forms (both Purchaser's Copies and Supplier's
Copies) as well as a completed DEA 222 form from a previous drug study.
Tr. 261, 475; RX S. Most significantly, Respondent's exhibit included a
copy of the allegedly missing DEA 222 form related to the January 16,
2014 controlled substances shipment to Respondent. RX S, at 16. The GS
did not recall seeing that form, and Respondent did not recall to which
DI he gave the folder. Tr. 291 (``Q Do you [Respondent] remember which
agent you gave these to? A ``I do not.''); id. at 475.
After the pending Show Cause Order was served on Respondent,
Respondent telephoned Mathilda Buchanan, an Arkansas-licensed private
investigator with whom Respondent had worked since 2006. Tr. 262, 417.
Respondent provided the same folder of DEA 222 forms (Respondent's
Exhibit S) to Ms. Buchanan that he had provided to the DIs. See id. at
262. When Ms. Buchanan examined the contents of the folder, she
testified that she discovered that the allegedly missing purchaser's
copy of January 2014 DEA 222 form was in fact within the folder but
stuck between unused DEA 222 forms. Id. at 452-53, 462; RX S, at 16.
Moreover, the DEA 222 form that Ms. Buchanan found was a purchaser's
copy for an order of controlled substances dated January 13, 2014,
which corresponded to the January 16, 2014 shipment of controlled
substances to Respondent reflected on the supplier's copy submitted
into evidence by the Government. See Tr. 260; GX 13, at 1; RX S, at 16.
The ALJ recommended that I make the fact finding that the January
16, 2014 DEA 222 form ``was available to the DEA investigators during
the inspection'' and that ``[i]t is highly probable that the alleged
missing 222 Form was caught up in the carbon copies of the other 222
Forms contained in the folder where the Respondent kept his records.''
R.D., at 22, 34. In other words, the ALJ believed that the DIs simply
overlooked the January 16, 2014 DEA 222 form during the onsite
inspection. Id. at 34. I agree, and I find that it is more likely than
not that the purchaser's copy of the January 2014 DEA 222 form was
indeed in Respondent's folder of DEA 222 forms on the date of the
onsite inspection.\23\
---------------------------------------------------------------------------
\23\ For the same reason, I again need not reach the question of
the GS's credibility regarding the allegedly missing DEA 222 form
raised by the ALJ in his Recommended Decision and the Government in
its Exceptions. R.D., at 34; ALJ Ex. 24, at 2 n.3, 5. Specifically,
because I find (as did the ALJ) that the DIs overlooked the DEA 222
form in question, the GS could credibly testify that she did not see
the form during the onsite inspection. Likewise, Ms. Buchanan could
credibly testify that her (apparently more thorough) review of the
folder of DEA 222 forms did uncover the allegedly missing form.
Accordingly, I find that there is no credibility issue regarding the
allegedly missing DEA 222 form because it is more likely than not
that the testimony of both witnesses is accurate.
---------------------------------------------------------------------------
The December 2014 Meeting
In December 2014, the lead DI contacted Respondent to set up a
meeting with him. Tr. 237. This was the first time the DIs had
contacted Respondent since the July 9, 2014 onsite inspection. See id.
On December 16, 2014, two DIs--the GS and the lead DI--met with
Respondent and Ms. Buchanan ``to report on the July 9, 2014
inspection.'' ALJ Ex. 9, at 3; Tr. 481. During the meeting, the DIs
advised Respondent that his ``inventory was off.'' Tr. 237. Respondent
stated that he offered to compare his inventory with DEA's inventory,
but the DIs refused. Id. at 238, 437, 507-08. The DIs also discussed
the accuracy of Respondent's dispensing records and that Respondent had
failed to provide the DIs with sufficient information to complete a
proper audit, which in turn required the DIs to go to Moore Clinical
Trials to supplement the information. Id. at 439, 461. The DIs did not
ask Respondent for any records during the meeting. Id. at 500.
On December 19, 2014, Respondent's attorney wrote a letter to the
lead DI and to the GS on behalf of Respondent in response to the
December 16, 2014
[[Page 47362]]
meeting. RX X. The letter memorialized Respondent's understanding that
DEA's ``audit was not available to us'' and asked for ``written
documentation of specific points you think are lacking so we can do
better.'' Id. The letter also stated that records related to the
identification of patients ``must be kept at Moore Clinical Trials and
are separate from the records at Dr. Nichol's office which only contain
the patients' identifying numbers.'' Id. Respondent never received a
reply to his attorney's letter, and the Government filed its Show Cause
Order on March 14, 2016. Tr. 443; ALJ Ex. 1.
Discussion
Under the Controlled Substances Act (``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 [its] registration under section
823 of this title inconsistent with the public interest as determined
under such section.'' 21 U.S.C. 824(a)(4). In the case of a physician,
who is deemed to be a practitioner, see id. Sec. 802(21), Congress
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. Sec. 823(f).
``[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'' an
application for registration should be denied. 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.\24\
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\24\ 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. 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, findings under a single factor can support the
revocation or suspension of a registration. MacKay, 664 F.3d at 821.
---------------------------------------------------------------------------
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, I have considered all
of the factors and concluded that the Government's evidence with
respect to Factors Two and Four support the conclusion that Respondent
has committed acts which render his ``registration inconsistent with
the public interest.'' 21 U.S.C. 823(f), 824(a)(4). While I agree with
the ALJ's conclusion that a sanction is appropriate, I find that the
record supports a stronger sanction than what the ALJ recommended.
Factor One--The Recommendation of the State Licensing Authority
The Government sought to revoke Respondent's DEA registration based
on Factors Two, Four, and Five. However, the ALJ considered Factor One
as well in his Recommendation. R.D., at 27. I agree with the ALJ's
finding that the ASMB has not made a recommendation to the Agency
regarding whether Respondent's DEA registration should be suspended or
revoked in this case. See id. The record only shows that the ASMB
suspended Respondent's state medical license for six months based on
his pre-signing of controlled substance prescriptions, which his staff
(who were not licensed to prescribe controlled substances) issued to
patients outside Respondent's presence and without consulting him. The
ALJ noted that the ASMB reinstated Respondent's medical license after
six months and stated that ``[t]he reinstatement of the Respondent's
medical license can be interpreted as a recommendation of the ASMB''
under Factor One. R.D., at 27 (citing Tyson D. Quy, M.D., 78 FR 47412,
47417 (2013); Vincent J. Scolaro, D.O., 67 FR 42060, 42064-65 (2002)).
As a result, the ALJ recommended that I find that ``the ASMB's
reinstatement of the Respondent's medical license only weighs slightly
in favor of not revoking the Respondent's registration.'' R.D., at 28.
