Peter F. Kelly, D.P.M.; Decision and Order, 28676-28692 [2017-13158]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 82, Number 120 (Friday, June 23, 2017)]
[Notices]
[Pages 28676-28692]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-13158]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 15-26]


Peter F. Kelly, D.P.M.; Decision and Order

    On July 10, 2015, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Peter F. Kelly, D.P.M. (Respondent), of Roanoke, 
Virginia. ALJ Ex. 1, at 1. The Show Cause Order proposed the revocation 
of Respondent's Certificate of Registration No. BK0639279, the denial 
of any application to renew or modify his registration, and the denial 
of any other application for a DEA registration, on the ground that he 
has committed acts which render his registration ``inconsistent with 
the public interest.'' Id. (citing 21 U.S.C. 824(a)(4), 823(f)).
    As to the jurisdictional basis for the proceeding, the Show Cause 
Order alleged that Respondent is registered ``as a practitioner in 
[s]chedules II-V,'' under the above registration number, at the address 
of 4106 Electric Road, Roanoke, Virginia. Id. The Show Cause Order 
alleged that Respondent's registration does not expire until December 
31, 2017. Id.
    As to the substantive grounds for the proceeding, the Show Cause 
Order alleged that in June 2000, Respondent was indicted in the Circuit 
Court for Roanoke County, Virginia, on four felony counts of unlawful 
possession of

[[Page 28677]]

controlled substances which included sufentanil, oxycodone, pethidine, 
and hydromorphone, as well as one misdemeanor count of marijuana 
possession. Id. The Order alleged that Respondent entered an Alford 
plea to the charges and was sentenced to probation and a fine. Id. The 
Order further alleged that as a result of the criminal case, on 
December 12, 2002, Respondent entered into a Memorandum of Agreement 
with DEA, and that on February 3, 2005, he entered into a Consent Order 
with the Virginia Board of Medicine for ``recordkeeping and other 
controlled substance violations,'' which resulted in his being fined 
and his license being ``placed on probation for twelve months.'' Id. at 
1-2.
    Next, the Show Cause Order alleged that ``[f]rom approximately 
December 2007 until approximately September 2012, [Respondent's] 
employee, Vickie Mullen, used [his] DEA registration number to call-in 
and/or fax-in 72 prescriptions in her own name and 1[,]596 
prescriptions in the names of others for controlled substances totaling 
127,686 dosage units of hydrocodone (then a [s]chedule III controlled 
substance) and 5,370 dosage units of Ambien ([z]olpidem tartrate, a 
[s]chedule IV controlled substance).'' Id. at 2. The Order alleged that 
``[t]hese prescriptions were not authorized by you and were not for a 
legitimate medical purpose, but rather were diverted by Ms. Mullen into 
illegitimate channels, including for her own personal use and the 
personal use of her son and numerous other individuals.'' Id. The Order 
then alleged that Respondent is ``responsible for the misuse of [his] 
registration by [his] employees.'' Id. (citations omitted). The Order 
further alleged that Respondent had ``continued to employ Ms. Mullen in 
[his] medical practice, even after learning of her diversion, in 
violation of 21 CFR 1301.92.'' Id.
    The Show Cause Order further alleged that ``[o]n July 10, 2013, DEA 
executed an Administrative Inspection Warrant . . . at [Respondent's] 
registered location'' and that the Agency found that Respondent was in 
violation of several record-keeping requirements. Id. More 
specifically, the Order alleged that Respondent ``failed to take'' both 
initial and biennial inventories of the controlled substances at his 
registered location. Id. (citing 21 U.S.C. 827(a) & (b); 21 CFR 
1304.11(a) & (c)). The Order also alleged that Respondent violated DEA 
regulations requiring that the inventories list ``the number of 
commercial containers'' and the ``number of units or volume of each 
finished form in each container.'' Id. (citing 21 U.S.C. 827(a) & (b); 
21 CFR 1304.11(e)(3) & (e)(1)(iii)(D)). The Order then alleged that 
these ``violations are the same as, or similar to, [the] recordkeeping 
violations previously found by the [S]tate as detailed in [the] 
February 3, 2005 Consent Order.'' Id.
    The Show Cause Order also alleged that Respondent left controlled 
substances, which included hydrocodone, alprazolam, and diazepam, ``out 
overnight in [his] office, rather than `stored in a securely locked, 
substantially constructed cabinet' as required by 21 CFR 1301.75(b).'' 
Id. at 2-3. The Order alleged that Respondent engaged in this practice 
so that his office manager, ``who is not a DEA registrant, could 
dispense these drugs to patients prior to [his] arrival in the 
office.'' Id. at 3. The Order then alleged that Respondent ``aided and 
abetted the unlawful distribution of controlled substances,'' because 
the office manager did not possess a DEA registration and dispensed 
controlled substances ``in [his] absence . . . in violation of 21 
U.S.C. 822(a)(2) and 21 CFR 1301.11(a).'' Id. (citing 21 U.S.C. 841(a) 
and 18 U.S.C. 2).
    Following service of the Show Cause Order, Respondent, through his 
counsel, requested a hearing on the allegations. ALJ Ex. 2. The matter 
was placed on the docket of the Office of Administrative Law Judges and 
was initially assigned to Chief Administrative Law Judge John J. 
Mulrooney, II. However, on September 22, 2015, the matter was 
reassigned to Administrative Law Judge (ALJ) Charles Wm. Dorman, who 
conducted further pre-hearing procedures and an evidentiary hearing on 
January 12-13, 2016, in Roanoke, Virginia.
    On April 11, 2016, the ALJ issued his Recommended Decision. With 
respect to Factor One, the ALJ found that the Board's 2005 Consent 
Order ``is the only disciplinary action in the record'' and that the 
Board terminated his probation one month early. R.D. 29. The ALJ noted, 
however, that while possessing a state license is a necessary condition 
for holding a DEA registration, it is not dispositive. As for Factor 
Three, the ALJ found that while in 2000, Respondent was convicted of 
possession of marijuana and other controlled substances, these were 
simple possession offenses which did not involve the manufacture, 
distribution or dispensing of controlled substances and thus did not 
fall within Factor Three. Id. at 29-30. The ALJ thus concluded that 
``there is no evidence to consider concerning Factor Three.'' Id. at 
30.
    The ALJ then addressed the various allegations of misconduct under 
Factors Two, Four and Five. The ALJ rejected the allegation that 
Respondent is responsible for the misuse of his registration by Ms. 
Mullen, holding that the Government was required to show that 
Respondent had entrusted his registration to Mullen and had failed to 
produce any evidence that Respondent had given his registration number 
to Mullen or that he had given her access to his registration whether 
expressly, impliedly, or negligently. Id. at 32-34. The ALJ further 
found that there was no ``credible or substantial evidence showing that 
. . . Respondent knew about Mullen's illegal activities prior to August 
20, 2012.'' Id. at 34. The ALJ specifically rejected the Government's 
contention that ```it is simply not believable that [Respondent] did 
not know of [Mullen's] diversion,'' finding that ``the evidence shows 
that no one, other than Mullen and her cohorts, was aware of Mullen's 
activities.'' Id. at 35.
    The ALJ also rejected the Government's contention that Respondent 
was put on notice that his registration was being misused when, in 
2008, he was contacted by a pharmacist regarding two prescriptions that 
were called-in under his name, and that Respondent should have 
monitored Mullen and his PMP report. Id. at 35. The ALJ cited four 
reasons for rejecting the Government's argument, including: (1) That a 
``fax did not contain any information that suggested that one of 
Respondent's employees was involved'' and that the ``prescription was 
not written for one of the Respondent's patients,'' (2) that the 
Respondent was never informed that Mullen was responsible for the 
prescriptions, (3) that even the detective who ran the investigation 
did not check the PMP, and 4) that ``the Government presented no 
evidence that . . . Respondent breached some duty by not monitoring his 
PMP.'' Id.
    The ALJ further rejected the Government's contention that 
Respondent violated 21 CFR 1301.92, by continuing to employ Mullen even 
after he learned of her diversion. R.D. 37-38. According to the ALJ, 
the regulation relied on by the Government ``does not require the 
immediate termination of an employee; it only requires that the 
employer immediately assess the employee's conduct to determine what 
employment actions to take against the employee.'' R.D. 37. The ALJ 
found that Respondent complied with the regulations because he told 
Mullen that she would be retained ``only until her replacement showed 
minimal proficiency,'' he ``began advertising [her] position the same 
week that he discovered her diversion,'' and

[[Page 28678]]

``promptly hired and began to train Mullen's replacement.'' Id. The ALJ 
also noted that ``Respondent moved his fax machine to a room with a 
deadbolt on the door, called local pharmacies to alert them to Mullen's 
actions, took away Mullen's keys to the office, and monitored his DEA 
number on the PMP system.'' Id.
    The ALJ further noted that Mullen was ``Respondent's only insurance 
secretary,'' that ``her position was essential to the continued 
operation of . . . Respondent's practice,'' and while ``Respondent's 
office manager was competent to perform the duties of the insurance 
secretary, she could not do so and also perform her various duties.'' 
Id. at 38. According to the ALJ, ``[f]or small businesses that depend 
on each employee performing essential business functions, it is 
reasonable to expect that terminating an employee can be a process 
rather than an instantaneous action.'' Id. The ALJ thus concluded that 
Respondent acted ``[c]onsistent with the requirements of 21 CFR 
1301.92'' by taking ``immediate action towards terminating Mullen's 
employment because of her misconduct'' and rejected the allegation. Id.
    With respect to the recordkeeping allegations, the ALJ rejected 
Respondent's contention that he was not subject to the recordkeeping 
requirements of 21 U.S.C. 827(a), because he did not ``regularly 
engage[] in the dispensing or administering of controlled substances 
and charge[d] his patients, either separately or together with charges 
for other professional services, for substances so dispense or 
administered.'' Id. at 39 (quoting 21 U.S.C. 827(c)(1)(B)).
    Based on the findings of the 2005 Virginia Board of Medicine 
Consent Order, the ALJ then found that the Government had proved that 
Respondent failed to conduct an initial inventory. Id. at 40 (citing 21 
U.S.C. 827(a)(1)). He also found that the Government had proved that 
Respondent failed to conduct and ``maintain[ ] a proper biennial 
inventory'' because his records did not contain an actual count of the 
controlled substances taken either at the beginning or close of 
business but rather ``a running balance of controlled substances after 
dispensing.'' Id. at 41 (citing 21 CFR 1304.11(c)). The ALJ further 
found that the inventories were not compliant because they did not 
contain ``the number of commercial containers of each controlled 
substance'' and the ``the number of units or volume of each commercial 
container of controlled substances.'' Id. at 42 (citations omitted).
    Next, the ALJ rejected the Government's contention that Respondent 
violated 21 CFR 1301.75, which requires that controlled substances be 
stored ``in a securely locked, substantially constructed cabinet,'' 
when he left the controlled substances out overnight for his office 
manager to administer to patients who were undergoing procedures the 
following morning. Id. at 44. The ALJ specifically noted that the DEA 
regulation does not define the term ``cabinet,'' but that the New 
College edition of the American Heritage Dictionary of the English 
Language (1976) includes as one of the word's definitions, ``a small or 
private room set aside for some specific activity.'' Id. The ALJ noted 
that the room in which the medications were kept was locked, that only 
the Respondent and his office manager had a key, that the room had a 
steel reinforced door and steel doorframe with a deadbolt, that 
Respondent's office was protected by a security system, and that there 
was no evidence that the room ``was used for any purpose other than to 
store controlled substances prior to 2014.'' Id. The ALJ thus concluded 
that the Government failed to prove the violation. Id.
    However, the ALJ found that the Government proved the allegation 
that Respondent had aided and abetted the unlawful distribution of 
controlled substances by having his office manager, who was not 
registered, administer controlled substances to patients who were to 
have procedures on days when he was late arriving at his office. Id. at 
44-45. The ALJ specifically rejected Respondent's argument that his 
office manager was exempt from registration under 21 CFR 1301.22(a), 
because she was an ``agent or employee . . . acting in the usual course 
of . . . her . . . employment.'' Id. at 45. Based on Respondent's 
testimony that the office manager administered controlled substances to 
patients ``only on `limited occasions,' '' the ALJ explained that he 
was ``find[ing] as a matter of fact that [her] administration of 
controlled substances was described repeatedly as `occasional,' which 
is the opposite of `usual[,]' '' and ``[t]herefore, [section] 
1301.22(a) does not apply.'' Id. As to this violation, the ALJ also 
found that Respondent did not acknowledge his misconduct. Id. at 46.
    Finally, the ALJ found that Respondent's 2000 state court 
convictions for unlawful possession of various controlled substances 
could be considered under Factor Five. The ALJ noted, however, that 
``these convictions occurred over 15 years ago, and [that] Respondent 
has not been convicted of any controlled substance offenses since 
2000.'' Id. at 47. The ALJ further rejected Respondent's contention 
that DEA was estopped from relying on the convictions because it 
subsequently entered into an MOA with Respondent. Id. The ALJ also 
rejected Respondent's contention that his possession of the drugs did 
not actually violate federal law because his home was a warehouse which 
was exempt from registration under the Controlled Substances Act (CSA), 
reasoning that issue could not be re-litigated in this proceeding. Id.
    Based on his findings of the recordkeeping violations, the aiding 
and abetting of the office manager's unlawful distribution of 
controlled substances, and the 2000 convictions, the ALJ concluded that 
the Government had established ``a prima facie case that . . . 
Respondent has acted in a manner that is inconsistent with the public 
interest and that marginally supports the sanction [revocation] that 
the Government requests.'' Id. at 48. Turning to whether Respondent had 
rebutted the Government's prima facie case, the ALJ found that while 
``Respondent acknowledged his three violations, [he] did not show 
remorse for his actions'' and that he had not accepted responsibility. 
Id.
    While the ALJ found that Respondent had not ``rebut[ted] the 
Government's prima facie showing that a sanction is appropriate,'' he 
also concluded that the egregiousness of Respondent's misconduct was 
mitigated by various circumstances. Id. at 50; see also id. at 52. 
However, even taking ``these matters into considerations,'' the ALJ 
still found that ``Respondent's violations, in combination, are serious 
and raise concerns of whether his registration is consistent with the 
public interest.'' Id. at 53. Continuing, the ALJ explained that ``[i]n 
light of . . . Respondent's failure to accept responsibility, the 
record supports the conclusion that [his] registration should be 
suspended and [he] should obtain training concerning recordkeeping, as 
well as storage and administration of controlled substances.'' Id.
    The ALJ thus recommended that Respondent's registration be 
suspended for a period of one year, to begin three months from the 
effective date of the Decision and Order in this matter, and that the 
suspension be stayed if during this period, Respondent completed 
courses in ``controlled substance recordkeeping,'' ``control substance 
storage,'' and ``the administration of controlled substances.'' Id. The 
ALJ also recommended that if his proposed suspension was stayed, that 
his

