Turning Tide, Inc. Decision and Order; Procedural History, 47411-47416 [2016-17245]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 81, Number 140 (Thursday, July 21, 2016)]
[Notices]
[Pages 47411-47416]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17245]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 10-71]


Turning Tide, Inc. Decision and Order; Procedural History

    On August 17, 2010, the former Administrator of the Drug 
Enforcement Administration issued an Order to Show Cause and Immediate 
Suspension of Registration (hereinafter, Show Cause Order or Order) to 
Turning Tide, Inc. (Respondent), of Rockland, Maine. Show Cause Order, 
at 1. The Show Cause Order proposed the revocation of Respondent's DEA 
Certificate of Registration RT0370015,\1\ which authorized it to 
dispense controlled substances as a Narcotic Treatment Program pursuant 
to 21 U.S.C. 823(g)(1), and the denial of any pending applications to 
renew or modify its registration, on the ground that its ``continued 
registration is inconsistent with the public interest, as that term is 
defined in 21 U.S.C. 823(f).'' Id. at 1.
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    \1\ The Order alleged that Respondent's registration was due to 
expire on November 30, 2010.
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    The Show Cause Order specifically alleged that ``Respondent is 
owned by Angel Fuller-McMahan'' and that its ``registration is 
conditioned upon a Memorandum of Agreement (MOA) with DEA which 
prohibits Ms. Fuller-McMahan from (1) having physical access to 
Respondent's premises; (2) ordering controlled substances on behalf of 
Respondent; and (3) executing any renewal applications . . . on behalf 
of Respondent.'' Id. at 1-2. The Order then alleged that Ms. Fuller-
McMahan had been arrested on July 13, 2010 and charged with unlawful 
possession of cocaine, and that at the time of her arrest, she had in 
her possession approximately 25 grams of cocaine and two hypodermic 
needles.\2\ Id. at 2. The Order further alleged that Ms. Fuller-McMahan 
had ``arranged to purchase cocaine'' from both a patient and an 
employee of Respondent. Id. The Order also alleged that ``[w]hile 
serving as Respondent's Program Director, Ms. Fuller-McMahan approached 
another patient . . . and offered to trade methadone for cocaine'' by 
``creat[ing] a fraudulent order for methadone,'' even though she was 
then prohibited by the MOA from ordering controlled substances on 
behalf of Respondent. Id. The Order then alleged that Ms. Fuller-
McMahan had purchased cocaine in three separate ``illegal drug 
transactions with another of Respondent's patients.'' Id.
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    \2\ The Order also alleged that on August 31, 2001, Ms. Fuller-
McMahan had been convicted in state court of unlawful possession of 
heroin. Show Cause Order, at 2.
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    Next, the Show Cause Order alleged that notwithstanding the MOA's 
terms, ``Ms. Fuller-McMahan continues to retain control and have 
supervisory authority over key aspects of Respondent's operation,'' 
that she had represented to a patient ``that she has access to 
controlled substances which are ordered on behalf of Respondent,'' and 
that she has ``repeatedly violated the terms of the MOA by entering the 
physical premises of [Respondent] and executing a renewal application 
on [its] behalf.'' Id. Finally, the Order alleged that Respondent 
``continued to employ Ms. Fuller-McMahan's husband, Vance McMahan, 
despite the fact that Mr. McMahan has been convicted of illegal drug 
possession and has access to Respondent's controlled substances and 
confidential patient information.'' Id.
    Based on the above allegations, the former Administrator concluded 
that Respondent's continued registration during the pending of the 
proceeding would ``constitute an imminent danger to the public health 
and safety'' and therefore ordered that its registration be suspended 
immediately. Id. at 3 (citing 21 U.S.C. 824(d)). The former 
Administrator also authorized the Special Agents and Diversion 
Investigators who served the Order to either ``place under seal or to 
remove for safekeeping all controlled substances that [Respondent] 
possesses pursuant to the registration which [was] suspended.'' Id. 
(citing 21 U.S.C. 824(f) and 21 CFR 1301.36(f)).
    Thereafter, Respondent requested a hearing on the allegations and 
the matter was placed on the docket of the Agency's Administrative Law 
Judges (ALJ). Following the ALJ's issuance of an Order for Pre-Hearing 
Statements, the Government moved for summary disposition on the ground 
that on September 7, 2010, the Maine Department of Health and Human 
Services (MDHHS) had temporarily suspended Respondent's Substance Abuse 
Treatment license. ALJ Dec., at 3. As support for the motion, the 
Government attached a letter dated September 7, 2010 from the Director 
of the MDHHS's Division of Licenses & Regulatory Services to Ms. 
Fuller-McMahan. Mot. for Summ. Disp., at Ex. 2. Therein, the Director 
stated that MDHHS was ``revoking on an emergency basis for a period not 
to exceed thirty days the agency's licenses to operate an Opioid 
Treatment Program and . . . Outpatient Substances Abuse Services.'' Id. 
(citing 14-118 C.M.R. Ch. 5, Sec.  2.10.9). The letter further stated 
that ``[t]he Department reserves its right to petition the District 
Court to extend the period of license revocation in accordance with 4 
M.R.S.A. Sec.  184(6) and 5 M.R.S.A. Sec.  10003.'' Id. at 2.
    Upon reviewing the motion, the ALJ directed Respondent to file a 
response to the Government's motion, which Respondent did after 
obtaining an extension.\3\ ALJ Dec., at 3. Thereafter, the Government 
filed a further pleading in which it noted that MDHHS had filed a 
complaint in state court seeking the temporary suspension and permanent 
revocation of Respondent's Maine

