Margy Temponeras, M.D.; Decision and Order, 45675-45688 [2012-18749]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 77, Number 148 (Wednesday, August 1, 2012)]
[Notices]
[Pages 45675-45688]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18749]


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

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 11-57]


Margy Temponeras, M.D.; Decision and Order

    On December 15, 2011, Administrative Law Judge (ALJ) Timothy D. 
Wing issued the attached recommended decision. Neither party filed 
exceptions to the decision.
    Having considered the entire record, I have decided to adopt the 
ALJ's recommended rulings, factual findings, and his legal conclusions, 
except as discussed below.\1\ I further hold that the record 
establishes that Respondent engaged in acts which are sufficiently 
egregious to warrant the revocation of her registration and that she 
has not rebutted this conclusion.\2\
---------------------------------------------------------------------------

    \1\ All citations to the ALJ's recommend decision are to the 
slip opinion.
    \2\ In discussing the public interest factors of 21 U.S.C. 
823(f), the ALJ ``conclude[d] that the reference in 21 U.S.C. 
823(f)(5) to `other conduct which may threaten public health and 
safety' would as a matter of statutory interpretation logically 
encompasses the factors listed in Section 824(a).'' ALJ at 19 n.24 
(citing Kuen H. Chen, M.D., 58 FR 65401, 65402 (1993)).
     To be sure, the Agency decision in Chen stated that ``[t]he 
administrative law judge has concluded here that the reference in 21 
U.S.C. 823(f)(5) to `other conduct which may threaten the public 
health and safety' would as a matter of statutory interpretation 
logically encompass the bases listed in 21 U.S.C. 824(a).'' 58 FR at 
65402. However, whether this constitutes a holding or merely dictum, 
Chen is totally devoid of any indication that the traditional tools 
of statutory construction (i.e, text, structure, statutory purpose, 
and legislative history) were employed in reaching this conclusion. 
Indeed, while factor five focuses on ``other conduct,'' several of 
the grounds for revocation are based on a registrant's status and do 
not require inquiry into the nature of the underlying conduct. See 
21 U.S.C. 824(a)(3) (authorizing revocation where registrant ``has 
had his State license or registration suspended, revoked, or denied 
by competent State authority and is no longer authorized'' to engage 
in controlled substance activities or such sanction has been 
recommended by competent state authority); id. Sec.  824(a)(5) 
(authorizing revocation where registrant has been excluded or is 
subject to exclusion from participating in federal healthcare 
programs under mandatory exclusion provisions). In addition, 
construing factor five in this manner renders superfluous factor 
one, which authorizes the Agency to consider the recommendation of 
the state licensing board or disciplinary authority, as well as the 
provision of section 823(f) stating that the ``[t]he Attorney 
General shall register practitioners * * * if the applicant is 
authorized to dispense * * * controlled substances under the laws of 
the State in which he practices.''
    Finally, it should be noted that since shortly after the CSA's 
enactment and years before section 823(f) was amended to include the 
public interest factors, DEA ``has consistently held that where a 
registration can be revoked under section 824, it can, a fortiori, 
be denied under section 823 since the law would not require an 
agency to indulge in the useless act of granting a license on one 
day only to withdraw it on the next.'' Serling Drug Co. v. Detroit 
Prescription Wholesaler, Inc., 40 FR 11918, 11919 (1975). See also 
John R. Amato, 40 FR 22852 (1975) (Denying application where 
practitioner's state license had been revoked, holding that section 
823(f) ``must logically give the Administrator the authority to deny 
a registration if the practitioner is not authorized by the State to 
dispense controlled substances. * * * To hold otherwise would mean 
that all applications would have to be granted only to be revoked 
the next day under 21 U.S.C. 824(a)(3). This [A]gency has 
consistently held that where a registration can be revoked under 
section 824, it can, a fortiori, be denied under section 823.'').
    Indeed, no court has ever questioned the Agency's longstanding 
and consistent interpretation that it has authority to deny an 
application on any of the grounds set forth in section 824(a). Cf. 
National Muffler Dealers Assn., Inc., v. United States, 440 U.S. 
472,477 (2011) (``A regulation may have particular force if it is a 
substantially contemporaneous construction of the statute by those 
presumed to have been aware of congressional intent.''); EEOC v. 
Associated Dry Goods Corp., 449 U.S. 590, 600 n.17 (1981) (``a 
contemporaneous construction deserves special deference when it has 
remained consistent over a long period of time'').

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

[[Page 45676]]

The ALJ's Footnote 9

    Among the allegations raised by the Government were: (1) That 
Respondent had failed to include required information on various 
prescriptions (such as a patient's address) in violation of 21 CFR 
1306.05(a); (2) that she failed to take initial and biennial 
inventories of the controlled substances she obtained and dispensed, in 
violation of 21 CFR 1304.11(b) & (c); and (3) that she failed to 
properly complete various order forms for schedule II controlled 
substances (DEA Form 222), in violation of 21 CFR 1305.13(e). ALJ Ex. 
1, at 3 (Order to Show Cause). According to the record, the 
prescriptions were seized pursuant to a search warrant executed at a 
local pharmacy. Tr. 53-55. As for the inventories and DEA 222s, these 
were apparently seized during the execution of a search warrant at 
Respondent's registered location.
    At the hearing, Respondent's counsel requested that the Government 
turn over the prescriptions, see Tr. 124-25; some fifty DEA Form 222s, 
see id. at 80-81, 353-54; and the daily inventories done by the 
employees of Respondent's dispensary. Id. at 423. The Government 
objected to each of these requests on the ground that there is no right 
to discovery in these proceedings. See id. at 80, 128, 423. The ALJ 
denied each of these requests, explaining in his opinion that the 
requests were ``untimely and unsupported by applicable legal 
authority.'' ALJ at 6 n.9 (citing Roy E. Berkowitz, 74 FR 36,578, 
36,760 (2009) (holding that there is no ``general right to discovery 
under either the APA or DEA regulations'') (citing Nicholas A. Sychak, 
d/b/a Medicap Pharmacy, 65 FR 75,959. 75,961 (2000))).
    While I adopt the ALJ's rulings, I do so only because the requests 
were untimely. In his Supplemental Pre-Hearing Ruling, which was issued 
on August 5, 2011, the ALJ made clear that ``[a]ny requests for 
subpoenas by either party are to be filed no later than 4:00 p.m. EDT 
on August 26, 2011.'' ALJ Ex. 8, at 7. Respondent did not comply with 
the ALJ's order and instead waited until the hearing to request the 
documents. Respondent, however, had notice of the Government's intent 
to litigate these issues from the outset of the proceeding; thus, she 
cannot claim that she was unaware until the hearing that she would need 
the various documents to respond to the allegations.\3\ Because 
Respondent failed to timely request the documents, the ALJ properly 
denied those requests.\4\
---------------------------------------------------------------------------

    \3\ Moreover, having reviewed the record, it contains 
substantial evidence (as the ALJ found) to support each of these 
allegations.
    \4\ That there is no general right to discovery in these 
proceedings would not have barred a timely request for these 
documents. Respondent did not seek broad-based discovery of whatever 
the Government had obtained in the course of its investigation, but 
rather, specific documents which were clearly relevant and material 
to these three allegations because they are the very basis for the 
three allegations. Thus, if the requests had been timely, this case 
would have been governed by the principle that ``[d]iscovery must be 
granted if in the particular situation a refusal to do so would so 
prejudice a party as to deny him due process.'' McClellan v. Andrus, 
606 F.2d 1278, 1286 (DC Cir. 1979) (noting that report was subject 
to discovery in administrative proceeding because it was potentially 
``uniquely relevant to appellant's case'' and ordering agency to 
turn over report to administrative tribunal for in camera review to 
determine relevancy and to allow Government to assert any claim of 
privilege). See also Echostar Communications Corp. v. FCC, 292 F.3d 
749, 756 (DC Cir. 2002) (noting that ``McClelland was seeking a 
specific document `uniquely relevant to [his] case' ''). See also 5 
U.S.C. 555(d) (``Agency subpoenas authorized by law shall be issued 
to a party on request and, when required by rules of procedure, on a 
statement or showing of general relevance and reasonable scope of 
the evidence sought.''). See also 21 U.S.C. 875 & 876.
    As the Agency has previous noted, under Goldberg v. Kelly, 397 
U.S. 254, 270 (1970), `` `where governmental action seriously 
injures an individual, and the reasonableness of the action depend 
on fact findings, the evidence used to prove the Government's case 
must be disclosed to the individual so that he has an opportunity to 
show that it is untrue.' '' Beau Boshers, M.D., 76 FR 19401, 19403 
(2011) (quoting 397 U.S. at 270). Moreover, the Supreme Court has 
further explained that `` `the Due Process Clause forbids an agency 
to use evidence in a way that forecloses an opportunity to offer a 
contrary presentation.' '' Id. (quoting Bowman Transp., Inc., v. 
Arkansas-Best Freight System, Inc., 419 U.S. 281, 288 n.4 (1974)). 
Where the Government alleges that one has failed to properly 
maintain or complete required records, it cannot seize those records 
and then refuse to turn them over in response to a timely request 
for them.
---------------------------------------------------------------------------

The ALJ's Legal Conclusions Regarding Respondent's Operation of a 
Dispensary

    The gravamen of the Government's case was Respondent's operation of 
a dispensary, which in the Government's view was illegal because 
Respondent dispensed thousands of controlled substance prescriptions 
which were issued by her father, who was not registered at the location 
of Respondent's practice, and Respondent does not hold a pharmacy 
registration under the Controlled Substances Act. See ALJ Ex. 1, at 1. 
The evidence showed that beginning in either November or December 2008, 
Respondent began dispensing controlled substances at her practice 
location and that during the period in which it operated, the 
dispensary filled 3,397 prescriptions for controlled substances issued 
by her father, most of which were for oxycodone, a schedule II 
narcotic, and Xanax, a schedule IV benzodiazepine. Tr. 210-11. In 
addition, the evidence showed that the prescriptions were filled and 
delivered to the patients by employees who were not licensed as 
pharmacists.
    The ALJ concluded that Respondent violated Ohio law because she was 
not licensed as a Terminal Distributor of Dangerous Drugs and did not 
fall within the exemption provided under state law for ``a business 
practice with a sole shareholder who is a licensed health 
professional.'' See ALJ at 21 (citing Ohio Rev. Code Ann. Sec.  
4729.51(B)(1)(j)).\5\ The ALJ based his reasoning in part on the 
evidence showing ``that Respondent established, solely owned, and 
operated two limited liability companies, Unique Pain Management ([her] 
medical practice) and Unique Relief ([her] dispensary), both of which 
are located at 418 Center Street, Wheelersburg, Ohio,'' and that the 
two entities were ``physically separate'' from each other, although 
Respondent could observe the dispensary through a system of security 
cameras and a monitor she maintained in her office. Id. The ALJ also 
noted that the dispensary also filled ``a significant

[[Page 45677]]

portion'' of the prescriptions issued by Respondent's father. Id. at 
22.

    \5\ The ALJ also noted that an Ohio Board of Pharmacy guidance 
document, which interprets this provision, states that ``if the 
business practice has a single prescriber * * * who is the sole 
shareholder, member, or owner of the practice, then this business 
practice is not required to be licensed as a Terminal Distributor of 
Dangerous Drugs with the Ohio Board of Pharmacy. Previously, this 
exemption was only for a prescriber who practices as a Sole 
Proprietor.'' ALJ at 21 (quoting Ohio State Board of Pharmacy, 
Licensing Issues For Prescribers--Updated (July 2008)).
---------------------------------------------------------------------------

    Continuing, the ALJ reasoned that:

    [t]o the extent Ohio law permits a sole practitioner to dispense 
or personally furnish controlled substances directly to a patient 
without a Terminal Distributor license, Respondent's dispensing 
practices were well outside of those parameters. Respondent 
established a distinctly separate legal entity to fill prescriptions 
that was physically separate from Respondent's medical office. 
Furthermore, Respondent's dispensary was not limited to filling 
prescriptions issued only by Respondent, but also routinely filled 
prescriptions issued by Respondent's father, notwithstanding the 
fact that Respondent did not have a Terminal Distributor license as 
required by state law.

    Id. (citing Ohio Rev. Code Ann. Sec. Sec.  4729.51(B)(1)(j) & 
4729.551).

