Jose G. Zavaleta, M.D.; Decision and Order, 27431-27441 [2013-11185]

Download as PDF Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices During the public comment period, the proposed consent decree may be examined and downloaded at this Justice Department Web site: http:// www.usdoj.gov/enrd/ Consent_Decrees.html. We will provide a paper copy of the proposed consent decree upon written request and payment of reproduction costs. Please mail your request and payment to: Consent Decree Library, U.S. DOJ— ENRD, P.O. Box 7611, Washington, DC 20044–7611. Please enclose a check or money order for $44.25 (with all attachments) or $9.00 (without attachments) (25 cents per page reproduction cost) payable to the United States Treasury. Maureen Katz, Assistant Chief Management, Environmental Enforcement Section, Environment and Natural Resources Division. [FR Doc. 2013–11107 Filed 5–9–13; 8:45 am] BILLING CODE 4410–15–P DEPARTMENT OF JUSTICE Antitrust Division mstockstill on DSK4VPTVN1PROD with NOTICES Notice Pursuant to the National Cooperative Research and Production Act of 1993—3D PDF Consortium, Inc. Notice is hereby given that, on April 19, 2013, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301 et seq. (‘‘the Act’’), 3D PDF Consortium, Inc. (‘‘3D PDF’’) has filed written notifications simultaneously with the Attorney General and the Federal Trade Commission disclosing changes in its membership. The notifications were filed for the purpose of extending the Act’s provisions limiting the recovery of antitrust plaintiffs to actual damages under specified circumstances. Specifically, INTRATECH Corporation, Mapo-gu, Seoul, REPUBLIC OF KOREA, has been added as a party to this venture. In addition, Boeing Shared Services Group has changed its name to The Boeing Company, Seattle, WA. No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and 3D PDF intends to file additional written notifications disclosing all changes in membership. On March 27, 2012, 3D PDF filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the Federal Register pursuant to Section 6(b) of the Act on April 20, 2012 (77 FR 23754). VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 The last notification was filed with the Department on November 8, 2012. A notice was published in the Federal Register pursuant to Section 6(b) of the Act on December 4, 2012 (77 FR 71831). Patricia A. Brink, Director of Civil Enforcement, Antitrust Division. [FR Doc. 2013–11113 Filed 5–9–13; 8:45 am] BILLING CODE 4410–11–P DEPARTMENT OF JUSTICE Drug Enforcement Administration [Docket No. 12–1] Jose G. Zavaleta, M.D.; Decision and Order On May 10, 2012, Administrative Law Judge Gail A. Randall issued the attached Recommended Decision.1 Neither party filed exceptions to the Recommended Decision. Having reviewed the record in its entirety, I have decided to adopt the ALJ’s recommended rulings, findings of fact, conclusions of law, and recommended sanction, except for her discussion that the findings of a prior agency order denying a previous application filed by Respondent, see Jose Gonzalo Zavaleta, 76 FR 49506 (2011), were not entitled to res judicata effect because they were issued in a proceeding in which Respondent waived his right to a hearing. ALJ at 12– 13 (citing Robert M. Golden, 65 FR 5663 (2000)). While the ALJ was bound by the existing Agency precedent on the issue, I conclude that a re-examination of the issue is warranted and overrule Golden. However, because this has no effect on the outcome, I will adopt the ALJ’s recommended sanction and will order that Respondent’s application for a DEA Certificate of Registration as a practitioner be denied. The ALJ’s Ruling on Whether the Prior Agency Order Denying Respondent’s Application Is Entitled to Res Judicata Effect On February 23, 2009, the Deputy Assistant Administrator, DEA Office of Diversion Control, issued an Order to Show Cause to Respondent which proposed the denial of the application for registration submitted by him on July 28, 2008. See Jose Gonzalo Zavaleta, 76 FR at 49506. The Show Cause Order was based on allegations that Respondent had issued multiple controlled-substance prescriptions to undercover officers (UCs) and that he 1 All citations to the Recommended Decision are to the ALJ’s slip opinion. PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 27431 lacked a legitimate medical purpose and violated federal law in doing so because he either performed a cursory medical examination or failed to perform any medical examination. Id. Respondent failed to request a hearing on the allegations. Id. On July 27, 2011, this Agency issued a Decision and Order denying the application which Respondent submitted on July 28, 2008. Id. at 49508. The Agency’s denial of Respondent’s application was based on the evidence submitted by the Government showing that two officers from the Louisiana State Police had made undercover visits to Respondent on various occasions, during which they obtained from him prescriptions for controlled substances including hydrocodone, alprazolam, and Phenergan with codeine. Id. With respect to UC1, who visited him on January 23, 2008, the evidence showed that he asked Respondent for Lortab and initially denied that he was in pain; nonetheless, Respondent issued him a prescription for Lortab after UC1 stated (falsely) that he had a sexually transmitted disease, and that Respondent did so without performing a physical examination. Id. at 49506. Likewise, with respect to UC2, the Agency found that while she initially denied being in pain, Respondent prescribed hydrocodone to her. Id. Moreover, on a subsequent visit, Respondent prescribed Phenergan, a narcotic cough syrup, even though UC2 had no symptoms of cough or congestion, as well as more hydrocodone. Id. Finally, at UC2’s third visit, Respondent prescribed hydrocodone as well as Xanax to her. Id. At no time did Respondent obtain UC2’s medical records or perform a physical examination on her. Id. Rather, Respondent coached UC2 as to what to say to justify the issuance of the prescriptions. Id. Based on these findings, the Agency concluded that Respondent had failed to establish a physician-patient relationship with the UCs and therefore lacked a legitimate medical purpose and acted outside of the usual course of professional practice when he prescribed controlled substances to them. Id. at 49508 (citing 21 U.S.C. 1306.04(a); 21 U.S.C. 841(a)(1); Louisiana v. Moody, 393 So.2d 1212, 1215 (La. 1981)). During the course of the instant proceeding, the ALJ directed the parties to address ‘‘whether the doctrine of res judicata applies to the Final Order’’ and ‘‘thus bar[s] Respondent from ‘relitigat[ing] the factual findings and conclusions of law of the prior proceeding.’ ’’ ALJ at 12. (quoting Robert E:\FR\FM\10MYN1.SGM 10MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES 27432 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices L. Dougherty, 76 FR 16823, 16830 (2011)). Both parties filed briefs, with the Government seeking partial summary disposition on this basis. The ALJ denied the Government’s motion, holding that while ‘‘the factual findings in DEA final orders are entitled to res judicata[,] . . . the Agency has also expressly limited the application of res judicata, refusing to apply the principle when the final order was issued without an evidentiary hearing.’’ ALJ at 12–13 (citing Golden, 65 FR at 5664). Noting that the July 27, 2011 Final Order denying Respondent’s first application was based ‘‘solely on . . . material in the [Agency’s] investigative file and not [issued] following an evidentiary hearing,’’ the ALJ held that ‘‘the factual findings and legal conclusion contained in the Final Order were not entitled to res judicata effect in this matter.’’ Id. at 13. In holding that the factual findings and legal conclusions of the July 2011 Order were not entitled to preclusive effect, the ALJ properly applied Golden. Indeed, the ALJ was bound by Golden. However, given Golden’s cursory discussion of the issue, I conclude that a re-examination of its holding is warranted. While there is support for the rule established in Golden, it is clear that its rule is not constitutionally required. Moreover, there is a substantial body of authority which supports the view that as long as the Agency previously provided a party with a full and fair opportunity to litigate the allegations which supported the Agency’s proposed action (whether the denial of an application or revocation of a registration), a party’s failure to avail itself of that opportunity does not prohibit the Agency from giving preclusive effect to the factual findings and conclusions of law rendered in the prior proceeding. As the Supreme Court has held, ‘‘ ‘[w]hen an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose.’ ’’ United States v. Utah Constr. & Mining Co., 384 U.S. 394, 421–22 (1966) (as quoted in University of Tennessee v. Elliot, 478 U.S. 788, 797–98 (1986)). In Elliot, the Court further explained that ‘‘giving preclusive effect to administrative factfinding serves the value underlying general principles of collateral estoppel,’’ namely ‘‘avoiding the cost and vexation of repetitive litigation and the public’s interest in conserving judicial resources.’’ Id. at 798 (citations omitted). Thus, VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 [w]here an administrative forum has the essential procedural characteristics of a court, its determinations should be accorded the same finality that is accorded the judgment of a court. The importance of bringing a legal controversy to conclusion is generally no less when the tribunal is an administrative tribunal than when it is a court. Id. at n.6 (quoting Restatement (Second) of Judgments § 83, p. 269 (1982) [hereinafter, Restatement]). The Restatement sets forth five requirements which an adjudicative determination issued by an administrative tribunal must satisfy for it to be entitled to res judicata effect. These are that the proceeding provide: (a) Adequate notice to persons who are to be bound by the adjudication . . . ; (b) The right on behalf of a party to present evidence and legal argument in support of the party’s contentions and fair opportunity to rebut evidence and argument by opposing parties; (c) A formulation of issues of law and fact in terms of the application of the rules with respect to specified parties concerning a specific transaction, situation, or status, or a specific series thereof; (d) A rule of finality, specifying a point in the proceeding when presentations are terminated and a final decision is rendered; and (e) Such other procedural elements as may be necessary to constitute the proceeding a sufficient means of conclusively determining the matter in question, having regard for the magnitude and complexity of the matter in question, the urgency with which the matter must be resolved, and the opportunity of the parties to obtain evidence and formulate legal contentions. Restatement, § 83. DEA’s proceedings meet each of these requirements. First, under 21 U.S.C. 824(c), the Agency is required to ‘‘serve upon the applicant or registrant an order to show cause why registration should not be denied, revoked, or suspended,’’ which ‘‘shall contain a statement of the basis therefor and shall call upon the applicant or registrant to appear before the Attorney General at a time and place stated in the order.’’ See also 21 CFR 1301.37(c) (‘‘The order to show cause shall also contain a statement of the legal basis for such hearing and for the denial, revocation, or suspension of registration and a summary of the matters of fact and law asserted.’’). Moreover, ‘‘[p]roceedings to deny, revoke, or suspend shall be conducted pursuant to this section in accordance with subchapter II of chapter 5 of Title 5.’’ 21 U.S.C. 824(c) (emphasis added). The latter are the provisions of the Administrative Procedure Act governing the conduct of adjudicatory proceedings, and which provide, inter PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 alia, that the hearing be conducted by an administrative law judge, whose powers include the issuance of subpenas, and that ‘‘[a] party is entitled to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts.’’ 5 U.S.C. 556(c) & (d). In addition, DEA regulations set forth additional procedural protections to ensure the fairness of the hearing and specify the point at which the proceeding becomes final. See 21 CFR 1316. Thus, proceedings conducted under sections 303 and 304 of the Controlled Substance Act (21 U.S.C. 823 & 824) clearly meet each of these requirements. Respondent does not dispute that he was served with an Order to Show Cause proposing the denial of his first application and that he failed to respond to the Order and thus waived his right to a hearing. Resp. Memorandum, at 3. Rather, Respondent asserts that the previous Final Order denying his application should not be given preclusive effect because he falls within one of the res judicata doctrine’s recognized exceptions. Id. More specifically, Respondent argues that ‘‘[t]here is a clear and convincing need for a new determination of the issue’’ for two reasons. Id. at 2 (quoting Restatement § 28). First, he invokes the exception which provides for relitigation ‘‘because of the potential adverse impact of the determination on the public interest or the interest of persons not themselves parties in the initial action.’’ Id. (quoting Restatement § 28). Second, he invokes the exception which provides for relitigation where ‘‘the party sought to be precluded, as a result of the conduct of his adversary or other special circumstances, did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action.’’ Id. at 3 (quoting Restatement § 28). With respect to the first exception, Respondent argues that ‘‘[h]e has been an asset in every community where he has practiced medicine’’ and that his ‘‘patients and the public interest, especially in the community where he practices medicine, have been adversely affected since he lost his ability to prescribe controlled substances.’’ Id. at 5. Respondent thus contends that ‘‘[i]f the doctrine of res judicata is applied in these proceedings and [his application] is denied, then the public interest will be affected in that [his] experience as a physician cannot be properly utilized because many of the employment opportunities available to him require a . . . registration.’’ Id. E:\FR\FM\10MYN1.SGM 10MYN1 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES DEA has held, however, that evidence as to the impact on the community of a practitioner’s lack (or loss) of a registration is not relevant under any of the factors of the public interest standard of 21 U.S.C. 823(f). See Gregory D. Owens, 74 FR 36751, 36756–57 & n.22 (2009).2 See also Kwan Bo Jin, 77 FR 35021, 35021 (2012); Linda Sue Cheek, 76 FR 66972, 66973 (2011); Mark De La Lama, 76 FR 20011, 20020 n.20 (2011); Bienvenido Tan, 76 FR 17673, 17694 n.58 (2011). Because such evidence is not relevant in assessing whether Respondent’s registration would be ‘‘consistent with the public interest,’’ 21 U.S.C. 823(f), this exception cannot support allowing Respondent to relitigate the issues decided by the July 2011 Order. As for the second exception, Respondent asserts that ‘‘he filed [his first Application] prematurely and did not follow the advice of his [former] counsel.’’ Resp. Memorandum, at 4. He further argues that while he ‘‘wanted to respond to the Order to Show Cause,’’ which was issued in response to his first application, ‘‘this time he followed the advice of his counsel which . . . advised him not to respond and wait until he completed his pretrial intervention program and [the] requirements placed on him by the Louisiana State Board of Medical Examiners.’’ Id. Respondent thus contends that ‘‘this is a special circumstance which did not give him an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action,’’ and that ‘‘[i]f he had been informed by counsel of the consequences of not responding, [he] would have responded regardless of the 2 In Owens, I rejected the ALJ’s reliance, in recommending a sanction, on evidence that the registrant ‘‘ha[d] 561 patients from underserved counties, and [that] many of these patients have limited incomes.’’ 74 FR at 36756. In so holding, I noted that section 823(f)’s public interest standard ‘‘is not a freewheeling inquiry but is guided by the five specific factors which Congress directed the Attorney General to consider’’ and that ‘‘consideration of the socioeconomic status of a practitioner’s patient population is not mandated by’’ the relevant provisions of the Act, ‘‘which focus primarily on the acts committed by a practitioner.’’ Id. at 36757. In Owens, I further held that such evidence ‘‘has no bearing on whether [a registrant] has accepted responsibility and undertaken adequate corrective measures,’’ which are two of the showings which a registrant must make in order to rebut the Government’s prima facie showing that a registrant has committed acts which render his registration inconsistent with the public interest. Id. In addition, I further noted the inherent unworkability of the ALJ’s proposed rule, and that it ‘‘would inject a new level of complexity into already complex proceedings and take the Agency far afield of the purpose of the CSA’s registration provisions, which is to prevent diversion.’’ Id. at n.22. VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 outcome in order to put his evidence into the record.’’ Id. In the civil context, however, courts generally do not overturn judgments simply because a party complied with legal advice that was erroneous or ultimately proved to be disadvantageous. Cf. Nelson v. The Boeing Co., 446 F.3d 1118, 1120 (10th Cir. 2006) (declining to recognize right to effective assistance of counsel in civil suit outside of immigration context). And in any event, the Show Cause Order issued in the first proceeding fully explained that the consequence of Respondent’s failure to request a hearing would include that he would be deemed to have waived his right to a hearing and that a final order would be issued ‘‘based upon the investigative file and record of this proceeding as it may then appear.’’ Order to Show Cause (Feb. 23, 2009) (ALJ Ex. 1, at 5). Moreover, as the comment to this exception states, while ‘‘the court in the second proceeding may conclude that issue preclusion should not apply because the party sought to be bound did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the first proceeding[,] [s]uch a refusal to give the first judgment preclusive effect should not occur without a compelling showing of unfairness, nor should it be based simply on a conclusion that the first determination was patently erroneous.’’ Restatement § 28, cmt. j.3 Respondent’s contention that he did not challenge the first Show Cause Order because he relied on the disadvantageous advice of his prior attorney does not make for a ‘‘compelling showing of unfairness.’’ Id. The ALJ further rejected as ‘‘illogical’’ and contrary to the Agency’s experience under Golden, the Government’s argument that denying res judicata effect to the July 2011 final order ‘‘‘would allow registrants to repeatedly litigate the same issues and thus render key portions of 21 CFR 1301.43 meaningless.’’’ Memorandum and Order, at 9–10 (quoting Gov. Mot. at 3– 4). She further reasoned that 3 The circumstance described by Respondent does not remotely approach any of the circumstances cited by the Restatement as a ground for invoking this exception, which suggest that it is extremely narrow in its scope. Specifically, the comment gives as examples: where ‘‘one party may conceal from the other information that would materially affect the outcome of the case,’’ especially where ‘‘there is a fiduciary relationship between the parties’’; where ‘‘one of the parties may have been laboring under a mental or physical disability that impeded effective litigation and that has since been removed’’; and where ‘‘the amount in controversy in the first action may have been so small in relation to the amount in controversy in the second that preclusion would be plainly unfair.’’ Restatement § 28, cmt. j. PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 27433 ‘‘[a]pplicants, like [Respondent,] gain no benefit or tactical advantage by failing to respond to an order to show cause, for during [the] application period they are without the authority to handle controlled substances.’’ Id. at 10. Yet, it is within the Agency’s experience that registrants, especially those who are the subject of a criminal investigation or pending criminal charges (as well as state administrative proceedings), choose not to contest a Show Cause proceeding. For any number of reasons, a criminal investigation may ultimately result in the prosecutor declining to file charges, and even where charges are filed, a prosecution may result in an acquittal. Moreover, a final disposition may not occur for several years. So, too, it may take several years for a state administrative proceeding to come to a conclusion. During that period, material witnesses may become unavailable, and even where they remain available, their recollections may become faulty; other evidence may be discarded. Yet nothing in the CSA or DEA’s regulations prevents a person whose registration has been revoked from reapplying, and this can occur years after the misconduct which was the basis of the first proceeding. See Robert L. Dougherty, 76 FR 16823 (2011). In Dougherty, DEA revoked a physician’s registration in 1995. Id. at 16824–25. More than a decade later, the physician applied for a new registration. Id. at 16823. While the physician attempted to relitigate many of the factual findings made in the Agency’s 1995 decision and final order, as well as the factual findings made in a 1997 state board proceeding, this Agency held that these findings were res judicata. See id. at 16830–16833. It is true that in Dougherty, the findings, which were given preclusive effect, were made in an Order which was issued following a hearing. Yet, had the physician waived his right to a hearing when the Agency initially took action, under Golden, the Government would have been required to prove its case—nearly twenty years after the underlying misconduct—through witness testimony and other evidence. This is a ludicrous result. Thus, while it may be that a former registrant gains no benefit from failing to respond to an Order to Show Cause because he will remain unregistered—a proposition which is not free of dispute—Golden nonetheless creates the wrong incentive and wastes scarce Agency resources. Where the Agency has proposed the denial of an application, the applicant should be encouraged to challenge the Agency’s E:\FR\FM\10MYN1.SGM 10MYN1 mstockstill on DSK4VPTVN1PROD with NOTICES 27434 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices contention when the evidence is freshest. Indeed, litigation when the evidence is freshest enhances the accuracy of the public interest determination and is one of the underlying reasons for the doctrine of issue preclusion. Moreover, in response to the increase in the diversion of prescription controlled substances, the number of Show Cause Orders issued by the Agency has doubled in recent years. While some of these matters are resolved by the registrants agreeing to surrender their registration, many of them are not and require the issuance of a decision and order, even where the registrant waived his/her right to a hearing. Allowing an applicant to relitigate issues which he/she had a full and fair opportunity to litigate in a prior proceeding but chose not to, misallocates the scarce resources of both the Office of Administrative Law Judges and the Office of the Administrator.4 Cf. Arizona v. California, 530 U.S. 392, 412 (2000) (doctrine of res judicata ‘‘‘is not based solely on the defendant’s interest in avoiding the burdens of twice defending a suit, but is also based on the avoidance of unnecessary judicial waste’’’ (quoting United States v. Sioux Nation, 448 U.S. 371, 432 (1980)); Parklane Hosiery Co., Inc., v. Shore, 439 U.S. 322, 326 (1979) (‘‘Collateral estoppel, like the related doctrine of res judicata, has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party . . . and of promoting judicial economy by preventing needless litigation.’’). To be sure, the Restatement of Judgments provides that an issue is not entitled to preclusive effect unless it is actually litigated in the prior proceeding, and that an issue is not actually litigated where a judgment is entered by default or where an issue is ‘‘raised by a material allegation of a party’s pleading but is admitted . . . by virtue of a failure to deny [it] in a responsive pleading.’’ Restatement § 27, cmt. e. Be that as it may, an increasing number of jurisdictions reject this view and ‘‘allow findings made in default proceedings to collaterally estop, provided that the defaulted party could have appeared and defended if he had wanted to.’’ In re Catt, 368 F.3d 789, 791 (7th Cir. 2004) (citing Indiana cases). See also Evans v. Ottimo, 469 F.3d 278, 282 (2d Cir. 2006) (noting that under 4 Obviously, if an applicant was not properly served with the Show Cause Order in the prior proceeding, he/she did not have a full and fair opportunity to litigate the issues. Respondent, however, acknowledges that he was served with the first Show Cause Order. VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 New York law, ‘‘‘when a party defaults by failure to answer . . . the defaulting litigant may not further contest the liability issues’’’) (citation omitted); In re Cantrell, 329 F.3d 1119, 1123–24 (9th Cir. 2003); Gottlieb v. Kest, 141 Cal. App. 4th 110, 149 (Cal. Ct. App. 2006) (‘‘A default judgment conclusively establishes, between the parties so far as subsequent proceedings on a different cause of action are concerned, the truth of all material allegations contained in the complaint in the first action, and every fact necessary to uphold the default judgment.’’) (internal quotations and other citations omitted); In re Dawson, 338 B.R. 756, 761 (Bankr. N.D. Ohio 2006) (applying collateral estoppel under Ohio law to preclude relitigation of findings made in trial on the merits where party failed to appear at earlier trial); Matter of Latimore, 252 A.D.2d 217, 219–20 (N.Y. App. Div. 1999) (collaterally estopping attorney in disciplinary proceeding from relitigating findings made in earlier proceeding in which she defaulted); TransDulles Center, Inc., v. Sharma, 472 SE.2d 274, 276 (Va. 1996) (applying collateral estoppel to issues essential to default judgment where ‘‘[t]estimonial and documentary evidence was presented ex parte in the [trial] court hearing’’); Jackson v. R.G. Whipple, Inc., 627 A.2d 374, 380 (Conn. 1993) (‘‘[H]ad there been a full and fair opportunity to litigate [the] issues and such issues were necessary to a default judgment, that judgment should put to rest subsequent litigation of all issues necessary for the rendering of the default judgment.’’), abrogated on other grounds by Macomber v. Travelers Property & Cas. Corp., 804 A.2d 180, 195–96 (2002); Heggy v. Grutzner, 456 NW.2d 845, 849 (Wis. 1990) (precluding relitigation of factual findings essential to default judgment entered in earlier case where party ‘‘intentionally evaded service of process’’); Masciarelli v. Maco Supply Corp., 224 So.2d 329, 330 (Fla. 1969) (applying collateral estoppel to preclude relitigation of issue, where issue was decided by default judgment in prior litigation, personal service was accomplished, and party failed to answer complaint). Moreover, giving preclusive effect to findings made in a default proceeding does not violate the Due Process Clause, which requires only ‘‘that the party sought to be precluded have had an opportunity for a hearing.’’ In re Catt, 368 F.3d at 792. In any event, notwithstanding that Respondent did not request a hearing, the findings of the July 2011 order were not rendered in a classic default proceeding as the PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 Government was required to submit substantial evidence to support its allegations and extensive findings were made based on that evidence. Accordingly, I conclude that to the extent that Golden or any other Agency decision holds that a respondent is entitled to relitigate the factual findings and legal conclusions of an Agency final order because he/she waived his/her right to a hearing in the prior proceeding, it is overruled. Whether the prior agency decision and order was based solely on the evidence submitted by the Government where an applicant waived hearing, or on the basis of a record of a hearing conducted pursuant to 21 CFR 1316.41 et seq., the Agency’s factual findings and legal conclusions are entitled to preclusive effect in a subsequent proceeding. This is not to say that the applicant is foreclosed from putting on any evidence in the subsequent proceeding. That evidence, however, is limited to that which is relevant to, and probative of, ‘‘‘the critical issue [of] whether the circumstances, which existed at the time of the prior proceeding, have changed sufficiently to support [the] conclusion that’ granting the application would be consistent with the public interest.’’ Dougherty, 76 FR at 16830 (quoting Stanley Alan Azen, 61 FR 57893, 57893–94 (1996)). Thus, in the second proceeding, a respondent can put on evidence of acceptance of responsibility as well as remedial measures he has undertaken. What he/ she cannot do, however, is relitigate the findings of misconduct made in the earlier Agency decision and order.5 In any event, here, as the ALJ found, Respondent asserted that UC1 complained of back pain when both the recording of the visit and the officer’s testimony establish otherwise. ALJ 24. Likewise, the ALJ found that Respondent’s testimony with respect to UC2 (who credibly testified that she never told Respondent that she had any pain), lacked ‘‘forthrightness’’ and ‘‘candor.’’ Id. at 25. Notwithstanding his evidence that he completed a course on prescribing, Respondent’s failure to testify truthfully about his prescribings to the two undercover officers demonstrates that he does not accept responsibility for his misconduct and that the circumstances have not ‘‘‘changed sufficiently to support [the] conclusion that’ granting [his] application would be consistent with 5 In addition to the 2011 Decision and Order, which denied Respondent’s first application, on October 8, 2012, I issued a Decision and Order denying Respondent’s second and third applications. See Jose Gonzalo Zavaleta, 77 FR 64128, 64131 (2012). E:\FR\FM\10MYN1.SGM 10MYN1 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices the public interest.’’ Dougherty, 76 FR at 16883 (quoting Azen, 61 FR at 57893– 94). Buttressing this conclusion, the ALJ found that on his December 2010 application, Respondent failed to disclose both the March 2008 voluntary surrender of his registration as well as the suspension of his state controlled substance registration in September 2010. These falsifications were clearly capable of influencing the decision of the Agency and were thus material; the 2008 surrender occurred following an investigation into his prescribing to the undercover officers without a legitimate medical purpose, and the loss of his state controlled substance registration was itself an independent and adequate ground for denying his application. See Hooper v. Holder, 2012 WL 2020079, *2 (4th Cir. 2012). Accordingly, I adopt the ALJ’s recommended sanction and will order that Respondent’s application be denied. Order Pursuant to the authority vested in my by 21 U.S.C. 823(f) and 28 CFR 0.100(b), I order that the application of Jose Gonzalo Zavaleta, M.D., for a DEA Certificate of Registration as a practitioner, be, and it hereby is, denied. This Order is effective June 10, 2013. Dated: May 2, 2013. Michele M. Leonhart, Administrator. Frank Mann, Esq., for the Government Jonathan D. Goins, Esq., for the Respondent mstockstill on DSK4VPTVN1PROD with NOTICES RECOMMENDED RULINGS, FINDINGS OF FACTS, CONCLUSIONS OF LAW, AND DECISION OF THE ADMINISTRATIVE LAW JUDGE Administrative Law Judge Gail A. Randall. This proceeding is an adjudication governed by the Administrative Procedure Act, 5 U.S.C. §§ 551 et. seq., to determine whether a physician’s application for a DEA certificate of registration should be denied under the Controlled Substances Act, 21 U.S.C. §§ 823(f) (2006). I. PROCEDURAL BACKGROUND On September 6, 2011, the Deputy Assistant Administrator, Office of Diversion Control, Drug Enforcement Administration issued an Order to Show Cause to Jose G. Zavaleta, M.D., (‘‘Respondent’’ or ‘‘Dr. Zavaleta’’), seeking to deny his application 1 for a 1 In July of 2008, the Respondent filed an application for a DEA certificate of registration, control number W08092985. The DEA issued an Order to Show Cause regarding this application on VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 DEA Certificate of Registration as a practitioner under 21 U.S.C. § 823(f), because his registration would be inconsistent with the public interest. [Administrative Law Judge Exhibit (‘‘ALJ Exh.’’) 1]. Specifically, the Order to Show Cause alleged that in 2008 the Respondent violated federal law by issuing prescriptions for schedule III and IV controlled substances without a legitimate medical purpose, without establishing a physician-patient relationship, and by acting outside the usual course of professional practice in prescribing controlled substances to undercover agents.2 On September 29, 2011, the Respondent filed a timely request for a hearing on the allegations raised by the Order to Show Cause dated September 6, 2011. [ALJ Exh. 2]. The hearing was held in Baton Rouge, Louisiana, on February 28, 2012. [ALJ Exh. 4]. At the hearing, both parties called witnesses to testify and introduced documentary evidence. [Transcript (‘‘Tr.’’) Volume I]. After the hearing, both parties submitted Proposed Findings of Fact, Conclusions of Law, and Argument (Govt. Brief and Resp. Brief). II. ISSUE The issue in this case is whether or not the record as a whole establishes by a preponderance of the evidence that the Drug Enforcement Administration (‘‘DEA’’ or ‘‘Government’’) should deny the application for a DEA Certificate of Registration of Jose G. Zavaleta, M.D., control number W11043099C, as a practitioner, pursuant to 21 U.S.C. § 823(f), because to grant his application would be inconsistent with the public interest as that term is defined in 21 U.S.C. § 823(f). [ALJ Exh. 3; Tr. at 6]. February 23, 2009. The Respondent failed to respond to that Order to Show Cause, and on July 27, 2011, the DEA Administrator issued a Final Order denying this application. [ALJ Exh. 1]. In April of 2010, the Respondent filed another application, control number W10020882, and in December of 2010, [Govt Exh. 2], the Respondent filed a third application, control number W10078290. On March 2, 2011, the DEA Deputy Assistant Administrator issued an Order to Show Cause proposing to deny these two applications. The Respondent failed to respond to this Order to Show Cause. The record contains no further information concerning these two applications. On July 1, 2011, the Respondent filed application W11043099, and it is this application which is the subject of this proceeding. 2 The Order to Show Cause asserted that the facts supporting this Order to Show Cause are the same facts contained in the Orders to Show Cause issued February 23, 2009, and March 2, 2011, and the Administrator’s Final Order, all of which were attached to this Order to Show Cause and incorporated by reference. For a full discussion of the res judicata issue raised by these facts, see the order attached at Appendix A. PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 27435 III. FINDINGS OF FACT I find by a preponderance of the evidence, the following facts: A. The Respondent’s Personal and Professional Background The Respondent has been a physician for twenty-nine years, practicing emergency room medicine for approximately ten of those years. [Tr. 115, 117]. He is sixty years old. [Tr. 115]. He received his medical education at The National University of Trujillo, Peru, completed his education in Frankfurt Hospital in Philadelphia, Pennsylvania, and graduated from a residency at the LSU Medical Center in Shreveport, Louisiana. [Tr. 116]. The Respondent has active medical licenses in Louisiana and Alabama. [Tr. 117, 153, 155–156, 231–232]. He also has a current Louisiana Board of Pharmacy Controlled Dangerous Substance License, which authorizes him to handle controlled substances. [Tr. 154– 155; Resp. Exh. 6]. On March 26, 2008, the Respondent voluntarily surrendered his DEA registration. [Tr. 158–160; Govt. Exh. 4]. In August of 2007, the Respondent opened a family practice clinic in Alexandria, Louisiana. [Tr. 117, 119– 120]. There, he also treated chronic pain patients. [Tr. 122]. He used small signs to advertise his clinic. [Tr. 76]. At the clinic, Respondent maintained approximately two hundred and forty medical charts.3 [Resp. Exh. 11]. However, as of the time of this hearing, the Respondent had closed this clinic. [Tr. 170]. To determine if a pain patient is addicted to controlled substances, the Respondent testified that he knows to question the patient and examine the patient, trying to identify the source of the pain. [Tr. 122]. The Respondent also testified that he would ask for prior medical records, which he stated were difficult to obtain. [Id.]. The Respondent 3 The Government challenged the reliability of this hearsay document. I find, based upon the Respondent’s testimony concerning the procedure used by his attorney to have this exhibit prepared, that the record has an adequate indicia of reliability to withstand the hearsay objection. [Tr. 219–221]. Within those charts, he prescribed hydrocodone 100 times, or approximately 14.8% of all of his prescriptions issued between July 2007 and March 2008. He issued Xanax 17 times, or 2.5% of his total prescriptions of 674 during this time period. [Resp. Exh. 11]. He also prescribed Phenergan with codeine 82 times, or approximately 12% of his total prescriptions. [Resp. Exh. 11; see also Tr. 169–171]. However, I find these statistics have little weight, given DEA precedent on this issue. Specifically, the Agency has revoked ‘‘other practitioners’ registrations for committing as few as two acts of diversion.’’ Jayam Krishna-Iyer, M.D, 74 Fed. Reg. 459, 463 (DEA 2009) (citing Alan H. Olefsky, 57 Fed. Reg. 928, 928–29 (DEA 1992)). E:\FR\FM\10MYN1.SGM 10MYN1 27436 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES also would limit any prescribing of controlled substances to twenty tablets at a time. [Tr. 123]. But the Respondent credibly testified that he found it difficult to identify patients who were addicted to controlled substances, and that he did not often identify such patients in his practice. [Tr. 124]. He testified that he would need to see a patient multiple times to satisfactorily diagnose a drug addiction problem. [Id.]. Patients with chronic complaints would be seen every month. [Tr. 125]. The Respondent further testified that he was remorseful regarding the issuance of the prescriptions to the undercover agents. [Tr. 173–174]. He testified that although he ‘‘failed’’ when treating the undercover agents, he learned that he had to become ‘‘more vigilant’’ when dealing with patients seeking controlled substances. [Tr. 174]. He also testified that he made mistakes with his DEA applications and that he ‘‘should have give(n) [his applications] more careful review.’’ [Id.]. Dr. Zavaleta acknowledged the severity of his conduct but asserted that he ‘‘learned [his] lesson’’ and now has ‘‘basically . . . rehabilitated myself.’’ [Tr. 174– 175]. B. Treatment of Ricky Harris On January 23, 2008, Ricky Harris 4 visited Dr. Zavaleta’s clinic. [Govt. Exh. 12]. During Dr. Zavaleta’s examination of Mr. Harris, he took his blood pressure and temperature. [Id.]. He also measured and weighed Mr. Harris. [Id.]. Dr. Zavaleta counseled Mr. Harris about his weight and high blood pressure and urged him to lose weight. [Id.]. Mr. Harris presented complaints of symptoms from what he claimed was a sexually transmitted infection. [Tr. 14– 15; Govt. Exh. 20]. Dr. Zavaleta proceeded to question Mr. Harris about his symptoms. [Govt. Exh. 12]. He inquired about Mr. Harris’s sexual history and number of sexual partners. [Id.]. Mr. Harris reported that he had experienced these symptoms in the past and that he had been previously treated for a sexually transmitted infection. [Id.]. When the Respondent sought to physically examine his genitals, Mr. Harris refused. [Tr. 15, 27, 186]. Likewise, he refused to submit to a blood test to confirm the nature of the infection. [Tr. 186]. He also refused to provide the Respondent with a sample of discharge he reported experiencing. [Tr. 127]. The Respondent agreed to write Mr. Harris a prescription for 4 ‘‘Ricky Harris’’ is the patient name and alias used by Master Trooper Richard Horton, Louisiana State Police. For consistency with the evidence of record, I will refer to him as Mr. Harris. [See Tr. 11–12, 14]. VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 antibiotics and left the examination room. [Tr. 16, 127–128; Govt. Exh. 12]. Mr. Harris followed Dr. Zavaleta out into the clinic hallway and requested a prescription for Lortab, a pain medication and Schedule III controlled substance. [Tr. 17; Govt. Exh. 20; Govt. Exh. 12]. Dr. Zavaleta initially refused to write Mr. Harris this prescription. [Govt. Exh. 12]. Respondent told Mr. Harris that he could only write a prescription for Lortab if Mr. Harris reported experiencing pain. [Id.; Tr. 17]. Mr. Harris testified at the hearing that he did not tell Dr. Zavaleta that he was in pain. [Tr. 15–17, 25, 31–32]. Although the Respondent testified that Mr. Harris complained of shoulder pain and back pain, [Tr. 128–130, 179–180, 182], I find more credible Trooper Horton’s testimony as corroborated by the audiovisual recording of the visit and his contemporaneous report. [Govt. Exh. 12; Govt. Exh. 20; see also Govt. Exh. 10 (Harris patient file which lacks any mention of shoulder pain); Tr. 182]. Dr. Zavaleta wrote Mr. Harris a prescription for fifteen Lortab tablets. [Tr. 24; Govt. Exh. 10 at 3]. The Respondent wrote ‘‘back pain’’ in Mr. Harris’ medical chart. [Govt. Exh. 10 at 4–5]. But the Respondent did not perform any examination on Mr. Harris’ back other than to listen to his breathing. [Tr. 25–26, 183]. When Mr. Harris requested more Lortabs, the Respondent refused to increase the prescription for a greater number of tablets. [Govt. Exh. 12]. In addition, Mr. Harris sought refills on the prescription, but Dr. Zavaleta refused to authorize any refills. [Tr. 27–28; Govt. Exh. 10; Govt. Exh. 12]. Mr. Harris paid one hundred dollars in cash for that visit. [Tr. 129]. When he testified at the hearing, the Respondent stated that he should have insisted that Mr. Harris provide him a sample of the discharge for testing. [Tr. 132]. He also stated that, given his suspicions, he should have refused to provide a controlled substance prescription to Mr. Harris without prior records or a validating test for pain. [Id.]. Respondent further testified that this prescription for hydrocodone issued to Mr. Harris apparently lacked a legitimate medical purpose. [Tr. 188– 190]. Although the Respondent stated Mr. Harris made him feel uncomfortable, he provided him with the prescription. [Tr. 131]. Mr. Harris testified that he returned to see the Respondent, but that the Respondent refused to see or treat him. [Tr. 26]. Regarding this second visit, Respondent testified that he instructed his secretary to inform Mr. Harris that he would not provide him PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 with any additional treatment [Tr. 130– 131]. C. Treatment of Christy Landry On January 30, February 8, and February 28, 2008, Respondent treated Christy Landry.5 [Tr. 37; Govt. Exh. 21]. At the first visit, Ms. Landry told the Respondent that her boyfriend had taken her pills, and that she needed to get a refill of her medication. [Tr. 37]. The Respondent took no action to verify this prior prescription. [Tr. 209]. Ms. Landry told the Respondent that while she did not have any pain, taking hydrocodone made her feel good. [Tr. 38, 67; Govt. Exh. 21].6 But she told him in response to his questioning that he could describe her symptoms as ‘‘withdrawal symptoms.’’ [Tr. 38, 68].7 The Respondent referred Ms. Landry to a pain clinic. [Govt. Exh. 11 at 7]. However, in follow-up visits, the pain clinic referral was not discussed, and there is no mention in the patient chart that Ms. Landry ever contacted a pain clinic. [Tr. 201–202; Govt. Exh. 11]. At the hearing, the Respondent demonstrated that he examined her heart, checked her back, and examined her abdomen. [Tr. 136–137]. However, Ms. Landry credibly described this examination as the Respondent’s effort to search her for a recording device. [Tr. 39–42; Govt. Exh. 21]. Furthermore, he examined her shin and knees, allegedly checking for swelling. [Tr. 40, 137–138]. The Respondent wrote her a prescription for twenty Lorcet, a hydrocodone product and Schedule III controlled substance. [Tr. 43–44, 138; Govt. Exh. 11 at 10]. Ms. Landry requested a prescription for her sister, but the Respondent refused to issue such a prescription. [Tr. 62–63, 70; Govt. Exh. 21 at 1]. Ms. Landry paid one hundred dollars cash for this office visit. [Tr. 45, 139]. She had informed the receptionist that she did not have insurance. [Tr. 45]. Ms. Landry next saw the Respondent on February 8, 2008. [Tr. 46; Govt. Exhs. 11, 21]. He asked her if she had ‘‘generalized pain,’’ and Ms. Landry did not respond. [Tr. 47]. However, Ms. 5 Christy Landry is the patient name used by Detective Heather Owens of the Louisiana State Police. [Tr. 33; Govt. Exh. 11]. For the record, I will use the patient name used by Detective Owens. 6 Although the Respondent testified that Ms. Landry complained of left shoulder pain, insomnia, and pain in the legs, [Tr. 134, 138], I find her testimony, as corroborated by the contemporaneous police report, more credible. [Tr. 38; Govt. Exh. 21]. The Respondent also acknowledged that such pain complaints were not in Ms. Landry’s medical record. [Tr. 193–194; Govt. Exh. 11]. 7 The record contains no evidence that the Respondent is properly registered as a narcotic treatment program participant. E:\FR\FM\10MYN1.SGM 10MYN1 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES Landry credibly testified that she did not indicate that she had any kind of pain. [Tr. 52]. Rather, Ms. Landry complained of congestion and requested a prescription for cough syrup with codeine. [Tr. 47]. In his physical examination, the Respondent notated that her lungs were ‘‘abnormal’’ and that she had a diagnosis of ‘‘chronic cough.’’ [Govt. Exh. 11 at 6]. Yet the Respondent could not recall, and did not document, when the cough began in order to verify the chronic nature of the cough. [Tr. 204–205, 226; Govt. Exh. 11]. Further, the Respondent testified that he had not made any medical findings that would substantiate a medical diagnosis of insomnia. [Tr. 210–211]. The Respondent cautioned Ms. Landry on the proper way to take her controlled substance medication. [Tr. 50–51]. She received a prescription for Lorcet and Phenergan,8 both of which are controlled substances. [Tr. 53; Govt. Exh. 11 at 11]. Ms. Landry paid one hundred dollars in cash for the office visit. [Tr. 52, 62]. Lastly, Ms. Landry visited the Respondent on February 28, 2008. [Tr. 55]. She told him that she wanted a prescription for hydrocodone and Soma. [Tr. 56]. The Respondent refused to issue her a prescription for Soma, but he did issue her a prescription for Xanax,9 a controlled substance, and Lorcet. [Tr. 55, 60; Govt. Exh. 11 at 12]. At this visit, Ms. Landry did not complain of insomnia or anxiety. [Tr. 60–61]. When asked why she wanted the medication, Ms. Landry laughed and told the Respondent to write whatever he needed to write. [Tr. 56; Govt. Exh. 21 at 5]. As on the other two visits, the Respondent behaved in a flirtatious manner, which Ms. Landry felt was inappropriate. [Tr. 58–59, 68; Govt. Exh. 21]. On the third visit, Ms. Landry admitted that she did not have any pain.10 [Tr. 139]. At the hearing, the Respondent admitted that he had not prescribed controlled substances to Ms. Landry for legitimate medical reasons. [Tr. 212]. But he also testified that he thought, at the time he wrote the prescriptions, that he was justified in issuing these prescriptions to her. [Tr. 213–214]. 8 Phenergan is a cough syrup containing a combination of promethazine and codeine. It is a schedule V controlled substance. 21 C.F.R. 1308.15(c) (2011). 9 Xanax is a schedule IV controlled substance. 21 C.F.R. 1308.14(c)(1) (2011). 10 Although the Respondent testified that he was ‘‘shocked’’ when she denied having any pain, I find his testimony lacked credibility, given the tenor of the visit. [Tr. 139–140]. VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 D. Interview of the Respondent Sergeant Roland Mathews, a Louisiana State Trooper, interviewed the Respondent with the Respondent’s attorney present. [Tr. 71, 79; Govt. Exh. 13]. The Respondent told Sgt. Mathews that he could identify drug-seeking patients, and he stated he would not treat such a patient, but that he would help the patient find treatment. [Tr. 81– 82; 221–222]. The Respondent also stated that he would need to perform tests and get prior medical records before prescribing such a patient controlled substances. [Tr. 85; 222]. During Sgt. Mathews’ investigation, he did not uncover any evidence that the Respondent attempted to obtain prior medical records for Ricky Harris or Christy Landry. [Tr. 86]. Sgt. Mathews testified that Respondent was cooperative in the investigation. [Tr. 90– 91]. E. Respondent’s Criminal Case On March 26, 2008, the Respondent was arrested on six counts of prescribing ‘‘controlled substances beyond his respective prescribing authority or for a purpose other than accepted medical treatment of a disease, condition, or illness,’’ in violation of LA. REV. STAT. ANN. § 40:971(C)(1). [Govt. Exh. 5]. The Rapides Parish District Attorney’s Office offered the Respondent the opportunity to participate in a pretrial intervention program. [Tr. 141]. The pretrial intervention program required that Respondent visit a parole officer monthly for a period of twenty-four months, complete one year of unsupervised probation, pay a seven thousand dollar fine, agree not to seek a DEA registration for two years, notify the Medical Board of his participation in the program, and participate in random drug testing. [Tr. 142; Resp. Exh. 2]. After successfully completing the program in February of 2011, the Respondent had the charges dismissed and the arrest expunged. [Tr. 141–142, 144; Resp. Exhs. 4 and 5]. F. The Medical Board Action and State Controlled Substance License On June 24, 2010, the Respondent entered into a Consent Order with the Louisiana State Board of Medical Examiners (‘‘Medical Board’’) regarding his criminal charges. [Govt. Exh. 9; Resp. Exh. 8]. The Medical Board issued a public reprimand, and placed conditions upon his continued practice of medicine which included: (1) that the Respondent successfully complete the terms and conditions of the pretrial intervention program; (2) that the PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 27437 Respondent take continuing medical education regarding proper prescribing; and (3) that the Respondent pay a one thousand dollar fine to the Medical Board. [Tr. 146; Govt. Exh. 9 at 4]. The Respondent completed these requirements. [Tr. 148]. Currently, the Respondent maintains an active Louisiana medical license. [Tr. 111–112, 153]. Pursuant to the Consent Order with the Medical Board, on June 11–13, 2008, the Respondent took a three-day course at the University of South Florida entitled ‘‘Prescribing Controlled Drugs: Critical Issues and Common Pitfalls of Misprescribing.’’ [Resp. Exh. 9]. He credibly testified that the course taught him how to better perform an evaluation of patients seeking controlled substances. [Tr. 150]. By agreement with the Louisiana Board of Pharmacy in September 2010, the Respondent’s Louisiana controlled substance license was suspended. [Govt. Exh. 24]. On February 14, 2011, his state controlled substance license was reinstated, and Dr. Zavaleta’s license remains current and active, with an expiration date of August 1, 2012. [Govt. Exh. 24; Resp. Exh. 6]. G. Respondent’s DEA Application On July 1, 2011, the Respondent electronically submitted an application for a DEA certificate of registration. [Tr. 95–96; Govt. Exh. 1]. The application was certified, using the Respondent’s name. [Tr. 95, 97; Govt. Exh. 1 at 4]. As part of the application for a certificate or registration, the Agency asks four ‘‘liability’’ questions. [Tr. 96–97; Govt. Exh. 1 at 3]. DEA Diversion Investigator Cheryl Golden testified that the purpose of these liability questions is to determine if there has been any previous disciplinary action taken against the applicant prior to deciding whether to approve the pending application. [Tr. 98]. On this application, the Respondent answered ‘‘Yes’’ to the second question: ‘‘Has the applicant ever surrendered for cause or had a federal controlled substance registration revoked, suspended, restricted or denied?’’ [Tr. 97; Govt. Exh. 1 at 3]. The third question asks if the applicant had ‘‘ever surrendered for cause or had a state professional license for a controlled substance registration revoked, suspended, denied, restricted or placed on probation,’’ and the Respondent answered ‘‘No,’’ to this question. [Tr. 97; Govt. Exh. 1 at 3]. However, on September 2, 2010, the Respondent’s Louisiana controlled substances registration had been suspended. [Govt. Exh. 24; see also Govt. Exh. 8]. E:\FR\FM\10MYN1.SGM 10MYN1 27438 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices Subsequently, on February 14, 2011, the Respondent’s Louisiana controlled substances registration was reinstated. [Tr. 100, 155; Govt. Exh. 24]. On December 8, 2010, the Respondent had also submitted an electronic application for a DEA registration.11 [Govt. Exh. 2]. On this application, the Respondent answered ‘‘No,’’ to all four liability questions, despite having surrendered his DEA registration number BZ5998250, in March of 2008, and the suspension of his Louisiana controlled substance license in September of 2010. [Tr. 104–105; Govt. Exh. 2 at 1; Govt. Exh. 4, 8, and 24]. The Respondent did not participate in a hearing regarding this application. [Tr. 158]. He testified that his incorrect answers to the liability questions on these applications were a mistake. [Tr. 164–167, 215–218]. The Respondent credibly testified that he needs a DEA certificate of registration to obtain hospital privileges and to fully practice medicine. [Tr. 172– 173, 175–176]. At the time of the hearing, the Respondent was employed at Outpatient Medical Clinic in Lisbon, Louisiana, and at Rapides Primary Healthcare. [Tr. 176–177]. mstockstill on DSK4VPTVN1PROD with NOTICES IV. Statement of Law and Discussion A. Res Judicata On November 22, 2011, I issued an order, directing the parties to file briefs, with supporting legal authorities, on whether the doctrine of res judicata applies to the Final Order entered against Respondent on July 27, 2011, see Jose Gonzalo Zavaleta, M.D., 76 Fed. Reg. 49,506 (DEA 2011), thus barring Respondent from ‘‘relitigati[ng] the factual findings and conclusions of law of the prior proceeding.’’ Robert L. Dougherty, M.D., 76 Fed. Reg. 16,823, 16,830 (DEA 2011). On December 16, 2011, the Government and Respondent filed briefs on this issue. See Government’s Motion for Partial Summary Disposition and Respondent’s Memorandum. Agency precedent has repeatedly held that factual findings in DEA final orders are entitled to res judicata. See e.g., Robert L. Dougherty, M.D., 76 Fed. Reg. 16,823, 16,830 (DEA 2011); Stanley Alan Azen, M.D., 61 Fed. Reg. 57,893, 57,893–94 (1996). But the Agency has also expressly limited the application of res judicata, refusing to apply the principle when the final order was issued without an evidentiary hearing. Robert M. Golden, M.D., 65 Fed. Reg. 11 Although the record copy of Government Exhibit 2 is not a certified copy, DI Golden credibly testified that she confirmed that a certified copy of the registration was on file at DEA. [Tr. 104]. VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 5,663, 5,664 (DEA 2000). In this case, the July 27, 2011 Final Order was issued against Dr. Zavaleta solely on the basis of material in the DEA’s investigative file and not following an evidentiary hearing. Therefore, I found, consistent with the Agency’s holding in Golden, that the factual findings and legal conclusions contained in the Final Order were not entitled to res judicata effect in this matter.12 B. Position of the Parties 1. Government’s Position The Government asserts that the Respondent’s application should be denied based upon the Government’s preponderating evidence that the Respondent’s registration would be contrary to the public interest. [Govt. Brief at 22–23]. Specifically, the Government claims that the Respondent prescribed controlled substances to undercover officers without a legitimate medical purpose and outside the course of professional practice. [Govt. Brief at 15]. Further, the Government argues that by issuing prescriptions to the two undercover officers the Respondent violated state law because he failed to adequately evaluate them, document a proper diagnosis, formulate a legitimate treatment plan, conduct a drug screen for these patients, and maintain adequate medical records. [Govt. Brief at 16–17]. Next, the Government asserts that the Respondent submitted two applications for registration to the DEA that contained materially false information, specifically his responses to the four liability questions. [Govt. Brief at 18– 19]. The Government argues that this conduct provides an independent basis to deny Respondent’s application. [Id.]. Lastly, the Government argues that the Respondent has not articulated any persuasive mitigating factors. [Govt. Brief at 21–22]. The Government claims that the Respondent has never ‘‘acknowledge[d] that he violated Federal or state law or that he assumed complete fault for his actions.’’ [Govt. Brief at 21]. Rather, the Government argues that the Respondent testified at the hearing that, given the information he had at the time, he thought he had acted reasonably. [Id.]. Given this lack of responsibility and remorse, and the Respondent’s failure to testify truthfully about the undercover visits, the Government asserts that Respondent’s conduct ‘‘belies any notion that he has accepted responsibility for his actions.’’ [Govt. Brief at 22]. 12 I have attached the relevant order and the parties’ briefs as appendix A & B for the Deputy Administrator’s consideration. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 2. Respondent’s Position The Respondent argues that his registration is in the public interest and consequently requests that his application be granted. The Respondent notes that he has been punished by the Louisiana Medical Board and the Louisiana Board of Pharmacy for his misconduct in the prescribing of controlled substances to the undercover agents. Although he acknowledges that it is DEA’s responsibility to determine the public interest in this matter, he asserts that the DEA should consider these actions when determining the appropriate remedy in this matter. [Resp. Brief at 7]. Next, the Respondent asserts that the Government did not provide an expert witness to testify concerning the legitimacy of the prescriptions written to the undercover officers. [Resp. Brief at 8–9]. He argues that the Government failed to establish that Respondent’s physical examination of the undercover officers or Dr. Zavaleta’s failure to request medical records for those patients was outside the usual course of professional practice. [Resp. Brief at 10]. The Respondent further argues that the Government has not alleged or proven that the Respondent’s conduct was outright drug dealing. [Resp. Brief at 11]. On this point, the Respondent highlights that, although Detective Owens requested a prescription for her sister, the Respondent refused her request. [Id.]. Furthermore, the Respondent notes that Dr. Zavaleta has not been convicted of any offenses under federal or state law relating to his handling of controlled substances. [Id.]. While Respondent acknowledged that he should not have prescribed controlled substances to the undercover agents, he asserts that he offered substantial mitigating evidence ‘‘to show he would not engage in the same conduct’’ in the future. [Resp. Brief at 12]. To this point, the Respondent notes that Dr. Zavaleta completed a three-day continuing medical education course in prescribing controlled substances. [Id.]. The Respondent also points out that Dr. Zavaleta cooperated with all agencies involved in this matter, and that he admitted that he made a mistake in prescribing to the undercover officers. [Id.]. The Respondent claims he demonstrated remorse for his conduct. [Id.]. He admitted he had failed and that he had learned his lesson when it came to prescribing controlled substances. [Resp. Brief at 13]. As for material falsification, the Respondent acknowledges that he had failed to answer the liability questions correctly on his two applications for E:\FR\FM\10MYN1.SGM 10MYN1 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES registration. But, the Respondent argues that his error on these applications was unintentional, because he had ‘‘no reason to hide the information.’’ [Id.]. However, he concedes that ‘‘[n]o matter how unintentional, his failure [to correctly answer the liability questions] could have the tendency to affect the outcome of his application thereby being materially false.’’ [Id.]. In conclusion, the Respondent argues that granting his application would be consistent with the public interest. [Resp. Brief at 13–14]. Although the Respondent engaged in misconduct, he asserts that he ‘‘has done everything within his control to make sure this does not happen again.’’ [Resp. Brief at 14]. The Respondent ‘‘believes he has demonstrated to this Court that he is remorseful for his actions and will not repeat the same behavior.’’ [Id.]. Therefore, he requests that his application be approved. [Id.]. C. Statement of Law Section 823(f) of the Controlled Substances Act (‘‘CSA’’ or ‘‘the Act’’) provides that ‘‘[t]he Attorney General 13 may deny an application for [a practitioner’s] registration if he determines that the issuance of such registration would be inconsistent with the public interest.’’ 21 U.S.C. 823(f). In making the public interest determination, the Act requires the consideration of 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. 21 U.S.C. § 823(f). These factors are considered in the disjunctive. Robert A. Leslie, M.D., 68 Fed. Reg. 15,227, 15,230 (DEA 2003). The Deputy Administrator may rely on any one or a combination of factors, and may give each factor the weight he deems appropriate in determining whether an application for a registration should be denied. Id. Moreover, the Deputy Administrator is ‘‘not required to make findings as to all of the factors.’’ Hoxie v. DEA, 419 F.3d 477, 482 (6th 13 The Deputy Administrator has the authority to make such determinations pursuant to 28 C.F.R. §§ 0.100(b) and 0.104 (2011). VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 Cir. 2005); see also Morall v. DEA, 412 F.3d 165, 173–74 (D.C. Cir. 2005). The Government bears the burden of proving that the requirements for registration are not satisfied. 21 C.F.R. § 1301.44(d) (2011). The burden of proof shifts to the Respondent once the Government has made its prima facie case. Medicine Shoppe—Jonesborough, 73 Fed. Reg. 364, 380 (DEA 2008). The Agency has recognized that ‘‘past performance is the best predictor of future performance.’’ ALRA Labs, Inc. v. DEA, 54 F.3d 450, 452 (7th Cir. 1995). Further, the Agency has repeatedly held that ‘‘where a registrant has committed acts inconsistent with the public interest, the registrant must accept responsibility for (his) actions and demonstrate that (he) will not engage in future misconduct.’’ Medicine Shoppe, 73 Fed. Reg. at 387; see also Samuel S. Jackson, D.D.S., 72 Fed. Reg. 23,848, 23,853 (DEA 2007). In short, after the Government makes its prima facie case, the Respondent must prove by a preponderance of the evidence that he can be entrusted with the authority that a registration provides by demonstrating that he accepts responsibility for his misconduct and that the misconduct will not re-occur. Under Section 824(a)(1), a registration may also be revoked or suspended ‘‘upon a finding that the registrant . . . has materially falsified any application filed pursuant to or required by this subchapter.’’ 21 U.S.C. § 824(a)(1) (2006). Under Agency precedent, the various grounds for revocation or suspension of an existing registration that Congress enumerated in 21 U.S.C. § 824(a), are also properly considered in deciding whether to grant or deny an application under section 823. See Anthony D. Funches, 64 Fed. Reg. 14,267, 14,268 (DEA 1999); Alan R. Schankman, M.D., 63 Fed. Reg. 45,260, 45,260 (DEA 1998); Kuen H. Chen, M.D., 58 Fed. Reg. 65,401, 65,402 (DEA 1993). Although the Government did not assert material falsification in the Order to Show Cause, the Government did place the Respondent properly on notice of this allegation in the Government’s Supplemental Prehearing Statement. Thus, the allegation that the Respondent materially falsified his application is properly considered in this proceeding. George Mathew, M.D., 75 Fed. Reg. 66,138, 66,146 (DEA 2010) (‘‘[T]he failure of the Government to disclose an allegation in the Order to Show Cause is not dispositive, and an issue can be litigated if the Government otherwise timely notifies a respondent of its intent to litigate the issue.’’); CBS Wholesale Distributors, 74 Fed. Reg. 36,746, 36,750 (DEA 2009). Longstanding Agency PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 27439 precedent has held that the scope of a DEA administrative hearing is determined not only by the allegations contained in the OSC, but also by the parties’ prehearing statements. Darrell Risner, D.M.D., 61 Fed. Reg. 728, 730 (DEA 1996); John Stanford Noell, M.D., 59 Fed. Reg. 47,359, 47,361 (DEA 1994). 1. The Material Falsification Allegation A false statement is material if it ‘‘has a natural tendency to influence, or was capable of influencing, the decision of the decisionmaking body to which it was addressed.’’ Kungys v. United States, 485 U.S. 759, 770 (1988). While the evidence must be ‘‘clear, unequivocal, and convincing,’’ the ultimate finding of materiality ‘‘turns on a substantive interpretation of the law.’’ Id. at 772; see also Craig H. Bammer, D.O., 73 Fed. Reg. 34,327, 34,328 (DEA 2008). However, ‘[i]t makes no difference that a specific falsification did not exert influence so long as it had the capacity to do so.’’’ United States v. Alemany Rivera, 781 F.2d 229, 234 (1st Cir. 1985). The record raises the issue of whether the Respondent’s failure to correctly answer the liability questions on his most recent application and his application in December of 2010 resulted in a material falsification of those applications. DEA has previously held that ‘‘[t]he provision of truthful information on applications is absolutely essential to effectuating [the] statutory purpose’’ of determining whether the granting of an application is consistent with the public interest. Peter H. Ahles, M.D., 71 Fed. Reg. 50,097, 50,098 (DEA 2006). In the July 2011 application, the Respondent disclosed his voluntary surrender of his DEA registration. However, he failed to disclose the suspension of his Louisiana controlled substance license, which occurred in September of 2010. Clearly, the Respondent knew or should have known about this suspension by July of 2011. Likewise, in the December 2010 application, the Respondent failed to disclose his voluntary surrender of his DEA registration in March of 2008, or the suspension of his Louisiana controlled substance license in September of 2010. I find these omissions resulted in the material falsification of the Respondent’s applications. Clearly, this information was capable of influencing the decisionmaker in this matter. Respondent’s lack of full disclosure in these applications weighs heavily in favor of denying his application for a certificate of registration. See Shannon L. Gallentine, D.P.M., 76 Fed. Reg. 45,864, 45,866 (DEA 2011). E:\FR\FM\10MYN1.SGM 10MYN1 27440 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES 2. Factor One: Recommendation of the Appropriate State Licensing Board While the Medical Board’s recommendation is probative, ‘‘DEA maintains a separate oversight responsibility with respect to the handling of controlled substances and has a statutory obligation to make its independent determination as to whether the granting of [a registration] would be in the public interest.’’ Mortimer B. Levin, D.O., 55 Fed. Reg. 8,209, 8,210 (DEA 1990); see also Jayam Krishna-Iyer, M.D., 74 Fed. Reg. 459, 461 (DEA 2009). The ultimate responsibility to determine whether a registration is consistent with the public interest has been delegated exclusively to the DEA, not to entities within state government. Edmund Chein, M.D., 72 Fed. Reg. 6,580, 6,590 (DEA 2007), aff’d, 533 F.3d 828 (DC Cir. 2008). Although not dispositive, state board decisions are relevant on the issue of granting or denying a DEA application. Gregory D. Owens, D.D.S., 74 Fed. Reg. 36,751, 36,755 (DEA 2009); Martha Hernandez, M.D., 62 Fed. Reg. 61,145, 61,147 (DEA 1997). Here, the Medical Board has not made a direct recommendation concerning the Respondent’s DEA application. However, on June 24, 2010, the Respondent entered into a Consent Order with the Louisiana Medical Board. Although not admitting to any misconduct, the Respondent agreed to the Medical Board’s action and conditions placed upon his medical license. Specifically, the Medical Board issued a public reprimand, and, among other conditions, required the Respondent to take a continuing medical education course regarding proper prescribing. The Respondent completed all of the requirements levied by the Medical Board, and he currently has an unrestricted, active medical license. Therefore, I find that this factor does not weigh in favor or against Respondent’s application for a DEA certificate of registration. 3. Factors Two and Four: The Applicant’s Experience With Controlled Substances and Compliance With Applicable State, Federal, or Local Laws Relating To Controlled Substances. DEA regulation dictates that a prescription, to be valid, must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice. 21 C.F.R. § 1306.04(a) (2011); see also LA. REV. STAT. ANN. § 40:1238.2 (2011).14 As the Supreme Court 14 This statutory provision provides in relevant part: A prescription, in order to be effective in VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 explained, ‘‘the prescription requirement. . . ensures patients use controlled substances under the supervision of a doctor so as to prevent addiction and recreational abuse. As a corollary, [it] also bars doctors from peddling to patients who crave the drugs for those prohibited uses.’’ Gonzales v. Oregon, 546 U.S. 243, 274 (2006) (citing United States v. Moore, 423 U.S. 122, 135 (1975)). Further, a valid prescription under Louisiana law is defined as a ‘‘a written request for a drug. . . issued by a licensed physician. . . for a legitimate medical purpose, for the purpose of correcting a physical, mental, or bodily ailment, and acting in good faith in the usual course of his professional practice.’’ LA. REV. STAT. ANN. § 40:961(33) (2011). Under the CSA, it is fundamental that a practitioner must establish and maintain a bonafide doctor-patient relationship in order to act ‘‘in the usual course of. . . professional practice’’ and to issue a prescription for a ‘‘legitimate medical purpose.’’ Laurence T. McKinney, M.D., 73 Fed. Reg. 43,260, 43,265 (DEA 2008); see also Moore, 423 U.S. 142–43 (noting that evidence established that physician ‘‘exceeded the bounds of ‘‘professional practice,’’ when ‘‘he gave inadequate physical examinations or none at all,’’ ‘‘ignored the results of the tests he did make,’’ and ‘‘took no precautions against. . . misuse and diversion’’). The CSA, however, generally looks to state law to determine whether a doctor and patient have established a bonafide doctorpatient relationship. Kamir GarcesMejias, M.D., 72 Fed. Reg. 54,931, 54,935 (DEA 2007); United Prescription Services, Inc., 72 Fed. Reg. 50,397, 50,407–08 (DEA 2007). Here, Louisiana law provides that it is unlawful for a physician to ‘‘assist a patient. . . in obtaining a controlled dangerous substance through misrepresentation, fraud, forgery, deception, or subterfuge.’’ LA. REV. STAT. ANN. § 40:971.2(B)(1) (2011). By coaching Mr. Harris and Ms. Landry to state they were in pain, and by falsely documenting their medical records to record these pain complaints when neither patient expressed that they were in pain is a violation of this provision. Louisiana law pertaining to the treatment of chronic pain requires a legalizing the possession of legend drugs, shall be issued for a legitimate medical purpose by one authorized to prescribe the use of such legend drugs * * * Any person who knows or should know that he or she is filling such a prescription * * * to a drug abuser or habitual user of legend drugs, as well as the person issuing the prescription, may be charged with a violation of this Section. LA. REV. STAT. ANN. § 40:1238.2(A) (2011). PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 physician to evaluate the patient to include an ‘‘assessment of the impact of pain on the patient’s physical and psychological functions, a review of previous diagnostic studies, previously utilized therapies, an assessment of coexisting illnesses, diseases, or conditions, and an appropriate physical examination.’’ LA. ADMIN. CODE tit. 46, § 6921(A)(1) (2011). Here, the Respondent failed to meet this standard, for he did not perform a physical or psychological functions analysis, did not review previous diagnostic studies, previously utilized therapies, or conduct an appropriate physical examination of either Mr. Harris or Ms. Landry. See Armstrong v. La. State Bd. Of Med. Examiners, 868 So. 2d 830, 840 (La. Ct. App. 2004) (noting that when a physician prescribes controlled substances for the relief of nonmalignant pain ‘‘unaccompanied by appropriate testing, diagnosis, oversight and monitoring. . . the physician falls below generally accepted standards of care’’). Although the Respondent looked at the patients’ backs, such observation may not be an adequate physical examination. Jack A. Danton, D.O., 76 Fed. Reg. 60,900, 60,910 (DEA 2011) (noting without deciding that mere observation may not be an adequate physical examination). Further, the Respondent failed to develop an individualized treatment plan for Mr. Harris and Ms. Landry. Louisiana law requires a physician to develop such a plan and to document the plan in the patient’s medical records. The plan is to include ‘‘medical justification for controlled substance therapy. Such plan shall include documentation that other medically reasonable alternative treatments for relief of the patient’s non-cancer-related chronic or intractable pain have been considered or attempted without adequate or reasonable success. Such plan shall specify the intended role of controlled substance therapy within the overall plan, which therapy shall be tailored to the individual medical needs of each patient.’’ LA. ADMIN. CODE tit. 46, § 6921(A)(3) (2011). The medical records here failed to reveal such an individualized treatment plan. Especially lacking in these medical records were any indications that alternative treatments were attempted prior to issuing prescriptions for controlled substances. LA. ADMIN. CODE tit. 46, § 6921(B)(6)(2011). In the case of Ms. Landry and her multiple visits to Dr. Zavaleta’s clinic, the Respondent failed to assess the efficacy of her treatment. Louisiana law requires a physician to ‘‘assure that controlled substance therapy remains E:\FR\FM\10MYN1.SGM 10MYN1 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES indicated, and evaluate the patient’s progress toward treatment objectives.’’ LA. ADMIN. CODE tit. 46, § 6921(B)(1). Ms. Landry’s chart failed to disclose any treatment objectives, and thus, her progress towards meeting those objectives was also lacking. Louisiana law also requires a physician to ‘‘document in the patient’s medical record the medical necessity for the use of more than one type or schedule of controlled substance employed in the management of a patient’s noncancer-related chronic or intractable pain.’’ Id. at (B)(5). The Respondent violated this provision when he added Xanax to Ms. Landry’s prescriptions without documenting the medical necessity for this anti-anxiety medication. Lastly, Louisiana case law establishes that it is a violation of the legitimate medical purpose provision when a physician provides a patient with controlled substances based upon their request for the drug. See Louisiana v. Moody, 393 So. 2d 1212, 1215 (La. 1981). Both Mr. Harris and Ms. Landry specifically requested hydrocodone products, and the Respondent provided them with a prescription for this requested controlled substance. Further, given the statements by both Mr. Harris and Ms. Landry that they were not experiencing any pain, the Respondent violated this provision when he prescribed Lorcet or Lortab for their non-existent pain. Accordingly, I find that the Government has made a prima facie case regarding the failure of the Respondent to prescribe controlled substances for a legitimate medical purpose in the usual course of professional practice.15 4. Respondent’s Remorse and Corrective Action The critical consideration in this proceeding is whether the circumstances, which existed at the time of the surrender of his registration in 2008, have changed sufficiently to support a conclusion that Respondent’s registration would be in the public interest. Ellis Turk, M.D., 62 Fed. Reg. 19,603, 19,604 (DEA 1997). As this Agency has repeatedly held, a proceeding under the Act ‘‘is a remedial measure, based upon the public interest and the necessity to protect the public from those individuals who have misused. . . their DEA Certificate of 15 Given the overwhelming evidence of the Respondent’s failure to issue controlled substances for a legitimate medical purpose, I do not address the Government’s allegations that the Respondent’s flirtatious behavior with Ms. Landry was outside the usual course of professional practice. VerDate Mar<15>2010 18:05 May 09, 2013 Jkt 229001 Registration, and who have not presented sufficient mitigating evidence to assure the Administrator that they can be entrusted with the responsibility carried by such a registration.’’ Jon Karl Dively, D.D.S., 72 Fed. Reg. 74,332, 74,334 (DEA 2007). At the hearing, the Respondent acknowledged that he should have refused to provide Mr. Harris with the Lortab prescription he requested without prior records or validating tests. He credibly testified that he agreed that providing Mr. Harris with a prescription for hydrocodone was not for a legitimate medical purpose. Nevertheless, I remain concerned about the Respondent’s insistence at the hearing that Mr. Harris had told him that he had back pain. My review of the undercover recording does not substantiate his assertion, and Mr. Harris credibly testified that he had not told the Respondent that he had any pain. To his credit, however, when Mr. Harris returned to his office, the Respondent refused to treat him. Likewise, at the hearing the Respondent admitted that he had not prescribed controlled substances to Ms. Landry for a legitimate medical purpose. Although Ms. Landry asserted that she needed a refill of her controlled substance prescription, the Respondent took no action to verify that her original controlled substance prescription had been provided for a legitimate medical purpose. To his credit, at the first visit Ms. Landry had requested a prescription for her sister, and the Respondent refused to provide her with such a prescription. But despite Ms. Landry’s credible testimony denying that she had told the Respondent that she had any type of pain, the Respondent testified that he thought, at the time he wrote the prescriptions, that he was right in his prescribing to her. The Respondent’s lack of forthrightness is troubling. Lastly, the Respondent was cooperative with the investigators. He also took remedial training in the handling of controlled substances, and he credibly testified that he is more knowledgeable about drug-seeking behavior. V. Conclusion and Recommendation In balance, however, I find that the Respondent’s current lack of candor, his material falsification of his DEA applications, and his illegal prescribing of controlled substances in 2008 outweigh his assertions that he can now responsibly handle controlled substance prescriptions. Accordingly, I recommend that the Respondent’s current application be denied. Should the Respondent file an application wherein he fully discloses the surrender PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 27441 of his DEA registration for cause and the suspension of his Louisiana controlled substance license, then such candor may be favorably considered. Dated: May 10, 2012. Gail A. Randall, Administrative Law Judge. [FR Doc. 2013–11185 Filed 5–9–13; 8:45 am] BILLING CODE 4410–09–P DEPARTMENT OF JUSTICE Office of Justice Programs [OJP (NIJ) Docket No. 1622] NIJ Evaluation of Hand-Held Cell Phone Detector Devices National Institute of Justice, Department of Justice. ACTION: Notice. AGENCY: The National Institute of Justice (NIJ) is soliciting interest in supplying hand-held cell phone detector devices for participation in an evaluation by the NIJ Corrections Technology Center of Excellence (CXCoE). SUMMARY: NIJ is soliciting interest in supplying handheld cell phone detector devices for participation in an evaluation by the NIJ Corrections Technology Center of Excellence (CXCoE). The evaluation is focused on field operation in correctional facility scenarios. Supplied hand-held cell phone detectors must: • Weigh less than 8 lbs, • Be battery operated with a minimum run time of 2 hours, • Be designed for single person operation, and • Operate using Radio Frequency (RF) and/or Non-Linear Junction Detection (NLJD) technology Manufacturers interested in participating in this evaluation will be asked to execute a Letter of Understanding. Participating manufacturers will receive a copy of the CXCoE Test & Evaluation Plan. Interested parties are invited to contact NIJ for information regarding participation, Letters of Understanding, and shipping. Letters of Understanding may be obtained from and should be submitted to Jack flame, National Institute of Justice, Office of Science and Technology, 810 7th Street NW., Washington, DC 20531, emailed to jack.harne@usdoj.gov, or faxed to (202) 305–9907. DATES: Manufacturers who wish to participate in the program must submit a request and an executed Letter of Understanding by 5 p.m. Eastern Time SUPPLEMENTARY INFORMATION: E:\FR\FM\10MYN1.SGM 10MYN1

