Scott C. Bickman, M.D.; Revocation of Registration, 17694-17704 [2011-7393]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 76, Number 61 (Wednesday, March 30, 2011)]
[Notices]
[Pages 17694-17704]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-7393]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 09-40]


Scott C. Bickman, M.D.; Revocation of Registration

    On March 27, 2009, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Scott C. Bickman, M.D. (Respondent), of Anaheim Hills, 
California. The Show Cause Order proposed the revocation of 
Respondent's DEA Certificate of Registration, BB3698632, as well as the 
denial of any pending applications to renew or modify his registration, 
on the ground that his ``continued registration is inconsistent with 
the public interest.'' ALJ Ex. 1, at 1.
    The Show Cause Order specifically alleged that ``[f]rom December 
2007 through October 2008,'' Respondent allowed his ``DEA registration 
to be used to purchase at least 281,500 dosage units of hydrocodone 
combination products, in exchange for $2,000 per month,'' in violation 
of 21 U.S.C. 843(a)(2) and (3). Id. The Show Cause Order also alleged 
that Respondent had materially falsified his July 25, 2008 application 
to renew his registration because he failed to disclose that the 
Medical Board of California had ``placed limits on [his] practice and 
placed [him] on probation for a period of thirty-five (35 months), 
effective September 18, 2006.'' Id. at 1-2 (citing 21 U.S.C. 
824(a)(1)).
    Respondent timely requested a hearing on the allegations and the 
matter was placed on the docket of the

[[Page 17695]]

Office of Administrative Law Judges (ALJ). Following pre-hearing 
procedures, an ALJ conducted a hearing in Los Angeles, California on 
January 26-27, 2010. At the hearing, both parties introduced 
documentary evidence and called witnesses to testify. Thereafter, both 
parties submitted briefs containing their proposed findings of fact, 
conclusions of law, and arguments.
    On May 28, 2010, the ALJ issued her recommended decision (also 
ALJ). Therein, the ALJ found that Respondent had materially falsified 
his July 2008 renewal application. ALJ at 31. Based on ``Respondent's 
inconsistent testimony about how the misstatement occurred and his 
failure to take responsibility for it,'' the ALJ further found that 
Respondent had not shown that ``the omission was unintentional and that 
there was no intent to deceive.'' Id. The ALJ thus concluded that this 
act ``constitutes grounds for revoking [Respondent's] registration.'' 
Id.
    The ALJ then turned to whether Respondent had committed acts 
rendering his registration inconsistent with the public interest. Id. 
(discussing 21 U.S.C. 823(f)). With respect to the first factor--the 
recommendation of the State licensing authority--the ALJ noted that 
Respondent's State medical license ``is unrestricted and that he is 
authorized to handle controlled substances in'' the State. Id. The ALJ 
thus found that this factor supports a finding that Respondent's 
``continued registration would be in the public interest.'' Id. at 31-
32. However, the ALJ further noted that this factor is not dispositive.
    Turning to the second factor--Respondent's experience in dispensing 
controlled substances--the ALJ noted that this factor was ``not at 
issue in th[e] proceeding.'' Id. at 32. With respect to the third 
factor--Respondent's record of convictions for offenses related to the 
manufacture, distribution or dispensing of controlled substances--the 
ALJ noted that there was no evidence that Respondent has been convicted 
of such an offense. Id. However, the ALJ noted that this factor was 
also not dispositive. Id.
    Addressing the fourth factor--Respondent's compliance with 
applicable Federal and State laws related to controlled substances--the 
ALJ found that ``between December 2007 and October 2008[,] some 120,000 
dosage units of hydrocodone were ordered [by another physician who was 
allowed to use his registration] and shipped from Harvard Drug using 
Respondent's DEA registration number'' and that ``Respondent does not 
deny that this happened, but urges that these orders were made without 
his authorization or knowledge.'' Id. The ALJ further found that while 
``[t]he record does not establish that Respondent had actual knowledge 
of every order placed with Harvard Drug using his DEA number[,] [it] 
conclusively establishes * * * that [he] had ample reason to suspect 
that his registration was being misused and that he chose not to act on 
those suspicions.'' Id. Further finding Respondent's various 
explanations of his conduct implausible, the ALJ concluded that he 
``knew or should have known that'' his registration was being used ``to 
order controlled substances that were likely to be diverted.'' Id. at 
33. The ALJ thus concluded that, by allowing another doctor to use his 
DEA registration ``to order controlled substances,'' Respondent had 
unlawfully distributed controlled substances in violation of 21 U.S.C. 
841(a) and that this factor supported a finding that his ``continued 
registration would be inconsistent with the public interest.'' Id.
    Turning to the fifth factor--other conduct which may threaten 
public health or safety--that ALJ found it ``abundantly clear from 
Respondent's testimony and his letters to [a DEA Investigator that he] 
does not admit to any wrongdoing or accept any responsibility for the 
120,000 dosage units of hydrocodone that were ordered * * * using his 
DEA registration number.'' Id. at 33. Concluding ``that Respondent's 
refusal to acknowledge his wrongdoing offers little hope for the 
prospect that if he retains his DEA registration he will act more 
responsibly in the future,'' the ALJ found that this factor also 
supported a finding that his continued registration would be 
inconsistent ``with the public interest.'' Id. at 34.
    The ALJ thus concluded that Respondent had ``at least 
constructively engaged in [the] unlawful distribution of hydrocodone 
and that he is unwilling or unable to accept the responsibilities 
inherent in a DEA registration.'' Id. The ALJ thus recommended that 
Respondent's ``registration be revoked and that any pending 
applications be denied.'' Id.
    Thereafter, Respondent filed exceptions to the ALJ's decision. The 
record was then forwarded to me for final agency action.
    Having considered the entire record in this matter, including 
Respondent's exceptions, I reject the ALJ's legal conclusion that 
Respondent materially falsified his application. I agree, however, with 
the ALJ's finding that Respondent has committed acts which render his 
registration inconsistent with the public interest because he either 
knew or had reason to know that his registration was being misused and 
yet did nothing to prevent it. I further agree with the ALJ that 
Respondent has failed to accept responsibility for his misconduct. 
Accordingly, I will adopt the ALJ's recommendation that his 
registration be revoked and pending application be denied. As ultimate 
fact finder I make the following findings.