[[Page 47412]]

Alcohol and Drug Treatment Certificate of Licensure. Reply to 
Opposition to Gov. Mot. for Summ. Disp., at 2. As support for its 
position, the Government attached a copy of the State's complaint with 
supporting exhibits, the summons and return of service, and a draft of 
an order entitled: Order Relating To Plaintiff's Application For 
Temporary Suspension Of License Pending Judicial Review. However, 
absent from the evidence was a court order extending the revocation of 
Respondent's state license.
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    \3\ Respondent argued that the proposed revocation of its DEA 
registration would violate its right to due process because it was 
based on the MDHHS suspension, which in turn, was based on the DEA 
Order to Show Cause and Immediate Suspension of Registration. See 
Response In Opposition To The DEA Motion For Summary Disposition, at 
2-5.
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    On October 6, 2010, the ALJ issued her recommended decision. 
Notwithstanding that the temporary suspension ordered by the Director 
of the MDHHS was due to expire on the following day and could not be 
extended without a court order, the ALJ granted the Government's motion 
for summary disposition on the ground that it was undisputed that 
Respondent ``lacks the authority to currently handle controlled 
substances under state law,'' and thus, it was not entitled to maintain 
its DEA registration. ALJ at 5-6. The ALJ therefore recommended that 
Respondent's registration be revoked. Id. at 10.
    On October 27, 2010, the ALJ forwarded the record to the 
Administrator's Office for final agency action. However, at no time did 
the Government move to supplement the record with evidence showing that 
the state court had extended the suspension of Respondent's state 
license.
    Upon review of the record, the former Administrator noted that 
Respondent's DEA registration had expired on November 30, 2010. A 
subsequent query of the Agency's registration records determined that 
Respondent had not filed a renewal application. Moreover, public 
records of the State indicated that Respondent was no longer in 
business. Accordingly, the former Administrator directed the parties to 
address why the case was not moot and to specifically identify what 
collateral consequence existed which precluded a finding of mootness. 
Order of the Administrator (Sept. 20, 2011), at 1-2 (citing RX Direct 
Pharmacy, Inc., 72 FR 54070 (2007)).
    Only the Government filed a response. Therein, the Government noted 
that upon service of the Immediate Suspension Order, it ``seized and 
placed under seal various controlled substances from Respondent's 
facility.'' Id. at 1 (citing Affidavit of DI). According to the DI, the 
Agency seized 121 unopened 500 ml bottles of methadone 10mg/ml; 18 
opened 500 ml bottles of methadone 10mg/ml ``containing various amounts 
of methadone''; and 23 individual ``take home'' doses of methadone. GX 
10, at 3.
    Noting that under the Controlled Substances Act, `` `[a]ll right, 
title and interest in' any controlled substances seized pursuant to a 
suspension order `vests in the United States upon a revocation order 
being[sic] final' and `shall be forfeited to the United States,' '' the 
Government argued that if the case ``is declared moot and dismissed, 
title to the controlled substances will be left undetermined.'' Id. 
(quoting 21 U.S.C. 824(f)). The Government further noted that `` `DEA 
has previously held that ``a litigant cannot defeat the effect of this 
provision by simply allowing its registration to expire.'' ' '' Id. 
(quoting East Main Street Pharmacy, 75 FR 66149 (2010) (other citation 
omitted)). Id. The Government thus maintained that the ``case 
remain[ed] a live controversy'' and requested the issuance of a final 
order. Id. at 2.
    Upon review of the matter, the former Administrator agreed with the 
Government that the case was not moot. Order Remanding for Proceedings, 
at 6 (May 20, 2013). She concluded, however, that a final order based 
on Respondent's lack of state authority could not resolve the issue of 
title to the drugs that were seized for two reasons. First, she 
explained that the Immediate Suspension Order, which provided authority 
for the seizure, was not based on Respondent's lack of state authority. 
Id. at 6. Second, she observed that ``even if a subsequent loss of 
state authority could be used to support the forfeiture of drugs which 
have been seized based on entirely different factual allegations and 
legal grounds, the Government [was] not entitled to prevail'' because 
the ``contention that Respondent lacked state authority was not 
supported by substantial evidence.'' Id. at 7. The former Administrator 
then observed that the MDHHS' suspension order was due to expire the 
day after the ALJ issued her recommended decision (and even before the 
record was forwarded to the Administrator's Office) and that while the 
Government had submitted a copy of the State's complaint which sought 
to extend the suspension, a summons, and an unsigned proposed order 
extending the suspension, the Government produced no evidence ``that 
the state court had continued the suspension past the initial thirty 
days imposed by the MDHHS.'' Id. Because the record did not support the 
finding required under 21 U.S.C. 824(a)(3), the former Administrator 
remanded the case for further proceedings consistent with her opinion. 
Id. at 8.
    On remand, the ALJ ordered the parties to file and serve their 
respective prehearing statements. Order for Prehearing Statements (GX 
11), at 1. The Government timely complied. Termination Order (GX 12), 
at 1. Thereafter, Respondent moved to enlarge the time for filing its 
prehearing statement. Id. While the ALJ granted the motion and extended 
the due date of Respondent's statement by three weeks, Respondent 
failed to comply. Id. Accordingly, twelve days later, the ALJ held, sua 
sponte, that ``Respondent ha[d] constructively waived its right to a 
hearing'' and ordered that the hearing be terminated. Id. at 2.
    Thereafter, the Government submitted a Request for Final Agency 
Action along with the investigative record to the Administrator's 
Office. Upon review of the record, the former Administrator adopted the 
ALJ's finding that Respondent had waived its right to a hearing as to 
the validity of the Immediate Suspension Order and the seizure of the 
controlled substances. However, the former Administrator denied the 
Government's Request for Final Agency Action, reasoning that the public 
interest provisions of 21 U.S.C. 823(f) and 824(a)(4), which the 
Government relied on as the source of its authority to immediately 
suspend Respondent's registration, do not apply to a Narcotic Treatment 
Program. Order Denying Government's Request for Final Agency Action, at 
9 (May 11, 2015).
    As the former Administrator explained, Respondent was registered 
under 21 U.S.C. 823(g)(1). Under this provision, ``[t]he Attorney 
General shall register an applicant to dispense narcotic drugs to 
individuals for maintenance [and/] or detoxification treatment'' if the 
following three conditions are met:

    (A) if the applicant is a practitioner who is determined by the 
Secretary to be qualified (under standards established by the 
Secretary) to engage in the treatment with respect to which 
registration is sought;
    (B) if the Attorney General determines that the applicant will 
comply with standards established by the Attorney General respecting 
(i) security of stocks of narcotic drugs for such treatment, and 
(ii) the maintenance of records (in accordance with section 827 of 
this title) on such drugs; and
    (C) if the Secretary determines that the applicant will comply 
with standards established by the Secretary (after consultation with 
the Attorney General) respecting the quantities of narcotic drugs 
which may be provided for unsupervised use by individuals in such 
treatment.

    21 U.S.C. 823(g)(1).
    The former Administrator explained that in contrast to every other 
category of registration set forth in section 823, this provision does 
not grant the Attorney General authority to deny an

[[Page 47413]]

application upon a determination ``that the issuance of such 
registration . . . would be inconsistent with the public interest.'' 
Order Denying Govt.'s Req., at 9 (comparing 21 U.S.C. 823(g)(1) with 
id. Sec.  823(f); see also id. Sec.  823(a), (b), (c), (d), (e), and 
(h). The former Administrator also observed that, in contrast to every 
other category of registration set forth in section 823, Congress did 
not characterize these three provisions as ``factors'' to be considered 
and given discretionary weight ``[i]n determining the public 
interest.'' Order Denying Govt.'s Req., at 9 (comparing Sec.  823(g) 
with id. Sec.  823(f); see also id. Sec.  823(a), (b), (c), (d), (e), 
and (h). Rather, the three subparagraphs of section 823(g)(1) are 
conditions for registration.
    With respect to the Agency's authority to revoke a registration, 
the former Administrator noted that while 21 U.S.C. 824(a) sets forth 
five different ground for revoking a registration, it also contains a 
specific provision which governs the Agency's authority to revoke a 
registration with respect to a Narcotic Treatment Program. This 
provision states that:

    A registration pursuant to section 823(g)(1) of this title to 
dispense a narcotic drug for maintenance treatment or detoxification 
treatment may be suspended or revoked by the Attorney General upon a 
finding that the registrant has failed to comply with any standard 
referred to in section 823(g)(1) of this title.