[[Page 28679]]

registration be restricted to authorize only the prescribing of 
controlled substances for a period of one year to begin on the stay's 
effective date. Id. And he further recommended that if the suspension 
is stayed, Respondent ``undergo an annual audit to ensure compliance 
with controlled substance regulations . . . by an independent auditor 
hired by . . . Respondent, for three years from the effective date of 
the stay[,]'' with ``[t]he first audit [to] be conducted no later than 
one year after the effective date of the stay,'' with the results to be 
forwarded to the local DEA office ``within [10] business days after the 
audit.'' Id. at 53-4.
    Respondent filed Exceptions to the Recommended Decision. 
Thereafter, the record was forwarded to my Office for Final Agency 
Action.
    Having considered the record in its entirety, including 
Respondent's Exceptions, I agree with the ALJ that the Government has 
failed to prove that Respondent is liable either for entrusting his 
registration to Ms. Mullen (his insurance clerk) or because he knew or 
should have known of her criminal misconduct prior to August 20, 2012. 
I also agree with the ALJ that the Government has failed to prove that 
Respondent violated 21 CFR 1301.75, on those occasions when he left 
controlled substances outside of the controlled substances safe but the 
drugs were left locked in the drug room.
    I further agree with the ALJ that Respondent failed to conduct an 
initial inventory and that he also failed to take a proper biennial 
inventory because he did not actually count the drugs that were on 
hand. In addition, I agree with the ALJ that Respondent aided and 
abetted a violation of 21 U.S.C. 841 when he directed his office 
manager to administer controlled substances to patients prior to 
procedures when he was not present in the office. Finally, I agree with 
the ALJ that Respondent was convicted in 2000 in state court of four 
felony offenses and one misdemeanor offense of unlawful possession of 
controlled substances.
    I disagree, however, with the ALJ's rejection of the Government's 
contention that Respondent should have immediately terminated Mullen 
after he determined that she had been calling and faxing in fraudulent 
prescriptions and refill requests for hydrocodone and zolpidem. While I 
agree with the ALJ that Respondent did not acknowledge any of his 
misconduct, I disagree with his recommended sanction of a stayed 
suspension. Instead, I conclude that relevant factors support the 
imposition of an outright suspension of Respondent's registration for a 
period of one year, as well as the requirement that Respondent take a 
course in controlled substance recordkeeping if, following termination 
of the suspension, he intends to resume either administering or 
engaging in the direct dispensing of controlled substances. I make the 
following factual findings.

Findings of Fact

Respondent's License and Registration Status

    Respondent is a board certified Doctor of Podiatric Medicine who is 
licensed by the Virginia Board of Medicine. GX 2. At all times relevant 
to the events at issue, Respondent maintained offices in Roanoke, 
Bedford, Radford, and Rocky Mount, Virginia. RX 13, at 2.
    Respondent is also the holder of DEA Certificate of Registration 
BK0639279, pursuant to which he is authorized to dispense controlled 
substances in schedules II through V, as a practitioner, at the 
registered address of 4106 Electric Road, P.O. Box 20566, Roanoke, VA 
24018. ALJ Ex. 8, at 15. Respondent's registration does not expire 
until December 31, 2017. Id.

The Prior Criminal and Administrative Proceedings

    On September 13, 2000, Respondent pled guilty in the Circuit Court 
of Roanoke County Virginia to four felony counts of possession of the 
controlled substances sufentanil, oxycodone (with acetaminophen), 
pethidine (meperidine), and hydromorphone,\1\ as well as a single 
misdemeanor count of possession of marijuana. GX 1, at 1. The Circuit 
Court, while finding the evidence sufficient to convict Respondent, 
withheld adjudication pursuant to the written plea agreement. Id. at 2. 
Thereafter, on October 30, 2000, the Circuit Court sentenced him to 
probation for a period of one year, the terms of which required him to 
perform 100 hours of community service, to forfeit his driver's license 
for 30 months, to undergo drug abuse testing and counseling, and to pay 
costs. Id. at 4; see also RX 83, at 1. Respondent successfully 
completed probation and on October 31, 2001, the charges were 
dismissed. GX 1, at 6; RX 83, at 1.
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    \1\ Each of the felony counts involved a schedule II controlled 
substance. See 21 CFR 1308.12(b)(1)(vii) (hydromorphone); id. Sec.  
1308.12(b)(1)(xiii) (oxycodone); id. Sec.  
1308.12(c)(18)(pethidine); id. Sec.  1308.12(c)(27) (sufentanil). 
Respondent maintained that the drugs (other than the marijuana) were 
both ``expired and existing medications'' which he moved from his 
office to his house because, based on his drug counts, some of the 
drugs were missing and while he suspected one of his employees, he 
``didn't really have any evidence to confront her and report this.'' 
Tr. 383-84. However, Respondent asserted that the pethidine ``was 
left over from [his] ex-wife's . . . rhinoplasty procedure, and she 
doesn't really take any narcotics, so she had some of these left 
over.'' Id. at 387. Respondent asserted that he entered the Alford 
plea because had he gone to trial, ``it would have made the front 
page [of the] paper for the whole week'' and ``would have cost me 
all my patients and reputation.'' Id. at 388. Respondent 
subsequently maintained that during the hearing on his plea, the 
Commonwealth's Attorney ``was unable to point to any specific 
violation of law.'' Id. at 389-90. However, the Circuit Court's 
orders identified the specific provisions of the Virginia Code 
violated by Respondent. See GX 1, at 1 (Trial Order citing Va. Code 
Sec. Sec.  18.2-250 and 18.2- 250.1); id. at 3 (Sentencing Order 
citing same provisions).
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    Shortly after Respondent was sentenced, representatives of the DEA 
notified him that his registration was subject to revocation based on 
the above proceeding; the letter also offered Respondent the 
opportunity to voluntarily surrender his registration. RX 83, at 1. 
Sometime thereafter, Respondent's attorney wrote a letter to the DEA 
representatives informing them that he had successfully completed his 
probation and that all of his drug tests were negative and that his 
propensity for drug abuse risk was found to be negligible. Id. On 
December 12, 2002, DEA agreed to renew his registration subject to a 
Memorandum of Agreement (MOA) which remained in effect for a period of 
one year. Id. at 2.
    On October 15, 2004, the Virginia Board of Medicine notified 
Respondent that it would hold ``an informal conference'' to inquire 
into various allegations that he ``violated certain laws and 
regulations governing the practice of podiatry in Virginia.'' GX 2, at 
1. The Board raised 19 different allegations including, inter alia, 
that he violated Virginia law by: (1) Unlawfully possessing controlled 
substances based on his Alford plea; (2) that prior to February 15, 
2001, he ``failed to perform an initial inventory, establish a biennial 
inventory date, and failed to take an inventory of all [s]chedule II to 
V controlled substances at least every two (2) years''; and (3) that 
the inventory he ``performed on February 15, 2001 lacked the time it 
was performed and the name of the individual who performed it.'' \2\ 
Id. at 1-3.
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    \2\ Some of the other allegations included that he administered 
expired controlled substances to his patients, and that he dispensed 
schedule III and IV controlled substances to patients for their ``at 
home use'' ``without a license from the Board of Pharmacy.'' GX 2, 
at 1-2.
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    On February 3, 2005, Respondent and the Board entered into a 
Consent Order, which found that Respondent had violated various 
provisions of Virginia law. The findings included ``that he . . . did 
not establish an initial inventory or maintain current and accurate 
records of his inventory, receipt and distribution of controlled 
substances,'' and that he

[[Page 28680]]

``did not provide for adequate storage for controlled substances 
maintained in his office.'' GX 3, at 1-2. The Consent Order further 
found that ``since the Board brought these matters to his attention in 
July 2002, [Respondent] has revised and updated his controlled 
substance recordkeeping, storage and dispensing practice, and believes 
that he is fully compliant with all regulatory requirements regarding 
controlled substances.'' Id. at 4.
    Based on its findings, the Board imposed a monetary penalty of 
$2,000 and placed Respondent on probation for a period of one year. Id. 
at 5. The Board further required that Respondent certify ``that he has 
read and agrees to fully comply with Chapters 33 and 34 of the Code of 
Virginia,'' that he ``successfully complete [a] continuing education 
course[] in recordkeeping,'' and that ``[w]ithin 60 days from the entry 
of [the] Order,'' he ``submit to an inspection and audit by an 
Investigator of the Department of Health Professions (DHP) to ensure 
that he is in compliance with record keeping, storage and dispensing 
requirements.'' Id. at 5-6. The Order also provided that ``[w]ithin 9 
months from the inspection and audit . . . Respondent's practice may be 
subject to an unannounced inspection by a'' DHP Investigator. Id.
    On January 11, 2006, a Committee of the Board met to review 
Respondent's compliance with the Consent Order and found that he ``had 
fully complied with all terms [of] the Order.'' GX 4, at 1. The Board 
thus terminated Respondent's probation and restored his license to un-
restricted status. Id.

The Diversion Occurring at Respondent's Practice

    Sometime in 2004, Respondent hired Ms. Vicki Mullen to work at his 
Roanoke office, where her duties included preparing and filing 
insurance claim forms. Tr. 73, 81. According to Respondent's office 
manager, Mullen was authorized to use Respondent's signature stamp on 
the forms. Id. at 81. She also had access to the fax machine.\3\ Id. at 
408.
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    \3\ According to the testimony of Respondent's office manager, 
Respondent saw patients once a week at his Roanoke office; he also 
did surgeries once a week at the Roanoke office, however, he did not 
do surgeries every week. Tr. 56.
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    Beginning on or about December 31, 2007, Mullen began calling in 
prescriptions to pharmacies for various drugs including 90 to 120 
dosage units of hydrocodone 10 mg (then a schedule III and now a 
schedule II controlled substance) and 30 dosage units of zolpidem (the 
generic version of Ambien, a schedule IV controlled substance). GX 12, 
at 1. According to the credited testimony, at one Walmart pharmacy, 
Mullen would call the pharmacy's doctor's line and leave a message for 
a prescription representing that she was calling on behalf of 
Respondent. The Walmart pharmacy would fill the prescriptions even 
though Mullen did not provide Respondent's DEA registration number.\4\ 
Tr. 42. Instead, notwithstanding that DEA regulations require that an 
oral prescription contain all of the information mandated under 21 CFR 
1306.05, including the prescriber's DEA registration number,\5\ the 
pharmacist would retrieve Respondent's registration number from the 
computer and put it on the call-in prescription form which the pharmacy 
would complete.\6\ Id. at 48. Mullen did not give her name as the 
person calling in the prescriptions; rather, she used such names as 
Virginia Norvel, Liz Norville, and Liz Chilton. See GX 6, at 2; GX 7, 
at 5, 7, 12, 14; Tr. 106.
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    \4\ According to the credited testimony of both Respondent and 
his office manager, his DEA registration was not posted and was kept 
in a file with his license in his office. Tr. 71, 319, 405. Also, 
his signature stamp did not contain his registration number. Id. at 
80 & 405. Nor did Respondent's prescription blanks contain his DEA 
number. Id. at 71; see also RX 16. Respondent did not, however, keep 
his office door locked. Tr. 274.
    \5\ The only exception is the prescriber's signature. 21 CFR 
1306.21(a).
    \6\ On cross-examination, a Diversion Investigator provided 
testimony suggesting that pharmacies ``normally'' fill oral 
prescriptions or called-in prescriptions that are missing ``the 
doctor's DEA number because it is already on file.'' Tr. 148. 
Moreover, the record contains numerous prescriptions that were 
reduced to writing by the pharmacist, but which were missing 
Respondent's DEA number. See GX 7. While in some instances, the DEA 
number was written on the prescription, the Government put forward 
no evidence that the pharmacist had obtained Respondent's DEA number 
off the voice mail message left by Mullen rather than through the 
pharmacy's database.
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    On some occasions, the pharmacies would fax a refill request to 
Respondent's office. On these occasions, Mullen would use Respondent's 
signature stamp to manifest that he had approved the refill request and 
fax the authorization back to the pharmacy which typically authorized 
three refills. See GX 7, at 9; GX 8, at 5, 7, 13, 15, 17, 19; GX 9, at 
7, 13, 23, 29, 34, 38; GX 10, at 9, 15, 19.
    However, notwithstanding Respondent's claim that Mullen did not 
have access to his DEA number,\7\ the record contains numerous refill 
request forms that suggest otherwise. These forms include a 
``Prescriber Comments'' box with lines for printing the ``Prescriber's 
Name,'' the ``Prescriber's DEA #,'' as well as lines for the 
``Prescriber's Signature''--which was where Mullen would use 
Respondent's signature stamp--and the ``Date.'' See GX 8, at 5. 
Notably, a number of these forms included Respondent's DEA number which 
was hand-written in the ``Prescriber Comments'' box. See GX 8, at 5, 7, 
13, 15, 17, 19; GX 9, at 7, 13, 23, 29, 34, 38; GX 10, at 9, 15, 19.
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    \7\ See Tr. 174-75 (Colloquy between Respondent's counsel and DI 
regarding refill request form (GX 7, at 9): ``Q[.] And as faxed back 
from, allegedly from the doctor's office, it does not have a DEA 
number on it, does it?'' A[.] No.'').
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    Over the course of the scheme, Mullen called in or faxed in 
prescriptions and refill requests for 82 prescriptions for herself 
which Respondent had not authorized.\8\ Tr. 106-07. On some occasions, 
she called in prescriptions listing her son and a daughter-in-law as 
the patients. Id. at 105. Moreover, Mullen's son provided her with the 
names and dates of birth of his co-workers, who agreed to pick up the 
prescriptions. Id. at 105-06. Mullen also called in and or stamped 
refill requests for 13 prescriptions for 90 dosage units of hydrocodone 
10 mg, with Respondent's office manager listed as the patient. RX 36. 
In her testimony, Respondent's office manager denied that she had 
received any of these prescriptions. Tr. 84.
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    \8\ While the testimony was to the effect that Mullen called in 
or faxed in 72 prescriptions for herself, the PMP report lists 82 
prescriptions/refills. RX 24.
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    Between December 31, 2007 and August 20, 2012, Mullen called in, or 
stamped and faxed, prescriptions and refill requests for 1,596 
prescriptions and refills for hydrocodone and zolpidem. GX 12. In 
total, the prescriptions resulted in the dispensing of 127,686 dosage 
units of hydrocodone and 5,370 dosage units of zolpidem under 
Respondent's registration.\9\ GX 11, at 2.
---------------------------------------------------------------------------

