[Federal Register Volume 85, Number 249 (Tuesday, December 29, 2020)]
[Notices]
[Pages 85667-85670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28676]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 18-33]


Steven M. Kotsonis, M.D.; Order

    On May 3, 2018, the Assistant Administrator, Office of Diversion 
Control, Drug Enforcement Administration (hereinafter, DEA or 
Government) issued an Order to Show Cause (hereinafter, OSC) to Steven 
M. Kotsonis, M.D. (hereinafter, Respondent), which sought to revoke 
Respondent's DEA Certificate of Registration FK1584336 and to deny any 
pending applications for renewals or modifications of such 
registration, based on its contention that his continued registration 
is inconsistent with the public interest. Administrative Law Judge 
Exhibit (ALJX) 1 (OSC). In response to the OSC, Respondent submitted a 
timely request for a hearing, which was held from August 14-17, 2018. 
On October 23, 2018, Chief Administrative Law Judge John J. Mulrooney, 
II issued a Recommended Rulings, Findings of Fact, Conclusions of Law, 
and Decision of the Administrative Law Judge (hereinafter, Recommended 
Decision), which recommended that I revoke Respondent's registration 
and that I deny any pending application for renewal. Respondent filed 
Exceptions to the Recommended Decision, and the record was forwarded to 
me for final Agency action on November 26, 2018.
    After reviewing the record, I learned that Respondent had 
surrendered his DEA registration on December 23, 2019. I issued an 
Order on September 25, 2020, requiring the Government to produce 
documentation of Respondent's surrender of his registration. The Order 
further instructed the parties to file a Request for Dismissal ``if it 
is the intent of [the] party to rely on Respondent's voluntary 
surrender of his registration to terminate this proceeding'' or a brief 
on the issue ``if [the] party opposes the dismissal of this proceeding 
prior to the issuance of my Decision on the Government's allegation in 
the OSC.'' Both parties filed timely responses.
    Respondent filed a Request for Dismissal on October 15, 2020. As 
grounds for the dismissal, Respondent stated that, ``upon DEA request, 
he voluntarily surrendered his DEA registration on December 23, 2019.'' 
Respondent Request for Dismissal.
    The Government submitted a response to my September 25 Order on 
October 23, 2020 (hereinafter, the Government Response). As required by 
my September 25 Order, the Government submitted a copy of the Voluntary 
Surrender of Controlled Substances Privileges form, DEA-104, signed by 
Respondent surrendering DEA Registration No. FK1584336. The Government 
stated that Respondent voluntarily surrendered his DEA registration 
following a guilty plea to felony criminal drug charges in a criminal 
matter concurrent to the instant matter. Government Response at 2. The 
Government Response neither requested that I dismiss this matter nor 
that I file a final Decision on the allegations it made in the OSC. 
Rather, the Government provided legal arguments regarding why 
Respondent's voluntary surrender of his registration did not preclude 
me from issuing a final Decision. Id. at 2-3. The Government then 
concluded its Response stating that I ``should issue whatever order is 
appropriate in light of the administrative record presented.'' Id. at 
3.
    Based upon my review of the parties' submissions, the record, and 
public documents from Respondent's criminal case, I am granting 
Respondent's Request for Dismissal.

Facts

    Respondent was registered with DEA as a practitioner in schedules 
II through V under Certificate of Registration No. FK1584336, at the 
registered address of 347 Park Ave., Pewaukee, Wisconsin 53702. OSC at 
1. In its OSC, the Government contended that Respondent's registration 
was inconsistent with the public interest and should be revoked because 
Respondent failed to comply with applicable federal law relating to 
controlled substances. Id. at 1-2. Specifically, the OSC alleged that 
Respondent issued prescriptions for controlled substances outside the 
usual course of professional practice and not for a legitimate medical 
purpose, in violation of 21 CFR 1306.04(a). Id. at 2.
    On December 23, 2019, Respondent voluntarily surrendered his DEA 
registration. Government Response, Attachment 1 (DEA Form 104 signed by 
Respondent). In his surrender form, Respondent affirmed that he was 
voluntarily surrendering his registration for cause ``[i]n view of 
[his] alleged failure to comply with the Federal requirements 
pertaining to controlled substances.'' Id. Respondent also acknowledged 
that submitting the form to DEA would result in the immediate 
termination of his registration. Id.
    The Government stated in its Response that Respondent surrendered 
his DEA registration ``following a guilty plea to felony criminal drug 
charges in [a] concurrent criminal matter.''