    However, I need not decide whether under Ohio law, Respondent's 
creation of ``a distinctly separately legal entity to fill 
prescriptions,'' id., required her to hold a Terminal Distributor 
license, because the Government did not raise this issue in either the 
Order to Show Cause or its pre-hearing statements. Nor are the few 
fragments of testimony regarding this license (which primarily involved 
the Board of Pharmacy Compliance Agent's statements regarding the 
reason for his February 2011 visit to the dispensary) sufficient to 
conclude that the parties litigated the issue by implied consent. 
Indeed, any such conclusion is belied by the fact that when 
Respondent's counsel attempted to question the Board's Compliance Agent 
about whether a Board employee had told Respondent's staff that she did 
not need to have a Terminal Distributor's License, the Government 
objected that the questions were outside the scope of direct 
examination as well as irrelevant and the ALJ sustained the 
objections.\6\ Tr. 345-47.
---------------------------------------------------------------------------

    \6\ Subsequently, Respondent succeeded in eliciting testimony 
from one of her employees regarding a phone conversation he had with 
an employee of the pharmacy board regarding whether she was required 
to have a Terminal Distributor's license. Tr. 567. However, given 
that the Government had already argued that this line of questioning 
was irrelevant, which it was in light of the Government's failure to 
disclose its intent to litigate the issue in either the Show Cause 
Order or its pre-hearing statement, I conclude that this testimony 
is not enough to establish implied consent and that the issue is not 
properly before the Agency.
---------------------------------------------------------------------------

    Under these circumstances, it is clear that the issue was not 
``fairly and fully litigated at [the] hearing'' and therefore cannot be 
the basis for a sanction. Yellow Freight System, Inc., v. Martin, 954 
F.2d 353, 358 (6th Cir. 1992). As the Sixth Circuit further explained:

    [A]n agency may not base its decision upon an issue the parties 
tried inadvertently. Implied consent is not established merely 
because one party introduced evidence relevant to an unpleaded issue 
and the opposing party failed to object to its introduction. It must 
appear that the parties understood the evidence to be aimed at the 
unpleaded issue.

    Id. (citing MBI Motor Co., Inc. v. Lotus/East, Inc., 506 F.2d 709, 
711 (6th Cir. 1974)).

    Moreover, ``where the Government's case `focus[es] on another issue 
and [the] evidence of [an] uncharged violation [is] ``at most 
incidental,' '' the Government has not satisfied its constitutional 
obligation to provide a full and fair opportunity to litigate the issue 
and it cannot rely on the incidental issue as a basis for imposing a 
sanction.'' CBS Wholesale Distributors, 74 FR 36746, 36750 (2009) 
(quoting Pergament United Sales, Inc., v. NLRB, 920 F.2d 130, 136 (2d 
Cir.1990) (quoting NLRB v. Majestic Weaving Co., 355 F.2d 854, 861-62 
(2d Cir. 1966))). Thus, because the issue was not properly raised and 
the evidence was at most incidental, I reject the ALJ's legal 
conclusion (and his discussion of Ohio law) that Respondent violated 
Ohio law because she failed to obtain an Ohio Terminal Distributor's 
license.
    However, the ALJ also concluded that Respondent violated federal 
law because she ``dispensed or directed and authorized the dispensing 
of controlled substances from an unregistered location on numerous 
occasions between November 2008 and May 2011.'' ALJ at 24 (citing 21 
U.S.C. 822(a)(2) & (e); id. Sec.   841; 21 CFR 1306.06). The ALJ 
offered no further explanation for this conclusion. While I hold that 
the ALJ erred in concluding that she violated section 822(e), which 
requires ``[a] separate registration * * * at each principal place of 
business or professional practice where the applicant * * * dispenses 
controlled substances,'' 21 U.S.C. 822(e), the record clearly supports 
a finding that Respondent's dispensing activities violated the CSA.
    The evidence of record shows that Respondent's dispensary was 
located at the same address as her medical practice. This was also the 
address at which Respondent was registered with the Agency.\7\ See GX 
1. Thus, Respondent did not violate the requirement that she obtain a 
separate registration for each principal place of professional practice 
where she dispensed controlled substances.
---------------------------------------------------------------------------

    \7\ There is no evidence that the dispensary had a separate 
suite number as might be the case in a large medical office 
building.
---------------------------------------------------------------------------

    Rather, Respondent violated the CSA because she exceeded the 
authority granted by her registration when she dispensed controlled 
substance prescriptions issued by her father without holding a pharmacy 
registration. Under 21 U.S.C. 822(b), ``[p]ersons registered by the 
[Agency] under this subchapter to * * * dispense controlled substances 
* * * are authorized to possess * * * or dispense such substances * * * 
to the extent authorized by their registration and in conformity with 
the other provisions of this subchapter.'' (emphasis added).
    Under Federal law and DEA regulations, a registered physician is 
authorized to prescribe, administer or ``dispense directly'' to her 
patients in the course of professional practice. See 21 CFR 1306.11(b) 
(``An individual practitioner may administer or dispense directly a 
controlled substance listed in Schedule II in the course of his 
professional practice without a prescription. * * *''); id. Sec.  
1306.21(b) (``An individual practitioner may administer or dispense 
directly a controlled substance listed in Schedule III, IV, or V in the 
course of his/her professional practice without a prescription * * 
*.''). See also 21 U.S.C. 829 (``Except when dispensed directly by a 
practitioner, other than a pharmacist, to an ultimate user, no 
controlled substance in schedule II, which is a prescription drug under 
the Federal Food, Drug, and Cosmetic Act * * * may be dispensed 
without'' a prescription); id. Sec.  829(b) (schedule III & IV).
    In addition, DEA regulations provide that ``[a] prescription for a 
controlled substance may only be filled by a pharmacist, acting in the 
usual course of his professional practice and either registered 
individually or employed in a registered pharmacy, or registered 
institutional practitioner.'' 21 CFR 1306.06. Accordingly, Respondent, 
who did not hold a pharmacy registration, exceeded the authority of her 
registration because she authorized her employees to fill prescriptions 
issued by her father.\8\ See 21 U.S.C. 822(b); id. Sec.  841(a) 
(rendering unlawful the knowing or intentional dispensing of a 
controlled substance ``[e]xcept as authorized by this subchapter''). 
And in filling her father's prescriptions, she also violated 21 CFR 
1306.06.
---------------------------------------------------------------------------

    \8\ The evidence also showed that Respondent's father did not 
hold a registration at the address of Respondent's dispensary.
---------------------------------------------------------------------------

    So too, Respondent violated Ohio law because she allowed unlicensed

[[Page 45678]]

personnel to fill the prescriptions and failed to personally furnish 
the controlled substances to her patients.\9\ See ALJ at 23-24. As the 
ALJ found, Respondent used unlicensed personnel to fill the 
prescriptions which her dispensary delivered to her patients. While 
Ohio law exempts ``a prescriber,'' which includes a physician who is 
authorized to practice medicine and prescribe drugs, see Ohio Rev. Code 
Ann. Sec.  4729.01(I), from the prohibition against the unauthorized 
practice of pharmacy under Ohio Rev. Code Ann. Sec.  4729.28, the 
exemption requires that the physician ``personally furnish [ ] the 
[prescriber's] patients with drugs, within the prescriber's scope of 
professional practice.'' Id. Sec.  4729.29(A)(1).\10\ Moreover, 
``[w]hen a prescriber personally furnishes drugs to a patient pursuant 
to [the exemption], the prescriber shall ensure that the drugs are 
labeled and packaged in accordance with state and federal drug laws and 
any rules and regulations adopted pursuant to those laws.'' Id. Sec.  
4729.29(B).
---------------------------------------------------------------------------

    \9\ In contrast to the issue of whether Respondent was required 
to hold an Ohio Terminal Distributor's license, the Government 
provided notice of its intent to litigate the issue of Respondent's 
use of unlicensed individuals to fill controlled substance 
prescriptions. ALJ Ex. 5, at 5.
    \10\ This citation, as well as the citation to section 
4729.29(B), are to the provisions which were in effect during the 
period at issue here.
---------------------------------------------------------------------------

    Respondent did present evidence that she had a security camera 
system and monitor in her office which allowed her to observe the 
operation of her dispensary. See Resp. Br. 3 (citing Tr. 400). However, 
given that she was actively seeing patients, her counsel's suggestion 
that she observed the actually delivery of the drugs to the patients, 
and thus was in compliance with Ohio's requirement that she 
``personally furnish'' the drugs, is, as a factual matter, ludicrous. I 
thus hold that she violated Ohio law because she did not personally 
furnish the controlled substances to her patients.\11\
---------------------------------------------------------------------------

    \11\ As for the other violations, I agree with the ALJ's 
conclusions that Respondent failed to properly complete DEA Form 
222s for the schedule II controlled substances she purchased, and 
that the records were not kept separate from other records as 
required by DEA regulations. See ALJ at 25-26 (citations omitted). I 
also agree with the ALJ's conclusion that Respondent failed to 
include required information on some prescriptions. See ALJ at 30 
(citing GX 7).
---------------------------------------------------------------------------

    In her brief, Respondent further claims that she ``was ill-advised 
by counsel'' as to whether she needed a pharmacy registration ``and was 
specifically told she was doing everything correctly with respect to 
operating the dispensary.'' Resp. Br. 7. Respondent then maintains that 
``[i]f a mistake was made it was not the Respondent's.'' Id. While the 
ALJ recounted the testimony of one Respondent's employees regarding the 
purported legal advice she received, see ALJ at 17 (citing Tr. 545, 
559-60), he did not address Respondent's contention.
    I do and I reject the contention. Even crediting the testimony of 
Respondent's employee that he had a discussion with an attorney 
regarding the dispensary's compliance with DEA regulations and was told 
that ``we were doing it perfectly,'' Tr. 545, the employee's testimony 
was exceedingly vague as to what issues were discussed and does not 
establish that Respondent discussed whether she needed to obtain a DEA 
pharmacy registration because she was filling the prescriptions issued 
by her father. Thus, even were the Agency to recognize a defense of 
good faith reliance on legal advice, the defense fails here because 
Respondent has not established that there was a ``full disclosure of 
all pertinent facts'' to the attorney and that her reliance was ``in 
good faith.'' United States v. Lindo, 18 F.3d 353, 356 (6th Cir.1994); 
see also United States v. Painter, 314 F.2d 939, 943 (4th Cir. 1963). 
Indeed, the contention is belied by the employee's testimony that he 
really ``didn't trust some of the opinions [he] was getting from'' the 
attorney and that upon looking at the DEA rules, he determined that 
Respondent's father had to be registered at her clinic if narcotics 
were stored there.\12\ Tr. 559-60. Moreover, because Respondent invoked 
her Fifth Amendment privilege and declined to answer any questions 
(other than to state her name and that she had a registration as an 
individual practitioner), she cannot establish that she relied in good 
faith on the attorney's advice.
---------------------------------------------------------------------------

    \12\ Having concluded that the Government did not provide 
adequate notice of its intent to litigate the issue of whether 
Respondent was required to hold a Terminal Distributor's license, it 
is unnecessary to decide the issue of whether Respondent properly 
relied on the statement of an Ohio Pharmacy Board employee that 
Respondent did not need to hold this license. Tr. 548.
---------------------------------------------------------------------------

The Inventory Violations

    The ALJ found that Respondent violated DEA regulations requiring 
that she take initial and biennial inventories. ALJ at 27-29. While I 
agree that the evidence establishes various violations, I find much of 
the ALJ's discussion of the evidence and his reasoning confusing.
    The ALJ found that Respondent did not have an initial inventory as 
required by DEA regulations. See ALJ at 27 (citing 21 CFR 1304.11(b) & 
(c)). While I adopt this finding, I do so based solely on the evidence 
that when the Board of Pharmacy Compliance Agent conducted his February 
9, 2011 inspection, Respondent's dispensary manager stated that ``one 
had not been done.'' Tr. 314. Under Federal law, ``every registrant * * 
* shall * * * as soon * * * as such registrant first engages in the * * 
* dispensing of controlled substances, and every second year 
thereafter, make a complete and accurate record of all stocks thereof 
on hand.'' 21 U.S.C. 827(a). Moreover, under DEA regulations, ``[i]n 
the event a person commences business with no controlled substances on 
hand, he/she shall record this fact as the initial inventory.'' 21 CFR 
1304.11(b). While under DEA regulations, a registrant is required to 
keep, and make available for inspection, an inventory for only two 
years, see 21 U.S.C. 827(b), a period which, given the evidence that 
Respondent opened the dispensary in November or December 2008, would 
have lapsed at the time of the February 2011 inspection, the statement 
of the dispensary manager is sufficient to find that this violation 
occurred.
    Moreover, by the date of the February 2011 Pharmacy Board 
inspection, Respondent was required to have performed a biennial 
inventory. See id. Sec.  827(a); 21 CFR 1304.11(c). However, while 
Respondent had an ``on-hand inventory'' that ``was within the computer 
itself,'' Tr. 314, this did not comply with DEA regulations which 
require that an inventory ``be maintained in written, typewritten, or 
printed form.'' 21 CFR 1304.11(a). And while there is evidence showing 
that during the May 2011 search, documents that were labeled as 
``biannual inventories'' were seized, the fact remains that Respondent 
was required to have on hand a proper biennial inventory at the time of 
the February 2011 inspection.\13\
---------------------------------------------------------------------------