    Id. Sec.  824(a). So too, section 824(d) provides that ``[a] 
failure to comply with a standard referred to in section 823(g)(1) of 
this title may be treated under this subsection as grounds for 
immediate suspension of a registration granted under such section.'' 
Id. Sec.  824(d).
    The former Administrator noted that section 824(a)(4) authorizes 
the revocation of a registration upon a finding that a 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.'' Order Denying Govt.'s Req., at 7. However, based 
on the provisions of section 823(g)(1) and the specific provision 
governing the revocation of an NTP registration for non-compliance with 
any standard referred to in 823(g)(1), the former Administrator 
explained that even assuming that the public interest revocation 
authority of section 824(a)(4) could be invoked in this proceeding, 
this provision does not grant the Government any additional authority 
because the determination must be made by reference to the standards 
set forth in section 823(g)(1). Id. at 8-9.
    The former Administrator further noted that because Respondent's 
registration was issued pursuant to section 823(g)(1), it was clear 
that the public interest standard of section 823(f) has no application 
in this proceeding. Id. at 9. She then held that, consistent with 
section 824(a), the suspension order could only be sustained if the 
Government put forward sufficient evidence to support ``a finding that 
the registrant has failed to comply with any standard referred to in 
section 823(g)(1).'' Id.
    The former Administrator noted, however, that the allegations of 
the Order to Show Cause and Immediate Suspension Order may, if 
supported by substantial evidence, establish that Respondent failed to 
comply with the standards of section 823(g)(1). Id. However, because in 
its Request for Final Agency Action, the Government had not addressed 
which of the standards had been violated and how so, the former 
Administrator denied the Government's Request for Final Agency Action. 
Id. Analogizing the Government's Request to a motion for summary 
judgment, the former Administrator then explained that just as the 
denial of a motion for summary judgment is an interlocutory order and 
not a final decision, so too the denial of the Government's Request for 
Final Agency Action is an interlocutory order and not a final decision 
of the Agency. Id. (citing, inter alia, R.R. Donnelley & Sons Co. v. 
FTC, 931 F.2d 430, 431 (7th Cir. 1991) (holding that the denial of a 
motion for summary judgment is an interlocutory order and not a final 
judgment)). The former Administrator thus provided the Government with 
the opportunity to file a successive Request for Final Agency Action. 
Id.
    Thereafter, the Government attempted to establish that this matter 
had become moot because there was no need to determine title to the 
drugs that were seized pursuant to the ISO. The basis for the 
Government's contention was that: (1) The drugs had since passed their 
expiration date, (2) Respondent's successor-in-interest (Ms. Fuller-
McMahan) had not responded to a letter from the Special Agent in Charge 
of the local Field Division which offered her the opportunity to make 
arrangements for the disposal of the drugs, and (3) in a phone call 
with an Agency Investigator months later, Ms. Fuller-McMahan permitted 
the Agency to destroy the drugs. I found, however, that Ms. Fuller-
McMahan's actions did not relinquish Respondent's title to the 
property. Order, at 1-2 (Mar. 16, 2016).
    Subsequently, the Government again suggested that the case was moot 
because it had determined that a creditor (Coastal Enterprises, Inc.) 
had placed a lien against Respondent assets, and that Coastal had 
executed a release of its claims against the drugs the Agency had 
seized. I rejected this as sufficient to establish mootness because the 
Government continued to acknowledge that Ms. Fuller-McMahan is 
Respondent's successor-in-interest and because the Government produced 
no evidence that Coastal had foreclosed on its lien and/or obtained a 
judgment against Respondent. Order, at 1 (May 4, 2016).
    Thereafter, the Government resubmitted its Request for Final Agency 
Action. See Second Req. for Final Agency Action. Ms. Fuller-McMahan 
also submitted a letter to me stating that she has in her ``possession 
documents and recordings that refute these allegations.'' Letter from 
Angel Fuller-McMahan to the Acting Administrator (May 20, 2106). 
However, Ms. Fuller-McMahan did not provide either the documents or the 
recordings, and in any event, the former-Administrator remanded this 
matter to the Office of Administrative Law Judges for the express 
purpose of allowing Respondent to challenge the Suspension Order. While 
Respondent initially indicated its intent to participate in the 
hearing, it failed to comply with the ALJ's Order and file a Prehearing 
Statement. As a result, the ALJ found that Respondent had waived its 
right to a hearing and terminated the proceeding. Thereafter, the 
former Administrator adopted the ALJ's waiver finding. Order Denying 
Government's Request for Final Agency Action, at 6 (May 11, 2015). Ms. 
Fuller-McMahan has offered no reason to reconsider that finding. 
Accordingly, based on the Investigative File submitted by the 
Government, I make the following finding of fact.

Findings

    Respondent, an administratively-dissolved corporation, was formerly 
registered as a Narcotic Treatment Program under 21 U.S.C. 823(g)(1). 
Ms. Angel Fuller-McMahan was the owner of the corporation.
    On August 31, 2001, Ms. Fuller-McMahan, following her entry into a 
plea agreement, was convicted by the Maine Superior Court of the 
unlawful possession of heroin and given a suspended sentenced of two 
years imprisonment and one year of probation. GX 3, at 1. She also 
enrolled in a methadone maintenance program. Id.

[[Page 47414]]

