Linda Sue Cheek, M.D., Decision and Order, 66972-66986 [2011-28002]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 76, Number 209 (Friday, October 28, 2011)]
[Notices]
[Pages 66972-66986]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28002]


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

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 10-55]


Linda Sue Cheek, M.D., Decision and Order

    On December 30, 2010, Administrative Law Judge (ALJ) Timothy D. 
Wing issued the attached recommended decision. Thereafter, Respondent 
filed exceptions to the decision.
    Having reviewed the entire record including Respondent's 
exceptions, I have decided to adopt the ALJ's rulings, findings of 
fact, conclusions of law, and recommended order, except as discussed 
below. Accordingly, I will order that Respondent's application be 
denied.
    Before proceeding to discuss Respondent's exceptions, a discussion 
of the ALJ's consideration of ``community impact'' evidence is 
warranted. See ALJ at 33-35.\1\ Therein, the ALJ acknowledged the 
recent decision in Gregory Owens, D.D.S., 74 FR 36751 (2009). In Owens, 
I explicitly declined to extend the holding of Pettigrew Rexall Drugs, 
64 FR 8855, 8859-60 (1999), which cited evidence that a pharmacy was 
``one of two pharmacies in a relatively poor, medically underserved 
community'' as ground for staying a revocation order, to the case of a 
prescribing practitioner. 74 FR at 36757. As Owens explained, 
``consideration of the socioeconomic status of a practitioner's patient 
population is not mandated by the text of either 21 U.S.C. 823(f) or 
824(a)(4).'' Id. Owens further explained that such a rule is 
``unworkable'' and ``would inject a new level of complexity into 
already complex proceedings and take the Agency far afield of the 
purpose of the CSA's registration provisions, which is to prevent 
diversion.'' Id.
---------------------------------------------------------------------------

    \1\ All citations to the ALJ's decision are to the slip opinion 
as issued by him.
---------------------------------------------------------------------------

    The ALJ further noted, however, that in Imran I. Chaudry, M.D., 69 
FR 62081, 62083-84 (2004), the Agency had ``considered and given weight 
to community impact evidence, without specifically citing Pettigrew.'' 
ALJ at 34. Notwithstanding the lengthy explanation Owens provided as to 
why community impact evidence is irrelevant in a proceeding involving a 
prescribing practitioner, the ALJ reasoned that in ``[i]n light of 
[Chaudry], I find that community impact evidence as a threshold matter 
is not entirely irrelevant.'' Id.
    While in Chaudry, the Agency noted that evidence that the 
respondent, who was a cardiologist, practiced in a medically 
underserved community ``provide[d] some support for maintaining [his] 
registration,'' the Agency further held that this evidence ``also has a 
negative implication for continued registration'' because Respondent 
placed the community at risk by abusing methamphetamine and 
distributing it to another physician. 69 FR at 62084. Thus, in Chaudry, 
while the registrant was the only cardiologist in ``a town of 
approximately 4,000 people,'' the Agency actually relied on this 
evidence to revoke the practitioner's registration.
    The decision in Chaudry did not, however, explain to what factor 
this evidence--whether cited in mitigation by the registrant or cited 
in aggravation by the final decision--was relevant. While it is 
possible to view such evidence as relevant (at least when offered as 
evidence of an aggravating circumstance) in determining whether a 
registrant has engaged in ``such other conduct as may threaten public 
health and safety,'' 21 U.S.C. 823(f)(5), a practitioner's self-abuse 
of a controlled substance ``threaten[s] public health and safety'' 
without regard to the socioeconomic characteristics of the community in 
which he or she practices.\2\
---------------------------------------------------------------------------

    \2\ While the decision noted that the registrant had also 
distributed methamphetamine to another physician, this conduct would 
clearly fall within factor four, ``[c]ompliance with applicable 
State, Federal, or local laws relating to controlled substances.'' 
21 U.S.C. 823(f)(4).
---------------------------------------------------------------------------

    Moreover, my review of Chaudry reinforces the correctness of my 
conclusion in Owens. As I explained in Owens, ``[t]he public interest 
standard of 21 U.S.C. Sec.  823(f) is not a freewheeling inquiry but is 
guided by the five specific factors which Congress directed the 
Attorney General to consider; consideration of the socioeconomic status 
of a practitioner's patient population is not mandated by the text of 
either 21 U.S.C. Sec. Sec.  823(f) or 824(a)(4), which focus primarily 
on the acts committed by a practitioner.'' 74 FR at 36757.
    As I further explained in Owens (as well as in numerous other 
cases), ``where the Government has made out a prima facie case that a 
practitioner has committed acts which render [her] registration 
inconsistent with the public interest, the relevant inquiry is * * * 
whether the practitioner has put forward `sufficient mitigating 
evidence to assure the Administrator that he can be entrusted with the 
responsibility carried by such a registration.' '' Id. (quoting 
Medicine Shoppe-Jonesborough, 73 FR 364, 387 (2008)). Moreover, in 
numerous decisions, I have made clear that ``this inquiry looks to 
whether the registrant has accepted responsibility for [her] misconduct 
and undertaken corrective measures to prevent the re-occurrence of 
similar acts.'' Id. As explained in Owens, ``[w]hether a practitioner 
treats patients who come from a medically underserved community or who 
have limited incomes has no bearing on whether [she] has accepted 
responsibility and undertaken adequate corrective measures.\3\'' Id.
---------------------------------------------------------------------------

    \3\ Of course, in determining the appropriate sanction, DEA also 
considers the extent and egregiousness of a registrant's misconduct, 
the degree of the registrant's candor, as well as the Agency's 
interest in deterring others from engaging in similar acts. See 
Owens, 74 FR at 36757; Paul Weir Battershell, 76 FR 44359 (2010); 
Joseph Gaudio, 74 FR 10083, 10095 (2009); Janet Thornton, 73 FR 
50354 (2008).
---------------------------------------------------------------------------

    In Owens, I also noted that the diversion of prescription 
controlled substances ``has become an increasingly serious societal 
problem, which is particularly significant in poorer communities 
whether they are located in rural or urban areas.'' Id. (citing George 
C. Aycock, 74 FR 17529, 17544 n.33 (2009); Laurence T. McKinney, 73 FR 
43260 (2008); Paul H. Volkman, 73

[[Page 66973]]

FR 30630 (2008); Medicine Shoppe-Jonesborough, 73 FR 364)). See also 
id. (citing U.S. General Accounting Office, Prescription Drugs: 
OxyContin Abuse and Diversion and Efforts to Address the Problem 31-32 
(Dec. 2003) (noting that ``the Appalachian region, which encompasses 
parts of Kentucky, Tennessee, Virginia, and West Virginia, has been 
severely affected by prescription drug abuse, particularly pain 
relievers * * * for many years'')). As I further explained, ``the 
residents of this Nation's poorer areas are as deserving of protection 
from diverters as are the citizens of its wealthier communities, and 
there is no legitimate reason why practitioners should be treated any 
differently because of where they practice or the socioeconomic status 
of their patients.'' \4\ Id.
---------------------------------------------------------------------------