To be sure, the Agency's case law contains some older decisions
which can be read as giving more than nominal weight in the public
interest determination to a State Board's decision (not involving a
recommendation to DEA) either restoring or maintaining a practitioner's
state authority to dispense controlled substances. See, e.g., Gregory
D. Owens, 67 FR 50461, 50463 (2002) (expressing agreement with ALJ's
conclusion that the Board's placing dentist on probation instead of
suspending or limiting his controlled substance authority ``reflects
favorably upon [his] retaining his . . . [r]egistration, and upon DEA's
granting of [his] pending renewal application''); Scolaro, 67 FR at
42065 (concurring with ALJ's ``conclusion that'' state board's
reinstatement of medical license ``with restrictions'' established that
``[b]oard implicitly agrees that the [r]espondent is ready to maintain
a DEA registration upon the terms set forth in'' its order). However,
these cases cannot be squared with the Agency's longstanding holding
that ``[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.'' Garrett Howard Smith,
M.D., 83 FR 18882, 18904 n.30 (2018) (quoting Mortimer Levin, 57 FR
8680, 8681 (1992)); Lon F. Alexander, M.D., 82 FR 49704, 49724 n.42
(2017) (same). Indeed, neither Owens nor Scolaro even acknowledged the
existence of Levin, let alone attempted to reconcile the weight it gave
the state board's action with Levin. Smith, 83 FR at 18904 n.30;
Alexander, 82 FR at 49724 n.42.
While in other cases, the Agency has given some weight to a Board's
action in allowing a practitioner to retain his state authority even in
the absence of an express recommendation, see Quy, 78 FR at 47417, the
Agency has repeatedly held that a practitioner's retention of his or
her state authority is not dispositive of the public interest inquiry.
See, e.g., Smith, 83 FR at 18904 n.30; Alexander, 82 FR at 49724 n.42;
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)). Accordingly, I find that the ASMB's
reinstatement of Respondent's state license is not dispositive of the
public
[[Page 47363]]
interest inquiry in this case, and I give it no weight.\25\
---------------------------------------------------------------------------
\25\ As to Factor Three, there is no evidence that Respondent
has been convicted of an offense under either federal or Arkansas
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 at 822.
The Agency has therefore held that ``the absence of such a
conviction is of considerably less consequence in the public
interest inquiry'' and is therefore not dispositive. Id.
---------------------------------------------------------------------------
Factors Two and Four--The Respondent's Experience in Dispensing
Controlled Substances, or Conducting Research With Respect to
Controlled Substances, and Compliance With Applicable Laws Related to
Controlled Substances
Pre-Signed Prescriptions Allegation
The Show Cause Order's first charge alleged that Respondent's pre-
signing of prescriptions for controlled substances violated 21 CFR
1306.05(a). Under the CSA, it is ``unlawful for any person [to]
knowingly or intentionally . . . manufacture, distribute, or
dispense,\26\ or possess with intent to manufacture, distribute, or
dispense, a controlled substance'' ``[e]xcept as authorized by'' the
Act. 21 U.S.C. 841(a)(1). According to the CSA's implementing
regulations, ``[a]ll prescriptions for controlled substances shall be
dated as of, and signed on, the day when issued and shall bear the full
name and address of the patient, the drug name, strength, dosage form,
quantity prescribed, directions for use, and the name, address and
registration number of the practitioner.'' 21 CFR 1306.05(a).
---------------------------------------------------------------------------
\26\ ``The term `dispense' means to deliver a controlled
substance to an ultimate user or research subject by, or pursuant to
the lawful order of, a practitioner, including the prescribing . . .
of a controlled substance.'' 21 U.S.C. 802(10).
---------------------------------------------------------------------------
The Agency has long held that pre-signing prescriptions violates
the CSA and 21 CFR 1306.05(a). Arvinder Singh, M.D., 81 FR 8247, 8248
(2016); Alvin Darby, M.D., 75 FR 26993, 26999 (2010) (``DEA has long
interpreted the CSA as prohibiting the pre-signing of
prescriptions.''); Jayam Krishna-Iyer, M.D., 71 FR 52148, 52158, 52159
n.9 (2006) (``Respondent further violated federal law and DEA
regulations by giving [his nurse] pre-signed prescriptions and allowing
him to issue them to a patient [Respondent] had not attended to. . . .
[T]his conduct of Respondent violated 21 CFR 1306.05(a)''), vacated on
other grounds, 249 Fed. Appx. 159 (11th Cir. 2007); Leslie, 68 FR at
15230-31; James Beale, 53 FR 15149, 15150 (1988) (``It is a violation
of 21 CFR 1306.05(a) to pre-sign prescriptions for controlled
substances.''). Most importantly, the Agency has held that pre-signing
prescriptions ``would be inconsistent with the public interest'' under
the CSA because such conduct ``create[s] a substantial risk that the
drugs would be diverted and abused.'' Singh, 81 FR at 8248, 8249.
As noted earlier, it is undisputed that on August 17, 2016, the
ASMB issued a final order suspending Respondent's medical license for
six months because he pre-signed prescriptions for controlled
substances. During the ASMB hearing leading up to its final order,
Respondent admitted in testimony that he pre-signed prescriptions in
which he failed to write the name of the patient on the prescription,
the substance prescribed, and instructions for taking the medication.
In addition, Respondent admitted during the ASMB hearing that he
permitted his office personnel, who were not licensed as physicians nor
authorized to prescribe medications under Arkansas law, to fill in the
blanks on the prescription pad and distribute them to patients without
Respondent being present.
Thus, I agree with the ALJ's recommendation that I find (and I do
so find) that Respondent's pre-signing of prescriptions violated 21 CFR
1306.05(a). I also find that this conduct constituted a serious
violation of the CSA and created a substantial risk that the drugs
would be diverted and abused. Krishna-Iyer, 71 FR at 52159; Singh, 81
FR at 8249. I further find that Respondent violated federal law by
giving the pre-signed prescription forms to office personnel who lacked
the authority to lawfully prescribe controlled substances under federal
or state law. See 21 CFR 1306.03(a); see also Krishna-Iyer, 71 FR at
52159. Accordingly, the Government's first charge of pre-signing
prescriptions is sustained and supports a finding that Respondent's
continued registration would be inconsistent with the public interest.