Findings

    Respondent is an anesthesiologist who holds a physician and surgeon 
license issued by the Medical Board of California (MBC). GX 7, at 1. 
Pursuant to a Stipulated Settlement and Disciplinary Order (State 
Order), which became effective on September 18, 2006, the MBC revoked 
Respondent's license but then stayed the revocation and placed him on 
probation for a period of thirty-five months subject to various 
conditions. Id. at 2-3. The State Order resolved an Accusation that 
Respondent had committed acts of gross negligence, negligence, 
incompetence, and had failed to maintain adequate and accurate records, 
based on his provision of epidural anesthesia to a patient. Id. at 21-
25. Notably, the Board did not place any restriction on Respondent's 
authority to administer, prescribe or dispense controlled substances. 
See id. at 5-15. It was undisputed that Respondent has satisfactorily 
completed the probation.
    Respondent is also the holder of a DEA Certificate of Registration, 
which authorizes him to dispense controlled substances in schedules II 
through V as a practitioner. GX 1. Respondent's registration was to 
expire on July 31, 2008; however, on July 28, 2008, Respondent 
submitted a renewal application. GX 6, at 3. On the application, 
Respondent was required to answer the following question: ``Has the 
applicant ever had a state professional license or controlled substance 
registration revoked, suspended, restricted, or placed on probation, or 
is any such action pending?'' GX 5, at 1. Respondent answered: ``No.'' 
Id.
    On September 28, 2005, when Respondent previously renewed his 
registration, he gave as his registered location his residence on 
Wilshire Boulevard in Los Angeles, California. GX 6, at 3-4. However, 
on August 22, 2007, an application was submitted through DEA's 
registration Web site which changed his registered address from his 
residence to 145 S. Chaparral Court, Suite 101, Anaheim Hills, 
California. GX 6, at 3. This address was the location of an outpatient 
surgery

[[Page 17696]]

center which was owned by Dr. Harrell E. Robinson, a plastic surgeon.
    According to Respondent, he first met Robinson in 2005 when the 
latter performed surgery at a surgery center in Beverly Hills. Tr. 471. 
On some date in either late 2006 or April/May 2007, Robinson began 
performing outpatient surgery at the Chaparral Court surgery center. 
Id. at 475-76. Robinson told Respondent that he was going to take over 
the center and asked him if he would be interested in providing 
anesthesia to the patients who underwent procedures there. Id. at 476. 
Respondent agreed to do so, and Robinson agreed to provide the 
controlled substances (among them fentanyl and midazolam) that were 
used to anesthetize the patients. Id. at 476-77. Respondent did not 
order the controlled substances but would tell the clinic's nurse when 
the supplies were running low, who would then order more. Id. at 477-
78. Respondent administered anesthesia to patients at the center until 
sometime in late November 2007. Id. at 480, 587.
    According to Respondent, the accreditation of Robinson's surgery 
center, which was issued by the Joint Commission on Accreditation of 
Healthcare Organizations (JCAHO), was due to expire at the end of 
November 2007 and Robinson had no plans to re-accredit the center. Id. 
at 480. Respondent maintained that he stopped performing anesthesia at 
the center after its accreditation expired because the State Order 
prohibited him from practicing at an unaccredited facility and that he 
had stopped going there.\1\ Id. at 481.
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    \1\ However, the State Order contains no such prohibition. See 
GX 7, at 5-16.
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    In mid-November 2007, Robinson asked Respondent to become the 
center's medical director. Id. Respondent declined Robinson's offer. 
Id. at 482. However, because Respondent knew a nurse anesthetist who 
had previously assisted other surgery centers in obtaining 
accreditation and who would provide him with the templates necessary to 
prepare the documents required to do so, as well as because upon the 
center's obtaining a new accreditation, he would then be able to work 
there, Respondent offered to help Robinson get the center re-accredited 
for a fee of $16,000.\2\ Id. at 482-83; see also id. at 347-48. 
Robinson agreed. Id. at 482-83.
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    \2\ According to Respondent, the nurse anesthetist recommended 
that the center seek accreditation from a different entity, the 
Institute for Medical Quality (IMQ).
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    Respondent maintained that in addition to preparing the necessary 
documents, he agreed to allow Robinson to use his DEA registration to 
order necessary supplies and medications for performing ``peri-
operative anesthesia services,'' which he maintained were necessary 
``to get the center up and running to be accredited.'' Tr. 496. 
According to Respondent, this included ``gloves, syringes, needles, 
IVs, IV bags, Bovies and drapes,'' as well as the drugs used prior to 
surgery (such as midazolam), during surgery (fentanyl) and post-surgery 
(Dilaudid and fentanyl). Id. at 496-97. Dilaudid (hydromorphone) and 
fentanyl are schedule II controlled substances, see 21 CFR 
1308.12(b)(1) & (c); midazolam is a schedule IV controlled substance. 
See id. 1308.14(c).
    Respondent also submitted into evidence a November 19, 2007 letter 
which he asserted he had written to Robinson stating the terms of his 
agreement for assisting Robinson with getting the center re-accredited. 
RX DD. According to the letter (which is not signed by either him or 
Robinson), Respondent agreed to ``provide use of my DEA certificate and 
DEA license for use of supplies and medications related to Peri-
operative Anesthesia services.'' Id. The letter further states that 
``[t]his authorization does not extend to clinic and post-operative 
services or oral analgesics,'' and that, ``[i]f at any time my * * * 
DEA is used for other then the narrow range specific [sic] in this 
letter of understanding then this letter of understanding is nil [sic] 
and void.'' Id.
    Respondent testified that he prepared the letter because he knew 
that Robinson had started dispensing hydrocodone from his office and he 
``just wanted to cover [him]self to make sure that [his] DEA in the 
future was not used for that purpose.'' Tr. 648. Respondent further 
denied having written the letter after the fact. Id. at 652. However, 
on either October 19 or 22, 2008, Respondent was interviewed by both a 
DEA Diversion Investigator (DI) and a DEA Special Agent (S/A) and did 
not mention the letter. Id. at 225, 656-57; GX 23, at 1. Moreover, 
while Respondent submitted a lengthy written statement to the DI 
following the interview (as well as two other statements), he did not 
mention the letter in any of the statements and admitted that he never 
provided it to the DI.\3\ Id. at 652, 654, 656-57; see also GX 23.
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    \3\ Respondent also submitted a lengthy document, which was a 
draft of a Policy and Procedure Manual he prepared for Robinson 
because the Chaparral Court clinic would need it to obtain 
accreditation. See RX E; Tr. 485, 492. Respondent further admitted 
that this document was only ``a draft * * * a rough copy,'' and was 
``not intended to be sent in time for approval, or even to request 
somebody to come [to] the center.'' Tr. 674. Respondent then 
explained: ``It's a rough draft, as a skeleton, so to speak, for him 
to have in place something that when he decided * * * then that was 
not for me to even know that he was going to get it ready. Then he 
had a rough draft that would have been cleaned up as it needed to 
be.'' Id. at 674-75. To similar effect, Respondent's fiancé, 
who helped prepare the document, acknowledged that the document was 
not final ``in any way, shape or form,'' but rather was ``a work in 
progress.'' Tr. 376.
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    Respondent further maintained that he did not authorize Robinson to 
use his DEA registration to order oral analgesics such as Vicodin or 
other controlled substances containing hydrocodone. Id. at 644-45. 
While Respondent testified that Robinson needed his DEA number to order 
both non-drug supplies and controlled substances from a distributor, 
id. at 496, Samir Shah, Vice-President of Regulatory Affairs for the 
Harvard Drug Group (hereinafter, either Harvard or HDG), a registered 
distributor, testified that his company only required a DEA 
registration if a customer sought to purchase controlled substances. 
Id. at 20-21. The record does not establish whose registration was used 
by Robinson's clinic to obtain the controlled substances that were 
needed to anesthetize patients who underwent surgery there in the 
period prior to the date on which Respondent authorized Robinson to use 
his registration for this purpose and why Respondent's registration was 
subsequently required to order the drugs.\4\
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    \4\ While B.C. testified that Robinson would place requests for 
various controlled substances which she would then order, Tr. 415, 
it is not clear whether the drugs were ordered under Robinson's, 
Respondent's, or someone else's registration.
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    According to B.C., who was the front office manager at Robinson's 
clinic from July through December 3, 2007, when Robinson fired the 
entire staff, id. 410-11, 413-14; in the summer of 2007, she observed 
Robinson's wife Alinka change Respondent's registered address through 
the DEA Web site. Id. at 416-17. B.C. testified that she asked Alinka 
Robinson whether Respondent ``knew that she was changing his address''; 
Ms. Robinson stated that Respondent had told her husband that ``it was 
okay.'' Id. at 417. Respondent subsequently denied having authorized 
this and maintained that he did not become aware that his address had 
been changed until he attempted to renew his registration in July 2008. 
Id. at 508, 636-40.
    In a declaration, B.C. testified that Alinka Robinson had used 
Respondent's registration to open an account with Ready Rx, another 
drug distributor, and did so without Respondent's knowledge and 
consent.\5\ RX X. The evidence