    \13\ Had Respondent produced at the February 2011 inspection an 
inventory which complied with 21 CFR 1304.11(a) & (c), I would not 
place any weight on the fact that the inventory was labeled as a 
``biannual'' rather than ``biennial.''
     The ALJ further noted that it was ``[o]f significance, [that] 
no invoices, DEA Form 222s, or dispensing logs were used to conduct 
the biennial inventory.'' ALJ at 28 (citing Tr. 480-82). However, 
while the CSA requires that a registrant retain its invoices, form 
222s, as well as a dispensing log, for at least two years, see 21 
U.S.C. 827(b), taking an inventory does not require doing anything 
more than counting the drugs on hand and making a record which 
includes the information required under 21 CFR 1304.11(e).
     The ALJ further concluded that ``no compliant * * *tory was * * 
*the May 17, 2011 search.'' ALJ at 28. However, the DI who seized 
the inventories during the May 17, 2011 search did not offer any 
testimony that the inventories were not compliant other than because 
they were not done within two years of the opening of the 
dispensary. Tr. 84. The ALJ further noted the testimony of one of 
Respondent's employees ``that the process to conduct a biennial 
inventory consisted of [her] husband using a computer printout while 
she physically counted the controlled substances, adding that she 
did not `document anything' from the inventory.'' ALJ at 28 (quoting 
481-82).
     It should be noted that even if the counts matched the 
printout, at a minimum, the inventories would have been required to 
document whether they were done on the opening of business or on the 
closing of business. See 21 CFR 1304.11(a). However, because the 
inventories were not submitted into evidence, there is no basis for 
concluding that they did not contain the required information.

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

[[Page 45679]]

Conclusion

    Having adopted the ALJ's conclusion (as modified herein) that 
Respondent violated the CSA by dispensing thousands of controlled 
substance prescriptions issued by her father and thus acted outside of 
the authority granted by her registration, I conclude that this conduct 
is egregious and warrants the conclusion that she has committed acts 
which render her continued registration inconsistent with the public 
interest and is sufficient by itself to support the revocation of her 
registration. See 21 U.S.C. 824(a)(4). The additional violations 
established on this record--her failure to have inventories, failure to 
complete form 222s, failure to include required information on 
prescriptions, her commingling of schedule II records with other 
records, as well as her state law violations of failing to personally 
furnish the drugs to her patients--buttress this conclusion. Because I 
further adopt the ALJ's findings that Respondent has presented no 
evidence that she accepts responsibility for her misconduct, I will 
order that her registration be revoked and that any pending application 
be denied.\14\
---------------------------------------------------------------------------

    \14\ The ALJ noted that Respondent did not present ``any 
evidence demonstrating that she will not engage in future 
misconduct.'' ALJ at 31. This is not entirely accurate as the record 
suggests that following the February 2011 visit of the Pharmacy 
Board's Compliance Agent, her employees did take inventories. 
However, Respondent did not put on any other evidence as to remedial 
measures and her failure to testify warrants, as the ALJ held, the 
adverse inference that she does not accept responsibility for her 
misconduct. See id. (citing cases).
---------------------------------------------------------------------------

Order

    Pursuant to the authority vested in me by 21 U.S.C. 824(a)(4) and 
28 CFR 0.100(b), I order that DEA Certificate of Registration 
BT5598214, issued to Margy Temponeras, M.D., be, and it hereby is, 
revoked. I further order that any pending application of Margy 
Temponeras, M.D., to renew or modify her registration, be, and it 
hereby is, denied. This Order is effective August 31, 2012.

    Dated: July 24, 2012.
Michele M. Leonhart,
Administrator.
D. Linden Barber, Esq. & Frank Mann, Esq., for the Government.

    Bradley Davis Barbin, Esq., for the Respondent.

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

I. Introduction

    Timothy D. Wing, Administrative Law Judge. This proceeding is an 
adjudication pursuant to the Administrative Procedure Act (APA), 5 
U.S.C. 551 et seq., to determine whether the Drug Enforcement 
Administration (DEA, Agency or Government) should revoke a physician's 
DEA Certificate of Registration (COR) as a practitioner pursuant to 21 
U.S.C. 824(a)(4) and deny, pursuant to 21 U.S.C. 823(f), any pending 
applications for renewal or modification thereof and any application 
for a new COR. Without this registration, Margy Temponeras, M.D. 
(Respondent), of Wheelersburg, Ohio, will be unable to lawfully 
prescribe, dispense or otherwise handle controlled substances in the 
course of her practice.
    On May 16, 2011, the Administrator, DEA, issued an Order to Show 
Cause and Immediate Suspension of Registration (OSC/IS), which was 
personally served upon Respondent on May 17, 2011.\1\ The OSC/IS 
immediately suspended Respondent's DEA COR as a practitioner, and also 
provided notice to Respondent of an opportunity to show cause as to why 
the DEA should not revoke Respondent's COR, pursuant to 21 U.S.C. 
824(a)(4), and deny, pursuant to 21 U.S.C. 823(f), any pending 
applications for renewal or modification thereof and any applications 
for a new COR, alleging that Respondent's continued registration is 
inconsistent with the public interest as that term is defined in 21 
U.S.C. 823(f).
---------------------------------------------------------------------------

    \1\ ALJ Exs. 1, 3.
---------------------------------------------------------------------------

    The OSC/IS alleged that Respondent is registered as a practitioner 
authorized to handle controlled substances in Schedules II through V 
under DEA COR BT5598214.
    The OSC/IS further alleged in relevant part: \2\
---------------------------------------------------------------------------

    \2\ The Government represented prior to hearing that it intended 
to proceed against Respondent only with regard to allegations 
contained in numbered paragraphs two, eight, nine, and ten of the 
OSC/IS.
---------------------------------------------------------------------------

    That between approximately January 1, 2007 and November 3, 2009, 
Respondent made approximately 3,397 unauthorized distributions of 
controlled substances. These distributions from Respondent's registered 
location were purportedly based on prescriptions issued by Dr. John 
Temponeras, who is registered with DEA as a practitioner in Portsmouth, 
Ohio. Respondent is not registered with DEA as a pharmacy. All in 
violation of 21 U.S.C. 841 and 21 CFR 1306.06;
    That Respondent failed to take an initial inventory and biennial 
inventories of the controlled substances in the dispensary that 
Respondent operated in violation of 21 CFR 1304.11(b) and (c);
    That Respondent failed to make and keep complete and accurate 
records of the receipt of controlled substances by, among other things, 
failing to complete DEA Form 222 with the amount and date received of 
controlled substances in violation of 21 CFR 1305.13(e); and
    That Respondent frequently issued prescriptions for controlled 
substances that did not contain all of the information required by 21 
CFR 1306.05(a).\3\
---------------------------------------------------------------------------

    \3\ The section requires in relevant part that ``[a]ll 
prescriptions for controlled substances shall * * * bear the full 
name and address of the patient * * * [and] directions for use * * 
*.''
---------------------------------------------------------------------------

    Following prehearing procedures, a hearing was held in Cincinnati, 
Ohio between September 13, 2011, and September 14, 2011, with the 
Government and Respondent each represented by counsel. Both parties 
called witnesses to testify and both 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.

II. Issue

    Whether the record establishes that Respondent's DEA COR BT5598214 
as a practitioner should be revoked and any pending applications for 
renewal or modification of that registration should be denied on the 
grounds that Respondent's continued registration would be inconsistent 
with the public interest as that term is used in 21 U.S.C. 824(a)(4) 
and 823(f).

III. Evidence and Incorporated Findings of Fact \4\
---------------------------------------------------------------------------

    \4\ In addition to the evidence discussed in this Section, 
additional evidence and findings of fact are discussed in later 
Sections of this Recommended Decision.
---------------------------------------------------------------------------

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

[[Page 45680]]

A. The Government's Evidence

    The Government's evidence included testimony from five witnesses: 
Respondent; DEA Diversion Investigator (DI) Christopher Kresnak (DI 
Kresnak); DI Paula Albert (DI Albert); Ohio State Board of Pharmacy 
Compliance Agent Joseph Kinneer (Agent Kinneer); and DI Stephanie 
Burkhart (DI Burkhart). In addition to testimonial evidence, the 
Government also introduced various documentary exhibits, to include: 
Respondent's COR record; \5\ three DEA Form 222 purchaser records;\6\ 
copies of prescriptions issued by Respondent between August and 
November 2006; \7\ and a document reflecting standard procedures for 
Unique Pain Management.\8\
---------------------------------------------------------------------------

    \5\ Gov't Ex. 1.
    \6\ Gov't Ex. 6.
    \7\ Gov't Ex. 7.
    \8\ Gov't Ex. 8.
---------------------------------------------------------------------------

    Respondent was called to testify but refused to answer any 
questions related to the relevant allegations in the OSC/IS by 
asserting her Fifth Amendment privilege. (Tr. 35-36; 41-42.)
    DI Kresnak testified in substance that he has approximately eight 
years of experience with DEA as a DI. (Tr.45.) DI Kresnak testified 
that Respondent is registered with DEA as a practitioner under DEA COR 
BT5598214 with an expiration date of November 30, 2012, and a current 
status listed as ``under suspension.'' (Tr. 47; Gov't Ex. 1.) DI 
Kresnak further testified that Respondent has never held any other type 
of DEA registration, including a pharmacy registration. (Tr. 48.) 
Respondent has never been registered with the State of Ohio as a 
pharmacist and has never held a pharmacy license in Ohio. (Id.)
    DI Kresnak next testified that Respondent owns and operates two 
limited liability companies-her medical practice, Unique Pain 
Management, and her dispensary, Unique Relief. (Tr. 48-49.) Both of 
Respondent's businesses are located in the same building at 418 Center 
Street, Wheelersburg, Ohio. (Tr. 49.) DI Kresnak testified that he was 
present inside both businesses on May 17, 2011, and he described the 
physical layout of the location to include Respondent's office on the 
far left hand corner from the entrance, with the ``dispensary* * * on 
the right-hand side of the building, * * *.'' (Tr. 50-51.) DI Kresnak 
testified that he interviewed Respondent on that same day, and in 
response to a question about why the dispensary was operating, 
Respondent ``said words to the effect that many of the local pharmacies 
stopped filling for her prescriptions and that she wanted to provide a 
low-cost convenience for her patients.'' (Tr. 52.)
    DI Kresnak also testified that pursuant to a search warrant at 
Prime Pharmacy Group d/b/a Medi-Mart Pharmacy, in Portsmouth, Ohio, he 
obtained prescriptions covering the time period 2005 to 2006 for 
Schedule III through V controlled substances, and identified twelve 
controlled substance prescriptions issued by Respondent. (Tr. 53, 54-
55.) The twelve prescriptions related to more than one patient, but DI 
Kresnak did not know how many patients exactly, nor could he recall any 
of the patients' names.\9\ (Tr. 118, 188.) DI Kresnak testified that of 
the twelve prescriptions, only one was compliant with DEA regulations. 
Eleven were noncompliant because they lacked a patient address. (Tr. 
54; 123-24.)
---------------------------------------------------------------------------

