Roberto Zayas, M.D., Decision and Order, 21410-21430 [2017-09285]

Download as PDF 21410 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices however, ‘‘accepts as valid and lawful the actions of a state regulatory board unless that action is overturned by a state court . . . pursuant to state law.’’ Kamal Tiwari, 76 FR 71604, 71607 (2011) (quoting George S. Heath, 51 FR 26610 (1986)). Rather, Respondent’s challenge to the lawfulness of the Texas Board’s Suspension Order must be raised in the forums provided by the State. Id. (quoting 51 FR at 26610). See also Calvin Ramsey, 76 FR 20034, 20036 (2011) (quoting Hicham K. Riba, 73 FR 75773, 75774 (2008) (‘‘DEA has repeatedly held that a registrant cannot collaterally attack the results of a state criminal or administrative proceeding in a proceeding brought under section 304 [21 U.S.C. 824] of the CSA.’’)). Here, there is no dispute over the material fact that Respondent is no longer currently authorized to dispense controlled substances in Texas, the State in which he is registered. Accordingly, he is not entitled to maintain his registrations. I will therefore adopt the CALJ’s recommendation that I revoke Respondent’s registrations and deny any pending applications to renew his registrations. R.D. 6. Order Pursuant to the authority vested in me by 21 U.S.C. 824(a)(3) and 28 CFR 0.100(b), I order that DEA Certificates of Registration Nos. BS3909718 and FS3571660 be, and they hereby are, revoked. Pursuant to the authority vested in me by 21 U.S.C. 823(f), I order that any applications to renew the above registrations be, and they hereby are, denied. This Order is effective immediately.4 Dated: May 1, 2017. Chuck Rosenberg, Acting Administrator. [FR Doc. 2017–09284 Filed 5–5–17; 8:45 am] BILLING CODE 4410–09–P DEPARTMENT OF JUSTICE Drug Enforcement Administration [Docket No. 15–24] asabaliauskas on DSK3SPTVN1PROD with NOTICES Roberto Zayas, M.D., Decision and Order On May 18, 2015, the Deputy Assistant Administrator, of the thenOffice of Diversion Control, issued an Order to Show Cause to Roberto Zayas, M.D. (hereinafter, Respondent), of 4 For the same reasons which led the Texas Board to order the temporary suspension of Respondent’s medical license, I conclude that the public interest necessitates that this Order be effective immediately. 21 CFR 1316.67. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 Houston, Texas and Dover, Florida. ALJ Ex. 1. The Show Cause Order proposed the revocation of Respondent’s Certificates of Registration Nos. FZ2249743 and FZ2418401, the denial of any pending applications to renew or modify these registrations, and the denial of any applications for new registrations, on the ground that his ‘‘continued registration is inconsistent with the public interest.’’ Id. at 1 (citing 21 U.S.C. 824(a)(4) and 823(f)). With respect to the Agency’s jurisdiction, the Show Cause Order alleged that Respondent is the holder of Registration No. FZ2249743, pursuant to which he is authorized to dispense schedule II through V controlled substances as a practitioner, at the registered address of 12121 Jones Road, Houston, Texas; the Order alleged that this registration was due to expire on May 31, 2016. Id. The Show Cause Order also alleged that Respondent is the holder of Registration No. FZ22418401, pursuant to which he is authorized to dispense schedule II through V controlled substances as a practitioner, at the registered address of 14222 Melouga Preserve Trail, Dover, Florida; the Order alleged that this registration is due to expire on May 31, 2017. Id. As grounds for the proposed actions, the Show Cause Order alleged that on September 20, 2010, Respondent ‘‘signed a Memorandum of Agreement’’ (MOA) which ‘‘imposed requirements . . . regarding [the] operation, management and supervision of seven different clinics’’ he ‘‘own[s] and/or manage[s] and control[s]’’ which are located in various Texas cities. Id. at 1– 2. The Show Cause Order alleged that ‘‘pursuant to paragraph 8 of the MOA, [Respondent] agreed that ‘[i]f controlled substances in Schedules II through V are purchased for any clinic, to be administered and/or dispensed to the clinic patient, [he] shall cause to be made and maintained all DEA required documents and information including records, reports, and inventories’ ’’ and that ‘‘[a]ll required documentation shall be maintained as required by federal and Texas laws and regulations.’’ Id. at 2. The Show Cause Order then alleged that pursuant to another part of paragraph 8, Respondent ‘‘agreed . . . that ‘[i]f any controlled substance is administered or dispensed at any clinic including the [seven clinics he owns or controls], the health care provider doing the administering and/or dispensing to the patient shall be registered at the clinic as required by 21 U.S.C. 822(a)(2) and 21 CFR 1301.12.’’ Id. And with respect to paragraph 9 of the MOA, the Order alleged that Respondent was PO 00000 Frm 00047 Fmt 4703 Sfmt 4703 required to submit to the DEA Houston Division Office ‘‘on a quarterly basis, the total number of controlled substances dispensed, to include the date dispensed, full name of patient, address of patient, name of controlled substance dispensed, quantity dispensed and [the] dispenser’s initials.’’ Id. The Show Cause Order alleged that ‘‘[b]etween August 28 and September 13[,] 2013,’’ DEA conducted inspections of each of the clinics and ‘‘determined that [Respondent] repeatedly violated the terms of paragraphs 8 and 9 of the MOA.’’ Id. The Show Cause Order then alleged that ‘‘controlled substances were dispensed and/or administered at four of the [clinics] during periods when the individual doing the dispensing and/or administering was not registered . . . at the’’ clinic. Id. at 2. The Show Cause Order also alleged that Respondent failed to make and maintain complete and accurate controlled substance inventories at six of the clinics; that he failed to make and maintain complete and accurate dispensing records at five of the clinics; and that he failed to make and maintain complete and accurate receipt records at several of the clinics. Id. at 3 (citing 21 CFR 1304.11(e)(3); id. § 1304(c); 1 id. § 1304.22(c); and id. § 1304.22(a)(2)). The Show Cause Order further alleged that Respondent failed to timely submit 10 of the required quarterly dispensing reports, that 10 of the reports that were submitted ‘‘on July 20, 2013, were backdated and hence, failed to indicate the true date they were prepared,’’ and that ‘‘[a]ll of these reports’’ falsely represented that ‘‘neither [Respondent] nor any of the . . . clinics . . . have dispensed any controlled substances to their patients for their medical needs.’’ Id. Finally, the Show Cause Order alleged that Respondent ‘‘violated 21 CFR 1306.04(b) by issuing prescriptions ‘in order for an individual practitioner to obtain controlled substances for supplying the individual practitioner for the purpose of general dispensing to patients.’ ’’ Id. The Order then identified two instances in which Respondent allegedly issued prescriptions for testosterone products which listed him (and in one instance, a clinic) as the patient. Id. Following service of the Show Cause Order, Respondent requested a hearing on the allegations. The matter was placed on the docket of the Office of 1 While there is no such provision, this appears to be a mistaken citation to 21 CFR 1304.22(c), which sets forth the records required to be maintained by dispensers. E:\FR\FM\08MYN1.SGM 08MYN1 asabaliauskas on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices Administrative Law Judges and following the departure from the Agency of the ALJ to whom the case was initially assigned, the matter was reassigned to Chief Administrative Law Judge John J. Mulrooney, II (hereinafter, CALJ). Following pre-hearing procedures, the CALJ conducted an evidentiary hearing on October 27–28, 2015, in Houston, Texas. At the hearing, the Government elicited testimony from multiple witnesses and introduced numerous exhibits into evidence; Respondent testified on his own behalf and introduced a single exhibit. On February 19, 2016, the CALJ issued his Recommended Decision. Therein, the CALJ found proved the allegations that Respondent: (1) Issued prescriptions to obtain controlled substances for office use in violation of 21 CFR 1306.04, see R.D. at 54; (2) violated 21 CFR 1304.11 and/or the MOA at six clinics by failing to cause to be made and maintained compliant inventories, see R.D. at 57–58, 68; (3) violated 21 CFR 1304.22(c) and/or the MOA by failing to cause to be made and maintained compliant dispensing records at the six clinics, see R.D. at 59– 60, 70; (4) violated 21 CFR 1304.22(c) and/or the MOA by failing to cause to be made and maintained compliant receipt records at the six clinics, see R.D. at 61, 72; (5) violated 21 U.S.C. 822(a)(2) and 21 CFR 1301.12(a), as well as the MOA, on multiple occasions when employees of four of the clinics administered testosterone to patients and there was no practitioner registered at the clinic’s location, see R.D. at 66; and (6) violated the MOA on eight occasions when he failed to timely submit the quarterly dispensing reports. Id. at 75. Based on these conclusions, the CALJ found that Respondent has committed such ‘‘ ‘acts as would render his registration under [21 U.S.C. 823(f)] inconsistent with the public interest,’ ’’ and that the Government had ‘‘ma[d]e out a prima facie case that maintaining [his registrations] would be contrary’’ to the requirements of 21 U.S.C. 823(f) and 824.’’ Id. at 76 (quoting 21 U.S.C. 824(a)(4)). Turning to whether Respondent had produced sufficient evidence to rebut the Government’s prima facie case, the CALJ found that while Respondent ‘‘begrudgingly accepted responsibility when his counsel led him to do so, . . . when left to his own devices, in response to questions by Government counsel, he approached the topic with a tenor that bordered on hostile sarcasm.’’ Id. at 77. The CALJ thus concluded that ‘‘[t]his record simply does not support a finding that the Respondent has accepted responsibility VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 in any meaningful way.’’ Id. While the CALJ noted that Respondent’s evidence of subsequent remedial measures was ‘‘rendered irrelevant in light of his refusal to accept responsibility,’’ he further concluded that his ‘‘purported evidence of corrective measures as it exists in the . . . record does not advance his position.’’ Id. After noting Respondent’s testimony that his clinics had stopped administering controlled substances as well as that they had stopped providing their patients with the option of having their prescriptions shipped to the clinic for pickup, the CALJ explained that ‘‘[n]one of these practice modifications reflect efforts to improve compliance with DEA regulations, adhere to terms of present or future . . . MOAs, or better guard against controlled substance diversion.’’ Id. at 78. Continuing, the CALJ characterized Respondent’s testimony as ‘‘essentially lecturing the Agency that its pesky regulations and the DEA MOA have proven so bothersome that he will gratuitously punish his patients because of them, and it is all the fault of the DEA.’’ Id. The CALJ further explained that ‘‘[i]t would be difficult to divine an enhanced commitment to DEA regulation compliance from a man who freely admits that he still has not read them.’’ Id. (citing Tr. 473–74). The CALJ further found that Agency’s interests in both specific and general deterrence ‘‘provide significant support for’’ revoking his registration. Id. With respect to the former, the CALJ found that ‘‘there is little in the record that lends support to the proposition that the Respondent’s future behavior will deviate in any positive respect from his past behavior,’’ noting that ‘‘Respondent blatantly disregarded his obligations under both the DEA regulations and the DEA MOA.’’ Id. at 78–79. And as for the Agency’s interest in general deterrence, the CALJ found that ‘‘[a] sanction less than revocation in this case would send a message to the regulated community that diligence in recordkeeping is not truly required and that agreements entered into with the Agency may be freely disregarded without consequence.’’ Id. at 80. Finally, the CALJ rejected Respondent’s contention that his conduct involved only ‘‘recordkeeping violations’’ which did not warrant revocation, explaining that this case did not present the situation ‘‘where a small number of modest recordkeeping errors are acknowledged and remedied promptly,’’ and that ‘‘[i]n this case, the anomalies were plentiful and dangerous’’ and ‘‘include instances where no records were kept.’’ Id. The CALJ thus recommended that PO 00000 Frm 00048 Fmt 4703 Sfmt 4703 21411 Respondent’s registrations be revoked and that any pending renewal applications be denied. Id. at 81. Respondent filed Exceptions to the Recommended Decision. Thereafter, the record was forwarded to my Office for final agency action. Having considered the record in its entirety, as well as Respondent’s Exceptions, I agree with the CALJ’s findings and legal conclusions as enumerated above. However, I further conclude that by failing to ensure that all six clinics made and maintained compliant inventory, dispensing and receipt records, Respondent not only violated the MOA, he also violated the CSA and DEA regulations. Moreover, while I agree with the CALJ’s legal conclusion that Respondent violated the MOA by failing to timely submit eight of the required quarterly reports, I reject the Government’s contention that the ‘‘reports contained false representations’’ because ‘‘each report states that ‘neither [Respondent] nor any of the IMC clinics . . . have dispensed any controlled substances to their patients for their medical needs.’ ’’ ALJ Ex. 1, at 3, ¶ 5(c). I also agree with the CALJ’s conclusion that Respondent has committed such ‘‘‘ acts as would render his registration under [21 U.S.C. 823(f)] inconsistent with the public interest,’ ’’ and that the Government had ‘‘ma[d]e out a prima facie case that maintaining [his registrations] would be contrary’’ to the requirements of 21 U.S.C. 823(f) and 824.’’ R.D. at 76 (quoting 21 U.S.C. 824(a)(4)). I further agree with the CALJ’s conclusions that the ‘‘record simply does not support a finding that the Respondent has accepted responsibility in any meaningful way,’’ id. at 77, that the Agency’s interests in both specific and general deterrence ‘‘provide significant support for’’ revoking his registration, id. at 78–79, and that the egregiousness of Respondent’s misconduct supports the revocation of his registration. Id. at 80– 81. Accordingly, I will adopt the CALJ’s recommended order that his registration be revoked and that any pending application be denied. I make the following findings. Findings of Fact Respondent is a physician licensed in Texas and Florida. He is also the holder of DEA Certificate of Registration No. FZ2418401, pursuant to which he is authorized to dispense controlled substances in schedules II through V, at the registered address of 14222 Melouga Preserve Trail, Dover, Florida. R.D. at 4. This registration does not expire until May 31, 2017. Id. Respondent was also E:\FR\FM\08MYN1.SGM 08MYN1 21412 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES the holder of DEA Certificate of Registration No. FZ2249743, pursuant to which he was authorized to dispense controlled substances in schedules II through V, at the registered address of 12121 Jones Road, Houston, Texas; this registration was due to expire on May 31, 2016. Id. However, because as of May 31, 2016, Respondent was under an Order to Show Cause, and did not submit a renewal application until June 27, 2016, this application was untimely and did not keep his registration in effect pending the issuance of this Decision and Order. See 5 U.S.C. 558; 21 CFR 1301.36(i). I therefore find that Certificate of Registration No. FZ2249743 expired on May 31, 2016. I further find, however, that Respondent’s June 27, 2016 application remains pending before the Agency. At the time of the events at issue here, Respondent owned indirectly and controlled seven different clinics through a limited partnership known as Z Healthcare Management; 99 percent of this entity is owned by the Zayas Family Trust with the remaining one percent owned by Z Healthcare Systems, Inc., the latter being 100 percent owned by Respondent; as of the date of this proceeding, he still owned and controlled five of these clinics.2 RX 1, Tr. 59, 371. These clinics included: (1) IMC Cy-Fair, which was located at 12121 Jones Road, Houston, Texas during the relevant time period, see GX 6; (2) IMC FM 1960, which was located at 3648 FM 1960, Houston, Texas, but has since closed, see GX 16, Tr. 365; (3) IMC Southwest, which was located at 7447 Harwin, Suite 100, Houston, Texas, see GX 22; (4) IMC Oak Hills, which was located at 4805 Fredericksburgh Road, San Antonio, Texas, see GX 12; (5) IMC Woodlands, which was located at 25329 I–45 North Suite B, The Woodlands, but which moved to 314 Sawdust Road, Spring, Texas during February/March 2013, GX 19; (6) IMC Victoria, which was located at 3804 John Stockbauer Drive, Suite E, Victoria, Texas, but has since closed,3 GX 25, Tr. 365; and: (7) IMC Corpus Christi, which was located at 4646 Corona Drive, #280, Corpus Christi, Texas. GXs 33, 34. The MOA On September 8, 2010, Z Healthcare Systems entered into a Settlement Agreement with the Office of the United States Attorney for the Southern District 2 The clinics were themselves incorporated, with two held by limited liability corporations and the others held by c-corporations. RX 1. 3 According to Respondent, the IMC 1960 and Victoria clinics were probably closed in 2014. Tr. 366. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 of Texas. GX 4, at 6. According to the agreement, the Government alleged that between August 2005 and June 2006, three IMC clinics dispensed controlled substances, in particular phentermine, ‘‘without a valid DEA registration.’’ Id. at 8. While Z Healthcare Systems was not required to admit liability, it did agree to pay $25,000 to the United States. Id. at 9. It also agreed that ‘‘each health care provider of each of its facilities including the [seven clinics] must have a separate DEA registration to administer, dispense, and prescribe a controlled substance for a legitimate medical purpose at each facility.’’ Id. at 10. It further agreed that ‘‘[i]f any controlled substance is purchased in order to be administered or dispensed, each facility is required to comply with the record-keeping and security requirements under 21 U.S.C. 801 to End and 21 CFR 1300 to End.’’ Id. at 10– 11. Respondent signed the Agreement as the President of Z Healthcare Systems. Id. at 13. Thereafter, on September 20, 2010, Respondent entered into a Memorandum of Agreement (MOA) with the Agency, which imposed various conditions which give rise to the allegations at issue in this proceeding. GX 4, at 5. After noting the investigation that led to the Settlement Agreement, the MOA stated that it ‘‘establishes the terms and conditions under which DEA will continue to permit [Respondent] to administer, dispense and prescribe any [s]chedules II though V controlled substance’’ and for granting his February 2009 application for registration at the IMC— Woodlands clinic. Id. at 2. Of relevance here are the terms and conditions imposed under paragraph 8. It provides that: If controlled substances in Schedules II through V are purchased for any clinic, to be administered and/or dispensed to the clinic patients, [Respondent] shall cause to be made and maintained all DEA required documents and information including records, reports, and inventories. All required documentation shall be maintained as required by federal and Texas laws and regulations, pertaining to the administering, dispensing, and prescribing of controlled substances. If any controlled substance is administered or dispensed at any clinic included the [seven clinics], the health care provider doing the administering and/or dispensing to the patient shall be registered at the clinic as required by 21 U.S.C. 822(a)(2) and 21 CFR 1301.12(a) and any administering and/or dispensing of a controlled substance shall be documented in the patient chart and made available for inspections as set forth in paragraph . . . 12 of this MOA. PO 00000 Frm 00049 Fmt 4703 Sfmt 4703 Id. at 2–3. Also of relevance are the terms and conditions included in paragraph 9. It provides that Respondent: shall submit to the DEA Diversion Group Supervisor, DEA Houston Division Office . . . on a quarterly basis, the total number of controlled substances dispensed, to include the date dispensed, full name of patient, address of patient, name of controlled substance dispensed, quantity dispensed and dispenser’s initials. Id. at 3. Respondent further ‘‘agree[d] that any violation of this MOA may result in the initiation of proceedings to immediately suspend or revoke his . . . Certificate of Registration. Id. at 4. The 2013 Investigation In April 2013, Respondent submitted an application to renew his registration, which ‘‘was due to expire at the end of May.’’ Tr. 86. On the application, Respondent was required to answer several questions including one which asked if his state medical license had been suspended. Id. at 91. Because Respondent provided a ‘‘yes’’ answer to this question, id., his application was not approved and was flagged for further review by a Diversion Investigator (DI). Id. at 84–85. The DI visited the Texas Medical Board’s Web site and printed out the suspension order that Respondent referenced on his application. Id. at 88; see also GX 2, at 1–11. However, the DI also found that the Board’s Web site listed another order which was not mentioned on Respondent’s application and printed it out.4 Tr. 88; GX 2 at 12–20. The DI also queried DEA’s databases and determined that Respondent ‘‘was under an MOA,’’ and that the MOA’s terms required ‘‘that he had to report quarterly his dispensing in all [of] his clinics.’’ Tr. 88. However, upon searching the Agency’s case file for the previous investigation, the DI could only find one report, which she believed was dated April 24, 2011. Tr. 107. While the DI’s initial attempts to contact Respondent were unsuccessful, on May 23, 2013, she spoke with Respondent and told him that she ‘‘need[ed] a written statement regarding the board order that [he] reported.’’ Id. at 97. According to the DI, Respondent ‘‘basically was like, you can go find it yourself. And at some point, he hung up the phone.’’ Id. at 98. Subsequently, on June 3, 2013, the DI sent Respondent an email which raised 4 While the DI testified that this was an order, it was actually a complaint, which was filed by the Board on September 5, 2012. GX 2, at 19. However, the Board and Respondent settled the matter, and on February 12, 2014, the complaint was dismissed. Id. at 21. E:\FR\FM\08MYN1.SGM 08MYN1 asabaliauskas on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices three issues; Respondent replied to the email the next day. GX 36, at 1–2. First, the DI asked Respondent to ‘‘[p]lease provide a detailed explanation relating to the suspension of [his] Texas Medical License in 2008’’ and to ‘‘be specific as to the details as to why [his] medical clinics were deemed a ‘danger to the public good.’ ’’ Id. at 2. Respondent replied that ‘‘[t]his is irrelevant to the renewal of my DEA certificate. You are welcome to get the one sides [sic] version of the story on the [TMB] Web site.’’ Id. Second, the DI wrote that ‘‘[r]ecords indicate that you are currently under a Memorandum of Understanding (MOU) . . . signed on September 2010, however, there is [a] record of only one (1) required quarterly reporting [sic] from you. If you have [a] record that you previously sent the required quarterly reporting [sic] please forward copies from April 2011 to the present . . . .’’ Id. Respondent replied: ‘‘As I said to you on the phone, you are mistaken. I am not, nor have I ever been under and [sic] MOU.’’ Id. Finally, the DI asked Respondent to ‘‘[p]lease describe your current medical practice[,] please include all locations and the names and numbers of any Physician Assistants . . . or Nurse Practitioners . . . that you currently supervise. Please indicate what changes you have made in your current medical practice that differentiates it from your current practice.’’ Id. Respondent wrote back: ‘‘Again this is irrelevant to the renewal of my DEA certificate.’’ Id. However, on June 19, 2013, Respondent wrote to the DEA Houston Office to ‘‘sincerely apologize for the misunderstanding that I was under with respect to the agreement we struck in 2010.’’ GX 35, at 1. Respondent offered to answer the DI’s questions either by email or in person. Id. He also enclosed 10 of the quarterly reports which the DI had previously requested and represented that ‘‘I haven’t practiced much in Texas since 2010, and I certainly haven’t dispensed any medication to patients.’’ Id. Each of these reports was a one-page letter, which was dated on an approximately quarterly basis beginning with January 29, 2011 and ending on April 24, 2013. GX 3, at 1–10. Each report contained the following statement: This letter is being sent to you as required by the DEA Memorandum of Agreement which was executed by me and your office. I am submitting the letter to indicate that since the signing of the Agreement neither I nor any of the IMC clinics, located in the State of Texas, have dispensed any controlled VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 substances to their patients for their medical needs. GX 3, at 1–10. Subsequently, Respondent submitted two more reports (dated July 20 and September 25, 2013), which contained the same statement. Tr. 113; GX 3, at 11–12. Thereafter, the DI decided to investigate whether Respondent’s clinics were in compliance with both the MOA’s recordkeeping and registration conditions. Tr. 114. The DI proceeded to issue a subpoena to Respondent requesting the names of the practitioners at each clinic. Id. at 115. She also decided to conduct inspections of each clinic.5 Id. The IMC Cy-Fair Inspection On August 28, 2013, the DI, accompanied by another DI, went to the IMC Cy-Fair clinic where they presented their credentials to Respondent and issued a notice of inspection. Tr. 116. The DI asked Respondent if there were any controlled substances on hand; Respondent answered that he didn’t know because he had just flown in that morning. Id. at 117. The DI asked the office manager, who told her that clinic did have controlled substances on hand. Id. The DI then asked Respondent if the controlled substances were ordered using his registration; he answered that he had ‘‘no idea.’’ Id. The DI also asked Respondent if someone else had used his registration to order the drugs; Respondent again answered that he had ‘‘no idea.’’ Id. The DI further asked to see the clinic’s receiving records, and after being ‘‘shown the bottle of testosterone that was in the cabinet in the back area . . . asked to see the dispensing log,’’ which was provided by the office manager. Id. at 119. During the inspection, the office manager ‘‘could not produce any [receiving] records,’’ regardless of whether the purchases had been made before or after he commenced his employment at the clinic. Id. at 119–20. Nor did the clinic have either an initial or biennial inventory. Id. at 119, 127. While the office manager said he would ‘‘go to [the] storage area’’ and look for the records, he produced no records other than a dispensing log for testosterone during the inspection, which lasted two to three hours. Id. at 120, 125. According to the DI, two days later, she received an email from the office manager which included a spreadsheet of the clinic’s purchases. Id. at 121. The DI further testified that there was ‘‘[a] vial of testosterone’’ on hand, 5 However, several other Investigators were involved in the inspections. PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 21413 which according to the clinic’s employees, was ‘‘used for administering to patients.’’ Id. at 121–22. According to the DI, the vial of testosterone did not bear a patient’s name on its label.6 Id. at 124. With respect to the dispensing log, the DI testified that the entries were not compliant because they did not list the dosage form of the testosterone, the patient’s address, and in some instances, did not list the amount.7 Id. at 130. There was also an entry which was missing the initials of the dispenser, and multiple entries appeared to have the patient’s signature or initials but not those of the dispenser. See id. at 130– 31; see also GX 8, at 2, 5. As for the clinic’s receipt records, see GX 9, they were comprised of a single sheet which contained 9 line items for purchases occurring between November 1, 2012 and August 6, 2013. Each entry stated: ‘‘10 Testosterone Cypionate 200MG/ML’’ followed by the date and initials. GX 9, at 1. According to the DI, these records were missing multiple items of required information including the name, address and registration number of the seller, the date it was shipped and date it was received. Tr. 132–33. On further questioning, the DI explained that the record did not list how much of the solution had been received as ‘‘you don’t know if’’ the notation of ‘‘10’’ is for ‘‘ten vials’’ or ‘‘if it’s ten what.’’ Id. at 133. Upon review of the receiving record, the DI emailed the office manager and asked him to clarify whether the initials were of the person ordering or receiving the drugs and whether the date was for the date the drugs were ordered or received; the office manager replied that he assumed that the initials were of the employee who ordered the drugs and that the date was the date of ordering. Id. at 134–36; GX 38, at 2. Based on information provided by Respondent in response to the previously issued subpoena, as well as information obtained during interviews she conducted of the clinic employees, the DI determined the names of the practitioners who had worked at the clinic. Tr. 138. She also conducted a query of the DEA Registration database to determine if the clinic had a practitioner who was registered at the clinic from the date the MOA was signed (Sept. 20, 2010) through September 20, 2013. Id. at 139. According to the DI, ‘‘between March 2, 6 According to the inventory conducted by the DIs and witnessed by Respondent, the vial contained 5 milliliters of the drug. GX 7. 7 While a number of the entries included the notation of ‘‘.5,’’ they did not list the unit of measure. GX 8, at 5. E:\FR\FM\08MYN1.SGM 08MYN1 21414 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices 2011 and September 26, 2011, there was no practitioner or mid-level practitioner [who was] registered at’’ the clinic. GX 6; Tr. 139–40. According to the dispensing log, on September 13, 2011, testosterone was administered to patient C.F. Tr. 145; GX 8, at 5. Moreover, the dispensing log contains numerous entries showing that controlled substances were being dispensed at the clinic during the period covered by the MOA. Tr. 148. asabaliauskas on DSK3SPTVN1PROD with NOTICES The IMC Woodlands Inspection On September 11, 2013, the DI, accompanied by two DIs and an Intelligence Research Specialist, went to the IMC Woodlands clinic and presented their credentials and a notice of inspection to Nurse Practitioner Penny Norman. Id. at 150. The DI ‘‘requested inventories, receiving records, [and] dispensing logs.’’ Id. at 150–51. However, the clinic did not have any inventories or receipt records and was able to provide only its testosterone shot log, which was a single page, and which showed that the clinic had administered testosterone on 25 occasions between November 20, 2012 and September 10, 2013. GX 20, at 1; Tr. 155–56. The DI inventoried the controlled substances then on hand and found that ‘‘[t]here was one bottle of testosterone on site,’’ which did not bear a patient’s name.8 Tr. 152. According to N.P. Norman, while some patients would obtain prescriptions for testosterone, the clinic’s medical assistants (MAs) would administer testosterone to patients who ‘‘had trouble giving it to themselves.’’ 9 Id. at 274. The MAs could not, however, ‘‘give an injection unless [there was] an order from a provider.’’ Id. at 279–80. According to the DI, sometime in either February or March 2013, this clinic moved from the address of 25329 I–45 North, Suite B, The Woodlands, to 314 Sawdust Road, Suite 119, Spring, Texas. GX 19. While two practitioners were registered at the clinic’s Woodlands location prior to the move, neither practitioner changed his/her registration to reflect the clinic’s new location until September 13, 2013. Id. Thus, no practitioner was registered at 8 While the DI testified that the results of the closing inventory were documented on GX 29, this document includes the notation of ‘‘10 ml’’ in the column for ‘‘Bottle Count/ML’’ and list ‘‘18 ml’’ as the ‘‘Quantity.’’ GX 29. While this suggests that the clinic had more than one bottle of testosterone (as testified to by the DI), the inventory was signed by N.P. Norman and it is undisputed that the clinic had some testosterone on the premises on the date of the inspection. 9 Ms. Norman also testified that the clinic ‘‘would do . . . lab work’’ on the patients ‘‘to make sure’’ they needed testosterone. Tr. 276. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 the clinic from the date it moved until September 13, 2013. Id. However, the testosterone shot log shows that testosterone was administered on at least 14 occasions 10 after the clinic had moved to its new location and neither practitioner was registered there. GX 20. The IMC Victoria Inspection On September 12, 2013, the DI, accompanied by another DI, went to the IMC Victoria clinic, and presented their credentials and a notice of inspection to Nurse Practitioner Ginger Carver. Tr. 160–61. The DIs asked for the clinic’s ‘‘inventories, receiving records, and administration . . . or dispensing logs.’’ Id. at 161. The DIs also took a closing inventory and found that the clinic had both testosterone and phentermine on hand. GX 31. According to the DI, N.P. Carver told her that some of the testosterone was for ‘‘office use.’’ Tr. 161–63; 169 (testimony that the N.P. referred to the office use testosterone ‘‘as the house bottle’’). Moreover, at the bottom of the cabinet was a crate containing phentermine and testosterone in bags prepared by a pharmacy located in Houston (Empower Pharmacy) to which were attached receipts listing the names of patients. Tr. 164–65, 169–70. According to the DI, the drugs were shipped to the clinic and were to be picked up by the patients. Id. at 163, 170. However, some of the testosterone was stored at the clinic for patients who were ‘‘not comfortable with administering to themselves,’’ and the clinic staff would administer the drugs when these patients ‘‘came in for their appointment[s].’’ Id. at 170. While Ms. Carver provided the DI with the clinic’s testosterone injection log and its receiving records, she did not provide an inventory. Id. at 172, 185. The DI further testified that no practitioner was registered at the clinic between from May 22, 2013 and August 29, 2013. Id. at 176. The testosterone injection log shows, however, that the clinic administered testosterone at least 117 times during this period.11 See GX 26, at 1–5, 7, 12–14, 16. According to the DI, there were instances in which the name of the person administering the drugs was not identified. Tr. 179; see GX 26, at 3 (Patient L.P.); id. at 4 (multiple patients). There were also 10 As the evidence does not establish the date on which the clinic moved, the precise number of administrations cannot be ascertained. However, from April 1, 2013 through the date of the inspection, the clinic administered testosterone 14 times. GX 20. 11 In some instances, the administration log lists an administration but does not include the date on which it occurred. PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 entries that were not dated. Tr. 181; see GX 26, at 2–5, 15. As for the receiving records, the DI testified that they did not comply with the Agency’s regulations because they did not have the supplier’s name, address, and DEA number. Tr. 185; see also GX 32. Nor did the records include the ordering registrant’s name, address, and DEA number. Tr. 185; see also GX 32. Of note, GX 32 is a list of both controlled and non-controlled prescriptions filled by Empower Pharmacy on various dates between October 1, 2012 and May 31, 2013, which list a prescription number, the patient’s name, the dates on which the prescriptions were written and filled, the quantity, drug name and strength, the ‘‘doctor,’’ the pharmacist’s initials and price. GX 32. Some of the pages list a total number of prescriptions and a ‘‘Total Price.’’ See id. at 2, 6–7, 10. According to the DI, this document was a list of ‘‘every prescription that was shipped to [the] clinic where the patient paid the clinic, picked up the prescription, and then the clinic . . . would pay the pharmacy whatever the total was at the end of the month.’’ Tr. 186. The DI further testified that ‘‘[w]ithin these records, there are purchases of testosterone in the clinic name.’’ Id.; see, e.g. GX 32, at 1(RX# C177831 dispensed on 10/22/12 and listing patient as ‘‘Victoria Clinic’’). The IMC Corpus Christi Inspection On September 13, 2013, the DI, accompanied by another DI, went to the IMC Corpus Christi clinic where they presented their credentials and a notice of inspection to Nurse Practitioner Allen Ford. Tr. 189. The DIs ‘‘asked to see what controlled substances they had on hand,’’ and after finding that the clinic had testosterone, ‘‘asked for [the clinic’s] inventories, records of receipt, and their dispensing log.’’ Id. As the clinic’s copier was not working, the clinic emailed various records to the DIs including its dispensing records and receiving records. Id. at 190, 196; GX 28. While the DIs along with NP Ford took an inventory of the controlled substances then on hand, the clinic did not have a prior inventory. GX 33. Of note, the clinic had 18 milliliters of testosterone 200 mg/ml on hand for ‘‘office use,’’ as well as 60 phentermine 45mg and 140 testosterone 200 mg/ml that it was storing for patients. Id. According to the DI, the latter drugs were in sealed bags which had a patient name on them. Tr. 191. The DIs testified, however, that some of the dispensing records did not identify the drug, id. at 197, and even when the records identified that E:\FR\FM\08MYN1.SGM 08MYN1 asabaliauskas on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices testosterone was the drug being dispensed, the record did not state the ‘‘dosage form’’ and the patient’s address. Id. at 198. As for its receipt records, the clinic provided a single page with the title ‘‘Log of Scripts’’ and which was apparently created by Empower Pharmacy and lists ‘‘[p]rescriptions filled between 8/29/2011 and 8/29/ 2013’’ and the patient as ‘‘CLINIC CORPUS CHRISTI.’’ GX 28. The document shows that Empower filled 14 prescriptions for testosterone 200 mg/ml and one prescription for a drug called ‘‘Scream Cream,’’ 12 which also contains testosterone, for the Corpus Christi clinic. Id.; see also Tr. 410. According to the DI, this record did not comply with DEA’s regulations for receiving records because it did not contain the clinic’s address and registration number, the package size or form, ‘‘and you don’t know how many was shipped, when it was shipped, and how it was shipped [sic].’’ Tr. 199. The DI also testified that when she asked how the clinic obtained the drugs for office use, ‘‘the office manager indicated that Mr. Ford would issue a prescription . . . to actually say[] office use.’’ Id. at 193; id. at 194. The Government submitted copies of six prescriptions which the clinic issued to obtain testosterone ‘‘for clinic use.’’ GX 34. Asked why she deemed these documents to be prescriptions rather than order forms, the DI explained that ‘‘the document says, prescription, in multiple places’’; she also testified that when she asked the clinic’s office manager: ‘‘[h]ow do you obtain the testosterone for your office use . . . she said, Mr. Ford issues a prescription.’’ Tr. 205. The DI added that when she asked the office manager if she had ‘‘copies of those prescriptions . . . this is what she presented.’’ Id. The DI also observed that the forms list ‘‘a date of birth’’ for the clinic although she was ‘‘not sure why.’’ Id. Of further note, next to the word ‘‘ALLERGIES’’ the forms include the abbreviation ‘‘NKDA’’ (no known drug allergies). See GX 34. The forms also included the notation: ‘‘This prescription may be filled with a generically equivalent drug product unless the words ‘‘BRAND MEDICALLY NECESSARY’’ are written in the practitioner’s own handwriting on this prescription form.’’ Id. Finally, each of the prescriptions was signed by a practitioner. GX 34. 12 According to Respondent, scream cream was compounded by a pharmacy and Super Scream Cream contained testosterone. Id. at 411–12. Based on the prescription number for the scream cream, which is prefaced with a ‘‘C’’ for controlled, see GX 28, at 62; I find that this formulation was controlled. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 The IMC FM 1960 West Inspection On September 11, 2013, two other DIs went to the IMC FM 1960 West clinic and conducted an inspection. Tr. 287; GX 14. During the inspection, the DIs determined that the clinic had controlled substances ‘‘on hand’’ and asked for the clinic’s dispensing records, invoices, and an inventory. Tr. 288. On taking inventory of the controlled substance on hand, the DIs found that there was one vial of testosterone that did not bear a patient name. Id. A DI testified that she was told by clinic employees that the vial ‘‘was used to administer testosterone [to] the[] male patients that would come in and get testosterone injections.’’ Id. The DIs also found ‘‘several bags of controlled substances that were . . . like from a pharmacy, that were already bagged up in patient names,’’ id., and ‘‘had a prescription number.’’ Id. at 291. These drugs included progesterone/ testosterone cream and phentermine capsules. GX 14. As for its records, the clinic did not have either an initial or biennial inventory. Tr. 288, 304–05. The clinic also did not have receipt records on hand but had Empower Pharmacy fax a two-page document bearing the caption: ‘‘PATIENT Rx HISTORY REPORT’’ and which also listed the clinic as the patient. Id. at 296, 305; GX 15. As submitted for the record, the document lists by prescription number and date various drugs distributed by Empower Pharmacy to the clinic including such controlled substances as testosterone and Scream Cream beginning on September 24, 2011 and ending on March 25, 2013. GX 15. The DI explained that the document did not comply with DEA regulations for receipt records because it does not contain the dates the drugs were received by the clinic. Tr. 296. As for the clinic’s dispensing records, the clinic provided a one page ‘‘Testosterone Shot Log.’’ GX 17. The log listed 20 different instances of testosterone administrations by the patient’s name and date beginning on September 27, 2011 through August 30, 2013. Id. While the log also listed the initials of a medical assistant, it contained no information as to the patient’s address, the drug strength and the amount administered. Id. The DI testified that during the inspection she asked ‘‘who is registered here?’’ Tr. 298. Subsequently, she determined no one was ‘‘registered at the clinic at the time.’’ Id. Moreover, the testosterone shot log and the receipt records show that testosterone was obtained on May 18, 2012 and PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 21415 administered the next day, and the lead DI found that ‘‘between April 4, 2012 and July 22, 2012, there was no practitioner or mid-level practitioner registered at the clinic.’’ GX 16. The lead DI also found that there was no practitioner or mid-level practitioner registered at the clinic between October 5, 2012 and September 11, 2013. Id. Yet the receipt records show that the clinic obtained Scream Cream containing testosterone on or about October 20, 2012 and testosterone 200mg/ml on January 28, 2013, and the testosterone shot log shows that the drug was administered to patients on November 9 and 29, and December 28, 2012, as well as on January 28, July 29, and August 30, 2013. See GX 15, at 2; GX 17. Because no practitioner was registered at the clinic at the time of the inspection, the DIs seized the clinic’s controlled substances. Tr. 298. The IMC Oak Hills Inspection On August 28, 2013, several DIs from the San Antonio District Office conducted an inspection of the IMC Oak Hills clinic. Id. at 308–09, 314. During the inspection, one of the DIs interviewed N.P. Norman, who explained that clinic was ‘‘a hormone and weight-loss clinic’’ which ‘‘used testosterone and ketamine.’’ Id. at 309. According to the DI, she was told by both N.P. Norman and the clinic’s ‘‘chief financial manager’’ that the clinic ordered testosterone ‘‘for office use.’’ Id. at 310–11. Ms. Norman further explained that a prescription would be sent to Empower Pharmacy and that the testosterone would be ‘‘mailed to the clinic for dispensation, administration to the patients.’’ Id. at 310. Ms. Norman also told the DI that she was a floater who ‘‘cover[ed] various clinics’’ and that ‘‘the same practice is [used] at all clinics.’’ Id. at 311. According to another DI who participated in the inspection, an inventory was taken of the controlled substances on hand. GX 11. According to the document memorializing the results, apparently one bottle of testosterone 200 mg/ml was on hand; the document, however, lists the quantity as ‘‘30 mg.’’ 13 Id. One of the DIs also ‘‘asked for the inventory records of the dispensations of the testosterone.’’ Tr. 319. Among the records submitted into evidence is a testosterone log, which like other such logs, lists various administrations by date, patient name, dose, lot number of the drug, and the medical assistant’s 13 Given that the testosterone was in liquid form, it is not clear why the quantity was listed in milligrams rather than milliliters. E:\FR\FM\08MYN1.SGM 08MYN1 21416 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices initials. GX 13, at 1–3. The log, however, includes only the administrations between April 3 and August 24, 2013. See id. The clinic also provided the DIs with a document bearing the caption: ‘‘Testosterone Daily Drug Inventory Log.’’ Id. at 4–28. The document shows the quantity of testosterone on hand on a daily basis beginning with January 1, 2011 but ending on March 30, 2013 in both the ‘‘AM’’ and ‘‘PM,’’ as well as the amounts dispensed, added to inventory, and wasted.14 Id. asabaliauskas on DSK3SPTVN1PROD with NOTICES The IMC Southwest Inspection On September 11, 2013, DIs went to the IMC Southwest clinic in Houston, Texas, and conducted an inspection. Tr. 324. The DIs requested the clinic’s inventories, receiving records, . . . transfer records, any records related to the controlled substances that [were] on hand,’’ including dispensing records. Id. at 326. While the clinic provided dispensing records, it did not provide any inventories or receiving records. Id. The DIs took an inventory of the controlled substances on hand and found that the clinic had testosterone in the 200 mg/ml strength. GX 30, at 1. As for the quantity of testosterone, the closing inventory simply notes the number ‘‘13’’; however, according to the DI, this represented 13 vials. See id.; Tr. 327 A separate inventory sheet documents that the clinic had on hand 630 tablets of phentermine 37.5 mg, 90 tablets of phentermine 30 mg, and 90 tablets of phendimetrazine 35 mg. GX 30, Id. at 2. According to the DI, none of the testosterone vials was labeled with the name of a specific patient. Tr. 327. However, there were specific patient names on some of the drugs lists on second page of the inventory. Id. at 327–28. The clinic did provide the DIs with a ‘‘Testosterone Log,’’ showing the date, the patient’s name, the amount administered, and the medical assistant’s initials. GX 23. The log’s first entry is dated September 4, 2012; the last is dated September 7, 2013. See id. at 1, 4. However, none of the entries list the strength of the testosterone or the patient’s address. Tr. 329–30. A DI testified that one of the clinic’s staff 14 The Government also submitted an Exhibit showing the various practitioners who worked at the Oak Hills Clinic and the locations at which they were registered and the dates on which they were registered at the various locations. GX 12. According to the table, Oak Hills did not have a Practitioner or Mid-Level Practitioner registered at it between December 11 and 20, 2010. Id. The Government did not, however, produce any evidence the clinic had controlled substances on hand or that it dispensed any controlled substances during this period. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 members had told him that another clinic had closed and that its controlled substances were transferred to the Southwest clinic. Id. at 330–31. However, the Southwest clinic did not have any records documenting the transfer of the controlled substances.15 Id. at 331. Evidence Related to Respondent’s Quarterly Reports In addition to her testimony to the effect that Respondent failed to comply with the MOA because he did not timely file the required quarterly reports, the lead DI testified that the statements made in the reports were untrue. Tr. 213. As to why, the DI explained that ‘‘[b]ased upon the records received at each clinic, there was dispensing at the clinics during the periods covered in these quarterly statements.’’ Id. The DI further testified that during her interactions with Respondent, whether in person, by phone or by email, there was no ‘‘discussion about what was meant by dispensing controlled substances.’’ Id. She also testified that there was no ‘‘discussion about whether the dates’’ of the ‘‘reports were accurate.’’ Id. at 214. Later, on cross-examination, the lead DI testified that her understanding of the term ‘‘dispense’’ as used in the MOA ‘‘goes back to’’ the definition in 21 U.S.C. 802, which ‘‘includes administering and actually physically . . . taking of the medication.’’ Id. at 244. She also testified on crossexamination that Respondent violated the MOA because there were recordkeeping violations and because ‘‘he was required to submit quarterly reports’’ which he failed to do until ‘‘he was basically pushed at some level to finally submit them.’’ Id. at 249. Respondent’s Evidence Respondent’s case was comprised solely of his testimony and a single demonstrative exhibit which showed how his various businesses (including the clinics) were held. Respondent testified that he graduated with honors from Harvard and attended medical school at Johns Hopkins. Tr. 346. 15 In an exhibit showing the registered addresses of various IMC Southwest practitioners and the dates they were registered at the particular addresses, the following statements were made: ‘‘The Dispensing/Administration Log provided during the NOI showed 127 testosterone injections administered to 15 patients by Medical Assistants (Non-DEA Registrants),’’ and that ‘‘[b]etween November 7, 2013 and May 6, 2014[,] there was no Practitioner or Mid-Level Practitioner registered at IMC Southwest.’’ GX 22. However, the Government produced no evidence showing that this clinic either possessed or dispensed controlled substances during the November 7, 2013 through the May 6, 2014 period. PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 Thereafter, he ‘‘did a transitional residency’’ which involved rotating through various specialties. Id. at 349. After his residency, Respondent worked in a private practice for several doctors in the Cy-Fair section of Houston, Texas on a part-time basis; he also worked on a locum tenens basis and treated workers compensation patients. Id. at 349–51. According to Respondent, he has practiced family medicine throughout the entirety of his medical practice and considers himself to be a general practitioner. Id. at 350. Respondent eventually started his own practice and purchased another practice in the Cy-Fair section from a physician who was retiring. Id. at 353. While Respondent moved this practice to a new office, it is now known as the IMC Cy-Fair clinic. Id. Respondent also acquired a third practice from another physician who was retiring. Id. at 354. According to Respondent, in late 2004/early 2005, Respondent sold the practices and moved to Miami, Florida, where he was also licensed, intending to open some clinics, only to find that the barriers to entry were greater than in Texas. Id. at 356. Respondent then decided to concentrate on developing software for electronic medical records and moved to Washington State. Id. However, ‘‘at the end of 2010,’’ Respondent bought back the Texas practices. Id. at 358, 360. Regarding the MOA, Respondent testified that ‘‘in 2006 . . . everything went down . . . [but] since I already sold the practices . . . it didn’t matter to me whether I had a registration, because I wasn’t working. I wasn’t living in Texas or working in Texas.’’ Id. at 359. However, after he knew that he ‘‘was going to . . . buy the practices back . . . [he] started the process to finally get these matters resolved.’’ Id. According to Respondent, he was advised by his counsel at the time that ‘‘the easiest and best way’’ to resolve the matters was to sign the MOA ‘‘because otherwise [he was] going to have this protracted fight’’ and the Agency had ‘‘sat on the paperwork’’ from 2006 to 2009.16 Id. Respondent further explained that he had to have his DEA number to get on insurance plans as well as Medicare and Medicaid. Id. at 360. However, Respondent testified that 16 Respondent was, however, allowed to continue to dispense controlled substances under his old registration and was provided with a letter to this effect. Id. at 361. While Respondent asserted that insurance companies and some pharmacies would not accept this letter, DEA does not control the actions of these entities. Moreover, given Respondent’s testimony that he had moved to Washington State to concentrate on software development, it is unclear the extent to which he was even practicing medicine during this period. E:\FR\FM\08MYN1.SGM 08MYN1 asabaliauskas on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices during the period when he did not own the clinics, he was ‘‘involved as a consultant and [would] occasionally substitute’’ for a practitioner. Id. at 373. Turning to the period after he entered the MOA and repurchased the clinics (specifically, from late 2010 to 2013), Respondent testified that ‘‘[e]veryone in the clinics [was] at least a medical assistant,’’ and that ‘‘[m]ost of the time, there was a midlevel provider, a physician assistant or a nurse practitioner, a supervising or collaborating physician, and myself.’’ Id. at 381. Respondent added that ‘‘[s]ometimes [he] was the collaborating physician or the supervising doctor,’’ and ‘‘[s]ometimes [he] wasn’t.’’ Id. Asked by the CALJ whether he was ‘‘involved in the day-to-day operations of these clinics,’’ Respondent explained that he ‘‘wasn’t every day, but [that he] was involved in . . . administration [and] management.’’ Id. Respondent further testified that ‘‘[s]ometimes [he] was involved in the hiring,’’ that he was ‘‘certainly . . . involved in training of the midlevels and the doctors, because many of the things that [the clinics] do . . . including bioidentical hormone replacement, are not taught in medical school or residency.’’ Id. During this time period, Respondent ‘‘was actually living in Washington State and coming to Texas when [he] had to’’ because he was able to review the patients’ electronic medical records from a remote location through a virtual private network (VPN). Id. at 382, 385. Respondent stated that on his visits to Texas he would generally visit each clinic and stay ‘‘[f]rom several hours to days . . . depend[ing] on the clinic needs’’ and ‘‘whether the staff was performing well and what have you.’’ Id. at 384. Respondent admitted that through the VPN, he could determine what services the clinics were providing. Id. at 385. While Respondent asserted that he ‘‘couldn’t see the invoices or the ordering’’ because the drugs were ordered ‘‘by fax or . . . calling in,’’ through the electronic medical records he ‘‘could see . . . if somebody . . . had ordered the administration of testosterone.’’ Id. at 386–87. Continuing, Respondent explained that he ‘‘couldn’t see—like the office manager would call or send a prescription over to the pharmacy to get filled, so I couldn’t see . . . if it was for general office use.’’ Id. at 387. Respondent asserted that ‘‘this is a common practice,’’ maintaining that ‘‘hospitals don’t order anesthesia medications for every individual patient’’ and that ‘‘[t]hey order . . . stock bottles, and the anesthesiologist VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 will use whatever is appropriate for a particular patient, because they don’t know how long the surgery’s going to go.’’ Id. at 388. He then added: ‘‘[t]hat happens every single day in every single hospital in this state, you know. You know, this is not something that’s unique to these practices. And we’re not even talking about that much medicine, for God’s sake.’’ Id.; see also id. at 450– 52 (analogizing the clinics’ practice of using office stock to dispense to the use of standing orders at hospitals). Respondent maintained that the testosterone shots were administered pursuant to a standing order in the patients’ charts, and that ‘‘just because [the practitioner] isn’t physically on site doesn’t mean that order is not valid.’’ Id. at 452; see also id. at 483. Respondent further testified that under the rules or policy of the Texas State Board, a standing order can last for ‘‘three months.’’ Id. at 453. Asked by his counsel what he did when he was physically at the clinics, Respondent testified that he would interview the staff and ‘‘maybe pull some patients aside and ask them . . . if they had a good experience or whether the staff was taking good care of them and things like that.’’ Id. at 389. He would also do a ‘‘physical inspection and make sure that everything was the way it should be in each practice,’’ by which he meant that he ‘‘would make sure that everything was neat and clean and in order’’ and that ‘‘everyone was just doing their [sic] job.’’ Id. at 389–90. Respondent was then asked by his counsel, ‘‘what, if anything, [he] did . . . with respect to ensuring compliance with . . . the controlled substance issues in this case?’’ Id. at 390. Respondent answered: ‘‘first of all . . . we didn’t do that many . . . of these injections . . . . And this is relevant, because . . . we’re not talking about that much. Every clinic had one bottle of testosterone they would use, one.’’ Id. After the CALJ told Respondent that he had not answered his counsel’s question, Respondent testified: ‘‘And, you know, so I would go, and I would make sure that . . . that everyone’s being documented. Now, we have two forms of records here. One is the electronic records, and the other one was the physical log. Okay?’’ Id. at 390– 91. The CALJ then asked Respondent ‘‘to tell us what steps you were taking to make sure that your clinics were . . . in compliance with the’’ MOA? Id. at 391. Respondent answered: Okay. You know, all I did would [sic] glance at the logs. I would glance at them and make sure that they’re being recorded with the name and the date and the amount that PO 00000 Frm 00054 Fmt 4703 Sfmt 4703 21417 was—of medicine that was given. I would glance at them. That’s just—you know, as part of my inspection, I would just glance. Like, you know, I wasn’t scrutinizing them and measuring, you know, how much was left and things like that. I would just, you know— I think the staff is very honest, in general honest, and— Id. Finding the answer to ‘‘still [be] going far afield,’’ the CALJ summarized Respondent’s testimony to the effect that he would interview staff members and ‘‘some patients about their care,’’ ‘‘do a physical inspection,’’ and ‘‘glance at the logs.’’ Id. at 392. The CALJ then asked Respondent if this was ‘‘the sum total of what [he] did?’’ Id. Respondent answered ‘‘yes,’’ and added that he would also train the ‘‘new personnel’’ on the protocols and make sure ‘‘that all their equipment was working,’’ such as the fax machines and computers; he also stated that he would give the staff ‘‘feedback on any comments’’ from the patients. Id. With respect to the testosterone injections, Respondent explained that he ‘‘would just look through [the physical log] and make sure they were keeping a log.’’ Id. at 394–95. Asked what records the clinics maintained on ‘‘the ordering side,’’ Respondent asserted that ‘‘most everybody maintained the invoices that, you know—because, you know, the clinic has to pay their [sic] bills every month and everything like that. So they maintained invoices. They would file it or scan it and put it onto . . . one of the servers.’’ Id. at 395. Asked whether he had any information that the invoices from the pharmacy were being maintained, Respondent testified: I believe for the most part. I mean, most of the managers are fairly experienced, and they know that . . . part of their job is to scan the invoices, and to keep them on servers . . . as a record of the bills paid and things like that. They may not keep a physical copy always, but they’re supposed to scan. Now, did I check every single time in all seven clinics? No. Of course, I mean, that’s an incredible amount of work. I can’t be in seven places at once. So I just would occasionally check, and I would ask, and I trusted my staff. Id. at 396. Respondent further asserted that he would ask his office managers: ‘‘Are you making sure you’re scanning this? Are you making sure you’re recording that? Are you making sure the medical assistants are doing—. I would ask the managers . . . and make sure that everything was being done . . . correctly.’’ Id. Respondent then testified that he ‘‘absolutely’’ did not ‘‘physically check every single time,’’ and asserted that ‘‘[t]here’s no way one person can do E:\FR\FM\08MYN1.SGM 08MYN1 21418 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices all that work’’ but that he was ‘‘trying [his] best’’ and ‘‘trusting [his] staff . . . to do their job.’’ Id. Asked by the CALJ if he thought this was a valid defense to the allegations that he failed to comply with the MOA, Respondent testified that he did not ‘‘think it’s a defense’’ but that he had ‘‘explanations on . . . things.’’ Id. at 397. The CALJ then asked Respondent if he thought that ‘‘say[ing] that it’s too much work’’ was a valid excuse for failing to comply with the MOA. Id. at 398. Respondent answered: ‘‘Unfortunately, Judge, medicine is not as good of a business as it used to be.’’ Id. Instructed by the CALJ to ‘‘[s]tick with my question,’’ Respondent answered: ‘‘Yes. So it’s not about making money. It’s about patient care. You know, the difference in revenue that doctors make now versus back in the past is night and day.’’ Id. After noting Respondent’s testimony to the effect ‘‘that patient care had very little to do with the things that you were looking at’’ and that ‘‘it’s too much work to do more than what you’re doing,’’ the CALJ asked: ‘‘What if the terms of the MOA required that?’’ Id. at 398–99. Respondent answered: asabaliauskas on DSK3SPTVN1PROD with NOTICES Yes, sir. The MOA required that, as I understood it, to send in reports for patients who are—that were dispensed medication. And because were [sic] not dispensing medication, I agreed to the MOA. So with respect to, you know, having logs, because the State didn’t want the clinics to dispense, no one was going to dispense anymore, you know. Id. at 399. Respondent then insisted that ‘‘[c]omplying with the MOA wasn’t too much work’’ and that ‘‘[w]hat [he] meant was . . . checking all the deposits and all the invoices and all the payments and reconciling them with the—it wasn’t having anything to do with the MOA.’’ Id. After asserting that he was ‘‘involved in patient care as well,’’ Respondent added that he ‘‘didn’t mean it was too much to comply with the MO[A] . . . but I just meant like . . . micromanaging and checking every single little thing, that was—that’s too much work. I didn’t say that, you know—.’’ Id. at 400–01. Subsequently, Respondent’s counsel referred to paragraph 5 of the MOA and its ‘‘reference to administer, dispense and prescribe’’ 17 and asked Respondent what he understood the term 17 This provision states: ‘‘This Memorandum of Agreement (‘‘MOA’’) is between [Respondent] and DEA and establishes the terms and conditions under which DEA will continue to permit [Respondent] to administer, dispense and prescribe any Schedules II through V controlled substances. Respondent and DEA agree to the following[.]’’ GX 4, at 2. The subsequent terms are, however, in separately numbered paragraphs. See id. at 2–5. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 ‘‘administer to mean?’’ Id. at 406. Respondent answered: ‘‘Administering means that I order myself or I physically give a patient a medication in the office’’ by ‘‘[d]irect application, orally or through injection or IV or what have you.’’ Id. Then asked what he understood the term ‘‘dispense’’ to mean, Respondent testified: ‘‘Dispense means to give a patient, physically give a patient medication for selfadministration outside of the office.’’ Id. at 407.18 Turning to paragraph 8 of the MOA, Respondent testified that the clinics never used any schedule II controlled substances and that the drugs they used were appetite suppressants (phentermine, phendimetrazine, and diethylpropion 19) and ‘‘bioidentical hormones,’’ i.e., testosterone. Id. at 407– 09. Respondent also testified that the clinics always administered ‘‘the same concentration’’ of testosterone, 200 mg/ ml, and did so ‘‘by injection.’’ Id. at 409–10. Respondent was then asked to explain his understanding of his obligations under paragraph 8. Id. at 412. As found above, this provision stated that ‘‘[i]f controlled substances in [s]chedules II through V are purchased for any clinic, to be administered and/or dispensed to the clinic patients, [Respondent] shall cause to be made and maintained all DEA required documents and information including records, reports, and inventories.’’ GX 4, at 2–3.20 Respondent answered: ‘‘That for the patients that I saw and the patients that were under my care, that I made sure that there were appropriate records being kept.’’ Tr. 413. Asked by the CALJ if this applied to ‘‘all the patients in all these clinics,’’ Respondent answered: ‘‘No, sir. I wasn’t the caregiver for most of these patients. I was the supervising doctor, but every midlevel has their credentials. Every single doctor also has their credentials.’’ Id. Upon further questioning by his counsel as to his understanding of his recordkeeping obligations under the MOA, Respondent testified that ‘‘there was no dispensing done in any of the 18 As for the term ‘‘prescribe,’’ Respondent testified that it ‘‘means you’re writing prescriptions, sending it to a pharmacy, and the patient’s filling it at a pharmacy.’’ Tr. 407. 19 While Respondent testified that each of these three drugs is in schedule III, this is true only of phendimetrazine, as both phentermine and diethylpropion are in schedule IV. See 21 CFR 1308.13(b); see also id. § 1308.14(f). 