[[Page 17697]]

shows that Alinka and Harrell Robinson used the account to order oral 
controlled substances such as Vicodin. Tr. 433, 506, 548-49. While B.C. 
testified that she did not tell Respondent about the account ``at the 
time that [it] was set up,'' she further stated that after she was laid 
off she called Respondent to ``let him know everything that was going 
on.'' Id. at 445. According to B.C., Respondent ``seemed very shocked 
when I told him.'' Id. Respondent maintained, however, that while he 
knew in November 2007, ``before [he] left the center that [Robinson] 
had actually been dispensing medicines out of the office,'' he had 
``never even heard of [Ready Rx] until today.'' Id. at 506. He also 
testified that he was never told by anyone at ``Robinson's office that 
oral controlled substances had been ordered using [his] DEA'' 
registration. Id. at 548.
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    \5\ The Government submitted a report it compiled from DEA's 
ARCOS database of hydrocodone purchases made in 2007 using 
Respondent's registration and which were shipped to Robinson's 
Anaheim Hills clinic. GX 18; see also 21 CFR 1304.33(a). While this 
report does not list any purchases as having been made from a firm 
named Ready RX, the report does list multiple distributions of 
hydrocodone by Top RX, Inc., which occurred between October 8 and 
November 19, 2007. GX 18, at 8-9. These distributions totaled 38,000 
tablets. See id.
     Respondent also submitted various documents including a Top Rx 
credit application (which listed Respondent's DEA registration 
number and listed ``Bickman, Coleman Scott MD'' as the ``legal 
name'' and ``Orange County Surg.'' as the ``trade name'') and a Top 
Rx ``DISPENSING PHYSICIAN QUESTIONNAIRE.'' RX LL, at 1, 2-4. The 
latter document is dated as having been completed on ``9/20/07.'' 
Id. at 2. The DI acknowledged that the signature on the documents 
did not look like Respondent's, Tr. 249, and conceded that the 
documents were a fraudulent application. Id. at 255.
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    The ALJ did not specifically address this factual dispute. However, 
as ultimate fact finder, I find that B.C., who was called as 
Respondent's witness, had no reason to testify falsely as to her having 
told Respondent about the Ready Rx account following her termination in 
early December 2007.\6\ I therefore credit this testimony.
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    \6\ B.C. also testified that twice a week, she would be told by 
one of the Robinsons not to come to the clinic because one Maggie 
Annan would be coming in. Tr. 426. B.C. further testified that Annan 
would pay Alinka Robinson between $9,000 and $10,000 in cash each 
month to use the clinic. Id. at 427-28.
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    In December 2007, Dr. Robinson, who had previously purchased 
controlled substances from HDG for a clinic he owned in Santa Ana, 
California, contacted the company to set up an account and obtain 
controlled substances for the Anaheim Hills clinic. Tr. 21. Robinson 
represented to HDG that Respondent was the medical director of the 
Anaheim Hills clinic. Id. at 22; GX 10, at 1 (Jan. 25, 2008 memorandum 
from Harrell Robinson to HDG).
    According to Mr. Shah, HDG required three documents to open up an 
account in Respondent's name and to ship controlled substances to the 
Anaheim Hills clinic: 1) a copy of his medical license, 2) a copy of 
his DEA registration, and 3) a document, which Mr. Shah called ``the 
DEA affidavit,'' a copy of which was submitted into evidence.\7\ Tr. 
29-30; see also GX 11. The affidavit reads as follows:
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    \7\ Invoices show, however, that HDG commenced filling orders 
for combination hydrocodone drugs using Respondent's DEA 
registration as early as December 18, 2007, nearly a month before 
Respondent executed the affidavit. GX 17, at 1. The invoices also 
listed Respondent and the Anaheim Hills office in the ``ship to'' 
block. Id. According to Mr. Shah, HDG did not require a customer to 
submit a credit application before it shipped controlled substances; 
HDG also allowed a customer a grace period of ``two to three weeks 
for providing'' the affidavit. Tr. 82. Thus, HDG actually only 
required a copy of a customer's State license and DEA registration 
before it would ship. Id. at 82-83, 87.
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    (1) This is to attest that BICKMAN, SCOTT COLEMAN MD, located at 
145 S. CHAPARRAL COURT, ANAHEIM HILLS, CA 92808, is not engaged in, nor 
has ever engaged in conducting business as an internet pharmacy or 
internet pharmacy supplier of controlled substances, nor do we dispense 
prescriptions by mail to patients.
    (2) DEA is BB3698632.
    (3) BICKMAN, SCOTT COLEMAN MD Harvard Drug Group/Major 
Pharmaceuticals Acct. is P4840.
    (4) BICKMAN, SCOTT COLEMAN MD is located in an area that is 
accessible to the public and walk-in customers are welcomed.

GX 11, at 1.