    On October 18, 2007, Ms. Fuller-McMahan filed a new application on 
behalf of Respondent for registration as a Narcotic Treatment Program. 
Id. On June 13, 2008, Ms. Fuller-McMahan entered into Memorandum of 
Agreement (MOA) with DEA's New England Field Division, pursuant to 
which the Agency granted Respondent's application subject to certain 
conditions. Id. at 1-2. As relevant here, these included that: (1) Ms. 
Fuller-McMahan ``is prohibited from ordering any controlled substances 
and will execute a power of attorney authorizing one of her management 
staff to order the controlled substances''; (2) that ``the same 
management staff will'' execute Respondent's renewal applications; (3) 
Ms. Fuller-McMahan ``will not have physical access to the registered 
location'' or ``any keys or codes to the alarm system''; (4) Ms. 
Fuller-McMahan ``will not be enrolled as a client of'' Respondent and 
``will not guest dose at [it] under any circumstances.'' Id. at 1. The 
MOA further provided that ``[v]iolations of the terms . . . may result 
in an order to show cause to revoke, or revoke and immediately 
suspend'' its DEA registration, and that in any such proceeding, ``DEA 
reserves the right to introduce into evidence . . . this Agreement and 
violations of this Agreement.'' Id. at 1-2. On June 23, 2008, the then 
Special Agent in Charge of the Field Division approved the MOA, id. at 
2, and on July 1, 2008, Respondent's application was approved. GX 2, at 
2.
    On December 11, 2008, J.C., a pharmacist, executed a state board 
application to become Respondent's new Pharmacist-in-Charge. GX 16, at 
1. On the application, J.C. listed Ms. Fuller-McMahan as an 
``authorized person.'' Id. at 6. According to a regulation of the Maine 
Board of Pharmacy, ``[a]n `authorized person' is a person other than a 
pharmacy technician (e.g., computer technician, bookkeeper) who the 
pharmacist in charge has designated to be present in the prescription 
filling area in the absence of a pharmacist.'' GX 17, at 1 (copy of 02-
392 CMR Ch. 1, Sec.  1).
    According to the affidavit of a Supervisory Special Agent with the 
Maine Drug Enforcement Agency (MDEA), on November 3, 2009, he 
``interviewed M.K., a former patient'' of Respondent. GX 15, at 2. The 
Agent further explained that M.K. had called him ``and requested to 
speak to [him] in exchange for consideration with M.K.'s pending drug 
charges.'' Id. The Agent further explained that an interview was 
arranged and that ``no promises were made to M.K. in exchange for any 
information she might divulge.'' Id.
    According to the Agent, during her interview, M.K. stated that Ms. 
Fuller-McMahan had ``approached her and asked her to procure cocaine 
for which [Fuller-McMahan] would be willing to trade methadone 
purchased on behalf of'' Respondent. Id. M.K. further stated that Ms. 
Fuller-McMahan had said ``that she intended to create a falsified order 
for methadone to be purchased by'' Respondent for the purported use by 
prisoners at the county jail ``for drug treatment,'' and that she would 
trade this methadone for cocaine. Id.
    The Agent also averred that M.K. had named two other persons who 
were obtaining methadone at Respondent for drug treatment and selling 
it. Id. According to the Agent, ``M.K. stated she had purchased 
controlled substances from these'' two persons. Id. The Agent did not, 
however, clarify whether M.K. had purchased methadone from these 
persons. While according to the Agent, M.K. offered to perform 
undercover buys from these persons, the Agent offered no evidence that 
any such buys were performed. Moreover, no further evidence was 
provided establishing that Respondent was improperly dispensing 
methadone to these two persons. See 42 CFR 8.12(i) (regulations 
governing ``[u]nsupervised or `take home use' '').
    In his affidavit, the Agent testified that on July 13, 2010, Ms. 
Fuller-McMahan was arrested and charged with Possession of Cocaine, a 
felony offense under Maine Law. Id. at 1 (citing 17-A M.R.S.A. Sec.  
1107-A). The Agent further stated that Ms. Fuller-McMahan was in 
possession of ``approximately 25 grams of powdered cocaine'' and two 
syringes which she had obtained from J.R., a patient of Respondent, who 
performed an undercover sale for the MDEA. Id.
    After her arrest, Ms. Fuller-McMahan waived her Miranda rights and 
was interviewed by the Agent; a video recording of the interview was 
provided by the Government. During the interview, Ms. Fuller-McMahan 
stated that she intended to deliver the cocaine to C.G., a drug and 
alcohol counselor employed by Respondent. Id. She also ``admitted that 
she was using cocaine and had ingested cocaine in the last three 
weeks.'' Id. During the interview, Ms. Fuller-McMahan asked the Agent: 
``can you charge me with something else? Less? . . . If I agree to not 
go into Turning Tide . . . or to fight it, ever . . . back out 
completely?'' Id. at 2.
    Thereafter, the State charged Ms. Fuller-McMahan with two counts of 
unlawful possession of a scheduled drug. GX 4, at 1. Ms. Fuller-McMahan 
pled guilty to one of the counts, and on October 28, 2010, Ms. Fuller-
McMahan was convicted by the Superior Court of a single count of 
unlawful possession of a scheduled drug. Id. The court sentenced Ms. 
Fuller-McMahan to 364 days in the county jail, but suspended all but 30 
days of the sentence; the court also placed her on probation for a 
period of one year. Id.
    On some date which is not clear from the evidence, Respondent, 
through its attorney, surrendered its state licenses to operate an 
Opioid Treatment Program and Outpatient Substance Abuse Services; 
Respondent also surrendered its pharmacy license. GX 5. Respondent also 
allowed its registration to expire.\4\
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    \4\ The Government put forward no evidence in support of the 
allegation that Respondent ``continues to employ Ms. Fuller-
McMahan's husband . . . despite the fact that [he] has been 
convicted of illegal drug possession and has access to Respondent's 
controlled substances and confidential patient information.'' GX 1, 
at 2. Nor did it put forward any evidence as to the allegations that 
she had engaged in three other illegal purchases of cocaine with 
another of Respondent's patients.
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Discussion