    \9\ According to Detective Findley of the Virginia State Police 
Drug Diversion Unit, Mullen stated that only ``one pharmacy called 
[the] office to verify the prescriptions,'' and because Mullen ``was 
there by herself and . . . took the phone call [she] obviously told 
the pharmacist that it was fine, to go ahead and fill'' the 
prescription. Tr. 225. Detective Finley further testified that 
zolpidem is a sleep medication which is not usually prescribed by 
podiatrists and that the issuance of two to three monthly 
prescriptions by a podiatrist should have been suspicious to a 
pharmacist and that it would be unusual for a podiatrist to continue 
prescribing this drug. Id. at 226-27. With respect to the 
hydrocodone prescriptions, Detective Finley agreed with Respondent's 
counsel that ``it would be unusual for a podiatrist to maintain 
somebody on narcotic pain medication at the levels'' of these 
prescriptions. Id. at 227.
---------------------------------------------------------------------------

    While Mullen was able to continue her illegal activity for nearly 
five years, she came to the attention of the Virginia State Police as 
early as November 18, 2008. GX 6, at 2. According to the evidence, on 
November 17, 2008,

[[Page 28681]]

Mullen called in two prescriptions for Tramadol, which although it was 
not then a federally-controlled substance, it was a controlled 
substance under Virginia law, to a Walmart Pharmacy in Christiansburg, 
Virginia. Id. Upon reviewing the prescriptions, the pharmacist noted 
that they were issued by the same doctor (Respondent), for the same 
exact prescription to two patients (C.T. and S.F.), who, while they had 
different last names, had the same address. Id. According to the 
pharmacist, the prescriptions were purportedly called in by Liz 
Norville. Id.
    Finding the two prescriptions to be suspicious, the pharmacist 
called Respondent's office and was told that ``no one named Liz 
Norville . . . worked at that office [and] that they had no patients by 
the name of'' C.T. and S.F. Id. Later that day, Respondent called the 
pharmacist and confirmed that C.T. and S.F. were not his patients and 
that ``no one had called those in from his office.'' Id. Respondent 
also faxed to the pharmacist a written statement, stating that 
``[n]either did my office nor I call in prescriptions for [C.T. or 
S.F.] at any time. They are not my patients.'' GX 5, at 1. The next 
day, the pharmacist reported the prescriptions to Detective Larry 
Findley, who was assigned to the Drug Diversion Unit of the Virginia 
State Police.\10\ Tr. 189; RX 93-A.
---------------------------------------------------------------------------

    \10\ On cross-examination, Respondent asserted that he ``didn't 
think [the November 2008 incident] had anything to do with me. There 
was nothing to link my employee with that at all.'' Tr. 404. He then 
testified that he thought the incident was ``associated more with'' 
a podiatrist who practiced in the Christiansburg, Virginia area and 
who had bought another practice in an area where there was ``a large 
drug ring down there.'' Id. at 404-05. Respondent explained that ``I 
addressed the issue as it was presented to me'' and ``I had [the 
office manager] search our computer database and our current patient 
files.'' Id. at 407. He further testified that because the purported 
patients were not his patients he made no changes to his office 
practices and had ``[n]o reason to'' discuss the incident with 
Mullen. Id. at 408.
     After Respondent acknowledged that Mullen had access to the fax 
machine and his signature stamp, the Government asked him what 
measures he had in place to supervise employees when he was in his 
other offices. Id. at 408-09. Respondent asserted that ``aside from 
recording all calls, and having copies faxed to my email, I can't 
think of any measure that wouldn't be extreme, and quite 
burdensome.'' Id. He then acknowledged that he took no such 
measures. Id. at 410.
---------------------------------------------------------------------------

    The same day, Detective Findley went to the pharmacy, interviewed 
the pharmacist and obtained a written statement from her, as well as 
the statement Respondent had provided to the pharmacist. GX 6, at 2; 
Tr. 189-90. Using video footage, the Detective, with the assistance of 
one of the store's asset protection officers, was able to identify the 
individual who picked up one of the prescriptions as M.F.,\11\ who has 
the same last name as S.F. RX 93-A. The Detective called M.F., who 
``admitted to picking up the forged prescriptions.'' Id. She also told 
the Detective that Vicki Mullen had called in the prescriptions. Id., 
see also Tr. 191.
---------------------------------------------------------------------------

    \11\ The asset protection officer had worked at the same Walmart 
in Salem, Virginia as had M.F. RX 93-A.
---------------------------------------------------------------------------

    Thereafter, on November 20, 2008, the Detective interviewed Mullen, 
who admitted that she had called in the forged prescriptions. RX 93-A. 
While on February 6, 2009, Mullen was indicted in state court on the 
charge that she ``did obtain or attempt to obtain [Tramadol], by fraud, 
deceit, misrepresentation, embezzlement, or subterfuge, or by the 
concealment of a material fact,'' which was punishable as a Class 6 
felony under Virginia law, at no point did the Detective tell 
Respondent that Mullen had been arrested.\12\ Tr. 214.
---------------------------------------------------------------------------

    \12\ Mullen was not arrested until February 20, 2009, after she 
was indicted. Tr. 217.
---------------------------------------------------------------------------

    The Detective further admitted that he did not obtain a 
Prescription Monitoring Program (PMP) report using Respondent's DEA 
registration number to determine what controlled substance 
prescriptions were being dispensed under his registration. Id. at 210. 
He also did not obtain a PMP report showing the prescriptions obtained 
by Ms. Mullen. Id. at 212. While the Detective testified that he did 
not remember the exact date on which the state police's drug diversion 
agents were given access to the PMP, he acknowledged that during the 
period in which he was investigating the tramadol prescriptions, he 
probably had the ability to obtain a PMP report of Respondent's 
controlled substance prescriptions. Id. at 211-12. While the 
Detective's testimony also suggests that he obtained a report from the 
Walmart Pharmacy of the prescriptions dispensed to the individuals who 
were filling the forged prescriptions, he did not ask the pharmacy to 
provide a report of Ms. Mullen's prescriptions. Id. at 212-13. 
Moreover, the Detective did not notify any other pharmacies to be on 
the lookout for potentially forged prescriptions from Respondent's 
office. Id. at 214.
    Notably, by November 17, 2008, Mullen's criminal conduct had 
already resulted in the dispensing of 200 prescriptions and refills, 
each being for 90 dosage units of hydrocodone, by three Walmart 
Pharmacies. See GX 12, at 1-7. And by this date, Mullen herself was 
able to fill a prescription or a refill for 90 dosage units of 
hydrocodone 10 mg on nine different occasions. See GX 13, at 1. Indeed, 
Mullen's criminal conduct continued unabated even after she was 
indicted, and even after May 27, 2009, when she pled guilty to two 
counts of prescription fraud and was offered probation for one year and 
a deferred adjudication of the charges. See GX 14, at 3-4, 7-9; GX 12, 
at 9-49. At no point was Respondent notified that Mullen had pled 
guilty to the charges, and he was not otherwise notified of Mullen's 
conviction by ``the parole [sic] system.'' Tr. 428; see also id. at 
357.\13\
---------------------------------------------------------------------------

    \13\ During cross-examination by Respondent, the Detective was 
asked whether he recalled that during Mullen's plea hearing in 
federal court, the Court asked him if he was ``convinced that 
[Respondent] had no idea this was going on until it was brought to 
[Respondent's] attention by his ex-wife, if I understand that,'' and 
that he [the Detective] had answered, ``Yes, sir.'' Tr. 228. While 
the Detective acknowledged his previous testimony, id., the 
transcript of Mullen's federal court plea hearing was not made part 
of the record, and nothing in the record of this proceeding 
establishes that Respondent's ex-wife brought ``this'' to 
Respondent's attention, let alone when she may have done so.
---------------------------------------------------------------------------

    Mullen continued to work for Respondent until late September 2012, 
nearly five weeks after August 20, 2012, when his office manager found 
a faxed refill request from a Walmart Pharmacy (#1301) for 90 dosage 
units of Lortab 10 mg for a patient named J.L. GX 15, at 2; see also RX 
18; Tr. 342-43. According to the office manager, she pulled a chart for 
a patient with the same name and determined that there was no such 
original prescription in the chart; she also determined that while the 
actual and purported patient had the same names and address, they had 
different birthdates. Tr. 60. The office manager showed the refill 
request to Respondent, who determined that he did not write the 
prescription. Id.; see also id. at 342.
    Respondent then called the pharmacy. GX 15, at 2; Tr. 343. The 
pharmacist reviewed J.L.'s prescription history and told Respondent 
that J.L. had been obtaining Lortab prescriptions/refills on a monthly 
basis since May 17, 2011, ``when the original prescription was called 
in by'' a person who gave Vicki as her first name but a different last 
name than Mullen. GX 15, at 2; Tr. 348; see also RX 27 (telephone 
prescription of May 17, 2011 with no DEA number); RX 28, at 1-4 
(request for refills dated 6/30/11 (four total refills), 11/22/11 (one 
refill), 12/20/11 (four total refills), 4/10/12 (four total refills). 
The pharmacist verified that the refill requests were faxed to and from 
Respondent's office. GX 15, at 2; see also RX 28, at 1-4.
    Respondent told the pharmacist ``that somebody was fraudulently 
using [his] DEA number.'' Tr. 350. He also told the

[[Page 28682]]

pharmacist ``to block [his] DEA number.'' Id. Respondent acknowledged, 
however, that a couple of prescriptions were filled after this 
conversation. Id. A spreadsheet compiled by the Government shows that 
on August 29 and September 2, 2012, two refills, each being for 120 
dosage units of hydrocodone, were filled by this same pharmacy. GX 12, 
at 49. The spreadsheet also shows that 10 other refills for 90 or 120 
dosage units of hydrocodone were dispensed between August 22 and 
September 15, 2012.\14\ Id. However, the prescription numbers support a 
finding that Mullen had either called in or faxed back the fraudulent 
authorization for each of these refills prior to August 20, 2012. Tr. 
166; GX 12, at 47-49.
---------------------------------------------------------------------------

    \14\ Four of the refills were dispensed by a different Walmart 
Pharmacy (#3243), three were dispensed at still another Walmart 
Pharmacy (#2312), one was filled at two different CVS pharmacies (#s 
06285 and 03949), and another prescription was dispensed at a 
Walgreens Pharmacy (#7604). GX 12, at 49.
     Respondent testified that he had called various pharmacies to 
report these incidents, but did not ``exactly know when [he] did 
that,'' before claiming that he might have done this on August 20, 
2012, before he left for his Radford office. Tr. 359. Respondent 
then explained that he notified one of the Walmarts that his ``DEA 
number [wa]s being . . . falsified and abused'' and that ``should go 
to all of the Walmarts'' because ``they're going to be on a 
network.'' Id. at 360. He also stated that he had called ``a handful 
of these'' pharmacies, including CVS and Walgreens, and that he knew 
it worked because he subsequently received phone calls from 
pharmacists questioning prescriptions. Id. As for why the two 
prescriptions were filled at Walmart #1301 even after he had 
informed this pharmacy that the refill authorization for J.L. was 
fraudulent, Respondent testified that he ``figured the same thing 
would happen with this Walmart 1301 also. So, I had no reason not to 
believe it would work.'' Id.
---------------------------------------------------------------------------

    Respondent further determined that only Mullen was working in his 
Roanoke office that afternoon as he and his office manager had worked 
at his Radford office. GX 15, at 2. Respondent confronted Mullen over 
the phone who ``confessed to falsifying [his] signature, submitting the 
refill authorizations, and picking them up.'' Id.; Tr. 354. Respondent 
asked Mullen ``how many other people she used for the[] false 
prescriptions''; Mullen answered ``about five.'' GX 15, at 2; Tr. 
355.\15\
---------------------------------------------------------------------------

    \15\ According to Respondent, sometime between August 20 and 24, 
2012, Mullen gave Respondent three refill authorization forms which 
had been faxed to his office from Walmart Pharmacies #s 2312 and 
3243. See RX 26. One of the requests, which was dated March 13, 
2012, was for Mullen herself and authorized the dispensing of four 
refills of 30 Ambien 10 mg. Id. at 1. The other requests, which were 
dated November 22, 2010 and August 14, 2012, authorized the 
dispensing of four refills of 90 Lortab 10 mg to R.H. and four 
refills of 120 Lortab 10 mg to J.B. Id. at 2-3.
---------------------------------------------------------------------------

    Respondent called DEA and spoke with a Diversion Investigator, who 
told him to call Detective Findley. Tr. 347. Respondent called 
Detective Findley; the two met at Respondent's Radford office that 
afternoon. Id. at 347, 355. According to Respondent, Findley told him 
that ``Vicki Mullen's history extended beyond the falsified 
prescriptions mentioned above, to include other stores, and other CIII 
medications.'' GX 15, at 2. Findley told Respondent that Mullen had 
committed similar acts in 2008. Id.
    Several days later, Respondent accessed the Virginia Court System's 
Web site and found the records of the 2009 criminal case in which 
Mullen pled guilty to obtaining drugs by fraud. RX 23, at 1-6. He also 
ran a PMP report on Mullen. RX 24. The Report showed that from January 
21, 2008 through August 24, 2012, Mullen had obtained 56 prescriptions/
refills for 90 dosage units of hydrocodone 10 mg and 26 prescriptions/
refills for 30 dosage units of zolpidem 10 mg which were dispensed 
under Respondent's registration. Id.
    On August 24, 2012, Respondent had Mullen prepare a written 
statement regarding her misconduct. See GX 16. In the statement, Mullen 
listed the stores she had used, including three Walmarts and three 
CVSs. Id. at 1. She also stated that Respondent and his office manager 
``had no part or knowledge of my activities.'' Id.
    While Respondent told Mullen that she would be fired, and placed an 
ad for her replacement, he retained her as an employee through 
September 28, 2012. See RX 49; Tr. 360. He testified that if he had 
another employee who could have done his insurance billing, Mullen 
``would have been out the door immediately.'' Tr. 362. He maintained 
that he ``could not operate'' his practice without his insurance clerk, 
that 99 percent of his cash flow came from insurance reimbursements, 
and that if he had fired Mullen immediately, ``we would have had a 
backlog, and things would have started trailing off in three weeks.'' 
Id. at 361. He also asserted that he had tried both ``electronic 
billing'' and ``any number of substitutes,'' but these measures had not 
``worked.'' Id. at 362. And he maintained that to prevent a re-
occurrence of Mullen's criminal activity, he had moved the fax machine 
into the medication room, which had a steel door and frame with a 
deadbolt lock for which Mullen did not have a key, and took away her 
office keys. Id. at 359, 421.
    Respondent further asserted that ``I needed to isolate [Mullen] 
from any of these communications, to keep the office safe from her.'' 
Id. at 362. Yet Respondent offered no testimony that Mullen was denied 
access to the office phone. And when asked by his counsel if Mullen 
would abide by ``[t]he limitations [he] placed on her with what she was 
doing,'' Respondent answered: ``She didn't indicate anything. She 
didn't have much choice in the matter.'' Id. at 363.
    Respondent also asserted that at the time he decided to retain 
Mullen while she trained her replacement he acted in ``proportion of 
things that I knew. So it wasn't . . . what we're looking at in 
retrospective now with this huge situation. It was only with a handful 
of information that I had, less than a dozen.'' Id. at 426. Yet, as 
found above, on August 24, 2012, Respondent ran a PMP report on 
Mullen's prescriptions. The report showed that between January 21, 2008 
and August 24, 2012, Mullen herself had obtained 56 prescriptions for 
90 hydrocodone 10 mg and 26 prescriptions for 30 tablets of zolpidem 10 
mg. RX 24. So too, Respondent testified that Mullen had given him 
copies of two refill request forms, which she had stamped with his 
signature and faxed back, which authorized the dispensing of four 
refills of hydrocodone to J.B. (120 du) and R.H. (90 du). RX 26; see 
also GX 12, at 26, 48.
    Consistent with Mullen's August 24, 2012 statement, both Respondent 
and his office manager denied having any knowledge of Mullen's criminal 
activity, including the 2009 state proceeding, until late August 2012. 
Tr.75-76, 88 (office manager's testimony); id. at 355, 357, 381-82. 
(Respondent's testimony). Respondent also disputed statements made by 
Mullen in an unsworn ``declaration'' to the effect that he had 
knowledge of the 2008 diversion incident and that both he and the 
office manager knew ``before 2012 that [she] was diverting drugs from 
his office.'' GX 20, at 1 (Mullen declaration); Tr. 381-82 
(Respondent's testimony).\16\ While the opening sentence of Mullen's 
declaration states that she was ``duly sworn,'' nothing else in the 
declaration establishes that she appeared before a person authorized to 
administer oaths. See GX 20, at 4 (signature page). Nor does the 
declaration contain an attestation clause.\17\ See id.; see also 28 
U.S.C. 1746.
---------------------------------------------------------------------------