Agencies

[Federal Register Volume 78, Number 91 (Friday, May 10, 2013)]
[Notices]
[Pages 27431-27441]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-11185]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 12-1]


Jose G. Zavaleta, M.D.; Decision and Order

    On May 10, 2012, Administrative Law Judge Gail A. Randall issued 
the attached Recommended Decision.\1\ Neither party filed exceptions to 
the Recommended Decision.
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    \1\ All citations to the Recommended Decision are to the ALJ's 
slip opinion.
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    Having reviewed the record in its entirety, I have decided to adopt 
the ALJ's recommended rulings, findings of fact, conclusions of law, 
and recommended sanction, except for her discussion that the findings 
of a prior agency order denying a previous application filed by 
Respondent, see Jose Gonzalo Zavaleta, 76 FR 49506 (2011), were not 
entitled to res judicata effect because they were issued in a 
proceeding in which Respondent waived his right to a hearing. ALJ at 
12-13 (citing Robert M. Golden, 65 FR 5663 (2000)). While the ALJ was 
bound by the existing Agency precedent on the issue, I conclude that a 
re-examination of the issue is warranted and overrule Golden. However, 
because this has no effect on the outcome, I will adopt the ALJ's 
recommended sanction and will order that Respondent's application for a 
DEA Certificate of Registration as a practitioner be denied.