    \4\ In Owens, the ALJ relied on the fact that roughly ten 
percent of the practitioner's patients were from an underserved 
community and that a majority of his patients had limited finances. 
74 FR at 36757 n.22. I rejected this evidence noting that ``the 
ALJ's reasoning begs the question of how many patients from 
underserved areas would a practitioner have to treat to claim the 
benefit of the rule.'' Id. I also rejected the ALJ's reliance on the 
fact that a majority of the registrant's patients had limited 
incomes, because determining what constitutes a patient with a 
limited income or finances and how many patients (or what percentage 
of patients) a practitioner must have to claim entitlement to this 
rule was unworkable. Id.
    While the evidence adduced here (which the ALJ rejected as 
insufficient) was primarily limited to Respondent's assertion that 
she ``was the only pain management doctor reasonably available in 
southwestern Virginia,'' ALJ at 34; here again, there are no 
workable standards for determining whether other doctors are 
reasonably available. Moreover, the CSA's primary purpose is to 
prevent the diversion of controlled substances and nothing in the 
respective statutes (21 U.S.C. 823(f) & 824(a)) directs the Agency 
to consider community impact evidence in determining whether to 
grant an application for registration or to continue an existing 
registration.
---------------------------------------------------------------------------

    It is acknowledged that there is no evidence in this record that 
Respondent was engaged in diverting controlled substances.\5\ Rather, 
the principal allegations involve Respondent's having been mandatorily 
excluded from participation in Federal health care programs by the 
Secretary of the Department of Health and Human Services pursuant to 42 
U.S.C. 1320a-7(a) following her conviction for having committed Health 
Care Fraud in violation of 18 U.S.C. 1347, as well as her having issued 
controlled substance prescriptions without a registration. ALJ Ex. 1, 
at 1-2 (citing 21 U.S.C. 823(f) & 824(a)(5)).
---------------------------------------------------------------------------

    \5\ To make clear, there was no evidence of diversion in Owens 
either.
---------------------------------------------------------------------------

    Under 21 U.S.C. 824(a)(5), the Attorney General is authorized to 
suspend or revoke a registration ``upon a finding that the registrant * 
* * has been excluded (or directed to be excluded) from participation 
in a program pursuant to'' 42 U.S.C. 1320a-7(a). As I recently 
explained, see Terese, Inc., 76 FR 46843, 46846 (2011), this provision 
subjects to revocation the registration of a practitioner who has been 
mandatorily excluded ``from participation in any Federal health care 
program'' based on her conviction for an offense falling within one of 
four categories of offenses including a ``[f]elony conviction relating 
to health care fraud.'' 42 U.S.C. 1320a-7(a)(3). The consequence of the 
exclusion is to prohibit Respondent from participating ``in any 
capacity in the Medicare, Medicaid, and all Federal health care 
programs as defined in section 1128B(f) of the Social Security Act.'' 
GX 6 (letter from Reviewing Official, Health Care Program Exclusions, 
Office of Counsel to the Inspector General, Department of Health and 
Human Services, to Respondent (Sep. 30, 2008)).
    In enacting 42 U.S.C. 1320a-7, Congress was obviously aware that 
many of the beneficiaries of Medicaid, Medicare, and other health care 
programs (such as SCHIP) are residents of medically underserved 
communities. Yet Congress made the exclusion of a provider from 
participation in these programs mandatory upon conviction of one of the 
four categories of offenses enumerated in 42 U.S.C. 1320a-7(a), 
including a conviction for Health Care Fraud. Given this, it makes no 
sense for the Agency to consider community impact evidence in 
exercising its authority under 21 U.S.C. 824(a)(5).
    I therefore re-affirm my holding in Owens that community impact 
evidence is not relevant in determining whether to grant a prescribing 
practitioner's application under 21 U.S.C. 823(f) or to revoke an 
existing registration under the various authorities provided in 21 
U.S.C. 824(a). I further hold that to the extent Chaudry (or any other 
case involving a prescribing practitioner) suggests otherwise, it is 
overruled.
    The ALJ also found that on February 12, 2009, the Virginia Medical 
Board reinstated Respondent's medical license. ALJ 26. The ALJ further 
concluded that this action ``weigh[s] in favor of a finding that 
Respondent's registration would not be inconsistent with the public 
interest, at least as of February 12, 2009.'' Id.
    However, following the closing of the record, on July 8, 2011, the 
Virginia Board of Medicine issued an Order following a hearing it 
conducted on June 24, 2011; I take official notice of the Board's 
Order.\6\ See In re: Linda Sue Cheek, M.D. (Va. Bd. Med., Jul 8, 2011). 
The Board made numerous findings, the most significant being that 
Respondent committed unprofessional conduct in violation of Va. Code 
Ann. Sec.  54.1-2915.A(16) & (17). Id. at 8. The Board also 
indefinitely suspended Respondent's medical license ``for a period of 
no less than twelve (12) months from entry of [its] Order.'' Id.
---------------------------------------------------------------------------

    \6\ Under the Administrative Procedure Act (APA), an agency 
``may take official notice of facts at any stage in a proceeding--
even in the final decision.'' U.S. Dept. of Justice, Attorney 
General's Manual on the Administrative Procedure Act 80 (1947) (Wm. 
W. Gaunt & Sons, Inc., Reprint 1979). In accordance with the APA and 
DEA's regulations, Respondent is ``entitled on timely request, to an 
opportunity to show to the contrary.'' 5 U.S.C. 556(e); see also 21 
CFR 1316.59(e). Respondent can dispute the facts of which I take 
official notice by filing a properly supported motion for 
reconsideration within twenty days of service of this Order, which 
shall begin on the date it is mailed.
---------------------------------------------------------------------------

    Under the Controlled Substances Act, a practitioner must possess 
authority to dispense controlled substances under the laws of the State 
in which she practices in order to hold a DEA registration. See 21 
U.S.C. 823(f) (``The Attorney General shall register practitioners * * 
* to dispense * * * controlled substances * * * if the applicant is 
authorized to dispense * * * controlled substances under the laws of 
the State in which he practices.''); id. Sec.  802(21) (``The term 
`practitioner' means a physician * * * licensed, registered, or 
otherwise permitted, by the United States or the jurisdiction in which 
he practices * * * to * * * dispense * * * a controlled substance in 
the course of professional practice. * * *''); see also 21 U.S.C. 
824(a)(3) (authorizing the revocation of a registration where 
registrant ``has had his State license * * * suspended * * * by 
competent State authority and is no longer authorized by State law to 
engage in the * * * dispensing of controlled substances''). 
Accordingly, this development provides a further basis to deny 
Respondent's application. See Robert Wayne Mosier, D.O., 75 FR 49950 
(2010) (citing cases) (``DEA has consistently held that holding 
authority under state law is a prerequisite for obtaining a 
registration under the CSA.''). Moreover, even if Respondent had 
prevailed on the other allegations (or rebutted the Government's prima 
facie case), the loss of her state authority would still require the 
denial of her application.