    As previously held, because Respondent's registration has expired, 
and there is no application to act upon, the only issue remaining in 
the proceeding is whether the Government can claim title to the 
controlled substances it seized pursuant to the authority granted by 
the Immediate Suspension Order. See S & S Pharmacy, Inc., 78 FR 57656, 
57659 (2013); RX Direct Pharmacy, Inc., 72 FR 54070, 54072 (2007). 
Pursuant to 21 U.S.C. 824(f),

    In the event the Attorney General suspends or revokes a 
registration under section 823 of this title, all controlled 
substances . . . owned or possessed by the registrant pursuant to 
such registration at the time of suspension or the effective date of 
the revocation order, as the case may be, may, in the discretion of 
the Attorney General, be placed under seal. . . . Upon a revocation 
order becoming final, all such controlled substances . . . shall be 
forfeited to the United States; and the Attorney General shall 
dispose of such controlled substances . . . in accordance with 
section 881(e) of this title. All right, title, and interest in such 
controlled substances . . . shall vest in the United States upon a 
revocation order becoming final.

    DEA has previously held that a registrant, whose property has been 
seized pursuant to an Immediate Suspension Order, cannot defeat the 
effect of this provision by allowing its registration to expire. See, 
e.g., Meetinghouse Community Pharmacy, Inc., 74 FR 10073, 10076 n.5 
(2009).

[[Page 47415]]

    As explained above, section 824(a) sets forth a specific provision 
which grants the Agency authority to suspend or revoke the registration 
of a Narcotic Treatment Program. This provision states that:

    A registration pursuant to section 823(g)(1) of this title to 
dispense a narcotic drug for maintenance treatment or detoxification 
treatment may be suspended or revoked by the Attorney General upon a 
finding that the registrant has failed to comply with any standard 
referred to in section 823(g)(1) of this title.