    According to Respondent, Robinson faxed him the affidavit and asked 
him to sign it and return it to HDG. Tr. 527. Upon reviewing the 
affidavit, Respondent discussed it with Mr. Shah because he wanted to 
know why he was being asked to sign it. Tr. 34. Mr. Shah told 
Respondent that HDG was doing ``due diligence to make sure that [the] 
pharmaceuticals [it sold were] not being dispensed through [an] 
internet pharmacy.'' Id. In his testimony, Respondent maintained that 
he interpreted the language--``This is to attest that BICKMAN, SCOTT 
COLEMAN MD, located at 145 S. CHAPARRAL COURT, ANAHEIM HILLS, CA 
92808''--to mean he was ``credentialed there, I'm located there,'' but 
not to mean that it was ``my clinic that I'm doing business out of.'' 
Id. at 531.
    It is undisputed that Respondent signed the affidavit and wrote 
that his title was ``Practitioner''; he also signed the accompanying 
California Jurat with Affiant Statement, which was sworn to by him on 
January 15, 2008. GX 11, at 2; Tr. 529, 585. It is undisputed that the 
affidavit was faxed to HDG after Respondent's conversation with Mr. 
Shah. Tr. 35.
    However, on the same day that Respondent signed the affidavit, he 
sent a letter to HDG which stated: ``This letter is to prohibit further 
use of my DEA license number unless there is a verbal confirmation from 
myself, Scott, Coleman Bickman, M.D. I can be reached at the following 
numbers[,]'' and listed two phone numbers and a fax number. GX 12, at 
1; Tr. 532-33. According to Respondent, he sent the letter because he 
``was bothered by the openness of the located question and the internet 
pharmacy business'' and he ``wanted to be very clear in [his] wording 
to Harvard that anything that was going to be ordered under [his] DEA 
license, [he] wanted to be notified to give confirmation, so that there 
was going to be a check and balance system in place.'' Tr. 533.
    However, the HDG invoices show that by the date Respondent signed 
the affidavit, HDG had already shipped 34,500 dosage units of various 
hydrocodone combination drugs to the Anaheim Hills Clinic listing his 
registration number as the ``Customer DEA.'' GX 17, at 1-13. According 
to Respondent, he ``had no idea that anything had ever been ordered by 
any[one] via my DEA besides myself,'' and if he had known he would have 
terminated his relationship with Robinson and ``turned him in.'' Tr. 
534.
    On January 24, 2008, Robinson prepared a credit application for 
HDG, which listed ``Physicians and Surgeons d/b/a Scott Bickman'' as 
both the legal name of the business and the buyer's name. RX G, at 5. 
While the document listed Robinson as the owner, it then listed 
Respondent as the Guarantor of the account. Id. Robinson called 
Respondent and asked him to sign the application which he then faxed to 
him. Tr. 521. Respondent, however, did not sign the document because it 
listed three trade references with whom he had no relationship. Id. at 
521-22.
    The same day, Robinson then completed a new credit application in 
which he listed the legal name and buyer's name as ``Physicians & 
Surgeons of O.C., d/b/a Harrell E. Robinson.'' GX 9, at 1. Robinson 
signed the application as Guarantor and faxed it to HDG the next day. 
Id. Robinson also faxed a memo to HDG which stated that he was the 
``owner of Physicians and Surgeons of Orange County Inc.''; and that he 
had

[[Page 17698]]

two clinics, one in Santa Ana and the other at 145 S. Chaparral Ct., 
Suite 101, in Anaheim Hills. GX 10, at 1. The memo also stated that 
``Dr. Bickman, MD, serves at [sic] my Medical Director at the Anaheim 
Hills' office[,]'' that ``our accounts payable office Dept covers both 
offices,'' and that the invoices should ``go through the channels 
originally set up.'' Id.
    On February 7, 2008, Respondent faxed a letter (which was dated 
January 30, 2008) to HDG. GX 13. Respondent wrote that ``[t]his letter 
is to authorize the Physicians and Surgeons of Orange County dba 
Harrell Robinson, MD to order the necessary supplies for the center 
without having The Harvard Drug Group notify me for approval only for 
the next sixty days.'' Id. According to Respondent, he wrote this 
letter because Robinson had called him and said that ``it was too 
difficult'' to order the supplies this way. Tr. 537. Respondent 
maintained that he wrote the letter ``not to undo my previous order, 
but to say, okay, they [HDG] don't have to contact me for supplies * * 
* not for the necessary supplies for the center,'' which he deemed to 
include syringes, needles, and gloves but ``absolutely not'' controlled 
substances. Id. at 538.
    Mr. Shah testified, however, that after HDG received the letter, he 
asked G.B., a salesperson, ``to contact [Respondent] and notify him 
that we intend[ed] to close the account as our system [was] not capable 
of handling his request for [the] next 60 days for holding all 
orders.'' Id. at 45. The salesperson called Respondent, who, upon being 
told that HDG ``would be closing the account,'' asked to speak to Mr. 
Shah. Id. at 46-47. The salesperson then transferred the call to Mr. 
Shah. Id. at 48.
    Mr. Shah testified that during the call, he explained to Respondent 
that HDG would ``not be able to handle [his] request'' because its 
system lacked the capability of ``holding orders'' for a ``certain time 
period.'' Id. Mr. Shah further told Respondent that HDG could either 
``continue to ship or not ship.'' Id. Respondent then told Mr. Shah to 
``reinstate the account'' and Shah stated that he could not do so until 
he received ``a written confirmation from'' Respondent. Id.
    According to Mr. Shah, during the conversation Respondent asked 
``what kind of products'' were being shipped. Id. Shah testified that 
he told Respondent that ``we are shipping hydrocodone products.'' Id. 
Shah further testified that Respondent appeared ``shocked'' by this 
information and asked: ``Oh is that right? We are ordering hydrocodone 
from you?'' Id. at 49. Shah replied: ``That is correct.'' \8\ Id.
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    \8\ On cross-examination, Respondent's counsel asked Shah 
whether he had ever contacted Respondent to ``tell him that a very 
large quantity of hydrocodone was being ordered.'' Tr. 88. Shah 
responded: ``I don't recollect having a conversation with 
[Respondent] that the orders that we have been shipping has [sic] 
hydrocodone in it that is being shipped. I don't remember anything 
else other than what quantity and so forth.'' Id. Shah further 
testified that he did not document the conversation in which he told 
Respondent that HDG was shipping hydrocodone because ``we did 
receive a confirmation on February 27, 2008 signed by Dr. Bickman 
[to] disregard all previous instructions and communications.'' Id. 
at 93.
    Respondent contends that Shah's testimony on cross-examination 
is inconsistent with his testimony on direct. Resp. Br. 24. However, 
Shah was asked two different questions; on direct, he testified that 
Ms. Brooks had initially contacted Respondent to notify him that HDG 
could not ``continue shipping products based on his instructions,'' 
that Respondent asked to speak with him, and that during the ensuing 
conversation, Respondent asked what HDG was shipping and Shah told 
him hydrocodone. Tr. 45-48. On direct examination, Shah did not 
maintain that he had contacted Respondent to tell him that his 
registration was being used to order a large quantity of 
hydrocodone, but rather to tell him that HDG would not comply with 
his instructions. Moreover, on cross-examination, Shah maintained 
that he had two conversations with Respondent, one in which HDG's 
``DEA affidavit'' was discussed and the second one in which he told 
Respondent that HDG was going to close the account. Tr. 89-90.
    In his Exceptions, Respondent notes that on June 15, 2010, DEA 
immediately suspended HDG's registration based on its distributions 
of oxycodone products over a two year period. Resp. Exc. at 1. 
Respondent argues that Shah's testimony is tainted because the 
Government knew and concealed from him that ``HDG was under 
investigation for massive diversion of millions of doses of 
controlled oral drugs,'' and that the Government ``posited that one 
of the reasons [R]espondent should have knew [sic] or should have 
know [sic] of the hydrocodone purchases is because HDG was a 
responsible drug wholesaler.'' Exc. at 3. Respondent further argues 
that because he did not have ``the benefit of knowing that he [Shah] 
and HDG conducted an unlawful business,'' he was denied ``an 
opportunity for impeachment.'' Id. Respondent thus contends that 
Shah's testimony should be stricken; he also argues that ``[t]he 
concealment of the investigation, and the offering of Mr. Shah's 
testimony may also represent the equivalent misconduct so 
contumacious in degree that dismissal of the section 841(a) charge 
would be an appropriate remedy.'' Id.
    I reject Respondent's Exceptions for the reasons stated in the 
ALJ's ruling. I further note that there is no support in the record 
for Respondent's contention that the Government's theory was that he 
should have known about the hydrocodone purchases because HDG ``was 
a responsible drug wholesaler.'' While the Government's case was 
based in part on Shah's testimony that he told Respondent that HDG 
was shipping hydrocodone, the Government also relied, inter alia, on 
the various letters Respondent sent to HDG, as well as the material 
inconsistencies in his testimony and written statements. I also note 
that Respondent had ample opportunity to cross-examine Shah, who 
admitted that HDG shipped large quantities of hydrocodone even 
though it was ``very unusual'' to get a letter (such as Respondent's 
Jan. 15, 2008 one) telling HDG not to ship without first getting 
verbal confirmation and that this was ``all the more reason'' why 
HDG should have then contacted Respondent. Tr. 96-97. I further note 
that while Shah testified that a customer had only two to three 
weeks to submit the affidavit HDG required, HDG had been shipping 
controlled substances to the Chaparral Court clinic for nearly four 
weeks before it obtained the affidavit from Respondent and had 
already shipped more than 34,000 dosage units. Respondent thus 
demonstrated several ways in which HDG did not act in a responsible 
manner, and I have considered this in making my findings.
---------------------------------------------------------------------------