Respondent's Exceptions

    Respondent filed extensive exceptions to the ALJ's decision. Most 
of these exceptions (which do not comply with DEA's regulations because 
they do not cite to the transcript or exhibits, see 21 CFR 1316.66(a)), 
involve challenges to

[[Page 66974]]

the ALJ's credibility determinations and what Respondent maintains was 
the ALJ's ``predetermined prejudice against'' her, Resp. Exc. at 4, 
including the ALJ's finding that Respondent lacked candor and gave 
inconsistent explanations. Id. at 11. The ALJ personally observed the 
demeanor of the various witnesses and evaluated each witness's 
testimony for its consistency and inherent probability. See Dewey C. 
MacKay, 75 FR 49956, 49963 (2010) (citing Universal Camera Corp. v. 
NLRB, 340 U.S. 474 (1951)). Moreover, having reviewed the entire 
record, I find no reason to reject the ALJ's various factual findings.
    Furthermore, I find no basis to conclude that the ALJ was biased 
against Respondent. As the Supreme Court has explained, ``judicial 
rulings alone almost never constitute a valid basis for a bias or 
partiality motion.'' Likety v. United States, 510 U.S. 540, 555 (1994). 
That an ALJ, upon considering the evidence, finds much of a party's 
evidence either not credible or unreliable, does not establish bias. 
Accordingly, I reject Respondent's exceptions to the ALJ's factual 
findings.
    Respondent further takes exception to the ALJ's findings that she 
does not accept responsibility for the various acts of misconduct which 
were proven on this record. With respect to her Health Care Fraud 
conviction, Respondent argues that by pleading guilty and complying 
with the various requirements of her sentence, she has accepted 
responsibility. Resp. Exc. at 6. With respect to the allegation that 
she wrote controlled substance prescriptions without a registration, 
Respondent argues that she admitted to writing two prescriptions by 
mistake shortly after her medical license was restored by the State and 
that she ``is only aware of [two] prescriptions'' which she wrote and 
``admitted to.'' Id. at 8. Respondent also takes exception to the ALJ's 
finding that she unlawfully used another physician's DEA registration 
to issue controlled substance prescriptions, arguing that she acted as 
a nurse practitioner, who was supervised by another physician, who 
reviewed the patient files and authorized the prescriptions. Id. at 9-
10. According to Respondent, there is nothing in either Federal law or 
the Virginia Board of Medicine's rules that prohibit one physician from 
supervising another. Id. at 9. Moreover, Respondent argues that if DEA 
had timely issued her a new registration, ``the complaint here would 
not have any substance'' and that DEA's failure to grant her 
application demonstrates an ``abject plan to create the scenario in 
which to charge [her] with committing a crime.'' Id. at 10.
    As for the ALJ's finding that Respondent did not accept 
responsibility for her Health Care Fraud conviction, it is true that 
pleading guilty and complying with her sentence is probative evidence 
of whether she has accepted responsibility. However, Respondent did not 
stop there. Instead, as the ALJ found (and the testimony shows), 
Respondent maintained that her conviction was ``unjust[],'' Tr. 386, as 
it was based on ``six billing incidents * * * when I was out of the 
country,'' that ``the most I got paid over or extra was $ 11.00 per 
visit,'' and that the U.S. Attorney's Office had brought her down ``for 
$ 66.00.'' Id. at 384-85. Moreover, Respondent testified that it was 
her belief that the prosecution was ``purely * * * a result of the fact 
that I treat pain, and I prescribe opiates, and that the agenda of the 
United States Government is to stop the treatment of pain in this 
country.'' Id. at 383. Respondent did not explain, however, why, if she 
had only defrauded the Government of $66, the District Court ordered 
her to pay more than $24,000 in restitution, including more than 
$17,000 to the Virginia Medicaid Program and more than $7,000 to 
Medicare. GX 4, at 2. Moreover, as the ALJ noted, she further testified 
that ``[i]f this is fraud, maybe we need more of it.'' Tr. 382. Thus, 
the ALJ properly held that Respondent did not accept responsibility for 
her Health Care Fraud conviction.
    As for the ALJ's finding that Respondent did not accept 
responsibility for her prescribing without holding a registration, it 
is acknowledged that she admitted to having written a prescription for 
Ambien (zolpidem), a schedule IV controlled substance, 21 CFR 
1308.14(c)(51), on February 23, 2009, and a prescription for Lyrica 
(pregabalin), a schedule V controlled substance, id. 1308.15(e), on 
March 20, 2009. However, when confronted with evidence that she had 
written other prescriptions such as one for Lortab (hydrocodone), a 
schedule III controlled substance, id. 1308.13(e)(1), on April 6, 2009, 
Respondent testified that ``I cannot say this is my signature.'' Tr. 
492. She then suggested that the Government had fabricated the 
prescription. Id.\7\ Respondent also testified that she could not 
``verify'' two other controlled substance prescriptions which bore a 
signature in her name. Tr. 493-94 (discussing GXs 11 & 12).\8\ The ALJ 
properly found this testimony ``palpably incredible.'' ALJ at 28.
---------------------------------------------------------------------------

    \7\ When asked whether she had written this prescription, 
Respondent testified: ``I cannot say that that is my signature.'' 
Tr. 492. When asked why she could not, Respondent answered:
     I cannot say that that is my signature. I am not opposed to the 
idea that the government can do a lot of things. And I do not, 
without having had this information, and be[ing] able to do some 
research on my own, I will not admit to this being my signature or 
my prescription.
    Id. When then asked whether she was ``asserting that the 
government may have falsified this document?,'' Respondent answered: 
``Very possible.'' Id.
    Respondent's failure to accept responsibility is further 
manifested by her contentions that if DEA had timely issued her a 
new registration, ``the complaint here would not have any 
substance'' and that DEA's failure to grant her application 
demonstrates an ``abject plan to create the scenario in which to 
charge [her] with committing a crime.'' Resp. Exc. at 10. However, 
no one forced Respondent to issue prescriptions without a 
registration and DEA's regulation clearly states that ``[n]o person 
required to be registered shall engage in any activity for which 
registration is required until the application for registration is 
granted and a Certificate of Registration is issued by the 
Administrator to such person.'' 21 CFR 1301.13(a). Also, given 
Respondent's exclusion under 42 U.S.C. 1320-7(a), DEA had no 
obligation to grant her application.
    \8\ Respondent maintained that she did not break any law by 
writing prescriptions which were not filled. Tr. 491, 493. However, 
under Federal law, the issuance of a prescription constitutes the 
constructive transfer of a controlled substance even if a pharmacist 
subsequently refuses to fill the prescription. United States v. 
Roya, 574 F.2d 386 (7th Cir. 1978); United States v. Tighe, 551 F.2d 
18 (3d Cir. 1977).
---------------------------------------------------------------------------

    So too, Respondent asserted that she had an agreement with another 
physician (Dr. Shultz) under which she acted as a nurse practitioner 
and evaluated the patients and was supervised by Dr. Schultz; 
Respondent further claimed that Dr. Schultz would then review her 
evaluation and authorize a controlled substance prescription for the 
patients, which was then called in to the patient's pharmacy by 
Respondent or her staff. See RX 41. However, during an interview with a 
Diversion Investigator, Dr. Schultz stated that she only went to 
Respondent's clinic on Thursdays. Tr. 117-18. Dr. Schultz further told 
the Investigator that she did not give Respondent permission to call in 
prescriptions under her registration. Id. at 115.\9\
---------------------------------------------------------------------------

    \9\ Against this evidence is a document signed on June 25, 2009, 
which purports to be a memorialization of a verbal contract entered 
into on February 23, 2009 between Respondent and Dr. Schultz. RX 41. 
Among this document's terms are that Dr. Schultz ``will approve 
medications as recommended by Dr. Cheek and allow Dr. Cheek or her 
staff to call them into the pharmacy in her name.'' Id. Continuing, 
the document states: ``Basically, Dr. Cheek is acting as a nurse 
practitioner would, under Dr. Schultz's supervision. Dr. Schultz 
reviews and signs the records of all patients receiving scheduled 
drugs on a regular basis.'' Id.
    On June 25, 2009, the same day that the above document was 
signed, Respondent discussed with Dr. Schultz her conversation with 
the DEA Investigator. Respondent testified:
    And when she told me she had said, ``No, I haven't told anybody 
they can use my DEA number,'' I said, ``Kathy, you allow us to call 
in prescriptions for our patients. That is using your DEA number.'' 
``Oh, I didn't realize that,'' was her reply.
    Tr. 422.