20 This paragraph also provided that ‘‘[a]ll required documentation shall be maintained as required by federal and Texas laws and regulations, pertaining to the administering, dispensing, and prescribing of controlled substances.’’ GX 4, at 2– 3. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 practices at all. Administering, making sure that the medical assistants recorded the administration in the . . . electronic medical record and making sure they maintained the log that was consistent with the medical record.’’ Id. at 418. Respondent also explained that ‘‘every single prescription is recorded, because when you save the note, it saves the prescriptions that you wrote as part of the note.’’ Id. Subsequently, Respondent was asked if he fully complied with the documentation requirements of paragraph 8. Id. at 431. Respondent answered: ‘‘I feel as though I have, because there were logs kept, both electronically and written, and there was no diversion.’’ Id. at 431–32. Then asked if he knew ‘‘whether opening inventories were taken . . . at these clinics,’’ Respondent answered: ‘‘There was hardly any testosterone ordered for any of the practices, and—.’’ Id. at 432. After directing Respondent to answer the question, the CALJ asked: ‘‘Was there [an] opening inventory taken? And what is the answer to that question?’’ Id. Respondent testified: ‘‘My answer to the question is I don’t know what opening inventory means. What does that mean?’’ Id. Respondent was then asked by his counsel what was his ‘‘understanding of the inventory requirements . . . if any, under the MOA?’’ Id. at 433. Respondent answered: ‘‘Whenever medication is—controlled medication is administered to a patient, that their name be recorded, the amount of the medication be recorded, the site, the date, you know, probably the lot number of the medication, the lot number.’’ Id. Moreover, when asked on crossexamination if he ‘‘acknowledge[d] that none of [the] clinics were [sic] able to produce an initial inventory,’’ Respondent testified: ‘‘No. It’s not correct.’’ Id. at 471. Asked ‘‘[w]hy is it not correct,’’ Respondent answered: ‘‘when you have people coming in, flashing badges and individually interviewing staff members, they’re scared . . . they’re worried, they’re like, Oh, my God, am I going to get fired? . . . It is an incredible intrusion onto the practice. The staff doesn’t even know . . . what an inventory is.’’ Id. at 471–72. When then asked if there were inventories at the clinics that were not provided to the DIs, Respondent replied: ‘‘Define inventory. There were logs kept of—.’’ Id. Respondent subsequently admitted that he had neither read the Code of Federal Regulation’s definition of the term inventory, nor the regulations requiring the keeping of inventories. Id. E:\FR\FM\08MYN1.SGM 08MYN1 asabaliauskas on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices at 473. The Government then asked: ‘‘you don’t even know what those regulations are, do you?’’ Id. Respondent testified: ‘‘I assumed that the logs were the inventory. Okay? I assumed that, foolishly. Admittedly, if that was my mistake, it’s my mistake. I did not go through the Code and read it, nor did my attorneys or consultant tell me that that was what was necessary.’’ Id. Respondent nonetheless continued to maintain that ‘‘the way’’ he saw it, ‘‘the log served as the inventory.’’ Id. Respondent subsequently maintained that he had not read the regulations since being served with the Show Cause Order because ‘‘we’re not administering anymore’’ and ‘‘there is no controlled substance at all on the premises,’’ and thus, in his view, ‘‘it’s not even relevant for me to read [the regulations] anymore.’’ Id. at 474. Respondent was also asked by his counsel if he agreed ‘‘that at least on some of the . . . [testosterone] logs, there was some missing information?’’ Id. at 433. Respondent agreed, and he also agreed that he was not in compliance with these sections of paragraph 8. Id. at 433–34. Respondent further testified that he accepted responsibility for not complying with paragraph 8. Id. at 434. Paragraph 8 also required, in relevant part, that ‘‘[i]f any controlled substance is administered or dispensed at any [of the] clinic[s] . . . the health care provider doing the administering and/or dispensing to the patient shall be registered at the clinic as required by 21 U.S.C. 822(a)(2) and 21 CFR 1301.12(a).’’ GX 4, at 3. Respondent explained that he understood his obligation under this provision as to ‘‘[m]ake sure that . . . the provider seeing the patient, unless it was . . . a temporary or a sub or something, that they changed their [sic] address on their [sic] DEA certificate to the practice, so they could administer. You don’t have to have your address changed to prescribe, because you can go anywhere just to prescribe. But to administer . . . that would be the case.’’ Tr. 419. Later, on cross-examination, Respondent maintained that the instances in which no practitioner was registered at a clinic and yet controlled substances were administered to patients ‘‘was an oversight,’’ and that ‘‘[t]here may have been some mid levels who didn’t . . . change their address.’’ Id. at 464, 491. However, when pressed by the Government as to whether he was going to admit that this had occurred, Respondent answered: ‘‘I don’t know whether it’s true or not.’’ Id. at 465; see also id. at 490. Respondent nonetheless VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 insisted that he was accepting responsibility for this misconduct. Id. at 465. Respondent also testified to the effect that even if there was no DEAregistered person registered at a specific clinic, there were ‘‘either mid-levels or doctors . . . and everybody was properly credentialed.’’ Id. at 495. Turning to paragraph 9 of the MOA, as found above, it required the submission of a quarterly report to the DEA Field Division of ‘‘the total number of controlled substances dispensed, to include the date dispensed, full name of patient, address of patient, name of controlled substance dispensed, quantity dispensed and dispenser’s initials.’’ GX 4, at 3; Tr. 419–20. On questioning by his counsel, Respondent admitted that 10 of the reports were not timely submitted and that he violated paragraph 9. Id. at 420. As for why he backdated the reports when he did not submit them until June 19, 2013, Respondent testified he did so ‘‘[b]ecause they were required to be filed on a quarterly basis, so I just dated the correspondence to reflect . . . every particular quarter.’’ Tr. 421–22. As for why he denied that he was subject to the MOA in his June 4, 2013 email to the DI, see GX 36, Respondent testified that he did so ‘‘[b]ecause all of this was such an unpleasant experience, [so] I blocked it out of my mind.’’ Id. at 426. Continuing, Respondent maintained: It was such an unpleasant experience, I literally blocked it out of my mind, so that I didn’t, you know, remember, you know, having these sorts of things, and I relied on someone to remind me, and that didn’t happen. And so I just, you know, blocked it out, I mean, because it was so unpleasant, and it was so humiliating, and it was so degrading, and it’s—not to mention, you know, costing a fortune. And I literally just blocked it out. I mean, that’s the—you know, athletes do this when they have a bad play. They block out the bad play, and they move on. And so that’s—you know, that was my mindset. And so once I realized that, hey, I was wrong and [the DI] was right, I immediately sent a letter of apology and I sent in the reports. Id. at 426–27. Respondent further maintained that he ‘‘had buried’’ the events surrounding his entering the MOA ‘‘so deep in my psyche, just so I could stay sane and stay working and productive, just like an athlete would do, like after a bad play.’’ Id. at 427. Respondent then noted that ‘‘[p]eople who are victims of crimes, people who are—they block out the bad experience, you know, and that’s exactly what I did, because this was an ordeal, Judge. This was a harrowing, awful, horrible experience to go through.’’ Id. at 428. PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 21419 Asked by his counsel ‘‘what if any efforts’’ he had made to prevent the recurrence of the issues raised regarding his compliance with the MOA, Respondent testified that ‘‘there was obviously no dispensing.’’ Id. at 436. Continuing, he testified that: since [the DI’s] inspections are so unpleasant and so invasive that I told everybody that we were not going to administer any medication to any patient anymore, despite the fact that many patients appreciated it because they don’t feel comfortable self-injecting. It’s actually a lot of work for the clinics to do that . . . It’s very tedious. And we did it as a courtesy to the patients. Id. at 436–37. Later, Respondent maintained that the clinics have not ‘‘administered anything for over a year.’’ Id. at 448. As found above, during several of the inspections, the DIs found controlled substances that the Empower Pharmacy had shipped to the clinics which bore labels indicating that they had been dispensed for specific patients. Respondent testified that the clinics engaged in this practice ‘‘[a]s a convenience to the patients,’’ and ‘‘they would act essentially as a delivery service for some of the patients that couldn’t afford to have the medicines mail-ordered to . . . their homes,’’ because ‘‘it was an extra $15’’ to have the prescription shipped to the patient’s home Id. at 438. However, Respondent acknowledged that the clinics offered this service without regard to ‘‘a patient’s financial status.’’ Id. at 439. Respondent subsequently testified that the clinics ‘‘don’t do it anymore’’ and that ‘‘we’re going to just send it to your home.’’ Id. at 446. He also disputed the Government’s suggestion that the clinics ‘‘had to have a registered person at that clinic’’ when the clinics accepted delivery and stored the prescriptions that were dispensed for specific patients. Id. at 479–80; see also id. at 481 (testifying that in his view, it is ‘‘absolutely’’ legal for a clinic to accept prescriptions for patients when no practitioner is registered at the clinic).21 Respondent testified that ‘‘[a]t this point,’’ the clinics have ‘‘zero’’ physical contact with controlled substances, and that their controlled substance activity is limited to prescribing. Id. at 448. He also represented that that he does not intend for the clinics to have any physical contact with controlled substances ‘‘at least for the duration of [his] license.’’ Id. at 449. Respondent testified that it is permissible to use a prescription to 21 Notwithstanding that it elicited extensive testimony about this practice, the Government made no argument that it is illegal. E:\FR\FM\08MYN1.SGM 08MYN1 21420 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices obtain a stock bottle, but maintained that he had never done so. Id. at 454. Asked whether the clinic employees had ever done so, Respondent asserted that ‘‘they didn’t write it but they would order it under the DEA number of the person who was registered at that address.’’ Id.; see also id. at 455 (testifying ‘‘no’ to CALJ’s questions: ‘‘Have staff members in your clinics, have they written prescriptions[?]’’). However, on follow-up questioning by the CALJ, Respondent admitted that the ‘‘mid levels’’ had done so. Id. He also asserted that ‘‘[i]t’s absolutely proper’’ for a mid-level practitioner to use a prescription to order controlled substances for office use because ‘‘[t]hey have their own DEA certificate, and they have their own medical licenses.’’ Id. at 456–57. Subsequently, Respondent’s counsel asked him if there is ‘‘anything relative to the nature of the investigation that you feel is important for the Judge to hear about?’’ Id. at 457. Respondent replied: I do have a lot to say. Okay. The only reason we’re here, Judge, the only reason why a senior attorney from the DEA’s office flew down here on taxpayer money over some logs, okay, that may not have been kept correctly is because when—you mentioned yesterday why did it take 12 months between the time that you—you know, that you approved the registration, renewal registration. Right? Remember you asked that? And the time it happened. I’ll tell you exactly why. I have a friend of mine who’s a federal agent. He told me that I can make a congressional complaint. Okay. Id. at 458. Following an objection by the Government which was overruled, Respondent added: asabaliauskas on DSK3SPTVN1PROD with NOTICES That I can make a congressional complaint against a federal agent who I feel has harassed me. And [the DI] has. Not only has she been ridiculously invasive in all my practices but she has attempted to vandalize and sabotage my relations with my vendors. Okay. And tried to ruin my business. She left me alone for months and months and months and months. As soon as I made the congressional complaint . . . [m]agically two months later I’m here with you taking up your time over this nonsense. Id. at 459. Respondent then asserted that the proceeding was ‘‘pure retaliation’’ for the ‘‘congressional complaints’’ and that ‘‘[w]e made all the changes.’’ Id. He maintained that ‘‘[t]he only reason’’ he had been subjected to this proceeding was because he had ‘‘made the congressional complaint.’’ Id. at 460. And he asserted: [w]hat is a senior attorney of the DEA flying all the way down here arguing over logs? Are you kidding? Why wasn’t he here in 2006? Why wasn’t he here in in 2008? Why wasn’t he here in 2010? Because it was such a tiny VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 matter; like don’t they have better things to do than this. I mean literally the reason they’re doing it, it’s a CYA, Judge. Okay? It’s a CYA, because it’s like, oh, my career’s on the line, I might get fired over this, and so now we have to go full steam against this doctor. Id. Respondent subsequently testified that he had filed his complaints to members of Congress in the spring of 2015. Id. at 488. However, on rebuttal, the Government recalled the lead DI who testified that she had submitted the documentation requesting the issuance of an Order to Show Cause to DEA Headquarters in February 2014, well before Respondent complained to his representatives. Id. at 497, 499. Respondent further disputed that his clinics had engaged in any unlawful practices, testifying that ‘‘[t]here’s never anything unlawful being done. I’ve never been accused of doing anything unlawful.’’ Id. at 476. Discussion Under the CSA, ‘‘[a] registration pursuant to section 823 of this title to manufacture, distribute, or dispense a controlled substance . . . may be suspended or revoked by the Attorney General upon a finding that the registrant . . . has committed such acts as would render his registration under section 823 of this title inconsistent with the public interest as determined under such section.’’ 21 U.S.C. 824(a)(4). So too, ‘‘[t]he Attorney General may deny an application for [a practitioner’s] registration . . . if the Attorney General determines that the issuance of such registration . . . would be inconsistent with the public interest.’’ Id. § 823(f). In the case of a practitioner, see id. § 802(21), Congress has directed the Attorney General to consider the following factors in making the public interest determination: (1) The recommendation of the appropriate State licensing board or professional disciplinary authority. (2) The applicant’s experience in dispensing or conducting research with respect to controlled substances. (3) The applicant’s conviction record under Federal or State laws relating to the manufacture, distribution, or dispensing of controlled substances. (4) Compliance with applicable State, Federal, or local laws relating to controlled substances. (5) Such other conduct which may threaten the public health and safety. Id. ‘‘[T]hese factors are . . . considered in the disjunctive.’’ Robert A. Leslie, M.D., 68 FR 15227, 15230 (2003). It is well settled that I ‘‘may rely on any one or a combination of factors, and may give each factor the weight [I] deem[ ] PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 appropriate in determining whether’’ to suspend or revoke an existing registration or deny an application. Id.; see also MacKay v. DEA, 664 F.3d 808, 816 (10th Cir. 2011); Volkman v. DEA, 567 F.3d 215, 222 (6th Cir. 2009); Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005). Moreover, while I am required to consider each of the factors, I ‘‘need not make explicit findings as to each one.’’ MacKay, 664 F.3d at 816 (quoting Volkman, 567 F.3d at 222); see also Hoxie, 419 F.3d at 482.22 Under the Agency’s regulation, ‘‘[a]t any hearing for the revocation or suspension of a registration, the Administration shall have the burden of proving that the requirements for such revocation or suspension pursuant to . . . 21 U.S.C. [§ ] 824(a) . . . are satisfied.’’ 21 CFR 1301.44(e). In this matter, while I have considered all of the factors, I conclude that the Government’s evidence with respect to Factors Two, Four, and Five 23 supports 22 In short, this is not a contest in which score is kept; the Agency is not required to mechanically count up the factors and determine how many favor the Government and how many favor the registrant/ applicant. Rather, it is an inquiry which focuses on protecting the public interest; what matters is the seriousness of the registrant’s or applicant’s misconduct. Jayam Krishna-Iyer, 74 FR 459, 462 (2009). Accordingly, as the Tenth Circuit has recognized, findings under a single factor can support the revocation of a registration. MacKay, 664 F.3d at 821. Likewise, findings under a single factor can support the denial of an application. 23 As to factor one, the Government introduced into evidence the Texas Medical Board’s 2008 Order Granting Temporary Suspension of his Texas medical license and the Board’s subsequent Termination of Temporary Suspension and Entry of Agreed Order. GX 2, at 1–11. Moreover, in September 2012, the Board filed a complaint alleging various violations with respect to the prescribing of drugs including progesterone, testosterone, and phentermine by Respondent and mid-level practitioners he supervised. Id. at 13–16. However, the complaint was eventually dismissed on the Board’s motion after the parties resolved the matter. Id. at 21. Thus, Respondent currently possesses authority under Texas law to dispense controlled substances. Moreover, there is no evidence that the Texas Medical Board has made a recommendation to the Agency with respect to Respondent. See 21 U.S.C. 823(f)(1). While Respondent is also registered in Florida, there is no evidence as to the status of his Florida medical license and the Florida Board has likewise made no recommendation to the Agency with respect to Respondent. In any event, the Government does not rely on factor one at all. See Gov. Proposed Findings of Fact, Conclusions of Law, and Argument 20–29. However, even assuming that Respondent currently possesses authority to dispense controlled substances under Texas law and thus meets a prerequisite for maintaining his registration, this finding is not dispositive of the public interest inquiry. See Mortimer Levin, 57 FR 8680, 8681 (1992) (‘‘[T]he Controlled Substances Act requires that the Administrator . . . make an independent determination [from that made by state officials] as to whether the granting of controlled substance privileges would be in the public interest.’’). Accordingly, this factor is not dispositive either for, or against, the revocation of Respondent’s E:\FR\FM\08MYN1.SGM 08MYN1 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices the conclusion that Respondent and the entities he controlled violated both provisions of the CSA and DEA regulations, as well as provisions of the MOA, which although they do not constitute violations of law or regulation, nonetheless constitute actionable misconduct which render his continued ‘‘registration inconsistent with the public interest.’’ 21 U.S.C. 823(f), 824(a)(4). Because I further agree with the ALJ’s finding that Respondent has not accepted responsibility for his misconduct, I also agree with the ALJ that he has not rebutted the Government’s prima facie showing. Because I find that Respondent’s misconduct is egregious, I will order that Respondent’s registration be revoked and that any pending application be denied. asabaliauskas on DSK3SPTVN1PROD with NOTICES Factor Two—Respondent’s Experience in Dispensing Controlled Substances The evidence shows that Respondent was previously the subject of an agency investigation of several IMC clinics which were allegedly ‘‘dispensing controlled substances to their patients without a valid registration.’’ GX 4, at 1. While Respondent was not required to admit to liability for any violation of federal law, the Agency agreed to grant his renewal application subject to his entering the MOA. The MOA specifically states that it ‘‘establishes the terms and conditions under which DEA . . . continues to permit [him] to administer, dispense and prescribe any [s]chedules II through V controlled substance.’’ Id. at 2. The MOA also states that Respondent’s ‘‘new registration will remain subject to applicable law and the terms and condition of this Memorandum of Agreement.’’ Id. (emphasis added). The CALJ acknowledged that a registrant’s conduct that violates the terms imposed by an MOA can constitute acts rendering a registration ‘‘inconsistent with the public interest,’’ even when the violations do not amount registration. Paul Weir Battershell, 76 FR 44359, 44366 (2011) (citing Edmund Chein, 72 FR 6580, 6590 (2007), pet. for rev. denied, Chein v. DEA, 533 F.3d 828 (D.C. Cir. 2008)). As to factor three, I acknowledge that there is no evidence that Respondent has been convicted of an offense under either federal or state law ‘‘relating to the manufacture, distribution or dispensing of controlled substances.’’ 21 U.S.C. 823(f)(3). However, there are a number of reasons why even a person who has engaged in criminal misconduct may never have been convicted of an offense under this factor, let alone prosecuted for one. Dewey C. MacKay, 75 FR 49956, 49973 (2010), pet. for rev. denied, MacKay v. DEA, 664 F.3d 808 (10th Cir. 2011). The Agency has therefore held that ‘‘the absence of such a conviction is of considerably less consequence in the public interest inquiry’’ and is therefore not dispositive. Id. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 to a violation of the CSA or its implementing regulations. R.D. at 45 (citing, inter alia, Fredal Pharmacy, 55 FR 53592, 53593 (1990)). The CALJ, however, asserted that ‘‘[a]gency precedent has been less sure-footed about where among the public interest factors an MOA violation should be considered.’’ Id. The CALJ then discussed several agency decisions that considered MOA violations under Factor Two and asserted that ‘‘the analyses employed by the Agency in’’ these cases—which he characterized as ‘‘lumping together activities which have no direct bearing on dispensing into Factor [Two]’’ and as ‘‘analytically infirm’’—‘‘should be abandoned.’’ Id. at 46 (discussing Mark De La Lama, 76 FR 20011, 20018 (2011); Erwin E. Feldman, 76 FR 16835, 16838 (2011); Michael J. Septer, 61 FR 53762, 53765 (1996)). I disagree that Factor Two requires that an activity have a ‘‘direct bearing on dispensing.’’ Here, as in previous cases, the MOA ‘‘established the terms and conditions under which [the Agency] will continue to permit [Respondent] to administer, dispense and prescribe and [s]chedules II through V controlled substances’’ and his new registration is subject to the MOA’s ‘‘terms and conditions.’’ Because that registration provides the authority by which Respondent may dispense controlled substances, any violation of it is properly considered as relevant in assessing his ‘‘experience in dispensing . . . controlled substances.’’ Indeed, even the various MOA violations discussed in other cases, which, in the CALJ’s view, do not have a ‘‘direct bearing on dispensing,’’ were indisputably relevant in assessing the registrant’s experience in dispensing controlled substances. Discussing Septer, the CALJ asserts that the registrant’s violation of an MOA provision requiring ‘‘daily audits . . . clearly involve[d] no ‘experience in dispensing.’ ’’ R.D. 46. Quite the contrary, the MOA provision at issue in Septer was imposed after both DEA and state-level investigators conducted an accountability audit at the practitioner’s office and found ‘‘a shortage of approximately 190,000 to 203,000 dosage units of [s]chedule III and IV controlled substances.’’ 61 FR at 53762. Whether these drugs were ordered by Dr. Septer or one of his employees, the drugs were ordered under his practitioner’s registration, pursuant to which he was authorized to dispense controlled substances, and thus, his inability to account for the drugs was part of his ‘‘experience in dispensing.’’ As the MOA’s provision was clearly intended to prevent a recurrence of this PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 21421 experience, and the Agency had an obviously compelling interest in ensuring that his more recent experience did not repeat his earlier experience, the MOA violation was clearly relevant under Factor Two.24 The CALJ suggests that in Mark De La Lama, 76 FR 20011, the Agency improperly considered MOA violations under Factor Two that included the respondent’s failure to maintain a prescription log and failure to notify the local DEA office that he was transferring his registration to another address, asserting that ‘‘neither activity involves ‘experience in dispensing.’ ’’ 25 R.D. 46. While the MOA’s condition that the respondent maintain a prescription log exceeded the requirements of the CSA and DEA regulations, the respondent’s failure to comply was clearly relevant in assessing his experience in dispensing controlled substances. As for his failure to notify the local DEA office when he changed his practice location, the whole point of the MOA was to ensure that the Agency ‘‘would be able to monitor Respondent’s handling [which includes the dispensing] of controlled substances.’’ 76 FR 20014. As during the period following the issuance of the registration which was conditioned on his entering the MOA, the respondent would accrue experience in dispensing controlled substances—which the Agency had a heightened interest in monitoring given his history of controlled substance offenses— Respondent’s violations of both MOA conditions clearly involved conduct relevant in assessing his experience in dispensing controlled substances. The CALJ also suggests that in Erwin E. Feldman, 76 FR 16835 (2011), the Agency improperly considered certain violations under Factor Two even though they did not involve prescribing. According to the CALJ, such violations as failing to maintain a prescription log, failing to ‘‘maintain[] specified patient charts for specified periods of time,’’ failing to ‘‘maintain[ ] state prescription monitoring program reports for a specified period of time,’’ and not ‘‘notifying the DEA about the initiation of any state administrative proceedings’’ do not involve prescribing and thus ‘‘have no direct bearing on dispensing’’ under Factor Two. R.D. 46. 24 DEA has long interpreted Factor Two to encompass not only those activities that are included in the statutory definition of dispensing but also those that are ancillary to those activities such as handling or possessing controlled substances. 25 These conditions were imposed based on the respondent’s conviction for drug distribution offenses. 76 FR at 20018. E:\FR\FM\08MYN1.SGM 08MYN1 21422 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices However, a careful reading of the Agency’s findings in Feldman shows that the Agency did not even find that the physician violated the MOA by failing to maintain patient charts or prescription monitoring reports. See 76 FR at 16837–88. However, even if it had, each of the MOA’s provisions was a condition placed on the physician’s authority to dispense controlled substances, and thus, subsequent allegations that he violated the MOA were clearly relevant in assessing his experience in dispensing controlled substances. Moreover, while in general terms the MOA’s requirement that he notify DEA about the initiation of any state administrative proceedings may not have necessarily involved the dispensing of controlled substances, the physician was accused by the State of both ‘‘prescribing drugs without a lawful diagnostic or therapeutic purpose’’ and ‘‘prescribing Suboxone to treat opioid dependence without having obtained the necessary certification.’’ Id. at 16837 (int. quotations and citations omitted). Thus, even aside from the fact that it was a condition on his registration, the physician’s violation of this provision was clearly relevant in assessing his experience in dispensing controlled substances. In any event, misconduct is misconduct whether it is relevant under Factor Two, Factor Four,26 or Factor Five, or multiple factors. And although asabaliauskas on DSK3SPTVN1PROD with NOTICES 26 The CALJ opines that ‘‘several of the violations in Feldman were also likely violations of applicable state, federal, and/or local laws, but there was no mention of Factor 4, even though in an earlier case, OTC Distribution Co., 68 FR 70538, 70542 (2003), the Agency considered the respondent’s failure to comply with the terms of the MOA as a failure to comply with applicable law, despite the fact that the conduct was not unlawful, but merely a violation of the MOA in that case.’’ R.D. 46 (footnotes omitted). With respect to Feldman, the CALJ speculated that the respondent’s ‘‘multiplerefills scrips most likely violated’’ 21 CFR 1306.12, which allows practitioners to issue multiple prescriptions to provide up to a 90-day supply of a schedule II controlled substance. Id. n.106. However, in Feldman, the Government made no such allegation and the Agency made no such finding. Indeed, with respect to the physician’s violation of the MOA’s condition which limited him to authorizing only one refill, the refills were for only schedule III and IV controlled substances. 76 FR at 16836–37. Indeed, none of the Decision’s findings involved schedule II drugs. See id. As for the CALJ’s discussion of OTC Distribution, I agree that the mere failure to comply with the term of an MOA does not necessarily establish a violation of an ‘‘applicable . . . law[ ] related to controlled substances.’’ 21 U.S.C. 823(f). While this factor has long been interpreted as encompassing both laws and duly enacted regulations, most MOA terms are the product of negotiation between the Agency and an applicant/registrant and do not arise from either the legislative or rulemaking process. Even where an MOA term imposes the same requirements as a law or regulation, a violation of that term falls under Factor Four because it is also a violation of a duly enacted law or regulation. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 the CALJ asserts that ‘‘[a]s agency precedent now stands, the distinction between the considerations of Factor [Two] are nearly imperceptible in this case from those considered under Factor [Four]’’ and that ‘‘[t]he risk of this approach is that evidence offered against the Respondent is considered and weighted twice,’’ R.D. 43, the Agency has repeatedly explained that it does not mechanically count up the factors and determine how many favor the Government versus how many favor the respondent. See Krishna-Iyer, 74 FR at 459, 462. Rather, the inquiry focuses on protecting the public interest; what matters is the seriousness of the registrant’s or applicant’s misconduct.27Id. The Show Cause Order also alleged that Respondent violated various provisions of the MOA which do not themselves rise to the level of violations of the CSA or DEA regulations. These include the allegation that Respondent violated paragraph 8 of the MOA because controlled substances ‘‘were dispensed and/or administered’’ to patients at various clinics when the clinics did not have a practitioner who was registered at the clinic. ALJ Ex. 1, at 2. They also include the allegation that Respondent violated paragraph 9 of the MOA by failing to submit quarterly reports of his controlled substance dispensings to the DEA Houston Office. 27 The CALJ also opines that under Agency precedent, ‘‘where the Government produces no evidence of other misconduct over the course of a lengthy career as a registrant, it will assume it to be benign and not consider under Factor [Two] (as Congress intended), but rather, as a matter of sanction discretion.’’ R.D. 43. However, while the Agency’s decisions typically set forth the specific public interest factors in discussing the evidence offered by the Government in support of its prima facie case, this does not mean that a respondent’s evidence of a lengthy history of compliance is given no weight in the public interest determination. In a revocation proceeding, the statute specifically directs the Agency to determine whether the registrant ‘‘has committed such acts as would render his registration . . . inconsistent with the public interest.’’ 