    \9\ None of the twelve prescriptions were produced by the 
Government at hearing, and DI Kresnak was uncertain if any of the 
twelve were the same as those contained in Government Exhibit 7. 
(Tr. 118-20.) Respondent requested production of the records at 
hearing and the Government objected, arguing in substance the lack 
of legal authority for such a discovery request. I denied 
Respondent's discovery request since it was untimely and unsupported 
by applicable legal authority. There is no ``general right to 
discovery under either the APA or DEA regulations, but rather only a 
limited right to receive in advance of hearing the documentary 
evidence and summaries of the testimony which the Government intends 
to rely upon.'' Roy E. Berkowitz, M.D., 74 FR 36,758, 36,760 (DEA 
2009) (citing Nicholas A. Sychak, d/b/a Medicap Pharmacy, 65 FR 
75,959, 75,961 (DEA 2000). Respondent made various untimely requests 
for discovery throughout hearing with regard to other documents, 
such as original Form 222s, which were denied for similar reasons.
---------------------------------------------------------------------------

    DI Kresnak next explained that DEA Form 222s are used by industry 
to order Schedule II controlled substances, and are issued to 
registrants by DEA. (Tr. 55.) DI Kresnak testified that a DEA Form 222 
contains, among other information, the name and address of a 
registrant, ``what the registrant is authorized to order,'' and a 
serial number. (Tr. 56.) A DEA Form 222 consists of three copies: the 
``brown sheet,'' which goes to the distributor; a carbonated second 
``green'' copy, which also goes to the distributor; and a ``blue'' 
copy, which is maintained at the registrant or practitioner's 
registered address when the registrant or practitioner orders Schedule 
II controlled substances. (Tr. 56-57.) DI Kresnak further explained 
that the distributor completes relevant information on the Form 222 at 
time of shipping, to include the National Drug Code (NDC) and number of 
controlled substances shipped. (Tr. 58.) The distributor then sends the 
green carbonated copy to the DEA office where the distributor is 
located. (Tr. 58.)
    DI Kresnak testified that he reviewed approximately fifty DEA Form 
222s seized from Respondent's dispensary, and on approximately six to 
ten forms he observed various discrepancies:

    Many of them weren't filled out properly, missing information. 
Several of them didn't even indicate whether a shipment had been 
received. One * * * just doesn't reflect anything. There were 
several, maybe seven lines filled out on it and there's nothing 
indicating any product was received.

(Tr. 60.) DI Kresnak compared the green copies of DEA Form 222s sent to 
DEA by the distributor with those seized from Respondent's dispensary, 
and testified that he recalled a specific discrepancy:

    I observed one particular 222 * * * where the distributor 
indicated that they [sic] did not fill the order. The blue copy of 
the 222, which is found in the dispensary, which is required by the 
Code to fill out how many is [sic] received, indicated that there 
were 60 received. There were 60 ordered. The blue copy was 
indicating 60 received, but the distributor's copy to DEA 
indicate[d] they did not fill that order.

(Tr. 63.) DI Kresnak further testified that he reviewed data from DEA's 
Automated Reports and Consolidated Order System (ARCOS),\10\ which 
confirmed that the information reflected on the distributor's DEA Form 
222 was accurate. (Tr. 63-64.)
---------------------------------------------------------------------------

    \10\ ``Registrants are also required to report records of sales 
or acquisitions of controlled substances in Schedules I and II, of 
narcotic controlled substances listed in Schedules III, IV and V, 
and of psychotropic controlled substances listed in Schedules III 
and IV with the DEA's Automation of Reports and Consolidated Orders 
System (ARCOS). 21 CFR 1304.33(c); 21 U.S.C. [Sec.  ] 827(d). These 
reports must be filed every quarter not later than the 15th day of 
the month succeeding the quarter for which it is submitted. 21 CFR 
1304.33(b).'' Easy Returns Worldwide, Inc. v. United States, 266 F. 
Supp. 2d 1014, 1016 (E.D. Mo. 2003).

    DI Kresnak also testified about three specific DEA Form 222s seized 
from Respondent's dispensary on May 17, 2011, which he found to be 
deficient. (Tr. 64-65; Gov't Ex. 6.) DI Kresnak testified that one was 
deficient ``[i]f these drugs were received * * * [because] a date 
received is omitted.'' (Tr. 65; Gov't Ex. 6, at 1.) A second form is 
deficient because the ``number of packages received is omitted and the 
date received is omitted.'' (Tr. 66; Gov't Ex. 6, at 2.) A third form 
is deficient because the ``number of packages is omitted on both items 
and the date received.'' (Tr. 66; Gov't Ex. 3, at 3.) DI Kresnak 
further testified somewhat tepidly with regard to whether the 
controlled substances were actually shipped to Respondent, that he 
``believed they were'' further explaining that he believed ``we found

[[Page 45681]]

documentation that these were shipped, yes.'' \11\ (Tr. 82.)
---------------------------------------------------------------------------

    \11\ DI Kresnak's testimony was further qualified by his 
statement that ``[w]e found invoices that reflect some of these.'' 
(Tr. 83.) Additionally, DI Kresnak explained that ARCOS reports 
indicated shipments of the relevant controlled substances to 
Respondent. (Tr. 134-36.)

    DI Kresnak testified that during the first two years that 
Respondent operated her dispensary, the majority of Respondent's 
ordering was completed through an electronic DEA controlled substance 
ordering system (CSOS), rather than using paper Form 222s. (Tr. 195-
96.)\12\
---------------------------------------------------------------------------

    \12\ 21 CFR1300.03. DI Kresnak explained that CSOS is only for 
Schedule II controlled substances and is ``used to eliminate paper 
flow.'' (Tr. 194.)
---------------------------------------------------------------------------

    DI Kresnak next testified that during the search of Respondent's 
dispensary, documents related to inventories were found, to include one 
marked opening inventory, which ``indicated that the date that they 
opened the dispensary there was a zero inventory.'' (Tr. 83.) ``No 
biennial inventory was ever found.'' (Tr. 84.) Rather, several 
documents entitled ``Biannual Inventories'' were found in a folder 
marked ``DEA inventories.'' (Tr. 144.) DI Kresnak testified that 
Respondent's dispensary opened ``sometime in November 2008, maybe 
December 2008.'' (Tr. 99.) Although DI Kresnak could not recall all of 
the details, he testified that the inventories appeared to be computer 
generated, listing the drugs on the far left and dollar values in 
another column. DI Kresnak did not know what the dollar values 
represented. He also testified that each inventory was marked 
``biannual,'' contained a date, and appeared to be signed by 
Respondent. (Tr. 136-137.) DI Kresnak testified that as a result of his 
investigation he determined that ``there was one particular oxycodone 
product that 100% was missing for the month of April, 2011.'' (Tr. 
150.) DI Kresnak further explained that he does not ``recall the number 
of dosages * * * missing * * * without referring to the audit.'' \13\ 
(Tr. 153.) DI Kresnak testified that he has not seen any inventories in 
electronic format seized from Respondent, but noted that he has not as 
yet looked for any. (Tr. 173.)
---------------------------------------------------------------------------

    \13\ No audit was produced at hearing.
---------------------------------------------------------------------------

    DI Kresnak next testified that Respondent and Respondent's father, 
Dr. John Temponeras, were the only practitioners who issued 
prescriptions for controlled substances in Schedules II through V that 
were filled at Respondent's dispensary. (Tr. 101.) DI Kresnak further 
testified that Dr. John Temponeras had previously been a DEA registrant 
with a registered location in Portsmouth, Ohio. DI Kresnak interviewed 
Dr. John Temponeras regarding his application for a DEA registration at 
Respondent's Center Street location in Wheelersburg, Ohio, and learned 
``he had written prescriptions [for controlled substances] that were 
filled at the dispensary, and he basically said he was needing a DEA 
registration at that location because his daughter said he needed one 
there.'' (Tr. 102.)
    DI Albert testified in substance that she has eleven years of 
experience with DEA as a diversion investigator. DI Albert testified 
that she was present at Respondent's business location in Wheelersburg, 
Ohio, on May 17, 2011, assisting in the execution of a federal search 
warrant and service of the OSC/IS. (Tr. 202.) DI Albert described the 
location as ``a medical clinic and a--I guess, a dispensary.'' (Tr. 
202.) By dispensary, DI Albert testified that she meant ``[t]hey filled 
prescriptions and dispense[d] medication to patients.'' (Id.) The 
location was described as having the doctor's office on the left of the 
building, and on the right after passing through a door there was 
another lobby and ``[i]nside that lobby there was a set of windows with 
thick glass, and behind those windows were [sic] the dispensary.'' (Tr. 
203.)
    DI Albert further testified that Darryl Leadingham (Mr. Leadingham) 
and Sue Leadingham (Mrs. Leadingham) were working in the dispensary on 
May 17, 2011. DI Albert interviewed Mr. Leadingham regarding his 
responsibilities in the pharmacy, and learned that ``he was responsible 
for the computer system, the security system in the whole building, the 
cameras. * * * [H]e ordered the controlled substances that were 
dispensed out of the dispensary, and he also worked as far as entering 
patient information into the computer system, printing labels, 
dispensing the controlled substances, billing patients' insurance, * * 
*.'' (Tr. 203-04.) In terms of dispensing, Mr. Leadingham indicated 
that patients would bring a physical hard copy prescription that either 
Respondent or Respondent's father had issued with an original 
signature. The information was entered in the computer system which 
would generate three labels, the first for the prescription bottle, 
second for the original hard copy prescriptions, and third on the 
outside bag containing all of the bottles of medicine distributed. (Tr. 
208.)
    DI Albert testified that Mrs. Leadingham similarly stated that 
``she was there to dispense the medication and put the information, 
print the labels and bill the insurance or accept cash.'' (Tr. 209.) DI 
Albert further testified that both Mr. Leadingham and Mrs. Leadingham 
stated during the May 17, 2011 interview:

    Dr. John Temponeras had filled in and had seen [Respondent's] 
patients and that there were prescriptions that patients brought to 
the dispensary with [Dr. John Temponeras'] name on them. And Darryl 
Leadingham told me that at some point he figured out that it was no 
longer--or that they shouldn't be doing that and that he had told 
[Respondent] that her father needed to get his own DEA registration 
for that location.

(Tr. 213.)

    DI Albert testified that based on information contained within the 
Ohio Automated Rx Reporting System (OARRS),\14\ the only prescriptions 
filled at the dispensary were issued by Respondent or Respondent's 
father. (Tr. 209.) DI Albert testified that OARRS data reflected that 
from November or December 2008 until 2011, Respondent's dispensary 
filled approximately 3,397 prescriptions issued by Respondent's father 
for controlled substances, ``mostly oxycodone products and Xanax or the 
Schedule IV.'' (Tr. 210-11.) Regarding prescriptions issued by 
Respondent, DI Albert testified in April 2010 alone, Respondent 
``filled 500 prescriptions at her dispensary, which came out to--after 
I compared that to other pharmacies, it was over eighty-three percent 
of her prescriptions were filled by herself.'' (Tr. 211.) DI Albert did 
not know why eighty-three percent of the patients chose to go to 
Respondent's dispensary and no cost analysis of pharmacies in the 
region was conducted by DI Albert. (Tr. 231.)
---------------------------------------------------------------------------

    \14\ DI Albert testified that OARRS is a prescription monitoring 
system run by the Ohio Board of Pharmacy based on information 
submitted by pharmacies. (Tr. 209-10.) See also Ohio Admin. Code R. 
4729-37-03 (2011).
---------------------------------------------------------------------------

    DI Albert next testified that as part of her investigation of 
Respondent, she reviewed ARCOS system data pertaining to ``all the 
oxycodone products [Respondent] ordered'' from the opening of the 
dispensary in 2008 until her last order in May 2011, finding a total of 
``approximately 1.6 million dosage units'' of oxycodone, a Schedule II 
controlled substance. (Tr. 206-07.) DI Albert testified that she 
recalled the presence of various drugs at the dispensary on May 17, 
2011, described as ``mostly controlled substances, oxycodone, 
OxyContin, benzos,\[15]\ Xanax, Valium.'' (Tr. 204.) DI Albert believed 
there may have been a small quantity of hydrocodone and ``a couple

[[Page 45682]]

of other Schedule II substances, such as morphine.'' (Tr. 204-05.)
---------------------------------------------------------------------------

    \15\ DI Albert explained her use of the term ``benzos'' was 
short-hand for benzodiazepines, a Schedule IV controlled substance. 
(Tr. 205.)
---------------------------------------------------------------------------

    DI Albert further testified that she has reviewed the originals of 
the DEA Form 222s reflected in Government Exhibit 6, which were seized 
from Respondent's dispensary on May 17, 2011, and did not remove any 
attachments from the originals nor was she aware of any other DEA 
personnel removing attachments. (Tr. 215.) DI Albert testified that she 
reviewed and compared distributor copies of the Form 222s with copies 
retained by Respondent, and found discrepancies between what the 
distributors indicated they shipped and what Respondent reported 
receiving. (Tr. 216-17.) DI Albert elaborated:

    I believe there were times where [hellip] on the distributor's 
copy, or the one that [the distributor] provide[d] to DEA, it 
indicates that they actually shipped a different quantity or they 
voided out the line, where, in fact, the copy that we found in the 
dispensary will show that they received a quantity and the 
distributor says that [the distributor] voided it.