The ALJ's Ruling on Whether the Prior Agency Order Denying Respondent's 
Application Is Entitled to Res Judicata Effect

    On February 23, 2009, the Deputy Assistant Administrator, DEA 
Office of Diversion Control, issued an Order to Show Cause to 
Respondent which proposed the denial of the application for 
registration submitted by him on July 28, 2008. See Jose Gonzalo 
Zavaleta, 76 FR at 49506. The Show Cause Order was based on allegations 
that Respondent had issued multiple controlled-substance prescriptions 
to undercover officers (UCs) and that he lacked a legitimate medical 
purpose and violated federal law in doing so because he either 
performed a cursory medical examination or failed to perform any 
medical examination. Id. Respondent failed to request a hearing on the 
allegations. Id.
    On July 27, 2011, this Agency issued a Decision and Order denying 
the application which Respondent submitted on July 28, 2008. Id. at 
49508. The Agency's denial of Respondent's application was based on the 
evidence submitted by the Government showing that two officers from the 
Louisiana State Police had made undercover visits to Respondent on 
various occasions, during which they obtained from him prescriptions 
for controlled substances including hydrocodone, alprazolam, and 
Phenergan with codeine. Id. With respect to UC1, who visited him on 
January 23, 2008, the evidence showed that he asked Respondent for 
Lortab and initially denied that he was in pain; nonetheless, 
Respondent issued him a prescription for Lortab after UC1 stated 
(falsely) that he had a sexually transmitted disease, and that 
Respondent did so without performing a physical examination. Id. at 
49506.
    Likewise, with respect to UC2, the Agency found that while she 
initially denied being in pain, Respondent prescribed hydrocodone to 
her. Id. Moreover, on a subsequent visit, Respondent prescribed 
Phenergan, a narcotic cough syrup, even though UC2 had no symptoms of 
cough or congestion, as well as more hydrocodone. Id. Finally, at UC2's 
third visit, Respondent prescribed hydrocodone as well as Xanax to her. 
Id. At no time did Respondent obtain UC2's medical records or perform a 
physical examination on her. Id. Rather, Respondent coached UC2 as to 
what to say to justify the issuance of the prescriptions. Id.
    Based on these findings, the Agency concluded that Respondent had 
failed to establish a physician-patient relationship with the UCs and 
therefore lacked a legitimate medical purpose and acted outside of the 
usual course of professional practice when he prescribed controlled 
substances to them. Id. at 49508 (citing 21 U.S.C. 1306.04(a); 21 
U.S.C. 841(a)(1); Louisiana v. Moody, 393 So.2d 1212, 1215 (La. 1981)).
    During the course of the instant proceeding, the ALJ directed the 
parties to address ``whether the doctrine of res judicata applies to 
the Final Order'' and ``thus bar[s] Respondent from `relitigat[ing] the 
factual findings and conclusions of law of the prior proceeding.' '' 
ALJ at 12. (quoting Robert

[[Page 27432]]

L. Dougherty, 76 FR 16823, 16830 (2011)). Both parties filed briefs, 
with the Government seeking partial summary disposition on this basis.
    The ALJ denied the Government's motion, holding that while ``the 
factual findings in DEA final orders are entitled to res judicata[,] . 
. . the Agency has also expressly limited the application of res 
judicata, refusing to apply the principle when the final order was 
issued without an evidentiary hearing.'' ALJ at 12-13 (citing Golden, 
65 FR at 5664). Noting that the July 27, 2011 Final Order denying 
Respondent's first application was based ``solely on . . . material in 
the [Agency's] investigative file and not [issued] following an 
evidentiary hearing,'' the ALJ held that ``the factual findings and 
legal conclusion contained in the Final Order were not entitled to res 
judicata effect in this matter.'' Id. at 13.
    In holding that the factual findings and legal conclusions of the 
July 2011 Order were not entitled to preclusive effect, the ALJ 
properly applied Golden. Indeed, the ALJ was bound by Golden. However, 
given Golden's cursory discussion of the issue, I conclude that a re-
examination of its holding is warranted. While there is support for the 
rule established in Golden, it is clear that its rule is not 
constitutionally required. Moreover, there is a substantial body of 
authority which supports the view that as long as the Agency previously 
provided a party with a full and fair opportunity to litigate the 
allegations which supported the Agency's proposed action (whether the 
denial of an application or revocation of a registration), a party's 
failure to avail itself of that opportunity does not prohibit the 
Agency from giving preclusive effect to the factual findings and 
conclusions of law rendered in the prior proceeding.
    As the Supreme Court has held, `` `[w]hen an administrative agency 
is acting in a judicial capacity and resolves disputed issues of fact 
properly before it which the parties have had an adequate opportunity 
to litigate, the courts have not hesitated to apply res judicata to 
enforce repose.' '' United States v. Utah Constr. & Mining Co., 384 
U.S. 394, 421-22 (1966) (as quoted in University of Tennessee v. 
Elliot, 478 U.S. 788, 797-98 (1986)). In Elliot, the Court further 
explained that ``giving preclusive effect to administrative factfinding 
serves the value underlying general principles of collateral 
estoppel,'' namely ``avoiding the cost and vexation of repetitive 
litigation and the public's interest in conserving judicial 
resources.'' Id. at 798 (citations omitted). Thus,

    [w]here an administrative forum has the essential procedural 
characteristics of a court, its determinations should be accorded 
the same finality that is accorded the judgment of a court. The 
importance of bringing a legal controversy to conclusion is 
generally no less when the tribunal is an administrative tribunal 
than when it is a court.

Id. at n.6 (quoting Restatement (Second) of Judgments Sec.  83, p. 269 
(1982) [hereinafter, Restatement]).
    The Restatement sets forth five requirements which an adjudicative 
determination issued by an administrative tribunal must satisfy for it 
to be entitled to res judicata effect. These are that the proceeding 
provide:

    (a) Adequate notice to persons who are to be bound by the 
adjudication . . . ;
    (b) The right on behalf of a party to present evidence and legal 
argument in support of the party's contentions and fair opportunity 
to rebut evidence and argument by opposing parties;
    (c) A formulation of issues of law and fact in terms of the 
application of the rules with respect to specified parties 
concerning a specific transaction, situation, or status, or a 
specific series thereof;
    (d) A rule of finality, specifying a point in the proceeding 
when presentations are terminated and a final decision is rendered; 
and
    (e) Such other procedural elements as may be necessary to 
constitute the proceeding a sufficient means of conclusively 
determining the matter in question, having regard for the magnitude 
and complexity of the matter in question, the urgency with which the 
matter must be resolved, and the opportunity of the parties to 
obtain evidence and formulate legal contentions.

Restatement, Sec.  83.
    DEA's proceedings meet each of these requirements. First, under 21 
U.S.C. 824(c), the Agency is required to ``serve upon the applicant or 
registrant an order to show cause why registration should not be 
denied, revoked, or suspended,'' which ``shall contain a statement of 
the basis therefor and shall call upon the applicant or registrant to 
appear before the Attorney General at a time and place stated in the 
order.'' See also 21 CFR 1301.37(c) (``The order to show cause shall 
also contain a statement of the legal basis for such hearing and for 
the denial, revocation, or suspension of registration and a summary of 
the matters of fact and law asserted.'').
    Moreover, ``[p]roceedings to deny, revoke, or suspend shall be 
conducted pursuant to this section in accordance with subchapter II of 
chapter 5 of Title 5.'' 21 U.S.C. 824(c) (emphasis added). The latter 
are the provisions of the Administrative Procedure Act governing the 
conduct of adjudicatory proceedings, and which provide, inter alia, 
that the hearing be conducted by an administrative law judge, whose 
powers include the issuance of subpenas, and that ``[a] party is 
entitled to present his case or defense by oral or documentary 
evidence, to submit rebuttal evidence, and to conduct such cross-
examination as may be required for a full and true disclosure of the 
facts.'' 5 U.S.C. 556(c) & (d). In addition, DEA regulations set forth 
additional procedural protections to ensure the fairness of the hearing 
and specify the point at which the proceeding becomes final. See 21 CFR 
1316. Thus, proceedings conducted under sections 303 and 304 of the 
Controlled Substance Act (21 U.S.C. 823 & 824) clearly meet each of 
these requirements.
    Respondent does not dispute that he was served with an Order to 
Show Cause proposing the denial of his first application and that he 
failed to respond to the Order and thus waived his right to a hearing. 
Resp. Memorandum, at 3. Rather, Respondent asserts that the previous 
Final Order denying his application should not be given preclusive 
effect because he falls within one of the res judicata doctrine's 
recognized exceptions. Id.
    More specifically, Respondent argues that ``[t]here is a clear and 
convincing need for a new determination of the issue'' for two reasons. 
Id. at 2 (quoting Restatement Sec.  28). First, he invokes the 
exception which provides for relitigation ``because of the potential 
adverse impact of the determination on the public interest or the 
interest of persons not themselves parties in the initial action.'' Id. 
(quoting Restatement Sec.  28). Second, he invokes the exception which 
provides for relitigation where ``the party sought to be precluded, as 
a result of the conduct of his adversary or other special 
circumstances, did not have an adequate opportunity or incentive to 
obtain a full and fair adjudication in the initial action.'' Id. at 3 
(quoting Restatement Sec.  28).
    With respect to the first exception, Respondent argues that ``[h]e 
has been an asset in every community where he has practiced medicine'' 
and that his ``patients and the public interest, especially in the 
community where he practices medicine, have been adversely affected 
since he lost his ability to prescribe controlled substances.'' Id. at 
5. Respondent thus contends that ``[i]f the doctrine of res judicata is 
applied in these proceedings and [his application] is denied, then the 
public interest will be affected in that [his] experience as a 
physician cannot be properly utilized because many of the employment 
opportunities available to him require a . . . registration.'' Id.

[[Page 27433]]

    DEA has held, however, that evidence as to the impact on the 
community of a practitioner's lack (or loss) of a registration is not 
relevant under any of the factors of the public interest standard of 21 
U.S.C. 823(f). See Gregory D. Owens, 74 FR 36751, 36756-57 & n.22 
(2009).\2\ See also Kwan Bo Jin, 77 FR 35021, 35021 (2012); Linda Sue 
Cheek, 76 FR 66972, 66973 (2011); Mark De La Lama, 76 FR 20011, 20020 
n.20 (2011); Bienvenido Tan, 76 FR 17673, 17694 n.58 (2011). Because 
such evidence is not relevant in assessing whether Respondent's 
registration would be ``consistent with the public interest,'' 21 
U.S.C. 823(f), this exception cannot support allowing Respondent to 
relitigate the issues decided by the July 2011 Order.
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    \2\ In Owens, I rejected the ALJ's reliance, in recommending a 
sanction, on evidence that the registrant ``ha[d] 561 patients from 
underserved counties, and [that] many of these patients have limited 
incomes.'' 74 FR at 36756. In so holding, I noted that section 
823(f)'s public interest standard ``is not a freewheeling inquiry 
but is guided by the five specific factors which Congress directed 
the Attorney General to consider'' and that ``consideration of the 
socioeconomic status of a practitioner's patient population is not 
mandated by'' the relevant provisions of the Act, ``which focus 
primarily on the acts committed by a practitioner.'' Id. at 36757.
    In Owens, I further held that such evidence ``has no bearing on 
whether [a registrant] has accepted responsibility and undertaken 
adequate corrective measures,'' which are two of the showings which 
a registrant must make in order to rebut the Government's prima 
facie showing that a registrant has committed acts which render his 
registration inconsistent with the public interest. Id. In addition, 
I further noted the inherent unworkability of the ALJ's proposed 
rule, and that it ``would inject a new level of complexity into 
already complex proceedings and take the Agency far afield of the 
purpose of the CSA's registration provisions, which is to prevent 
diversion.'' Id. at n.22.
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    As for the second exception, Respondent asserts that ``he filed 
[his first Application] prematurely and did not follow the advice of 
his [former] counsel.'' Resp. Memorandum, at 4. He further argues that 
while he ``wanted to respond to the Order to Show Cause,'' which was 
issued in response to his first application, ``this time he followed 
the advice of his counsel which . . . advised him not to respond and 
wait until he completed his pretrial intervention program and [the] 
requirements placed on him by the Louisiana State Board of Medical 
Examiners.'' Id. Respondent thus contends that ``this is a special 
circumstance which did not give him an adequate opportunity or 
incentive to obtain a full and fair adjudication in the initial 
action,'' and that ``[i]f he had been informed by counsel of the 
consequences of not responding, [he] would have responded regardless of 
the outcome in order to put his evidence into the record.'' Id.
    In the civil context, however, courts generally do not overturn 
judgments simply because a party complied with legal advice that was 
erroneous or ultimately proved to be disadvantageous. Cf. Nelson v. The 
Boeing Co., 446 F.3d 1118, 1120 (10th Cir. 2006) (declining to 
recognize right to effective assistance of counsel in civil suit 
outside of immigration context). And in any event, the Show Cause Order 
issued in the first proceeding fully explained that the consequence of 
Respondent's failure to request a hearing would include that he would 
be deemed to have waived his right to a hearing and that a final order 
would be issued ``based upon the investigative file and record of this 
proceeding as it may then appear.'' Order to Show Cause (Feb. 23, 2009) 
(ALJ Ex. 1, at 5).
    Moreover, as the comment to this exception states, while ``the 
court in the second proceeding may conclude that issue preclusion 
should not apply because the party sought to be bound did not have an 
adequate opportunity or incentive to obtain a full and fair 
adjudication in the first proceeding[,] [s]uch a refusal to give the 
first judgment preclusive effect should not occur without a compelling 
showing of unfairness, nor should it be based simply on a conclusion 
that the first determination was patently erroneous.'' Restatement 
Sec.  28, cmt. j.\3\ Respondent's contention that he did not challenge 
the first Show Cause Order because he relied on the disadvantageous 
advice of his prior attorney does not make for a ``compelling showing 
of unfairness.'' Id.
---------------------------------------------------------------------------

    \3\ The circumstance described by Respondent does not remotely 
approach any of the circumstances cited by the Restatement as a 
ground for invoking this exception, which suggest that it is 
extremely narrow in its scope. Specifically, the comment gives as 
examples: where ``one party may conceal from the other information 
that would materially affect the outcome of the case,'' especially 
where ``there is a fiduciary relationship between the parties''; 
where ``one of the parties may have been laboring under a mental or 
physical disability that impeded effective litigation and that has 
since been removed''; and where ``the amount in controversy in the 
first action may have been so small in relation to the amount in 
controversy in the second that preclusion would be plainly unfair.'' 
Restatement Sec.  28, cmt. j.
---------------------------------------------------------------------------

    The ALJ further rejected as ``illogical'' and contrary to the 
Agency's experience under Golden, the Government's argument that 
denying res judicata effect to the July 2011 final order ```would allow 
registrants to repeatedly litigate the same issues and thus render key 
portions of 21 CFR 1301.43 meaningless.''' Memorandum and Order, at 9-
10 (quoting Gov. Mot. at 3-4). She further reasoned that 
``[a]pplicants, like [Respondent,] gain no benefit or tactical 
advantage by failing to respond to an order to show cause, for during 
[the] application period they are without the authority to handle 
controlled substances.'' Id. at 10.
    Yet, it is within the Agency's experience that registrants, 
especially those who are the subject of a criminal investigation or 
pending criminal charges (as well as state administrative proceedings), 
choose not to contest a Show Cause proceeding. For any number of 
reasons, a criminal investigation may ultimately result in the 
prosecutor declining to file charges, and even where charges are filed, 
a prosecution may result in an acquittal. Moreover, a final disposition 
may not occur for several years. So, too, it may take several years for 
a state administrative proceeding to come to a conclusion. During that 
period, material witnesses may become unavailable, and even where they 
remain available, their recollections may become faulty; other evidence 
may be discarded. Yet nothing in the CSA or DEA's regulations prevents 
a person whose registration has been revoked from reapplying, and this 
can occur years after the misconduct which was the basis of the first 
proceeding. See Robert L. Dougherty, 76 FR 16823 (2011).
    In Dougherty, DEA revoked a physician's registration in 1995. Id. 
at 16824-25. More than a decade later, the physician applied for a new 
registration. Id. at 16823. While the physician attempted to relitigate 
many of the factual findings made in the Agency's 1995 decision and 
final order, as well as the factual findings made in a 1997 state board 
proceeding, this Agency held that these findings were res judicata. See 
id. at 16830-16833.
    It is true that in Dougherty, the findings, which were given 
preclusive effect, were made in an Order which was issued following a 
hearing. Yet, had the physician waived his right to a hearing when the 
Agency initially took action, under Golden, the Government would have 
been required to prove its case--nearly twenty years after the 
underlying misconduct--through witness testimony and other evidence. 
This is a ludicrous result.
    Thus, while it may be that a former registrant gains no benefit 
from failing to respond to an Order to Show Cause because he will 
remain unregistered--a proposition which is not free of dispute--Golden 
nonetheless creates the wrong incentive and wastes scarce Agency 
resources. Where the Agency has proposed the denial of an application, 
the applicant should be encouraged to challenge the Agency's

[[Page 27434]]

contention when the evidence is freshest. Indeed, litigation when the 
evidence is freshest enhances the accuracy of the public interest 
determination and is one of the underlying reasons for the doctrine of 
issue preclusion.
    Moreover, in response to the increase in the diversion of 
prescription controlled substances, the number of Show Cause Orders 
issued by the Agency has doubled in recent years. While some of these 
matters are resolved by the registrants agreeing to surrender their 
registration, many of them are not and require the issuance of a 
decision and order, even where the registrant waived his/her right to a 
hearing. Allowing an applicant to relitigate issues which he/she had a 
full and fair opportunity to litigate in a prior proceeding but chose 
not to, mis-allocates the scarce resources of both the Office of 
Administrative Law Judges and the Office of the Administrator.\4\ Cf. 
Arizona v. California, 530 U.S. 392, 412 (2000) (doctrine of res 
judicata ```is not based solely on the defendant's interest in avoiding 
the burdens of twice defending a suit, but is also based on the 
avoidance of unnecessary judicial waste''' (quoting United States v. 
Sioux Nation, 448 U.S. 371, 432 (1980)); Parklane Hosiery Co., Inc., v. 
Shore, 439 U.S. 322, 326 (1979) (``Collateral estoppel, like the 
related doctrine of res judicata, has the dual purpose of protecting 
litigants from the burden of relitigating an identical issue with the 
same party . . . and of promoting judicial economy by preventing 
needless litigation.'').
---------------------------------------------------------------------------