21 U.S.C. 824(a)(4) (emphasis added). The public interest factors of section 823(f) simply shape the scope of the relevant evidence in the proceeding, and given the nature of this inquiry, the Agency properly considers a respondent’s evidence of a lengthy history of compliance after the Government makes out its prima facie case, as determining what sanction is necessary to protect the public interest is the ultimate purpose of these provisions. As for the CALJ’s discussion of Krishna-Iyer v. DEA, 249 Fed. App’x 159 (11th Cir. 2007), in which he asserts that this Agency failed to follow the Eleventh Circuit’s order on remand, as well as his assertion that while the Tenth Circuit in MacKay v. DEA ‘‘upheld an Agency final order that included the Krishna-Iyer analysis, but the Agency’s view of Factor [Two] was not a focus of the Court’s decision,’’ R.D. 41, these mistaken contentions have been thoroughly addressed and rejected. See Wesley Pope, M.D., 82 FR 14944, 14981–82 (2017). I therefore decline to re-address the CALJ’s discussion. PO 00000 Frm 00059 Fmt 4703 Sfmt 4703 Failure To Ensure That if Controlled Substances Were Administered or Dispensed at a Clinic, the Provider Doing the Administration or Dispensing Was Registered at the Clinic Under the CSA’s registration provisions, ‘‘[a] separate registration shall be required at each principal place of business or professional practice where the applicant . . . dispenses controlled substances.’’ 21 U.S.C. 822(e). See also 21 CFR 1301.12(a) (‘‘A separate registration is required for each principal place of business or professional practice at one general physical location where controlled substances are . . . dispensed by a person.’’). While by regulation DEA has exempted from the separate registration provision ‘‘[a]n office used by a practitioner (who is registered at another location in the State . . .) where controlled substances are prescribed but neither administered nor otherwise dispensed as a regular part of the professional practice of the practitioner at such office and where no supplies of controlled substances are maintained,’’ id. 1301.12(b)(2) (emphasis added), this provision makes plain that if controlled substances are administered at a clinic, the practitioner must be registered at that location. As found above, in paragraph 8 of the MOA, Respondent agreed that ‘‘[i]f any controlled substance is administered or dispensed at any clinic . . . the health care provider doing the administering and/or dispensing to the patient shall be registered at the clinic as required by 21 U.S.C. 822(a)(2) 28 and 21 CFR 1301.12(a).’’ While the Government does not argue that Respondent personally violated the CSA’s separate registration provision, the evidence is clear that several of the clinics administered testosterone to patients during various time periods when there was no practitioner registered at the particular clinic. With respect to the Cy-Fair clinic, the evidence shows that one testosterone shot was administered when no practitioner was registered at the clinic. GX 6, at 1; GX 8, at 5. As for the FM 1960 clinic, the evidence shows that one testosterone shot was administered on May 19, 2012, on which date no practitioner was registered at the clinic and five testosterone shots were administered between October 5, 2012 and September 11, 2013, during which 28 Under this provision, ‘‘[e]very person who dispenses, or who proposes to dispense, any controlled substance, shall obtain from the Attorney General a registration issued in accordance with the rules and regulations promulgated by him.’’ 21 U.S.C. 822(a)(2). E:\FR\FM\08MYN1.SGM 08MYN1 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices period no practitioner was registered at the clinic. GXs 16, 17. With respect to the Woodlands clinic, the evidence shows that no practitioner was registered at the clinic from the date it moved (in either February or March 2013) to its new location until two days after the inspection and that during this period, testosterone was administered to patients at least 14 times. GXs 19 & 20. Yet the evidence also shows that the two practitioners who worked at the clinic had been registered at its previous location, and thus the evidence suggests that the practitioners simply forgot to change their registered address. While these are relatively minor violations, the evidence with respect to the Victoria clinic is of considerably greater concern. There, testosterone was administered at least 117 times during a more than three-month period when no practitioner was registered at the clinic.29 See GX 26, at 1–5, 7, 12–14, 16; GX 25. Given the scope of the controlled substance activities being engaged in by the Victoria clinic, Respondent failure to ensure that clinic was in compliance with the CSA is an egregious violation of the MOA. asabaliauskas on DSK3SPTVN1PROD with NOTICES Failure To Timely File Accurate Quarterly Dispensing Reports As found above, in the MOA, Respondent also agreed to submit to the Houston DEA Field Division Office a report, ‘‘on a quarterly basis, [of] the total number of controlled substances dispensed, to include the date dispensed, full name of patient, address of patient, name of controlled substance dispensed, quantity dispensed and dispenser’s initials.’’ The Government alleged that Respondent violated this provision for two reasons: (1) He submitted untimely reports, and (2) the reports he submitted contained ‘‘false statements’’ because he denied ‘‘that controlled substances had been dispensed from his clinics.’’ Govt. PostHrng. Br. 23. Neither the Act nor the Agency’s regulations require a practitioner to file quarterly reports of their dispensings. Nonetheless, the Agency has held that a violation of an MOA provision constitutes actionable misconduct under 29 In some instances, the log entry was missing the date of the administration. See, e.g., GX 26, at 4. However, where the entries before and after such an entry were dated and those dates were within the period in which no practitioner was registered at the clinic, those administrations are deemed to have occurred on or between the entries which were dated and within the period. Moreover, even if I ignored entirely the undated entries, the evidence would still support a finding that there were 110 administrations which occurred during the period in which a practitioner was not registered at the clinic. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 the public interest standard even if does not amount to a violation of the Act or an agency regulation. See Erwin E. Feldman, 76 FR 16835, 16838 (2011) (citing Fredal Pharmacy, 55 FR 53592, 53593 (1990)). Here, Respondent admitted that he did not timely file 10 of the reports and that he violated paragraph 9 of the MOA by failing to timely file the reports. Tr. 4209. While the CALJ found that the evidence only supports a finding that Respondent did not timely file eight of the reports, either way, the evidence supports the conclusion that Respondent repeatedly violated the MOA by failing to timely file the reports. I reject, however, the Government’s contention that Respondent also violated the MOA because the reports falsely stated that the clinics had dispensed no controlled substances during the various quarterly periods when the clinics were administering testosterone injections to various patients. ALJ Ex. 1, at 3, ¶ 5(c); Gov. Post-Hrng. Br. 21. In support of its contention, the Government invokes the CSA’s definitions of the terms ‘‘dispense’’ and ‘‘dispenser.’’ Gov. PostHrng. Br. 23 (citing 21 U.S.C. 802(10)). Notably, the CSA defines the term ‘‘dispense’’ to ‘‘mean[ ] to deliver a controlled substance to an ultimate user . . . by, or pursuant to the lawful order of, a practitioner, including the prescribing and administering of a controlled substance,’’ and it defines ‘‘[t]he term ‘dispenser’ [to] mean[ ] a practitioner who so delivers a controlled substance to an ultimate user.’’ 21 U.S.C. 802(10). The argument is nonetheless unavailing because the Government ignores that numerous provisions of the MOA differentiate the terms ‘‘dispense’’ (and ‘‘dispensing’’) from the terms ‘‘administer’’ (and ‘‘administering’’) and ‘‘prescribe’’ (and ‘‘prescribing’’). For example, paragraph two states that ‘‘DEA continued to allow [Respondent] to administer, dispense, and prescribe controlled substances,’’ GX 4, at 1, ¶ 2 (emphasis added); and paragraph five states that ‘‘[t]his Memorandum of Agreement . . . is between [Respondent] and DEA and establishes the terms and conditions under which DEA will continue to permit [Respondent] to administer, dispense and prescribe any Schedules II through V controlled substance.’’ Id. at 2, ¶ 5 (emphasis added). So too, in paragraph seven, Respondent ‘‘agree[d] to abide by all federal and Texas laws and regulations including statutes and regulations related to the administering, dispensing PO 00000 Frm 00060 Fmt 4703 Sfmt 4703 21423 and prescribing of controlled substances.’’ Id. at 2, ¶ 7 (emphasis added). Likewise, paragraph 8 provides that: If controlled substances in Schedules II though V are purchased for any clinic, to be administered and/or dispensed to clinic patients, [Respondent] shall cause to be made and maintained all DEA required documents and information including records, reports, and inventories. . . . . If any controlled substance is administered or dispensed at any clinic . . . the health care provider doing the administering and/or dispensing to the patient shall be registered at the clinic as required by 21 U.S.C. 822 (a)(2) and 21 CFR 1301.12(a) and any administering and/or dispensing of a controlled substance shall be documented in the patient chart . . . . Id. at 2–3, ¶ 8 (emphasis added). And finally, paragraph 11 states that Respondent ‘‘will not administer, dispense, or prescribe a controlled substance to any individual without a doctor-patient relationship and a treatment plan outlining the purpose for administering, dispensing or prescribing a controlled substance for a legitimate medical purpose.’’ Id. at 3, ¶ 11 (emphasis added). By contrast, the reporting obligation of paragraph 9 makes reference only to ‘‘the total number of controlled substances dispensed, to include the date dispensed . . . name of controlled substances dispensed, quantity dispensed and dispenser’s initials.’’ Id. at 3, ¶ 9 (emphasis added). While the Government points to the statutory definition of the term ‘‘dispense,’’ the argument fails because the MOA contains no provision which explicitly defines the term ‘‘dispense’’ as encompassing the administration of a controlled substance or which incorporates by reference the CSA’s definition of term.30 Thus, given the 30 In its post-hearing brief, the Government notes Respondent’s testimony to the effect that ‘‘[t]he state and the federal definition[s] of . . . administering [ ] and dispensing are different.’’ Gov. Post-Hrng. Br. 17. Correctly noting that the Texas Health and Safety Code defines the term ‘‘dispense’’ to ‘‘ ‘include[ ] the prescribing, administering, packaging, labeling, or compounding necessary to prepare the substance for delivery,’ ’’ the Government argues that Respondent’s claim that he relied on the state definition is without merit. Id. at 24 (quoting Tex. Health & Safety code § 481.001(12)). The Government ignores, however, that the Rules of the Texas Medical Board define the term ‘‘[d]ispense’’ as only the ‘‘[p]repairing, packing, compounding, or labeling for delivery a prescription drug . . . in the course of professional practice to an ultimate user . . . by or pursuant to the lawful order of a physician,’’ as well as the term ‘‘[a]dminister’’ as only ‘‘[t]he direct application of a drug by injection, inhalation, ingestion, or any other means to the body of a physician’s patient.’’ Tex. Admin Code § 169.2(2) & (4). Other provisions of the Board’s rules distinguish between the E:\FR\FM\08MYN1.SGM Continued 08MYN1 21424 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES numerous instances, both before and after paragraph 9, in which the MOA differentiates between the terms ‘‘dispense’’ and ‘‘administer’’ (even though the latter is expressly included in the CSA’s definition of the former), the Government cannot persuasively argue that the MOA clearly imposed on Respondent the obligation to file a quarterly report of the clinic’s administrations. At most, the Government’s reliance on the CSA’s definition creates an ambiguity as to the meaning of the term as used in the MOA.31 Even so, ambiguities in contracts are generally resolved against the drafter. Here, while there is no direct evidence as to which party drafted the MOA or this particular term, the MOA does contain a provision pursuant to which Respondent ‘‘waive[d] all rights to seek judicial review or to challenge or contest the validity of any terms or conditions of’’ the MOA, thus suggesting that the Government wrote the MOA. Id. at 4. See Restatement (Second) of Contracts § 206, at 105 cmt. a (1981) (‘‘Where one party chooses the terms of a contract, he is likely to provide more carefully for the protection of his own interests than for those of the other party.’’). Moreover, while there may be some negotiation over the specific wording of MOA provisions, MOAs are customarily drafted by the Government and the Government has produced no evidence that Respondent drafted paragraph nine. Thus, I conclude that the Government created the ambiguity as to whether the term ‘‘dispense’’ as used in paragraph nine was intended to include the full scope of the statutory definition which also encompasses administering and prescribing or the narrower meaning which encompasses only the physical delivery of a controlled substance to an ultimate user. Because paragraph 9 does not effectuate compliance with any provision of the CSA or DEA regulations, I apply settled principles of ‘‘[a]dministration of [d]rugs,’’ id. § 169.3, and ‘‘[p]roviding, [d]ispensing, or [d]istributing [d]rugs.’’ Id. § 169.4. As to the former provision, it states, in part, that ‘‘[a] physician may personally administer those drugs to his or her patients, which are, in the physician’s medical judgment, therapeutically beneficial or necessary for the patient’s treatment.’’ Id. § 169.3. As to the latter, it states, in part, that ‘‘a physician may provide, dispense, or distribute drugs for use or consumption by the patient away from the physician’s office or after the conclusion of the physician-patient encounter.’’ Id. § 169.4. Thus, the Board’s rules provide some support to Respondent’s contention. 31 Indeed, under the Government’s broader interpretation, Respondent was also required to include each controlled substance prescription he wrote. Yet the Government never took issue with Respondent’s failure to include on the reports the prescriptions that were issued at the various clinics. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 contract law and resolve the ambiguity against the Government.32 See Restatement (Second) of Contracts § 206, at 105 (‘‘In choosing among the reasonable meanings of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds.’’). Factor Four—Respondent’s Compliance With Applicable Laws Related to Controlled Substances In the Show Cause Order, the Government alleged that with respect to various clinics, Respondent violated both paragraph 8 of the MOA and DEA recordkeeping regulations, including the requirements to: (1) Make and maintain inventories as required by 21 CFR 1304.11(e)(3); (2) make and maintain complete and accurate dispensings records as required by 21 CFR 1304.22(c); and (3) make and maintain complete and accurate records of the receipts of the controlled substances as required by 21 CFR 1304.22(c) and 1304.22(a)(2). ALJ Ex. 1, at 3. The Show Cause Order also alleged that Respondent violated 21 CFR 1306.04(b), by authorizing prescriptions to obtained controlled substances ‘‘for the purpose of general dispensing to patients.’’ Id. The Alleged Violations at Cy-Fair The evidence clearly establishes that Respondent was registered at the CyFair clinic and that the clinic was in possession of testosterone and engaged in the administration of the drug to patients. The evidence also shows that the clinic did not have either an initial or biennial inventory at the time of the inspection. Respondent thus violated the CSA and DEA regulations. See 21 U.S.C. 827(a) (1) (‘‘every registrant under this subchapter shall . . . as soon . . . as such registrant first engaged in the . . . dispensing of controlled substances, and every second year thereafter, make a complete and accurate record of all stocks thereof on hand’’). See also 21 CFR 1304.11(b) (‘‘every person required to keep records shall take an inventory of all stocks of controlled substances on hand on the 32 The Government also alleged that the ‘‘reports submitted . . . on July 20, 2012, were back-dated and hence, failed to indicate the true date they were prepared.’’ ALJ Ex. 1, at 3 ¶ 5(c). However, the Government was well aware of the fact that the reports had not been timely submitted, and the Government has offered no evidence explaining why Respondent’s back dating of the reports was capable of influencing the outcome of its investigation given that Respondent never represented that he had previously submitted the reports. See Roy S. Schwartz, 79 FR 34360, 34363 n.6 (2014). PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 date he/she first engaged in the . . . dispensing of controlled substances’’); id. § 1304.11(c) (requiring that ‘‘[a]fter the initial inventory is taken, the registrant shall take a new inventory of all stocks of controlled substances on hand at least every two years’’). The evidence also shows that while the Cy Fair office manager provided the DIs with a log showing its administrations of testosterone, the log was missing required information including the address of the patient and the name of the finished form dispensed (i.e., the strength of the testosterone per ml). This too was a violation of the CSA and DEA regulations. See 21 U.S.C. 827(a)(3) (‘‘every registrant under this subchapter . . . dispensing a controlled substance or substances shall maintain, on a current basis, a complete and accurate record of each such substance manufactured, received, sold, delivered, or otherwise disposed of by him’’); see also 21 CFR 1304.22(c) (‘‘records shall be maintained of the number of units or volume of such finished form dispensed, including the name and address of the person to whom it was dispensed, the date of the dispensing, the number of units or volume dispensed, and the written or typewritten name or initials of the individual who dispensed or administered the substance on behalf of the dispenser’’).33 As for Cy Fair’s receipt records, the clinic provided but a single page listing nine instances in which it had acquired ‘‘10 Testosterone Cypionate 200 mg/ml’’ by date. GX 9, at 1. However, this document was not ‘‘a complete and accurate record of each such substance . . . received . . . by’’ the clinic. 21 U.S.C. 827(a)(3). Specifically, while the document included the number ‘‘10’’ before the drug name, it does not indicate whether this number refers to the quantity of the drug in the vials or the number of vials. See 21 CFR 1304.22(c) (incorporating by reference 21 CFR 1304.22(a)(2)(ii) & (iv) (requiring that records list ‘‘each finished form’’ and ‘‘the number of units of finished forms . . . acquired from other persons’’). Moreover, the record does not include ‘‘the name, address, and registration number of the person from whom the units were acquired.’’ 21 CFR 1304.22(a)(2)(iv). Thus, Respondent 33 See also id. (requiring dispensers to ‘‘maintain records with the same information required of manufacturers pursuant to paragraph (a)(2)(i), (ii), (iv), (vii), and (ix) of this section.’’ As relevant to the administration log, this information includes, ‘‘the name of the substance’’ and ‘‘[e]ach finished form (e.g., . . . 10-milligram concentration per fluid ounce or milliliter) and the number of units or volume of finished form in each commercial container (e.g., . . . 3 milliliter vial’’). E:\FR\FM\08MYN1.SGM 08MYN1 asabaliauskas on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices violated 21 U.S.C. 827(a)(3) for this reason as well. The Government further alleged Respondent violated 21 CFR 1306.04(b), which prohibits the use of ‘‘[a] prescription . . . in order for an individual practitioner to obtain controlled substances for supplying the individual practitioner for the purpose of general dispensing to patients.’’ ALJ Ex. 1, at 3, ¶ 6. As support for the allegation that Respondent used prescriptions to order the testosterone from the Empower Pharmacy, the Government produced a document created by the pharmacy which lists testosterone ‘‘[p]rescriptions filled between 8/29/2011 and 8/29/2013’’ and the patient as ‘‘CLINIC, CYFAIR.’’ GX 37, at 2. The document includes an Rx Number for each dispensing, the date of the dispensing and the date written, the number of refills, and lists both Respondent and several nurse practitioners as the ‘‘Doctor.’’ Id. The Government also submitted copies of six testosterone prescriptions, several of which included Respondent’s name on the signature line as well as that of one of the mid-level practitioners. See id. at 74–79. The DI who obtained these documents from the Empower Pharmacy testified, however, that the prescription documents were ‘‘generated by the pharmacy’’ and not the clinic. She further characterized one of the documents as ‘‘on a blank—what is commonly used as a call-in prescription form.’’ Tr. 226. While these documents were created by the pharmacy, and standing alone would not have been sufficient to sustain the allegation, on direct examination, Respondent admitted that ‘‘the office managers would call or send a prescription over to the pharmacy to get filled’’ for general office use and asserted that ‘‘this is a common practice’’ in hospitals. Id. at 387–88. See also id. at 311 (testimony of DI that nurse practitioner who floated between various clinics told him that ‘‘the same practice’’ was used ‘‘at all clinics’’). Moreover, in his testimony, Respondent never asserted that his employees were simply ordering the drugs without issuing prescriptions and that it was actually Empower Pharmacy’s decision to use a call-in prescription form to document the transaction. Id. at 455–56. Indeed, he repeatedly defended the practice, asserting that it was ‘‘absolutely proper’’ for his office staff to use a prescription to obtain a controlled substance for office use. Id. at 456–57. Thus, Respondent was clearly aware that his VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 various office managers engaged in this practice including those at Cy-Fair. In his post-hearing brief, Respondent asserts that ‘‘there is no evidence that he wrote the prescriptions, knew about them, or ‘authorized’ them as the term is commonly understood.’’ Resp. Closing Argument, at 6. The argument is counterfactual. Respondent clearly knew that his clinics (and in particular, the Cy-Fair clinic) were administering testosterone to patients and he also knew how his clinics were obtaining the drug. Moreover, even if Respondent did not personally authorize the Cy-Fair prescriptions, the mid-level practitioners who authorized the prescriptions were only able to do so because Respondent delegated prescribing authority to them. See Tex. Occupations Code § 157.0511 (authorizing a physician to delegate prescribing authority for schedule III through V controlled substances); id. § 157.0512 (requiring a prescriptive authority agreement by which a physician delegates prescribing authority to advance practice registered nurses and physician assistants and setting rules for such agreements). Thus, with respect to the prescriptions issued by Cy-Fair to obtain testosterone, I conclude that Respondent violated 21 CFR 1306.04(b).34 Nor were Respondent’s violations of 21 CFR 1306.04(b) confined to the CyFair clinic as the Government produced two other testosterone prescriptions which were authorized under his registration which were for the use of the Oak Hills and FM—1960 clinics. See GX 37, at 70, 85. Specifically, the Government produced a prescription dated October 19, 2012 for Scream Cream 35 ‘‘#5 ml’’ which lists Respondent as the prescriber and the patient as ‘‘1960—R Zayas.’’ GX 37, at 85. The Government also produced a prescription dated February 6, 2013 for one 10 ml bottle of testosterone which again lists Respondent as the prescriber and the patient as ‘‘Oak Hills—Dr. R. Zayas.’’ Id. at 70. Also, each of these 34 As for Respondent’s assertion that it is common practice that hospitals do not order anesthesia medications for every patient and order stock bottles, undoubtedly that is true. While there is no evidence in the record as to how hospitals order the drugs they administer or dispense to patients, what a hospital cannot do is use a prescription to order the drugs for general dispensing. Indeed, hospitals typically order the stock from a registered distributor, and with respect to the schedule II drugs which are invariably used for anesthesia, they must use an Order Form as required under 21 U.S.C. 828(a) & (c)(2). See also 21 CFR Pt. 1305. 35 Notwithstanding that there was a noncontrolled version of Scream Cream, the pharmacy assigned a prescription number for this dispensing which begins with a C, thus evidencing that this was for a product which contained testosterone. PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 21425 prescriptions bears Respondent’s registration number for his Houston registered address. Thus, the evidence is clear that prescriptions were authorized pursuant to Respondent’s registration, and even if he did not personally call in the prescriptions, he is strictly liable for the misuse of his registration by any person to whom he entrusted his registration. See Rosemary Jacinta Lewis, 72 FR 4035, 4041 (2007). Alleged Violations at the Other Clinics As discussed above, Respondent was registered only at the Cy-Fair clinic at the time of the inspection. Thus, with respect to the recordkeeping allegations, Respondent argues that he was ‘‘the DEA registered supervising physician at [only] one of’’ the clinics (i.e., Cy Fair), and that ‘‘the Government is attempting to turn a contractual violation into a violation of a statute or regulation which is unjustified, unsupported by existing case law, or might be beyond the DEA’s statutory authority.’’ Resp.’s Closing Argument, at 5. Respondent further maintains that: The case against him is based on [the] unstated (and as yet unsupported) assumption that the DEA has authority to sanction a registrant for a breach of contract where the contract seeks to impose the obligations of a . . . registrant for which [he] was not the . . . registrant, on the theory that because he owns the entity which has a controlling interest in the operating company which owns and manages the clinics, that somehow establishes a violation of federal law. Id. The CALJ found Respondent’s argument persuasive to the extent it involved his contention that he cannot be held liable for violating the CSA and Agency regulations pertaining to recordkeeping at the clinics where he was not registered. See R.D. 62. The CALJ explained that: Although each dispensing registrant is required to maintain a [registration] at the place[s] where administering/dispensing occurs, these alleged (and established) administering/dispensing events pertained to other individuals, not to the Respondent. The same can be said of those portions of the [Show Cause Order] ¶5(b) allegations pertaining to dispensing, receiving, and inventory records at the non-Cy-Fair clinics that dispensers are required to create and maintain . . . . Evaluated in a world without the DEA MOA, these allegations do not raise evidence within the purview of the public interest factors in relation to the Respondent. Id. The CALJ did, however, consider the evidence as to the recordkeeping violations by the non-Cy Fair clinics as constituting ‘‘such other conduct which E:\FR\FM\08MYN1.SGM 08MYN1 21426 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices may threaten public health and safety.’’ See id. at 66–72.36 I reject Respondent’s and the CALJ’s conclusion that Respondent is not liable for violating the CSA’s recordkeeping provisions because he was not the registrant at the six other clinics.37 Indeed, this Agency has previously noted that liability can be imposed on a non-registrant for failing to keep required records even though that conduct is also properly chargeable to a registered practitioner. See Moore Clinic Trials, L.L.C., 79 FR 40145, 40156 (2014) (holding non-registrant clinic owner liable for failure of physician to maintain required records). Indeed, in Moore, the Agency explained that under the CSA, if controlled substances are dispensed at a clinic, both the clinic’s owner and the physician it employs or contracts with to perform services on the clinic’s behalf are responsible for maintaining complete and accurate records. See 79 FR at 40156 (citing United States v. Clinical Leasing Serv., Inc., 759 F. Supp. 310, 313 (E.D. La. 1990), aff’d 925 F.2d 120, 123 (5th Cir. 1991)). As the court explained in Clinical Leasing Services: The clinic is charged with failure to maintain proper records. The law clearly requires every ‘‘person’’ (including a corporation) to maintain proper records if that person dispenses controlled substances. By employing physicians to dispense drugs in connection with its operation, the clinic is a dispenser of controlled substances. Therefore, the clinic, as well as the physicians it employs, must maintain the proper records required by law. 759 F. Supp. at 312 (emphasis added). The court expressly rejected the clinic’s contention that ‘‘it was not required to maintain records,’’ because asabaliauskas on DSK3SPTVN1PROD with NOTICES 36 While I agree with the CALJ that violating a provision of an MOA does not necessarily establish a violation of an applicable law related to controlled substances which is actionable under factor four (‘‘[c]ompliance applicable . . . States, Federal or local laws related to controlled substances’’), see R.D. 46 (citing OTC Distribution Co., 68 FR 70538, 70542 (2003)), for reasons explained above, under federal law, Respondent is also liable for failing to maintain complete and accurate records at the non Cy-Fair clinics. Thus, this conduct is clearly actionable under Factor Four. 37 While the Government does not appear to have relied on the theory that Respondent, as the owner of the clinics, is liable for the recordkeeping violations committed at the non-Cy Fair clinics, I conclude that Respondent has raised the issue. See Resp. Closing Argument, at 5. And even if I concluded that Respondent did not raise the issue of whether he is personally liable under the CSA for the record-keeping violations committed at the clinics where he was not registered, this would not change the outcome of this matter because he still violated the MOA by failing to ‘‘cause to be made and maintained all DEA required documents and information including records, reports, and inventories.’’ GX 4, at 2. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 ‘‘the record keeping requirements pertain only to ‘registrants,’’’ noting that 21 U.S.C. 842(a)(5) ‘‘does not require that one who refuses or fails to make, keep, or furnish records be a ‘registrant,’’’ but applies to ‘‘any person,’’ including ‘‘‘an individual, corporation . . . business trust, partnership, association, or other legal entity.’’’ Id. at 313 (quoting 21 CFR 1301.02(j)). Multiple federal courts have likewise rejected the contention that the CSA’s recordkeeping requirements do not apply to non-registrant owners of clinics that dispense controlled substances. See United States v. Robinson, 2012 WL 3984786, *6–7 (S.D. Fla., Sept. 11, 2012) (holding non-registrant owner of cosmetic surgery clinic liable for recordkeeping violations under section 842(a)(5); statute ‘‘includes the broader term of ‘any person’ and does not limit application of the subsection to registrants’’); id. at * 7 (‘‘Where corporate officers have been in a position to prevent or correct the violations at issue, courts have found that there is individual liability under the subsection, which plainly applies to all ‘persons.’’’). See also United States v. Stidham, 938 F.Supp. 808, 813–15 (S.D. Ala. 1996) (holding non-registrant owner of methadone clinic liable for recordkeeping violations); United States v. Poulin, 926 F.Supp. 246, 250–51 (D. Mass. 1996) (‘‘The recordkeeping provisions of the [CSA] apply to all persons who dispense drugs, even if they have not registered as required under the Act’’ and holding both pharmacy’s owner/proprietor and corporate entity liable for recordkeeping violations); see also 21 U.S.C. 842(a)(5). Notwithstanding the various arrangements and entities used by Respondent to hold the clinics, the record clearly establishes that Respondent was the real owner and operator of the clinics. See GX 4, at 13 (settlement agreement with United States Attorney signed by Respondent as President of Z Healthcare Systems, Inc.); see also Tr. 381–82, 384–87, 392, 394– 96 (Respondent’s testimony discussing his role in overseeing the clinics). Thus, with respect to the six other clinics, he is also a ‘‘person’’ within the meaning of 21 U.S.C. 842(a)(5) and 21 CFR 1301.02(j), and as such, he is liable for any recordkeeping violations committed by the other clinics even if those clinics had a practitioner who was registered at the clinic.38 38 As found above, nearly every clinic had a substantial period in which it did not have a practitioner who was registered at it. Respondent does not explain who, but him, was responsible for PO 00000 Frm 00063 Fmt 4703 Sfmt 4703 As for the other six clinics, the evidence shows that each of these clinics was either entirely missing certain records or failed to maintain complete and accurate records as required by the CSA and DEA regulations. With respect to the Woodlands clinic, the clinic did not have any inventories and receipt records. Tr. 155–56. Thus, Respondent is liable for violating 21 U.S.C. 827(a)(1) (requiring inventories) and § 827(a)(3) (requiring records of receipts) with respect to this clinic. Moreover, while the clinic presented the DI with its Testosterone Shot Log, the log was missing various items of required information including the patients’ addresses, the finished form of the substance (e.g., the concentration per milliliter), and the volume administered to the patient. Thus, Respondent is liable for failing to ‘‘maintain a complete and accurate record’’ of its testosterone administrations at this clinic. See 21 U.S.C. 827(a)(3) and 21 CFR 1304.22(c). As for the Victoria clinic, it did not have an initial or biennial inventory. Thus, Respondent is liable for violating 21 U.S.C. 827(a)(1). While the clinic provided its testosterone injection log to the DIs, none of the entries included the patient’s address and a number of entries were not dated. See GX 26. And while the entries on some pages of the log did include both the concentration of the finished form (‘‘200 mg’’) and the dose, nearly all of the other entries were missing the drug’s concentration. Compare GX 26, at 2–5, 15, with id. at 1, 6–14, 16. Thus, Respondent is liable for failing to ‘‘maintain a complete and accurate record’’ of the Victoria clinic’s testosterone administrations. See 21 U.S.C. 827(a)(3) and 21 CFR 1304.22(c). While the Victoria clinic provided receipt records, which appears to be a printout from a pharmacy, the records are illegible with respect to the name of the supplier, its address, and its DEA registration. GX 32; see 21 CFR 1304.22(c) (incorporating by reference 21 CFR 1304.22(a)(2)(iv)). Thus, Respondent is also liable for the clinic’s failure to ‘‘maintain a complete and accurate record’’ of its testosterone receipts. 