Recordkeeping Allegations
The Show Cause Order sets forth five recordkeeping charges based on
DEA's July 4, 2014 on-site inspection of Respondent's registered
location. ``Recordkeeping is one of the CSA's central features; a
registrant's accurate and diligent adherence to this obligation is
absolutely essential to protect against the diversion of controlled
substances.'' Paul H. Volkman, 73 FR 30630, 30644 (2008). As the Agency
recently held:
[T]he CSA and DEA regulations require that a registrant take an
actual physical count of the controlled substances on hand, and an
accurate actual count, as memorialized in either an initial or
biennial inventory[. This] is essential in conducting an accurate
audit. Likewise, an accurate audit is essential in determining
whether a registrant is maintaining complete and accurate records of
both the controlled substances he receives and those he ``deliver[s]
or otherwise dispose[s] of.'' 21 U.S.C. 827(a)(3). . . .
[G]enerally, it is diversion that results in recordkeeping
irregularities and not the other way around.
Peter F. Kelly, D.P.M., 82 FR 28676, 28692 n.41 (2017), pet. for rev.
denied, Kelly v. DEA, No. 17-1175, 2018 WL 3198774 (D.C. Cir. May 18,
2018).
The Show Cause Order's first recordkeeping charge alleged that
Respondent failed to maintain an initial inventory of all controlled
substances ``in violation of 21 U.S.C. 827(a)(3) & 842(a)(5) and 21 CFR
1304.11(b).'' ALJ Ex. 1, at 2. As a threshold matter, the ALJ correctly
noted ``that it appears that the Government made an error because Sec.
827(a)(3) requires a registrant to maintain a dispensing record'' and
not an initial inventory as Sec. 827(a)(1) requires. See R.D., at 31
n.34. The ALJ also noted accurately that the ``Government, however,
also correctly cites to 21 CFR 1304.11(b).'' Id. Section 1304.11(b)
states that ``[e]very person required to keep records shall take an
inventory of all stocks of controlled substances on hand on the date
he/she first engages in the manufacture, distribution, or dispensing of
controlled substances.'' Thus, I agree with the ALJ that the Government
intended to charge Respondent with failing to maintain an initial
inventory, despite its reference to Sec. 827(a)(3) instead of Sec.
827(a)(1), and I further find that Respondent had adequate notice of
this charge.
Most importantly, the CSA and DEA's regulations only require a
practitioner like Respondent to maintain an initial inventory when he
``first engages in . . . dispensing controlled substances.'' 21 CFR
1304.11(b); 21 U.S.C. 827(a)(1). ``After 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''--that is, a
``biennial inventory.'' 21 CFR 1304.11(c); accord 21 U.S.C. 827(a)(1).
Thus, the CSA and DEA's regulations only required Respondent to
maintain an initial inventory when Respondent first engaged in
dispensing controlled substances after obtaining his DEA registration,
even if the initial inventory was zero when Respondent ``commence[d]
business.'' 21 CFR 1304.11(b). After that, the CSA and DEA regulations
required Respondent to
[[Page 47364]]
maintain a biennial inventory. 21 U.S.C. 827(a)(1); 21 CFR 1304.11(c).
Here, the Government's first recordkeeping charge cannot be
sustained as a matter of law because Respondent was not legally
required to maintain an initial inventory as of the date of the alleged
violation--i.e., at the time of the July 9, 2014 inspection. It is
undisputed that Respondent was dispensing controlled substances at
least as far back as 2006 under his current DEA registration, and that
Respondent has maintained, and timely renewed, his DEA registration
ever since.
Although the CSA and DEA regulations required Respondent to
maintain an initial inventory when he first commenced the business of
dispensing controlled substances under his current DEA registration for
two years, he was only required to maintain a biennial inventory
thereafter. Yet the Government's first recordkeeping charge centers on
whether Respondent maintained an initial inventory when he ordered
controlled substances in December 2012, not on when Respondent first
``commence[d the] business'' of dispensing controlled substances under
his current DEA registration. Thus, even if Respondent began dispensing
controlled substances for the first time as late as 2006--the earliest
dispensing activity under Respondent's current DEA registration
reflected in the record--he had no legal obligation to maintain an
initial inventory beyond 2008. Instead, as already noted, he was
legally obligated to maintain a biennial inventory thereafter. However,
the Government did not charge Respondent with failing to maintain an
accurate biennial inventory in December 2012 or at the time of the July
2014 inspection. Accordingly, I do not sustain the Government's first
recordkeeping charge.\27\
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\27\ In any event, as noted supra, I found that the Government
failed to establish by a preponderance of the evidence that
Respondent failed to provide the DIs with an inventory consistent
with the CSA and DEA's regulations during the July 9, 2014 onsite
inspection.
---------------------------------------------------------------------------
The Government's second recordkeeping charge alleged that
Respondent failed to provide dispensing records to the DIs during the
July 9, 2014 inspection. Both the CSA and DEA regulations require
registrants to ``maintain, on a current basis, a complete and accurate
record of each substance manufactured, received, sold . . . or
otherwise disposed of by him.'' 21 U.S.C. 827(a)(3); 21 CFR 1304.21(a).
As found above, supra, the Government failed to establish by a
preponderance of the evidence that Respondent failed to provide the DIs
with the relevant dispensing logs during the inspection. Furthermore, I
agree with the ALJ's recommended finding (and I so find) that the
dispensing log that Respondent testified that he provided to the DIs
(RX U) was sufficient to rebut the Government's allegation that he
failed to maintain complete and accurate dispensing records in
violation of 21 U.S.C. 827(a)(3), 842(a)(5) and 21 CFR 1304.21(a). See
R.D., at 32-33. Thus, I do not sustain the Government's second
recordkeeping charge.
For related reasons, I cannot sustain the Government's fifth
recordkeeping charge that Respondent failed to maintain his inventory
and dispensing records at his registered location and maintained them
instead at Moore Clinical Trials. The CSA requires that registrants
maintain ``[a] separate registration . . . at each principal place of
business or professional practice where the applicant . . . dispenses
controlled substances.'' 21 U.S.C. 822(e). ``In short, the requirements
that a practitioner be registered at each principal place of
professional practice where he dispenses controlled substances . . .
[is one] of the fundamental features of the closed regulatory system
created by the CSA.'' Moore Clinical Trials, 79 FR at 40155.
However, as found above, the Government has provided insufficient
evidence for me to find by a preponderance of the evidence that
Respondent, in fact, (1) maintained his dispensing records at Moore
Clinical Trials and (2) failed to maintain inventory and dispensing
records at his registered location.\28\ See supra. Thus, I agree with
the ALJ's recommendation that I find (and I do so find) that the
Government failed to sustain the fifth recordkeeping charge. See R.D.,
at 36.