    Id. Sec.  824(a). So too, section 824(d) provides that ``[a] 
failure to comply with a standard referred to in section 823(g)(1) of 
this title may be treated under this subsection as grounds for 
immediate suspension of a registration granted under such section.'' 
Id. Sec.  824(d). Thus, consistent with section 824(a), the former 
Administrator held that the suspension order can only be sustained if 
the Government puts forward sufficient evidence to support ``a finding 
that the registrant has failed to comply with any standard referred to 
in section 823(g)(1).''
    Of the three standards for registration as an NTP set forth in 21 
U.S.C. 823(g)(1), the Government invokes only subparagraph B. It 
authorizes ``the Attorney General [to] determine[] that the applicant 
will comply with standards established by the Attorney General 
respecting (i) security of stocks of narcotic drugs for such treatment, 
and (ii) the maintenance of records (in accordance with section 827 of 
this title) on such drugs.'' 21 U.S.C. 823(g)(1)(B) (emphasis added).
    The Government argues that ``Ms. Fuller-McMahan's conduct 
demonstrated that she was a security threat to [Respondent] and, 
accordingly, a security risk to its stocks of controlled substances.'' 
Second Request for Final Agency Action, at 10. It further argues that 
her ``continued ownership and control over Respondent's clinic 
constituted an imminent danger to the public health or safety.'' Id. 
(citing 21 U.S.C. 824(d)). And it argues that ``[b]y permitting Ms. 
Fuller-McMahan to act as Turning Tide's director and continue to have 
control over the drug treatment facility, Respondent failed to comply 
with standards respecting the `security of stocks of narcotic drugs for 
. . . treatment,' '' and thus violated section 823(g)(1)(B). Id. at 11.
    Invoking the terms of the MOA, the Government argues that ``the 
evidence paints a far different picture of Ms. Fuller-McMahan's 
involvement in [Respondent] than that contemplated by'' the MOA. Id. 
First, the Government argues that Ms. Fuller-McMahan admitted that she 
remained Turning Tide's director. Id. The Government does not, however, 
point to any provision of the MOA which prohibited Ms. Fuller-McMahan 
from acting as Turning Tide's director.
    Stronger is the Government's claim that Ms. Fuller-McMahan violated 
the MOA because she was entering its physical premises. The MOA 
specifically prohibited her from ``hav[ing] physical access to the 
registered location,'' GX 3, at 1; and as found above, during the 
interview which followed her arrest, Ms. Fuller-McMahan clearly tried 
to negotiate a lesser charge for agreeing not to go into the clinic. 
See id. Moreover, the Government produced the application filed by 
Respondent's PIC, in which he designated her as an ``authorized 
person,'' GX 16, at 4; which under Maine's regulation authorized her 
``to be present in the prescription filling area in the absence of a 
pharmacist.'' GX 17.
    Yet there is no evidence that Ms. Fuller-McMahan ever actually 
entered the pharmacy or that she possessed the keys or the alarm code 
for the pharmacy.\5\ See, e.g., 21 CFR 1301.72(d) (``The controlled 
substances storage areas shall be accessible only to an absolute 
minimum of specifically authorized employees.''). Thus, while the 
evidence supports a finding that Ms. Fuller-McMahan had access to the 
clinic and thus violated the MOA, by itself, this conclusion does not 
support a finding that Respondent posed ``an imminent danger to the 
public health or safety,'' 21 U.S.C. 824(d), as is required to support 
the Order of Immediate Suspension.
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    \5\ The record contains no evidence of interviews of any 
employees who might have observed her entering the pharmacy.
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    The Government further argues that ``[b]y executing a renewal 
application in direct violation of the MOA . . . Ms. Fuller-McMahan 
also provided herself with the legal means to order controlled 
substances . . . and therefore carry out the scheme she had proposed to 
M.K.'' Id. at 11 (citing 21 CFR 1305.11(c); other citations omitted). 
While the Government then acknowledges that ``there is no evidence that 
this particular transaction took place,'' id., it notes that Ms. 
Fuller-McMahan was arrested and convicted for possessing cocaine which 
she had obtained from a patient and intended to deliver to an employee. 
Id. at 11-12.
    The Government then argues that ``Ms. Fuller-McMahan was 
predisposed to continue to engage in drug trafficking which could have 
involved trading Respondent's stocks of narcotic substances for 
cocaine'' and that ``[h]er behavior in this regard independently 
confirms her intent to purchase illegal substances with narcotic drugs 
slated for legitimate drug treatment.'' Id. at 12 (emphasis added). And 
arguing that her ``past performance is the best predictor of future 
performance,'' the Government asserts that Ms. Fuller-McMahan's conduct 
``demonstrated a high likelihood that she would find a way to divert 
Respondent's supply of methadone in exchange for illegal drugs[,]'' and 
``[t]hus, her continued access, ownership, and control over 
Respondent's business constituted an imminent threat to the public 
health or safety.'' Id. (int. quotations and citation omitted).
    Under DEA's regulation which is applicable to ``all registrants,'' 
Respondent was required to ``provide effective controls and procedures 
to guard against theft and diversion of controlled substances.'' 21 CFR 
1301.71(a). See also 21 CFR 1301.72(d). Thus, substantial evidence that 
Ms. Fuller-McMahan was obtaining methadone from Respondent's stocks and 
trading it for other drugs would clearly establish Respondent's non-
compliance with a standard established under 21 U.S.C. 823(g)(1)(B) and 
would clearly support the requisite finding that its continued 
registration posed an imminent danger to public health or safety as 
required by 21 U.S.C. 824(d). The Government, however, has not produced 
such evidence.
    The Government points to Ms. Fuller-McMahan's execution of the 
renewal application. It argues that Ms. Fuller-McMahan did this to 
``provide[ ] herself with the legal means to order controlled 
substances.'' Second Request, at 11. Yet the Government has not 
produced a single order form (DEA-222) that Ms. Fuller-McMahan executed 
on behalf of Respondent or any other evidence that she was ordering 
methadone.
    The Government also points to Ms. Fuller-McMahan's alleged proposal 
to provide methadone to M.K. in exchange for cocaine as support for its 
assertion that she ``was predisposed to continue to engage in drug 
trafficking which could have involved trading Respondent's stocks of 
narcotic substances for cocaine.'' id. at 12. This fails too, as 
notwithstanding Respondent's waiver of its right to challenge the 
Immediate Suspension Order, the Agency's Order in this matter must be 
supported by ``reliable, probative, and substantial evidence.'' 5 
U.S.C. 556.
    Under the Agency's rules, Respondent's waiver of its right to a 
hearing does not constitute an

[[Page 47416]]