    In his testimony, Respondent acknowledged that he had spoken to Mr. 
Shah and that Shah had said that ``he couldn't conduct business like 
this'' and that ``he wasn't going to call [him] every time'' because 
HDG's system was not ``set up * * * to handle verbally notify[ing] me 
about my DEA usage.'' \9\ Id. at 544. However, Respondent maintained 
Mr. Shah did not ``mention one item of any drugs being ordered from 
[HDG] on my DEA.'' Id. Respondent also stated that he did not 
``understand why [Shah] was so adamantly violently yelling at [him] on 
the phone'' and that he ``really was taken aback.'' Id. at 545. 
Respondent further testified that he never asked Shah (or Ms. B., the 
HDG sales rep.) what was

[[Page 17699]]

being ordered on the account. Id. at 571-72.
---------------------------------------------------------------------------

    \9\ At the time of the conversation, Respondent was attending 
the Physician Assessment and Clinical Education (PACE) Program at 
the University of San Diego pursuant to the probation imposed by the 
State Board. Tr. 542-43; GX 7, at 9.
     In a letter Respondent wrote to the DI, he maintained that 
while attending the PACE program, he received a phone call from both 
Dr. Robinson and Harvard during which ``[t]hey both complained that 
they could not do business with all of this notification.'' GX 23, 
at 8. Respondent further asserted that he ``was extremely 
preoccupied at the time and again Dr. Robinson pleaded with me that 
he could not get orders filled for the operating room and that he 
would have to cancel surgeries as a result.'' Id. Continuing, 
Respondent wrote: ``[a]gain, I trusted Dr. Robinson that he was just 
ordering supplies and anesthesia drugs and wrote the second letter 
to Harvard[.]'' Id.
    Yet earlier in the same letter, Respondent wrote that he ``was 
unaware of whether or not Harvard had knowledge that they were 
sending drugs to a center that was unaccredited and not legally 
performing surgery. In no way did it even occur to me that my 
allowing Dr. Robinson to order his supplies and anesthesia related 
drugs could lead to this deception because any law abiding company 
would have confirmed the status of Dr. Robinson's center and 
questioned why they were using my DEA to supply an unaccredited 
center not performing surgery and therefore having no need for the 
quantities of narcotics they were shipping to Dr. Robinson.'' Id. at 
7.
    On cross-examination, the Government asked Respondent why he had 
written the letter ``authorizing Dr. Robinson to place orders as 
needed so he wouldn't have to cancel his surgeries at the 
unaccredited center?'' Tr. 625. Respondent replied that he had not 
said in the letter that the center was unaccredited. Id. The 
Government then asked Respondent if ``the center was unaccredited?'' 
Id. Respondent answered: ``for all I know, he took the supplies with 
him to the place next door that was accredited. I have no idea. But 
I did not give him authorization for him to order supplies to do 
surgery in an unaccredited surgery center. I don't know [what] he 
did with the supplies. He could have taken them down * * * the 
street and used them.'' Id. at 625-26.
---------------------------------------------------------------------------

    The ALJ did not resolve the factual dispute as to whether Mr. Shah 
told Respondent that hydrocodone or other drugs were being ordered with 
his registration. However, I credit Shah's testimony given that 
Respondent admitted that the conversation concerned his ``DEA usage,'' 
and it seems strange that Respondent would not have asked what type of 
drugs were being ordered.
    In addition, the ALJ generally found Respondent to be a less than 
credible witness. ALJ at 34. For example, while Respondent testified 
that he did not give Robinson authorization ``to order supplies to do 
surgery in an unaccredited surgery center,'' Tr. 625-26, he had 
previously written to the DI that the reason he told HDG to reinstate 
the account was because Robinson ``pleaded with me that he could not 
get orders filled for the operating room and that he would have to 
cancel surgeries as a result.'' GX 23, at 8. Likewise, Respondent 
denied that he had ever been told that his registration was being used 
to order controlled substances, Tr. 534, a statement which was 
contradicted by B.C., who was his own witness, and who had no reason to 
testify falsely.
    After the conversation, Respondent wrote a new letter \10\ which he 
apparently faxed to Robinson, who then faxed it to HDG. See GX 15; Tr. 
50. This letter, which is dated February 27, 2008, and which is on 
stationary of the University of California San Diego Medical Center 
reads: ``Please Disregard All Previous Faxes Regarding Management of My 
Account and Allow Dr. Robinson's Office to Place Orders as Needed. 
Thank You for Reinstating the Account At This Time.'' GX 15. Respondent 
testified that he ``had no problem writing this'' because ``no one had 
told me that there was any problem from the ordering standpoint, that 
they [the Robinsons] were ordering anything'' with his DEA 
registration.\11\ Tr. 545.
---------------------------------------------------------------------------

    \10\ The record also contains a February 21, 2008 letter which 
Respondent faxed to HDG the same day. See GX 14, at 2; Tr. 541. 
Therein, Respondent wrote: ``Please change the previous ordering 
arrangement for my account to holding all orders until I have been 
notified and give verbal authorization for them to be honored by The 
Harvard Group.'' GX 14, at 2. According to Respondent, he wrote the 
letter because Robinson ``had skipped a month in paying me'' and he 
``wasn't willing to continue any sort of a relationship at all with 
him in any capacity until he was going to go ahead and honor * * * 
what I was working for him for. So I wasn't going to extend the 
courtesy of trying to get his center accredited with him using my 
DEA * * * to get any supplies or anything without using me to 
accreditate him.'' Tr. 541.
    \11\ In his October 27, 2008 letter to the DI, Respondent stated 
that he wrote the February 27 letter because both HDG and Robinson 
``complained that they could not do business with all of this 
notification. I was extremely preoccupied at the time and again Dr. 
Robinson pleaded with me that he could not get orders filled for the 
operating room and that he would have to cancel surgeries as a 
result. Again, I trusted Dr. Robinson that he was just ordering 
anesthesia drugs and wrote the * * * letter to Harvard.'' GX 23, at 
8.
---------------------------------------------------------------------------