[[Page 85668]]

Government Response, at 1-2. According to the publicly available 
records from the Respondent's concurrent criminal matter, U.S. v. 
Steven M. Kotsonis, No. 2:16-CR-92 (E.D. Wis. filed July 21, 2016), 
Respondent was criminally indicted on June 21, 2016, on twenty counts 
alleging violations of the Controlled Substances Act, specifically 21 
U.S.C. 841(a)(1), (b)(1)(C), and 846.\1\ Respondent pled guilty to one 
count, Count 17, of the indictment for ``dispensing unlawfully a 
controlled substance outside a professional medical practice and not 
for a legitimate medical purpose'' in violation of 21 U.S.C. 841(a)(1) 
and (b)(1)(C). Judgment, at 1, Kotsonis, No. 2:16-cr-92.
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    \1\ I am taking official notice of the docket and two documents 
from Respondent's criminal matter, the Plea Agreement and the 
Judgment. Kotsonis, No. 2:16-cr-92. Under the Administrative 
Procedure Act, an agency ``may take official notice of facts at any 
stage in a proceeding--even in the final decision.'' United States 
Department of Justice, Attorney General's Manual on the 
Administrative Procedure Act 80 (1947) (Wm. W. Gaunt & Sons, Inc., 
Reprint 1979). Pursuant to 5 U.S.C. 556(e), ``[w]hen an agency 
decision rests on official notice of a material fact not appearing 
in the evidence in the record, a party is entitled, on timely 
request, to an opportunity to show the contrary.'' Accordingly, 
Respondent may dispute my finding by filing a properly supported 
motion for reconsideration of finding of fact within fifteen 
calendar days of the date of this Order. Any such motion shall be 
filed with the Office of the Administrator and a copy shall be 
served on the Government. In the event Respondent files a motion, 
the Government shall have fifteen calendar days to file a response. 
Any such motion and response may be filed and served by email 
([email protected]).
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    Attachment A of the Plea Agreement, which I have attached to this 
Order, provides a narrative of the factual basis for Respondent's 
guilty plea.\2\ Plea Agreement, at 13-15, Kotsonis, No. 2:16-cr-92. In 
brief summary, Respondent admitted that the clinic he co-owned, and at 
which he was the exclusive health care provider, only accepted cash, 
that individuals payed $200 to $350 in cash to obtain a prescription, 
that ``[p]rescriptions were written for large quantities of Oxycodone, 
particularly Oxycodone 30 mg (average of 150-180 tablets per month), 
along with other narcotic medications commonly prescribed for pain 
relief such as amphetamine and morphine,'' \3\ and that ``[i]ndividuals 
frequently obtaine[ed] prescriptions at [his clinic] without being 
examined or having their vitals (height, weight, blood pressure) taken 
during the visit.'' Id. at 13. Respondent also admitted to signing 
controlled substance prescriptions prepared by his office manager, who 
was not a licensed health care provider, without examining the patients 
or reviewing the patients' files. Id. at 13 and 15. In regard to the 
specific count to which Respondent pled guilty, Count 17 of the 
indictment, Respondent admitted that on January 31, 2013, he signed a 
prescription for 90 tablets of Oxycodone 30 mg for ``Patient D'' that 
the clinic's office manager prepared and that he did so without seeing 
Patient D. Id. at 14. When Patient D was interviewed regarding 
Respondent's clinic, she stated that, despite having visited the clinic 
and received prescriptions for Oxycodone on four prior occasions, ``she 
did not see [Respondent], did not have vitals taken, did not receive 
any type of medical exam, and did not submit a urine screening.'' Id. 
at 13.
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    \2\ Respondent admitted that the facts in Attachment A are true 
and ``establish his guilt beyond a reasonable doubt.'' Plea 
Agreement, at 2, Kotsonis, No. 2:16-cr-92.
    \3\ Oxycodone is a schedule II controlled substance. 21 CFR 
1308.12(1).
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Discussion