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\28\ The Government also alleged in its fifth recordkeeping
charge that Respondent's inventory and dispensing records were not
``readily retrievable'' pursuant to 21 CFR 1304.04. Section
1304.04(g) requires registered individual practitioners like
Respondent to keep ``records of controlled substances in the manner
prescribed in paragraph (f) of this section.'' Section 1304.04(f),
in turn, requires that ``records of controlled substances listed in
Schedules III, IV, and V shall be maintained either separately from
all other records of the registrant or in such form that the
information required is readily retrievable from the ordinary
business records of the registrant.'' Here, the controlled substance
used during the Quintiles study was oxycodone, a Schedule II
controlled substance. 21 CFR 1308.12(b)(1)(xiii).
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The Government's third recordkeeping charge alleged that Respondent
failed to provide a January 2014 DEA 222 form during the inspection.
DEA regulation 21 CFR 1305.17(a) requires the purchaser of controlled
substances to ``retain Copy 3 of each executed DEA Form 222 and all
copies of unaccepted or defective forms with each statement attached.''
See also 21 CFR 1304.04(a) (requiring registrants to keep dispensing
records and every inventory for at least two years). However, here too,
I have already found that the Government's evidence is insufficient to
support this charge. Specifically, I found supra that it is more likely
than not that the purchaser's copy of the allegedly missing January
2014 DEA 222 form was, in fact, within Respondent's folder of DEA 222
forms that he presented to the DIs on the date of the onsite
inspection. Thus, I do not sustain the Government's third recordkeeping
charge.
The Government's remaining (fourth) recordkeeping charge alleged
that Respondent failed to properly annotate two DEA-222 order forms
(dated August 15, 2013 and June 24, 2014) in violation of 21 U.S.C.
842(a)(5) and 21 CFR 1305.13(b). The DEA 222 forms at issue in the
fourth recordkeeping charge were suppliers' copies, and DEA regulations
require suppliers to ``record on Copies 1 and 2 [of the DEA 222 form]
the number of commercial or bulk containers furnished on each item and
the date on which the containers are shipped to the purchaser.'' 21 CFR
1305.13(b). Here, as already noted, Respondent admitted that he failed
to properly annotate on both forms (1) the date when he shipped
controlled substances back to FCS and (2) the amount shipped.
Accordingly, I find that the Government sustained its fourth
recordkeeping charge that Respondent failed to properly annotate two
DEA 222 supplier's copy forms pursuant to 21 U.S.C. 842(a)(5) and 21
CFR 1305.13(b). These violations support a finding that Respondent's
continued registration would be inconsistent with the public interest
under Factors Two and Four.
Factor Five--Other Conduct Which May Threaten the Public Health and
Safety
The Government argues that Respondent engaged in ``other conduct''
actionable under Factor Five because he violated the MOA.\29\ Under the
fifth
[[Page 47365]]
public interest factor, the Agency considers ``[s]uch other conduct
which may threaten the public health and safety.'' 21 U.S.C. 823(f)(5).
The Agency has clarified that Congress' use of the word ``may'' in
Factor Five means that it intended the Agency to consider conduct which
creates a probable or possible (and not necessarily an actual) threat
to public health and safety. Mark P. Koch, D.O., 79 FR 18714, 18735
(2014) (collecting cases); ChipRX, L.L.C., d/b/a City Center Pharmacy,
82 FR 51433, 51438 n.10 (2017) (``Factor Five does not require that the
Government prove an actual threat to public health or safety''). Thus,
the Government is not required to establish that a specific violation
of the MOA by Respondent created an actual threat to the health and
safety of the public under Factor Five.
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\29\ The Government also argued that Respondent's alleged
violations of the MOA should be considered under Factor 2. ALJ Ex.
20, at 19. In addition, the Agency has held that ``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.'' Roberto Zayas, M.D., 82 FR
21410, 21422 n.26 (2017). To the extent that I have already
addressed Respondent's alleged recordkeeping violations under
Factors Two and Four, I will not consider them again under Factor
Five because they would not then constitute ``other conduct'' under
Factor Five. See id. at 21427 n.40. However, I will consider whether
the proved recordkeeping violations already discussed are sufficient
evidence to establish a violation of the MOA under Factor Five.
---------------------------------------------------------------------------
DEA has long held that a registrant's failure to comply with the
terms of an MOA can constitute acts which render his registration
inconsistent with the public interest. Erwin E. Feldman, D.O., 76 FR
16835, 16838 (2011) (revoking practitioner's registration under Factors
Two and Five for violating MOA) (internal citation omitted); cf. Fredal
Pharmacy, 55 FR 53592, 53593 (1990) (revoking pharmacy's registration
for violations of its MOA ``which threatens the public health and
safety''). This is so even if the violation of the MOA does not
establish a violation of the CSA or its implementing regulations.
Feldman, 76 FR at 16838. In its Proposed Findings of Fact and
Conclusions of Law, the Government argued that this case is similar to
OTC Distribution Company, where the Agency revoked the registration of
a distributor for ``its inability or unwillingness to fully comply with
its recordkeeping and report obligations under the MOA.'' ALJ Ex. 20 at
20-21 (quoting OTC Distribution Company, 68 FR 70538, 70542 (2003)).
The Government further argued that, ``[a]s in OTC, the Respondent here
has demonstrated, over a period of years, an unwillingness or inability
to follow DEA's recordkeeping requirements even after being placed
under an MOA with strict monitoring requirements.'' ALJ Ex. 20 at
21.\30\
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\30\ In his Recommendation, the ALJ disagreed with the
Government's characterization of Respondent's past recordkeeping
conduct because ``the Respondent does not have a history of failing
to keep the required records.'' R.D., at 39. However, as discussed
more fully infra, Respondent's history of recordkeeping violations
is already documented in published Agency precedent. See, e.g.,
Moore Clinical Trials, 79 FR at 40151, 40155.
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Indeed, the history of Respondent's recordkeeping violations (and
other violations) directly led to the MOA that attempted to resolve
them. As I already noted supra, the GS testified that DEA first became
aware of Respondent as part of its 2011 investigation of his
recordkeeping (and other) violations regarding the earlier NKRT-118
study he conducted with Moore Clinical Trials. Tr. 28-29. This 2011
investigation not only led to the 2011 Show Cause Order against
Respondent; it also led to a separate 2011 Show Cause Order against
Moore Clinical Trials. However, unlike Respondent, who resolved the
Show Cause Order against him by entering into an MOA, the Order against
Moore Clinical Trials resulted in a final published order. Moore
Clinical Trials, L.L.C., 79 FR 40145 (2014).