    In his testimony Respondent also maintained that until he was 
interviewed by a DEA Diversion Investigator,\12\ he was unaware that 
``some inordinate amount of Vicodin had been ordered on my DEA through 
the Harvard Drug Group,'' that this was ``absolutely quite shocking'' 
because ``no one had ever said to me, `Is this okay,' when I had 
actually put everything in place along the way for that not to 
happen.'' Id. at 546. Respondent further testified that during the 
relevant time period, he never ``dispensed Vicodin to a patient,'' and 
that the last time he had been to the Anaheim Hills clinic was in 
``later November of 07.'' Id. at 547. As noted above, Respondent also 
testified that he was unaware that his registration was being used to 
order oral controlled substances from other companies. Id. at 548. 
However, the ALJ found that Respondent knew or had reason to know that 
his registration was being misused. ALJ at 34.
---------------------------------------------------------------------------

    \12\ According to a DEA DI, the interview occurred on October 
22, 2008. Tr. 225.
---------------------------------------------------------------------------

    Regarding the events surrounding the submission of his renewal 
application, Respondent testified that he knew his registration was 
about to expire because several of the surgery centers where he worked 
(and which required that he submit his credentials) had told him so. 
Id. at 550-51. Respondent added that because he procrastinated in 
renewing his registration, he asked A.R., his fiancé, to go 
online and fill out the form. Id. at 551. Respondent's fiancé
made several unsuccessful attempts to access the Web page (apparently 
because she inputted the zip code of Respondent's registered address 
before it was changed by Alinka Robinson,\13\ see id. at 382-83) at 
which the renewal application is submitted. Id. at 379; 552.
---------------------------------------------------------------------------

    \13\ The Chief of the DEA Registration Unit testified that in 
order to log in and complete a renewal application, an applicant 
must type in seven items of information including the zip code of 
the registered address which must match exactly the information in 
the registration database. Tr. 129-30.
---------------------------------------------------------------------------

    Both Respondent and his fiancé testified that the impending 
expiration of Respondent's registration prompted several phone calls 
from Alinka Robinson. Id. at 380 (testimony of A.R; ``Alinka Robinson 
started calling * * * and saying that his DEA license is going to 
expire, his DEA license is going to expire''). According to Respondent, 
``we had Alinka Robinson, Harrell Robinson calling incessantly asking 
why it hadn't been renewed * * * It became * * * a state of almost * * 
* panic for us to get it done.'' Id. at 552; see also id. at 640 
(``Alinka was blowing up the phone night and day, `Where's my 
renewal?'''). When asked whether it concerned him that Alinka Robinson 
``was in a state of panic,'' Respondent replied that he was ``very 
busy'' doing anesthesia and did not think twice about it. Id. at 644.
    Respondent maintained that he trusted A.R. ``to be very diligent'' 
in completing the on-screen application and that while he did ``check 
it over for a second before [he] sent it,'' he ``didn't catch'' the 
false answer to the question about whether his State license had been 
sanctioned. Id. at 564. Respondent further testified that he was 
``[a]bsolutely not'' trying ``to deceive anybody.'' Id.
    As noted above, Respondent maintained that he did not learn that 
his registered address had been changed until July 2008, when he 
renewed his registration. Id. at 640. While Respondent maintained that 
his registered address had been changed without consent, he admitted 
that he did not report this to DEA, id. at 641, even though ``it was 
unfathomable to'' him. Id. at 642. Nor, according to his own testimony, 
did he visit the Anaheim Hills clinic after he authorized Robinson to 
use his registration, to see what was going on there. Id. at 643.
    Respondent also admitted that at the time he agreed to allow 
Respondent to use his DEA number, he ``absolutely'' knew that Harrell 
Robinson had been accused of being involved in million dollar insurance 
fraud ring. Id. at 628. See also GX 23, at 5 (Respondent's Oct. 27, 
2008 letter to DI; ``[A]ll I knew about him was some information that I 
came across on the Internet. Specifically, allegedly Dr. Robinson was 
involved in some major insurance fraud ring and received more than one 
million dollars illegally. However, according to the article, Dr. 
Robinson has never been found guilty due to his non cooperation and 
evasion of prosecutors.''). According to Respondent, he did not ask 
Robinson ``about his fraud and all the stuff related to it'' because it 
did not ``concern [him] when [he] did anesthesia for him.'' Tr. 656.
    According to a report obtained from DEA's ARCOS system,\14\ 
approximately

[[Page 17700]]

250,000 dosage units of hydrocodone drugs were purchased under 
Respondent's registration and distributed to the Anaheim Hills location 
during 2007 and 2008. See GX 18, at 1 & 3 (showing 193,500 units in 
2008 and 53,800 in 2007); see also Tr. 194. The ARCOS report further 
shows that while most of the drugs were obtained from HDG, 20,000 
dosages units were purchased from A.F. Hauser, Inc., and 38,500 units 
were purchased from Top Rx. See GX 18, at 5-9; see also GX 8 (Top Rx 
invoices) and GX 20 (A.F. Hauser, Inc. Invoices). Most of the drugs 
were purchased after Respondent was told by B.C. that his registration 
was being used to order controlled substances. See id. Moreover, 
numerous purchases were made even after the February 2008 phone call 
during which Mr. Shah told Respondent that the clinic was ordering 
hydrocodone from HDG. See id. at 6-8; see also GX 17, at 22-52. The 
purchases continued even after July 2008, when Respondent became aware 
that his registered address had been changed without his consent and 
Alinka Robinson was ``in a state of panic'' because he had not renewed 
his registration. GX 17, at 40-52; GX 18, at 8.
---------------------------------------------------------------------------

    \14\ Pursuant to Federal Regulations, all registered 
manufacturers and distributors of various controlled substances 
including schedule III narcotics such as combination hydrocodone 
drugs are required to report their distributions on a quarterly 
basis to DEA. 21 CFR 1304.33.
---------------------------------------------------------------------------

    As part of his investigation, the DI obtained delivery information 
from HDG and conducted surveillance of several deliveries that were 
made to the Anaheim Hills office. Tr. 215-16. On three occasions, the 
DI observed the deliveries being made, and several hours later, either 
Robinson or his wife remove the packages from the office and take them 
either to their home or to a parking lot. Id. at 218. According to the 
DI, the drugs were eventually delivered to Maggie Annan, who was 
previously identified by B.C. as an associate of the Robinsons. Id. at 
426-27.
    Thereafter, search warrants were obtained and executed at five 
premises including Robinson's Santa Ana clinic, the Anaheim Hills 
clinic, Robinson's residence in Yorba Linda, and Ms. Annan's residence 
in Santa Ana. Id. at 219. While during the search of the Anaheim Hills 
clinic, 6,000 hydrocodone tablets were delivered from HDG, no other 
hydrocodone was found in the office and there were no records such as 
invoices or a dispensing log. Id. at 220-21. However, at Ms. Annan's 
house, the search party found six to ten invoices for hydrocodone 
purchases of about ``6,000 pills each,'' ``as well as 6,000 tablets of 
hydrocodone.'' \15\ Id. at 221-22. With respect to the disposition of 
the drugs, the DI testified that while Robinson had claimed that Annan 
asked him to order the drugs to give to poor people in Mexico, there 
were no records to support this claim and the DI had no idea what Ms. 
Annan did with the drugs. Id. at 223.
---------------------------------------------------------------------------

