[Federal Register Volume 90, Number 61 (Tuesday, April 1, 2025)]
[Notices]
[Pages 14383-14385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-05526]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 24-12]
Phong H. Tran, M.D.; Decision and Order
On October 4, 2023, the Drug Enforcement Administration (DEA or
Government) issued an Order to Show Cause (OSC) to Phong H. Tran, M.D.
(Respondent). OSC, at 1, 3. The OSC proposed the denial of Respondent's
application for a DEA Certificate of Registration (registration),
Control No. W22138631C, in California, alleging that Respondent has
been mandatorily excluded from participation in Medicare, Medicaid, and
all Federal health care programs pursuant to 42 U.S.C. 1320a-7(a). Id.
at 1-2 (citing 21 U.S.C. 824(a)(5)).
A hearing was held before DEA Administrative Law Judge (ALJ) Teresa
A. Wallbaum who, on August 9, 2024, issued her Recommended Rulings,
Findings of Fact, Conclusions of Law, and Decision of the
Administrative Law Judge (RD). The RD recommended that Respondent's
application be denied. RD, at 29. Neither party filed exceptions to the
RD. Having reviewed the entire record, the Agency adopts and hereby
incorporates by reference the entirety of the ALJ's rulings,
credibility findings,\1\ findings of fact, conclusions of law,
sanctions analysis, and recommended sanction in the RD, and summarizes
and expands upon portions thereof herein.
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\1\ The Agency adopts the ALJ's summary of the witnesses'
testimonies as well as the ALJ's assessment of the witnesses'
credibility. RD, at 5-29. The Agency agrees with the ALJ that the
testimony from the DEA Diversion Investigator (DI), which was
primarily focused on the introduction of the Government's
documentary evidence, was ``sufficiently plausible, internally
consistent, and corroborated by the documentary evidence to be
afforded full credibility.'' Id. at 8.
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The Agency also adopts the ALJ's conclusion that ``Respondent lacks
state authority to handle controlled substances in the State of
California, the state in which he is registered. . . .'' RD, at 29.\2\
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\2\ The lack of state authority allegation was not noticed in
the OSC. However, DEA has consistently held that because the
possession of state authority is a prerequisite for obtaining and
maintaining a registration, the issue of state authority can be
raised at any stage of a proceeding. See, e.g., Hatem M. Ataya,
M.D., 81 FR 8221, 8244 (2016) (noting that ``because the possession
of state authority is a prerequisite for obtaining a registration
and for maintaining a registration, the issue can be raised sua
sponte even at this stage of the proceeding''); Joe W. Morgan, D.O.,
78 FR 61961, 61973-74 (2013); see also Gonzales v. Oregon, 546 U.S.
243, 270 (2006) (finding that the possession of authority to
dispense controlled substances under the laws of the state in which
a practitioner engages in professional practice is a fundamental
condition for obtaining and maintaining a practitioner's
registration). Neither the CSA nor DEA's implementing regulations
requires that the Government amend the OSC to add a lack of state
authority allegation if the Government obtains evidence during the
pendency of a proceeding of a registrant's lack of state authority.
Here, Respondent raised the issue of his lack of state authority in
his Post-Hearing Brief, ALJX 31, at 2 n.2, and the ALJ afforded both
parties notice and an opportunity to be heard on the issue before
issuing the RD. RD, at 2; ALJX 33.
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I. Loss of State Authority
A. Findings of Fact
On August 2, 2024, the Medical Board of California revoked
Respondent's California medical license. RD, at 2, 4; ALJ Exhibit
(ALJX) 34.\3\ According to California's online records, of which the
Agency takes official notice, Respondent's California medical license
remains revoked.\4\ California DCA License Search, https://search.dca.ca.gov/ (last visited date of signature of this Order).