Most importantly, in Moore Clinical Trials, the Agency found that
Respondent committed recordkeeping and other violations related to the
NKRT-118 study that correspond to the terms of the MOA. For example,
the Agency noted the ALJ's findings that Respondent's ``documents''
``were deficient and that the order forms for Schedule II controlled
substances (DEA-222) were lacking'' in connection with the NKRT-118
study. Id. at 40147 (internal quotations omitted). The Agency also
noted the ALJ's finding that Respondent had improperly transported
controlled substances to Moore Clinical Trials' location where he was
not registered to dispense them in connection with that study. Id. The
then-Administrator also found that Respondent's DEA 222 forms related
to the NKRT-118 study did not properly indicate the date the drugs were
received and the quantity received. Id. at 40151, 40156. The then-
Administrator concluded that ``the record clearly establishes that Dr.
Nichol violated both the separate registration provision and DEA
recordkeeping requirements.'' Id. at 40155. The DEA therefore entered
into the MOA (which expressly referenced the NKRT-118 study) with
Respondent as an intermediary step to get Respondent into compliance
and to address Respondent's recordkeeping and separate registration
violations related to the NKRT-118 study described and found by the
Agency in Moore Clinical Trials.\31\
---------------------------------------------------------------------------
\31\ See supra footnote 12.
---------------------------------------------------------------------------
Respondent agreed to meet the following seven conditions set forth
in the MOA:
(1) Abide by all Federal, State and local statutes and
regulations relating to controlled substances.
(2) Make and keep (and make available for inspection) records of
all controlled substances that he prescribes, dispenses, and
administers at his registered location pursuant to 21 CFR 1306.05(a)
and 1304.21.
(3) Make and keep a legible log of all Schedule II-V controlled
substances that he prescribed and provide that to DEA on a quarterly
basis for three years.
(4) Retain his prescribing, administering and dispensing records
at his registered location.
(5) Notify DEA if he will prescribe, dispense, or administer
controlled substances at any location other than his registered
location or the Springhill Surgery Center where he routinely
administers drugs during a scheduled medical procedure.
(6) Order, receive, administer, and dispense controlled
substances only at his registered location.
(7) Notify DEA in advance of commencing any drug study involving
controlled substances additional to the NKTR-118 study.
GX 7, at 2-4. It is undisputed that Respondent did not violate the
MOA's third and fifth conditions. See Tr. 92, 93, 117-19.
The Government argued that the same five alleged recordkeeping
violations also violated the MOA's first, second, fourth, and sixth
conditions.\32\ See R.D.,
[[Page 47366]]
at 40; Tr. 91-93, 178-79. I discussed all of the recordkeeping
allegations in my analysis of Factors Two and Four, wherein I concluded
that the Government proved only one recordkeeping violation by a
preponderance of the evidence--Respondent's failure to properly
annotate two supplier DEA 222 forms. With respect to Factor Five, I
also find that these two recordkeeping failures violated the MOA's
first condition that Respondent abide by all Federal regulations
because (as already noted) failing to properly annotate a supplier's
DEA 222 form violates 21 CFR 1305.13(b). Thus, I agree with the ALJ's
recommendation that I find (and I do find) that Respondent violated the
MOA based on his failure to properly annotate two supplier DEA 222
forms. R.D., at 40.
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\32\ During the hearing, the Government alleged that Respondent
violated the MOA's seventh condition for failing to notify DEA in
advance of commencing the Quintiles Study set forth in the CTA. See
Tr. 93-94, 119-21, 181-82; GX 7, at 3 (``if [Respondent] is asked to
participate in additional drug studies involving controlled
substances, he will notify DEA in advance of commencing the
study''). Although the ALJ questioned whether the Government had
provided sufficient notice to Respondent that the Government would
rely on a violation of this MOA condition, the ALJ proceeded to
analyze the issue and recommended that I find that Respondent did
not violate this MOA condition. See R.D., at 10 n.11.
I agree (and I do so find) that Respondent did not violate this
MOA condition for the following reasons. Although the GS testified
that ``[i]n DEA's mind'' the study commenced when Respondent placed
his first order for controlled substances related to the study on
December 3, 2012 (Tr. 93-94, 121), the Government has identified no
provision of the CSA, DEA's regulations or Agency precedent
supporting this statement. Moreover, the MOA did not define what
constituted ``commencing the study.'' Absent additional evidence of
the parties' intent when entering into the MOA, I find that the
Quintiles Study commenced when Respondent first dispensed controlled
substances. If, hypothetically, Respondent had ordered and received
controlled substances for the Quintiles Study, enrolled study
patients for it, but never ultimately dispensed the controlled
substances to the enrolled study patients, then the study still
would not have commenced.
Here, on December 31, 2012, Respondent notified the GS (by
letter from his attorney) that he was participating in the study. As
noted supra, I found that Respondent began enrolling patients for
the Quintiles study in January 2013, and that he first dispensed
controlled substances to study patients on February 18, 2013. Thus,
I find that Respondent did not violate the MOA's seventh condition
because he notified DEA that he was asked to participate in the
Quintiles Study on December 31, 2012, in advance of commencing the
study on February 18, 2013.
---------------------------------------------------------------------------
I also agree with the ALJ's recommendation that the analysis of
whether the MOA violation was sufficient to establish a violation of
Factor Five does not stop here. Under the MOA, Respondent agreed that
``any violations of the Agreement may result in the initiation of
proceedings to revoke or immediately suspend and revoke his DEA
Certificate of Registration.'' GX 7, at 3. However, DEA agreed that it
would ``not seek to revoke Dr. Nichol's DEA registration . . . unless
Dr. Nichol substantially violates this Agreement or unless [he] commits
additional acts that constitute grounds under 21 U.S.C. 823(f) and
824(a).'' Id. at 3-4 (emphasis added). In other words, DEA agreed not
to seek to revoke Respondent's DEA registration unless he
``substantially violates'' the MOA. Here, I agree with the ALJ's
recommendation that I find (and I do find) that Respondent's failure to
properly complete two supplier DEA 222 forms alone is insufficient to
establish that Respondent ``substantially violate[d]'' the MOA. R.D.,
at 40 (``I find that the violation of the 2012 MOA, of improperly
completing the two supplier 222 Forms, standing along is not a
significant violation of the 2012 MOA itself.'') (emphasis in
original). Accordingly, I find that Respondent's non-substantial
violation of the MOA nominally supports a finding that Respondent's
continued registration would be inconsistent with the public interest
under Factor Five.
Having considered all the factors above, I hold that the Government
has established its prima facie case showing that Respondent's
registration ``would be inconsistent with the public interest.'' 21
U.S.C. 823(f).