    \15\ According to the DI, ``[a]t Ms. Annan's house we found 
about 6,000 tablets of hydrocodone. At Ms. Annan's house we found 
about 10 bottles of hydrocodone in her garage.'' Tr. 222. The DI 
then explained that each bottle contained about 500 tablets. Id. It 
is not clear, however, whether the drugs found in the garage were 
all of the total found in Ms. Annan's home or were in addition to 
those found in her house.
---------------------------------------------------------------------------

    The DI further testified that he had interviewed Harrell Robinson, 
who told him that Annan had ``asked him to obtain a second registration 
to order these drugs,'' and that ``he contacted Dr. Bickman and asked 
him to allow him to use the registration to order drugs and supplies 
for the office and [that] he would pay [Bickman] $2,000 a month to do 
this.'' Id. at 224. However, when asked by the Government whether 
Robinson had talked to Respondent ``about using his DEA registration 
for ordering controlled substances,'' the DI replied: ``Yes. During the 
interview it was based upon Dr. Robinson being asked by Maggie [Annan] 
to order more hydrocodone products in order to get more purchase[s] 
made other than the one registration so [Respondent's] license was 
needed for that purpose.'' Id. Beyond the fact that Robinson's hearsay 
statement is of dubious reliability, I find that the DI's testimony is 
too vague to conclude that Respondent had knowledge that Robinson's 
purpose in initially obtaining his registration was to enable Annan to 
obtain more drugs.
    Regarding the Robinsons' use of his registration, Respondent 
testified that he was not ``okay with it'' and that he felt ``that the 
numbers that it escalated to could have been totally avoided had I been 
notified even up front as early as when * * * the relationship started 
with Harvard.'' Tr. 565. He further testified that ``it's so 
irresponsible to have let that happen * * * for people that knew,'' and 
that with the amounts that were being ordered, he would have thought 
that there would have been ``a check and balance * * * from Shamir[sic] 
Shah or whoever in a compliance role,'' who would ``have called to 
verify * * * that these amounts [were] being ordered.'' Id. at 566-67. 
He further asked: ``Where am I supposed to get the information from, 
when the companies [and DEA] aren't telling me?'' Id. at 567. See also 
GX 23, at 6 (Resp. Ltr. to DI; ``There was no mention by either Dr. 
Robinson or Harvard Group about consenting for Dr. Robinson or Alinka 
Robinson to knowingly order excessive quantities of oral pain 
medication on a regular basis with my DEA. Furthermore, it is 
incomprehensible that Harvard Drug Group would not have notified me 
that another person was using my DEA in a reckless and illegal 
manner.'').
    Respondent further maintained that he told HDG that he ``wanted to 
be notified'' of the orders, but that HDG ``didn't notify me'' and 
asked ``what else are you supposed to do?'' Id. Yet on cross-
examination, Respondent testified that he did not ask either Shah or 
Ms. B., the HDG sales rep., what Robinson was ordering with his 
registration. Id. at 571-72.
    Finally, the Government asked Respondent whether he had designated 
anyone to maintain records of Dr. Robinson's purchases. Id. at 580. 
Respondent stated that he ``did not,'' but that he assumed that 
Robinson would be doing it because ``he owns a surgical center and 
knows the rules and regulations about how controlled substances * * * 
need to be logged and receipts need to be kept for a certain amount of 
time.'' Id.

Discussion

    Section 304(a) of the CSA provides that a ``registration pursuant 
to section 823 of this title to * * * dispense a controlled substance * 
* * may be suspended or revoked by the Attorney General upon a finding 
that the registrant * * * has materially falsified any application 
filed pursuant to or required by this subchapter,'' or ``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)(1) & (4). With respect to the latter 
inquiry, Congress directed that the following factors be considered:
    (1) The recommendation of the appropriate State licensing board or 
professional disciplinary authority.
    (2) The applicant's experience in dispensing * * * 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.

21 U.S.C. 823(f).

    ``[T]hese factors are considered in the disjunctive.'' Robert A. 
Leslie, 68 FR

[[Page 17701]]

15227, 15230 (2003). 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 revoke an existing registration or to deny an application 
for a registration. Id. Moreover, I am ``not required to make findings 
as to all of the factors.'' Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 
2005); see also Morall v. DEA, 412 F.3d 165, 173-74 (DC Cir. 2005).
    The Government has ``the burden of proving that the requirements 
for * * * revocation or suspension pursuant to section 304(a) * * * are 
satisfied.'' 21 CFR 1301.44(e); see also 21 CFR 1301.44(d) (Government 
has ``the burden of proving that the requirement for [a] registration 
pursuant to section 303 * * * are not satisfied''). However, where the 
Government satisfies its prima facie burden, the burden then shifts to 
the registrant to demonstrate why he can be entrusted with a new 
registration. Medicine Shoppe-Jonesborough, 73 FR 363, 380 (2008).

The Material Falsification Allegation

    The Government argues, and the ALJ found, that Respondent 
materially falsified his 2008 renewal application because he provided a 
``no'' answer to the question: ``[h]as the applicant ever had a State 
professional license or controlled substance registration revoked, 
suspended, denied, restricted, or placed on probation, or is any such 
action pending?'' Gov. Br. 24; ALJ at 31. It is undisputed that this 
answer was false because Respondent's State medical license had 
previously been placed on probation based on what was, in essence, a 
case of malpractice. The ALJ further concluded that Respondent's false 
answer was material, reasoning that `` `[a]nswers to the liability 
question[s] are always material because DEA relies on the answers to 
these questions to determine whether it is necessary to conduct an 
investigation prior to granting an application.' '' ALJ at 31 (quoting 
Theodore Neujahr, D.V.M., 65 FR 5680, 5681 (2000); other citations 
omitted). Contrary to the ALJ's understanding, the Supreme Court (and 
this Agency) have held otherwise.
    ``The most common formulation'' of the concept of materiality is 
that ``a concealment or misrepresentation is material if it `has a 
natural tendency to influence, or was capable of influencing, the 
decision of' the decisionmaking body to which it was addressed.'' 
Kungys v. United States, 485 U.S. 759, 770 (1988) (quoting Weinstock v. 
United States, 231 F.2d 699, 701 (DC Cir. 1956) (other citation 
omitted)) (quoted in Samuel S. Jackson, 72 FR 23848, 23852 (2007)); see 
also United States v. Wells, 519 U.S. 482, 489 (1997) (quoting Kungys, 
485 U.S. at 770). Most significantly for this proceeding, the Supreme 
Court has explained that ``[i]t has never been the test of materiality 
that the misrepresentation or concealment would more likely than not 
have produced an erroneous decision, or even that it would more likely 
than not have triggered an investigation.'' Kungys, 485 U.S. at 771 
(emphasis added). Rather, the test is ``whether the misrepresentation 
or concealment was predictably capable of affecting, i.e., had a 
natural tendency to affect, the official decision.'' Id. `` `[T]he 
ultimate finding of materiality turns on an interpretation of 
substantive law,' '' id. at 772 (int. quotations and other citation 
omitted), and must be met ``by evidence that is clear, unequivocal, and 
convincing.'' \16\ Id.
---------------------------------------------------------------------------