Accordingly, the Agency finds substantial record evidence that
Respondent is not licensed to practice medicine in California, the
state in which he is registered with DEA.\5\
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\3\ See also Respondent's Post-Hearing Brief, at 2 n.2 (``The
court is hereby notified that Respondent's California medical
license was revoked by the Medical Board, effective August 2,
2024.'').
\4\ 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).
\5\ 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.'' The material fact here is
that Respondent, as of the date of this decision, is not licensed to
practice medicine in California. Accordingly, Respondent may dispute
the Agency's finding by filing a properly supported motion for
reconsideration of findings of fact within fifteen calendar days of
the date of this Order. Any such motion and response shall be filed
and served by email to the other party and to the DEA Office of the
Administrator, Drug Enforcement Administration at
[email protected].
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B. Discussion
Pursuant to 21 U.S.C. 824(a)(3), the Attorney General is authorized
to suspend or revoke a registration issued under 21 U.S.C. 823 ``upon a
finding that the registrant . . . has had his State license or
registration suspended . . . [or] revoked . . . by competent State
authority and is no longer authorized by State law to engage in the . .
. dispensing of controlled substances.''
With respect to a practitioner, DEA has also long held that the
possession of authority to dispense controlled substances under the
laws of the state in which a practitioner engages in professional
practice is a fundamental condition for obtaining and maintaining a
practitioner's registration. Gonzales v. Oregon, 546 U.S. 243, 270
(2006) (``The Attorney General can register a physician to dispense
controlled substances `if the applicant is authorized to dispense . . .
controlled substances under the laws of the State in which he
practices.' . . . The very definition of a `practitioner' eligible to
prescribe includes physicians `licensed, registered, or otherwise
permitted, by the United States or the jurisdiction in which he
practices' to dispense controlled substances. Sec. 802(21).''). The
Agency has applied these principles consistently. See, e.g., James L.
Hooper, M.D., 76 FR 71371, 71372 (2011), pet. for rev. denied, 481 F.
App'x 826 (4th Cir. 2012); Frederick Marsh Blanton, M.D., 43 FR 27616,
27617 (1978).\6\
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\6\ This rule derives from the text of two provisions of the
Controlled Substances Act (CSA). First, Congress defined the term
``practitioner'' to mean ``a physician . . . or other person
licensed, registered, or otherwise permitted, by . . . the
jurisdiction in which he practices. . . , to distribute, dispense, .
. . [or] administer . . . a controlled substance in the course of
professional practice.'' 21 U.S.C. 802(21). Second, in setting the
requirements for obtaining a practitioner's registration, Congress
directed that ``[t]he Attorney General shall register practitioners
. . . if the applicant is authorized to dispense . . . controlled
substances under the laws of the State in which he practices.'' 21
U.S.C. 823(g)(1). Because Congress has clearly mandated that a
practitioner possess state authority in order to be deemed a
practitioner under the CSA, DEA has held repeatedly that revocation
of a practitioner's registration is the appropriate sanction
whenever he is no longer authorized to dispense controlled
substances under the laws of the state in which he practices. See,
e.g., James L. Hooper, M.D., 76 FR 71371-72; Sheran Arden Yeates,
M.D., 71 FR 39130, 39131 (2006); Dominick A. Ricci, M.D., 58 FR
51104, 51105 (1993); Bobby Watts, M.D., 53 FR 11919, 11920 (1988);
Frederick Marsh Blanton, M.D., 43 FR 27617.
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According to California statute, ``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, furnishing, packaging, labeling, or compounding necessary
to prepare the substance for that delivery.'' Cal. Health & Safety Code
section 11010 (2024). Further, a ``practitioner'' means a person
``licensed, registered, or otherwise permitted, to distribute,
dispense, conduct research with respect to, or administer, a controlled
substance in the course of professional practice or research in [the]
state.'' Id. section 11026(c).