    \4\ Obviously, if an applicant was not properly served with the 
Show Cause Order in the prior proceeding, he/she did not have a full 
and fair opportunity to litigate the issues. Respondent, however, 
acknowledges that he was served with the first Show Cause Order.
---------------------------------------------------------------------------

    To be sure, the Restatement of Judgments provides that an issue is 
not entitled to preclusive effect unless it is actually litigated in 
the prior proceeding, and that an issue is not actually litigated where 
a judgment is entered by default or where an issue is ``raised by a 
material allegation of a party's pleading but is admitted . . . by 
virtue of a failure to deny [it] in a responsive pleading.'' 
Restatement Sec.  27, cmt. e. Be that as it may, an increasing number 
of jurisdictions reject this view and ``allow findings made in default 
proceedings to collaterally estop, provided that the defaulted party 
could have appeared and defended if he had wanted to.'' In re Catt, 368 
F.3d 789, 791 (7th Cir. 2004) (citing Indiana cases). See also Evans v. 
Ottimo, 469 F.3d 278, 282 (2d Cir. 2006) (noting that under New York 
law, ```when a party defaults by failure to answer . . . the defaulting 
litigant may not further contest the liability issues''') (citation 
omitted); In re Cantrell, 329 F.3d 1119, 1123-24 (9th Cir. 2003); 
Gottlieb v. Kest, 141 Cal. App. 4th 110, 149 (Cal. Ct. App. 2006) (``A 
default judgment conclusively establishes, between the parties so far 
as subsequent proceedings on a different cause of action are concerned, 
the truth of all material allegations contained in the complaint in the 
first action, and every fact necessary to uphold the default 
judgment.'') (internal quotations and other citations omitted); In re 
Dawson, 338 B.R. 756, 761 (Bankr. N.D. Ohio 2006) (applying collateral 
estoppel under Ohio law to preclude relitigation of findings made in 
trial on the merits where party failed to appear at earlier trial); 
Matter of Latimore, 252 A.D.2d 217, 219-20 (N.Y. App. Div. 1999) 
(collaterally estopping attorney in disciplinary proceeding from 
relitigating findings made in earlier proceeding in which she 
defaulted); TransDulles Center, Inc., v. Sharma, 472 SE.2d 274, 276 
(Va. 1996) (applying collateral estoppel to issues essential to default 
judgment where ``[t]estimonial and documentary evidence was presented 
ex parte in the [trial] court hearing''); Jackson v. R.G. Whipple, 
Inc., 627 A.2d 374, 380 (Conn. 1993) (``[H]ad there been a full and 
fair opportunity to litigate [the] issues and such issues were 
necessary to a default judgment, that judgment should put to rest 
subsequent litigation of all issues necessary for the rendering of the 
default judgment.''), abrogated on other grounds by Macomber v. 
Travelers Property & Cas. Corp., 804 A.2d 180, 195-96 (2002); Heggy v. 
Grutzner, 456 NW.2d 845, 849 (Wis. 1990) (precluding relitigation of 
factual findings essential to default judgment entered in earlier case 
where party ``intentionally evaded service of process''); Masciarelli 
v. Maco Supply Corp., 224 So.2d 329, 330 (Fla. 1969) (applying 
collateral estoppel to preclude relitigation of issue, where issue was 
decided by default judgment in prior litigation, personal service was 
accomplished, and party failed to answer complaint).
    Moreover, giving preclusive effect to findings made in a default 
proceeding does not violate the Due Process Clause, which requires only 
``that the party sought to be precluded have had an opportunity for a 
hearing.'' In re Catt, 368 F.3d at 792. In any event, notwithstanding 
that Respondent did not request a hearing, the findings of the July 
2011 order were not rendered in a classic default proceeding as the 
Government was required to submit substantial evidence to support its 
allegations and extensive findings were made based on that evidence.
    Accordingly, I conclude that to the extent that Golden or any other 
Agency decision holds that a respondent is entitled to relitigate the 
factual findings and legal conclusions of an Agency final order because 
he/she waived his/her right to a hearing in the prior proceeding, it is 
overruled. Whether the prior agency decision and order was based solely 
on the evidence submitted by the Government where an applicant waived 
hearing, or on the basis of a record of a hearing conducted pursuant to 
21 CFR 1316.41 et seq., the Agency's factual findings and legal 
conclusions are entitled to preclusive effect in a subsequent 
proceeding.
    This is not to say that the applicant is foreclosed from putting on 
any evidence in the subsequent proceeding. That evidence, however, is 
limited to that which is relevant to, and probative of, ```the critical 
issue [of] whether the circumstances, which existed at the time of the 
prior proceeding, have changed sufficiently to support [the] conclusion 
that' granting the application would be consistent with the public 
interest.'' Dougherty, 76 FR at 16830 (quoting Stanley Alan Azen, 61 FR 
57893, 57893-94 (1996)). Thus, in the second proceeding, a respondent 
can put on evidence of acceptance of responsibility as well as remedial 
measures he has undertaken. What he/she cannot do, however, is 
relitigate the findings of misconduct made in the earlier Agency 
decision and order.\5\
---------------------------------------------------------------------------

    \5\ In addition to the 2011 Decision and Order, which denied 
Respondent's first application, on October 8, 2012, I issued a 
Decision and Order denying Respondent's second and third 
applications. See Jose Gonzalo Zavaleta, 77 FR 64128, 64131 (2012).
---------------------------------------------------------------------------

    In any event, here, as the ALJ found, Respondent asserted that UC1 
complained of back pain when both the recording of the visit and the 
officer's testimony establish otherwise. ALJ 24. Likewise, the ALJ 
found that Respondent's testimony with respect to UC2 (who credibly 
testified that she never told Respondent that she had any pain), lacked 
``forthrightness'' and ``candor.'' Id. at 25. Notwithstanding his 
evidence that he completed a course on prescribing, Respondent's 
failure to testify truthfully about his prescribings to the two 
undercover officers demonstrates that he does not accept responsibility 
for his misconduct and that the circumstances have not ```changed 
sufficiently to support [the] conclusion that' granting [his] 
application would be consistent with

[[Page 27435]]

the public interest.'' Dougherty, 76 FR at 16883 (quoting Azen, 61 FR 
at 57893-94).
    Buttressing this conclusion, the ALJ found that on his December 
2010 application, Respondent failed to disclose both the March 2008 
voluntary surrender of his registration as well as the suspension of 
his state controlled substance registration in September 2010. These 
falsifications were clearly capable of influencing the decision of the 
Agency and were thus material; the 2008 surrender occurred following an 
investigation into his prescribing to the undercover officers without a 
legitimate medical purpose, and the loss of his state controlled 
substance registration was itself an independent and adequate ground 
for denying his application. See Hooper v. Holder, 2012 WL 2020079, *2 
(4th Cir. 2012).
    Accordingly, I adopt the ALJ's recommended sanction and will order 
that Respondent's application be denied.

Order

    Pursuant to the authority vested in my by 21 U.S.C. 823(f) and 28 
CFR 0.100(b), I order that the application of Jose Gonzalo Zavaleta, 
M.D., for a DEA Certificate of Registration as a practitioner, be, and 
it hereby is, denied. This Order is effective June 10, 2013.

    Dated: May 2, 2013.
Michele M. Leonhart,
Administrator.
Frank Mann, Esq., for the Government
Jonathan D. Goins, Esq., for the Respondent

RECOMMENDED RULINGS, FINDINGS OF FACTS, CONCLUSIONS OF LAW, AND 
DECISION OF THE ADMINISTRATIVE LAW JUDGE

    Administrative Law Judge Gail A. Randall. This proceeding is an 
adjudication governed by the Administrative Procedure Act, 5 U.S.C. 
Sec. Sec.  551 et. seq., to determine whether a physician's application 
for a DEA certificate of registration should be denied under the 
Controlled Substances Act, 21 U.S.C. Sec. Sec.  823(f) (2006).

I. PROCEDURAL BACKGROUND

    On September 6, 2011, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration issued an Order to 
Show Cause to Jose G. Zavaleta, M.D., (``Respondent'' or ``Dr. 
Zavaleta''), seeking to deny his application \1\ for a DEA Certificate 
of Registration as a practitioner under 21 U.S.C. Sec.  823(f), because 
his registration would be inconsistent with the public interest. 
[Administrative Law Judge Exhibit (``ALJ Exh.'') 1]. Specifically, the 
Order to Show Cause alleged that in 2008 the Respondent violated 
federal law by issuing prescriptions for schedule III and IV controlled 
substances without a legitimate medical purpose, without establishing a 
physician-patient relationship, and by acting outside the usual course 
of professional practice in prescribing controlled substances to 
undercover agents.\2\
---------------------------------------------------------------------------

    \1\ In July of 2008, the Respondent filed an application for a 
DEA certificate of registration, control number W08092985. The DEA 
issued an Order to Show Cause regarding this application on February 
23, 2009. The Respondent failed to respond to that Order to Show 
Cause, and on July 27, 2011, the DEA Administrator issued a Final 
Order denying this application. [ALJ Exh. 1]. In April of 2010, the 
Respondent filed another application, control number W10020882, and 
in December of 2010, [Govt Exh. 2], the Respondent filed a third 
application, control number W10078290. On March 2, 2011, the DEA 
Deputy Assistant Administrator issued an Order to Show Cause 
proposing to deny these two applications. The Respondent failed to 
respond to this Order to Show Cause. The record contains no further 
information concerning these two applications. On July 1, 2011, the 
Respondent filed application W11043099, and it is this application 
which is the subject of this proceeding.
    \2\ The Order to Show Cause asserted that the facts supporting 
this Order to Show Cause are the same facts contained in the Orders 
to Show Cause issued February 23, 2009, and March 2, 2011, and the 
Administrator's Final Order, all of which were attached to this 
Order to Show Cause and incorporated by reference. For a full 
discussion of the res judicata issue raised by these facts, see the 
order attached at Appendix A.
---------------------------------------------------------------------------

    On September 29, 2011, the Respondent filed a timely request for a 
hearing on the allegations raised by the Order to Show Cause dated 
September 6, 2011. [ALJ Exh. 2].
    The hearing was held in Baton Rouge, Louisiana, on February 28, 
2012. [ALJ Exh. 4]. At the hearing, both parties called witnesses to 
testify and introduced documentary evidence. [Transcript (``Tr.'') 
Volume I]. After the hearing, both parties submitted Proposed Findings 
of Fact, Conclusions of Law, and Argument (Govt. Brief and Resp. 
Brief).

II. ISSUE

    The issue in this case is whether or not the record as a whole 
establishes by a preponderance of the evidence that the Drug 
Enforcement Administration (``DEA'' or ``Government'') should deny the 
application for a DEA Certificate of Registration of Jose G. Zavaleta, 
M.D., control number W11043099C, as a practitioner, pursuant to 21 
U.S.C. Sec.  823(f), because to grant his application would be 
inconsistent with the public interest as that term is defined in 21 
U.S.C. Sec.  823(f). [ALJ Exh. 3; Tr. at 6].

III. FINDINGS OF FACT

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

A. The Respondent's Personal and Professional Background

    The Respondent has been a physician for twenty-nine years, 
practicing emergency room medicine for approximately ten of those 
years. [Tr. 115, 117]. He is sixty years old. [Tr. 115]. He received 
his medical education at The National University of Trujillo, Peru, 
completed his education in Frankfurt Hospital in Philadelphia, 
Pennsylvania, and graduated from a residency at the LSU Medical Center 
in Shreveport, Louisiana. [Tr. 116]. The Respondent has active medical 
licenses in Louisiana and Alabama. [Tr. 117, 153, 155-156, 231-232]. He 
also has a current Louisiana Board of Pharmacy Controlled Dangerous 
Substance License, which authorizes him to handle controlled 
substances. [Tr. 154-155; Resp. Exh. 6]. On March 26, 2008, the 
Respondent voluntarily surrendered his DEA registration. [Tr. 158-160; 
Govt. Exh. 4].
    In August of 2007, the Respondent opened a family practice clinic 
in Alexandria, Louisiana. [Tr. 117, 119-120]. There, he also treated 
chronic pain patients. [Tr. 122]. He used small signs to advertise his 
clinic. [Tr. 76]. At the clinic, Respondent maintained approximately 
two hundred and forty medical charts.\3\ [Resp. Exh. 11]. However, as 
of the time of this hearing, the Respondent had closed this clinic. 
[Tr. 170].
---------------------------------------------------------------------------

    \3\ The Government challenged the reliability of this hearsay 
document. I find, based upon the Respondent's testimony concerning 
the procedure used by his attorney to have this exhibit prepared, 
that the record has an adequate indicia of reliability to withstand 
the hearsay objection. [Tr. 219-221]. Within those charts, he 
prescribed hydrocodone 100 times, or approximately 14.8% of all of 
his prescriptions issued between July 2007 and March 2008. He issued 
Xanax 17 times, or 2.5% of his total prescriptions of 674 during 
this time period. [Resp. Exh. 11]. He also prescribed Phenergan with 
codeine 82 times, or approximately 12% of his total prescriptions. 
[Resp. Exh. 11; see also Tr. 169-171]. However, I find these 
statistics have little weight, given DEA precedent on this issue. 
Specifically, the Agency has revoked ``other practitioners' 
registrations for committing as few as two acts of diversion.'' 
Jayam Krishna-Iyer, M.D, 74 Fed. Reg. 459, 463 (DEA 2009) (citing 
Alan H. Olefsky, 57 Fed. Reg. 928, 928-29 (DEA 1992)).
---------------------------------------------------------------------------

    To determine if a pain patient is addicted to controlled 
substances, the Respondent testified that he knows to question the 
patient and examine the patient, trying to identify the source of the 
pain. [Tr. 122]. The Respondent also testified that he would ask for 
prior medical records, which he stated were difficult to obtain. [Id.]. 
The Respondent

[[Page 27436]]

also would limit any prescribing of controlled substances to twenty 
tablets at a time. [Tr. 123]. But the Respondent credibly testified 
that he found it difficult to identify patients who were addicted to 
controlled substances, and that he did not often identify such patients 
in his practice. [Tr. 124]. He testified that he would need to see a 
patient multiple times to satisfactorily diagnose a drug addiction 
problem. [Id.]. Patients with chronic complaints would be seen every 
month. [Tr. 125].
    The Respondent further testified that he was remorseful regarding 
the issuance of the prescriptions to the undercover agents. [Tr. 173-
174]. He testified that although he ``failed'' when treating the 
undercover agents, he learned that he had to become ``more vigilant'' 
when dealing with patients seeking controlled substances. [Tr. 174]. He 
also testified that he made mistakes with his DEA applications and that 
he ``should have give(n) [his applications] more careful review.'' 
[Id.]. Dr. Zavaleta acknowledged the severity of his conduct but 
asserted that he ``learned [his] lesson'' and now has ``basically . . . 
rehabilitated myself.'' [Tr. 174-175].

B. Treatment of Ricky Harris

    On January 23, 2008, Ricky Harris \4\ visited Dr. Zavaleta's 
clinic. [Govt. Exh. 12]. During Dr. Zavaleta's examination of Mr. 
Harris, he took his blood pressure and temperature. [Id.]. He also 
measured and weighed Mr. Harris. [Id.]. Dr. Zavaleta counseled Mr. 
Harris about his weight and high blood pressure and urged him to lose 
weight. [Id.].
---------------------------------------------------------------------------

    \4\ ``Ricky Harris'' is the patient name and alias used by 
Master Trooper Richard Horton, Louisiana State Police. For 
consistency with the evidence of record, I will refer to him as Mr. 
Harris. [See Tr. 11-12, 14].
---------------------------------------------------------------------------

    Mr. Harris presented complaints of symptoms from what he claimed 
was a sexually transmitted infection. [Tr. 14-15; Govt. Exh. 20]. Dr. 
Zavaleta proceeded to question Mr. Harris about his symptoms. [Govt. 
Exh. 12]. He inquired about Mr. Harris's sexual history and number of 
sexual partners. [Id.]. Mr. Harris reported that he had experienced 
these symptoms in the past and that he had been previously treated for 
a sexually transmitted infection. [Id.]. When the Respondent sought to 
physically examine his genitals, Mr. Harris refused. [Tr. 15, 27, 186]. 
Likewise, he refused to submit to a blood test to confirm the nature of 
the infection. [Tr. 186]. He also refused to provide the Respondent 
with a sample of discharge he reported experiencing. [Tr. 127]. The 
Respondent agreed to write Mr. Harris a prescription for antibiotics 
and left the examination room. [Tr. 16, 127-128; Govt. Exh. 12].
    Mr. Harris followed Dr. Zavaleta out into the clinic hallway and 
requested a prescription for Lortab, a pain medication and Schedule III 
controlled substance. [Tr. 17; Govt. Exh. 20; Govt. Exh. 12]. Dr. 
Zavaleta initially refused to write Mr. Harris this prescription. 
[Govt. Exh. 12]. Respondent told Mr. Harris that he could only write a 
prescription for Lortab if Mr. Harris reported experiencing pain. [Id.; 
Tr. 17]. Mr. Harris testified at the hearing that he did not tell Dr. 
Zavaleta that he was in pain. [Tr. 15-17, 25, 31-32]. Although the 
Respondent testified that Mr. Harris complained of shoulder pain and 
back pain, [Tr. 128-130, 179-180, 182], I find more credible Trooper 
Horton's testimony as corroborated by the audiovisual recording of the 
visit and his contemporaneous report. [Govt. Exh. 12; Govt. Exh. 20; 
see also Govt. Exh. 10 (Harris patient file which lacks any mention of 
shoulder pain); Tr. 182].
    Dr. Zavaleta wrote Mr. Harris a prescription for fifteen Lortab 
tablets. [Tr. 24; Govt. Exh. 10 at 3]. The Respondent wrote ``back 
pain'' in Mr. Harris' medical chart. [Govt. Exh. 10 at 4-5]. But the 
Respondent did not perform any examination on Mr. Harris' back other 
than to listen to his breathing. [Tr. 25-26, 183]. When Mr. Harris 
requested more Lortabs, the Respondent refused to increase the 
prescription for a greater number of tablets. [Govt. Exh. 12]. In 
addition, Mr. Harris sought refills on the prescription, but Dr. 
Zavaleta refused to authorize any refills. [Tr. 27-28; Govt. Exh. 10; 
Govt. Exh. 12]. Mr. Harris paid one hundred dollars in cash for that 
visit. [Tr. 129].
    When he testified at the hearing, the Respondent stated that he 
should have insisted that Mr. Harris provide him a sample of the 
discharge for testing. [Tr. 132]. He also stated that, given his 
suspicions, he should have refused to provide a controlled substance 
prescription to Mr. Harris without prior records or a validating test 
for pain. [Id.]. Respondent further testified that this prescription 
for hydrocodone issued to Mr. Harris apparently lacked a legitimate 
medical purpose. [Tr. 188-190].
    Although the Respondent stated Mr. Harris made him feel 
uncomfortable, he provided him with the prescription. [Tr. 131]. Mr. 
Harris testified that he returned to see the Respondent, but that the 
Respondent refused to see or treat him. [Tr. 26]. Regarding this second 
visit, Respondent testified that he instructed his secretary to inform 
Mr. Harris that he would not provide him with any additional treatment 
[Tr. 130-131].