    \16\ Both the office manager and Respondent also disputed 
Mullen's statement in the 2015 declaration that Respondent ``stood 
over me and at one point he leaned over me, grabbed my shoulder and 
shook me.'' GX 20, at 3; Tr. 86 & 369.
    \17\ On November 6, 2014, Mullen, along with her son, were 
indicted on multiple counts of violating 21 U.S.C. 841(a)(1) 
(unlawful distribution of hydrocodone and zolpidem), 846 (conspiracy 
to distribute hydrocodone and zolpidem), and 843(a)(3) (obtaining 
controlled substances by fraud), and a single count of violating 21 
U.S.C. 843(a)(2) (use of a DEA registration number issued to 
another). GX 20, at 132-40. Mullen pled guilty to all six counts, 
and on July 17, 2015, she was sentenced to 18 months incarceration. 
Id. at 156-158.

---------------------------------------------------------------------------

[[Page 28683]]

    Respondent further testified that he never authorized Mullen to 
call in prescriptions for pain medications and/or controlled substances 
using his name and DEA number. Tr. 319. Indeed, he asserted that Ms. 
Mullen ``doesn't know my DEA number.'' Id. When asked whether he ever 
authorized Mullen to fax in refill prescriptions, Respondent ``doubted 
that because whenever I gave out prescriptions for any kind of pain 
medicine . . . I would give that to the patient directly. And then if 
[the patient] needed a refill, I would refill it with the patient when 
I saw [him/her], so that was directly handed to the patient.'' Id. at 
320.
    Asked whether he accepted responsibility for the ``diversion that 
occurred out of [his] office and under [his] identity,'' Respondent 
answered that Mullen ``was not entrusted with [his] DEA number'' and 
that ``there was nothing I could do to supplement that.'' Id. at 429. 
He further testified that when ``I found out about this, I acted 
immediately,'' and ``as far as . . . acting in the public interest, I 
think I did that.'' Id. Continuing, Respondent testified that ``[a]s 
far as if you're asking me if I accept responsibility for all of her 
diversion for the five years and so forth, I don't know how I could do 
that.'' Id. at 429-30.

The DEA Administrative Inspection and Investigation

    On July 10, 2013, DEA Diversion Investigators executed an 
Administrative Inspection Warrant (AIW), presumably at Respondent's 
Roanoke office as it was his registered location.\18\ RX 88, at 1; Tr. 
135. In testimony which was both confused and confusing, the DI stated 
that Respondent had various recordkeeping violations, which, in his 
view, included that the ``initial inventory wasn't listed.'' Tr. 135-
36. The DI then asserted that while Respondent ``had a dispensing log 
and it did have the number of pills that was dispensed each time and a 
running count . . . DEA requires a beginning inventory, which would 
actually . . . be the drug strength, the number of commercial 
containers or the size of the commercial containers.'' Id. at 136. 
However, on questioning by the ALJ as to whether the beginning 
inventory would be ``from the date that he opened his practice or . . . 
from the date that he received these particular drugs,'' the DI 
explained that ``[i]t would be from the last biennial inventory. So he 
did have a biennial inventory. So that we can use that as a beginning 
inventory.'' \19\ Id. at 137. After acknowledging that a biennial 
inventory is done ``[e]very two years,'' the DI acknowledged that ``we 
would use that biennial inventory or the initial inventory'' as the 
``starting point.'' Id. at 137-38.
---------------------------------------------------------------------------

    \18\ The Government did not submit the AIW for the record and 
the DI did not testify to the exact date on which the AIW was 
executed. Tr. 135. I thus derive the date of the inspection from the 
closing inventory document, which was submitted by Respondent. RX 
88. Even though the Show Cause Order alleged that various other 
records did not comply with the CSA and DEA regulations, the 
Government did not submit these either.
    \19\ The CSA does not use the term ``beginning inventory.'' See 
21 U.S.C. 827(a)(1). Rather, it uses the term ``initial inventory'' 
to describe the requirement that ``every registrant . . . shall . . 
. as soon thereafter as such registrant first engages in the 
manufacture, distribution, or dispensing of controlled substances . 
. . make a complete and accurate record of all stocks thereof on 
hand[.]'' Id. While the CSA also requires a registrant who engages 
in the dispensing of controlled substances to take an inventory 
``every second year thereafter,'' the statute calls this inventory a 
``biennial inventory.'' See id. The term ``beginning inventory'' 
simply refers to an inventory that is used as the starting point for 
an audit of a registrant's handling of controlled substances.
---------------------------------------------------------------------------

    However, upon questioning by Government counsel, the DI testified 
that there was no beginning inventory, that this is the same as the 
initial inventory which must be created when a person first becomes 
registered and obtains drugs, and that there was also no biennial 
inventory. Id. at 138. Then asked if there were ``any other regulation 
violations in terms of the inventories that were required to be kept,'' 
the DI answered: ``No. Basically he didn't list the number of 
commercial containers or how many dosage units were in each commercial 
container.'' Id. The DI also testified that he found it troubling that 
Respondent's violations ``were similar'' to those found in the 2005 
Consent Order, ``especially about the biennial inventory and initial 
inventory.'' Id. at 140. The DI further asserted that Respondent's 
recordkeeping violations ``should have been rectified . . . back in 
2005,'' and that the records ``should have been done correctly . . . 
actually, ever since [Respondent] entered into the MOA with DEA.'' Id. 
at 141.
    The DI acknowledged, however, that Respondent had receipt records 
that went back beyond the period of the audit he conducted, which 
covered a period of two years. Id. at 161, 163. The DI also conceded 
that Respondent could account for nearly every pill he had obtained, 
the exception being that he was off three pills of hydrocodone 10/650 
mg. Id. at 162-63.
    Regarding the recordkeeping allegation, Respondent testified that 
DHP's inspector who audited his records did not raise any issue with 
respect to his recordkeeping and ``said they were good.'' Id. at 397. 
Respondent testified that based on his conversation with the inspector, 
he continued to maintain the records in ``just the same way'' until the 
DI advised him as to the ``deficiencies he found.'' Id. at 398. 
Respondent then testified that as a result of his conversation with the 
DEA, he changed his recordkeeping practices ``right away.'' Id.
    The DI also testified that in the summer of 2015, he interviewed 
Respondent's office manager. Id. at 133. In the interview, the office 
manager denied any knowledge that prescriptions were being called-in in 
her name. Id. She also told the DI that Respondent was not ``aware of 
that.'' Id.
    The office manager also told the DI that ``sometimes the controlled 
substances, which would be [h]ydrocodone, Xanax, and [d]iazepam . . . 
would be left out for . . . her to administer to the patient.'' Id. at 
134. The DI testified that the office manager is not a registrant and 
that she is not permitted to administer controlled substances when 
Respondent is not present because she is ``not registered'' and 
``doesn't have the training to handle controlled substances.'' Id. The 
DI also testified that leaving the controlled substances out overnight 
is not permitted, and that under the Code of Federal Regulations, 
controlled substances ``have to be secured in a substantial cabinet,'' 
such as ``a steel cabinet'' or ``a safe.'' Id. Finally, the DI asserted 
that Respondent did not maintain effective controls against diversion 
because he was not monitoring his employee closely enough, id. at 142, 
and that Respondent ``has an obligation to know about any diversion 
that happens with his employees or any criminal information.'' Id. at 
144. However, when asked by Government counsel if there were ``[a]ny 
other controls that [Respondent] should have been using,'' the DI 
answered: ``I don't believe so.'' Id.
    The DI conceded that Respondent no longer has controlled substances 
in his office. Id. at 165-66. He also acknowledged that he had looked 
at Respondent's prescriptions since 2013, and that none of these 
prescriptions raised any concern. Id. at 166.
    As to the allegation that he did not provide adequate security for 
the controlled substances that he left out of the safe the night before 
he would perform procedures, Respondent

[[Page 28684]]

testified that his office was in ``a freestanding building,'' that it 
was the only office in the building, that he had a security system that 
had motion and door detectors that was monitored, that the door and 
door frame to the drug room were made of steel, and that the door had a 
deadbolt lock. Id. at 305-10. He further testified that Ms. Mullen did 
not have a key to the room. Id. at 308.
    As for his practice of allowing his office manager to administer 
controlled substances to patients prior to procedures, Respondent 
testified that this ``was not a routine practice'' and occurred only 
``on occasion.'' Id. at 336. Respondent added that this would occur if 
he was ``inevitably going to be late, right when the patient starts . . 
. complaining about that,'' prompting a call from his office manager 
``asking[] if she [could] administer. . . the medicines.'' Id. at 337. 
Respondent explained that his office manager ``had already checked the 
[patient's] vitals,'' and that he ``would either say yes or no about 
that.'' Id. He also testified that he did procedures only one day a 
week, and that it ``would only be the first case in the morning, if 
that happened at all.'' Id.
    While Respondent testified that he would leave drugs outside of the 
safe (in the storage room) either the night before the procedure or if 
he had ``come in earlier in the morning,'' he further explained that he 
would leave out only the aliquot for ``just that one patient,'' and 
that it was kept ``behind the locked door'' of the drug room. Id. at 
338-39. According to Respondent, opening the safe required both a key 
and a combination, but only he knew the combination. Id. at 340. 
Respondent stated that he had ended the practice of allowing his office 
manager to administer medication in September 2013, after a patient 
questioned the practice. Id. at 341.
    Asked by the ALJ whether he thought ``it was improper to have [his 
office manager] administer'' controlled substances to patients when he 
was ``not in the office,'' Respondent maintained that he ``thought it 
was a common practice.'' Id. at 431. He then maintained that ``my 
interpretation of the state code and publications by the Board of 
Medicine, it seemed like it was all right.'' Id. However, Respondent 
provided no such materials to corroborate that this practice complied 
with state law.
    Asked by the ALJ when he first started using the PMP, Respondent 
testified: ``August 24, 2012.'' Id.at 435. When then asked by the ALJ 
why he didn't ``use it prior to that time,'' Respondent asserted that 
he had tried several times but ``couldn't get a log-in.'' Id.; see also 
id. at 366-67. Respondent then testified that he later found out ``that 
the site had been hacked . . . in 2009'' but did not remember when he 
had tried to access the PMP. Id. at 367 & 435. Nor did he testify as to 
why he had previously sought to access the PMP. However, Respondent 
testified that he now monitors the state PMP every month to determine 
if someone is misusing his registration. Id. at 382.

Discussion

    Under the CSA, ``[a] registration pursuant to section 823 of this 
title to manufacture, distribute, or dispense a controlled substance . 
. . may be suspended or revoked by the Attorney General upon a finding 
that the registrant . . . has committed such acts as would render his 
registration under section 823 of this title inconsistent with the 
public interest as determined under such section.'' 21 U.S.C. 
824(a)(4). So too, ``[t]he Attorney General may deny an application for 
[a practitioner's] registration . . . if the Attorney General 
determines that the issuance of such registration . . . would be 
inconsistent with the public interest.'' Id. Sec.  823(f). In the case 
of a practitioner, see id. Sec.  802(21), Congress has directed the 
Attorney General to consider the following factors in making the public 
interest determination:

    (1) The recommendation of the appropriate State licensing board 
or professional disciplinary authority.
    (2) The applicant's experience in dispensing or conducting 
research with respect to controlled substances.
    (3) The applicant's conviction record under Federal or State 
laws relating to the manufacture, distribution, or dispensing of 
controlled substances.
    (4) Compliance with applicable State, Federal, or local laws 
relating to controlled substances.
    (5) Such other conduct which may threaten the public health and 
safety.
    Id. Sec.  823(f).