Here, the undisputed evidence in the record is that Respondent
currently lacks authority to practice medicine in California. As
discussed above, a physician must be a licensed practitioner to
dispense a controlled substance in California. Thus, because
[[Page 14384]]
Respondent currently lacks authority to practice medicine in California
and, therefore, is not currently authorized to handle controlled
substances in California, Respondent is not eligible to obtain or
maintain a DEA registration. Accordingly, the Agency will order that
Respondent's application for a DEA registration be denied.
II. Mandatory Exclusion From Federal Health Care Programs 7
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\7\ Although DEA lacks authority to grant Respondent's
registration application because he lacks state authority, DEA
considers Respondent's mandatory exclusion from federal healthcare
programs as a separate, independent ground to deny Respondent's
application.
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A. Findings of Fact
In 2018, Respondent pled guilty to one count of conspiracy to
commit honest services mail fraud and healthcare fraud in violation of
18 U.S.C. 1349. RD, at 3; Government Exhibit (GX) 5, 7. As a result of
Respondent's criminal conviction based on his guilty plea, the U.S.
Department of Health and Human Services, Office of Inspector General
(HHS/OIG), excluded Respondent, effective September 20, 2022, from
participation in Medicare, Medicaid, and all federal health care
programs pursuant to 42 U.S.C. 1320a-7(a) for a period of twelve
years.\8\ RD, at 3; GX 8. Accordingly, the Agency finds substantial
record evidence that Respondent has been, and continues to be, excluded
from participation in federal healthcare programs.
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\8\ The HHS/OIG initially excluded Respondent from participating
in federal health care programs for a period of 17 years. GX 8.
However, the HHS/OIG later reduced the exclusion period to 12 years.
RD, at 7; see also Transcript (Tr.) 58-59.
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B. Discussion
Pursuant to 21 U.S.C. 824(a)(5), the Attorney General is authorized
to suspend or revoke a registration upon finding that the registrant
``has been excluded (or directed to be excluded) from participation in
a program pursuant to section 1320a-7(a) of Title 42.'' Id. section
824(a)(5).\9\ The Agency has consistently held that it may also deny an
application upon finding that an applicant has been excluded from a
federal health care program. Arvinder Singh, M.D., 81 FR 8247, 8248 n.3
(2016) (quoting Kwan Bo Jin, M.D., 77 FR 35021, 35021 n.2 (2012))
(``[W]here a registration can be revoked under [21 U.S.C.] 824, it can,
a fortiori, be denied under [21 U.S.C.] 823 since the law would not
require an agency to indulge in the useless act of granting a license
on one day only to withdraw it on the next.''); Robert Wayne Locklear,
M.D., 86 FR 33745 (citing South Corp. v. United States, 690 F.2d 1369,
1374 (Fed. Cir. 1982)) (``A statutory construction which would impute a
useless act to Congress will be viewed as unsound and rejected.'').
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\9\ In its OSC, the Government relies upon grounds Congress
provided to support revocation/suspension, not denial of an
application. Prior Agency decisions have addressed whether it is
appropriate to consider a provision of 21 U.S.C. 824(a) when
determining whether or not to grant a practitioner registration
application. For over forty-five years, Agency decisions have
concluded that it is. Robert Wayne Locklear, M.D., 86 FR 33738,
33744-45 (2021) (collecting cases).
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The Agency agrees with the ALJ and finds substantial record
evidence that Respondent has been, and remains, mandatorily excluded
from federal health care programs pursuant to 42 U.S.C. 1320a-7(a),\10\
and Respondent has admitted to the same. RD, at 4, 14-16; GX 5-9;
Respondent's Post-Hearing Brief, at 3. Accordingly, the Agency finds
that substantial record evidence establishes the Government's prima
facie case for denying Respondent's application under 21 U.S.C.
824(a)(5). See also 21 U.S.C. 823(g)(1).