21 U.S.C. 827(a)(3). The Corpus Christi clinic also did not have an initial or biennial inventory. Tr. 194. Thus, Respondent is liable for violating 21 U.S.C. 827(a)(1). And while the clinic produced records of its administrations, with a separate log sheet for each patient, none of the records included the patient’s address the respective clinic’s recordkeeping violations in these periods. E:\FR\FM\08MYN1.SGM 08MYN1 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES and most of the records did not even list the name of the controlled substance. See GX 28; 21 CFR 1304.22(c); id. § 1304.22(a)(2)(ii). Moreover, while some of the log sheets bore the heading of ‘‘TESTOSTERONE,’’ the sheets did not list the drug concentration. See id. (incorporating by reference 21 CFR 1304.22(a)(2)(ii)). Thus, Respondent is liable for the clinic’s failure to ‘‘maintain a complete and accurate record’’ of the controlled substances it dispensed. 21 U.S.C. 827(a)(3). As for the Corpus Christi clinic’s receipt records, these consisted of a ‘‘Log of Scripts’’ which appears to have been created and provided by the Empower Pharmacy. GX 28, at 62. This record was also missing required information in that while it listed the drug and finished form (200 mg/ml injectable), as well as a quantity, it did not list the volume of the finished form and the record does not specify whether the quantity figure referred to the number of vials or the number of milliliters shipped by the pharmacy. Id.; 21 CFR 1304.22(c) (incorporating by reference 21 CFR 1304.22(a)(2)(ii) & (iv)). Moreover, while the Log indicates the date the drugs were ‘‘dispensed’’ by Empower, the clinic did not record on the document ‘‘the date on which the controlled substances are actually received.’’ 21 CFR 1304.21(d).39 Thus, Respondent is liable for the clinic’s failure to ‘‘maintain a complete and accurate record’’ of the controlled substances it dispensed. 21 U.S.C. 827(a)(3). Similarly, the FM 1960 West clinic also did not have either an initial or biennial inventory. Tr. 288, 305. Thus, Respondent is liable for the clinic’s failure to comply with 21 U.S.C. 827(a)(1). The clinic also did not have receipt records on hand; instead, it had Empower Pharmacy fax a report which listed the clinic as the patient and the ‘‘dispensings’’ to it. GX 15. As before, the report was not ‘‘a complete and accurate record’’ because it did not list the number of units or volume of the testosterone products (both injectables and the Scream Cream) the clinic received and did not document the date the drugs were received. 21 CFR 1304.21(d); 1304.22(c). Moreover, given that the clinic did not have the receipt records on hand, it clearly violated 21 39 Indeed, the record states that it was ‘‘[p]rinted’’ on August 29, 2013, three weeks after the date on which the last prescription listed was dispensed by Empower Pharmacy, and lists 15 prescriptions going back February 14, 2012. GX 28, at 62. However, both the CSA and DEA regulations require that receiving records be maintained ‘‘on a current basis.’’ 21 U.S.C. 827(a)(3); 21 CFR 1304.21(a). This record clearly did not comply with this requirement. VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 U.S.C. 827(a)(3) and 21 CFR 1304.21(a) by failing to maintain these ‘‘on a current basis.’’ Respondent is thus liable for these violations. As for the testosterone shot log, each entry was missing the patient’s address, the dosage form, and the volume administered. GX 17. Thus, this record was not ‘‘a complete and accurate record’’ as required under 21 U.S.C. 827(a)(3). See 21 CFR 1304.22(c); see also id. § 1304.22(a)(2)(ii). Respondent is therefore liable for these violations as well. The Oak Hills clinic provided the Investigators with its ‘‘Testosterone Daily Drug Inventory Log.’’ This document did include the required information including the dosage form (on some but not all of the log’s pages) and quantity on hand; the log also included counts that had been taken within the last two years. GX 13, at 4– 28. Thus, this record largely complied with 21 U.S.C. 827(a)(1). The clinic also provided a testosterone log, which listed administrations. The log did not, however, include the patients’ addresses or the dosage form (concentration) of the testosterone. Id. at 1–3. Moreover, the administration log only included administrations between April 3, 2013 and August 24, 2013, id., even though the daily drug inventory shows that testosterone was dispensed on numerous occasions within the two-year period preceding the inspection. Id. at 12–22. Thus, Respondent is liable for the clinic’s failure to maintain ‘‘a complete and accurate record’’ of the administrations. 21 U.S.C. 827(a)(3); see also 21 CFR 1304.22(c); id. § 1304.22(a)(2)(ii); 21 U.S.C. 827(b) (‘‘Every . . . record required under this section . . . shall be kept and be available, for at least two years, for inspection and copying by officers or employees of the United States . . . .’’). Upon the request of the Investigators, the Southwest Clinic did not provide either inventory records or receipt records. Tr. 326. Moreover, while a clinic employee told an Investigator that controlled substances had been transferred to the clinic from another clinic that had closed, Southwest had no record documenting the transfer. Id. at 331. Thus, Respondent is liable for the clinic’s failure to take initial or biennial inventories, see 21 U.S.C. 827(a)(1), as well as the clinic’s failure to ‘‘maintain, on a current basis, a complete and accurate record of each [controlled] substance . . . received . . . by’’ it. Id. § 827(a)(3). As for the testosterone log, it was also missing the patients’ addresses and the dosage form (concentration) of the PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 21427 testosterone. See 21 CFR 1304.22(c); id. 1304.22(a)(2)(ii). Moreover, the earliest dispensing record in the testosterone log was dated September 4, 2012. GX 23, at 4. Yet a prescription report obtained from Empower Pharmacy shows that injectable testosterone was ‘‘dispensed’’ to the clinic (as the ‘‘patient’’) on April 24, 2012, June 5, 2012, July 19, 2012, August 18, 2012 and September 1, 2012, thus supporting the inference that the clinic was regularly administering testosterone prior to the first entry in its testosterone log without documenting the administrations. See GX 37, at 3. I therefore conclude that Respondent is liable for the clinic’s failure to ‘‘maintain, on a current basis, a complete and accurate record of each [controlled] substance . . . delivered by’’ it. 21 U.S.C. 827(a)(3); 21 CFR 1304.22(c). Factor Five—Such Other Conduct Which May Threaten the Public Health and Safety The Government also argues that Respondent has engaged in other conduct which is actionable under Factor Five.40 Of specific relevance here, the Government argues that ‘‘Respondent’s false statement and obstructionist behavior towards [the DI] are also applicable under Factor Five insofar as they constitute the failure to maintain effective controls against diversion.’’ Id. (citing Island Wholesale, Inc., 68 FR 17406, 17407 (2003) 41 and Leonel Tano, 62 FR 22968, 22971 (1997)). Here, the evidence shows that Respondent made a false statement and obstructed the DI who was assigned to review his renewal application. Specifically, when asked by the DI in an email to forward to her copies of the quarterly reports of his dispensings which were required under the MOA, Respondent denied that he was even under an MOA. Respondent’s statement was clearly false and while the DI 40 The Government also argues that ‘‘[t]o the extent Respondent’s multiple failures to comply with the . . . MOA is [sic] not actionable under Factor Four, it would be actionable under Factor Five.’’ Gov. Post-Hrng. Br. at 25. It then points to the allegations regarding the quarterly dispensing reports, the failure to ensure that the clinic practitioners were properly registered, and that the clinics were not maintaining proper records. Id. at 26. As each of these allegations has been addressed under either Factor Two or Factor Four, they do not constitute ‘‘other conduct.’’ 41 This case did not, however, involve a practitioner, but rather a list I chemical distributor. See 68 FR 17407. The ‘‘catch-all’’ factor for list I distributor only requires a showing that the factor is ‘‘relevant to and consistent with the public health and safety.’’ 21 U.S.C. 823(h)(5). This is a considerably lower bar than ‘‘such other conduct which may threaten the public health and safety.’’ Id. § 823(f)(5). E:\FR\FM\08MYN1.SGM 08MYN1 asabaliauskas on DSK3SPTVN1PROD with NOTICES 21428 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices obviously knew that the statement was false, the statement nonetheless had the capacity to influence the Agency’s decision as to whether to grant his renewal application and was made with fraudulent intent as Respondent obviously knew that his registration was subject to the MOA and that he had failed to comply with the requirement that he submit the quarterly reports. See United States v. Alemany Rivera, 781 F.2d 229, 234 (1st Cir. 1985) (‘‘It makes no difference that a specific falsification did not exert influence so long as it had the capacity to do so.’’); United States v. Norris, 749 F.2d 1116, 1121 (4th Cir. 1984) (‘‘There is no requirement that the false statement influence or effect the decisionmaking process of a department of the United States Government.’’). This is actionable misconduct under Factor Five. See Shannon L. Gallentine, 76 FR 45864, 45866 (2011); see also Hoxie v. DEA, 419 F.3d at 483 (‘‘The DEA properly considers the candor of the physician and his forthrightness in assisting in the investigation . . . important factors in determining whether the physician’s registration should be revoked.’’). So too, in response to the DI’s request to ‘‘describe [his] current medical practice’’ and to ‘‘please include all locations and the names and DEA numbers of any Physician Assistants . . . or Nurse Practitioners that [he] currently supervise[d],’’ he replied that ‘‘this is irrelevant to the renewal of my DEA certificate.’’ GX 36, at 2. The information requested by the DI was, however, relevant to the renewal of his registration because it was fully within the Government’s authority to investigate whether Respondent had complied with the MOA. See Hoxie, 419 F.3d at 483. Moreover, at the hearing, Respondent offered the excuse that he had ‘‘blocked’’ the events surrounding his entering into the MOA out of his mind because it was such an ‘‘unpleasant’’ and ‘‘humiliating’’ experience. Tr. 426– 27. The CALJ did not find his testimony credible, characterizing his testimony as a ‘‘dubious account of a variety of amnesia that deprived him of any memory of even the existence of the highly-detailed . . . MOA’’ that ‘‘was simply implausible.’’ R.D. 33. The CALJ further noted that Respondent’s ‘‘memory lapse commenced and ended at points that were conveniently tailored to his narrative and [was] entirely unsupported by any medical diagnosis.’’ Id. As the CALJ concluded, ‘‘it is clear that he made it up.’’ R.D. 33. I agree with the CALJ’s assessment that Respondent’s testimony regarding his failure to comply with the MOA was VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 false; his provision of false testimony also constitutes actionable misconduct under Factor Five. Thus, I conclude that an adverse finding is warranted under Factor Five. Summary of the Government’s Prima Facie Case As found above, the Government’s evidence with respect to Factors Two and Four establishes that Respondent has committed multiple violations of the CSA and DEA regulations, as well as the MOA. The Government’s evidence shows that Respondent repeatedly failed to comply with the MOA’s provision which required that any clinic that either administered or dispensed controlled substances have a practitioner who was registered at the clinic, as well as the provision that he timely file quarterly reports of the clinics’ dispensings. The Government’s evidence further shows that Respondent violated various recordkeeping requirements under the CSA and DEA regulations, including the requirements that he: (1) Make and maintain initial and biennial inventories, (2) make and maintain complete and accurate dispensing records, and (3) make and maintain completed and accurate records of receipts of controlled substances. See, e.g., 21 U.S.C. 827(a) & (c). Moreover, as the real owner of the clinics, Respondent is liable for these violations of the CSA and DEA regulations, notwithstanding that he was registered at only the Cy-Fair clinic. Also, the evidence shows that Respondent violated 21 CFR 1304.22(c), by authorizing prescriptions to obtain controlled substances for ‘‘general dispensing to patients.’’ The evidence further shows that Respondent made a materially false statement to the DI and attempted to obstruct her investigation. And finally, the evidence shows that Respondent gave false testimony in the proceeding. I therefore conclude that the Government has satisfied its prima facie burden of showing that Respondent ‘‘has committed such acts as would render his registration . . . inconsistent with the public interest.’’ 21 U.S.C. 824(a)(4), and which support the revocation of his Florida registration and the denial of his pending application for his Texas registration. See id. § 823(f). Sanction Where, as here, the Government has established grounds to revoke a registration or deny an application, a respondent must then ‘‘present[ ] sufficient mitigating evidence’’ to show PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 why he can be entrusted with a new registration. Samuel S. Jackson, 72 FR 23848, 23853 (2007) (quoting Leo R. Miller, 53 FR 21931, 21932 (1988)). ‘‘ ‘Moreover, because ‘past performance is the best predictor of future performance,’ ALRA Labs, Inc. v. DEA, 54 F.3d 450, 452 (7th Cir. 1995), [DEA] has repeatedly held that where [an applicant] has committed acts inconsistent with the public interest, the [applicant] must accept responsibility for [his] actions and demonstrate that [he] will not engage in future misconduct.’’ Jayam Krishna-Iyer, 74 FR 459, 463 (2009) (citing Medicine Shoppe, 73 FR 364, 387 (2008)); see also Jackson, 72 FR at 23853; John H. Kennedy, 71 FR 35705, 35709 (2006); Cuong Tron Tran, 63 FR 64280, 64283 (1998); Prince George Daniels, 60 FR 62884, 62887 (1995). However, while an applicant must accept responsibility for his misconduct and demonstrate that he will not engage in future misconduct in order to establish that his registration is consistent with the public interest, DEA has repeatedly held that these are not the only factors that are relevant in determining the appropriate disposition of the matter. See, e.g., Joseph Gaudio, 74 FR 10083, 10094 (2009); Southwood Pharmaceuticals, Inc., 72 FR 36487, 36504 (2007). Obviously, the egregiousness and extent of an applicant’s misconduct are significant factors in determining the appropriate sanction. See Jacobo Dreszer, 76 FR 19386, 19387–88 (2011) (explaining that a respondent can ‘‘argue that even though the Government has made out a prima facie case, his conduct was not so egregious as to warrant revocation’’); Paul H. Volkman, 73 FR 30630, 30644 (2008); see also Paul Weir Battershell, 76 FR 44359, 44369 (2011) (imposing six-month suspension, noting that the evidence was not limited to security and recordkeeping violations found at first inspection and ‘‘manifested a disturbing pattern of indifference on the part of [r]espondent to his obligations as a registrant’’); Gregory D. Owens, 74 FR 36751, 36757 n.22 (2009). So too, the Agency can consider the need to deter similar acts, both with respect to the respondent in a particular case and the community of registrants. See Gaudio, 74 FR at 10095 (quoting Southwood, 71 FR at 36503). Cf. McCarthy v. SEC, 406 F.3d 179, 188–89 (2d Cir. 2005) (upholding SEC’s express adoption of ‘‘deterrence, both specific and general, as a component in analyzing the remedial efficacy of sanctions’’). The CALJ found that Respondent’s acceptance of responsibility ‘‘was E:\FR\FM\08MYN1.SGM 08MYN1 asabaliauskas on DSK3SPTVN1PROD with NOTICES Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices equivocal, at best, and was entirely selfserving.’’ R.D. 77. The CALJ further found that ‘‘[h]e begrudgingly accepted responsibility when his counsel led him to do so, but . . . in response to questions by Government’s counsel, he approached the topic with a tenor that bordered on hostile sarcasm.’’ Id. The CALJ specifically noted Respondent’s testimony that the proceeding was ‘‘nonsense,’’ that it was ‘‘arguing over logs,’’ and that this ‘‘we’re not even talking about that much medicine.’’ Id. Moreover, Respondent continued to insist that it is ‘‘absolutely proper’’ for his employees to use prescriptions to order controlled substances for office use. Tr. 456. And when asked whether he was going to admit to violating the MOA provision which required that if any clinic dispensed or administered a controlled substance, the dispensing/ administering was to be done by a practitioner who was registered at the clinic, he asserted that he did not ‘‘know whether it’s true or not’’ while nonetheless insisting that he was accepting responsibility for this misconduct. Id. at 465. In his Exceptions, Respondent points to his testimony that he ‘‘changed the business of his clinics such that they no longer handled controlled substances, thus avoiding the recordkeeping and inventory problems which led to the MOA violations.’’ Resp. Exceptions, at 5. He argues that ‘‘there is DEA precedent that in some conditions, acceptance of responsibility is not absolutely required.’’ Id. (citing Rosalind A. Cropper, 66 FR 41040 (2001)). He correctly notes that in Cropper, the Agency granted the respondent’s application notwithstanding her failure to admit to any of the proven misconduct, which involved treating patients for opiate addiction with methadone for more than three days without being registered as a narcotic treatment program. 66 FR at 41048. Respondent argues ‘‘[t]he Cropper case appears [to] show[ ] that there are exceptions to the acceptance of responsibility requirement in cases like this one where the Respondent has changed his circumstance and business to avoid a recurrence of the problems which are the subject of the DEA action.’’ Exceptions, at 5–6. Relying on Cropper, Respondent argues that even if I agree with the CALJ that ‘‘there was not complete acceptance of responsibility by the Respondent . . . revocation is not required because of the changed circumstance.’’ Id. Addressing the CALJ’s statement that ‘‘[t]he tenor of the Respondent’s declaration that his clinics will no longer directly handle controlled substances strikes less as a VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 remedial step than it does as a tantrum,.’’ R.D. 77 n.197, he argues that the CALJ ‘‘is reading . . . an intentionality element which does not exist in the case law’’ and that ‘‘[a]ll that is required is that a registrant take actions to ensure that the violative conduct does not recur.’’ Id. at 6. He further argues that ‘‘[t]he important point’’ to be taken from Cropper ‘‘was that [Dr. Cropper’s] job didn’t put her near the drug [methadone] and that was enough . . . to conclude that remedial efforts were adequate.’’ Id. And Respondent argues that regardless of what the CALJ ‘‘feels is his motivation for the change’’ in his practice, ‘‘it should be enough that [he] had made sure that the recordkeeping and inventory problems/violations which are at the heart of this case will not recur.’’ Id. at 6–7. Finally, he maintains that his change in the clinics’ practices ‘‘can be viewed as a manifestation of his acceptance; for even in an acceptance of responsibility analysis, actions should speak louder than words.’’ Id. at 7. I reject Respondent’s contentions. While it true that there are some cases besides Cropper in which the Agency imposed a sanction less than revocation or outright denial notwithstanding the respondent’s less than unequivocal acceptance of responsibility, those cases have generally involved less egregious misconduct than that engaged in by Respondent. For example, in Gregory Owens, 74 FR 36751 (2009), the Agency imposed a three-month suspension, notwithstanding the respondent’s equivocal evidence as to his acceptance of responsibility. Id. at 36757–78. However, the proven misconduct was limited to failing to report a state board disciplinary order and failing to submit a quarterly drug activity log during a four-month period.42 Id. at 36757. To be sure, in Jeffrey Martin Ford, 68 FR 10750 (2003), the Agency granted a new registration to a dentist who had been convicted of four felony counts of violating the Controlled Substances Act including conspiracy to possess with intent to distribute cocaine, possession with intent to distribute cocaine and marijuana, and the use of the mail to facilitate a narcotics transaction. Id. at 10751. Moreover, the Agency granted 42 To be sure, there are also cases predating the Agency’s decision in Jayam Krishna-Iyer, 74 FR 459, 464 (2009), in which even a respondent who knowingly diverted controlled substances and who failed to accept responsibility for his misconduct was granted a new registration. See, e.g., Anant N. Mauskar, 63 FR 13687, 13689 (1998). However, in Krishna-Iyer, the Agency explicitly overruled any case which suggests that a physician who has engaged in knowing diversion is entitled to remain registered absence a credible acceptance of responsibility. See Krishna-Iyer, 74 FR at 464 n.9. PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 21429 the respondent a new registration, notwithstanding that it found perplexing ‘‘the [r]espondent’s apparent willingness to accept responsibility for past actions on the one hand . . . and his seeming refusal to acknowledge wrong doing in other respects,’’ as well as its concern ‘‘that the [r]espondent has apparently failed to learn from the negative experiences surrounding his drug use.’’ 68 FR at 10753. While the decision apparently excused the respondent’s failure to unequivocally accept responsibility based on his having attended drug rehabilitation and remained sober for more than 10 years, as well his having satisfied the conditions for reinstatement of his state license, the decision does not even address whether he accepted responsibility for his criminal conduct. Because I find the reasoning of this case unpersuasive, were a case with similarly egregious misconduct presented to me, I would not grant a registration absent a clear and unequivocal acceptance of responsibility for all of misconduct that was proven on the record. In sum, while there may be some instances in which the proven misconduct is not so egregious as to warrant revocation or a lengthy suspension (see, e.g., Owens), and a respondent, while offering a less than unequivocal acceptance of responsibility nonetheless offers sufficient evidence of adequate remedial measures to rebut the Government’s proposed sanction, this is not such a case. Here, Respondent agreed to abide by all federal laws and regulations related to the administering, dispensing and prescribing of controlled substances, as well as that he ‘‘shall cause to be made and maintained all DEA required . . . records, reports, and inventories’’ at any clinic that administered or dispensed controlled substances’’; he also agreed to ‘‘abide by [the MOA’s] contents in good faith.’’ The evidence, however, suggests that Respondent had no intention of abiding by the MOA in good faith but rather entered the agreement simply to get the Government off his back. Tr. 359 (Respondent’s testimony that he entered the MOA because it was ‘‘the easiest and best way’’ to keep his registration’’ and avoid a ‘‘protracted fight’’). For example, notwithstanding that he promised to ensure that his clinics would maintain proper inventories (which he was legally obligated to do even in the absence of the MOA), Respondent testified that he had not even read the applicable regulations which require the keeping of inventories. Tr. 473. Indeed, even as of the hearing, he still had not read the E:\FR\FM\08MYN1.SGM 08MYN1 21430 Federal Register / Vol. 82, No. 87 / Monday, May 8, 2017 / Notices asabaliauskas on DSK3SPTVN1PROD with NOTICES regulations. Id. at 474. While he attempted to shift the blame to his attorneys and consultant for failing to tell him what was required under the MOA, Respondent offered no testimony that he asked either his attorneys or consultant to explain what was required. Id. at 473–74. So too, while Respondent submitted the first two quarterly reports in a timely fashion, thereafter, he blew off this requirement until he was confronted by the DI. So too, even acknowledging that the absolute amounts of the testosterone being handled by the various clinics were not especially large, it is notable that six of the clinics had recordkeeping violations including missing inventories, missing receipt records, and missing required information related to the clinics’ administration of the drug. And notwithstanding his legally erroneous contention that he cannot be held to have violated the CSA’s recordkeeping requirements at the nonCy Fair clinics because he was not the registrant at those clinics, there were recordkeeping violations even at the CyFair clinic, where he was registered. Likewise, while he agreed that if his clinics engaged in administration or dispensing, the provider would be registered at the clinic, here again, Respondent breached the agreement. Particularly egregious is his failure to ensure that there was a registered provider at the Victoria clinic, where testosterone was administered at least 117 times during a three-month period when no practitioner was registered at the clinic. I thus conclude that Respondent’s misconduct was egregious (a conclusion which is buttressed by my findings with respect to Factor Five), and given his failure to offer a credible and meaningful acceptance of responsibility, I hold that he has not refuted the conclusion that his continued registration ‘‘is inconsistent with the public interest’’ and that both the revocation of his Florida registration and the denial of his Texas renewal application are warranted.43 43 I have also considered Respondent’s argument that ‘‘[r]evocation is too severe and [is] not required.’’ Resp. Exceptions, at 7. Therein, Respondent maintains that ‘‘it seems clear that recordkeeping violations of the type found in this case are rarely if ever a reasons [sic] to revoke a provider’s DEA registration.’’ Id. He also contends ‘‘that the conduct proven in this case seems far less egregious than any of the 2015 cases including the two (Corbett and Zina), which did not result in . . . revocation.’’ Id. at 7–8. Contrary to Respondent’s understanding, recordkeeping violations alone can support the revocation of a registration or the denial of an application, and in this case, there were violations of multiple requirements at nearly every one of the clinics. See Keith Ky Ly, 80 FR 29025, 29035 (2015) VerDate Sep<11>2014 18:27 May 05, 2017 Jkt 241001 I further agree with the CALJ that the Agency’s interests in both specific and general deterrence support the revocation of his Florida registration and the denial of his Texas application. As for the Agency’s interest in specific deterrence, Respondent is not barred from reapplying in the future, and were Respondent to do so and offer a credible acknowledgement of his misconduct (to go along with his remedial measures) and be granted a new registration, the sanctions I impose in this Decision and Order would hopefully deter him from engaging in future misconduct. As for the Agency’s interest in general deterrence, not only does the Agency have an obvious and manifest interest in deterring violations of the CSA and regulations by members of the regulated community, the Agency also has a manifest interest in ensuring that those members to whom it extends the forbearance of an MOA will comply with the terms of those agreements. I therefore conclude that Respondent has not refuted the Government’s prima facie showing that his registrations are not consistent with the public interest. 21 U.S.C. 823(f), 824(a) (4). Accordingly, I will order that Respondent’s Florida registration be revoked and that his application to renew his expired Texas registration be denied. (citing Paul H. Volkman, 73 FR 30630, 30644 (2008)). Nor is the evidence in this matter confined to the recordkeeping violations, as it also includes his failure to file the required quarterly reports, his failure to ensure that there was a provider who was registered at the clinics which were dispensing or administering controlled substances, his use of prescriptions to obtain controlled substances for general dispensing to patients, his false statement in denying that he was subject to the MOA, his obstructionist behavior when the DI requested certain information, and his giving false testimony as to the reason why he denied to the DI that he was under the MOA. As for Respondent’s reference to the ‘‘Corbett’’ case, Respondent did not provide a citation and I am unaware of any case involving a respondent with this name. As for his reference to the ‘‘Zina’’ case, even assuming that this was typographical error and that Respondent was referring to Abbas E. Sina, 80 FR 53191 (2015), a self-abuse case, the case provides no comfort to Respondent because Dr. Sina fully admitted to his misconduct. Id. at 53201. (Dr. Sina also offered credible evidence of his rehabilitation, including four years of compliance with his monitoring contract with no failed drug tests, as well as the testimony of two physicians who attested to his commitment to his recovery and compliance with his monitoring contract. See id. at 53201–202). I thus reject’s Respondent’s contention. Finally, while Respondent also invokes Morall v. DEA, he ignores that, in that case, there were findings that the respondent’s recordkeeping violations ‘‘occurred over a fairly short period of time’’ and that the respondent ‘‘appeared to regret’’ her misconduct. 412 F.2d at 166; see also id. at 183. Here, by contrast, Respondent’s recordkeeping violations are not confined to a fairly short period and involve multiple clinics, and as the CALJ concluded, Respondent has not offered a credible acceptance of responsibility. PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 Order Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 824(a)(4), as well as 28 CFR 0.100(b), I order that DEA Certificate of Registration FZ2418401 issued to Roberto Zayas, M.D., be, and it hereby is, revoked. I also order that any pending application of Roberto Zayas, M.D., to renew or modify this registration, be, and it hereby is, denied. I further order that that the pending application of Roberto Zayas, M.D., to renew DEA Certificate of Registration FZ2249743, be, and it hereby is, denied. I further order that any other pending application of Roberto Zayas, M.D., for a DEA Certificate of Registration, be, and it hereby is, denied. This Order is effective June 7, 2017. Dated: April 28, 2017. Chuck Rosenberg, Acting Administrator. [FR Doc. 2017–09285 Filed 5–5–17; 8:45 am] BILLING CODE 4410–09–P DEPARTMENT OF LABOR Office of the Secretary Agency Information Collection Activities; Submission for OMB Review; Comment Request; Workforce Innovation Fund Grants Reporting and Recordkeeping Requirements ACTION: Notice. The Department of Labor (DOL) is submitting the Employment and Training Administration (ETA) sponsored information collection request (ICR) titled, ‘‘Workforce Innovation Fund Grants Reporting and Recordkeeping Requirements,’’ to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995. Public comments on the ICR are invited. DATES: The OMB will consider all written comments that agency receives on or before June 7, 2017. ADDRESSES: A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at http:// www.reginfo.gov/public/do/ PRAViewICR?ref_nbr=201702-1205-004 (this link will only become active on the day following publication of this notice) or by contacting Michel Smyth by telephone at 202–693–4129, TTY 202– SUMMARY: E:\FR\FM\08MYN1.SGM 08MYN1