(Tr. 218; Gov't Ex. 6.)

    Finally, DI Albert testified that she reviewed various 
prescriptions for controlled substances issued to Patient [IM] by 
Respondent, dated between August and November 2006, and determined that 
the prescriptions were missing the address of the patient, as required 
by regulation. (Tr. 220-21, 249-50; Gov't Ex. 7.)
    Agent Kinneer testified that he has been employed with the Ohio 
Board of Pharmacy as a Compliance Agent for approximately seventeen 
years.\16\ Agent Kinneer further testified that he was familiar with 
Respondent's professional practice, explaining that in December 2010, 
Respondent applied for a Terminal Distributor license,\17\ which would 
allow for the purchase of prescription drugs and controlled substances. 
(Tr. 301-02.)
---------------------------------------------------------------------------

    \16\ Agent Kinneer's duties include inspection of entities 
licensed by the Ohio Board of Pharmacy, to include physicians, 
pharmacies, pharmacists, dentists, and paramedics. Agent Kinneer's 
duties further include investigation of drug diversion. (Tr. 300.)
    \17\ The license was for Respondent's dispensary, Unique Relief, 
located within the same building as Respondent's medical practice. 
(Tr. 308.)
---------------------------------------------------------------------------

    Agent Kinneer next testified that based on Respondent's application 
for a Terminal Distributor license, he conducted an inspection of 
Respondent's location on February 9, 2011. (Tr. 303.) As a result of 
the inspection, Agent Kinneer determined that the dispensary was 
operated by Mr. Leadingham, who had been introduced as the dispensary 
manager. (Tr. 307.) Agent Kinneer further determined that for the past 
two years, Respondent had no role in the physical delivery of 
controlled substances to her patients. (Tr. 307, 334.)
    Agent Kinneer explained that during his inspection, he observed a 
dispensing practice that failed to properly document the filling of 
prescriptions. ``What would happen is, you had one prescription that 
had all three labels on it * * * [a]nd then the other two had no labels 
at all. So there was no way to document that those prescriptions had 
actually been filled.'' (Tr. 313.)
    Agent Kinneer testified that he requested an opening inventory and 
none was produced. Instead, Mr. Leadingham stated that ``one had not 
been done.'' (Tr. 314.) Mr. Leadingham was also unable to produce a 
biennial inventory. (Tr. 315.) Agent Kinneer further testified that he 
conducted a series of audits of individual drugs using a running 
inventory from the computer in Respondent's dispensary. (Tr. 316-17.) 
He determined a slight overage for two controlled substances and a 
shortage of two other controlled substances. (Tr. 317.) Agent Kinneer 
testified that ``our demonstration was to show Mr. Leadingham that you 
cannot rely on a running inventory. There actually needs to be a hard 
copy. And the purpose of it was to show that those things can be off.'' 
(Tr. 317.) The running audit also revealed that ``[t]here was drugs 
[sic] that were dead on.'' (Tr. 318.) Agent Kinneer further testified 
that there was no way to tell whether Respondent's dispensary had 
significant shortages or overages, since the absence of a starting 
point for the audit precluded a true inventory of controlled substances 
within Respondent's dispensary.

    Remember, this [running inventory] was just a tool to show 
Darryl Leadingham and Sue Leadingham that they cannot rely on the 
running inventory as a true inventory, that they needed an opening 
inventory as well as their DEA inventory. In order for me to do an 
audit I need a starting point. And that's what I am trying to 
express to them.

(Tr. 373-75.)

    Agent Kinneer also reviewed DEA Form 222s during his inspection, 
specifically requesting the production of ``their blue copy where they 
actually receipted the medication.'' (Tr. 318.) Based on a review of a 
two to three inch stack of DEA Form 222s on the counter at the 
dispensary, Agent Kinneer testified that none had been ``receipted,'' 
explaining that none ``had a date or quantity on a filled-out line for 
those individual drugs that had been ordered and received.'' (Tr. 319, 
362-63.) A review of DEA Form 222s kept in a vault within the 
dispensary also revealed that none had been receipted.\18\ Agent 
Kinneer testified that Mr. Leadingham was unaware of the requirement to 
do so, instead indicating ``that he had been trained just to * * * do 
the invoices * * * [and] documenting it in the computer that they had 
received them.'' (Tr. 320.) Agent Kinneer further testified that he did 
not recall seeing invoices attached to the DEA Form 222s that he looked 
at, noting that it did not matter since that is not the requirement. 
(Tr. 320-21.) Agent Kinneer does not recall seeing staple marks on the 
DEA Form 222s that he reviewed, but explained he was not looking for 
staple marks. (Tr. 348.)
---------------------------------------------------------------------------

    \18\ Agent Kinneer testified that his inspection did not focus 
on how many dispensary orders were electronic as compared with 
orders using hand-written Form 222's with an accompanying blue copy. 
``We were solely looking at the blue copies.'' (Tr. 360.)
---------------------------------------------------------------------------

    Agent Kinneer testified that controlled substances were ordered by 
the dispensary manager, Mr. Leadingham, using Respondent's DEA 
registration, but there was no indication that Respondent was active or 
accountable for the accuracy and completeness of the dispensary's 
records. (Tr. 321-22.) Agent Kinneer further testified that at the 
completion of the inspection, he informed Mr. Leadingham that ``from 
what we were witnessing he was running a pharmacy, which was illegal.'' 
(Tr. 323.) Agent Kinneer testified that Respondent's dispensary was not 
registered with the Ohio Board of Pharmacy as a pharmacy, nor were any 
personnel working in the dispensary licensed as pharmacists in Ohio. 
(Tr. 324-25.)
    DI Burkhart was called in rebuttal by the Government, and testified 
in substance that she participated in the execution of a federal search 
warrant at Respondent's location on May 17, 2011, to include seizing 
the blue copies of DEA Form 222s. (Tr. 600-01.) Specifically, DI 
Burkhart testified that she seized and reviewed approximately fifty DEA 
Form 222s and only two blue copies had an invoice stapled to the back 
of them. (Tr. 601.) The fifty seized DEA Form 222s included the three 
reflected in Government Exhibit 6, which did not have any documents or 
invoices stapled to them at the time they were seized. (Id.) DI 
Burkhart further testified that she seized the DEA Form 222s from 
within the dispensary vault and in other places in the dispensary. (Tr. 
607-08.)
    I find the foregoing witness testimony fully credible in that each 
of the witnesses presented testimony that was internally consistent and 
evidenced a

[[Page 45683]]

reasonable level of memory for past events. Each witness presented 
testimony in a professional manner and the material portions of the 
testimony were consistent with other credible evidence of record, as 
discussed more fully below.

C. Respondent's Evidence

    Respondent's evidence included testimony from two witnesses: Mrs. 
Leadingham and Mr. Leadingham. Respondent also introduced a letter 
dated April 27, 2010, from the Director of the Ohio Department of 
Health.\19\ Mrs. Leadingham testified in substance as to her background 
and experience, to include having worked for approximately five years 
at an assisted living center before beginning work in Respondent's 
dispensary in or about November 2008. (Tr. 385, 390.) Prior to working 
for Respondent, Mrs. Leadingham had no prior working experience 
dispensing drugs at a pharmacy. (Tr. 457.) Mrs. Leadingham testified 
that when hired in November 2008, she worked for Ken Days (Mr. Days) in 
Respondent's dispensary. (Tr. 390-91.) Mrs. Leadingham described her 
duties to include counting pills, labeling medicine bottles, helping 
with inventory, filing, and handling invoices and DEA Form 222s. (Tr. 
391.) Mrs. Leadingham further testified that she loved working for 
Respondent, who she described as caring and ``the best employer I have 
ever had.'' (Id.) Mrs. Leadingham explained that Respondent's 
dispensary operated like a pharmacy to include the use of pharmacy 
software called Rx30, as well as printed prescriptions, labeled drugs, 
and the filling of prescriptions, all consistent with that of a 
pharmacy. (Tr. 473.) Mrs. Leadingham testified that the dispensary 
filled controlled substance prescriptions for Respondent and 
Respondent's father, on a regular basis between 2008 and late 2010, 
when Respondent's father stopped issuing prescriptions. (Tr. 485.)
---------------------------------------------------------------------------

    \19\ Resp't Ex. 6. This was the only exhibit offered by 
Respondent at hearing.
---------------------------------------------------------------------------

    Mrs. Leadingham next testified that Respondent's role in the 
dispensary included stopping by every morning and evening to answer 
questions or discuss issues. (Tr. 400.) ``She had a monitor in her 
office that she watched us the whole time we were at work. She could 
see everything we did at any given time.'' (Id.) Mrs. Leadingham later 
contradicted this testimony, admitting that Respondent could not watch 
the dispensary while she was examining patients throughout the day. 
(Tr. 478.) No monitors were present in patient examination rooms. (Tr. 
469.) Mrs. Leadingham further testified to the physical layout of the 
dispensary, to include security measures. (Tr. 403-04.)
    Mrs. Leadingham testified that the dispensary kept detailed daily 
inventories, and also completed a biennial inventory every two years 
that was kept ``in a file in the vault.'' (Tr. 407.) Other than working 
from a computerized printout, Mrs. Leadingham testified that she did 
not document anything from the biennial inventory. (Tr. 481-82.) Mrs. 
Leadingham further testified that she believes the physical copy of the 
inventory was seized by DEA on May 17, 2011, since the folder was gone 
from the dispensary after that date. (Tr. 408, 412.)
    Mrs. Leadingham testified that she worked in Respondent's 
dispensary until April 2009, when she was fired along with Mr. 
Leadingham. (Tr. 419.) Mrs. Leadingham testified that she returned to 
work at Respondent's dispensary on July 1, 2009, along with Mr. 
Leadingham, explaining the circumstances of why Respondent asked them 
to return to work:

    [Respondent] was very, very concerned with the way the 
dispensary was being run. She was allowed no access to the 
dispensary itself in these two months that we were gone. When we got 
back, I know we got a lot of complaints from the patients that there 
was pills missing, they weren't treated well, * * *.''

(Tr. 421.) Mrs. Leadingham further testified that upon her return to 
Respondent's dispensary in July 2009 she observed pills that had been 
put in unmarked vials, to include some pills that appeared to have been 
crushed. (Tr. 427.)