Sanction
Where, as here, ``the Government has proved that a registrant has
committed acts inconsistent with the public interest, a registrant must
`` `present sufficient mitigating evidence to assure the Administrator
that [he] can be entrusted with the responsibility carried by such a
registration.' ''thnsp;'' Medicine Shoppe-Jonesborough, 73 FR 364, 387
(2008) (quoting Samuel S. Jackson, 72 FR 23848, 23853 (2007) (quoting
Leo R. Miller, 53 FR 21931, 21932 (1988))). ``Moreover, because `past
performance is the best predictor of future performance,' ALRA Labs,
Inc. v. DEA, 54 F.3d 450, 452 (7th Cir. 1995), [DEA] has repeatedly
held that where a registrant has committed acts inconsistent with the
public interest, the registrant must accept responsibility for its
actions and demonstrate that it will not engage in future misconduct.''
Medicine Shoppe, 73 FR at 387; see also Jackson, 72 FR at 23853; John
H. Kennedy, 71 FR 35705, 35709 (2006); Prince George Daniels, 60 FR
62884, 62887 (1995). See also Hoxie, 419 F.3d at 483 (``admitting
fault'' is ``properly consider[ed]'' by DEA to be an ``important
factor[ ]'' in the public interest determination).
An applicant's acceptance of responsibility must be unequivocal.
See Alexander, 82 FR at 49728 (collecting cases). Also, an applicant's
candor during both an investigation and the hearing itself is an
important factor to be considered in determining both whether he has
accepted responsibility as well as the appropriate sanction. Michael S.
Moore, 76 FR 45867, 45868 (2011); Robert F. Hunt, D.O., 75 FR 49995,
50004 (2010); see also Jeri Hassman, 75 FR 8194, 8236 (2010) (quoting
Hoxie, 419 F.3d at 483 (6th Cir. 2005) (``Candor during DEA
investigations, regardless of the severity of the violations alleged,
is considered by the DEA to be an important factor when assessing
whether a physician's registration is consistent with the public
interest[.]'')), pet. for rev. denied, 515 Fed. Appx. 667 (9th Cir.
2013).
While a registrant must accept responsibility for his misconduct
and demonstrate that he will not engage in future misconduct in order
to establish that his registration would be 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''); Volkman, 73
FR at 30644; see also Battershell, 76 FR at 44369 (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'').
After considering (1) Respondent's unlawful pre-signing of
prescriptions that his unlicensed staff members then issued to patients
without further consulting Respondent and (2) Respondent's failure to
properly annotate two supplier DEA 222 forms, the ALJ recommended a
sanction of imposing restrictions on Respondent's DEA registration
based solely on the sustained recordkeeping violation. R.D., at 41-46.
He did not recommend that I impose a sanction of either suspension or
revocation. See id. As set forth more fully below, I disagree with the
ALJ's recommended sanction.
Pre-Signing Prescription Misconduct
With respect to Respondent's pre-signing of prescriptions, the ALJ
recommended that I do not rely on this misconduct as a basis for any
sanction whatsoever. Id. at 42-43 (recommending against relying upon
``Respondent's pre-signing of prescriptions as a basis for revocation
or sanction''). The ALJ identified five mitigating actions or factors
related to Respondent's unlawful pre-signing of prescriptions to
support his Recommendation: (1) Respondent ``obtained high quality
prescription pads that make reproduction difficult, and he writes all
of his prescriptions by hand'' ``[t]o prevent forgery of his
prescriptions;'' (2) ``his prescription pads produce a duplicate copy,
which
[[Page 47367]]
the Respondent keeps in the medical file'' ``[t]o increase the
likelihood that he can identify his prescriptions;'' (3) he ``began
providing the DEA with copies of his prescriptions, as required by the
MOA;'' (4) ``the DEA has renewed his registration multiple times since
his medical license was restored;'' and (5) he ``had not been cited for
any prescription violations in the past ten years'' and ``the amount of
time that has passed since.'' Id. Based on these five factors and the
fact that Respondent had accepted responsibility for unlawfully pre-
signing prescriptions, the ALJ found that Respondent had taken
sufficient ``mitigating actions'' and ``efforts at remediation'' that
this unlawful conduct should not be the basis for any sanction
whatsoever. Id. at 42-43.
Although I agree with the ALJ that Respondent accepted
responsibility for unlawfully pre-signing prescriptions, I disagree
that there exists sufficient mitigating evidence to warrant no sanction
at all for Respondent's pre-signing of prescriptions. For example,
Respondent's decision to handwrite his prescriptions on ``high quality
prescription pads'' that ``produce a duplicate copy'' is an admirable
effort to prevent prescription forgery. However, the ALJ failed to
explain how these actions intended to prevent forgery of Respondent's
signature on a prescription (the ALJ's first two factors) would
remediate or prevent Respondent from again pre-signing prescriptions
with his authentic signature in the future. It is manifest that a
practitioner, whether he or she pre-signs a ``high quality'' or a
``low-quality'' prescription pad, is still the one signing the
prescription in a case like this one involving unlawful pre-signing of
prescriptions.
Here, there is no allegation that anyone forged Respondent's
signature on prescriptions. It is Respondent's pre-signing of his own
signature on prescriptions, not forgery, that is the basis for
Respondent's unlawful prescription conduct at issue in this case. Thus,
I find Respondent's efforts to prevent forgery would not and do not
mitigate Respondent's unlawful pre-signing of prescriptions.
The ALJ's reliance on Respondent providing DEA with copies of his
prescriptions as mitigating evidence (the ALJ's third mitigating
factor) is similarly unavailing. As the ALJ concedes, Respondent only
provided copies of his prescriptions to DEA because the MOA required
him to do so. See R.D., at 42. I find that the fact that Respondent
complied with this MOA requirement does not constitute sufficient
mitigating evidence regarding his unlawful pre-signing of prescriptions
to warrant no sanction for his unlawful conduct.
In addition, the ALJ's reliance on DEA's renewals of Respondent's
registration in 2010 and 2013 after the ASMB restored Respondent's
state license in 2007 as a mitigating factor is misplaced because it
overlooks the chronology of DEA's investigation of Respondent. The GS
testified that DEA first became aware of Respondent as part of its 2011
investigation of his violations regarding the NKRT-118 study he
conducted with Moore Clinical Trials. DEA's 2011 investigation led to
the 2011 Show Cause Order against Respondent. The 2011 Order included
DEA's allegation that Respondent unlawfully pre-signed prescriptions
and that the ASMB suspended him in 2006 for this conduct. Prior to
2011, there is no evidence in the record that DEA was aware of
Respondent's misconduct--thereby making any renewals of Respondent's
DEA registration prior to 2011 (including the 2010 renewal) irrelevant.