    DEA regulations promulgated pursuant to the authority delegated by 
the Controlled Substances Act (CSA) provide that ``the registration of 
any person . . . shall terminate, without any further action by the 
Administration, if and when such person . . . surrenders a 
registration.'' 21 CFR 1301.52. As Respondent surrendered his DEA 
registration on December 23, 2019, pursuant to the regulation, his 
registration terminated on the day of his surrender, and Respondent is 
no longer authorized to dispense controlled substances under federal 
law.
    The termination of Respondent's registration, however, does not 
automatically terminate this proceeding. Although factually distinct 
from registrations terminated through a voluntary surrender, DEA has 
issued final decisions revoking registrations subsequent to their 
expirations, and the legal reasoning for the Agency's ability to issue 
decisions in those matters is applicable here. As my predecessor 
explained in Jeffrey Olsen, M.D., in which he ordered the revocation of 
an expired registration, ``mootness does not play the same role in 
administrative agency adjudications as it plays in Article III court 
proceedings'' and `` `[t]he agency, with like effect as in the case of 
other orders, and in its sound discretion, may issue a declaratory 
order to terminate a controversy or remove uncertainty.' '' 84 FR 
68,474, 68,478 (2019) (quoting Tennessee Gas Pipeline v. Federal Power 
Comm'n, 606 F.2d 1373, 1380 (D.C. Cir. 1979); 5 U.S.C. 554(e)); see 
also Climax Molybdenum Co. v. Sec'y of Labor, Mine Safety and Health 
Admin., 703 F.2d 447, 451 (10th Cir. 1983) (``At the outset, we note 
that an administrative agency is not bound by the constitutional 
requirement of a `case or controversy' that limits the authority of 
[A]rticle III courts to rule on moot issues.''). DEA is therefore not 
precluded from issuing a final decision revoking a registration that 
was voluntarily surrendered even though that registration is 
terminated.
    As my predecessor identified in Olsen,

[F]inal adjudications are particularly helpful in supporting the 
purposes of the CSA and my responsibilities to enforce the CSA 
because nothing in the CSA prohibits an individual or an entity from 
applying for a registration even when there is a history of being 
denied a registration, or a history of having a registration 
suspended or revoked. As such, having a final, official record of 
allegations, evidence, and the Administrator's decisions regarding 
those allegations and evidence, assists and supports future 
interactions between the Agency and the registrant or applicant.

84 FR at 68,479. As additionally noted in Olsen, ``a final adjudication 
is a public record of the Agency's expectations for current and 
prospective members of that community.'' Id. Final adjudications also 
provide continuing education for all DEA personnel and help coordinate 
law enforcement efforts. Id. Finally, final adjudications inform 
stakeholders, such as legislators and the public, about the Agency's 
work and allows them to provide feedback to the Agency, thereby helping 
shape how the Agency carries out its responsibilities under the CSA. 
Id.
    Since Olsen was decided, the Agency has universally issued final 
adjudications in cases where a registration expired while a proceeding 
to revoke the registration was pending before the Administrator. See, 
e.g., Salvatore Cavaliere, D.O., 85 FR 45,657 (2020); Jaime C. David, 
M.D., 85 FR 10,462 (2020); Jeanne E. Germeil, M.D., 85 FR 73,786 
(2020). I recognize, however, that a voluntary surrender for cause of a 
registration that is executed while the matter is pending before the 
Administrator can be distinct from the expiration of a registration, 
depending on the circumstances particular to a matter, and that the 
aforementioned benefits obtained by a final Agency adjudication could 
be diminished by those circumstances. I also recognize that the 
voluntary surrender for cause is an essential tool in preserving Agency 
enforcement resources and in preventing the misuse of a registration 
during the pending enforcement action. However, it would be contrary to 
my duties under the CSA to allow the usurpation of the Agency's 
enforcement mission by permitting the unilateral