Agencies

[Federal Register Volume 82, Number 87 (Monday, May 8, 2017)]
[Notices]
[Pages 21410-21430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-09285]


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

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 15-24]


Roberto Zayas, M.D., Decision and Order

    On May 18, 2015, the Deputy Assistant Administrator, of the then-
Office of Diversion Control, issued an Order to Show Cause to Roberto 
Zayas, M.D. (hereinafter, Respondent), of Houston, Texas and Dover, 
Florida. ALJ Ex. 1. The Show Cause Order proposed the revocation of 
Respondent's Certificates of Registration Nos. FZ2249743 and FZ2418401, 
the denial of any pending applications to renew or modify these 
registrations, and the denial of any applications for new 
registrations, on the ground that his ``continued registration is 
inconsistent with the public interest.'' Id. at 1 (citing 21 U.S.C. 
824(a)(4) and 823(f)).
    With respect to the Agency's jurisdiction, the Show Cause Order 
alleged that Respondent is the holder of Registration No. FZ2249743, 
pursuant to which he is authorized to dispense schedule II through V 
controlled substances as a practitioner, at the registered address of 
12121 Jones Road, Houston, Texas; the Order alleged that this 
registration was due to expire on May 31, 2016. Id. The Show Cause 
Order also alleged that Respondent is the holder of Registration No. 
FZ22418401, pursuant to which he is authorized to dispense schedule II 
through V controlled substances as a practitioner, at the registered 
address of 14222 Melouga Preserve Trail, Dover, Florida; the Order 
alleged that this registration is due to expire on May 31, 2017. Id.
    As grounds for the proposed actions, the Show Cause Order alleged 
that on September 20, 2010, Respondent ``signed a Memorandum of 
Agreement'' (MOA) which ``imposed requirements . . . regarding [the] 
operation, management and supervision of seven different clinics'' he 
``own[s] and/or manage[s] and control[s]'' which are located in various 
Texas cities. Id. at 1-2. The Show Cause Order alleged that ``pursuant 
to paragraph 8 of the MOA, [Respondent] agreed that `[i]f controlled 
substances in Schedules II through V are purchased for any clinic, to 
be administered and/or dispensed to the clinic patient, [he] shall 
cause to be made and maintained all DEA required documents and 
information including records, reports, and inventories' '' and that 
``[a]ll required documentation shall be maintained as required by 
federal and Texas laws and regulations.'' Id. at 2. The Show Cause 
Order then alleged that pursuant to another part of paragraph 8, 
Respondent ``agreed . . . that `[i]f any controlled substance is 
administered or dispensed at any clinic including the [seven clinics he 
owns or controls], the health care provider doing the administering 
and/or dispensing to the patient shall be registered at the clinic as 
required by 21 U.S.C. 822(a)(2) and 21 CFR 1301.12.'' Id. And with 
respect to paragraph 9 of the MOA, the Order alleged that Respondent 
was required to submit to the DEA Houston Division Office ``on a 
quarterly basis, the total number of controlled substances dispensed, 
to include the date dispensed, full name of patient, address of 
patient, name of controlled substance dispensed, quantity dispensed and 
[the] dispenser's initials.'' Id.
    The Show Cause Order alleged that ``[b]etween August 28 and 
September 13[,] 2013,'' DEA conducted inspections of each of the 
clinics and ``determined that [Respondent] repeatedly violated the 
terms of paragraphs 8 and 9 of the MOA.'' Id. The Show Cause Order then 
alleged that ``controlled substances were dispensed and/or administered 
at four of the [clinics] during periods when the individual doing the 
dispensing and/or administering was not registered . . . at the'' 
clinic. Id. at 2.
    The Show Cause Order also alleged that Respondent failed to make 
and maintain complete and accurate controlled substance inventories at 
six of the clinics; that he failed to make and maintain complete and 
accurate dispensing records at five of the clinics; and that he failed 
to make and maintain complete and accurate receipt records at several 
of the clinics. Id. at 3 (citing 21 CFR 1304.11(e)(3); id. Sec.  
1304(c); \1\ id. Sec.  1304.22(c); and id. Sec.  1304.22(a)(2)). The 
Show Cause Order further alleged that Respondent failed to timely 
submit 10 of the required quarterly dispensing reports, that 10 of the 
reports that were submitted ``on July 20, 2013, were back-dated and 
hence, failed to indicate the true date they were prepared,'' and that 
``[a]ll of these reports'' falsely represented that ``neither 
[Respondent] nor any of the . . . clinics . . . have dispensed any 
controlled substances to their patients for their medical needs.'' Id.
---------------------------------------------------------------------------

    \1\ While there is no such provision, this appears to be a 
mistaken citation to 21 CFR 1304.22(c), which sets forth the records 
required to be maintained by dispensers.
---------------------------------------------------------------------------

    Finally, the Show Cause Order alleged that Respondent ``violated 21 
CFR 1306.04(b) by issuing prescriptions `in order for an individual 
practitioner to obtain controlled substances for supplying the 
individual practitioner for the purpose of general dispensing to 
patients.' '' Id. The Order then identified two instances in which 
Respondent allegedly issued prescriptions for testosterone products 
which listed him (and in one instance, a clinic) as the patient. Id.
    Following service of the Show Cause Order, Respondent requested a 
hearing on the allegations. The matter was placed on the docket of the 
Office of

[[Page 21411]]