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

[[Page 66975]]

    DEA Investigators found numerous controlled substance prescriptions 
which were called into local pharmacies under Dr. Schultz's DEA 
registration by either Respondent or her employee, A.Y. Id. at 119; GXs 
15-17. Upon reviewing the prescriptions, an Investigator determined 
that most of them were called in on days other than Thursdays. Tr. 118. 
Moreover, both the ALJ and Virginia Board (which conducted its own 
formal hearing) found Respondent's testimony that she was working under 
the supervision of Dr. Schultz to not be credible and that the 
arrangement was a sham. ALJ at 28-30; see also In re Linda Sue Cheek, 
at 4 (``The Board determined that [Respondent's] testimony concerning 
the arrangement that she had with Individual A \10\ to provide patients 
with controlled substances, whereby Individual A was to establish a 
practitioner-patient relationship and issue prescriptions for 
controlled substances, was not credible. The Board finds that 
[Respondent] intended to circumvent her inability to prescribe Schedule 
II-V controlled substances as a result of not having a valid DEA 
registration.''). Thus, I reject Respondent's exception and agree with 
the ALJ that ``[t]he evidence as a whole demonstrates that Respondent's 
claim that she was working at the direction of Dr. Schultz is not 
supported by credible evidence.'' ALJ at 30.
---------------------------------------------------------------------------

    \10\ The Board identified Individual A as ``a practitioner of 
osteopathic medicine who held [a DEA] registration, under which 
Individual A authorized prescriptions for controlled substances for 
Respondent's patients.'' In re Linda Sue Cheek, at 2. The Board's 
findings make clear that Individual A is Dr. Schultz.
---------------------------------------------------------------------------

    Under Federal law, it is ``unlawful for any person knowingly or 
intentionally * * * to use in the course of the * * * dispensing of a 
controlled substance * * * a registration number which is * * * issued 
to another person.'' 21 U.S.C. 843(a)(2). It is also unlawful to 
dispense a controlled substance without first obtaining a registration 
to do so. 21 U.S.C. 822(a)(2). The evidence shows that Respondent 
committed multiple violations of both provisions.\11\
---------------------------------------------------------------------------

    \11\ As noted above, Respondent analogized her relationship with 
Dr. Schultz to that of a nurse practitioner who is supervised by a 
physician. Apparently, the Virginia Board did not find the analogy 
persuasive as it found Respondent guilty of unprofessional conduct. 
See In re Linda Sue Cheek, at 2-4, 8. It is also noted that while 
the Virginia Board's rules allow a nurse practitioner to prescribe 
controlled substances, ``a practice agreement between the nurse 
practitioner and the supervising physician'' must be submitted and 
approved by both the Board of Medicine and the Board of Nursing. 18 
VAC90-40-30; id. 90-40-40(3). In addition, the State's rules require 
that ``[t]he nurse practitioner shall include on each prescription 
written or dispensed his signature and prescriptive authority number 
as issued by the board and the Drug Enforcement Administration (DEA) 
number, when applicable.'' Id. 90-40-110.
---------------------------------------------------------------------------

    Accordingly, the record establishes three independent grounds for 
denying Respondent's application: (1) Her loss of state authority, see 
21 U.S.C. 823(f); (2) her having violated Federal law by issuing 
controlled substance prescriptions when she did not possess a 
registration, see id. Sec.  824(a)(4); and (3) her having been 
mandatorily excluded from participation in Federal Health Care programs 
based on her conviction for Health Care Fraud. See id. Sec.  824(a)(5). 
In addition, the record establishes that Respondent has not accepted 
responsibility for her misconduct. Therefore, I will order that 
Respondent's application be denied.

Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 28 
CFR 0.100(b), I order that the application of Linda Sue Cheek, M.D., 
for a DEA Certificate of Registration as a practitioner be, and it 
hereby is, denied. This order is effective November 28, 2011.

    Dated: October 17, 2011.
Michele M. Leonhart,
Administrator.

Robert W. Walker, Esq., for the Government

Linda Sue Cheek, M.D., Pro se, for the Respondent

Recommended Ruling, Findings of Fact, Conclusions of Law and Decision 
of the Administrative Law Judge

Introduction

    Timothy D. Wing, Administrative Law Judge. This proceeding is an 
adjudication pursuant to the Administrative Procedure Act, 5 U.S.C. 551 
et seq., to determine whether the Drug Enforcement Administration 
(``DEA'' or ``Government'') should deny Respondent's pending 
application for a DEA Certificate of Registration (``COR''). Without 
this registration, Respondent, Linda Sue Cheek, M.D. (``Respondent''), 
of Dublin, Virginia, would be unable to lawfully possess, prescribe, 
dispense, or otherwise handle controlled substances in the course of 
her practice.
    On March 13, 2010, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause (``OSC'') seeking the denial of Respondent's pending 
application as a practitioner for registration in Schedules II through 
V, alleging that issuing a registration would be inconsistent with the 
public interest as that term is used in 21 U.S.C. 823(f) and that 
Respondent has been excluded from participation in a federal health 
care program as defined in 21 U.S.C. 824(a)(5). (ALJ Ex. 1 at 1.) The 
OSC alleged in substance: (a) Respondent had been excluded from 
participation in all federal health care programs for a period of five 
years following her guilty plea to one count of health care fraud in 
federal district court on February 21, 2008; and (b) Respondent 
surrendered her DEA COR number BC4510865 on November 17, 2008, but 
thereafter continued to issue numerous prescriptions for controlled 
substances using the surrendered COR, as well as the COR of another 
practitioner without authorization.
    Respondent, acting pro se, timely requested a hearing (ALJ Ex. 2), 
which was held in Roanoke, Virginia, between October 5-6, 2010. After 
acknowledging that she understood her right to representation, as 
codified at 21 CFR 1316.50, Respondent elected to represent herself 
during the hearing. (See ALJ Exs. 3 & 4.) Both parties called witnesses 
to testify and introduced documentary evidence. After the hearing, both 
parties filed proposed findings of fact, conclusions of law and 
argument. All of the evidence and post-hearing submissions have been 
considered, and to the extent the parties' proposed findings of fact 
have been adopted, they are substantively incorporated into those set 
forth below.

Issue

    Whether the record evidence establishes by substantial evidence 
that Respondent's pending application for a DEA COR as a practitioner 
in Schedules II through V should be denied because such registration 
would be inconsistent with the public interest as that term is used in 
21 U.S.C. 823(f) and because Respondent has been excluded or directed 
to be excluded from participation in a health care program pursuant to 
21 U.S.C. 824(a)(5).