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\10\ DEA has consistently held that it may deny an application
under 21 U.S.C. 824(a)(5) even if the conviction underlying the
exclusion does not relate to controlled substances. Jeffrey Stein,
M.D., 84 FR 46968, 46,971-72 (2019); see also Narciso Reyes, M.D.,
83 FR 61678, 61681 (2018); KK Pharmacy, 64 FR 49507, 49510 (1999)
(collecting cases); Melvin N. Seglin, M.D., 63 FR 70431, 70433
(1998); Stanley Dubin, D.D.S., 61 FR 60727, 60728 (1996). As the
Agency explained in Jeffrey Stein, this interpretation is ``well
founded in the CSA'' for several reasons. 84 FR 46,971-72. ``First,
only one of the four mandatory exclusion categories is related to
controlled substances (42 U.S.C. 1320a-7(a)(4)),'' yet ``Congress
specifically cited to the entirety of 1320a-7(a) of Title 42 in 21
U.S.C. 824(a)(5), rather than only including Section 1320a-
7(a)(4).'' Id. at 46,971. Second, the legislative history supports
DEA's plain language reading of the statute. Id. at 46,971-72. For
example, the Senate Report announcing the amendment of the CSA to
add this basis for revocation does not signal an intent to exclude
any categories of exclusions; it states, ``The bill would amend the
Controlled Substances Act to add exclusion from Medicare or a State
health care program as a basis for the denial, revocation, or
suspension of registration to manufacture, distribute or dispense a
controlled substance.'' S. Rep. 100-109, at 22 (1987); Jeffrey
Stein, 84 FR 46972. Finally, if 21 U.S.C. 824(a)(5) were read to
only permit DEA to revoke a registration if the exclusion were based
on a controlled substance conviction, this section would be largely
duplicative of 21 U.S.C. 824(a)(2), which permits DEA to revoke a
registration when the registrant ``has been convicted of a felony .
. . relating to any substance defined in this subchapter as a
controlled substance or a list I chemical.'' Jeffrey Stein, 84 FR
46972. ``To limit the application of Section 824(a)(5) to crimes
involving controlled substances would be an impermissible statutory
construction, because it would render Congress's amendment
superfluous.'' Id. (citing Dept. of Def., Army Air Force Exchange
Serv. v. Fed. Labor Relations Auth., 659 F.2d 1140, 1160 (D.C. Cir.
1981), cert. denied, 455 U.S. 945 (1982) (A statute should be read
in a ``manner which effectuates rather than frustrates the major
purpose of the legislative draftsmen.'')).
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C. Sanction
Where, as here, the Government has met its prima facie burden of
showing that Respondent's application for a registration should be
denied, the burden shifts to Respondent to show why he can be entrusted
with a registration. Morall v. Drug Enf't Admin., 412 F.3d. 165, 174
(D.C. Cir. 2005); Jones Total Health Care Pharmacy, LLC v. Drug Enf't
Admin., 881 F.3d 823, 830 (11th Cir. 2018); Garrett Howard Smith, M.D.,
83 FR 18882 (2018). The issue of trust is necessarily a fact-dependent
determination based on the circumstances presented by the individual
respondent. Jeffrey Stein, M.D., 84 FR 46968, 46972 (2019); see also
Jones Total Health Care Pharmacy, 881 F.3d at 833. Moreover, as past
performance is the best predictor of future performance, DEA
Administrators have required that a registrant who has committed acts
inconsistent with the public interest must accept responsibility for
those acts and demonstrate that he will not engage in future
misconduct. Jones Total Health Care Pharmacy, 881 F.3d at 833. A
registrant's acceptance of responsibility must be unequivocal. Id. at
830-31. In addition, a registrant's candor during the investigation and
hearing has been an important factor in determining acceptance of
responsibility and the appropriate sanction. Id. Further, DEA
Administrators have found that the egregiousness and extent of the
misconduct are significant factors in determining the appropriate
sanction. Id. at 834 & n.4. DEA Administrators have also considered the
need to deter similar acts by the respondent and by the community of
registrants. Jeffrey Stein, M.D., 84 FR 46972-73.