admission of the allegations. Thus, the Government had the burden of 
proving its claim that Ms. Fuller-McMahan was likely to trade 
Respondent's methadone for cocaine.
    However, the Government's evidence as to the alleged proposal of 
Ms. Fuller-McMahan to trade methadone to M.K. in exchange for cocaine 
is so lacking in indicia of reliability that it does not support the 
requisite finding under section 823(g)(1). Notably, M.K.'s statement is 
hearsay,\6\ and there is no evidence that M.K., who has not been 
identified, was under oath when she provided the statement. Also, the 
MDEA Agent acknowledged that M.K. had offered ``to speak to [him] in 
exchange for consideration with M.K.'s pending drug charges.'' GX 15, 
at 2. Notwithstanding that the MDEA Agent further explained that ``no 
promises were made to M.K. in exchange for any information she might 
divulge,'' informants typically do not provide information without some 
expectation of receiving favorable treatment and have ample motive to 
shade their statements. Nor did the MDEA Agent's affidavit provide any 
additional facts tending to establish that M.K. had provided reliable 
information in other matters, or that the information M.K. provided 
regarding Ms. Fuller-McMahan was otherwise corroborated.\7\
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    \6\ While M.K.'s statement is actually hearsay within hearsay, I 
have no reason to question the MDEA Agent's recounting of the facts 
surrounding M.K.'s agreeing to provide the statement or that he has 
accurately testified as to the substance of M.K.'s statement.
    \7\ Likewise, the Government did not produce the entirety of 
M.K.'s statement and thus, there is no way to evaluate the internal 
consistency of the statement.
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    In short, this type of statement has been traditionally viewed by 
the courts as inherently unreliable, and as such, M.K.'s statement 
cannot be given any weight in this decision. See, e.g., Carlos 
Gonzales, 76 FR 63118, 63119-20 (2011). And even if the Government had 
established that M.K.'s statement was reliable, this interview, which 
occurred more than nine months prior to the issuance of the Immediate 
Suspension Order, could not support a finding of imminent danger and 
the subsequent seizure of the drugs.\8\ See, e.g., Norman Bridge Drug 
Co. v. Banner, 529 F.2d 822, 829 (5th Cir. 1976).
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    \8\ The record does not establish when the MDEA Agent first told 
DEA about M.K.'s allegations.
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    Thus, the only evidence which arguably supports the Immediate 
Suspension Order and seizure of Respondent's methadone stock is the 
arrest of Ms. Fuller-McMahan for the possession of cocaine and the 
syringes, which she had received from J.R., a patient at Respondent, 
and which Ms. Fuller-McMahan admitted she intended to provide to C.G., 
a counselor at Respondent. Yet even here, there is no evidence that Ms. 
Fuller-McMahan either traded methadone for the cocaine she received 
from J.R. or that she intended to provide the cocaine to C.B. for 
methadone.
    Moreover, notwithstanding M.K.'s allegation, there is no evidence 
that the Government ever audited Respondent's recordkeeping to 
determine whether Respondent's methadone was missing or that it 
developed any reliable evidence that Ms. Fuller-McMahan was diverting 
methadone. See 21 U.S.C. 823(g)(1)(B). Nor did the Government produce 
any evidence that Respondent's recordkeeping was inadequate.\9\ Id. In 
short, while the Government has established that Ms. Fuller-McMahan 
violated the MOA and this would have supported the issuance of an Order 
to Show Cause, the Government's principal justification for immediately 
suspending Respondent's registration and seizing the drugs is not 
supported by substantial evidence but rests on a hunch. Accordingly, I 
hold that the Immediate Suspension Order is ultra vires and the 
resulting seizure of Respondent's methadone was unlawful. See Norman 
Bridge, 529 F.2d at 828 (``Such a suspension, or such a seizure, may be 
invoked only to avoid imminent danger to the public health and safety. 
In the absence of that factor there can be no suspension and no seizure 
without notice and an opportunity to be heard.'').\10\
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    \9\ The Government also argues that ``there was no evidence that 
Respondent's employees . . . were taking any steps to minimize that 
risk,'' i.e., the risk that Ms. Fuller-McMahan was diverting 
Respondent's methadone. Second Req. for Final Agency Action, at 14. 
However, the Government has the burden of proving that Respondent's 
methadone was being diverted. Moreover, it bears noting that under 
the Maine Board of Pharmacy's rules, Respondent was required to have 
a licensed pharmacist overseeing its pharmacy, and ``[t]he 
pharmacist in charge is responsible legally and professionally for 
all activities related to the practice of pharmacy within the opioid 
treatment program for which the licensee is registered as pharmacist 
in charge, and for the opioid treatment program's compliance with . 
. . federal and state laws and rules,'' including the CSA and DEA 
regulations. 02-392 CMR 36 Sec.  4; see also 02-392 CMR 29 Sec.  1.
    \10\ In a June 29, 2015 letter, the Special Agent in Charge of 
the New England Field Division wrote to Ms. Fuller-McMahan that 
``[a]lthough the controlled substances were seized pursuant to an 
Immediate Suspension Order, they are also being held by virtue of 
the fact that your registration expired on November 30, 2010, 
resulting in your not having any authority to handle controlled 
substances.'' However, to the extent the Government retained 
possession of the controlled substances based on the expiration of 
Respondent's registration, 21 U.S.C. 824(g) provides that: [s]uch 
controlled substances . . . shall be held for the benefit of the 
registrant, or his successor in interest. The Attorney General shall 
notify a registrant, or his successor in interest, who has any 
controlled substance . . . seized or placed under seal of the 
procedures to be followed to secure the return of the controlled 
substance . . . and the conditions under which it will be returned. 
The Attorney General may not dispose of any controlled substance . . 
. seized or placed under seal under this subsection until the 
expiration of one hundred and eighty days from the date such 
substance . . . was seized or placed under seal.
    21 U.S.C. 824(g). The Government has provided no evidence that 
it complied with the procedures required by this subsection. 
Accordingly, the propriety of the seizure must be evaluated under 
the standards of subsection 824(d) and (f).
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Order

    Pursuant to the authority vested in me by 21 U.S.C. 824(a) and (d), 
I hereby declare the Order of Immediate Suspension issued to Turning 
Tide, Inc., ultra vires. This Order is effective immediately.

    Dated: July 15, 2016.
Chuck Rosenberg,
Acting Administrator.
[FR Doc. 2016-17245 Filed 7-20-16; 8:45 am]
 BILLING CODE 4410-09-P