Evidence and Incorporated Findings of Fact

    I find, by a preponderance of the evidence, the following facts:

I. Background

Respondent's State Medical License
    On June 4, 2008, the Virginia Department of Health Professions 
ordered Respondent's medical license

[[Page 66976]]

suspended due to Respondent's felony conviction for health care fraud 
before the United States District Court for the Western District of 
Virginia. (Gov't Ex. 5.)
    On October 29, 2008, after a formal administrative hearing, the 
Virginia Board of Medicine (``Board'') issued an Order denying 
reinstatement of Respondent's medical license, which remained on 
indefinite suspension. The Order precluded Respondent from petitioning 
the Board for reinstatement until Respondent presented satisfactory 
written evidence that she had successfully completed a Board-approved 
comprehensive physician competency evaluation. (Gov't Ex. 7.)
    On January 8, 2009, Respondent petitioned the Board for 
reinstatement, after completing the required comprehensive physician 
competency evaluation. (Resp't Ex. 17.) On February 12, 2009, the 
Virginia Department of Health Professions notified Respondent of the 
decision to reinstate Respondent's medical license to full and 
unrestricted status with all attendant rights and privileges. (Resp't 
Ex. 18.)
Respondent Linda Sue Cheek, M.D.
    Respondent graduated from the University of Texas Health and 
Science Center at San Antonio, earning a Doctor of Medicine degree on 
May 23, 1992. (Resp't Ex. 1.) Respondent completed her first year of 
family practice training at the University of Texas Health Science 
Center at San Antonio and successfully completed her last two years of 
training at Roanoke Memorial Hospital in Roanoke, Virginia in June 
1995. The Virginia Department of Health Professions, Board of Medicine, 
issued Respondent a license to practice medicine and surgery on July 1, 
1993. Respondent has since maintained a family practice to include a 
specialty in pain management and alternative medicine. Since 1998, 
Respondent has completed a number of medical training activities to 
include: Traditional Chinese Medicine, acupuncture, herbal medicine, Qi 
Gong, Clinical Issues in Primary Care, evidence-based wellness, 
clinical hypnosis, The Psychology of Health, Immunity and Disease, 
numerous pain management courses, addiction and drug diversion courses 
and homeopathic courses, among others. (Resp't Exs. 7-16.)
    Respondent held DEA COR BC4510865 as of July 18, 1995, as a 
practitioner in controlled substances in Schedules II through V, at the 
registered address 28 Town Center Drive, Dublin, Virginia, which was 
last renewed on August 24, 2007. This COR had an expiration date of 
August 31, 2010. In a letter dated November 14, 2008, Respondent 
voluntarily surrendered her COR after a formal administrative hearing 
and denial of reinstatement of Respondent's medical license by the 
Virginia Board of Medicine on October 29, 2008. (See Gov't Ex. 8; Tr. 
73-76.) On February 16, 2009, Respondent applied for a new registration 
with DEA as a practitioner in Schedules II through V, 28 Town Center 
Drive, Dublin, Virginia 24084. (Gov't Ex. 1.)

II. Investigation of Respondent

    In support of the allegations contained in the OSC, the Government 
presented at hearing the testimony of three witnesses: Special Agent 
Jeffrey Overbeck, U.S. Department of Health and Human Services, Office 
of Inspector General (``SA Overbeck''), Diversion Investigator Steven 
Tomaziefski, U.S. Drug Enforcement Administration (``DI Tomaziefski''), 
and Special Agent Robert Slease, U.S. Department of Health and Human 
Services, Office of Inspector General (``SA Slease'').
    SA Overbeck testified in substance that he has been a special agent 
for approximately nine years and has approximately twenty-one years of 
law enforcement experience. In his current position, SA Overbeck 
specializes in investigating Medicare and Medicaid fraud. SA Overbeck 
testified that his office began an investigation of Respondent on 
September 20, 2005, based on information provided by law enforcement 
agencies regarding concerns with Respondent's prescribing of narcotics 
and the use of ``cleansing sessions'' at Respondent's practice. (Tr. 
31-32.) SA Overbeck further testified that the investigation revealed 
the cleansing sessions consisted of a group of patients that were 
required to either watch a movie or listen to a family nurse 
practitioner talk, before the patients could obtain prescriptions. If 
patients required additional medication they would have to repeat the 
cleansing sessions, which cost patients ``up to an additional hundred 
dollars a month, because they were required to buy supplements, and 
herbal supplements * * *'' before they could obtain prescription 
medications. (Tr. 42.) Respondent then billed the cleansing sessions as 
individual office visits, even though Respondent knew from a prior 
audit that Medicaid, Medicare and Anthem \12\ would not pay for 
cleansing sessions.
---------------------------------------------------------------------------

    \12\ Anthem is a health insurance provider. (See Tr. 474.)
---------------------------------------------------------------------------

    SA Overbeck also testified that investigative findings revealed 
that Respondent's practice, New River Medical Associates, Inc., in 
Dublin, Virginia focused on pain management and alternative medicine. 
Respondent also employed two family nurse practitioners. Respondent and 
the two nurse practitioners each had Medicare, Medicaid and Anthem 
provider numbers, which could be billed for the services that each 
provided. On a number of occasions, Respondent submitted a bill for 
services under Respondent's provider number when Respondent was not 
actually present, contrary to the rules and regulations for ``incident 
to'' billing. (Tr. at 33-39.) SA Overbeck's testimony was fully 
credible. His testimony was internally consistent and the witness was 
able to recall factual events with a reasonable level of certainty.
    Documentary evidence included Respondent's December 9, 2007, signed 
agreement to plead guilty to a one-count information charging health 
care fraud in violation of 18 U.S.C. 1347. (Gov't Ex. 3.) On May 27, 
2008, the United States District Court for the Western District of 
Virginia entered a judgment pursuant to a plea of guilty by Respondent 
to one count of health care fraud, 18 U.S.C. 1347, for offense conduct 
ending in March 2006. Respondent was sentenced to ``probation for a 
term of: Four (4) years,'' with conditions of supervision, a $100.00 
assessment, $1,000.00 fine and restitution in the amount of $24,210.37. 
(Gov't Ex. 4.)
    A September 30, 2008 letter from the U.S. Department of Health and 
Human Services, Office of Inspector General, notified Respondent she 
was ``excluded from participation in any capacity in the Medicare, 
Medicaid, and all Federal health care programs as defined in section 
1128B(f) of the Social Security Act (Act) for the minimum statutory 
period of 5 years.'' The exclusion action was effective twenty days 
from the date of the letter. (Gov't Ex. 6.)
    DI Tomaziefski testified in substance that he has been a diversion 
investigator with DEA for approximately five years, and following 
initial training was assigned to Roanoke, Virginia. DI Tomaziefski's 
experience includes participation as a lead investigator in 
approximately thirty regulatory investigations, and his duties also 
include reviewing pending applications for DEA registration. DI 
Tomaziefski testified to becoming aware of Respondent in August of 
2008, and learning that Respondent had previously pled guilty and had 
her medical license suspended. (Tr. 68-70.) In September 2008 he 
contacted Respondent regarding her DEA registration but decided not to 
take any action regarding surrender of her DEA