    Mrs. Leadingham also testified as to her understanding and practice 
with regard to DEA Form 222s, stating in substance that she always 
stapled the invoices for incoming controlled substances to the Form 
222. (Tr. 428.) Mrs. Leadingham further testified that most controlled 
substance orders were placed electronically, but approximately fifty 
paper copies of DEA Form 222s would have been present in the dispensary 
within folders identified by suppliers. (Tr. 440-41.) Prior to February 
2010, the dispensary practice was not to put the date and amount of 
controlled substances received on DEA Form 222s, but rather to staple 
the invoice for controlled substances to the form. (Tr. 462-63.) Mrs. 
Leadingham testified that following the Ohio Pharmacy Board inspection 
of the dispensary in February 2011, she personally wrote the amount and 
date received on DEA Form 222s. (Tr. 464-65.)
    Mrs. Leadingham next testified to completing pill counts within the 
dispensary to ensure that the numbers on hand matched the computer 
records, and does not recall any significant discrepancies of greater 
than one percent. (Tr. 446.) Mrs. Leadingham further testified that 
Respondent has been present in the dispensary on at least one occasion 
and counted medications which were matched with inventories. 
Additionally, Respondent received daily inventories from the 
dispensary. (Tr. 453-54.)
    Mrs. Leadingham was called by Respondent in rebuttal, and testified 
in substance that she had separated existing DEA Form 222s from the 
invoices two to three weeks prior to May 16, 2011, in order to prepare 
copies for submission to the Ohio Medical Board. (Tr. 629.) Mrs. 
Leadingham further testified that during the week prior to May 16, 
2011, she stapled the DEA Form 222s and invoices together again, and 
filed them in the dispensary vault. (Tr. 631.)
    Mr. Leadingham testified in substance as to his background and 
experience, to include work in Respondent's dispensary, Unique Relief, 
beginning in November 2008. (Tr. 513.) Unique Relief was a separately 
operated business from Respondent's medical practice, Unique Pain 
Management. (Tr. 572.) The dispensary's sole purpose was to fill 
prescriptions issued by Respondent and Respondent's father. (Tr. 572-
73.) Mr. Leadingham testified that he worked as the manager of the 
dispensary, to include pricing, printing labels for prescriptions, and 
ordering. (Id.) Mr. Leadingham testified that he received no training 
prior to dispensing controlled substances from Respondent's dispensary, 
other than to travel to an existing pharmacy to observe a pharmacist 
for approximately two hours. (Tr. 576, 580.) Mr. Leadingham explained 
that he worked for Mr. Days and Respondent, describing his relationship 
with Mr. Days as ``very contentious'' because Mr. Days kept telling Mr. 
Leadingham what to tell Respondent to do, which Mr. Leadingham would 
not. (Tr. 514-15.) In April 2009, Mr. Leadingham and Mrs. Leadingham 
were fired by Mr. Days. (Tr. 517.)
    Mr. Leadingham testified that he returned to work for Respondent in 
July 2009, after the departure of Mr. Days. (Tr. 520.) Upon return, Mr. 
Leadingham testified that he completed an inventory, which was placed 
in a folder and ``we had written on it that it was for a DEA 
biennial.'' (Id.) A similar inventory was

[[Page 45684]]

done in February 2011, and marked ``DEA Biannual Report.'' (Tr. 521.) 
Mr. Leadingham testified that the two files were present in the 
dispensary on May 17, 2011, but following that date ``[t]here was no 
paperwork left in the vault.'' (Tr. 522.) Mr. Leadingham testified that 
between July 2009 and May 17, 2011, there were never any large amounts 
of drugs missing, and with regard to oxycodones, Mr. Leadingham did not 
believe variances existed of ``even one-tenth of a percent.'' (Tr. 
561.)
    Mr. Leadingham testified that with regard to his compliance with 
federal regulations for the operation of Respondent's dispensary, he 
received legal advice that ``we were doing it perfectly.'' (Tr. 545.) 
Mr. Leadingham further testified that he later questioned the legal 
advice he was getting with regard to filling prescriptions issued by 
Respondent's father and looked up the DEA rules ``that stated there had 
to be a DEA license address for the [d]octor at that address, with that 
address, if there was a Schedule II narcotics there.'' (Tr. 559-60.) 
Mr. Leadingham testified that he provided a printout of the rules to 
Respondent, who then applied to DEA for a license for her father at 
Respondent's address. (Tr. 560.) Mr. Leadingham testified, however, 
that he did not see the DEA regulation that DEA Form 222s had to be 
kept separate from all other records, and the dispensary was 
``[a]pparently not'' complying with that regulation. (Tr. 568.)
    Respondent's witnesses presented their testimony in a professional 
and serious manner, but as more fully explained in the discussion 
section below, I find it only partially credible in several material 
respects.

IV. Discussion

A. The Applicable Statutory and Regulatory Provisions

    The Controlled Substances Act (CSA) provides that any person who 
dispenses (including prescribing) a controlled substance must obtain a 
registration issued by the DEA in accordance with applicable rules and 
regulations.\20\ ``A prescription for a controlled substance to be 
effective must be issued for a legitimate medical purpose by an 
individual practitioner acting in the usual course of his professional 
practice. The responsibility for the proper prescribing and dispensing 
of controlled substances is upon the prescribing practitioner'' with a 
corresponding responsibility on the pharmacist who fills the 
prescription.\21\ It is unlawful for any person to possess a controlled 
substance unless that substance was obtained pursuant to a valid 
prescription from a practitioner acting in the course of their 
professional practice.\22\ It is also unlawful to refuse or negligently 
fail to make, keep or furnish required records.\23\
---------------------------------------------------------------------------

    \20\ 21 U.S.C. 802(10), 822(a)(2).
    \21\ 21 CFR 1306.04(a).
    \22\ 21 U.S.C. 844(a).
    \23\ 21 U.S.C. 842(a)(5).
---------------------------------------------------------------------------

B. The Public Interest Standard

    The CSA, at 21 U.S.C. 824(a)(4), provides, insofar as pertinent to 
this proceeding, that the Administrator may revoke a DEA COR if she 
finds that the continued registration would be inconsistent with the 
public interest as that term is used in 21 U.S.C. 823(f). Pursuant to 
21 U.S.C. 823(f), the Administrator may deny an application for a DEA 
COR if she determines that such registration would be inconsistent with 
the public interest. In determining the public interest, the 
Administrator is required to consider the following factors:
    (1) The recommendation of the appropriate state licensing board or 
professional disciplinary authority.
    (2) The applicant's experience in dispensing or conducting research 
with respect to controlled substances.
    (3) The applicant's conviction record under federal or state laws 
relating to the manufacture, distribution or dispensing of controlled 
substances.
    (4) Compliance with applicable state, federal or local laws 
relating to controlled substances.
    (5) Such other conduct which may threaten the public health and 
safety.\24\
---------------------------------------------------------------------------

    \24\ In addition, I conclude that the reference in 21 U.S.C. 
823(f)(5) to ``other conduct which may threaten the public health 
and safety'' would as a matter of statutory interpretation logically 
encompass the factors listed in Section 824(a). See Kuen H. Chen, 
M.D., 58 FR 65,401, 65,402 (DEA 1993).
---------------------------------------------------------------------------

    As a threshold matter, the factors specified in Section 823(f) are 
to be considered in the disjunctive: The Administrator may properly 
rely on any one or a combination of those factors, and give each factor 
the weight she deems appropriate, in determining whether a registration 
should be revoked or an application for registration denied. See David 
H. Gillis, M.D., 58 FR 37,507, 37,508 (DEA 1993); see also D & S Sales, 
71 FR 37,607, 37,610 (DEA 2006); Joy's Ideas, 70 FR 33,195, 33,197 (DEA 
2005); Henry J. Schwarz, Jr., M.D., 54 FR 16,422, 16,424 (DEA 1989). 
Application of the public interest factors requires an individualized 
determination and assessment of prescribing and record-keeping 
practices that are ``tethered securely to state law * * * and federal 
regulations.'' Volkman v. DEA, 567 F.3d 215, 223 (6th Cir. 2009). 
Additionally, in an action to revoke a registrant's COR, the DEA has 
the burden of proving that the requirements for revocation are 
satisfied.\25\ The burden of proof shifts to the respondent once the 
Government has made its prima facie case.\26\
---------------------------------------------------------------------------

    \25\ See 21 CFR 1301.44(e).
    \26\ See Medicine Shoppe--Jonesborough, 73 FR 364,380 (DEA 
2008); see also Thomas E. Johnston, 45 FR 72,311, 72,311 (DEA 1980).
---------------------------------------------------------------------------

C. The Factors to Be Considered

Factors 1 and 3: The Recommendation of the Appropriate State Licensing 
Board or Professional Disciplinary Authority and Conviction Record 
Under Federal or State Laws Relating to the Manufacture, Distribution 
or Dispensing of Controlled Substances
    In this case, regarding Factor One, it is undisputed that 
Respondent currently holds a valid, unrestricted medical license in 
Ohio. Although not dispositive, Respondent's possession of a valid 
unrestricted medical license in Ohio weighs against a finding that 
Respondent's registration would be inconsistent with the public 
interest. See Robert A. Leslie, M.D., 68 FR 15,227, 15,230 (DEA 2003) 
(state license is a necessary, but not a sufficient condition for 
registration, and therefore, this factor is not dispositive).
    Regarding Factor Three, there is no evidence that Respondent has 
ever been convicted under any federal or state law relating to the 
manufacture, distribution or dispensing of controlled substances. I 
therefore find that this factor, although not dispositive, see Leslie, 
68 FR at 15,230, weighs against a finding that Respondent's 
registration would be inconsistent with the public interest.
Factors 2 and 4: Respondent's Experience in Handling Controlled 
Substances and Compliance with Applicable State, Federal or Local Laws 
Relating to Controlled Substances
    In this case, there is indeed evidence that Respondent has failed 
to remain in compliance with applicable federal and state law relating 
to controlled substances, and that her past experience in handling 
controlled substances and compliance with applicable laws is 
inconsistent with the public interest.
1. Respondent's Dispensing Practices
    Federal law requires every person who dispenses (including 
prescribing) any controlled substance to obtain a registration from the 
Attorney

[[Page 45685]]

General.\27\ Additionally, a separate registration must be obtained for 
each principal place of practice where a registrant dispenses 
controlled substances and a registrant must report any change of 
address by applying to modify her registration, which shall be treated 
as an application for registration.\28\ The Code of Federal Regulations 
delineates the procedures a registrant must follow to request a change 
in registered address.\29\ Federal regulations also mandate that a 
``prescription for a controlled substance may only be filled by a 
pharmacist, acting in the usual course of his professional practice and 
either registered individually or employed in a registered pharmacy, a 
registered central fill pharmacy, or registered institutional 
practitioner.'' \30\
---------------------------------------------------------------------------

    \27\ 21 U.S.C. 822(a)(2).
    \28\ 21 U.S.C. 822(e), 827(g); 21 CFR 1301.51.
    \29\ See 21 CFR 1301.51.
    \30\ 21 CFR 1306.06
---------------------------------------------------------------------------

    Ohio law requires ``[e]ach person * * * who sells dangerous drugs 
[31] at retail for delivery or distribution to persons 
residing in this state, shall be licensed as a terminal distributor of 
dangerous drugs pursuant to sections 4729.54 and 4729.55 of the Revised 
Code.'' Ohio Rev. Code Ann. Sec.  4729.551 (2011). It further requires 
that to operate a pharmacy, a ``person not a pharmacist, who owns, 
manages, or conducts a pharmacy, shall employ a pharmacist to be in 
full and actual charge of such pharmacy, * * * .'' Ohio Rev. Code Ann. 
Sec.  4729.27 (2011).
---------------------------------------------------------------------------

    \31\ Dangerous drugs under Ohio law includes any ``drug that may 
be dispensed only upon a prescription.'' Ohio Rev. Code Ann. Sec.  
4729.01(F) (2011).
---------------------------------------------------------------------------

    Various provisions of Ohio law authorize a licensed health 
professional, including a physician,\32\ to prescribe, administer, or 
personally furnish controlled substances to a patient, or ``[c]ause * * 
* controlled substances to be administered under the prescriber's 
direction and supervision.'' Ohio Rev. Code Ann. Sec.  3719.06 
(2011).\33\ Furthermore, Ohio law exempts, under defined circumstances, 
a business practice with a sole shareholder who is a licensed health 
professional from the requirement of obtaining a terminal distributor 
license. Ohio Rev. Code Ann. Sec.  4729.51 (B)(1)(j) (2011) (effective 
September 2008). The parameters of this exemption are set forth in a 
guidance document published by the Ohio State Board of Pharmacy:
---------------------------------------------------------------------------

    \32\ Ohio Rev. Code Ann. Sec.  4729.01(I)(4) (2011).
    \33\ See also Ohio Rev. Code Ann. Sec. Sec.  4729.29, 4729.291 
(2011).

    [S]ection 4729.51(B)(1)(j) which will now allow registered 
wholesale distributors of dangerous drugs to sell dangerous drugs to 
a business practice that is a corporation, limited liability 
company, or professional association if the business practice has a 
SOLE SHAREHOLDER who is a licensed health professional authorized to 
prescribe drugs (prescriber) and is authorized to provide the 
professional services being offered by the practice.
    This means that if the business practice has a single prescriber 
(M.D. * * *) who is the sole shareholder, member, or owner of the 
practice, then this business practice is not required to be licensed 
as a Terminal Distributor of Dangerous Drugs with the Ohio Board of 
Pharmacy. Previously, this exemption was only for a prescriber who 
practiced as a Sole Proprietor.

(Emphasis in original).\34\
---------------------------------------------------------------------------

    \34\ Ohio State Board of Pharmacy, Licensing Issues for 
Prescribers (Updated July 2008), https://www.pharmacy.ohio.gov/Licensing_Issues_for_Prescribers_07252008.pdf.