    ``[T]hese factors are . . . considered in the disjunctive.'' Robert 
A. Leslie, M.D., 68 FR 15227, 15230 (2003). It is well settled that I 
``may rely on any one or a combination of factors, and may give each 
factor the weight [I] deem[] appropriate in determining whether'' to 
suspend or revoke an existing registration or deny an application. Id.; 
see also MacKay v. DEA, 664 F.3d 808, 816 (10th Cir. 2011); Volkman v. 
DEA, 567 F.3d 215, 222 (6th Cir. 2009); Hoxie v. DEA, 419 F.3d 477, 482 
(6th Cir. 2005). Moreover, while I am required to consider each of the 
factors, I ``need not make explicit findings as to each one.'' MacKay, 
664 F.3d at 816 (quoting Volkman, 567 F.3d at 222); see also Hoxie, 419 
F.3d at 482.\20\
---------------------------------------------------------------------------

    \20\ In short, this is not a contest in which score is kept; the 
Agency is not required to mechanically count up the factors and 
determine how many favor the Government and how many favor the 
registrant/applicant. Rather, it is an inquiry which focuses on 
protecting the public interest; what matters is the seriousness of 
the registrant's or applicant's misconduct. Jayam Krishna-Iyer, 74 
FR 459, 462 (2009). Accordingly, as the Tenth Circuit has 
recognized, findings under a single factor can support the 
revocation of a registration. MacKay, 664 F.3d at 821. Likewise, 
findings under a single factor can support the denial of an 
application.
---------------------------------------------------------------------------

    Under the Agency's regulation, ``[a]t any hearing for the 
revocation or suspension of a registration, the Administration shall 
have the burden of proving [by substantial evidence] that the 
requirements for such revocation or suspension pursuant to . . . 21 
U.S.C. [Sec.  ] 824(a) . . . are satisfied.'' 21 CFR 1301.44(e). In 
this matter, I conclude that the Government's evidence with respect to 
Factors Two, Four, and Five \21\ supports the conclusion that 
Respondent has committed acts which render his ``registration 
inconsistent

[[Page 28685]]

with the public interest.'' 21 U.S.C. 823(f), 824(a)(4). While I agree 
with the ALJ's conclusion that a sanction is appropriate, I find that 
the record supports a stronger sanction than that recommended by the 
ALJ.
---------------------------------------------------------------------------

    \21\ With respect to Factor One, the Virginia Board has not made 
a recommendation to the Agency in this matter. Moreover, even under 
the broader view taken in numerous agency cases of what constitutes 
relevant evidence under this factor, the Virginia Board's 2005 
restoration of Respondent's medical license to unrestricted status 
is of de minimis probative value in assessing whether his continued 
registration is consistent with the public interest given that the 
most serious allegations in this matter post-date the Board's 
action. Thus, the most that can be said for the Board's restoration 
of his medical license to unrestricted status is that Respondent 
currently possesses authority to dispense controlled substances 
under Virginia law and therefore meets the CSA's prerequisite for 
maintaining a practitioner's registration. See Frederic Marsh 
Blanton, 43 FR 27616 (1978) (``State authorization to dispense or 
otherwise handle controlled substances is a prerequisite to the 
issuance and maintenance of a Federal controlled substances 
registration.'') However, this finding is not dispositive of the 
public interest inquiry. See Mortimer Levin, 57 FR 8680, 8681 (1992) 
(``[T]he Controlled Substances Act requires that the Administrator . 
. . make an independent determination [from that made by state 
officials] as to whether the granting of controlled substance 
privileges would be in the public interest.''); see also Paul Weir 
Battershell, 76 FR 44359, 44366 (2011) (citing Edmund Chein, 72 FR 
6580, 6590 (2007), pet. for rev. denied, Chein v. DEA, 533 F.3d 828 
(D.C. Cir. 2008)).
     As to Factor Three, I agree with the ALJ that there is no 
evidence that Respondent has been convicted of an offense under 
either federal or state law ``relating to the manufacture, 
distribution or dispensing of controlled substances,'' 21 U.S.C. 
823(f)(3), and that the simple possession offenses of which he has 
been convicted are properly considered under Factor Five. The Agency 
has recognized, however, there are a number of reasons why even a 
person who has engaged in criminal misconduct may never have been 
convicted of an offense under this factor, let alone prosecuted for 
one. Dewey C. MacKay, 75 FR 49956, 49973 (2010), pet. for rev. 
denied, MacKay v. DEA, 664 F.3d 808 (10th Cir. 2011). Thus, ``the 
absence of such a conviction is of considerably less consequence in 
the public interest inquiry'' and is therefore not dispositive. Id.
---------------------------------------------------------------------------

Factors Two, Four and Five--Respondent's Experience in Dispensing 
Controlled Substances, Compliance with Applicable Laws Related to 
Controlled Substances, and Such Other Conduct Which May Threaten Public 
Health and Safety

Respondent's Liability for Mullen's Misuse of His Registration

    In the Show Cause Order, the Government alleged that Respondent is 
``responsible for the misuse of [his] registration by'' Ms. Mullen. ALJ 
Ex. 1, at 2. Moreover, in its post-hearing brief, the Government 
asserts that Respondent ``knew or should have known about the diversion 
that Ms. Mullen was committing under his name'' based on the fraudulent 
tramadol prescriptions that were brought to his attention by a 
pharmacist in November 2008. Gov. Post-Hrng. Br. 15-16. The Government 
notes Respondent's testimony that he ``didn't think [these acts of 
diversion] had anything to do with him,'' even though the prescriptions 
were called in under his name, and argues that ``he admitted [that] he 
made no changes in his office practices, did not discuss the situation 
with his employees and did not begin to use Virginia's PMP to monitor 
the drugs being prescribed under his'' registration. Id. at 16-17. The 
Government then argues that the Agency has consistently applied the 
principle ``that a registrant bears responsibility for the misuse of 
their [sic] registration . . . by an employee.'' Id. at 17. Also 
pointing to the ``testimony'' it presented in the form of Ms. Mullen's 
unattested declaration, the Government argues that Respondent entrusted 
his registration to Ms. Mullen because her ``duties also included 
occasionally calling-in patient prescriptions to pharmacies.'' Id. at 
20.
    The ALJ rejected the allegation, reasoning that the Government did 
not prove that Respondent ``provide[d] Mullen with access to his 
registration number expressly, impliedly, or negligently,'' R.D. 34, or 
that Respondent either had knowledge or was willfully blind to Mullen's 
actions prior to August 20, 2012. Id. at 35. While I agree with the ALJ 
that the Government's proof was inadequate to support the imposition of 
liability for entrusting his registration to Mullen, I disagree with 
substantial aspects of the ALJ's reasoning.
    First, the ALJ's opinion suggests that he gave weight to 
Respondent's testimony that he did not believe that the 2008 incident 
had anything to do with him. See R.D. 35. Specifically, in rejecting 
the Government's contention that ``Respondent should have monitored 
Mullen and his PMP report, the ALJ reasoned, in part, that ``the 2008 
fax \22\ did not contain any information that suggested that one of 
Respondent's employees was involved'' and that ``the refill 
prescription was not written for one of the Respondent's patients.'' 
Id.
---------------------------------------------------------------------------

    \22\ While there was a 2008 fax, this document was generated by 
Respondent in response to the call from the pharmacist questioning 
the prescriptions, which were phoned-in.
---------------------------------------------------------------------------

    As for Respondent's contention that he did not believe the incident 
involved him, the incident obviously involved him because his name was 
being used as the purported issuer of the prescriptions. Moreover, 
neither Respondent nor the ALJ explained why one would reasonably 
expect an employee who was engaged in criminal activity by calling in 
fraudulent prescriptions to give her actual name. Indeed, with respect 
to the person who was calling in the prescriptions, there were only two 
possibilities: either the prescriptions were being called in by someone 
who did not work for him or by someone who did.\23\ The record does 
not, however, establish whether the pharmacist told Respondent that 
``Liz Norville'' (Mullen) had provided Respondent's phone number in the 
voice mail message that she left for the prescription.
---------------------------------------------------------------------------

    \23\ I acknowledge the possibility that someone outside of a 
physician's practice could call-in (or fax-in) a fraudulent 
prescription to a pharmacy. Thus, obtaining the phone number 
provided by the caller (or the number used to fax the prescription) 
would tend to eliminate one of the two possible sources of the 
prescription's origin. There is, however, no evidence that the 
pharmacist told Respondent that ``Liz Norville,'' the name Mullen 
used on this occasion, had provided his office phone number when she 
called in the prescriptions, or whether the pharmacy had obtained 
Respondent's phone number from its dispensing software.
---------------------------------------------------------------------------

    I agree with the ALJ that the Government did not prove that 
Respondent either had actual knowledge of, or was willfully blind to, 
Mullen's criminal behavior until August 20, 2012.\24\ R.D. 35-36. 
However, DEA has previously held that ``[c]onsistent with a 
registrant's obligation to `provide effective controls and procedures 
to guard against theft and diversion of controlled substances,' every 
registrant has a duty to conduct a reasonable investigation upon 
receiving credible information to suspect that a theft or diversion had 
occurred.'' Rose Mary Jacinta Lewis, 72 FR 4035, 4042 (2007) (quoting 
21 CFR 1301.71(a)). Thus, the Government is not required to show that a 
registrant either had actual knowledge of, or was willfully blind to, 
an employee's or agent's criminal behavior.\25\
---------------------------------------------------------------------------

    \24\ As noted previously, in support of its contention that 
Respondent authorized Mullen to use his registration and was also 
aware that she was diverting controlled substances, the Government 
produced an unattested declaration by Ms. Mullen. Notwithstanding 
that some of the statements made by Mullen in this document are 
corroborated by other evidence, the Government's failure to ensure 
that Ms. Mullen attested to the truth of her statements under 
penalty of perjury renders this document inherently unreliable.
    \25\ The Government did not explicitly cite this duty or Jacinta 
Lewis in the Show Cause Order, its Pre-Hearing Statements, or its 
Post-Hearing brief. Because I reject the Government's contentions as 
to the steps Respondent should have taken but did not following the 
2008 incident, I need not decide whether the Government failed to 
provide adequate notice of its intent to rely on this duty in this 
matter.
---------------------------------------------------------------------------

    The Agency has further explained that ``the precise scope of'' the 
duty to investigate ``necessarily depends upon the facts and 
circumstances.'' Id. Moreover, a registrant's duty to investigate 
potential theft or diversion by his employees (or agents) applies to 
all such acts, regardless of whether the employee has been entrusted 
with authority to use his registration. Cf. John V. Scalera, 78 FR 
12092 (2013). In Scalera, the former Administrator denied a physician's 
application for registration, based, in part, on his testimony that he 
``had no idea'' and did not ``know anything about'' how unlawful 
prescriptions that were issued under his name as the prescriber were 
either called-in or faxed to the pharmacies. Id. at 12095-96; see also 
id. at 12099. The Administrator further noted the physician's testimony 
that ``there was not enough evidence to convince him that any of his 
employees had actually called in the prescriptions with his surrendered 
number.'' Id. at 12097; see also id. at 12099. Notably, the former 
Administrator denied the physician's application notwithstanding that 
there was no showing that the physician had entrusted his registration 
to any employee,\26\ holding that ``[h]aving failed to explain why the 
. . . prescriptions were called in, [r]espondent has offered no 
credible assurance that similar acts will not occur in the future''). 
Id. at 12100.
---------------------------------------------------------------------------

    \26\ In Scalera, the physician had previously surrendered his 
registration. 78 FR at 12094. While the physician testified that 
office employees had access to his registration number, there was no 
showing by the Government that the physician had authorized the 
employees to call in prescriptions.
---------------------------------------------------------------------------

    Nonetheless, the Agency has not previously held that the potential 
misuse by an employee or agent of a

[[Page 28686]]

practitioner's state prescribing authority to divert a non-federally 
controlled drug triggers the duty to investigate whether his DEA 
registration has also been misused. I now hold that where a registrant 
is provided with credible information that his state prescribing 
authority is being used to divert a state-controlled (but not 
federally-controlled) drug, such information triggers the duty to 
investigate whether his DEA registration is also being used to divert 
federally controlled substances. However, as this is a new and 
additional duty beyond that which was announced in Jacinta Lewis, which 
applies only to a practitioner's receipt of information that his DEA 
registration is being misused, I conclude that it cannot be 
retroactively imposed on Respondent.
    Moreover, even if the duty had been announced prior to the 2008 
incident, I would find unpersuasive the Government's contention that 
Respondent should be held liable because ``he made no changes in his 
office practices, did not discuss the situation with his employees and 
did not begin to use Virginia's PMP to monitor the drugs being 
prescribed under his DEA number.'' Gov. Post-Hrng. Br., at 16-17. See 
also id. at 21 (arguing that ``[e]ven assuming . . . that [Respondent] 
did not know of Ms. Mullen's diversion, his failure to discover it over 
a five-year period and his failure to properly monitor Ms. Mullen or to 
even check his own PMP report demonstrates a gross and reckless 
disregard for his responsibilities as a registrant and for the public 
health and safety'').
    The Government offered no explanation as to what changes Respondent 
should have made to his office practices (other than to check his PMP 
report) or other steps he should have taken ``to properly monitor Ms. 
Mullen.'' As for its claim that Respondent did not discuss the 
situation with his employees, while there is evidence that he did not 
discuss the matter with Mullen, perhaps Mullen would have confessed and 
perhaps not. Thus, it is unclear what this would have accomplished. 
Finally, as for the contention that Respondent should have checked his 
own PMP report, under Virginia law in effect at the time of the 2008 
incident, Respondent was not authorized to obtain a PMP report showing 
his own prescribings. See Va. Stat. Sec.  54.1-2523.B & C (2008). 
Indeed, Virginia law did not authorize the disclosure by the PMP 
Director of this information until 2013.\27\ See 2013 Va. Laws Ch. 
739(H.B. 1704) (Amending Va. Code Sec.  54.1-2523.C by authorizing the 
Director to disclose, ``in his discretion,'' ``.8 Information relating 
to prescriptions for covered substances issued by a specific 
prescriber, which have been dispensed and reported to the program, to 
that prescriber.'').
---------------------------------------------------------------------------

    \27\ The Government argues that Respondent's ``failure to 
discover [Mullen's diversion] over a five-year period and his 
failure to properly monitor'' her ``demonstrates a gross and 
reckless disregard for his responsibility as a registrant.'' 
Notably, the Government does not explain by what method Respondent 
should have discovered Mullen's diversion when the state police 
detective acknowledged that he did not tell Respondent about 
Mullen's 2008 arrest and the subsequent convictions until the August 
2012 incidents, and only a single pharmacy questioned the dosing of 
a prescription (but not its legitimacy) after the 2008 incident.
     Given the scope of the diversion, there is much about this case 
(such as the failure of the detective to tell Respondent of Mullen's 
arrest and convictions, not to mention that the terms of her 
probation did not prohibit her from working in a doctor's office; 
the fact that prescriptions which were missing Respondent's DEA 
number were routinely filled notwithstanding that they were facially 
invalid; as well as that the prescriptions were for hydrocodone in 
quantities and dosings that were clearly outside of the scope of 
what is usually prescribed by podiatrists), which is deeply 
disturbing. While the Government believes Respondent's and his 
office manager's testimony as to his lack of knowledge is 
implausible, the burden was on the Government to prove otherwise 
under the theory it advanced in this case.
---------------------------------------------------------------------------

    Nonetheless, where a practitioner receives credible information 
that fraudulent prescriptions under his name are being presented for 
state but not federally-controlled drugs, and the state PMP permits a 
practitioner to obtain information as to his controlled substance 
prescribings, that practitioner has a duty to obtain that information 
and to determine whether unlawful prescriptions for federally 
controlled substances are also being dispensed under his registration. 
Moreover, even if state law does not authorize a practitioner to obtain 
a PMP report of the dispensings which have been attributed to him, a 
practitioner is obligated to obtain that information from a pharmacy 
that reports a fraudulent prescription to him. If information obtained 
from either the PMP or a pharmacy shows that one's registration is 
being misused, a registrant must report that information to DEA (as 
well as local law enforcement authorities) even if the practitioner 
concludes that no employee or agent is involved in the misuse of his 
registration.\28\ A practitioner is not excused from this duty because 
others, who also have responsibilities to investigate, such as law 
enforcement officers and pharmacists, failed to carry out those 
responsibilities.
---------------------------------------------------------------------------

    \28\ Depending upon the extent of the misuse, the practitioner 
may need to request the cancellation of his registration number and 
the issuance of a new registration number.
---------------------------------------------------------------------------

    In conclusion, I agree with the ALJ's legal conclusion that on this 
record, the Government has not sustained the allegation that Respondent 
is liable for Mullen's criminal misconduct. However, regardless of 
whether a registrant has entrusted his registration to an employee, 
upon receiving credible information that his registration may be the 
subject of misuse, a registrant has a duty to conduct a reasonable 
investigation to determine whether his employees are involved in the 
misuse of his registration. A failure to do so constitutes ``other 
conduct which may threaten the public health and safety.'' 21 U.S.C. 
823(f)(5).
    To establish a violation of this duty, the Government is not 
required to prove that the registrant had actual knowledge or was 
willfully blind to the fact that an employee was engaged in diversion. 
Rather, the Government is required to show only that the registrant 
received credible information creating a suspicion that his 
registration was being misused, that reasonable measures were available 
to the registrant to determine if his/her employee or agent was 
misusing his registration, and that the registrant failed to take such 
measures.