[[Page 85669]]

execution of a voluntary surrender for cause by a registrant after the 
registrant has availed himself of the hearing process and, particularly 
where he obtained an unfavorable recommendation from an Administrative 
Law Judge; and therefore, I find that it is most reasonable to assess 
whether to adjudicate particular matters to finality based on the 
particular circumstances presented by the matters.
    Based on my evaluation of the record in this matter, I have decided 
that the benefits to issuing a final adjudication in this matter are 
diminished by the particular circumstances, and as such, I am 
dismissing this matter. Here, Respondent voluntarily surrendered his 
registration for cause concurrent with his guilty plea to a felony, 
thereby acknowledging that the surrender was ``[i]n view of [his] 
alleged failure to comply with the Federal requirements pertaining to 
controlled substances.'' Government Response, Attach. 1. The Judgment 
from Respondent's concurrent criminal case provides a record of 
Respondent's criminal violation of the CSA for issuing a prescription 
for a controlled substance outside the usual course of professional 
practice and without a legitimate medical purpose, and the Plea 
Agreement provides an official record of the details of Respondent's 
criminal violation. I find that these records provide many of the same 
benefits that a final Decision would provide in this matter--they will 
assist and support any future interactions between the Agency and 
Respondent including by providing the Agency with facts that may be 
relevant should Respondent re-apply for a registration in the future; 
they provide a public record regarding the Agency's expectations of 
registrants; they inform stakeholders about the Agency's work; and they 
enable me to allocate Agency resources efficiently and effectively. 
Accordingly, I find that it is in the Agency's interest to dismiss this 
matter without my issuing a final Decision on the Government's request 
to revoke Respondent's registration, and I will grant Respondent's 
Request for Dismissal.
    My decision to dismiss this matter should not be interpreted as 
applying unilaterally to all matters seeking revocation of a 
registration in which a registrant surrenders their license while the 
matter is pending before me. The Agency expends considerable resources 
investigating and adjudicating these matters, not every matter will 
have such a robust record absent a final adjudication, and each matter 
is unique. I will, therefore, continue to evaluate such matters on a 
case-by-case basis to determine if a final adjudication is warranted.

Order

    Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 
U.S.C. 824, I hereby dismiss the Order to Show Cause issued to Steven 
M. Kotsonis, M.D. This Order is effective immediately.

Timothy J. Shea,
Acting Administrator.