    The credible evidence at hearing demonstrated that Respondent 
established, solely owned, and operated two limited liability 
companies, Unique Pain Management (medical practice) and Unique Relief 
(dispensary), both of which are located at 418 Center Street, 
Wheelersburg, Ohio. (Tr. 48-49, 302-03.) Respondent's medical practice, 
which included her office and patient examination rooms, was physically 
separate from the dispensary, although a system of security cameras 
allowed some level of observing the dispensary operation by Respondent 
from a monitor located in her medical practice office. (Tr. 400.) The 
dispensary filled prescriptions issued by Respondent, as well as by 
Respondent's father, Dr. John Temponeras. The evidence of record 
reflects that between November 2008 and May 2011, a total of 
approximately 1.6 million dosage units of oxycodone, a Schedule II 
controlled substance, were ordered by Respondent, among other 
controlled substances. (Tr. 206-07.) The evidence further reflects that 
Respondent's father issued a large number of prescriptions for 
controlled substances while working at Respondent's medical practice at 
least one day a week from 2008 until late 2010, a significant portion 
of which were filled at Respondent's dispensary. (Tr. 181, 484-87.) 
Respondent's father was registered with DEA as an individual 
practitioner in Portsmouth, Ohio, but was not registered at 
Respondent's practice location. (Tr. 214.)
    To the extent Ohio law permits a sole practitioner to dispense or 
personally furnish controlled substances directly to a patient without 
a Terminal Distributor license, Respondent's dispensing practices were 
well outside of those parameters. Respondent established a distinctly 
separate legal entity to fill prescriptions that was physically 
separate from Respondent's medical office. Furthermore, Respondent's 
dispensary was not limited to filling prescriptions issued only by 
Respondent, but also routinely filled prescriptions issued by 
Respondent's father, notwithstanding the fact that Respondent did not 
have a Terminal Distributor license as required by state law. Compare 
Ohio Rev. Code Ann. Sec.  4729.551, with Sec.  4729.51(B)(1)(j) (2011). 
Respondent's dispensary was not registered with DEA as a pharmacy and 
none of the dispensary employees was licensed in Ohio as a pharmacist, 
as required by state and federal law.\35\ (Tr. 103-04.)
---------------------------------------------------------------------------

    \35\ 21 CFR 1306.06 (2011); Ohio Rev. Code Ann. Sec.  4729.27 
(2011).
---------------------------------------------------------------------------

    In addition to the foregoing violations, Respondent also failed to 
directly monitor or supervise the dispensing activities of her 
employees, none of whom were licensed, trained, or qualified to handle 
and dispense controlled substances in Ohio. Rather, Respondent's 
employees operated in large measure as an independent pharmacy filling 
prescriptions for Respondent and Respondent's father. The weight of the 
evidence demonstrated that Respondent and her father were not 
personally administering, dispensing, or furnishing controlled 
substances to their patients, but rather issued prescriptions for 
patients to be filled either at Respondent's dispensary or at other 
pharmacies. (Tr. 210-11.) The fact that patients had the option to fill 
prescriptions at other locations, which occurred to some extent, is 
inconsistent with personally administering or furnishing controlled 
substances.\36\ While the majority of prescriptions issued by 
Respondent or her father were filled at Respondent's dispensary, there 
is no credible evidence of record that Respondent or her father had any 
personal role or supervision of that process. Instead, the process was 
left to Respondent's employees, who were unlicensed, untrained, and 
unqualified to handle or distribute controlled substances.
---------------------------------------------------------------------------

    \36\ A sampling of data for a one month time period in April 
2010 revealed that Respondent filled approximately eighty-three 
percent of her prescriptions, with the remainder filled at other 
pharmacies. (Tr. 211.)
---------------------------------------------------------------------------

    I do not find the testimonial evidence with regard to cameras in 
the dispensary and a monitor within Respondent's office credible 
insofar as establishing, consistent with Ohio law, that Respondent 
effectively supervised her employees dispensing or furnishing of

[[Page 45686]]

controlled substances. For example, Mrs. Leadingham testified that 
Respondent could not monitor the dispensary while treating patients in 
the examination rooms, nor did the screen on the monitor allow for the 
reading of labels on prescription bottles. (Tr. 471, 478.) The evidence 
of record establishes at most a system of cameras that was designed for 
security of the premises, rather than Respondent's direct supervision 
of the dispensing or furnishing of controlled substances. Moreover, 
Mrs. Leadingham testified that upon her return to work at Respondent's 
dispensary in July 2009, Respondent was very concerned with the way the 
dispensary had been run, to include complaints from patients and 
missing pills. (Tr. 421.) Respondent ``was allowed no access to the 
dispensary itself in these two months that we were gone.'' (Id.) The 
fact that Respondent continued to operate a dispensary from April to 
July 2009, with admittedly no access at all, is fully consistent with 
other credible evidence of record, to include testimony by Agent 
Kinneer, that Respondent had for significant periods of time 
essentially no role in the physical delivery of controlled substances 
to her patients. (Tr. 307.)
    Respondent also offered at hearing one documentary exhibit, namely 
a letter from the Ohio Department of Health, dated April 27, 2010, 
which apparently was in reply to a document submitted by Respondent 
entitled: ``Policy and Procedure for Initial Intake, Screening, 
Verification of Identity and Medical Records, Monthly Processing of 
Patient.'' (Resp't Ex. 6; Gov't Ex. 8.) The reply letter in relevant 
part complimented Respondent and her staff ``on your thoroughness and 
intense efforts for security in preventing prescription drug abuse.'' 
(Id.) For purposes of this recommended decision, I have given this 
letter little weight. While the document facially confirms that 
Respondent had a written policy related to prevention of drug abuse, it 
does not address or rebut the specific evidence of Respondent's 
noncompliance with various provisions of state and federal law related 
to her handling of controlled substances alleged in the OSC/IS. 
Additionally, there is no credible evidence of record to suggest that 
the Ohio Department of Health, through Alvin D. Jackson, Director, was 
aware in April 2010 of the evidence of Respondent's specific misconduct 
which forms the basis of the instant proceeding, a significant portion 
of which became known to state and federal authorities after April 
2010.
    I find by a preponderance of the evidence that Respondent dispensed 
or directed and authorized the dispensing of controlled substances from 
an unregistered location on numerous occasions between November 2008 
and May 2011, in violation of 21 U.S.C. 841 and 822(a)(2) and (e), as 
well as 21 CFR 1306.06.\37\ I further find that Respondent's dispensing 
practices and lack of supervision of employees during that time period 
violated applicable state law. Ohio Rev. Code Ann. Sec. Sec.  4729.551, 
4729.27, and 3719.06 (2011).
---------------------------------------------------------------------------

    \37\ The OSC/IS alleged misconduct beginning on January 1, 2007, 
but the undisputed evidence of record established that Respondent 
opened her dispensary in or about November 2008, and no other 
relevant evidence was offered by the Government pertaining to 
``unauthorized distributions of controlled substances'' by 
Respondent prior to that date. See ALJ Ex. 1, at 1.
---------------------------------------------------------------------------

2. Respondent's Record-Keeping Practices

    Pursuant to 21 CFR 1304.03(b), 1304.21(a), 1304.22(a)(2)(iv), 
1304.22(a)(2)(ix) and 1304.22(c), a registered individual practitioner 
is required to maintain records of controlled substances in Schedules 
II through V that are dispensed and received, including the number of 
dosage units, the date of receipt or disposal and the name, address and 
registration number of the distributor. It is unlawful to refuse or 
negligently fail to make, keep or furnish required records.\38\ DEA 
regulations require that ``each registered individual practitioner 
required to keep records'' shall maintain inventories and records of 
Schedule II controlled substances ``separately from all of the records 
of the registrant;'' inventories and records of Schedule III through V 
controlled substances ``shall be maintained either separately from all 
other records of the registrant or in such form that the information 
required is readily retrievable from the ordinary business records of 
the registrant.'' \39\ DEA registrants are required to maintain ``a 
complete and accurate record of all controlled substances on hand * * * 
.'' \40\ They must ``take a new inventory * * * at least every two 
years.'' \41\ The inventory ``must be kept by the registrant and be 
available[] for at least 2 years'' from the date of its creation.\42\ 
``The inventory may be taken either as of opening of business or as of 
the close of business on the inventory date and it shall be indicated 
on the inventory.'' \43\
---------------------------------------------------------------------------

    \38\ 21 U.S.C. 842(a)(5).
    \39\ 21 CFR 1304.04(g), (f)(2).
    \40\ 21 CFR 1304.11(a).
    \41\ 21 CFR 1304.11(c); see also 21 CFR 1304.04(a) (``every 
inventory * * * must be kept by the registrant and be available * * 
* for at least two years from the date of such inventory'').
    \42\ 21 CFR 1304.04(a).
    \43\ 21 CFR 1304.11(a).
---------------------------------------------------------------------------

    Under longstanding Agency precedent, ``the failure to comply with 
record keeping requirements is a basis for revoking a registration.'' 
Alexander Drug Co., 66 FR 18,299, 18,303 (DEA 2001) (citing Singer-
Andreini Pharmacy, Inc., 63 FR 4,668 (DEA 1998); Arthur Sklar, d/b/a 
King Pharmacy, 54 FR 34,623 (DEA 1989); Summer Grove Pharmacy, 54 FR 
28,522 (DEA 1989); and The Boro Pharmacy and Bell Apothecary, 53 FR 
15,151 (DEA 1988)). The CSA's emphasis on record-keeping constitutes `` 
`an attempt to regulate closely the distribution of certain substances 
determined by Congress to pose dangers, if freely available, to the 
public at large.' '' United States v. Poulin, 926 F. Supp. 246, 250 (D. 
Mass. 1996) (quoting United States v. Averi, 715 F. Supp. 1508, 1510 
(M.D. Ala. 1989)).
    One mandatory record-keeping vehicle is DEA Form 222, the 
``official triplicate order form[] used by physicians to order 
scheduled narcotics'' and other controlled substances.\44\ A menu of 
federal regulations specifies procedures relating to DEA Form 222, such 
as obtaining, 21 CFR 1305.11, executing, Sec.  1305.12, filling, Sec.  
1305.13, and endorsing DEA Form 222, Sec.  1305.14, among other 
procedures.\45\ In addition, 21 CFR 1305.03 requires that a DEA Form 
222 be used for each distribution of a controlled substance listed in 
Schedules I or II, and Section 1305.17 provides that these order forms 
must be maintained separately from all other records and that they 
``are required to be kept available for inspection for a period of 2 
years.''
---------------------------------------------------------------------------

    \44\ Robert L. Dougherty, Jr., M.D., 60 FR 55,047, 55,048 (DEA 
1995).
    \45\ See, e.g., 21 CFR 1305.15-.19.
---------------------------------------------------------------------------

    The evidence at hearing reflected numerous record-keeping 
violations by Respondent. The evidence credibly reflects that 
Respondent did not properly prepare or maintain DEA Form 222s as 
required by law. The evidence also demonstrated with regard to 
Respondent's dispensary, that Schedule II controlled substance records 
were improperly commingled with other controlled substance records, 
contrary to 21 CFR 1304.04.
    Respondent's evidence did not deny the record-keeping violations 
with regard to DEA Form 222 alleged by the Government in the OSC/IS. 
Respondent's witnesses admitted that paper copies of DEA Form 222 were 
not properly maintained with required

[[Page 45687]]

information, or in separate locations from other records. Rather, the 
testimony focused on whether the improperly completed DEA Form 222s had 
distributor invoices stapled to them in an apparent attempt to comply 
with the substance and spirit of the applicable DEA regulations.
    As a factual matter, the testimony from Respondent's witnesses that 
invoices were routinely stapled to DEA Form 222s was directly 
contradicted by physical evidence at hearing, namely three purchaser 
copies of Form 222 seized from Respondent's dispensary on May 17, 2011, 
none of which was accompanied by an invoice. (Tr. 64-65; Gov't Ex. 6.) 
Additionally, all of the Government witnesses were consistent in 
describing the absence of stapled invoices in the vast majority of DEA 
Form 222s observed and seized from Respondent's dispensary.
    Agent Kinneer credibly testified that during his February 9, 2011 
inspection of Respondent's dispensary he reviewed a two to three inch 
stack of Form 222s on the dispensary counter with no attached invoices, 
noting that ``none of them had a date or quantity on a filled-out line 
for those individual drugs that had been ordered and received.'' (Tr. 
319.) Agent Kinneer also testified that he reviewed a box kept in the 
dispensary vault with folders full of blue Form 222s, and none of them 
had the requisite receipt information, to include date or quantity 
received. (Tr. 319-20.) With regard to attached invoices, Agent Kinneer 
testified that he did not go through all of the forms in the box, but 
none of those he recalls reviewing had an invoice attached. (Tr. 320.)
    Consistent with Agent Kinneer's testimony, DI Burkhart credibly 
testified that she participated in the execution of a federal search 
warrant at Respondent's dispensary on May 17, 2011, resulting in the 
seizure of approximately fifty blue purchaser copies of DEA Form 222, 
among other items. (Tr. 600-01.) Of the fifty, only two had an invoice 
stapled to the back of them. (Tr. 601.)
    In light of the foregoing testimony credibly demonstrating that on 
February 9, 2011, and May 17, 2011, the vast majority of DEA Form 222s 
present in Respondent's dispensary did not have accompanying invoices 
attached, I do not find credible the testimony of Respondent's 
witnesses to the contrary. Even if there had been credible evidence 
offered to establish that Respondent routinely attached invoices to DEA 
Form 222s, such evidence would ``not obsolve [a registrant] from its 
obligation to adhere to the law.'' Alexander Drug Co., 66 FR at 18,303.