Respondent's Continued Employment of Mullen After He Became Aware of 
Her Criminal Conduct

    As found above, even after Mullen admitted to Respondent that she 
had submitted the fraudulent refill authorization for hydrocodone and 
he was told by Detective Findley that Mullen had a history of 
submitting fraudulent prescriptions which included the 2008 tramadol 
prescriptions, Respondent continued to employ Mullen. Indeed, within 
days of receiving this information, Respondent found the state court 
records showing that Mullen had pled guilty to obtaining prescription 
drugs by fraud. He also obtained a PMP report showing that from January 
21, 2008 through August 24, 2012, Mullen had filled 56 prescriptions/
refills for 90 dosage units of hydrocodone 10 mg and 26 prescriptions/
refills for zolpidem 10 mg. Respondent nonetheless continued to employ 
Mullen for another five weeks, asserting that he needed to retain her 
because she was his insurance clerk and needed her to maintain his cash 
flow while a new insurance clerk was hired and trained.
    The ALJ rejected the Government's contention that Respondent 
violated 21 CFR 1301.92 because he continued to employ Mullen ``even 
after learning of her diversion.'' Show Cause Order (ALJ

[[Page 28687]]

Ex. 1), at 2; R.D. 37-38. According to the ALJ, this regulation ``does 
not require the immediate termination of an employee; it only requires 
that the employer immediately assess the employee's conduct to 
determine what employment action to take against the employee.'' R.D. 
37.
    In the ALJ's view, ``Respondent immediately assessed both the 
seriousness of Mullen's violations and her position of responsibility, 
as required under'' the regulation. Id. The ALJ also gave weight to 
Respondent's testimony that while Mullen remained in his employment, he 
moved the fax machine into the secure medication room, took away her 
office keys, called local pharmacies to alert them to Mullen's actions, 
and monitored his DEA number on the PMP system.\29\ R.D. 37. The ALJ 
further gave weight to the testimony that Respondent needed to retain 
Mullen for this period because 99 percent of his cash flow came from 
insurance payments and ``no replacement could immediately fill Mullen's 
position so as to continue the Respondent's normal business 
operations,'' even though Respondent acknowledged that his ``office 
manager was competent to perform these duties.'' Id. at 38.
---------------------------------------------------------------------------

    \29\ The ALJ also found that ``Respondent's office manager 
monitored Mullen from August 20, 2012, until she left the 
Respondent's employment.'' R.D. 37 (citing Tr. 79). The cited 
testimony involved only the question by Respondent's counsel: ``Do 
you recall whether you were more vigilant watching Ms. Mullen during 
that month that she was still there?'' followed by the office 
manager's answer: ``I would say yes.'' Tr. 79. The office manager 
did not, however, offer any further testimony explaining in what 
manner she was more vigilant in watching Mullen during this period.
---------------------------------------------------------------------------

    Continuing, the ALJ explained that ``[f]or small businesses that 
depend on each employee performing essential business functions, it is 
reasonable to expect that terminating an employee can be a process 
rather than an instantaneous action.'' Id. The ALJ then rejected the 
allegation, concluding that Respondent had acted ``[c]onsistent with 
the requirements of 21 CFR 1301.92'' by taking ``immediate action 
towards terminating Mullen's employment because of her misconduct.'' 
Id.
    Section 1301.92 is contained in a section of part 1301 which 
follows the heading: ``EMPLOYEE SCREENING-NON-PRACTITIONERS,'' thus 
raising the question, which was not addressed by either party or the 
ALJ as to whether it even applies to Respondent who is a practitioner. 
I need not decide this question because under the public interest 
standard applicable to practitioners, the Agency's authority includes 
not only those acts that constitute violations of its regulations, it 
also includes ``[s]uch other conduct which may threaten the public 
health and safety.'' \30\ 21 U.S.C. 823(f)(5).
---------------------------------------------------------------------------

    \30\ Notwithstanding that the Government did not cite Factor 
Five with reference to this allegation, Respondent clearly knew that 
his conduct in retaining Mullen in his employment after discovering 
that she was diverting drugs was at issue in the proceeding and put 
on a full defense against the allegation. Of consequence, the public 
interest factors do not impose substantive legal duties which can be 
violated, but simply shape the scope of relevant evidence in the 
proceeding, and Respondent clearly knew throughout the proceeding 
that the Government was alleging that his retention of Mullen was 
conduct which renders his registration inconsistent with the public 
interest. ALJ Ex. 1, at 1-2 (citing 21 U.S.C. 824(a)(4) and 823(f)).
     Of further note, 21 CFR 1301.76(a), which is titled ``[o]ther 
security controls for practitioners,'' provides, in part, that 
``[t]he registrant shall not employ as an agent or employee who has 
access to controlled substances, any person who has been convicted 
of a felony offense relating to controlled substances.''
---------------------------------------------------------------------------

    Moreover, whether I were to apply section 1301.92 or evaluate 
Respondent's conduct under Factor Five, I would come to the same 
result. Here, the evidence shows that by August 24, 2012, Respondent 
knew that Mullen had been convicted in state court of two counts of 
prescription fraud. And once he obtained the PMP report which showed 
the controlled substances prescriptions she obtained under his DEA 
registration, Respondent knew that Mullen had committed at least 
another 82 felony offenses of prescription fraud.
    To the extent the ALJ's recommendation suggests that Respondent 
properly ``assessed . . . the seriousness of Mullen's violations,'' 
R.D. 37, I disagree. Indeed, proof that Mullen had committed a single 
act of prescription fraud should have resulted in her immediate 
termination. Of further note, when confronted on cross-examination as 
to why he retained Mullen even after he obtained the PMP report, 
Respondent attempted to minimize the scope of Mullen's misconduct when 
he testified that ``I acted upon the, you know, the proportion of 
things that I knew. So it wasn't--it wasn't what we're looking at in 
retrospective now with this huge situation. It was only with a handful 
of information that I had, less than a dozen.'' Tr. 426.
    However, by August 24, 2012, Mullen's criminal conduct in obtaining 
prescriptions for herself alone made this an indisputably ``huge 
situation'' given that she had obtained more than 5,000 dosage units of 
hydrocodone 10 mg, the strongest dosage form of this highly abused 
controlled substance, not to mention another 780 dosage units of 
zolpidem. Notably, the ALJ, in his discussion as to why he rejected the 
Government's contention that Respondent should have immediately fired 
Mullen, did not address this testimony.
    I also disagree with the ALJ that the measures undertaken by 
Respondent justify his failure to immediately terminate Mullen. As for 
his moving the fax machine into the secure medications room, this did 
not address Mullen's ability to phone in prescriptions. So too, while 
Respondent took away Mullen's keys to the office, obviously she was 
allowed into the office in order to train her replacement and 
Respondent offered no testimony that anyone was watching Mullen on 
those days when he was at his other offices.
    As for the ALJ's finding that Respondent ``monitored his DEA number 
on the PMP system,'' R.D.37, while Respondent claimed he did this 
``every month,'' Tr. 382, he offered conflicting testimony as to when 
he started doing so. Specifically, after testifying that he checked the 
PMP every month to see if anyone was misusing his number, when then 
asked by his counsel if he had found any misuse since August 2012, 
Respondent answered: ``No. I will say I've been doing every month for 
approximately a year, nine months, something like that that. No, no 
deviations there.'' \31\ Id. at 382-83. Yet when later asked by the ALJ 
``when did you start using the PMP on a regular basis?'' Respondent 
answered: ``August 24 of 2012.'' Id. at 435. Not only is this conflict 
in his testimony unresolved, Respondent did not testify as to any other 
instance during the remaining period of Mullen's employment in which he 
accessed the PMP to determine what prescriptions were being dispensed 
under his registration.
---------------------------------------------------------------------------

    \31\ Even if Respondent meant that he had been checking the PMP 
for one year and nine months (since the date of the hearing), this 
still would not support a finding that he had commenced doing so 
every month since August 2012 and did so while Mullen remained 
employed with him.
---------------------------------------------------------------------------

    To be sure, there is evidence that Respondent called local 
pharmacies to alert them to Mullen's actions. Yet the evidence also 
shows while Respondent claimed to have called ``a handful of these'' 
pharmacies on August 20, 2012 (the day the refill authorization form 
was found on the fax), at least 12 refills for 90 or 120 dosage units 
of hydrocodone were nonetheless dispensed by several of these 
pharmacies after that date, including by those he called. Moreover, 
Respondent saw patients at four different locations

[[Page 28688]]

in southwestern Virginia, and while there is no evidence as to the 
number of pharmacies in this area of Virginia, presumably there are 
more than ``a handful.''
    I further reject Respondent's contention that he was justified in 
continuing to employ Mullen because he needed to maintain his cash flow 
while a new insurance clerk was hired and trained. The evidence showed 
that Respondent's office manager could have performed these duties, and 
while she testified that she could not do so and perform her other 
duties, no evidence was offered that Respondent could not have hired 
someone to fill the office manager's duties or that he could not have 
hired a billing service. Moreover, Respondent offered no evidence that 
he did not have access to other sources of funds (such as his savings, 
credit cards, or a line of credit) to support his practice while a new 
insurance clerk was hired and trained. As for the ALJ's suggestion that 
Respondent acted reasonably because he ran a small business and Mullen 
performed an essential business function, a DEA registrant is obligated 
at all times to act in the public interest.
    It is true that ``there was no evidence that Mullen used her 
position in . . . Respondent's office to generate any fraudulent 
prescriptions after August 20, 2012.'' R.D. 38. Respondent was 
nonetheless willing to risk causing additional harm to the public 
health and safety. His conduct in continuing to employ a serial 
diverter clearly constitutes ``conduct which may threaten the public 
health and safety.'' 21 U.S.C. 823(f)(5) (emphasis added).

The Recordkeeping Allegations

    Pursuant to 21 U.S.C. 827(a)(1), ``every registrant shall . . . as 
soon . . . as such registrant first engages in the manufacture, 
distribution, or dispensing of controlled substances . . . and every 
second year thereafter, make a complete and accurate record of all 
stocks thereof on hand.'' See also 21 CFR 1304.11(c) (``After the 
initial inventory is taken, the registrant shall take a new inventory 
of all stocks of controlled substances on hand at least every two 
years.''). Moreover, ``[e]ach inventory shall contain a complete and 
accurate record of all controlled substances on hand on the date the 
inventory is taken. . . . The inventory may be taken either as of 
opening of business or as of the close of business on the inventory 
date and it shall be indicated on the inventory.'' Id. Sec.  
1304.11(a).
    The evidence shows that in 2005, Respondent entered into a Consent 
Order which found that he ``did not establish an initial inventory.'' 
GX 3, at 1-2. Moreover, during the July 2013 inspection, Diversion 
Investigators found that Respondent did not have a biennial inventory 
which was based on an actual count of the drugs on hand as required by 
DEA regulations. See 21 CFR 1304.11(a) & (c). Rather, he maintained a 
perpetual inventory, which was not based on an actual count of the 
drugs on hand at the required biennial interval, but rather, as the ALJ 
found, was ``a mathematical calculation of how many [controlled 
substances] the Respondent should have had after dispensing the listed 
amounts.'' R.D. 41. Thus, I agree with the ALJ that Respondent violated 
21 U.S.C. 827(a) by failing to establish an initial inventory (as found 
in the 2005 Consent Order) and by failing to ``make a complete and 
accurate'' biennial inventory. R.D. 40-41.
    In his Exceptions, Respondent raises two contentions to the ALJ's 
findings. First, he argues that because he was engaged in administering 
medication to his patients, he was ``not required to perform the 
initial and biennial inventories that are required of other 
registrants.'' Exceptions, at 1 (citations omitted). Respondent points 
to 21 U.S.C. 827(c)(1)(B), which states, in relevant part, that the 
recordkeeping provisions of section 827 ``shall not apply . . . to the 
administering of a controlled substance in schedule II, III, IV, or V 
unless the practitioner regularly engages in the dispensing or 
administering of controlled substances and charges his patients, either 
separately or together with charges for other professional services, 
for substances so dispensed or administered.'' Exceptions, at 1-2. 
Respondent argues that ``DEA had the burden of proof as to this 
allegation,'' and because the Government failed ``to offer evidence 
that [he] falls into the statutory exception,'' the allegation must be 
rejected. Id. at 2. Respondent further maintains that ``[t]his is not a 
case where [he] seeks to invoke a statutory exception; rather, DEA 
seeks to invoke it.'' Id.
    Respondent is mistaken. Section 827(a) states that ``[e]xcept as 
provided in subsection (c) of this section . . . every registrant shall 
. . . as soon . . . as such registrant first engages in the . . . 
distribution[] or dispensing of controlled substance, and every second 
year thereafter, make a complete and accurate record of all stocks 
thereof on hand.'' (emphasis added). Thus, section 827(a) makes plain 
that the provisions of subsection C are simply exceptions to the 
provisions of subsection A and B, which are generally applicable to all 
registrants.
    Fatal to Respondent's contention is 21 U.S.C. 885(a)(1). It 
provides that:

    It shall not be necessary for the United States to negative any 
exemption or exception set forth in this subchapter in any 
complaint, information, indictment, or other pleading or in any 
trial, hearing, or other proceeding under this subchapter, and the 
burden of going forward with the evidence with respect to any such 
exemption or exception shall be upon the person claiming its 
benefit.