The Agency agrees with the ALJ that Respondent failed to
unequivocally accept responsibility for his misconduct. Respondent
testified that following his criminal conviction in 2018, he
volunteered with the Buddhist Meditation Center and stayed in the
temple for at least two one-week periods so that he could ``learn about
the right thing to do in life, and then meditate [himself] to stay in
control.'' Tr. 79-80; see RD, at 10. Respondent also testified that he
volunteered with several nonprofit organizations in his community and
generally stated that he ``help[ed] out the seniors.'' Tr. 80-83; see
RD, at 10. In 2021, Respondent received a Juris Doctor from Pacific
Coast University so that he could ``learn more about what's right and
what's wrong.'' Tr. 104; see RD, at 10; RX 4.
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Respondent also attended a continuing medical education course about
controlled substances and ``basically learn[ed] about opiates.'' Tr.
106-07; see RD, at 10. Finally, Respondent stated that he attended an
ethics course ``to learn more about ethics and boundaries,
unprofessional conduct, and learned [sic] things to avoid so that I
don't re-offended [sic] again.'' Tr. 75-76; see RD, at 10.
Though Respondent engaged in activities that he believed would help
him avoid future violations of the law, he did not unequivocally accept
responsibility for his actions. The Agency agrees with the ALJ that
``Respondent's testimony repeatedly minimized the nature, seriousness,
and scope of his criminal actions and minimized Respondent's
responsibility for intentionally entering into a sweeping, complex
conspiracy to commit honest services fraud that used his staff, abused
the trust of his patients, and cost the state of California millions of
dollars.'' RD, at 20-21 (emphasis in original). At the hearing,
Respondent failed to acknowledge his specific illegal conduct regarding
the charges of honest services mail fraud and healthcare fraud.
Instead, he described his misconduct in generalized terms stating: ``I
feel that is dishonest conduct, unprofessional conduct, and I accept
the responsibility for my misconduct.'' Tr. 72-73. Respondent also
failed to demonstrate that he understood how his fraudulent acts
impacted his patients, his office staff, the State of California, and
the U.S. government. RD, at 20; see Bernadette U. Iguh, M.D., 87 FR
56709, 56711 (2022) (``Respondent's emphasis on her ignorance as the
cause of her misconduct, in tandem with Respondent's lack of emphasis
on the damages she caused, both serve to downplay the extent to which
her own actions and decisions were harmful.'').\11\ Respondent's
attempts to minimize this egregious misconduct undermine any purported
acceptance of responsibility. Michael A. White v. Drug Enf't Admin.,
626 F. App'x 493, 496-97 (5th Cir. 2015).
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\11\ Respondent stated that he ``realize[d] that [he] hurt a lot
of people,'' but he did not discuss his fraudulent activities and
its impact on the people that he had served and supervised. Tr. 126.
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The Agency further agrees with the ALJ that ``Respondent never
acknowledged what he did wrong, what his triggers were, or what he had
done to ensure that his fraudulent behavior would not reoccur.'' RD, at
20 (emphasis in original). Indeed, ``[e]nsuring that a registrant is
trustworthy to comply with all relevant aspects of the CSA without
constant oversight is crucial to the Agency's ability to complete its
mission of preventing diversion within such a large regulated
population.'' Robert Wayne Locklear, M.D., 86 FR 33748 (citing Jeffrey
Stein, M.D., 84 FR 46974). Ultimately, the ALJ concluded, and the
Agency agrees, that Respondent has not demonstrated unequivocal
acceptance of responsibility for his actions. RD, at 21.\12\
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\12\ When a registrant fails to make the threshold showing of
acceptance of responsibility, the Agency need not address the
registrant's remedial measures. Ajay S. Ahuja, M.D., 84 FR 5479,
5498 n.33 (2019) (citing Jones Total Health Care Pharmacy, L.L.C. &
SND Health Care, L.L.C., 81 FR 79188, 79202-03 (2016)); Daniel A.