Administrative Law Judges and following the departure from the Agency 
of the ALJ to whom the case was initially assigned, the matter was re-
assigned to Chief Administrative Law Judge John J. Mulrooney, II 
(hereinafter, CALJ). Following pre-hearing procedures, the CALJ 
conducted an evidentiary hearing on October 27-28, 2015, in Houston, 
Texas. At the hearing, the Government elicited testimony from multiple 
witnesses and introduced numerous exhibits into evidence; Respondent 
testified on his own behalf and introduced a single exhibit.
    On February 19, 2016, the CALJ issued his Recommended Decision. 
Therein, the CALJ found proved the allegations that Respondent: (1) 
Issued prescriptions to obtain controlled substances for office use in 
violation of 21 CFR 1306.04, see R.D. at 54; (2) violated 21 CFR 
1304.11 and/or the MOA at six clinics by failing to cause to be made 
and maintained compliant inventories, see R.D. at 57-58, 68; (3) 
violated 21 CFR 1304.22(c) and/or the MOA by failing to cause to be 
made and maintained compliant dispensing records at the six clinics, 
see R.D. at 59-60, 70; (4) violated 21 CFR 1304.22(c) and/or the MOA by 
failing to cause to be made and maintained compliant receipt records at 
the six clinics, see R.D. at 61, 72; (5) violated 21 U.S.C. 822(a)(2) 
and 21 CFR 1301.12(a), as well as the MOA, on multiple occasions when 
employees of four of the clinics administered testosterone to patients 
and there was no practitioner registered at the clinic's location, see 
R.D. at 66; and (6) violated the MOA on eight occasions when he failed 
to timely submit the quarterly dispensing reports. Id. at 75. Based on 
these conclusions, the CALJ found that Respondent has committed such `` 
`acts as would render his registration under [21 U.S.C. 823(f)] 
inconsistent with the public interest,' '' and that the Government had 
``ma[d]e out a prima facie case that maintaining [his registrations] 
would be contrary'' to the requirements of 21 U.S.C. 823(f) and 824.'' 
Id. at 76 (quoting 21 U.S.C. 824(a)(4)).
    Turning to whether Respondent had produced sufficient evidence to 
rebut the Government's prima facie case, the CALJ found that while 
Respondent ``begrudgingly accepted responsibility when his counsel led 
him to do so, . . . when left to his own devices, in response to 
questions by Government counsel, he approached the topic with a tenor 
that bordered on hostile sarcasm.'' Id. at 77. The CALJ thus concluded 
that ``[t]his record simply does not support a finding that the 
Respondent has accepted responsibility in any meaningful way.'' Id. 
While the CALJ noted that Respondent's evidence of subsequent remedial 
measures was ``rendered irrelevant in light of his refusal to accept 
responsibility,'' he further concluded that his ``purported evidence of 
corrective measures as it exists in the . . . record does not advance 
his position.'' Id. After noting Respondent's testimony that his 
clinics had stopped administering controlled substances as well as that 
they had stopped providing their patients with the option of having 
their prescriptions shipped to the clinic for pickup, the CALJ 
explained that ``[n]one of these practice modifications reflect efforts 
to improve compliance with DEA regulations, adhere to terms of present 
or future . . . MOAs, or better guard against controlled substance 
diversion.'' Id. at 78. Continuing, the CALJ characterized Respondent's 
testimony as ``essentially lecturing the Agency that its pesky 
regulations and the DEA MOA have proven so bothersome that he will 
gratuitously punish his patients because of them, and it is all the 
fault of the DEA.'' Id. The CALJ further explained that ``[i]t would be 
difficult to divine an enhanced commitment to DEA regulation compliance 
from a man who freely admits that he still has not read them.'' Id. 
(citing Tr. 473-74).
    The CALJ further found that Agency's interests in both specific and 
general deterrence ``provide significant support for'' revoking his 
registration. Id. With respect to the former, the CALJ found that 
``there is little in the record that lends support to the proposition 
that the Respondent's future behavior will deviate in any positive 
respect from his past behavior,'' noting that ``Respondent blatantly 
disregarded his obligations under both the DEA regulations and the DEA 
MOA.'' Id. at 78-79. And as for the Agency's interest in general 
deterrence, the CALJ found that ``[a] sanction less than revocation in 
this case would send a message to the regulated community that 
diligence in recordkeeping is not truly required and that agreements 
entered into with the Agency may be freely disregarded without 
consequence.'' Id. at 80. Finally, the CALJ rejected Respondent's 
contention that his conduct involved only ``recordkeeping violations'' 
which did not warrant revocation, explaining that this case did not 
present the situation ``where a small number of modest recordkeeping 
errors are acknowledged and remedied promptly,'' and that ``[i]n this 
case, the anomalies were plentiful and dangerous'' and ``include 
instances where no records were kept.'' Id. The CALJ thus recommended 
that Respondent's registrations be revoked and that any pending renewal 
applications be denied. Id. at 81.
    Respondent filed Exceptions to the Recommended Decision. 
Thereafter, the record was forwarded to my Office for final agency 
action.
    Having considered the record in its entirety, as well as 
Respondent's Exceptions, I agree with the CALJ's findings and legal 
conclusions as enumerated above. However, I further conclude that by 
failing to ensure that all six clinics made and maintained compliant 
inventory, dispensing and receipt records, Respondent not only violated 
the MOA, he also violated the CSA and DEA regulations. Moreover, while 
I agree with the CALJ's legal conclusion that Respondent violated the 
MOA by failing to timely submit eight of the required quarterly 
reports, I reject the Government's contention that the ``reports 
contained false representations'' because ``each report states that 
`neither [Respondent] nor any of the IMC clinics . . . have dispensed 
any controlled substances to their patients for their medical needs.' 
'' ALJ Ex. 1, at 3, ] 5(c).
    I also agree with the CALJ's conclusion that Respondent has 
committed such ``` acts as would render his registration under [21 
U.S.C. 823(f)] inconsistent with the public interest,' '' and that the 
Government had ``ma[d]e out a prima facie case that maintaining [his 
registrations] would be contrary'' to the requirements of 21 U.S.C. 
823(f) and 824.'' R.D. at 76 (quoting 21 U.S.C. 824(a)(4)). I further 
agree with the CALJ's conclusions that the ``record simply does not 
support a finding that the Respondent has accepted responsibility in 
any meaningful way,'' id. at 77, that the Agency's interests in both 
specific and general deterrence ``provide significant support for'' 
revoking his registration, id. at 78-79, and that the egregiousness of 
Respondent's misconduct supports the revocation of his registration. 
Id. at 80-81. Accordingly, I will adopt the CALJ's recommended order 
that his registration be revoked and that any pending application be 
denied. I make the following findings.

Findings of Fact

    Respondent is a physician licensed in Texas and Florida. He is also 
the holder of DEA Certificate of Registration No. FZ2418401, pursuant 
to which he is authorized to dispense controlled substances in 
schedules II through V, at the registered address of 14222 Melouga 
Preserve Trail, Dover, Florida. R.D. at 4. This registration does not 
expire until May 31, 2017. Id. Respondent was also

[[Page 21412]]

the holder of DEA Certificate of Registration No. FZ2249743, pursuant 
to which he was authorized to dispense controlled substances in 
schedules II through V, at the registered address of 12121 Jones Road, 
Houston, Texas; this registration was due to expire on May 31, 2016. 
Id. However, because as of May 31, 2016, Respondent was under an Order 
to Show Cause, and did not submit a renewal application until June 27, 
2016, this application was untimely and did not keep his registration 
in effect pending the issuance of this Decision and Order. See 5 U.S.C. 
558; 21 CFR 1301.36(i). I therefore find that Certificate of 
Registration No. FZ2249743 expired on May 31, 2016. I further find, 
however, that Respondent's June 27, 2016 application remains pending 
before the Agency.
    At the time of the events at issue here, Respondent owned 
indirectly and controlled seven different clinics through a limited 
partnership known as Z Healthcare Management; 99 percent of this entity 
is owned by the Zayas Family Trust with the remaining one percent owned 
by Z Healthcare Systems, Inc., the latter being 100 percent owned by 
Respondent; as of the date of this proceeding, he still owned and 
controlled five of these clinics.\2\ RX 1, Tr. 59, 371. These clinics 
included: (1) IMC Cy-Fair, which was located at 12121 Jones Road, 
Houston, Texas during the relevant time period, see GX 6; (2) IMC FM 
1960, which was located at 3648 FM 1960, Houston, Texas, but has since 
closed, see GX 16, Tr. 365; (3) IMC Southwest, which was located at 
7447 Harwin, Suite 100, Houston, Texas, see GX 22; (4) IMC Oak Hills, 
which was located at 4805 Fredericksburgh Road, San Antonio, Texas, see 
GX 12; (5) IMC Woodlands, which was located at 25329 I-45 North Suite 
B, The Woodlands, but which moved to 314 Sawdust Road, Spring, Texas 
during February/March 2013, GX 19; (6) IMC Victoria, which was located 
at 3804 John Stockbauer Drive, Suite E, Victoria, Texas, but has since 
closed,\3\ GX 25, Tr. 365; and: (7) IMC Corpus Christi, which was 
located at 4646 Corona Drive, #280, Corpus Christi, Texas. GXs 33, 34.
---------------------------------------------------------------------------

    \2\ The clinics were themselves incorporated, with two held by 
limited liability corporations and the others held by c-
corporations. RX 1.
    \3\ According to Respondent, the IMC 1960 and Victoria clinics 
were probably closed in 2014. Tr. 366.
---------------------------------------------------------------------------

The MOA

    On September 8, 2010, Z Healthcare Systems entered into a 
Settlement Agreement with the Office of the United States Attorney for 
the Southern District of Texas. GX 4, at 6. According to the agreement, 
the Government alleged that between August 2005 and June 2006, three 
IMC clinics dispensed controlled substances, in particular phentermine, 
``without a valid DEA registration.'' Id. at 8.
    While Z Healthcare Systems was not required to admit liability, it 
did agree to pay $25,000 to the United States. Id. at 9. It also agreed 
that ``each health care provider of each of its facilities including 
the [seven clinics] must have a separate DEA registration to 
administer, dispense, and prescribe a controlled substance for a 
legitimate medical purpose at each facility.'' Id. at 10. It further 
agreed that ``[i]f any controlled substance is purchased in order to be 
administered or dispensed, each facility is required to comply with the 
record-keeping and security requirements under 21 U.S.C. 801 to End and 
21 CFR 1300 to End.'' Id. at 10-11. Respondent signed the Agreement as 
the President of Z Healthcare Systems. Id. at 13.
    Thereafter, on September 20, 2010, Respondent entered into a 
Memorandum of Agreement (MOA) with the Agency, which imposed various 
conditions which give rise to the allegations at issue in this 
proceeding. GX 4, at 5. After noting the investigation that led to the 
Settlement Agreement, the MOA stated that it ``establishes the terms 
and conditions under which DEA will continue to permit [Respondent] to 
administer, dispense and prescribe any [s]chedules II though V 
controlled substance'' and for granting his February 2009 application 
for registration at the IMC--Woodlands clinic. Id. at 2. Of relevance 
here are the terms and conditions imposed under paragraph 8. It 
provides that:

    If controlled substances in Schedules II through V are purchased 
for any clinic, to be administered and/or dispensed to the clinic 
patients, [Respondent] shall cause to be made and maintained all DEA 
required documents and information including records, reports, and 
inventories. All required documentation shall be maintained as 
required by federal and Texas laws and regulations, pertaining to 
the administering, dispensing, and prescribing of controlled 
substances. If any controlled substance is administered or dispensed 
at any clinic included the [seven clinics], the health care provider 
doing the administering and/or dispensing to the patient shall be 
registered at the clinic as required by 21 U.S.C. 822(a)(2) and 21 
CFR 1301.12(a) and any administering and/or dispensing of a 
controlled substance shall be documented in the patient chart and 
made available for inspections as set forth in paragraph . . . 12 of 
this MOA.

    Id. at 2-3. Also of relevance are the terms and conditions included 
in paragraph 9. It provides that Respondent:

shall submit to the DEA Diversion Group Supervisor, DEA Houston 
Division Office . . . on a quarterly basis, the total number of 
controlled substances dispensed, to include the date dispensed, full 
name of patient, address of patient, name of controlled substance 
dispensed, quantity dispensed and dispenser's initials.

    Id. at 3. Respondent further ``agree[d] that any violation of this 
MOA may result in the initiation of proceedings to immediately suspend 
or revoke his . . . Certificate of Registration. Id. at 4.

The 2013 Investigation

    In April 2013, Respondent submitted an application to renew his 
registration, which ``was due to expire at the end of May.'' Tr. 86. On 
the application, Respondent was required to answer several questions 
including one which asked if his state medical license had been 
suspended. Id. at 91. Because Respondent provided a ``yes'' answer to 
this question, id., his application was not approved and was flagged 
for further review by a Diversion Investigator (DI). Id. at 84-85. The 
DI visited the Texas Medical Board's Web site and printed out the 
suspension order that Respondent referenced on his application. Id. at 
88; see also GX 2, at 1-11. However, the DI also found that the Board's 
Web site listed another order which was not mentioned on Respondent's 
application and printed it out.\4\ Tr. 88; GX 2 at 12-20. The DI also 
queried DEA's databases and determined that Respondent ``was under an 
MOA,'' and that the MOA's terms required ``that he had to report 
quarterly his dispensing in all [of] his clinics.'' Tr. 88. However, 
upon searching the Agency's case file for the previous investigation, 
the DI could only find one report, which she believed was dated April 
24, 2011. Tr. 107.
---------------------------------------------------------------------------

    \4\ While the DI testified that this was an order, it was 
actually a complaint, which was filed by the Board on September 5, 
2012. GX 2, at 19. However, the Board and Respondent settled the 
matter, and on February 12, 2014, the complaint was dismissed. Id. 
at 21.
---------------------------------------------------------------------------

    While the DI's initial attempts to contact Respondent were 
unsuccessful, on May 23, 2013, she spoke with Respondent and told him 
that she ``need[ed] a written statement regarding the board order that 
[he] reported.'' Id. at 97. According to the DI, Respondent ``basically 
was like, you can go find it yourself. And at some point, he hung up 
the phone.'' Id. at 98.
    Subsequently, on June 3, 2013, the DI sent Respondent an email 
which raised

[[Page 21413]]

three issues; Respondent replied to the email the next day. GX 36, at 
1-2. First, the DI asked Respondent to ``[p]lease provide a detailed 
explanation relating to the suspension of [his] Texas Medical License 
in 2008'' and to ``be specific as to the details as to why [his] 
medical clinics were deemed a `danger to the public good.' '' Id. at 2. 
Respondent replied that ``[t]his is irrelevant to the renewal of my DEA 
certificate. You are welcome to get the one sides [sic] version of the 
story on the [TMB] Web site.'' Id.
    Second, the DI wrote that ``[r]ecords indicate that you are 
currently under a Memorandum of Understanding (MOU) . . . signed on 
September 2010, however, there is [a] record of only one (1) required 
quarterly reporting [sic] from you. If you have [a] record that you 
previously sent the required quarterly reporting [sic] please forward 
copies from April 2011 to the present . . . .'' Id. Respondent replied: 
``As I said to you on the phone, you are mistaken. I am not, nor have I 
ever been under and [sic] MOU.'' Id.
    Finally, the DI asked Respondent to ``[p]lease describe your 
current medical practice[,] please include all locations and the names 
and numbers of any Physician Assistants . . . or Nurse Practitioners . 
. . that you currently supervise. Please indicate what changes you have 
made in your current medical practice that differentiates it from your 
current practice.'' Id. Respondent wrote back: ``Again this is 
irrelevant to the renewal of my DEA certificate.'' Id.
    However, on June 19, 2013, Respondent wrote to the DEA Houston 
Office to ``sincerely apologize for the misunderstanding that I was 
under with respect to the agreement we struck in 2010.'' GX 35, at 1. 
Respondent offered to answer the DI's questions either by email or in 
person. Id. He also enclosed 10 of the quarterly reports which the DI 
had previously requested and represented that ``I haven't practiced 
much in Texas since 2010, and I certainly haven't dispensed any 
medication to patients.'' Id.
    Each of these reports was a one-page letter, which was dated on an 
approximately quarterly basis beginning with January 29, 2011 and 
ending on April 24, 2013. GX 3, at 1-10. Each report contained the 
following statement:

    This letter is being sent to you as required by the DEA 
Memorandum of Agreement which was executed by me and your office. I 
am submitting the letter to indicate that since the signing of the 
Agreement neither I nor any of the IMC clinics, located in the State 
of Texas, have dispensed any controlled substances to their patients 
for their medical needs.

    GX 3, at 1-10. Subsequently, Respondent submitted two more reports 
(dated July 20 and September 25, 2013), which contained the same 
statement. Tr. 113; GX 3, at 11-12.
    Thereafter, the DI decided to investigate whether Respondent's 
clinics were in compliance with both the MOA's recordkeeping and 
registration conditions. Tr. 114. The DI proceeded to issue a subpoena 
to Respondent requesting the names of the practitioners at each clinic. 
Id. at 115. She also decided to conduct inspections of each clinic.\5\ 
Id.
---------------------------------------------------------------------------

    \5\ However, several other Investigators were involved in the 
inspections.
---------------------------------------------------------------------------

The IMC Cy-Fair Inspection

    On August 28, 2013, the DI, accompanied by another DI, went to the 
IMC Cy-Fair clinic where they presented their credentials to Respondent 
and issued a notice of inspection. Tr. 116. The DI asked Respondent if 
there were any controlled substances on hand; Respondent answered that 
he didn't know because he had just flown in that morning. Id. at 117. 
The DI asked the office manager, who told her that clinic did have 
controlled substances on hand. Id. The DI then asked Respondent if the 
controlled substances were ordered using his registration; he answered 
that he had ``no idea.'' Id. The DI also asked Respondent if someone 
else had used his registration to order the drugs; Respondent again 
answered that he had ``no idea.'' Id. The DI further asked to see the 
clinic's receiving records, and after being ``shown the bottle of 
testosterone that was in the cabinet in the back area . . . asked to 
see the dispensing log,'' which was provided by the office manager. Id. 
at 119.
    During the inspection, the office manager ``could not produce any 
[receiving] records,'' regardless of whether the purchases had been 
made before or after he commenced his employment at the clinic. Id. at 
119-20. Nor did the clinic have either an initial or biennial 
inventory. Id. at 119, 127. While the office manager said he would ``go 
to [the] storage area'' and look for the records, he produced no 
records other than a dispensing log for testosterone during the 
inspection, which lasted two to three hours. Id. at 120, 125. According 
to the DI, two days later, she received an email from the office 
manager which included a spreadsheet of the clinic's purchases. Id. at 
121.
    The DI further testified that there was ``[a] vial of 
testosterone'' on hand, which according to the clinic's employees, was 
``used for administering to patients.'' Id. at 121-22. According to the 
DI, the vial of testosterone did not bear a patient's name on its 
label.\6\ Id. at 124.
---------------------------------------------------------------------------

    \6\ According to the inventory conducted by the DIs and 
witnessed by Respondent, the vial contained 5 milliliters of the 
drug. GX 7.
---------------------------------------------------------------------------

    With respect to the dispensing log, the DI testified that the 
entries were not compliant because they did not list the dosage form of 
the testosterone, the patient's address, and in some instances, did not 
list the amount.\7\ Id. at 130. There was also an entry which was 
missing the initials of the dispenser, and multiple entries appeared to 
have the patient's signature or initials but not those of the 
dispenser. See id. at 130-31; see also GX 8, at 2, 5.
---------------------------------------------------------------------------

    \7\ While a number of the entries included the notation of 
``.5,'' they did not list the unit of measure. GX 8, at 5.
---------------------------------------------------------------------------

    As for the clinic's receipt records, see GX 9, they were comprised 
of a single sheet which contained 9 line items for purchases occurring 
between November 1, 2012 and August 6, 2013. Each entry stated: ``10 
Testosterone Cypionate 200MG/ML'' followed by the date and initials. GX 
9, at 1. According to the DI, these records were missing multiple items 
of required information including the name, address and registration 
number of the seller, the date it was shipped and date it was received. 
Tr. 132-33. On further questioning, the DI explained that the record 
did not list how much of the solution had been received as ``you don't 
know if'' the notation of ``10'' is for ``ten vials'' or ``if it's ten 
what.'' Id. at 133. Upon review of the receiving record, the DI emailed 
the office manager and asked him to clarify whether the initials were 
of the person ordering or receiving the drugs and whether the date was 
for the date the drugs were ordered or received; the office manager 
replied that he assumed that the initials were of the employee who 
ordered the drugs and that the date was the date of ordering. Id. at 
134-36; GX 38, at 2.
    Based on information provided by Respondent in response to the 
previously issued subpoena, as well as information obtained during 
interviews she conducted of the clinic employees, the DI determined the 
names of the practitioners who had worked at the clinic. Tr. 138. She 
also conducted a query of the DEA Registration database to determine if 
the clinic had a practitioner who was registered at the clinic from the 
date the MOA was signed (Sept. 20, 2010) through September 20, 2013. 
Id. at 139. According to the DI, ``between March 2,

[[Page 21414]]

2011 and September 26, 2011, there was no practitioner or mid-level 
practitioner [who was] registered at'' the clinic. GX 6; Tr. 139-40. 
According to the dispensing log, on September 13, 2011, testosterone 
was administered to patient C.F. Tr. 145; GX 8, at 5. Moreover, the 
dispensing log contains numerous entries showing that controlled 
substances were being dispensed at the clinic during the period covered 
by the MOA. Tr. 148.

The IMC Woodlands Inspection

    On September 11, 2013, the DI, accompanied by two DIs and an 
Intelligence Research Specialist, went to the IMC Woodlands clinic and 
presented their credentials and a notice of inspection to Nurse 
Practitioner Penny Norman. Id. at 150. The DI ``requested inventories, 
receiving records, [and] dispensing logs.'' Id. at 150-51. However, the 
clinic did not have any inventories or receipt records and was able to 
provide only its testosterone shot log, which was a single page, and 
which showed that the clinic had administered testosterone on 25 
occasions between November 20, 2012 and September 10, 2013. GX 20, at 
1; Tr. 155-56. The DI inventoried the controlled substances then on 
hand and found that ``[t]here was one bottle of testosterone on site,'' 
which did not bear a patient's name.\8\ Tr. 152. According to N.P. 
Norman, while some patients would obtain prescriptions for 
testosterone, the clinic's medical assistants (MAs) would administer 
testosterone to patients who ``had trouble giving it to themselves.'' 
\9\ Id. at 274. The MAs could not, however, ``give an injection unless 
[there was] an order from a provider.'' Id. at 279-80.
---------------------------------------------------------------------------

    \8\ While the DI testified that the results of the closing 
inventory were documented on GX 29, this document includes the 
notation of ``10 ml'' in the column for ``Bottle Count/ML'' and list 
``18 ml'' as the ``Quantity.'' GX 29. While this suggests that the 
clinic had more than one bottle of testosterone (as testified to by 
the DI), the inventory was signed by N.P. Norman and it is 
undisputed that the clinic had some testosterone on the premises on 
the date of the inspection.
    \9\ Ms. Norman also testified that the clinic ``would do . . . 
lab work'' on the patients ``to make sure'' they needed 
testosterone. Tr. 276.
---------------------------------------------------------------------------

    According to the DI, sometime in either February or March 2013, 
this clinic moved from the address of 25329 I-45 North, Suite B, The 
Woodlands, to 314 Sawdust Road, Suite 119, Spring, Texas. GX 19. While 
two practitioners were registered at the clinic's Woodlands location 
prior to the move, neither practitioner changed his/her registration to 
reflect the clinic's new location until September 13, 2013. Id. Thus, 
no practitioner was registered at the clinic from the date it moved 
until September 13, 2013. Id. However, the testosterone shot log shows 
that testosterone was administered on at least 14 occasions \10\ after 
the clinic had moved to its new location and neither practitioner was 
registered there. GX 20.
---------------------------------------------------------------------------

    \10\ As the evidence does not establish the date on which the 
clinic moved, the precise number of administrations cannot be 
ascertained. However, from April 1, 2013 through the date of the 
inspection, the clinic administered testosterone 14 times. GX 20.
---------------------------------------------------------------------------

The IMC Victoria Inspection

    On September 12, 2013, the DI, accompanied by another DI, went to 
the IMC Victoria clinic, and presented their credentials and a notice 
of inspection to Nurse Practitioner Ginger Carver. Tr. 160-61. The DIs 
asked for the clinic's ``inventories, receiving records, and 
administration . . . or dispensing logs.'' Id. at 161. The DIs also 
took a closing inventory and found that the clinic had both 
testosterone and phentermine on hand. GX 31. According to the DI, N.P. 
Carver told her that some of the testosterone was for ``office use.'' 
Tr. 161-63; 169 (testimony that the N.P. referred to the office use 
testosterone ``as the house bottle''). Moreover, at the bottom of the 
cabinet was a crate containing phentermine and testosterone in bags 
prepared by a pharmacy located in Houston (Empower Pharmacy) to which 
were attached receipts listing the names of patients. Tr. 164-65, 169-
70. According to the DI, the drugs were shipped to the clinic and were 
to be picked up by the patients. Id. at 163, 170. However, some of the 
testosterone was stored at the clinic for patients who were ``not 
comfortable with administering to themselves,'' and the clinic staff 
would administer the drugs when these patients ``came in for their 
appointment[s].'' Id. at 170.
    While Ms. Carver provided the DI with the clinic's testosterone 
injection log and its receiving records, she did not provide an 
inventory. Id. at 172, 185. The DI further testified that no 
practitioner was registered at the clinic between from May 22, 2013 and 
August 29, 2013. Id. at 176. The testosterone injection log shows, 
however, that the clinic administered testosterone at least 117 times 
during this period.\11\ See GX 26, at 1-5, 7, 12-14, 16. According to 
the DI, there were instances in which the name of the person 
administering the drugs was not identified. Tr. 179; see GX 26, at 3 
(Patient L.P.); id. at 4 (multiple patients). There were also entries 
that were not dated. Tr. 181; see GX 26, at 2-5, 15.
---------------------------------------------------------------------------

    \11\ In some instances, the administration log lists an 
administration but does not include the date on which it occurred.
---------------------------------------------------------------------------

    As for the receiving records, the DI testified that they did not 
comply with the Agency's regulations because they did not have the 
supplier's name, address, and DEA number. Tr. 185; see also GX 32. Nor 
did the records include the ordering registrant's name, address, and 
DEA number. Tr. 185; see also GX 32. Of note, GX 32 is a list of both 
controlled and non-controlled prescriptions filled by Empower Pharmacy 
on various dates between October 1, 2012 and May 31, 2013, which list a 
prescription number, the patient's name, the dates on which the 
prescriptions were written and filled, the quantity, drug name and 
strength, the ``doctor,'' the pharmacist's initials and price. GX 32. 
Some of the pages list a total number of prescriptions and a ``Total 
Price.'' See id. at 2, 6-7, 10. According to the DI, this document was 
a list of ``every prescription that was shipped to [the] clinic where 
the patient paid the clinic, picked up the prescription, and then the 
clinic . . . would pay the pharmacy whatever the total was at the end 
of the month.'' Tr. 186. The DI further testified that ``[w]ithin these 
records, there are purchases of testosterone in the clinic name.'' Id.; 
see, e.g. GX 32, at 1(RX# C177831 dispensed on 10/22/12 and listing 
patient as ``Victoria Clinic'').