21 U.S.C. 885(a)(1) (emphasis added). By its plain terms, this 
provision applies not only to criminal proceedings but also to 
suspension and revocation proceedings.
    Because section 827(c) is clearly an exception to the generally 
applicable recordkeeping requirements and Respondent is ``the person 
claiming its benefit,'' he had the burden of producing evidence to show 
why he was entitled to the exception. Id. As Respondent produced no 
evidence showing that he did not ``charge[ ] his patients, either 
separately or together with charges for other professional services, 
for substances so dispensed or administered,'' id. Sec.  827(c)(1)(B), 
he is not entitled to claim the exception. I therefore reject 
Respondent's exception and hold that Respondent violated section 827(a) 
by failing to maintain proper inventories.\32\
---------------------------------------------------------------------------

    \32\ As Respondent did not maintain a proper initial and 
biennial inventory at all, these are the violations he committed. 
Having made these findings, I agree with Respondent that the ALJ's 
additional findings that his inventory did not contain the number of 
containers and the number of units or volume in each container, see 
R.D. at 42, ``are subsumed under the `greater' violation'' of 
failing to take a biennial inventory. Exceptions, at 3.
---------------------------------------------------------------------------

The Failure To Maintain Adequate Physical Security Allegation

    As found above, on occasion, the night before he was to perform a 
procedure, Respondent would set out in a cup--outside of the controlled 
substance safe--the controlled substances that his office manager was 
to provide to his first patient. However, the evidence shows that the 
drugs were nonetheless kept locked in his medication room which was 
secured with a steel door (and door frame) that had a deadbolt lock. 
The evidence also shows that this office was a freestanding building 
and that Respondent had a security monitoring system.
    The ALJ rejected the Government's contention that Respondent 
violated 21 CFR 1301.75, which provides that ``[c]ontrolled substances 
listed in [s]chedules II, III, IV, and V shall be

[[Page 28689]]

stored in a securely locked, substantially constructed cabinet.'' R.D. 
43-44. Noting that the Agency's regulations do not define the term 
``substantially constructed cabinet,'' the ALJ explained that at least 
one prominent dictionary provides a definition of the term ``cabinet'' 
which includes ``[a] small or private room set aside for some specific 
activity.'' R.D. 44 (quoting American Heritage Dictionary of the 
English Language 185 (1976)). The ALJ further gave ``consideration to 
the factors contained in 21 CFR 1301.71(b)'' and found that 
Respondent's use of the Extra Meds Room ``to store his controlled 
substances substantially complied with the requirements of 21 CFR 
1301.71(b).'' Id.
    Of note, section 1301.75(b) does not require that most schedule II 
through V controlled substances be stored in a safe, and indeed, 
section 1301.75(e) specifies two drugs (carfentanil etorphine 
hydrochloride and diprenorphine) which ``shall be stored in a safe or 
steel cabinet equivalent to a U.S. Government Class V security 
container.'' 21 CFR 1301.75(b) & (e). And while the use of the word 
``cabinet'' to describe a small room appears archaic,\33\ I agree with 
the ALJ that in light of the small amount of controlled substances that 
were stored outside of the safe and the level of security provided by 
the medication room and the office's alarm system, Respondent 
nonetheless remained in substantial compliance with section 1301.75 
when he left the drugs outside of the safe but locked in the medication 
room.
---------------------------------------------------------------------------

    \33\ See Merriam-Webster.com. Merriam-Webster, n.d. Web. 22 May 
2017.
---------------------------------------------------------------------------

Aiding and Abetting the Unlawful Distribution of Controlled Substances 
by an Unregistered Person

    The Government alleged and the ALJ found that Respondent aided and 
abetted the unlawful distribution of controlled substances when he 
allowed his office manager to administer the controlled substances, 
which he had set out in the drug room the night before, to those 
patients who were undergoing procedures and he had yet to arrive at his 
office. R.D. 44-46. The evidence showed that Respondent's office 
manager did not hold a registration to dispense controlled 
substances.\34\ Id. at 44 (citing Tr. 57). The ALJ further rejected 
Respondent's contention that his office manager was exempt from 
registration under 21 CFR 1301.22(a) because in administering the 
drugs, she was Respondent's ``agent or employee'' and was ``acting in 
the usual course of . . . her business or employment.'' Id. at 45.
---------------------------------------------------------------------------

    \34\ Nor does she hold any DEA registration. Tr. 57.
---------------------------------------------------------------------------

    In so holding, the ALJ reasoned that because in his post-hearing 
brief, ``Respondent described [the office manager's] administration of 
controlled substances as occurring only on `limited occasions,' '' 
``Respondent himself argued . . . that [she] did not administer 
controlled substances in the usual course of business.'' Id. (quoting 
Resp. Post-Hrng. Br. 38). Continuing, the ALJ explained that he was 
``find[ing] as a matter of fact that [the office manager's] 
administration of controlled substances was described repeatedly as 
`occasional,' which is the opposite of `usual.' Therefore, 21 [CFR] 
1301.22(a) does not apply.'' Id.
    Respondent takes exception to the ALJ's legal conclusion. He argues 
that his office manager was an agent within the meaning of the CSA, 
which defines the term as ``an authorized person who acts on behalf of 
or at the direction of a manufacturer, distributor, or dispenser.'' 
Exceptions, at 4 (quoting 21 U.S.C. 802(3)). Respondent further notes 
that ``[w]hile the phrase `in the usual course of business' is used 
many times in the CSA and the associated regulations, it is not 
defined.'' Id. at 5 (citing 21 U.S.C. 822(c); 21 CFR 1300.04). 
Respondent then maintains that ``[t]he fact that a business practice 
occasionally, or on limited occasions, does not mean that it is not in 
the usual course of that business.'' Id. Respondent argues that the 
testimony shows ``that during the course of [his] surgical practice, it 
was in the usual course of business for [the office manager] to 
administer medication in lieu of [his] doing it personally when [he] 
was not going to be in the office when the surgery patient arrived[.]'' 
Id. Respondent thus contends that the office manager ``was acting as 
[his] agent and employee within the scope of her responsibilities and 
duties'' and was not required ``to be registered.'' Id. Respondent thus 
contends that he ``did not aid and abet an illegal distribution of a 
controlled substance under 21 U.S.C. 841(a).'' Id.
    I need not decide whether the frequency of the office manager's 
administrations of controlled substances to Respondent's patients was 
sufficient to establish that she was acting in the usual course of her 
employment when she did so. Rather, I conclude that because under 
Virginia law, the office manager could not legally administer 
controlled substances to Respondent's patients, it does not matter 
whether she did so only ``on limited occasions'' or routinely, and that 
because her conduct was unlawful, it cannot qualify under section 
822(c) as ``acting in the usual course of [a registrant's] business or 
employment.''
    The Virginia Drug Control Act defines the term ``[a]dminister [to] 
mean[ ] the direct application of a controlled substance, whether by 
injection, inhalation, ingestion, or any other means, to the body of a 
patient . . . by (i) a practitioner or by his authorized agent and 
under his direction or (ii) the patient . . . at the direction and in 
the presence of the practitioner.'' Va. Code Sec.  54.1-3401. Even 
assuming that the office manager's conduct in providing the drugs to 
patients falls within the provision allowing a practitioner's 
``authorized agent'' to do so, the Virginia Drug Control Act contained 
extensive and detailed provisions governing the circumstances in which 
drugs can be administered by someone other than a licensed prescribing 
practitioner. See id. Sec.  54.1-3408. Relevant here is subsection U, 
which states:

    Pursuant to a specific order for a patient and under his direct 
and immediate supervision, a prescriber may authorize the 
administration of controlled substances by personnel who have been 
properly trained to assist a doctor of medicine or osteopathic 
medicine, provided the method does not included intravenous, 
intrathecal, or epidural administration and the prescriber remains 
responsible for such administration.

Id. Sec.  54.1-3408.U. Even assuming that this provision allows a 
doctor of podiatry \35\ to authorize his employee to administer a 
controlled substance to his patient, the evidence shows that Respondent 
would approve the administration when he was ``going to be late,'' 
prompting his office manager to call and ask ``if she [could] 
administer . . . the medicines.'' Tr. 337. Respondent was not in the 
office when this occurred, and while he asserted that

[[Page 28690]]

``he thought it was a common practice'' and was permitted by the Board 
of Medicine, he produced no materials from the Board such as an opinion 
letter or Board decision that would support his contention that even 
though he was not physically present in the office, he was nonetheless 
engaged in the ``direct and immediate supervision'' of his office 
manager when he authorized his office manager to administer the drugs 
to the patients.
---------------------------------------------------------------------------

    \35\ While this provision specifically refers to ``a doctor of 
medicine or osteopathic medicine,'' Va. Code Sec.  54.1-3408.U, 
subsection A refers to ``[a] practitioner of medicine, osteopathy, 
podiatry, dentistry, or veterinary medicine.'' Id. Sec.  54.1-
3408.A.
     In his Post-Hearing Brief, Respondent implies that this 
practice was lawful under the Board of Medicine's Rules governing 
Office-Based Anesthesia. Resp. Post-Hrng. Br. 50. He specifically 
notes that Board's ``requirements for office based anesthesia'' do 
not apply to ``[m]inimal sedation/anxiolysis.'' Id. (quoting 18 Va. 
Admin. Code 85-20-320(A)(1). That may be (even though there is no 
evidence as to whether the cocktail of drugs that were given to the 
patients resulted in the inducement of ``minimal sedation/
anxiolysis'' or ``moderate sedation/conscious sedation,'' which is 
subject to the requirements for office-based anesthesia), but this 
argument does not address whether Respondent's practice of having 
his office manager administer the drugs to the patients in his 
absence was lawful under Va. Code Sec.  54.1-3408.U.
---------------------------------------------------------------------------

    Accordingly, I reject Respondent's exception that his office 
manager was exempt from registration because she was ``acting in the 
usual course of [her] . . . employment'' and that he is not liable for 
aiding and abetting the unlawful distribution of controlled substances. 
As explained above, I further hold that on those occasions when 
Respondent was not physically present in the office and his office 
manager administered the controlled substances to various patients, she 
engaged in an unlawful distribution under 21 U.S.C. 841(a)(1).\36\ I 
further agree with the ALJ that Respondent aided and abetted these 
violations and that this conduct is actionable under Factor Four. R.D. 
46; see also 18 U.S.C. 2.
---------------------------------------------------------------------------

    \36\ In his Exceptions, Respondent argues that ``[t]here is no 
DEA precedent for finding [the office manager's] conduct to be an 
illegal distribution.'' Exceptions, at 5 (citing Fred Samimi, 79 FR 
18698 (2014), and Margy Temponeras, 77 FR 45675 (2012)). Discussing 
Samimi, Respondent states that ``Dr. Samimi was found by the State 
of California to have aided and abetted the unlicensed practice of 
medicine by allowing his staff to dispense (not administer) 
controlled substances when he was not present. In sustaining that 
finding as relevant to her consideration, the Administrator made no 
suggestions that Dr. Samimi's actions violated the CSA.'' Id. And 
discussing Temponeras, Respondent noted that ``Dr. Temponeras had 
unregistered employees dispensing (not administering) drugs to 
patients by filling prescriptions while she was not actually 
present[,]'' and that while ``the Administrator found that Dr. 
Temponeras violated the CSA because she was not registered as a 
dispenser and . . . violated Ohio law by allowing unlicensed 
individual[s] to fill controlled substance[ ] prescriptions . . . 
there was no reference to Dr. Temponeras' conduct as constituting 
illegal distributions.'' Id. at 5-6 (int. quotations omitted).
     Neither case supports Respondent. As for Samimi, the Government 
never argued that the physician's practice of allowing unlicensed 
staff to dispense controlled substances without being directly 
supervised by him constituted a violation of 21 U.S.C. 841, and 
thus, that case did not address the question of whether an 
unregistered person can administer controlled substances to a 
patient outside of the presence of the physician. See 79 FR at 18698 
(discussing allegations of Show Cause Order); id. at 18710 
(discussing state board's findings and relevant state law 
prohibiting practice of allowing unlicensed and unsupervised office 
staff to dispense drugs).
     As for Temponeras, the Agency's decision found that the 
physician, who was not registered as a pharmacy, ``exceeded the 
authority of her registration because she authorized her employees 
to fill prescriptions issued by her father.'' 77 FR at 45677. 
Notably, the decision cited both 21 U.S.C. Sec.  822(b), which 
provides that a registrant is authorized to engage in controlled 
substances activities ``to the extent authorized by [his] 
registration and in conformity with the other provisions of'' the 
CSA, and Sec.  841(a), which renders unlawful the knowing or 
intentional distribution of a controlled substance ``[e]xcept as 
authorized by'' the CSA. Thus, Respondent's assertion that ``[i]n 
Temponeras, there was no reference to Dr. Temponeras' conduct as 
constituting `illegal distributions' '' misstates the case. 
Exceptions, at 6.
---------------------------------------------------------------------------

The State Court Convictions

    As the ALJ found, in 2000, Respondent pled guilty in state court to 
four felony counts of the unlawful possession of controlled substances 
which included sufentanil, oxycodone, pethidine, and hydromorphone, as 
well as one misdemeanor count of unlawful possession of marijuana. R.D. 
47. While the ALJ noted that the Agency had ``declined to revoke'' 
Respondent's registration based on these convictions and the 
convictions were over 15 years old, he rejected Respondent's contention 
that because the Agency entered into the Memorandum of Agreement (MOA) 
with Respondent it is now estopped from seeking revocation based on 
these convictions. Id.
    Respondent takes exception to the ALJ's ruling. Exceptions, at 10-
11. He argues that that ``[t]he ALJ cited no basis for his finding that 
the MOA did not estopped [sic] DEA from relying on [his] 2000 
conviction [sic] in its attempt to sanction him today.'' Id. at 10. He 
also argues that he ``has not found an agency decision that relied on 
conduct predating a MOA as a basis for revoking a registration.'' Id. 
And he argues that ``[t]he MOA was a contract between DEA and 
[himself],'' that the MOA placed restrictions on his registration 
``[i]n lieu of initiating procedures for the revocation of'' his 
registration, that he ``fulfilled his obligations under the'' MOA, and 
that ``DEA is bound by its agreement to accept the MOA in lieu of 
seeking revocation based on [his] 2000 conviction'' under ``[s]imple 
contract law.'' Id. at 11.
    I disagree. While the MOA noted that ``[i]n light of [his] past 
actions, authority exists under 21 U.S.C. [823(f) and 824a)(4)] for DEA 
to initiate Show Cause action to revoke [his ] registration'' and that 
``[i]n lieu of initiating procedures for the revocation of [his] 
[r]egistration,'' the parties had agreed to various terms including the 
renewal of his registration, none of those terms precluded the Agency 
from relying on the state court convictions in any subsequent 
proceeding.\37\ RX 83, at 2. Thus, applying ``simple contract law,'' 
Respondent got exactly what he bargained for--the renewal of his 
registration subject to various conditions. What he did not bargain for 
was the ability to preclude the Agency from considering the state court 
convictions in the event he committed additional misconduct in the 
future and was subject to a Show Cause Order.\38\
---------------------------------------------------------------------------

    \37\ Respondent might have an argument under ``simple contract 
law'' if, after the MOA expired (that being one year from the date 
that DEA signed the agreement), the Agency then brought a show cause 
proceeding based on the exact same grounds that led to the MOA and 
nothing else. But it has not.
    \38\ Respondent also argues that he ``has not found an Agency 
decision that relied on conduct predating a MOA as a basis for 
revoking a registration.'' Exceptions, at 10. However, in Mark De La 
Lama, 76 FR 20011 (2011), the Agency denied an application 
(submitted by a nurse practitioner who allowed his registration to 
expire) based, in part, on his prior convictions for controlled 
substance offenses which gave rise to an MOA when he first became 
registered and which he subsequently violated. See 76 FR at 20018 & 
n.15; id. at 20019 n.18. While the decision did not place 
substantial weight on the applicant's convictions due to their age, 
it did not hold that the Agency could not consider the convictions 
because they predated the MOA. See id.
     Moreover, Respondent cites no Agency decision which holds that 
following the entry of an MOA, the Agency is precluded from 
considering the conduct which gave rise to the MOA in a subsequent 
proceeding.
---------------------------------------------------------------------------

    I therefore reject Respondent's exceptions that I am precluded from 
considering Respondent's state court convictions by the MOA. However, 
in light of the fact that Respondent's convictions occurred 17 years 
ago and that there is no evidence that Respondent has been subsequently 
convicted of either a federal or state offense related to controlled 
substances (whether falling within the scope of Factor Three or Factor 
Five), I place only limited weight on the state court convictions.