Glick, D.D.S., 80 FR 74800, 74801, 74810 (2015).
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In addition to acceptance of responsibility, the Agency considers
both specific and general deterrence when determining an appropriate
sanction. Daniel A. Glick, D.D.S., 80 FR 74810. Regarding specific
deterrence, the Agency agrees with the ALJ that ``Respondent's sentence
of one year of probation, with limited restrictions, did not apparently
instill in Respondent a full understanding of the scope of his
misconduct, in particular, the damage he has done to his victims,''
including his patients and his employees. RD, at 28-29; Tr. 126,
136.\13\ Regarding general deterrence, the Agency agrees with the ALJ
that the interests of general deterrence also support a denial of
Respondent's application, as a lack of sanction in the current matter
would send a message to the registrant community that a registrant can
commit similar misconduct without consequences. RD, at 28.
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\13\ Respondent stated that he ``was very remorseful about [his
misconduct] and tried to do everything to redeem [him]self.'' Tr.
98. But Respondent also stated that he wanted to redeem himself by
``being an anesthesiologist because [he's] talented at what [he]
do[es] as [sic] anesthesiologist.'' Tr. 126-27. Here, Respondent
failed to explain how his ability as an anesthesiologist would
redeem his prior dishonest misconduct. See Daniel A. Glick, D.D.S.,
80 FR 74810.
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The Agency also agrees with the ALJ that ``the egregious nature of
Respondent's exclusion from Medicare/Medicaid for more than five years
and the egregious nature of the underlying criminal convictions weigh
in favor of denial of his application.'' Id. The record reflects that
Respondent was involved in a ``sophisticated and complex'' fraudulent
scheme over a period of three years that involved bribes, kickbacks,
sham lease agreements, disguise payments, and coded text messages,
which all resulted in millions of dollars of damages. Id. at 27; see
id. at 7-8, 22. Respondent entered a plea agreement with the U.S.
government acknowledging that he had violated federal law and that he
had ``acted willfully and intended to defraud.'' GX 5; see Tr. 37-39,
133-34.\14\ The Agency agrees with the ALJ's description that the
criminal convictions involved ``the abuse of patients' trust, the
creation of straw companies and false salary records, and the use of
employees to further the fraud, and millions of dollars of damages.''
Id. at 22.
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\14\ Respondent even attempted to disguise the unlawful referral
payments by covering up the fees as ``basic rent'' and ``salary''
under various shell companies. GX 5; see RD, at 6. Respondent also
involved his ``office staff and medical professionals at his clinic
to act in ways to further his kickback scheme.'' Tr. 133; see GX 5.
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In sum, Respondent has not offered any credible evidence on the
record to rebut the Government's prima facie case for denial of his
application and Respondent has not demonstrated that he can be
entrusted with the responsibility of registration. Id. at 19.
Accordingly, the Agency will order that Respondent's application be
denied.
Order
Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21
U.S.C. 823(g)(1) and 824(a)(5), I hereby deny the pending application
for a DEA Certificate of Registration, Control No. W22138631C,
submitted by Phong H. Tran, M.D., as well as any other pending
application of Phong H. Tran, M.D., for additional registration in
California. This Order is effective [insert Date Thirty Days From the
Date of Publication in the Federal Register].
Signing Authority
This document of the Drug Enforcement Administration was signed on
March 25, 2025, by Acting Administrator Derek Maltz. That document with
the original signature and date is maintained by DEA. For
administrative purposes only, and in compliance with requirements of
the Office of the Federal Register, the undersigned DEA Federal
Register Liaison Officer has been authorized to sign and submit the
document in electronic format for publication, as an official document
of DEA. This administrative process in no way alters the legal effect
of this document upon publication in the Federal Register.
Heather Achbach,
Federal Register Liaison Officer, Drug Enforcement Administration.
[FR Doc. 2025-05526 Filed 3-31-25; 8:45 am]
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