Attachment A

    This investigation began in 2012 and arose in connection with the 
investigation of Dr. Beaver who operated Beaver Medical Clinic. In 
April of 2012, Dr. Beaver voluntarily surrendered his DEA registration 
for cause based upon allegations of improper prescribing of controlled 
substances and Dr. Beaver's Wisconsin medical license was limited to 
preclude him from prescribing controlled substances. In May of 2012, 
Dr. Kotsonis began working at Beaver Medical Clinic and DEA 
Investigators met with Kotsonis to notify him of DEA's concerns that 
narcotics prescribed at Beaver Medical Clinic were frequently being 
sold by patients. During this meeting, Kotsonis acknowledged that 
Moyer, who was the office manager at Beaver Medical Clinic at the time, 
sometimes prepared prescriptions for him, and he agreed with 
Investigators when they suggested that Kotsonis himself should prepare 
the prescriptions.
    Sometime prior to December of 2012, Kotsonis relocated his practice 
to 10721 W Capitol Drive, Office G103, Wauwatosa, Wisconsin, and 
changed the name of the practice to Compassionate Care Clinic. Moyer 
continued to work for Kotsonis as the officer manager of the 
Compassionate Care Clinic (``Compassionate'') and also, at some point, 
became the co-owner of Compassionate. Moyer is not a licensed health 
care provider and there are no other licensed physicians, nurses, or 
other health care providers working at Compassionate aside from 
Kotsonis.
    The investigation of Compassionate has revealed that only cash is 
accepted and individuals pay $200 to $350 in cash to obtain a 
prescription. Prescriptions are written for large quantities of 
Oxycodone, particularly Oxycodone 30mg (average of 150-180 tablets per 
month), along with other narcotic medications commonly prescribed for 
pain relief such as amphetamine and morphine. Moyer typically fills out 
the prescriptions and has Kotsonis sign the prescriptions without 
Kotsonis actually seeing the individual patient. Individuals frequently 
obtain prescriptions at Compassionate without being examined or having 
their vitals (height, weight, blood pressure) taken during their visit.
    For example, in January 2013, CS #1 a/k/a Patient ``D,'' was 
interviewed regarding Compassionate. CS #1 stated that she was brought 
to Compassionate by her friend, who was addicted to Oxycodone, and CS 
#1 was introduced to Moyer by her friend as a new patient. CS #1 stated 
that she visited Compassionate on approximately 4 occasions and CS #1's 
friend went with her on every occasion but one. CS #1's friend paid for 
the appointment fee and in return received a portion of CS #1's pills. 
CS #1's friend also brought other individuals to Compassionate to 
obtain Oxycodone prescriptions. CS #1 provided MRI's regarding back 
issues from 2006 to 2008 to Moyer and was accepted as a patient. CS #1 
stated that she received prescriptions ranging from 150-210 tablets of 
Oxycodone 30 mg at each of her visits to Compassionate. During the 
visits CS #1 did not see Kotsonis, did not have vitals taken, did not 
receive any type of medical exam, and did not submit a urine screening. 
CS #1 received prescriptions from Moyer, who prepared the prescriptions 
and took the prescriptions to Kotsonis for signature. During the 
visits, Moyer asked CS #1 a few questions about pain and CS #1 stated 
she had back pain. CS #1 filled out a form regarding pain during each 
visit. On one occasion CS #1 and her friend went to a visit early and 
said they were driving to Florida. Moyer asked what they were 
prescribed last time and CS #1 said 180 tablets of Oxycodone 30mg. 
Moyer told CS #1 that she would write the prescription for 210 tablets 
because of the long drive to Florida. Moyer wrote the prescriptions out 
in the waiting room because they were already signed by Kotsonis. CS #1 
stated that during the visits she witnessed Moyer take the patient 
sign-in sheet, write the individuals' names and dates of birth on the 
prescriptions (sometimes written in the waiting room) and take the 
stack of prescriptions to Kotsonis's office for signature. Moyer then 
saw the individuals and wrote the quantities on the prescription. The 
waiting room was always full with approximately 15 individuals in the 
waiting room and approximately 5 individuals waiting outside the 
waiting room in the hallway.
    Count Seventeen: On January 31, 2013, CS #1 and an undercover agent 
(UC #1) visited Compassionate and this visit is audio and video 
recorded.

[[Page 85670]]