Moreover, Respondent and DEA attempted to resolve the 2011 Show
Cause Order's allegations by entering into the 2012 MOA. Once
Respondent's DEA registration came up for renewal in 2013, DEA renewed
it because at that time DEA believed Respondent was complying with the
CSA, DEA regulations, and the 2012 MOA. DEA did not learn that
Respondent had violated the 2012 MOA until after DEA's July 2014 onsite
inspection of Respondent's registered address. As a result of
Respondent's violation of the MOA, DEA was entitled to issue a new Show
Cause Order against Respondent, which it issued on March 14, 2016, that
included the allegations set forth in the earlier 2011 Show Cause
Order. Thus, I find that the fact that DEA renewed Respondent's
registration in 2010 and 2013 does not constitute evidence mitigating
Respondent's unlawful pre-signing of prescriptions.
However, I do agree with the ALJ that the final factor he
identified constitutes mitigating evidence. Specifically, I find that
the amount of time that has passed since Respondent unlawfully pre-
signed prescriptions is mitigating evidence because he has not repeated
this particular misconduct since 2006. Koch, 79 FR at 18736 (``time is
certainly an appropriate factor to be considered'' where `` `during
that time [the] Respondent has learned from his past mistakes' '')
(quoting Leonardo V. Lopez, M.D., 54 FR 36915, 36915 (1989)). And it is
this mitigating evidence, along with the fact that Respondent accepting
responsibility, that I consider in imposing a sanction.
The Agency has long held that pre-signing prescriptions ``would be
inconsistent with the public interest'' under the CSA because such
conduct ``create[s] a substantial risk that the drugs would be diverted
and abused.'' E.g., Singh, 81 FR at 8248, 8249. And as I noted earlier,
Respondent's pre-signing of prescriptions constituted a serious
violation of the CSA--not only because it created a substantial risk
that the drugs would be diverted and abused but also because Respondent
gave the pre-signed prescription forms to office personnel who lacked
the authority to lawfully prescribe controlled substances under federal
or state law. See 21 CFR 1306.03(a); see also Krishna-Iyer, 71 FR at
52159.
Unlike the ALJ, I find that the Agency's interest in deterring this
misconduct in the future both on the part of Respondent as well as the
community of registrants supports a sanction. The ASMB imposed a six-
month suspension of Respondent's state license for unlawfully pre-
signing prescriptions. Although there is precedent in the context of
pre-signing prescriptions for imposing a sanction to match the ASMB's
sanction, cf. Walter S. Gresham, M.D., 57 FR 44213, 44214-15 (1992)
(imposing same sanction against respondent who unlawfully pre-signed
prescriptions as Georgia imposed), I believe Respondent's acceptance of
responsibility for unlawfully pre-signing prescriptions, and the lack
of any evidence that Respondent has engaged in this same misconduct
since 2006, warrants a lesser sanction than that imposed by the ASMB.
Accordingly, I find that suspending Respondent's DEA registration for
one month is what is necessary to protect the public interest.
As for the issue of specific deterrence, a suspension of
Respondent's registration for one month is not a bar on his practice,
much less a permanent bar. And regarding general deterrence, those
members of the regulated community who contemplate unlawfully pre-
signing prescriptions need to know that the Agency takes such
misconduct--and the grave risk of diversion that it creates--seriously
and that there will be concomitantly serious consequences if they
choose to engage in such misconduct. This interest would be compelling
even if it was not the case that the nation faces an epidemic of opioid
abuse.
Recordkeeping Misconduct
With respect to the recordkeeping violations, the ALJ stated that
this ``violation [of DEA's regulations] is significant because without
knowing the
[[Page 47368]]
quantity of controlled substances shipped back to Fisher, it is
impossible to conduct an accurate audit of the Respondent's controlled
substances using his records, and it is his records that are the
subject of these proceedings.'' R.D., at 43. The ALJ recommended that I
find that ``Respondent's recordkeeping violation to be egregious. It
was egregious because it prevented the DEA from being able to use the
Respondent's own records to conduct an accurate audit of the controlled
substances for which the Respondent was accountable while he served as
the principal investigator in the controlled drug study.'' Id. at 45.
Nevertheless, the ALJ found that Respondent can be entrusted with a
DEA registration and recommended that I only place restrictions upon
Respondent's registration, rather than revoking or suspending his
registration. Id. at 42-43, 45-46. Although the ALJ acknowledged that
Respondent ``has not taken any specific remedial steps to address his
improper completion of supplier 222 forms,'' the ALJ reasoned that
Respondent ``now knows how to properly complete a 222 form when he is a
supplier, and he has stated that in the future he will fill out the
form correctly.'' Id. at 43 (citing Tr. 257). In short, the ALJ
believed that Respondent's ``egregious'' and ``significant''
recordkeeping violations nonetheless warranted only the imposition of
restrictions on (and not suspension or revocation of) Respondent's DEA
registration because it was the first time Respondent had committed
recordkeeping violations.
In contrast, the Government argued in its Proposed Findings that
Respondent ``has demonstrated, over a period of years, an unwillingness
or inability to follow DEA's recordkeeping requirements.'' ALJ Ex. 20,
at 21. The Government further argued that Respondent's ``recordkeeping
violations that prompted DEA's 2011 Order to Show Cause, which was
settled with the 2012 MOA, and his continued violations of these same
recordkeeping requirements,'' ``warranted'' ``revocation.'' Id. at 19.
In his Recommendation, the ALJ disagreed because he believed that
``the Respondent does not have a history of failing to keep the
required records.'' R.D., at 39. The ALJ reached this conclusion
because ``Respondent entered into an MOA with the DEA'' ``[t]o resolve
the September 2011 [Show Cause Order],'' and ``[n]owhere in the 2011
[Show Cause Order] are recordkeeping violations.'' Id. Elsewhere, the
ALJ contested the Government's characterization of Respondent's history
of recordkeeping violations:
The Government's arguments are puzzling in this regard because
the Respondent was not cited for any recordkeeping violations in the
2011 [Show Cause Order], and in its post-hearing brief, the
Government does not cite to any recordkeeping violations that
occurred prior to the current allegations. . . .
Respondent does not have a history of failing to keep the
required records. The Government's attempt to paint Respondent's
current violations as a continuation of the DEA's concerns that
prompted the issuance of the 2011 OSC is disingenuous at best! . . .
Here, . . . there is no evidence that the Respondent has a
history of improperly completing 222 Forms, either as a purchaser or
as a supplier.
Id. at 44 (emphasis in original).