[[Page 66977]]

registration because of a pending petition by Respondent for 
reinstatement of her medical license. DI Tomaziefski further testified 
to contacting Respondent in November 2008 following the indefinite 
suspension of Respondent's medical license by the Commonwealth of 
Virginia, and discussing the surrender of her controlled substances 
privileges. In a letter to DI Tomaziefski dated November 14, 2008, 
Respondent relinquished her DEA COR. (Gov't Ex. 8; see Tr. 75.)
    DI Tomaziefski further testified that in April 2009 he received 
information from the Virginia Department of Health Professions 
pertaining to two prescriptions that were written and signed by 
Respondent using her surrendered DEA number. (Tr. 79-80.) One 
prescription, for ``Lyrica 75 mg capsule 60 (sixty)'' with two 
refills, dated March 20, 2009, was not filled by a pharmacy. (Tr. 81; 
Gov't Ex. 9.) The second prescription, for ``Ambien 10 mg tablet 
30 (thirty)'' with five refills, dated February 23, 2009, was 
filled by a pharmacy in Wytheville, Virginia. (Tr. 82-83; Gov't Ex. 
13.) DI Tomaziefski further testified that he next began looking at 
different pharmacies for prescriptions that Respondent may have 
written. On May 19, 2009, DI Tomaziefski received by facsimile a three-
page letter from Respondent (see Gov't Ex. 18) stating that she was 
aware that DEA ``is scouring the area for infractions of scripts for 
controlled drugs written by me * * *'' (Gov't Ex. 18 at 1.) She 
admitted that on the first day she got her medical license back, she 
conducted ``business as I always have, and signed all the scripts for 
the patients * * *'' but realized halfway through the morning that she 
did not have a DEA COR. (Id.) Respondent also stated ``I am willing to 
go to jail for providing the people of Southwest Virginia with relief 
from their suffering.'' (Id. at 2.) Respondent also advised in the 
letter that she had hired a Dr. Schultz locum tenens to see patients 
that needed her, explaining that

    Dr. Schultz saw the patients on her own from September, 2008 to 
February, 2009. When I got my license in February 2009, I asked her 
to continue assisting me with the scheduled medications, since I did 
not have my DEA certificate. She had experience with working with 
nurse practitioners, so she had no problem supervising me in the 
same manner. She also established her own practice in my building, 
so that those patients with Medicare, Medicaid, and any other 
insurance that I did not associate with, could have a primary care 
physician to write orders for them. Every patient that pertains to 
has seen her personally. She has personally seen every patient that 
receives Schedule II meds. She has approved the medications that 
they are receiving. Then they continue to see me and she signs their 
scripts. She has also given me instructions to call scripts in for 
patients that are schedule III-V. She reviews my notes and signs 
them. For her supervisory duties, New River Medical Associates pays 
her $100 per week. We are handling things as if I am a physician 
extender and she is the supervisory physician * * *
    (Id. at 3.)

    DI Tomaziefski also testified that the dates of the prescriptions 
written by Respondent that he had obtained and seized as evidence did 
not match the date that Respondent had her medical license reinstated. 
DI Tomaziefski testified that on May 28, 2009, he sent a confidential 
source (``CS'') into New River Medical Associates to meet with 
Respondent as a patient. As a result of that visit, Respondent's office 
assistant, [AY],\13\ called in a prescription for hydrocodone in the 
name of the CS to Dublin Pharmacy, Dublin, Virginia. (Tr. 99-100.) The 
record evidence contains a Dublin Pharmacy record with a handwritten 
notation including the names ``[AY]'' and ``Schultz,'' and the typed 
name of the CS, address, cost and quantity of the drug prescribed, 
along with the name ``Dr. Linda Cheek.'' DI Tomaziefski further 
testified that the CS wore a ``wire'' during the visit, which DI 
Tomaziefski listened to and learned that Dr. Schultz did not see the 
CS, even though the prescription was called in under Dr. Schultz's DEA 
number. (Tr. 101, 105; Gov't Ex. 14.)
---------------------------------------------------------------------------

    \13\ As noted below, Respondent's employee [AY] is also a 
patient of Respondent. To protect patient privacy, only initials are 
used in this Recommended Decision when referring to Respondent's 
patients.
---------------------------------------------------------------------------

    DI Tomaziefski further testified that on June 2, 2009, he 
participated with the CS in a controlled purchase of the above 
prescribed hydrocodone from Dublin Pharmacy, and the purchased 
prescription drug was seized as evidence by DEA. On June 4, 2009, DI 
Tomaziefski and the CS returned for another controlled visit to 
Respondent. Respondent and Dr. Schultz confronted the CS with 
urinalysis results which revealed the presence of buprenorphine, not 
otherwise prescribed or disclosed by the CS to DEA. As a result, DEA 
terminated the undercover operation.
    DI Tomaziefski next testified to obtaining additional copies of 
prescriptions issued under Respondent's name and using Respondent's 
surrendered DEA registration number. (Tr. 109.) On June 26, 2009, a 
prescription dated May 14, 2009, for ``Ambien 10 mg tablet 30 
(thirty)'' with five refills was obtained from Martin's Pharmacy, in 
Pulaski, Virginia. DI Tomaziefski concluded the prescription had not 
been filled because it did not contain a pharmacy tag on the 
prescription. (Tr. 110; see Gov't Ex. 11.) On April 6, 2010, DI 
Tomaziefski obtained from Martin's Pharmacy a prescription dated 
February 23, 2009, for ``Lortab 7.5-500 mg tablet 120 (one 
hundred-twenty)'' with two refills and signed with Respondent's name, 
which was crossed out, and the name ``K Schultz'' inserted. DI 
Tomaziefski testified this prescription had been filled, as evinced by 
the presence of pharmacy tags on the record copies. (Tr. 111; see Gov't 
Ex. 12.) DI Tomaziefski further testified that he asked the pharmacist 
why Dr. Schultz's name was written on the prescription and was told 
that when the prescription was brought into the pharmacy he called New 
River and was told by ``someone at New River'' that Dr. Schultz had 
authorized the prescription. The pharmacist crossed out Respondent's 
name and wrote in Dr. Schultz's name. (Tr. 112.)
    DI Tomaziefski next testified that on June 17, 2009, he spoke with 
Dr. Schultz by telephone and Dr. Schultz said she was not affiliated 
with New River Medical Associates but was just helping out until 
Respondent got her medical license back. Dr. Schultz also stated that 
she did not allow Respondent to call in prescriptions for any 
authorized refills under Dr. Schultz's DEA number. (Tr. 115.) The 
record evidence also reflects that Dr. Schultz only worked at New River 
Medical Associates on Thursdays. (Tr. 117-18.)
    The record evidence includes twenty-two prescription records 
obtained by DI Tomaziefski from Dublin Pharmacy, in Dublin, Virginia, 
covering the period from March to April 2009, all reflecting ``called-
in'' prescriptions by Respondent or [AY] using Dr. Schultz's DEA 
number. (Tr. 119; Gov't Ex. 15.) DI Tomaziefski testified that the 
dates on the prescriptions were significant because most of the 
prescriptions were called in on dates other than Thursdays. (Tr. 118.)
    The record evidence also includes ten prescription records obtained 
by DI Tomaziefski from Martin's Pharmacy in Dublin, Virginia, covering 
the period from May to June 2009, all reflecting ``called-in'' 
prescriptions using Dr. Schultz's DEA number. All but one contained a 
handwritten notation of either Respondent or [AY]. (Gov't Ex. 16.) DI 
Tomaziefski testified that he knows these prescriptions are ``call-
ins'' because an original prescription would have the identifying 
prescriber information, including DEA number, and signature of the 
provider. (Tr. 564.)