    The efficacy of the closed system of distribution for controlled 
substances and certain chemicals mandated by Congress through the 
Controlled Substances Act depends upon strict adherence by all 
registrants to all record keeping requirements including those set 
forth at 21 U.S.C. [Sec. Sec.  ] 827, 828, 829, and 830, and all 
implementing regulations found in Title 21 Code of Federal 
Regulations, as well as all applicable state laws and regulations.

(Id.)

    The evidence at hearing also demonstrated that Respondent did not 
take an initial inventory or biennial inventories, contrary to 
applicable regulations. 21 CFR 1304.11(b) and (c). Agent Kinneer 
credibly testified that during his February 9, 2011 inspection, he 
requested an opening inventory but was informed by Mr. Leadingham that 
``one had not been done.'' (Tr. 314.) Nor was a biennial inventory 
produced during the inspection. DI Kresnak credibly testified that as a 
result of the May 2011 search of Respondent's dispensary, documents 
related to inventories were found, none of which reflected a ``biennial 
inventory.'' For example, there is evidence of record that documents 
were seized from Respondent's dispensary reflecting ``biannual 
inventories,'' and one marked ``opening inventory'' which ``indicated 
that the date that they opened the dispensary there was a zero 
inventory.'' (Tr. 83.)
    Respondent's evidence with regard to inventories centered primarily 
on testimony by Respondent's dispensary employees that frequently 
during ``down time'' they would count on-hand drugs, including 
controlled substances, to ensure a match with computer records. Mrs. 
Leadingham testified that the dispensary kept detailed daily 
inventories, and completed a biennial inventory every two years, which 
was kept in the dispensary vault. (Tr. 407.) Later contradicting that 
testimony, Mrs. Leadingham testified that the process to conduct a 
biennial inventory consisted of Mr. Leadingham using a computer 
printout while she physically counted the controlled substances, adding 
that she did not ``document anything'' from the inventory. (Tr. 481-
82.) The lack of documentation undermines the credibility of Mrs. 
Leadingham's assertions that detailed inventories were kept. Of 
significance, no invoices, DEA Form 222s, or dispensing logs were used 
to conduct the biennial inventory. (Tr. 480-82.) Nor is there any 
credible evidence that Respondent participated in the inventory process 
in any meaningful way to ensure an accurate inventory was taken and 
proper records maintained.\46\ Instead, the credible evidence of record 
reflects that Respondent delegated that task to employees who were 
neither trained nor properly supervised to perform the task.
---------------------------------------------------------------------------

    \46\ I have carefully considered and reject as not credible 
testimony by Respondent's employees that Respondent actively 
participated or supervised the inventory process. (See, e.g., Tr. 
453-54.) Even if such testimony was found to be credible, the 
methodology used to conduct the inventory, with or without the 
Respondent, was clearly contrary to law.
---------------------------------------------------------------------------

    The evidence at hearing unequivocally demonstrates that 
Respondent's employees, however well-intentioned, lacked the 
qualifications, training, or supervision to conduct an appropriate 
initial or biennial inventory, as required by applicable law and 
regulation. The fact that no compliant initial or biennial inventory 
was produced by Respondent or her employees during the February 9, 2011 
inspection, nor seized during the May 17, 2011 search, amply 
demonstrates Respondent's blatant non-compliance with this important 
record-keeping requirement. As Agent Kinneer succinctly testified, a 
``running inventory'' is no substitute for a true inventory, since in 
``order for me to do an audit I need a starting point.'' (Tr. 373-74.) 
There is no evidence that such a starting point existed within 
Respondent's dispensary records, nor any other compliant inventory 
records.
    Contrary to Respondent's assertion that the foregoing represents 
``highly technical paperwork errors,'' (Resp't Br. At 7), the failure 
by Respondent to properly maintain required records prevented 
investigators, as well as Respondent, from determining whether 
Respondent's dispensary had significant shortages or overages. (See, 
e.g., Tr. 375.) The sheer volume of controlled substances handled by 
Respondent, which between November 2008 and May 2011, totaled 
approximately 1.6 million dosage units of the Schedule II controlled 
substance oxycodone alone, demonstrates that overages or shortages had 
the potential to be quantitatively significant. (See Tr. 375.) Nor was 
the risk of diversion purely speculative with regard to Respondent's 
dispensary given, for example, the testimony by Mrs. Leadingham that 
during May and June 2009, Respondent was not allowed access to her own 
dispensary. (Tr. 421.) Additionally, Mrs. Leadingham testified that 
when she returned to work in Respondent's dispensary in July 2009, she 
observed crushed pills and pills in unmarked vials, and received 
complaints from customers of missing pills. (Tr. 421, 427.) Rather than 
being technical paperwork errors, I find

[[Page 45688]]

Respondent's blatant disregard for fundamental record-keeping 
requirements, among other violations, to be significantly at odds with 
the public interest.
    Accordingly I find by a preponderance of the evidence that 
Respondent unlawfully failed to make, keep or furnish required records 
relating to her handling of controlled substances, during the time 
period from November 2008 to May 2011, in violation of applicable 
federal law.\47\
---------------------------------------------------------------------------

    \47\ See 21 U.S.C. 827(a), 842(a)(5); 13 CFR 1304.11 (b) and 
(c), 1305.13(e).
---------------------------------------------------------------------------

3. Respondent's Issuance of Prescriptions Without Required Information

    Pursuant to 21 CFR 1306.05(a), ``[a]ll prescriptions for controlled 
substances shall * * * bear the full name and address of the patient * 
* * [and] directions for use * * *.'' The evidence of record included 
approximately eleven prescriptions issued by Respondent for various 
controlled substances to a single patient covering the time period 
August to November 2006. (Tr. 219-20; Gov't Ex. 7.) Each of the eleven 
prescriptions was deficient by failing to include the patient's 
address. (Tr. 220-21; see Gov't Ex. 7.)
    Additionally, the Government introduced testimony by DI Kresnak 
that he reviewed approximately twelve prescriptions seized from a 
Portsmouth, Ohio pharmacy that Respondent had issued for controlled 
substances to more than one patient between 2005 and 2006. Of the 
twelve reviewed, DI Kresnak testified that eleven lacked a patient 
address. (Tr. 53-55, 123-24.) None of these prescriptions were 
introduced by the Government at hearing, and DI Kresnak was uncertain 
if any of the prescriptions he recalled reviewing from the Portsmouth, 
Ohio pharmacy were the same as those identified in Government Exhibit 
7. Nor could DI Kresnak recall any of the patient names from memory 
without reviewing copies of the prescriptions.\48\ (Tr. 118.) In light 
of this testimony, I give little overall weight to the testimony 
offered by the Government with regard to the eleven prescriptions 
seized from the Portsmouth, Ohio pharmacy, since those prescriptions 
may or may not be the same as those contained within Government Exhibit 
7. ``Speculation is, of course, no substitute for evidence, and a 
decision based on speculation is not supported by substantial 
evidence.'' White ex rel. Smith v. Apfel, 167 F.3d 369, 375 (7th Cir. 
1999) (citing Erhardt v. Sec'y, DHS, 969 F.2d 534, 538 (7th Cir. 
1992)).
---------------------------------------------------------------------------

    \48\ The Government did not seek to refresh DI Kresnak's 
recollection with any documents, nor were the prescriptions at issue 
introduced at hearing. See supra note 9.
---------------------------------------------------------------------------

    Accordingly, I find by a preponderance of the evidence that 
Respondent issued approximately eleven prescriptions between August and 
November 2006 for controlled substances without providing a patient 
address, in violation of applicable federal regulations.
    All of the above findings regarding Respondent's violation of 
applicable law and regulation as it pertains to her prescribing 
practices, record-keeping, and dispensing from an unregistered location 
weigh heavily against a finding under Factors Two and Four of 21 U.S.C. 
823(f) that Respondent's continued registration would be consistent 
with the public interest.
Factor 5: Such Other Conduct Which May Threaten the Public Health and 
Safety
    Under Factor Five, the Administrator is authorized to consider 
``other conduct which may threaten the public health and safety.'' 5 
U.S.C. 823(f)(5). The Agency has accordingly held that ``where a 
registrant has committed acts inconsistent with the public interest, 
the registrant must accept responsibility for his or her actions and 
demonstrate that he or she will not engage in future misconduct. 
Patrick W. Stodola, 74 FR 20,727, 20,734 (DEA 2009).\49\ A 
``[r]espondent's lack of candor and inconsistent explanations'' may 
serve as a basis for denial of a registration. John Stanford Noell, 
M.D., 59 FR 47,359, 47,361 (DEA 1994).
---------------------------------------------------------------------------

    \49\ See also Hoxie v. DEA, 419 F.3d 477, 484 (6th Cir. 2005) 
(decision to revoke registration ``consistent with the DEA's view of 
the importance of physician candor and cooperation'').
---------------------------------------------------------------------------

    In this case Respondent was called by the Government to testify, 
but refused to answer questions by invoking her Fifth Amendment 
privilege. ``It is well established that the Agency may draw an adverse 
inference from a respondent's failure `to testify in response to 
probative evidence offered against' [her].'' Surinder Dang, M.D., 76 FR 
51,417, 51,422 (DEA 2011) (citing Baxter v. Palmigiano, 425 U.S. 308, 
318 (1976)). I find it appropriate on the facts of this case to draw an 
adverse inference against Respondent where the Government presented 
evidence of misconduct involving Respondent's prescribing, dispensing, 
and record-keeping practices, yet Respondent failed to testify and 
respond to this evidence. Additionally, Respondent presented no 
evidence of acceptance of responsibility for past misconduct, nor any 
evidence demonstrating that she will not engage in future misconduct, 
which weighs heavily against a finding under Factor Five of 21 U.S.C. 
823(f) that Respondent's continued registration would be consistent 
with the public interest.

V. Conclusion and Recommendation

    After balancing the foregoing public interest factors, I find that 
the Government has established by substantial evidence a prima facie 
case in support of revoking Respondent's DEA COR BT5598214, based on 
Factors Two, Four and Five of 21 U.S.C. 823(f). Once DEA has made its 
prima facie case for revocation or denial, the burden shifts to the 
respondent to show that, given the totality of the facts and 
circumstances in the record, revoking or denying the registration would 
not be appropriate. See Morall v. DEA, 412 F.3d 165, 174 (D.C. Cir. 
2005); Humphreys v. DEA, 96 F.3d 658, 661 (3d Cir. 1996); Shatz v. 
United States Dep't of Justice, 873 F.2d 1089, 1091 (8th Cir. 1989); 
Thomas E. Johnston, 45 FR 72,311 (DEA 1980). The record reveals that 
Respondent has not sustained her burden in this regard. In light of the 
foregoing, Respondent's evidence as a whole fails to sustain her burden 
to accept responsibility for her misconduct and demonstrate that she 
will not engage in future misconduct.
    I recommend revocation of Respondent's DEA COR BT5598214 as a 
practitioner, and denial of any pending applications for renewal or 
modification, on the grounds that Respondent's continued registration 
would be fully inconsistent with the public interest as that term is 
used in 21 U.S.C. 824(a)(4) and 823(f).

    Dated: December 15, 2011.
Timothy D. Wing,
Administrative Law Judge.
[FR Doc. 2012-18749 Filed 7-31-12; 8:45 am]
BILLING CODE 4410-09-P