It is unclear why the ALJ was unaware of Respondent's history of
recordkeeping violations, including a history of improperly completing
DEA 222 Forms, in light of Moore Clinical Trials. As I noted earlier,
Respondent's history of recordkeeping (and other) violations was
referenced in the record. In its Proposed Findings filed post-hearing,
the Government referenced the GS's testimony that she first became
aware of Respondent after receiving an application for a DEA
registration from Moore Clinical Trials, and that this application led
to a DEA investigation of both Moore Clinical Trials and Respondent in
2011 that found recordkeeping violations. See ALJ Ex. 20, at 4.
The Government also referenced the GS's testimony that Moore
Clinical Trial's DEA application was denied. Id. The ALJ even
acknowledged this denial in his Recommendation. R.D., at 3. Although
the Government could have better assisted the ALJ by directing him to a
case citation to the Agency's decision, it does not change the fact
that Moore Clinical Trials--like all other final agency actions issued
by my office--was an Agency decision published in the Federal Register.
As such, Moore Clinical Trials compels a finding that Respondent has a
history of recordkeeping violations.
As already noted, the Agency found in Moore Clinical Trials that
Respondent committed both separate registration and recordkeeping
violations in connection with the NKRT-118 study Respondent conducted
with Moore Clinical Trials that, not coincidentally, correspond to the
terms of the MOA. Moore Clinical Trials even documented Respondent's
history of recordkeeping violations in connection with DEA 222 forms.
For example, the Agency noted the ALJ's findings that Respondent's
``documents'' ``were deficient and that the order forms for Schedule II
controlled substances (DEA-222) were lacking'' in connection with the
NKRT-118 study. Moore Clinical Trials, 79 FR at 40147 (internal
quotations omitted). The then-Administrator also found that
Respondent's DEA 222 forms related to the NKRT-118 study did not
properly indicate the date the drugs were received and the quantity
received. Id. at 40151, 40156. Most significantly, this type of
recordkeeping violation involving DEA 222 forms--failure to properly
record the date and quantity of controlled substances--is the same type
of recordkeeping violation that Respondent committed in this case.
Thus, contrary to the ALJ's conclusion, Respondent in fact ``has a
history of improperly completing 222 Forms.'' See R.D., at 44.
The then-Administrator concluded in Moore Clinical Trials that
``the record clearly establishes that Dr. Nichol violated both the
separate registration provision and DEA recordkeeping requirements.''
79 FR at 40155. The DEA therefore entered into the MOA (which expressly
referenced the NKRT-118 study) with Respondent as an intermediary step
to get Respondent into compliance and to address Respondent's
recordkeeping and separate registration violations related to the NKRT-
118 study described and found by the Agency in Moore Clinical Trials.
The ALJ's finding that Respondent's recordkeeping violation in this
case is not ``a minor oversight'' but an ``egregious'' and
``significant'' violation, combined with Respondent's history of
recordkeeping violations, requires a stronger sanction than what the
ALJ recommended. In that vein, I find that the Agency's interest in
deterring this misconduct in the future both on the part of Respondent
as well as the community of registrants supports imposing a two-part
sanction. Although the ALJ's recommended restrictions on Respondent's
registration could be a sufficient deterrent for a registrant who
lacked a history of recordkeeping violations, that is not this case.
Here, the Agency already attempted to address Respondent's prior
recordkeeping violations by imposing the restrictions (rather than
suspending or revoking his DEA registration) set forth in the MOA. To
simply impose more restrictions after Respondent again committed
recordkeeping violations would be no sanction at all in this case. See
Mark De La Lama, P.A., 76 FR 20011, 20020 (2011) (``granting
Respondent's application subject to the restrictions proposed by the
ALJ, which do no more than replicate the conditions imposed
[[Page 47369]]
by the MOA, amounts to no sanction at all. In short, adopting the ALJ's
proposed sanction would send the wrong message to both Respondent . . .
as well as other applicants/registrants''). For this reason, I find
that suspending Respondent's DEA registration for one month
(concurrently with the sanction I imposed for Respondent's unlawful
pre-signing of prescriptions) is necessary to protect the public
interest. In addition, I impose the same restrictions to Respondent's
registration as proposed by the ALJ, and I direct that these
restrictions--set forth infra--are set to begin at the conclusion of
Respondent's one-month suspension.
The Agency's interests in both specific and general deterrence
support this two-part sanction. As for the Agency's interest in
specific deterrence, and as already noted, the one-month suspension of
his DEA registration is not a bar on his practice, much less a
permanent bar. In addition, the restrictions that I impose in this
Decision and Order will hopefully deter Respondent 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 DEA's 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. Roberto Zayas,
M.D., 82 FR 21410, 21430 (2017).
I therefore conclude that the suspension of Respondent's DEA
registration for one month, in addition to the imposition of the ALJ's
recommended restrictions at the conclusion of Respondent's one-month
suspension, are necessary to protect the public interest.
Order
Pursuant to the authority vested in me by 21 U.S.C. 823(f) and
824(a), as well as 28 CFR 0.100(b), I order that DEA Certificate of
Registration No. BN4578057, issued to Brian Thomas Nichol, M.D., be,
and it hereby is, suspended for one month. At the conclusion of this
one-month suspension, I impose the following restrictions on Brian
Thomas Nichol's DEA Certificate of Registration No. BN4578057:
1. That he may not participate in any drug studies in which he
is required to order, maintain, store, or dispense controlled
substances for a period of four years.
2. That he may not order, maintain, store, or dispense any
controlled substances at his registered location for a period of
four years.
3. That restrictions one and two, above, will not be lifted,
even after four years, until the Respondent has completed a course
in controlled substance recordkeeping, a course in controlled
substance storage, and a course in the administration of controlled
substances, and provides the DEA with evidence of completion of
these courses. These courses may not be used to meet any continuing
medical education requirement.
4. That prior to renewal of the Respondent's DEA registration,
he sign a document consenting to inspections by DEA personnel of his
medical practice without the need for DEA personnel to obtain an
administrative inspection warrant prior to conducting an inspection.
By the terms contained in the consent form, the consent shall be
valid for four years from the date his current renewal application
for a DEA registration is approved. This consent form is to be
delivered to the Respondent's local DEA Field Office.
5. That prior to renewal of the Respondent's DEA registration,
he sign a document consenting to the conditions set forth in
Paragraphs one and two above and acknowledging his understanding
that his failure to comply with the terms of those conditions will
constitute an independent basis for administrative enforcement
proceedings by the DEA. This consent and acknowledgement document
shall be delivered to the Respondent's local DEA Field Office.
This Order is effective October 19, 2018.
Dated: September 5, 2018.
Uttam Dhillon,
Acting Administrator.
[FR Doc. 2018-20383 Filed 9-18-18; 8:45 am]
BILLING CODE 4410-09-P