[[Page 66978]]

    The record evidence further reflects seven prescription records 
obtained by DI Tomaziefski from a Rite Aid pharmacy covering the period 
May to June 2009, with all but one record reflecting ``called-in'' 
prescriptions using Dr. Schultz's DEA number. The prescription dated 
June 29, 2009, is a ``non-called in'' prescription bearing a signature 
consistent with K. Schultz and written on a prescription form in the 
name of Kathleen Schultz, D.O., 28 Town Center Drive, Dublin, VA. (Tr. 
126-27; see Gov't Ex. 17 at 7.)
    DI Tomaziefski further testified that on June 23, 2009, he traveled 
to Dr. Schultz's house with a Virginia State Police investigator for 
the purpose of serving a subpoena and to clarify information contained 
on Schedule II prescriptions that had been obtained during the DEA 
investigation. DI Tomaziefski explained that upon identifying 
themselves to Dr. Schultz, Dr. Schultz spontaneously stated that ``she 
didn't authorize anybody to use her DEA number.'' Dr. Schultz further 
stated that she was somewhat retired and worked one day a week at a 
clinic ``and that on Thursdays, most Thursdays'' would be at New River 
Medical Associates and wrote Schedule II prescriptions for patients. 
(Tr. 132.)
    DI Tomaziefski further testified that on June 25, 2009, he received 
a telephone call from Respondent regarding the status of her 
application for a DEA COR. During the call, Respondent put Dr. Schultz 
on the line together with Respondent. Respondent and Dr. Schultz 
informed DI Tomaziefski that they had a verbal agreement wherein 
Respondent could call in prescriptions under Dr. Schultz's DEA number. 
(Tr. 134.)
    On cross examination, DI Tomaziefski testified that the normal time 
to render a decision on an application for a DEA COR is approximately 
four to six weeks, but DEA is not obligated to adhere to that time 
period and the time period is longer when there are issues with the 
applicant. (Tr. 142-43.)
    DI Tomaziefski's testimony was fully credible. The witness 
testified consistently with regard to facts, and his testimony as a 
whole reflected a recollection of factual events with a reasonable 
level of certainty.

III. Respondent's Evidence

    Respondent testified at hearing and also presented testimony from 
former patients [AZ], [DS] and [ET]. [ET] testified by telephone, with 
consent of the parties, because [ET] was incarcerated at the time of 
hearing. Additionally, Respondent presented testimony from an employee 
and patient, [AY].
    [AZ] testified in substance that [AZ] is a resident of Elliston, 
Virginia and had been a patient of Respondent for approximately three 
years before Respondent lost her medical license. [AZ] testified to 
being able to maintain a quality of life and function with pain 
medications, and believed that [AZ] ``wouldn't be here today if it 
wasn't for Dr. Cheek helping'' with [AZ]'s pain. (Tr. 178.) [AZ] 
further testified that after Respondent lost her medical license it was 
a very difficult time and a constant worry as to how [AZ] would obtain 
medication. (Tr. 181.) In 2008 [AZ] contacted Respondent's office and 
learned that Dr. Schultz was available. [AZ] returned to the office as 
a patient, at first seeing Dr. Schultz. [AZ] further testified that 
Respondent is not an easy doctor to get medications from, has rules to 
follow, and expects patients to maintain a healthy diet. [AZ] explained 
that [AZ] participated in ``cleansing groups'' and last participated 
several years prior to the hearing. (Tr. 187-88.)
    On cross examination, [AZ] testified that it is approximately a 
twenty minute drive from [AZ]'s home to Respondent's office, and there 
are no other pain management physicians in the area. [AZ] had been 
referred to Respondent by another physician who had prescribed the same 
pain medication that [AZ] has taken for approximately fifteen years, 
including from Respondent. [AZ] explained that at no time did 
Respondent double up on [AZ]'s pain medication but was not sure if 
Respondent may have written extra prescriptions during May or June 
2008. [AZ] explained that after returning to Respondent's practice in 
October 2008, [AZ] saw Dr. Schultz approximately once every three 
months, obtaining three months' worth of prescriptions per visit, 
because it was more cost- and environmentally effective than monthly 
visits.\14\ (Tr. 214.) [AZ] stated that Dr. Schultz is [AZ]'s physician 
but [AZ] also sees Respondent. The last time Dr. Schultz had given [AZ] 
a physical examination was nine months to a year ago. [AZ] further 
testified that [AZ] did not make Dr. Schultz [AZ]'s full time physician 
because ``she has been practicing since back in the `50s, so I know 
she--but she is also kind of getting up there in age * * * but you 
know, she is 75 years old, or so. Well I'm not sure about her exact age 
is.'' (Tr. 220.) I find [AZ]'s testimony credible to the extent that it 
was internally consistent and the witness was able to recall factual 
events with a reasonable level of certainty.
---------------------------------------------------------------------------

    \14\ [AZ] testified that [AZ] gets three months' worth of 
prescriptions, paying $110.00, ``which comes out to be cheaper than 
if I would have went monthly, and it is the green thing to do, 
because I'm not running up and down the road burning gas to get back 
and forth to the office.'' (Tr. 214.)
---------------------------------------------------------------------------

    Patient [DS] testified in substance to being a patient of 
Respondent since September 10, 2009, having previously been treated at 
a VA hospital. [DS] stated that [DS] left the VA hospital after it 
stopped managing [DS]'s pain for no reason. After discharge from the VA 
hospital and prior to treating with Respondent [DS] stated that [DS] 
was ninety percent disabled, suffering from withdrawal, and did not 
believe [DS] would live another two weeks without treatment. (Tr. 237.) 
After discharge from the VA hospital [DS] had difficulty finding a 
physician that would take [DS] given [DS]'s financial means. [DS] 
further testified that after treating with Respondent and Dr. Schultz, 
[DS]'s life improved ninety percent or more and [DS] was able to 
continue attending college. [DS] explained that Respondent is not an 
easy doctor and only gives pain medicine to someone actually in pain.
    On cross examination [DS] indicated that [DS] lives approximately 
twenty-two miles from Respondent's office. While at the VA hospital 
[DS] was prescribed methadone and Percocet together, along with 
Neurontin. [DS] explained that [DS]'s frequency of visits to 
Respondent's office is once every three months, with the last visit 
being August 26, 2010. [DS] saw Dr. Schultz in September 2009, which 
[DS] described as a sit-down discussion. [DS] explained that [DS] 
believed Respondent was [DS]'s primary care physician. Respondent 
performed the first physical examination on [DS]'s first visit. (Tr. 
254.) I find [DS]'s testimony credible in that it was generally 
consistent and the witness was able to recall factual events with a 
reasonable level of certainty.
    [AY] testified in substance that [AY] is a certified nursing 
assistant and receptionist, hired by Respondent on February 5, 2002, 
initially working as a receptionist. [AY] testified that [AY] currently 
works as a receptionist and also assists patients. [AY] further 
testified to being laid off from work in October 2008 and returning to 
employment with Respondent in February 2009. [AY] stated that Dr. 
Schultz told [AY] that [AY] could call in prescriptions for the 
patients based on recommendations of Respondent. [AY] explained that in 
May 2009 Dr. Schultz put in writing that [AY] was authorized to call in 
controlled substances under Dr. Schultz's name. (Tr. 261-62.) [AY] 
further testified that