C. Treatment of Christy Landry

    On January 30, February 8, and February 28, 2008, Respondent 
treated Christy Landry.\5\ [Tr. 37; Govt. Exh. 21]. At the first visit, 
Ms. Landry told the Respondent that her boyfriend had taken her pills, 
and that she needed to get a refill of her medication. [Tr. 37]. The 
Respondent took no action to verify this prior prescription. [Tr. 209].
---------------------------------------------------------------------------

    \5\ Christy Landry is the patient name used by Detective Heather 
Owens of the Louisiana State Police. [Tr. 33; Govt. Exh. 11]. For 
the record, I will use the patient name used by Detective Owens.
---------------------------------------------------------------------------

    Ms. Landry told the Respondent that while she did not have any 
pain, taking hydrocodone made her feel good. [Tr. 38, 67; Govt. Exh. 
21].\6\ But she told him in response to his questioning that he could 
describe her symptoms as ``withdrawal symptoms.'' [Tr. 38, 68].\7\ The 
Respondent referred Ms. Landry to a pain clinic. [Govt. Exh. 11 at 7]. 
However, in follow-up visits, the pain clinic referral was not 
discussed, and there is no mention in the patient chart that Ms. Landry 
ever contacted a pain clinic. [Tr. 201-202; Govt. Exh. 11].
---------------------------------------------------------------------------

    \6\ Although the Respondent testified that Ms. Landry complained 
of left shoulder pain, insomnia, and pain in the legs, [Tr. 134, 
138], I find her testimony, as corroborated by the contemporaneous 
police report, more credible. [Tr. 38; Govt. Exh. 21]. The 
Respondent also acknowledged that such pain complaints were not in 
Ms. Landry's medical record. [Tr. 193-194; Govt. Exh. 11].
    \7\ The record contains no evidence that the Respondent is 
properly registered as a narcotic treatment program participant.
---------------------------------------------------------------------------

    At the hearing, the Respondent demonstrated that he examined her 
heart, checked her back, and examined her abdomen. [Tr. 136-137]. 
However, Ms. Landry credibly described this examination as the 
Respondent's effort to search her for a recording device. [Tr. 39-42; 
Govt. Exh. 21]. Furthermore, he examined her shin and knees, allegedly 
checking for swelling. [Tr. 40, 137-138].
    The Respondent wrote her a prescription for twenty Lorcet, a 
hydrocodone product and Schedule III controlled substance. [Tr. 43-44, 
138; Govt. Exh. 11 at 10]. Ms. Landry requested a prescription for her 
sister, but the Respondent refused to issue such a prescription. [Tr. 
62-63, 70; Govt. Exh. 21 at 1]. Ms. Landry paid one hundred dollars 
cash for this office visit. [Tr. 45, 139]. She had informed the 
receptionist that she did not have insurance. [Tr. 45].
    Ms. Landry next saw the Respondent on February 8, 2008. [Tr. 46; 
Govt. Exhs. 11, 21]. He asked her if she had ``generalized pain,'' and 
Ms. Landry did not respond. [Tr. 47]. However, Ms.

[[Page 27437]]

Landry credibly testified that she did not indicate that she had any 
kind of pain. [Tr. 52]. Rather, Ms. Landry complained of congestion and 
requested a prescription for cough syrup with codeine. [Tr. 47]. In his 
physical examination, the Respondent notated that her lungs were 
``abnormal'' and that she had a diagnosis of ``chronic cough.'' [Govt. 
Exh. 11 at 6]. Yet the Respondent could not recall, and did not 
document, when the cough began in order to verify the chronic nature of 
the cough. [Tr. 204-205, 226; Govt. Exh. 11]. Further, the Respondent 
testified that he had not made any medical findings that would 
substantiate a medical diagnosis of insomnia. [Tr. 210-211]. The 
Respondent cautioned Ms. Landry on the proper way to take her 
controlled substance medication. [Tr. 50-51]. She received a 
prescription for Lorcet and Phenergan,\8\ both of which are controlled 
substances. [Tr. 53; Govt. Exh. 11 at 11]. Ms. Landry paid one hundred 
dollars in cash for the office visit. [Tr. 52, 62].
---------------------------------------------------------------------------

    \8\ Phenergan is a cough syrup containing a combination of 
promethazine and codeine. It is a schedule V controlled substance. 
21 C.F.R. 1308.15(c) (2011).
---------------------------------------------------------------------------

    Lastly, Ms. Landry visited the Respondent on February 28, 2008. 
[Tr. 55]. She told him that she wanted a prescription for hydrocodone 
and Soma. [Tr. 56]. The Respondent refused to issue her a prescription 
for Soma, but he did issue her a prescription for Xanax,\9\ a 
controlled substance, and Lorcet. [Tr. 55, 60; Govt. Exh. 11 at 12]. At 
this visit, Ms. Landry did not complain of insomnia or anxiety. [Tr. 
60-61]. When asked why she wanted the medication, Ms. Landry laughed 
and told the Respondent to write whatever he needed to write. [Tr. 56; 
Govt. Exh. 21 at 5]. As on the other two visits, the Respondent behaved 
in a flirtatious manner, which Ms. Landry felt was inappropriate. [Tr. 
58-59, 68; Govt. Exh. 21]. On the third visit, Ms. Landry admitted that 
she did not have any pain.\10\ [Tr. 139].
---------------------------------------------------------------------------

    \9\ Xanax is a schedule IV controlled substance. 21 C.F.R. 
1308.14(c)(1) (2011).
    \10\ Although the Respondent testified that he was ``shocked'' 
when she denied having any pain, I find his testimony lacked 
credibility, given the tenor of the visit. [Tr. 139-140].
---------------------------------------------------------------------------

    At the hearing, the Respondent admitted that he had not prescribed 
controlled substances to Ms. Landry for legitimate medical reasons. 
[Tr. 212]. But he also testified that he thought, at the time he wrote 
the prescriptions, that he was justified in issuing these prescriptions 
to her. [Tr. 213-214].

D. Interview of the Respondent

    Sergeant Roland Mathews, a Louisiana State Trooper, interviewed the 
Respondent with the Respondent's attorney present. [Tr. 71, 79; Govt. 
Exh. 13]. The Respondent told Sgt. Mathews that he could identify drug-
seeking patients, and he stated he would not treat such a patient, but 
that he would help the patient find treatment. [Tr. 81-82; 221-222]. 
The Respondent also stated that he would need to perform tests and get 
prior medical records before prescribing such a patient controlled 
substances. [Tr. 85; 222]. During Sgt. Mathews' investigation, he did 
not uncover any evidence that the Respondent attempted to obtain prior 
medical records for Ricky Harris or Christy Landry. [Tr. 86]. Sgt. 
Mathews testified that Respondent was cooperative in the investigation. 
[Tr. 90-91].

E. Respondent's Criminal Case

    On March 26, 2008, the Respondent was arrested on six counts of 
prescribing ``controlled substances beyond his respective prescribing 
authority or for a purpose other than accepted medical treatment of a 
disease, condition, or illness,'' in violation of La. Rev. Stat. Ann. 
Sec.  40:971(C)(1). [Govt. Exh. 5]. The Rapides Parish District 
Attorney's Office offered the Respondent the opportunity to participate 
in a pretrial intervention program. [Tr. 141]. The pretrial 
intervention program required that Respondent visit a parole officer 
monthly for a period of twenty-four months, complete one year of 
unsupervised probation, pay a seven thousand dollar fine, agree not to 
seek a DEA registration for two years, notify the Medical Board of his 
participation in the program, and participate in random drug testing. 
[Tr. 142; Resp. Exh. 2]. After successfully completing the program in 
February of 2011, the Respondent had the charges dismissed and the 
arrest expunged. [Tr. 141-142, 144; Resp. Exhs. 4 and 5].

F. The Medical Board Action and State Controlled Substance License

    On June 24, 2010, the Respondent entered into a Consent Order with 
the Louisiana State Board of Medical Examiners (``Medical Board'') 
regarding his criminal charges. [Govt. Exh. 9; Resp. Exh. 8]. The 
Medical Board issued a public reprimand, and placed conditions upon his 
continued practice of medicine which included: (1) that the Respondent 
successfully complete the terms and conditions of the pretrial 
intervention program; (2) that the Respondent take continuing medical 
education regarding proper prescribing; and (3) that the Respondent pay 
a one thousand dollar fine to the Medical Board. [Tr. 146; Govt. Exh. 9 
at 4]. The Respondent completed these requirements. [Tr. 148]. 
Currently, the Respondent maintains an active Louisiana medical 
license. [Tr. 111-112, 153].
    Pursuant to the Consent Order with the Medical Board, on June 11-
13, 2008, the Respondent took a three-day course at the University of 
South Florida entitled ``Prescribing Controlled Drugs: Critical Issues 
and Common Pitfalls of Misprescribing.'' [Resp. Exh. 9]. He credibly 
testified that the course taught him how to better perform an 
evaluation of patients seeking controlled substances. [Tr. 150].
    By agreement with the Louisiana Board of Pharmacy in September 
2010, the Respondent's Louisiana controlled substance license was 
suspended. [Govt. Exh. 24]. On February 14, 2011, his state controlled 
substance license was reinstated, and Dr. Zavaleta's license remains 
current and active, with an expiration date of August 1, 2012. [Govt. 
Exh. 24; Resp. Exh. 6].

G. Respondent's DEA Application

    On July 1, 2011, the Respondent electronically submitted an 
application for a DEA certificate of registration. [Tr. 95-96; Govt. 
Exh. 1]. The application was certified, using the Respondent's name. 
[Tr. 95, 97; Govt. Exh. 1 at 4]. As part of the application for a 
certificate or registration, the Agency asks four ``liability'' 
questions. [Tr. 96-97; Govt. Exh. 1 at 3]. DEA Diversion Investigator 
Cheryl Golden testified that the purpose of these liability questions 
is to determine if there has been any previous disciplinary action 
taken against the applicant prior to deciding whether to approve the 
pending application. [Tr. 98].
    On this application, the Respondent answered ``Yes'' to the second 
question: ``Has the applicant ever surrendered for cause or had a 
federal controlled substance registration revoked, suspended, 
restricted or denied?'' [Tr. 97; Govt. Exh. 1 at 3]. The third question 
asks if the applicant had ``ever surrendered for cause or had a state 
professional license for a controlled substance registration revoked, 
suspended, denied, restricted or placed on probation,'' and the 
Respondent answered ``No,'' to this question. [Tr. 97; Govt. Exh. 1 at 
3]. However, on September 2, 2010, the Respondent's Louisiana 
controlled substances registration had been suspended. [Govt. Exh. 24; 
see also Govt. Exh. 8].

[[Page 27438]]

Subsequently, on February 14, 2011, the Respondent's Louisiana 
controlled substances registration was reinstated. [Tr. 100, 155; Govt. 
Exh. 24].
    On December 8, 2010, the Respondent had also submitted an 
electronic application for a DEA registration.\11\ [Govt. Exh. 2]. On 
this application, the Respondent answered ``No,'' to all four liability 
questions, despite having surrendered his DEA registration number 
BZ5998250, in March of 2008, and the suspension of his Louisiana 
controlled substance license in September of 2010. [Tr. 104-105; Govt. 
Exh. 2 at 1; Govt. Exh. 4, 8, and 24]. The Respondent did not 
participate in a hearing regarding this application. [Tr. 158]. He 
testified that his incorrect answers to the liability questions on 
these applications were a mistake. [Tr. 164-167, 215-218].
---------------------------------------------------------------------------

    \11\ Although the record copy of Government Exhibit 2 is not a 
certified copy, DI Golden credibly testified that she confirmed that 
a certified copy of the registration was on file at DEA. [Tr. 104].
---------------------------------------------------------------------------

    The Respondent credibly testified that he needs a DEA certificate 
of registration to obtain hospital privileges and to fully practice 
medicine. [Tr. 172-173, 175-176]. At the time of the hearing, the 
Respondent was employed at Outpatient Medical Clinic in Lisbon, 
Louisiana, and at Rapides Primary Healthcare. [Tr. 176-177].

IV. Statement of Law and Discussion

A. Res Judicata

    On November 22, 2011, I issued an order, directing the parties to 
file briefs, with supporting legal authorities, on whether the doctrine 
of res judicata applies to the Final Order entered against Respondent 
on July 27, 2011, see Jose Gonzalo Zavaleta, M.D., 76 Fed. Reg. 49,506 
(DEA 2011), thus barring Respondent from ``relitigati[ng] the factual 
findings and conclusions of law of the prior proceeding.'' Robert L. 
Dougherty, M.D., 76 Fed. Reg. 16,823, 16,830 (DEA 2011). On December 
16, 2011, the Government and Respondent filed briefs on this issue. See 
Government's Motion for Partial Summary Disposition and Respondent's 
Memorandum.
    Agency precedent has repeatedly held that factual findings in DEA 
final orders are entitled to res judicata. See e.g., Robert L. 
Dougherty, M.D., 76 Fed. Reg. 16,823, 16,830 (DEA 2011); Stanley Alan 
Azen, M.D., 61 Fed. Reg. 57,893, 57,893-94 (1996). But the Agency has 
also expressly limited the application of res judicata, refusing to 
apply the principle when the final order was issued without an 
evidentiary hearing. Robert M. Golden, M.D., 65 Fed. Reg. 5,663, 5,664 
(DEA 2000). In this case, the July 27, 2011 Final Order was issued 
against Dr. Zavaleta solely on the basis of material in the DEA's 
investigative file and not following an evidentiary hearing. Therefore, 
I found, consistent with the Agency's holding in Golden, that the 
factual findings and legal conclusions contained in the Final Order 
were not entitled to res judicata effect in this matter.\12\
---------------------------------------------------------------------------

    \12\ I have attached the relevant order and the parties' briefs 
as appendix A & B for the Deputy Administrator's consideration.
---------------------------------------------------------------------------

B. Position of the Parties

1. Government's Position

    The Government asserts that the Respondent's application should be 
denied based upon the Government's preponderating evidence that the 
Respondent's registration would be contrary to the public interest. 
[Govt. Brief at 22-23]. Specifically, the Government claims that the 
Respondent prescribed controlled substances to undercover officers 
without a legitimate medical purpose and outside the course of 
professional practice. [Govt. Brief at 15]. Further, the Government 
argues that by issuing prescriptions to the two undercover officers the 
Respondent violated state law because he failed to adequately evaluate 
them, document a proper diagnosis, formulate a legitimate treatment 
plan, conduct a drug screen for these patients, and maintain adequate 
medical records. [Govt. Brief at 16-17].
    Next, the Government asserts that the Respondent submitted two 
applications for registration to the DEA that contained materially 
false information, specifically his responses to the four liability 
questions. [Govt. Brief at 18-19]. The Government argues that this 
conduct provides an independent basis to deny Respondent's application. 
[Id.].
    Lastly, the Government argues that the Respondent has not 
articulated any persuasive mitigating factors. [Govt. Brief at 21-22]. 
The Government claims that the Respondent has never ``acknowledge[d] 
that he violated Federal or state law or that he assumed complete fault 
for his actions.'' [Govt. Brief at 21]. Rather, the Government argues 
that the Respondent testified at the hearing that, given the 
information he had at the time, he thought he had acted reasonably. 
[Id.]. Given this lack of responsibility and remorse, and the 
Respondent's failure to testify truthfully about the undercover visits, 
the Government asserts that Respondent's conduct ``belies any notion 
that he has accepted responsibility for his actions.'' [Govt. Brief at 
22].

2. Respondent's Position

    The Respondent argues that his registration is in the public 
interest and consequently requests that his application be granted. The 
Respondent notes that he has been punished by the Louisiana Medical 
Board and the Louisiana Board of Pharmacy for his misconduct in the 
prescribing of controlled substances to the undercover agents. Although 
he acknowledges that it is DEA's responsibility to determine the public 
interest in this matter, he asserts that the DEA should consider these 
actions when determining the appropriate remedy in this matter. [Resp. 
Brief at 7].
    Next, the Respondent asserts that the Government did not provide an 
expert witness to testify concerning the legitimacy of the 
prescriptions written to the undercover officers. [Resp. Brief at 8-9]. 
He argues that the Government failed to establish that Respondent's 
physical examination of the undercover officers or Dr. Zavaleta's 
failure to request medical records for those patients was outside the 
usual course of professional practice. [Resp. Brief at 10]. The 
Respondent further argues that the Government has not alleged or proven 
that the Respondent's conduct was outright drug dealing. [Resp. Brief 
at 11]. On this point, the Respondent highlights that, although 
Detective Owens requested a prescription for her sister, the Respondent 
refused her request. [Id.]. Furthermore, the Respondent notes that Dr. 
Zavaleta has not been convicted of any offenses under federal or state 
law relating to his handling of controlled substances. [Id.].
    While Respondent acknowledged that he should not have prescribed 
controlled substances to the undercover agents, he asserts that he 
offered substantial mitigating evidence ``to show he would not engage 
in the same conduct'' in the future. [Resp. Brief at 12]. To this 
point, the Respondent notes that Dr. Zavaleta completed a three-day 
continuing medical education course in prescribing controlled 
substances. [Id.]. The Respondent also points out that Dr. Zavaleta 
cooperated with all agencies involved in this matter, and that he 
admitted that he made a mistake in prescribing to the undercover 
officers. [Id.]. The Respondent claims he demonstrated remorse for his 
conduct. [Id.]. He admitted he had failed and that he had learned his 
lesson when it came to prescribing controlled substances. [Resp. Brief 
at 13].
    As for material falsification, the Respondent acknowledges that he 
had failed to answer the liability questions correctly on his two 
applications for

[[Page 27439]]

registration. But, the Respondent argues that his error on these 
applications was unintentional, because he had ``no reason to hide the 
information.'' [Id.]. However, he concedes that ``[n]o matter how 
unintentional, his failure [to correctly answer the liability 
questions] could have the tendency to affect the outcome of his 
application thereby being materially false.'' [Id.].
    In conclusion, the Respondent argues that granting his application 
would be consistent with the public interest. [Resp. Brief at 13-14]. 
Although the Respondent engaged in misconduct, he asserts that he ``has 
done everything within his control to make sure this does not happen 
again.'' [Resp. Brief at 14]. The Respondent ``believes he has 
demonstrated to this Court that he is remorseful for his actions and 
will not repeat the same behavior.'' [Id.]. Therefore, he requests that 
his application be approved. [Id.].