During the visit, CS #1 filled out a two-page pain form and CS #1 and 
UC #1 signed in on the patient sign-in sheet. During the visit, Moyer 
stood next to the patient sign-in sheet and wrote down names on a 
prescription pad from the sign-in sheet and she asked some of the 
individuals for their date of birth and which drug they were 
prescribed. Moyer entered Kotsonis's office carrying the handwritten 
prescriptions and exited minutes later. The individuals were provided 
prescriptions and many did not see Kotsonis. During the visit, Moyer 
called CS #1 and UC #1 into her office. UC #1 did not see any medical 
equipment in the office. Moyer asked CS #1 to tell the truth about her 
current criminal charges. Moyer said she would have to cut CS #1 loose 
but would give CS #1 a prescription. Moyer said DEA would say what kind 
of people CS #1 was hanging out with and then ``bye bye clinic, bye bye 
license, bye bye Dr. Steve's career'' because DEA would go after the 
doctor. Moyer said if CS #1's criminal charges were dropped she could 
come back to the clinic. Moyer said CS #1's friend (who referred CS #1 
to the clinic) was dumb because he sold pills to an undercover cop. 
Moyer asked CS #1 for her name and date of birth and wrote CS #1 a 
prescription for 90 tablets of Oxycodone 30mg, which Moyer took to 
Kotsonis to sign. CS #1 paid Moyer $200 cash for the visit. Moyer asked 
CS #1 if she knew what people called Moyer. CS #1 said no and Moyer 
responded ``The Oxy Czar.'' ``They call me the gestapo because if you 
screw up the world will stop, so don't screw up.'' Moyer then continued 
to fill out additional prescriptions.
    CS #1 asked Moyer if UC #1 could be accepted as a patient and she 
said everyone who came with CS #1 would have to be rescreened (because 
of CS #1's criminal charges). Moyer then looked over the MRIs provided 
by UC #1 and said the second MRI looked a little better than the first. 
Moyer said she would show the MRIs to the doctor. Moyer opened her desk 
drawer and pulled out a handful of prescriptions, papers, and cash, 
then put everything back in the drawer and said ``This is a nasty 
little business we're in.'' Moyer then said ``I own this clinic now, 
and I don't have to be nice. I don't have to let just anybody in 
neither. It's my clinic, me and the doctor's clinic, I don't have to 
let anybody in. And I won't, if I think they're a problem. No way, why 
would I? Are you kidding? This is a big business here.'' She told UC #1 
that the first office visit was $350 and UC #1 could come alone next 
time and asked him/her to bring prescription records. UC #1 was given a 
longer version of the pain form provided to CS #1 earlier in the visit 
to bring back with her to the next visit. Moyer exited her office, 
called out CS #1's name along with five other names and said she would 
get the prescriptions signed. Moyer then entered Kotsonis's office and 
approximately four minutes later she exited Kotsonis's office and 
handed out the prescriptions. CS #1 and UC #1 then made their next 
appointment with the receptionist.
    On July 23, 2013, a search warrant was executed at Compassionate 
Care Clinic and Kotsonis' patient files were seized along with other 
evidence. Patient files, computers, Moyer's cellphone and pre-signed 
prescriptions (containing the doctor's signature only), filled out 
prescriptions without signature and ripped up prescriptions were 
recovered from Moyer's office. Agents also recovered a letter from 
Costco refusing to fill Dr. Kotsonis' prescriptions and an Express 
Scripts letter regarding excessive medication prescribed to a patient 
as well as prefilled out monthly evaluation notes. Agents observed 
minimal medical equipment in the clinic. During the execution of the 
search warrant Kotsonis agreed to be interviewed and was advised he was 
not under arrest. Kotosnis admitted to allowing Moyer to prepare 
prescriptions that he subsequently signs and said she brings in 
prescriptions 3-4 patients at a time and that he trusts Moyer's advice 
on what medication should be prescribed and generally agrees with her. 
Kotsonis stated most of the time he verifies what prescription the 
patient is receiving. He stated that if Moyer does not bring the 
patient file to his office with the prescription to verify he trusts 
what she says the patient is receiving. Kotsonis estimated 20-25 
patients per day are follow up patients and Moyer brings 10-12 patient 
charts to Kotsonis a day and Kotsonis actually sees and examines 1-2 
patients per day. Moyer was also interviewed and stated the she and 
Kotsonis discuss patients but he determines what to prescribe. She 
stated she writes out prescriptions before the patients are seen based 
upon their last prescription but does not write down a quantity.

[FR Doc. 2020-28676 Filed 12-28-20; 8:45 am]
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