[[Page 66979]]

from May 2008 to October 2008 many patients called stating they were 
having a hard time finding physicians to care for them.
    On cross examination and redirect examination [AY] further 
explained that [AY] has called in prescriptions as part of [AY]'s job 
and on a date uncertain Dr. Shultz gave [AY] verbal permission to call 
in prescriptions, later reduced to writing in June 2009. (Tr. 272-73.) 
[AY] further testified that [AY] is prescribed controlled substances by 
New River Medical Associates, is paid eleven dollars per hour, and the 
cost of [AY]'s visits is offset as part of [AY]'s employment, in that 
[AY] does not pay for office visits. (Tr. 277-78, 285-86.) [AY]'s 
Schedule II medications are prescribed by Dr. Schultz but Dr. Schultz 
has not performed a physical examination of [AY], only a patient 
history. (Tr. 278.) [AY] stated that she has only seen Dr. Schultz as a 
patient ``one time'' within the past year, but did not recall the date. 
(Tr. 279.) Dr. Schultz only comes into the office one day a week, on 
Thursdays. [AY] explained that all of the patients at New River Medical 
Associates are pain patients and all or most pay cash, which includes 
credit card payments and money orders, ranging from $55.00 to $110.00. 
[AY] stated that a patient paying $110.00 ``would get their examination 
of three month's worth of medication.'' (Tr. 284.) [AY] provided 
contradictory testimony with regard to insurance and Medicare patients, 
first testifying on cross examination that ``about ten percent'' are 
insurance patients but on redirect examination that the office does 
``not accept insurance.''
    [AY]'s testimony at times was not internally consistent and [AY]'s 
testimony is evaluated in light of [AY]'s employment status with 
Respondent at the time of hearing. Additionally, [AY] is a patient of 
Respondent, receiving services at reduced cost. [AY]'s testimony with 
regard to Dr. Schultz's presence at the office only on Thursdays is 
consistent with other objective record evidence and credible. [AY]'s 
testimony with regard to ``call-in'' prescription authority from Dr. 
Schultz largely mirrors that of Respondent and, as more fully explained 
below, I do not find that testimony entirely credible.
    Patient [ET] testified in substance that [ET] was a patient of 
Respondent before Respondent lost her medical license in 2008. [ET] 
began seeing Respondent again in February 2009. [ET] testified that 
while Respondent was without a medical license [ET] received treatment 
at a health center in Pulaski, Virginia for depression, and also 
received heart medication and ibuprofen for pain. Upon returning to 
Respondent for treatment in February 2009, [ET] testified to receiving 
prescriptions from Respondent, but later learned from Respondent's 
office that [ET] had to return the prescription because it needed to be 
issued by a Dr. Schultz. [ET] further testified that Respondent was a 
good doctor. (Tr. 296-346.) On cross-examination [ET] testified that 
[ET] did not think that [ET] ever received a physical examination by 
Dr. Schultz. [ET] further testified that as of the date of hearing [ET] 
was taking only ibuprofen for pain. (Tr. 350-51.) I find [ET]'s 
testimony credible in that it was internally consistent and the witness 
was able to recall factual events with a reasonable level of certainty.
    Respondent testified in substance that she is a resident of Dublin, 
Virginia, and began her family practice rotation at the University 
Health Science Center before transferring to Roanoke Memorial Hospital 
Family Practice Residency. (Tr. 359-60.) Respondent applied for a DEA 
COR while in residency but did not really use it until becoming a 
practicing physician in 1995. Respondent stated that she chose family 
practice in part because of the variety of the work and wanted to work 
in a rural area where good doctors were needed. Respondent explained 
that after beginning practice on her own she began studying alternative 
medicine and saw her first pain patient in the late 1990s. (Tr. 362.) 
Respondent further testified that she was not taught pain management in 
residency. Respondent began self-study in alternative medicine in 2000, 
attending numerous training courses and lectures on a variety of 
subjects. (Resp't Exs. 7-16.) Respondent further testified that she has 
become noted well enough as a pain management expert that she has been 
invited twice by two different drug companies to attend review sessions 
on how the drug companies could present drugs to the Food and Drug 
Administration (FDA), and how to market them. (Tr. 375.)
    Respondent also testified to developing a multidisciplinary 
facility called New River Medical Associates, in Dublin, Virginia, 
which was designed to help fix problems and help people heal. (Tr. 377-
78.) Respondent testified that she developed ``cleansing sessions'' 
which consisted of thirty minutes of exercise or counseling, with 
remarkable results. (Tr. 378-79.) Respondent explained that she decided 
to ``simply bill the simplest ENM code * * * because if you bill too 
simple, the insurance company can say, `This was worth more than that,' 
and they can get you for fraud either way. Laws are basically built to 
cause doctors to be charged with fraud * * *.'' (Tr. 379-80.) 
Respondent further testified to ending the cleansing sessions in 
October 2005, after a conversation with an insurance investigator, who 
told Respondent the sessions were not billable. Respondent stated that 
as a result of the cleansing sessions taxpayers saved hundreds of 
thousands or even millions of dollars through improved patient health, 
concluding: ``If this is fraud, maybe we need more of it.'' (Tr. 382.)
    Respondent testified that she signed a plea agreement and pled 
guilty due to six billing incidents when she was out of the country, 
stating that the most she was paid extra because of the billings was 
eleven dollars per hour or a total loss of $66.00. (Tr. 384-85.) 
Respondent further explained that following her guilty plea in 2008, 
she lost her medical license and ``[n]inety-nine percent of my patients 
were unable to find another physician to take care of them, even though 
I tried to communicate to my colleagues that these people needed a 
physician * * *.'' (Tr. 388.)
    Respondent further testified that her medical license was 
reinstated on February 13, 2008, and she thereafter resumed seeing 
patients. Respondent testified that she was aware the Government had 
sent individuals to her practice, identified herein as confidential 
sources. In August 2005 Respondent declined to provide treatment to a 
confidential source after discovering that the individual's medical 
history was false. More recently, she instructed another confidential 
source to complete a detoxification program after a drug screen 
revealed multiple positive results. Respondent described having strict 
rules and procedures, including drug screens. (Tr. 391-93.)
    Respondent next testified to hiring Dr. Kathy Schultz locum tenans 
to work with patients on her own from the ``fall of `08 to February 
23rd of '09.'' (Tr. 407.) Respondent testified that Respondent acted in 
the manner of a family nurse practitioner during this time, to continue 
the plan established by Dr. Schultz, who ``simply established a 
continuation of my plan from the previous year.'' (Tr. 412.) Respondent 
testified to an agreement with Dr. Schultz that Dr. Schultz would see 
all patients receiving Schedule II drugs and Dr. Schultz did not need 
to see patients receiving Schedule III to V drugs. On or about June 25, 
2009, Respondent had a conversation with Dr. Schultz, who told 
Respondent that she had a conversation with DEA and told DEA that she 
had not given anyone permission to use her DEA

[[Page 66980]]

number. Respondent testified she informed Dr. Schultz that ``you allow 
us to call in prescriptions for our patients * * *'' and Dr. Schultz 
replied that she ``didn't realize that.'' (Tr. 422.) Respondent then 
asked Dr. Schultz to call DI Tomaziefski to rectify the situation.
    Respondent also testified that on June 25, 2009, a written document 
was created reflecting a February 23, 2009 verbal agreement, along with 
a June 25, 2009 addendum further describing the arrangement between 
Respondent, Respondent's staff and Dr. Schultz. (Resp't Ex. 41; Tr. 
424.) Respondent also introduced a letter dated July 20, 2009, from 
Kathleen Schultz authorizing [AY] to call in Schedule III to V 
medications. (Resp't Ex. 36.)
    Respondent further testified that since June 2010 a webcam service 
was added to allow Dr. Schultz to connect with Respondent's office and 
has offered Dr. Schultz a service to review computer information or 
patient records, but this service has not been set