C. Statement of Law

    Section 823(f) of the Controlled Substances Act (``CSA'' or ``the 
Act'') provides that ``[t]he Attorney General \13\ may deny an 
application for [a practitioner's] registration if he determines that 
the issuance of such registration would be inconsistent with the public 
interest.'' 21 U.S.C. 823(f). In making the public interest 
determination, the Act requires the consideration of the following 
factors:
---------------------------------------------------------------------------

    \13\ The Deputy Administrator has the authority to make such 
determinations pursuant to 28 C.F.R. Sec. Sec.  0.100(b) and 0.104 
(2011).
---------------------------------------------------------------------------

    (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.

21 U.S.C. Sec.  823(f).
    These factors are considered in the disjunctive. Robert A. Leslie, 
M.D., 68 Fed. Reg. 15,227, 15,230 (DEA 2003). The Deputy Administrator 
may rely on any one or a combination of factors, and may give each 
factor the weight he deems appropriate in determining whether an 
application for a registration should be denied. Id. Moreover, the 
Deputy Administrator is ``not required to make findings as to all of 
the factors.'' Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); see 
also Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005).
    The Government bears the burden of proving that the requirements 
for registration are not satisfied. 21 C.F.R. Sec.  1301.44(d) (2011). 
The burden of proof shifts to the Respondent once the Government has 
made its prima facie case. Medicine Shoppe--Jonesborough, 73 Fed. Reg. 
364, 380 (DEA 2008). The Agency has recognized that ``past performance 
is the best predictor of future performance.'' ALRA Labs, Inc. v. DEA, 
54 F.3d 450, 452 (7th Cir. 1995). Further, the Agency has repeatedly 
held that ``where a registrant has committed acts inconsistent with the 
public interest, the registrant must accept responsibility for (his) 
actions and demonstrate that (he) will not engage in future 
misconduct.'' Medicine Shoppe, 73 Fed. Reg. at 387; see also Samuel S. 
Jackson, D.D.S., 72 Fed. Reg. 23,848, 23,853 (DEA 2007). In short, 
after the Government makes its prima facie case, the Respondent must 
prove by a preponderance of the evidence that he can be entrusted with 
the authority that a registration provides by demonstrating that he 
accepts responsibility for his misconduct and that the misconduct will 
not re-occur.
    Under Section 824(a)(1), a registration may also be revoked or 
suspended ``upon a finding that the registrant . . . has materially 
falsified any application filed pursuant to or required by this 
subchapter.'' 21 U.S.C. Sec.  824(a)(1) (2006). Under Agency precedent, 
the various grounds for revocation or suspension of an existing 
registration that Congress enumerated in 21 U.S.C. Sec.  824(a), are 
also properly considered in deciding whether to grant or deny an 
application under section 823. See Anthony D. Funches, 64 Fed. Reg. 
14,267, 14,268 (DEA 1999); Alan R. Schankman, M.D., 63 Fed. Reg. 
45,260, 45,260 (DEA 1998); Kuen H. Chen, M.D., 58 Fed. Reg. 65,401, 
65,402 (DEA 1993).
    Although the Government did not assert material falsification in 
the Order to Show Cause, the Government did place the Respondent 
properly on notice of this allegation in the Government's Supplemental 
Prehearing Statement. Thus, the allegation that the Respondent 
materially falsified his application is properly considered in this 
proceeding. George Mathew, M.D., 75 Fed. Reg. 66,138, 66,146 (DEA 2010) 
(``[T]he failure of the Government to disclose an allegation in the 
Order to Show Cause is not dispositive, and an issue can be litigated 
if the Government otherwise timely notifies a respondent of its intent 
to litigate the issue.''); CBS Wholesale Distributors, 74 Fed. Reg. 
36,746, 36,750 (DEA 2009). Longstanding Agency precedent has held that 
the scope of a DEA administrative hearing is determined not only by the 
allegations contained in the OSC, but also by the parties' prehearing 
statements. Darrell Risner, D.M.D., 61 Fed. Reg. 728, 730 (DEA 1996); 
John Stanford Noell, M.D., 59 Fed. Reg. 47,359, 47,361 (DEA 1994).

1. The Material Falsification Allegation

    A false statement is material if it ``has a natural tendency to 
influence, or was capable of influencing, the decision of the 
decisionmaking body to which it was addressed.'' Kungys v. United 
States, 485 U.S. 759, 770 (1988). While the evidence must be ``clear, 
unequivocal, and convincing,'' the ultimate finding of materiality 
``turns on a substantive interpretation of the law.'' Id. at 772; see 
also Craig H. Bammer, D.O., 73 Fed. Reg. 34,327, 34,328 (DEA 2008). 
However, `[i]t makes no difference that a specific falsification did 
not exert influence so long as it had the capacity to do so.''' United 
States v. Alemany Rivera, 781 F.2d 229, 234 (1st Cir. 1985).
    The record raises the issue of whether the Respondent's failure to 
correctly answer the liability questions on his most recent application 
and his application in December of 2010 resulted in a material 
falsification of those applications. DEA has previously held that 
``[t]he provision of truthful information on applications is absolutely 
essential to effectuating [the] statutory purpose'' of determining 
whether the granting of an application is consistent with the public 
interest. Peter H. Ahles, M.D., 71 Fed. Reg. 50,097, 50,098 (DEA 2006). 
In the July 2011 application, the Respondent disclosed his voluntary 
surrender of his DEA registration. However, he failed to disclose the 
suspension of his Louisiana controlled substance license, which 
occurred in September of 2010. Clearly, the Respondent knew or should 
have known about this suspension by July of 2011. Likewise, in the 
December 2010 application, the Respondent failed to disclose his 
voluntary surrender of his DEA registration in March of 2008, or the 
suspension of his Louisiana controlled substance license in September 
of 2010.
    I find these omissions resulted in the material falsification of 
the Respondent's applications. Clearly, this information was capable of 
influencing the decisionmaker in this matter. Respondent's lack of full 
disclosure in these applications weighs heavily in favor of denying his 
application for a certificate of registration. See Shannon L. 
Gallentine, D.P.M., 76 Fed. Reg. 45,864, 45,866 (DEA 2011).

[[Page 27440]]

2. Factor One: Recommendation of the Appropriate State Licensing Board

    While the Medical Board's recommendation is probative, ``DEA 
maintains a separate oversight responsibility with respect to the 
handling of controlled substances and has a statutory obligation to 
make its independent determination as to whether the granting of [a 
registration] would be in the public interest.'' Mortimer B. Levin, 
D.O., 55 Fed. Reg. 8,209, 8,210 (DEA 1990); see also Jayam Krishna-
Iyer, M.D., 74 Fed. Reg. 459, 461 (DEA 2009). The ultimate 
responsibility to determine whether a registration is consistent with 
the public interest has been delegated exclusively to the DEA, not to 
entities within state government. Edmund Chein, M.D., 72 Fed. Reg. 
6,580, 6,590 (DEA 2007), aff'd, 533 F.3d 828 (DC Cir. 2008). Although 
not dispositive, state board decisions are relevant on the issue of 
granting or denying a DEA application. Gregory D. Owens, D.D.S., 74 
Fed. Reg. 36,751, 36,755 (DEA 2009); Martha Hernandez, M.D., 62 Fed. 
Reg. 61,145, 61,147 (DEA 1997).
    Here, the Medical Board has not made a direct recommendation 
concerning the Respondent's DEA application. However, on June 24, 2010, 
the Respondent entered into a Consent Order with the Louisiana Medical 
Board. Although not admitting to any misconduct, the Respondent agreed 
to the Medical Board's action and conditions placed upon his medical 
license. Specifically, the Medical Board issued a public reprimand, 
and, among other conditions, required the Respondent to take a 
continuing medical education course regarding proper prescribing. The 
Respondent completed all of the requirements levied by the Medical 
Board, and he currently has an unrestricted, active medical license. 
Therefore, I find that this factor does not weigh in favor or against 
Respondent's application for a DEA certificate of registration.

3. Factors Two and Four: The Applicant's Experience With Controlled 
Substances and Compliance With Applicable State, Federal, or Local Laws 
Relating To Controlled Substances.

    DEA regulation dictates that a prescription, to be valid, must be 
issued for a legitimate medical purpose by an individual practitioner 
acting in the usual course of his professional practice. 21 C.F.R. 
Sec.  1306.04(a) (2011); see also La. Rev. Stat. Ann. Sec.  40:1238.2 
(2011).\14\ As the Supreme Court explained, ``the prescription 
requirement. . . ensures patients use controlled substances under the 
supervision of a doctor so as to prevent addiction and recreational 
abuse. As a corollary, [it] also bars doctors from peddling to patients 
who crave the drugs for those prohibited uses.'' Gonzales v. Oregon, 
546 U.S. 243, 274 (2006) (citing United States v. Moore, 423 U.S. 122, 
135 (1975)). Further, a valid prescription under Louisiana law is 
defined as a ``a written request for a drug. . . issued by a licensed 
physician. . . for a legitimate medical purpose, for the purpose of 
correcting a physical, mental, or bodily ailment, and acting in good 
faith in the usual course of his professional practice.'' La. Rev. 
Stat. Ann. Sec.  40:961(33) (2011).
---------------------------------------------------------------------------

    \14\ This statutory provision provides in relevant part: A 
prescription, in order to be effective in legalizing the possession 
of legend drugs, shall be issued for a legitimate medical purpose by 
one authorized to prescribe the use of such legend drugs * * * Any 
person who knows or should know that he or she is filling such a 
prescription * * * to a drug abuser or habitual user of legend 
drugs, as well as the person issuing the prescription, may be 
charged with a violation of this Section. La. Rev. Stat. Ann. Sec.  
40:1238.2(A) (2011).
---------------------------------------------------------------------------

    Under the CSA, it is fundamental that a practitioner must establish 
and maintain a bonafide doctor-patient relationship in order to act 
``in the usual course of. . . professional practice'' and to issue a 
prescription for a ``legitimate medical purpose.'' Laurence T. 
McKinney, M.D., 73 Fed. Reg. 43,260, 43,265 (DEA 2008); see also Moore, 
423 U.S. 142-43 (noting that evidence established that physician 
``exceeded the bounds of ``professional practice,'' when ``he gave 
inadequate physical examinations or none at all,'' ``ignored the 
results of the tests he did make,'' and ``took no precautions against. 
. . misuse and diversion''). The CSA, however, generally looks to state 
law to determine whether a doctor and patient have established a 
bonafide doctor-patient relationship. Kamir Garces-Mejias, M.D., 72 
Fed. Reg. 54,931, 54,935 (DEA 2007); United Prescription Services, 
Inc., 72 Fed. Reg. 50,397, 50,407-08 (DEA 2007).
    Here, Louisiana law provides that it is unlawful for a physician to 
``assist a patient. . . in obtaining a controlled dangerous substance 
through misrepresentation, fraud, forgery, deception, or subterfuge.'' 
La. Rev. Stat. Ann. Sec.  40:971.2(B)(1) (2011). By coaching Mr. Harris 
and Ms. Landry to state they were in pain, and by falsely documenting 
their medical records to record these pain complaints when neither 
patient expressed that they were in pain is a violation of this 
provision.
    Louisiana law pertaining to the treatment of chronic pain requires 
a physician to evaluate the patient to include an ``assessment of the 
impact of pain on the patient's physical and psychological functions, a 
review of previous diagnostic studies, previously utilized therapies, 
an assessment of co-existing illnesses, diseases, or conditions, and an 
appropriate physical examination.'' La. Admin. Code tit. 46, Sec.  
6921(A)(1) (2011). Here, the Respondent failed to meet this standard, 
for he did not perform a physical or psychological functions analysis, 
did not review previous diagnostic studies, previously utilized 
therapies, or conduct an appropriate physical examination of either Mr. 
Harris or Ms. Landry. See Armstrong v. La. State Bd. Of Med. Examiners, 
868 So. 2d 830, 840 (La. Ct. App. 2004) (noting that when a physician 
prescribes controlled substances for the relief of non-malignant pain 
``unaccompanied by appropriate testing, diagnosis, oversight and 
monitoring. . . the physician falls below generally accepted standards 
of care''). Although the Respondent looked at the patients' backs, such 
observation may not be an adequate physical examination. Jack A. 
Danton, D.O., 76 Fed. Reg. 60,900, 60,910 (DEA 2011) (noting without 
deciding that mere observation may not be an adequate physical 
examination).
    Further, the Respondent failed to develop an individualized 
treatment plan for Mr. Harris and Ms. Landry. Louisiana law requires a 
physician to develop such a plan and to document the plan in the 
patient's medical records. The plan is to include ``medical 
justification for controlled substance therapy. Such plan shall include 
documentation that other medically reasonable alternative treatments 
for relief of the patient's non-cancer-related chronic or intractable 
pain have been considered or attempted without adequate or reasonable 
success. Such plan shall specify the intended role of controlled 
substance therapy within the overall plan, which therapy shall be 
tailored to the individual medical needs of each patient.'' La. Admin. 
Code tit. 46, Sec.  6921(A)(3) (2011). The medical records here failed 
to reveal such an individualized treatment plan. Especially lacking in 
these medical records were any indications that alternative treatments 
were attempted prior to issuing prescriptions for controlled 
substances. La. Admin. Code tit. 46, Sec.  6921(B)(6)(2011).
    In the case of Ms. Landry and her multiple visits to Dr. Zavaleta's 
clinic, the Respondent failed to assess the efficacy of her treatment. 
Louisiana law requires a physician to ``assure that controlled 
substance therapy remains

[[Page 27441]]

indicated, and evaluate the patient's progress toward treatment 
objectives.'' La. Admin. Code tit. 46, Sec.  6921(B)(1). Ms. Landry's 
chart failed to disclose any treatment objectives, and thus, her 
progress towards meeting those objectives was also lacking.
    Louisiana law also requires a physician to ``document in the 
patient's medical record the medical necessity for the use of more than 
one type or schedule of controlled substance employed in the management 
of a patient's noncancer-related chronic or intractable pain.'' Id. at 
(B)(5). The Respondent violated this provision when he added Xanax to 
Ms. Landry's prescriptions without documenting the medical necessity 
for this anti-anxiety medication.
    Lastly, Louisiana case law establishes that it is a violation of 
the legitimate medical purpose provision when a physician provides a 
patient with controlled substances based upon their request for the 
drug. See Louisiana v. Moody, 393 So. 2d 1212, 1215 (La. 1981). Both 
Mr. Harris and Ms. Landry specifically requested hydrocodone products, 
and the Respondent provided them with a prescription for this requested 
controlled substance. Further, given the statements by both Mr. Harris 
and Ms. Landry that they were not experiencing any pain, the Respondent 
violated this provision when he prescribed Lorcet or Lortab for their 
non-existent pain.
    Accordingly, I find that the Government has made a prima facie case 
regarding the failure of the Respondent to prescribe controlled 
substances for a legitimate medical purpose in the usual course of 
professional practice.\15\
---------------------------------------------------------------------------

    \15\ Given the overwhelming evidence of the Respondent's failure 
to issue controlled substances for a legitimate medical purpose, I 
do not address the Government's allegations that the Respondent's 
flirtatious behavior with Ms. Landry was outside the usual course of 
professional practice.
---------------------------------------------------------------------------

4. Respondent's Remorse and Corrective Action

    The critical consideration in this proceeding is whether the 
circumstances, which existed at the time of the surrender of his 
registration in 2008, have changed sufficiently to support a conclusion 
that Respondent's registration would be in the public interest. Ellis 
Turk, M.D., 62 Fed. Reg. 19,603, 19,604 (DEA 1997). As this Agency has 
repeatedly held, a proceeding under the Act ``is a remedial measure, 
based upon the public interest and the necessity to protect the public 
from those individuals who have misused. . . their DEA Certificate of 
Registration, and who have not presented sufficient mitigating evidence 
to assure the Administrator that they can be entrusted with the 
responsibility carried by such a registration.'' Jon Karl Dively, 
D.D.S., 72 Fed. Reg. 74,332, 74,334 (DEA 2007).
    At the hearing, the Respondent acknowledged that he should have 
refused to provide Mr. Harris with the Lortab prescription he requested 
without prior records or validating tests. He credibly testified that 
he agreed that providing Mr. Harris with a prescription for hydrocodone 
was not for a legitimate medical purpose. Nevertheless, I remain 
concerned about the Respondent's insistence at the hearing that Mr. 
Harris had told him that he had back pain. My review of the undercover 
recording does not substantiate his assertion, and Mr. Harris credibly 
testified that he had not told the Respondent that he had any pain. To 
his credit, however, when Mr. Harris returned to his office, the 
Respondent refused to treat him.
    Likewise, at the hearing the Respondent admitted that he had not 
prescribed controlled substances to Ms. Landry for a legitimate medical 
purpose. Although Ms. Landry asserted that she needed a refill of her 
controlled substance prescription, the Respondent took no action to 
verify that her original controlled substance prescription had been 
provided for a legitimate medical purpose. To his credit, at the first 
visit Ms. Landry had requested a prescription for her sister, and the 
Respondent refused to provide her with such a prescription. But despite 
Ms. Landry's credible testimony denying that she had told the 
Respondent that she had any type of pain, the Respondent testified that 
he thought, at the time he wrote the prescriptions, that he was right 
in his prescribing to her. The Respondent's lack of forthrightness is 
troubling.
    Lastly, the Respondent was cooperative with the investigators. He 
also took remedial training in the handling of controlled substances, 
and he credibly testified that he is more knowledgeable about drug-
seeking behavior.

V. Conclusion and Recommendation

    In balance, however, I find that the Respondent's current lack of 
candor, his material falsification of his DEA applications, and his 
illegal prescribing of controlled substances in 2008 outweigh his 
assertions that he can now responsibly handle controlled substance 
prescriptions. Accordingly, I recommend that the Respondent's current 
application be denied. Should the Respondent file an application 
wherein he fully discloses the surrender of his DEA registration for 
cause and the suspension of his Louisiana controlled substance license, 
then such candor may be favorably considered.

    Dated: May 10, 2012.
Gail A. Randall,
Administrative Law Judge.
[FR Doc. 2013-11185 Filed 5-9-13; 8:45 am]
BILLING CODE 4410-09-P