    \16\ While Kungys involved a denaturalization proceeding, in 
other civil proceedings, courts have required that a party establish 
that a falsification is material by ``clear, unequivocal, and 
convincing evidence'' and not simply by a ``preponderance of the 
evidence.'' Driscoll v. Cebalo, 731 F.2d 878, 884 (1984). In any 
event, the Government's evidence on materiality would not even meet 
the preponderance standard.
---------------------------------------------------------------------------

    As the above makes clear, the relevant decision for assessing 
whether a false statement is material is not the decision to conduct an 
investigation, but rather the decision as to whether an applicant is 
entitled to be registered. The Government's evidence does not, however, 
establish that Respondent's failure to disclose that the State Board 
had placed him on probation was capable of influencing the decision to 
grant his renewal application.
    Notably, at the time he submitted the application, Respondent had a 
current State medical license and was authorized under California law 
to dispense controlled substances; he thus met the CSA's statutory 
requirement for holding a registration that he be ``authorized to 
dispense * * * controlled substances under the laws of the State in 
which he practices.'' 21 U.S.C. 823(f); see also id. Sec.  824(a)(3) 
(authorizing the suspension or revocation of a registration upon a 
finding that ``the registrant * * * has had his State license or 
registration suspended, revoked, or denied by competent State authority 
and is no longer authorized by State law to engage in the * * * 
dispensing of controlled substances''). Nor had the State Board 
recommended that his State or Federal controlled substance authority be 
suspended or revoked. Id. Sec.  823(f)(1).
    Moreover, the conduct which was the basis of the State Board's 
order does not implicate any of the other grounds provided for in the 
CSA for revoking a registration or denying an application. More 
specifically, the Board Order was not based on Respondent's having been 
convicted of a felony related to controlled substances under either 
State or Federal law, his having diverted or abused controlled 
substances, his failure to comply with other State or Federal 
controlled substance regulations, or his having committed an act of 
health care fraud resulting in his exclusion from participating in a 
program pursuant to 42 U.S.C. 1320a-7(a). See 21 U.S.C. 824(a)(2), (4), 
(5); see also 21 U.S.C. 823(f).
    Rather, the only evidence in the record is that Respondent failed 
to properly administer anesthesia to a patient. DEA does not, however, 
have authority to revoke a registration or deny an application simply 
because a physician has committed an act of medical malpractice.\17\ 
See generally Gonzales v. Oregon, 546 U.S. 243 (2006). Short of the 
Medical Board's having concluded that Respondent's conduct posed such a 
risk to patients as to warrant the suspension or revocation of his 
medical license (and authority to prescribe controlled substances under 
State law), DEA could not have denied his renewal application. Thus, 
Respondent's falsification was not ``capable of influencing'' the 
Agency's decision and was thus not material. Kungys, 485 U.S. at 772. 
Accordingly, I concluded that the Government has failed to prove this 
allegation.
---------------------------------------------------------------------------

    \17\ This is not to say that every case of medical malpractice 
is not material to the Agency's registration decision. Where, for 
example, there is evidence that a physician committed malpractice 
while being under the influence of a an illegally obtained 
controlled substance, the failure to disclose a State proceeding 
would be a material falsification even where a State board has 
imposed only a period of probation. However, here there is no 
evidence that Respondent was unlawfully under the influence of a 
controlled substance when he committed the acts which were the basis 
of the MBC proceeding.
---------------------------------------------------------------------------

The Public Interest Allegations

    The Government argues that the evidence relevant to factors two 
(Respondent's experience in dispensing controlled substances), four 
(Respondent's compliance with applicable laws related to controlled 
substances), and five (such other conduct which may threaten public 
health and safety) supports the revocation of Respondent's 
registration. Gov. Br. 18, 22. Specifically, the Government argues that 
Respondent unlawfully distributed several hundred thousand dosage units 
of hydrocodone, a schedule III controlled substance, to

[[Page 17702]]

an unknown and unregistered person. Id. at 18-19.
    The Government argues that even if Harrell Robinson and Maggie 
Annan ``operated without his knowledge or consent, Respondent still 
violated the [CSA] by failing to supervise their activities.'' Id. at 
20 (citing 21 CFR 1301.71(a) & (b)(14)). The Government further argues 
that under agency precedent, Respondent is strictly liable for the 
misuse of his registration because he entrusted his registration to 
these persons. Id. at 23 (quoting Harrell Robinson, M.D., 74 FR 61370, 
61377-78 (2009) (citing Rose Mary Jacinta Lewis, M.D., 72 FR 4035 
(2007)). Finally, the Government argues that Respondent violated the 
CSA (and California law) because he failed ``to maintain dispensing 
records as required by 21 CFR 1304.22(c).'' Id. at 20 (also citing 21 
U.S.C. 827(b) and 21 CFR 1304.04(a)); see also id. at 21 (citing Cal. 
Health & Safety Code Sec.  11190(c)(1) & (G.2)).
    Citing the CSA's provisions defining the terms ``distribute'' and 
``deliver,'' the ALJ reasoned that the ``constructive transfer of a 
controlled substance is included in the meaning of distribution.'' ALJ 
at 32 (citing 21 U.S.C. 802(8) & (10)). While acknowledging that 
``[t]he record does not establish that Respondent had actual knowledge 
of every order placed with Harvard Drug using his DEA number,'' the ALJ 
found that ``[t]he record conclusively establishes * * * that 
Respondent had ample reason to suspect that his registration was being 
misused and that he chose not to act on those suspicions.'' Id. Finding 
that his testimony as to why he had authorized Robinson to use his DEA 
registration number and his explanations of his various instructions to 
Harvard lacked credibility, id. at 32-33, the ALJ further found ``that 
Respondent knew or should have known that Dr. Robinson was using [his] 
DEA registration number to order controlled substances that were likely 
to be diverted,'' that ``Respondent engaged in [the] distribution of 
those [controlled] substances,'' and that these distributions violated 
the CSA. Id. at 33 (citing 21 U.S.C. 841(a)).
    I need not decide whether the evidence is sufficient to support the 
ALJ's finding that Respondent constructively transferred controlled 
substances and thus distributed them in violation of 21 U.S.C. 
841(a).\18\ Under the public interest standard, DEA can consider a 
broader range of conduct than that which supports a finding of a 
criminal violation of the CSA. See 21 U.S.C. 823(f).
---------------------------------------------------------------------------

    \18\ The Government did not argue that Respondent is liable for 
Robinson's unlawful conduct under either a conspiracy or aiding and 
abetting theory.
---------------------------------------------------------------------------

    Here, the evidence is clear that at least from November 19, 2007, 
Respondent expressly authorized Robinson to use his DEA registration to 
order controlled substances. Respondent offered no explanation as to 
why Robinson, beginning on that date, then needed to use Respondent's 
registration (as opposed to his own) to obtain controlled substances 
for the clinic; indeed, Respondent's testimony that he had be