Summary of the Government's Prima Facie Case

    Given Respondent's knowledge that Mullen had fraudulently obtained 
controlled substance prescriptions/refills 82 times from January 21, 
2008 through August 24, 2012, as well as his knowledge that Mullen had 
been convicted in state court of two counts of prescription fraud, I 
conclude that he has committed ``other conduct which may threaten the 
public health and safety'' when he failed to immediately terminate 
Mullen. 21 U.S.C. 823(f)(5). I further conclude that Respondent's 
convictions for the unlawful possession of various controlled 
substances provide limited support for the finding that Respondent has 
committed ``other conduct which may threaten public health or safety.'' 
Id.

[[Page 28691]]

    As also found above, Respondent failed to comply with the CSA's 
requirement that he ``make a complete and accurate record of all stocks 
. . . on hand'' both when he first engaged in the dispensing of 
controlled substances as well as ``every second year thereafter.'' 21 
U.S.C. 827(a)(1); 21 CFR 1304.11(a) & (c). He also violated the CSA by 
directing his office manager, who does not hold a registration, to 
administer controlled substances to those patients who were to undergo 
procedures when Respondent was not at his office. 21 U.S.C. 841(a); 18 
U.S.C. 2. Both his failure to maintain proper records and his conduct 
in directing his office manager to administer controlled substances to 
patients is relevant in assessing Respondent's experience in dispensing 
controlled substances (Factor Two) and his compliance with applicable 
laws related to controlled substances (Factor Four).
    I therefore hold that the Government has met its prima facie burden 
of showing that Respondent ``has committed such acts as would render 
his registration . . . inconsistent with the public interest.'' 21 
U.S.C. 824(a)(4). I further conclude that grounds exist to suspend or 
revoke Respondent's registration.

Sanction

    Where, as here, the Government has established grounds to revoke a 
registration or deny an application, a respondent must then ``present[ 
] sufficient mitigating evidence'' to show why he can be entrusted with 
a new registration. Samuel S. Jackson, 72 FR 23848, 23853 (2007) 
(quoting Leo R. Miller, 53 FR 21931, 21932 (1988)). `` `Moreover, 
because `past performance is the best predictor of future performance,' 
ALRA Labs, Inc. v. DEA, 54 F.3d 450, 452 (7th Cir. 1995), [DEA] has 
repeatedly held that where [a registrant] has committed acts 
inconsistent with the public interest, the [registrant] must accept 
responsibility for [his] actions and demonstrate that [he] will not 
engage in future misconduct.'' Jayam Krishna-Iyer, 74 FR 459, 463 
(2009) (citing Medicine Shoppe, 73 FR 364, 387 (2008)); see also 
Jackson, 72 FR at 23853; John H. Kennedy, 71 FR 35705, 35709 (2006); 
Cuong Tron Tran, 63 FR 64280, 64283 (1998); Prince George Daniels, 60 
FR 62884, 62887 (1995). Also, a registrant's candor during both an 
investigation and the hearing itself is an important factor to be 
considered in determining both whether he has accepted responsibility 
as well as the appropriate sanction. Michael S. Moore, 76 FR 45867, 
45868 (2011); Robert F. Hunt, D.O., 75 FR 49995, 50004 (2010); see also 
Jeri Hassman, 75 FR 8194, 8236 (2010) (quoting Hoxie v. DEA, 419 F.3d 
477, 483 (6th Cir. 2005) (``Candor during DEA investigations, 
regardless of the severity of the violations alleged, is considered by 
the DEA to be an important factor when assessing whether a physician's 
registration is consistent with the public interest[.]'').
    While a registrant must accept responsibility for his misconduct 
and demonstrate that he will not engage in future misconduct in order 
to establish that his continued registration is consistent with the 
public interest, DEA has repeatedly held that these are not the only 
factors that are relevant in determining the appropriate disposition of 
the matter. See, e.g., Joseph Gaudio, 74 FR 10083, 10094 (2009); 
Southwood Pharmaceuticals, Inc., 72 FR 36487, 36504 (2007). Obviously, 
the egregiousness and extent of a registrant's misconduct are 
significant factors in determining the appropriate sanction. See Jacobo 
Dreszer, 76 FR 19386, 19387-88 (2011) (explaining that a respondent can 
``argue that even though the Government has made out a prima facie 
case, his conduct was not so egregious as to warrant revocation''); 
Paul H. Volkman, 73 FR 30630, 30644 (2008); see also Paul Weir 
Battershell, 76 FR 44359, 44369 (2011) (imposing six-month suspension, 
noting that the evidence was not limited to security and recordkeeping 
violations found at first inspection and ``manifested a disturbing 
pattern of indifference on the part of [r]espondent to his obligations 
as a registrant''); Gregory D. Owens, 74 FR 36751, 36757 n.22 (2009).
    So too, the Agency can consider the need to deter similar acts, 
both with respect to the respondent in a particular case and the 
community of registrants. See Gaudio, 74 FR at 10095 (quoting 
Southwood, 71 FR at 36503). Cf. McCarthy v. SEC, 406 F.3d 179, 188-89 
(2d Cir. 2005) (upholding SEC's express adoption of ``deterrence, both 
specific and general, as a component in analyzing the remedial efficacy 
of sanctions'').
    Having considered the relevant facts and circumstances, I disagree 
with the ALJ's recommended sanction of a one year suspension which 
would not be effective for three months from the date of my Final Order 
and which would be stayed provided Respondent takes certain courses 
within that period. Instead, because I find Respondent's failure to 
immediately terminate Mullen upon determining that she had fraudulently 
obtained 82 prescriptions for herself is egregious misconduct, which 
clearly posed a threat to public health and safety, I am compelled to 
reject the ALJ's recommended sanction and conclude that the imposition 
of a substantial period of outright suspension is warranted.\39\
---------------------------------------------------------------------------

    \39\ Because the ALJ rejected this allegation, he did not 
address the relevant facts and circumstances related to this 
misconduct.
---------------------------------------------------------------------------

    Notably, Respondent did not acknowledge his misconduct in retaining 
Mullen, and instead, justified his decision to retain her until a new 
insurance clerk was hired and trained because of his need to maintain 
his cash flow. Moreover, when confronted as to why he had retained 
Mullen even after he obtained the PMP report which listed 82 different 
prescriptions which she had fraudulently obtained, Respondent attempted 
to minimize the scope of her misconduct, testifying that he ``acted 
upon . . . the proportion of things that I knew. So it wasn't . . . 
what we're looking at in retrospective now with this huge situation. It 
was only with a handful of information that I had, less than a dozen.'' 
Tr. 426.
    It is true that there is no evidence that Mullen continued her 
criminal acts during the five week period before she was finally 
terminated. Had the Government produced such evidence, I would revoke 
Respondent's registration. While it is also true that Respondent moved 
the fax machine into a room to which Mullen did not have access, this 
does not mitigate Respondent's misconduct because the evidence shows 
that many of the fraudulent prescriptions (whether for Mullen 
personally or for her co-conspirators) were phoned in.
    Finally, I conclude that the Agency's interests in both specific 
and general deterrence also support a substantial period of outright 
suspension for this misconduct. As to specific deterrence, were 
Respondent to confront the same situation of a diverting employee in 
the future, he must know that there will be serious consequences for 
failing to act responsibly. Also, Respondent may confront different 
scenarios in which he is faced with the choice of placing his private 
interests over the public interest. As to the Agency's interests in 
general deterrence, the community of practitioner registrants must know 
that there will be substantial consequences for failing to promptly 
terminate employees who are diverting controlled substances.\40\
---------------------------------------------------------------------------

    \40\ Respondent argues that I should consider his cooperation 
with law enforcement upon discovering the 2012 fraudulent refill 
request. Resp. Post-Hrng. Br. 67. However, as discussed above, I 
conclude that the other factors discussed above greatly outweigh his 
cooperation with the Detective's investigation.

---------------------------------------------------------------------------

[[Page 28692]]

    Accordingly, based solely on Respondent's misconduct in retaining 
Mullen, I conclude that the factors relevant to this misconduct support 
the outright suspension of Respondent's registration for a period of 
one year. Moreover, I conclude that Respondent's failure to maintain 
complete and accurate inventories, as well as his misconduct in 
directing his unregistered office manager to administer controlled 
substances to patients, provide additional support for my conclusion 
that an outright suspension for one year is warranted.
    While Respondent's failure to establish an initial inventory 
occurred sometime ago, his failure to maintain a complete and accurate 
biennial inventory based on an actual physical count of the controlled 
substances he had on hand is far more recent. While Respondent 
testified that he kept the records as he did based on the guidance he 
received from the state inspector in the 2005 time frame, the 
requirements to take an actual physical count ``either as of the 
opening of business or as of the close of business on the inventory 
date'' and to indicate this ``on the inventory'' are clear on the 
regulation's face. And even if Respondent was given erroneous advice by 
the state inspector, Respondent is responsible for knowing what is 
required by DEA's regulations.\41\ Moreover, while in response to the 
DI's instructions Respondent started taking an actual count, the ALJ 
found that ``Respondent did not show remorse for his recordkeeping 
violations.'' R.D. 49.
---------------------------------------------------------------------------

    \41\ In his Recommended Decision, the ALJ discussed eight 
considerations that in his view, ``mitigate the egregious of the 
shortcomings of Respondent's controlled substance inventory.'' R.D. 
50. However, several of these do not mitigate the violation. For 
example, the ALJ noted that ``Respondent kept a thorough and 
detailed perpetual inventory,'' that the DI was able to use the 
perpetual inventory to do an audit, and that ``there is no evidence 
that the Respondent's recordkeeping errors resulted in any 
diversion.'' Id. These do not mitigate the violation because the CSA 
and DEA regulations require that a registrant take an actual 
physical count of the controlled substances on hand, and an accurate 
actual count, as memorialized in either an initial or biennial 
inventory, is essential in conducting an accurate audit. Likewise, 
an accurate audit is essential in determining whether a registrant 
is maintaining complete and accurate records of both the controlled 
substances he receives and those he ``deliver[s] or otherwise 
dispose[s] of.'' 21 U.S.C. 827(a)(3). As for the ALJ's statement 
that there is no evidence that Respondent's recordkeeping errors 
resulted in diversion, generally, it is diversion that results in 
recordkeeping irregularities and not the other way around.
     As for the ALJ's observation that Respondent kept receipt 
records that ``showed the number of containers, the number of 
dosages in the containers, and the strength of the dosages,'' these 
records were prepared by Respondent's suppliers, see, e.g., RX 89, 
at 37-47; and Respondent is required to maintain these records under 
the CSA and DEA regulations. See 21 U.S.C. 827(a)(3); 21 CFR 
1304.21(a); id. Sec.  1304.22(c). Moreover, because I hold that the 
violation is based on his failure to have a biennial inventory based 
on an actual count of the drugs on hand and not on the fact that his 
inventory did not list the number of containers, the number of units 
or volume of each container, and the drug strength, the fact that he 
had records showing this information for the various receipts does 
not mitigate the violation.
---------------------------------------------------------------------------

    As for his practice of directing his office manager to administer 
controlled substances to patients who were undergoing procedures when 
he was running late and not in the office, the ALJ also found that 
there were several factors that mitigate the egregiousness of these 
violations. According to the ALJ, these factors include that this 
happened only ``occasionally,'' that Respondent had previously 
determined what medications should be administered to the patient based 
on his assessment of the patient's needs, that there is no evidence 
that the drugs were diverted, and that Respondent had ceased this 
practice after a patient questioned it. R.D. 50-51.
    I do not take issue with the ALJ's conclusions that these factors 
mitigate the egregiousness of these violations. However, here again, 
the ALJ found that ``Respondent never acknowledged that [the office 
manager's] administration of controlled substances violated DEA 
regulations. . . . Respondent never showed remorse for aiding and 
abetting dispensations by a non-registrant. Rather, the Respondent 
denied that these actions were wrongful.'' Id. at 46. The ALJ thus 
concluded that ``Respondent has not accepted responsibility for his 
conduct, even though he discontinued these practices [and] . . . 
Respondent has not rebutted the Government's prima facie showing that 
the Respondent violated 21 U.S.C. [Sec.  841(a)].'' Id. I agree.
    Respondent's violations in failing to take a proper inventory and 
in directing his unregistered office manager to administer controlled 
substances, coupled with his failure to acknowledge his misconduct with 
respect to both violations, provide additional support for my decision 
to suspend Respondent's registration for a period of one year. As for 
the state court convictions, because they did not involve distribution 
to others and occurred 17 years ago, I give them only limited weight in 
my determination as to the appropriate sanction.
    Accordingly, I will order that Respondent's registration be 
suspended outright for a period of one year. While Respondent testified 
that he no longer uses controlled substances during his procedures, if, 
following termination of the suspension, he intends to resume 
administering and/or engaging in the direct dispensing of controlled 
substances, Respondent must provide evidence to the local DEA office 
that he has completed a course in controlled substance recordkeeping 
prior to doing so. If Respondent does not provide such evidence, his 
registration shall be restricted to prescribing controlled substances.

Order

    Pursuant to the authority vested in me by 21 U.S.C. 824(a) as well 
as 21 CFR 0.100(b), I order that DEA Certificate of Registration No. 
BK0639279 issued to Peter F. Kelly, D.P.M., be, and it hereby is, 
suspended for a period of one year. I further order that upon 
termination of the suspension, said registration shall be restricted to 
prescribing controlled substances, until such date that Peter F. Kelly, 
D.P.M., provides evidence that he has completed a course in controlled 
substance prescribing. This Order is effective July 24, 2017.

    Dated: June 19, 2017.
Chuck Rosenberg,
Acting Administrator.
[FR Doc. 2017-13158 Filed 6-22-17; 8:45 am]
 BILLING CODE 4410-09-P