The IMC Corpus Christi Inspection

    On September 13, 2013, the DI, accompanied by another DI, went to 
the IMC Corpus Christi clinic where they presented their credentials 
and a notice of inspection to Nurse Practitioner Allen Ford. Tr. 189. 
The DIs ``asked to see what controlled substances they had on hand,'' 
and after finding that the clinic had testosterone, ``asked for [the 
clinic's] inventories, records of receipt, and their dispensing log.'' 
Id. As the clinic's copier was not working, the clinic emailed various 
records to the DIs including its dispensing records and receiving 
records. Id. at 190, 196; GX 28. While the DIs along with NP Ford took 
an inventory of the controlled substances then on hand, the clinic did 
not have a prior inventory. GX 33.
    Of note, the clinic had 18 milliliters of testosterone 200 mg/ml on 
hand for ``office use,'' as well as 60 phentermine 45mg and 140 
testosterone 200 mg/ml that it was storing for patients. Id. According 
to the DI, the latter drugs were in sealed bags which had a patient 
name on them. Tr. 191.
    The DIs testified, however, that some of the dispensing records did 
not identify the drug, id. at 197, and even when the records identified 
that

[[Page 21415]]

testosterone was the drug being dispensed, the record did not state the 
``dosage form'' and the patient's address. Id. at 198. As for its 
receipt records, the clinic provided a single page with the title ``Log 
of Scripts'' and which was apparently created by Empower Pharmacy and 
lists ``[p]rescriptions filled between 8/29/2011 and 8/29/2013'' and 
the patient as ``CLINIC CORPUS CHRISTI.'' GX 28. The document shows 
that Empower filled 14 prescriptions for testosterone 200 mg/ml and one 
prescription for a drug called ``Scream Cream,'' \12\ which also 
contains testosterone, for the Corpus Christi clinic. Id.; see also Tr. 
410. According to the DI, this record did not comply with DEA's 
regulations for receiving records because it did not contain the 
clinic's address and registration number, the package size or form, 
``and you don't know how many was shipped, when it was shipped, and how 
it was shipped [sic].'' Tr. 199.
---------------------------------------------------------------------------

    \12\ According to Respondent, scream cream was compounded by a 
pharmacy and Super Scream Cream contained testosterone. Id. at 411-
12. Based on the prescription number for the scream cream, which is 
prefaced with a ``C'' for controlled, see GX 28, at 62; I find that 
this formulation was controlled.
---------------------------------------------------------------------------

    The DI also testified that when she asked how the clinic obtained 
the drugs for office use, ``the office manager indicated that Mr. Ford 
would issue a prescription . . . to actually say[] office use.'' Id. at 
193; id. at 194. The Government submitted copies of six prescriptions 
which the clinic issued to obtain testosterone ``for clinic use.'' GX 
34. Asked why she deemed these documents to be prescriptions rather 
than order forms, the DI explained that ``the document says, 
prescription, in multiple places''; she also testified that when she 
asked the clinic's office manager: ``[h]ow do you obtain the 
testosterone for your office use . . . she said, Mr. Ford issues a 
prescription.'' Tr. 205. The DI added that when she asked the office 
manager if she had ``copies of those prescriptions . . . this is what 
she presented.'' Id. The DI also observed that the forms list ``a date 
of birth'' for the clinic although she was ``not sure why.'' Id. Of 
further note, next to the word ``ALLERGIES'' the forms include the 
abbreviation ``NKDA'' (no known drug allergies). See GX 34. The forms 
also included the notation: ``This prescription may be filled with a 
generically equivalent drug product unless the words ``BRAND MEDICALLY 
NECESSARY'' are written in the practitioner's own handwriting on this 
prescription form.'' Id. Finally, each of the prescriptions was signed 
by a practitioner. GX 34.

The IMC FM 1960 West Inspection

    On September 11, 2013, two other DIs went to the IMC FM 1960 West 
clinic and conducted an inspection. Tr. 287; GX 14. During the 
inspection, the DIs determined that the clinic had controlled 
substances ``on hand'' and asked for the clinic's dispensing records, 
invoices, and an inventory. Tr. 288. On taking inventory of the 
controlled substance on hand, the DIs found that there was one vial of 
testosterone that did not bear a patient name. Id. A DI testified that 
she was told by clinic employees that the vial ``was used to administer 
testosterone [to] the[] male patients that would come in and get 
testosterone injections.'' Id. The DIs also found ``several bags of 
controlled substances that were . . . like from a pharmacy, that were 
already bagged up in patient names,'' id., and ``had a prescription 
number.'' Id. at 291. These drugs included progesterone/testosterone 
cream and phentermine capsules. GX 14.
    As for its records, the clinic did not have either an initial or 
biennial inventory. Tr. 288, 304-05. The clinic also did not have 
receipt records on hand but had Empower Pharmacy fax a two-page 
document bearing the caption: ``PATIENT Rx HISTORY REPORT'' and which 
also listed the clinic as the patient. Id. at 296, 305; GX 15. As 
submitted for the record, the document lists by prescription number and 
date various drugs distributed by Empower Pharmacy to the clinic 
including such controlled substances as testosterone and Scream Cream 
beginning on September 24, 2011 and ending on March 25, 2013. GX 15. 
The DI explained that the document did not comply with DEA regulations 
for receipt records because it does not contain the dates the drugs 
were received by the clinic. Tr. 296.
    As for the clinic's dispensing records, the clinic provided a one 
page ``Testosterone Shot Log.'' GX 17. The log listed 20 different 
instances of testosterone administrations by the patient's name and 
date beginning on September 27, 2011 through August 30, 2013. Id. While 
the log also listed the initials of a medical assistant, it contained 
no information as to the patient's address, the drug strength and the 
amount administered. Id.
    The DI testified that during the inspection she asked ``who is 
registered here?'' Tr. 298. Subsequently, she determined no one was 
``registered at the clinic at the time.'' Id. Moreover, the 
testosterone shot log and the receipt records show that testosterone 
was obtained on May 18, 2012 and administered the next day, and the 
lead DI found that ``between April 4, 2012 and July 22, 2012, there was 
no practitioner or mid-level practitioner registered at the clinic.'' 
GX 16. The lead DI also found that there was no practitioner or mid-
level practitioner registered at the clinic between October 5, 2012 and 
September 11, 2013. Id. Yet the receipt records show that the clinic 
obtained Scream Cream containing testosterone on or about October 20, 
2012 and testosterone 200mg/ml on January 28, 2013, and the 
testosterone shot log shows that the drug was administered to patients 
on November 9 and 29, and December 28, 2012, as well as on January 28, 
July 29, and August 30, 2013. See GX 15, at 2; GX 17. Because no 
practitioner was registered at the clinic at the time of the 
inspection, the DIs seized the clinic's controlled substances. Tr. 298.

The IMC Oak Hills Inspection

    On August 28, 2013, several DIs from the San Antonio District 
Office conducted an inspection of the IMC Oak Hills clinic. Id. at 308-
09, 314. During the inspection, one of the DIs interviewed N.P. Norman, 
who explained that clinic was ``a hormone and weight-loss clinic'' 
which ``used testosterone and ketamine.'' Id. at 309. According to the 
DI, she was told by both N.P. Norman and the clinic's ``chief financial 
manager'' that the clinic ordered testosterone ``for office use.'' Id. 
at 310-11. Ms. Norman further explained that a prescription would be 
sent to Empower Pharmacy and that the testosterone would be ``mailed to 
the clinic for dispensation, administration to the patients.'' Id. at 
310. Ms. Norman also told the DI that she was a floater who ``cover[ed] 
various clinics'' and that ``the same practice is [used] at all 
clinics.'' Id. at 311.
    According to another DI who participated in the inspection, an 
inventory was taken of the controlled substances on hand. GX 11. 
According to the document memorializing the results, apparently one 
bottle of testosterone 200 mg/ml was on hand; the document, however, 
lists the quantity as ``30 mg.'' \13\ Id.
---------------------------------------------------------------------------

    \13\ Given that the testosterone was in liquid form, it is not 
clear why the quantity was listed in milligrams rather than 
milliliters.
---------------------------------------------------------------------------

    One of the DIs also ``asked for the inventory records of the 
dispensations of the testosterone.'' Tr. 319. Among the records 
submitted into evidence is a testosterone log, which like other such 
logs, lists various administrations by date, patient name, dose, lot 
number of the drug, and the medical assistant's

[[Page 21416]]

initials. GX 13, at 1-3. The log, however, includes only the 
administrations between April 3 and August 24, 2013. See id. The clinic 
also provided the DIs with a document bearing the caption: 
``Testosterone Daily Drug Inventory Log.'' Id. at 4-28. The document 
shows the quantity of testosterone on hand on a daily basis beginning 
with January 1, 2011 but ending on March 30, 2013 in both the ``AM'' 
and ``PM,'' as well as the amounts dispensed, added to inventory, and 
wasted.\14\ Id.
---------------------------------------------------------------------------

    \14\ The Government also submitted an Exhibit showing the 
various practitioners who worked at the Oak Hills Clinic and the 
locations at which they were registered and the dates on which they 
were registered at the various locations. GX 12. According to the 
table, Oak Hills did not have a Practitioner or Mid-Level 
Practitioner registered at it between December 11 and 20, 2010. Id. 
The Government did not, however, produce any evidence the clinic had 
controlled substances on hand or that it dispensed any controlled 
substances during this period.
---------------------------------------------------------------------------

The IMC Southwest Inspection

    On September 11, 2013, DIs went to the IMC Southwest clinic in 
Houston, Texas, and conducted an inspection. Tr. 324. The DIs requested 
the clinic's inventories, receiving records, . . . transfer records, 
any records related to the controlled substances that [were] on hand,'' 
including dispensing records. Id. at 326. While the clinic provided 
dispensing records, it did not provide any inventories or receiving 
records. Id.
    The DIs took an inventory of the controlled substances on hand and 
found that the clinic had testosterone in the 200 mg/ml strength. GX 
30, at 1. As for the quantity of testosterone, the closing inventory 
simply notes the number ``13''; however, according to the DI, this 
represented 13 vials. See id.; Tr. 327 A separate inventory sheet 
documents that the clinic had on hand 630 tablets of phentermine 37.5 
mg, 90 tablets of phentermine 30 mg, and 90 tablets of phendimetrazine 
35 mg. GX 30, Id. at 2. According to the DI, none of the testosterone 
vials was labeled with the name of a specific patient. Tr. 327. 
However, there were specific patient names on some of the drugs lists 
on second page of the inventory. Id. at 327-28.
    The clinic did provide the DIs with a ``Testosterone Log,'' showing 
the date, the patient's name, the amount administered, and the medical 
assistant's initials. GX 23. The log's first entry is dated September 
4, 2012; the last is dated September 7, 2013. See id. at 1, 4. However, 
none of the entries list the strength of the testosterone or the 
patient's address. Tr. 329-30. A DI testified that one of the clinic's 
staff members had told him that another clinic had closed and that its 
controlled substances were transferred to the Southwest clinic. Id. at 
330-31. However, the Southwest clinic did not have any records 
documenting the transfer of the controlled substances.\15\ Id. at 331.
---------------------------------------------------------------------------

    \15\ In an exhibit showing the registered addresses of various 
IMC Southwest practitioners and the dates they were registered at 
the particular addresses, the following statements were made: ``The 
Dispensing/Administration Log provided during the NOI showed 127 
testosterone injections administered to 15 patients by Medical 
Assistants (Non-DEA Registrants),'' and that ``[b]etween November 7, 
2013 and May 6, 2014[,] there was no Practitioner or Mid-Level 
Practitioner registered at IMC Southwest.'' GX 22.
     However, the Government produced no evidence showing that this 
clinic either possessed or dispensed controlled substances during 
the November 7, 2013 through the May 6, 2014 period.
---------------------------------------------------------------------------

Evidence Related to Respondent's Quarterly Reports

    In addition to her testimony to the effect that Respondent failed 
to comply with the MOA because he did not timely file the required 
quarterly reports, the lead DI testified that the statements made in 
the reports were untrue. Tr. 213. As to why, the DI explained that 
``[b]ased upon the records received at each clinic, there was 
dispensing at the clinics during the periods covered in these quarterly 
statements.'' Id. The DI further testified that during her interactions 
with Respondent, whether in person, by phone or by email, there was no 
``discussion about what was meant by dispensing controlled 
substances.'' Id. She also testified that there was no ``discussion 
about whether the dates'' of the ``reports were accurate.'' Id. at 214.
    Later, on cross-examination, the lead DI testified that her 
understanding of the term ``dispense'' as used in the MOA ``goes back 
to'' the definition in 21 U.S.C. 802, which ``includes administering 
and actually physically . . . taking of the medication.'' Id. at 244. 
She also testified on cross-examination that Respondent violated the 
MOA because there were recordkeeping violations and because ``he was 
required to submit quarterly reports'' which he failed to do until ``he 
was basically pushed at some level to finally submit them.'' Id. at 
249.

Respondent's Evidence

    Respondent's case was comprised solely of his testimony and a 
single demonstrative exhibit which showed how his various businesses 
(including the clinics) were held. Respondent testified that he 
graduated with honors from Harvard and attended medical school at Johns 
Hopkins. Tr. 346. Thereafter, he ``did a transitional residency'' which 
involved rotating through various specialties. Id. at 349. After his 
residency, Respondent worked in a private practice for several doctors 
in the Cy-Fair section of Houston, Texas on a part-time basis; he also 
worked on a locum tenens basis and treated workers compensation 
patients. Id. at 349-51. According to Respondent, he has practiced 
family medicine throughout the entirety of his medical practice and 
considers himself to be a general practitioner. Id. at 350. Respondent 
eventually started his own practice and purchased another practice in 
the Cy-Fair section from a physician who was retiring. Id. at 353. 
While Respondent moved this practice to a new office, it is now known 
as the IMC Cy-Fair clinic. Id. Respondent also acquired a third 
practice from another physician who was retiring. Id. at 354.
    According to Respondent, in late 2004/early 2005, Respondent sold 
the practices and moved to Miami, Florida, where he was also licensed, 
intending to open some clinics, only to find that the barriers to entry 
were greater than in Texas. Id. at 356. Respondent then decided to 
concentrate on developing software for electronic medical records and 
moved to Washington State. Id. However, ``at the end of 2010,'' 
Respondent bought back the Texas practices. Id. at 358, 360.
    Regarding the MOA, Respondent testified that ``in 2006 . . . 
everything went down . . . [but] since I already sold the practices . . 
. it didn't matter to me whether I had a registration, because I wasn't 
working. I wasn't living in Texas or working in Texas.'' Id. at 359. 
However, after he knew that he ``was going to . . . buy the practices 
back . . . [he] started the process to finally get these matters 
resolved.'' Id. According to Respondent, he was advised by his counsel 
at the time that ``the easiest and best way'' to resolve the matters 
was to sign the MOA ``because otherwise [he was] going to have this 
protracted fight'' and the Agency had ``sat on the paperwork'' from 
2006 to 2009.\16\ Id. Respondent further explained that he had to have 
his DEA number to get on insurance plans as well as Medicare and 
Medicaid. Id. at 360. However, Respondent testified that

[[Page 21417]]

during the period when he did not own the clinics, he was ``involved as 
a consultant and [would] occasionally substitute'' for a practitioner. 
Id. at 373.
---------------------------------------------------------------------------

    \16\ Respondent was, however, allowed to continue to dispense 
controlled substances under his old registration and was provided 
with a letter to this effect. Id. at 361. While Respondent asserted 
that insurance companies and some pharmacies would not accept this 
letter, DEA does not control the actions of these entities. 
Moreover, given Respondent's testimony that he had moved to 
Washington State to concentrate on software development, it is 
unclear the extent to which he was even practicing medicine during 
this period.
---------------------------------------------------------------------------

    Turning to the period after he entered the MOA and repurchased the 
clinics (specifically, from late 2010 to 2013), Respondent testified 
that ``[e]veryone in the clinics [was] at least a medical assistant,'' 
and that ``[m]ost of the time, there was a midlevel provider, a 
physician assistant or a nurse practitioner, a supervising or 
collaborating physician, and myself.'' Id. at 381. Respondent added 
that ``[s]ometimes [he] was the collaborating physician or the 
supervising doctor,'' and ``[s]ometimes [he] wasn't.'' Id. Asked by the 
CALJ whether he was ``involved in the day-to-day operations of these 
clinics,'' Respondent explained that he ``wasn't every day, but [that 
he] was involved in . . . administration [and] management.'' Id. 
Respondent further testified that ``[s]ometimes [he] was involved in 
the hiring,'' that he was ``certainly . . . involved in training of the 
midlevels and the doctors, because many of the things that [the 
clinics] do . . . including bioidentical hormone replacement, are not 
taught in medical school or residency.'' Id.
    During this time period, Respondent ``was actually living in 
Washington State and coming to Texas when [he] had to'' because he was 
able to review the patients' electronic medical records from a remote 
location through a virtual private network (VPN). Id. at 382, 385. 
Respondent stated that on his visits to Texas he would generally visit 
each clinic and stay ``[f]rom several hours to days . . . depend[ing] 
on the clinic needs'' and ``whether the staff was performing well and 
what have you.'' Id. at 384.
    Respondent admitted that through the VPN, he could determine what 
services the clinics were providing. Id. at 385. While Respondent 
asserted that he ``couldn't see the invoices or the ordering'' because 
the drugs were ordered ``by fax or . . . calling in,'' through the 
electronic medical records he ``could see . . . if somebody . . . had 
ordered the administration of testosterone.'' Id. at 386-87. 
Continuing, Respondent explained that he ``couldn't see--like the 
office manager would call or send a prescription over to the pharmacy 
to get filled, so I couldn't see . . . if it was for general office 
use.'' Id. at 387.
    Respondent asserted that ``this is a common practice,'' maintaining 
that ``hospitals don't order anesthesia medications for every 
individual patient'' and that ``[t]hey order . . . stock bottles, and 
the anesthesiologist will use whatever is appropriate for a particular 
patient, because they don't know how long the surgery's going to go.'' 
Id. at 388. He then added: ``[t]hat happens every single day in every 
single hospital in this state, you know. You know, this is not 
something that's unique to these practices. And we're not even talking 
about that much medicine, for God's sake.'' Id.; see also id. at 450-52 
(analogizing the clinics' practice of using office stock to dispense to 
the use of standing orders at hospitals).
    Respondent maintained that the testosterone shots were administered 
pursuant to a standing order in the patients' charts, and that ``just 
because [the practitioner] isn't physically on site doesn't mean that 
order is not valid.'' Id. at 452; see also id. at 483. Respondent 
further testified that under the rules or policy of the Texas State 
Board, a standing order can last for ``three months.'' Id. at 453.
    Asked by his counsel what he did when he was physically at the 
clinics, Respondent testified that he would interview the staff and 
``maybe pull some patients aside and ask them . . . if they had a good 
experience or whether the staff was taking good care of them and things 
like that.'' Id. at 389. He would also do a ``physical inspection and 
make sure that everything was the way it should be in each practice,'' 
by which he meant that he ``would make sure that everything was neat 
and clean and in order'' and that ``everyone was just doing their [sic] 
job.'' Id. at 389-90.
    Respondent was then asked by his counsel, ``what, if anything, [he] 
did . . . with respect to ensuring compliance with . . . the controlled 
substance issues in this case?'' Id. at 390. Respondent answered: 
``first of all . . . we didn't do that many . . . of these injections . 
. . . And this is relevant, because . . . we're not talking about that 
much. Every clinic had one bottle of testosterone they would use, 
one.'' Id. After the CALJ told Respondent that he had not answered his 
counsel's question, Respondent testified: ``And, you know, so I would 
go, and I would make sure that . . . that everyone's being documented. 
Now, we have two forms of records here. One is the electronic records, 
and the other one was the physical log. Okay?'' Id. at 390-91.
    The CALJ then asked Respondent ``to tell us what steps you were 
taking to make sure that your clinics were . . . in compliance with 
the'' MOA? Id. at 391. Respondent answered:

    Okay. You know, all I did would [sic] glance at the logs. I 
would glance at them and make sure that they're being recorded with 
the name and the date and the amount that was--of medicine that was 
given. I would glance at them. That's just--you know, as part of my 
inspection, I would just glance. Like, you know, I wasn't 
scrutinizing them and measuring, you know, how much was left and 
things like that. I would just, you know--
    I think the staff is very honest, in general honest, and--

    Id. Finding the answer to ``still [be] going far afield,'' the CALJ 
summarized Respondent's testimony to the effect that he would interview 
staff members and ``some patients about their care,'' ``do a physical 
inspection,'' and ``glance at the logs.'' Id. at 392. The CALJ then 
asked Respondent if this was ``the sum total of what [he] did?'' Id. 
Respondent answered ``yes,'' and added that he would also train the 
``new personnel'' on the protocols and make sure ``that all their 
equipment was working,'' such as the fax machines and computers; he 
also stated that he would give the staff ``feedback on any comments'' 
from the patients. Id.
    With respect to the testosterone injections, Respondent explained 
that he ``would just look through [the physical log] and make sure they 
were keeping a log.'' Id. at 394-95. Asked what records the clinics 
maintained on ``the ordering side,'' Respondent asserted that ``most 
everybody maintained the invoices that, you know--because, you know, 
the clinic has to pay their [sic] bills every month and everything like 
that. So they maintained invoices. They would file it or scan it and 
put it onto . . . one of the servers.'' Id. at 395. Asked whether he 
had any information that the invoices from the pharmacy were being 
maintained, Respondent testified:

    I believe for the most part. I mean, most of the managers are 
fairly experienced, and they know that . . . part of their job is to 
scan the invoices, and to keep them on servers . . . as a record of 
the bills paid and things like that.
    They may not keep a physical copy always, but they're supposed 
to scan. Now, did I check every single time in all seven clinics? 
No. Of course, I mean, that's an incredible amount of work. I can't 
be in seven places at once. So I just would occasionally check, and 
I would ask, and I trusted my staff.

    Id. at 396.
    Respondent further asserted that he would ask his office managers: 
``Are you making sure you're scanning this? Are you making sure you're 
recording that? Are you making sure the medical assistants are doing--. 
I would ask the managers . . . and make sure that everything was being 
done . . . correctly.'' Id. Respondent then testified that he 
``absolutely'' did not ``physically check every single time,'' and 
asserted that ``[t]here's no way one person can do

[[Page 21418]]

all that work'' but that he was ``trying [his] best'' and ``trusting 
[his] staff . . . to do their job.'' Id. Asked by the CALJ if he 
thought this was a valid defense to the allegations that he failed to 
comply with the MOA, Respondent testified that he did not ``think it's 
a defense'' but that he had ``explanations on . . . things.'' Id. at 
397.
    The CALJ then asked Respondent if he thought that ``say[ing] that 
it's too much work'' was a valid excuse for failing to comply with the 
MOA. Id. at 398. Respondent answered: ``Unfortunately, Judge, medicine 
is not as good of a business as it used to be.'' Id. Instructed by the 
CALJ to ``[s]tick with my question,'' Respondent answered: ``Yes. So 
it's not about making money. It's about patient care. You know, the 
difference in revenue that doctors make now versus back in the past is 
night and day.'' Id. After noting Respondent's testimony to the effect 
``that patient care had very little to do with the things that you were 
looking at'' and that ``it's too much work to do more than what you're 
doing,'' the CALJ asked: ``What if the terms of the MOA required 
that?'' Id. at 398-99. Respondent answered:

    Yes, sir. The MOA required that, as I understood it, to send in 
reports for patients who are--that were dispensed medication. And 
because were [sic] not dispensing medication, I agreed to the MOA. 
So with respect to, you know, having logs, because the State didn't 
want the clinics to dispense, no one was going to dispense anymore, 
you know.

    Id. at 399. Respondent then insisted that ``[c]omplying with the 
MOA wasn't too much work'' and that ``[w]hat [he] meant was . . . 
checking all the deposits and all the invoices and all the payments and 
reconciling them with the--it wasn't having anything to do with the 
MOA.'' Id. After asserting that he was ``involved in patient care as 
well,'' Respondent added that he ``didn't mean it was too much to 
comply with the MO[A] . . . but I just meant like . . . micromanaging 
and checking every single little thing, that was--that's too much work. 
I didn't say that, you know--.'' Id. at 400-01.
    Subsequently, Respondent's counsel referred to paragraph 5 of the 
MOA and its ``reference to administer, dispense and prescribe'' \17\ 
and asked Respondent what he understood the term ``administer to 
mean?'' Id. at 406. Respondent answered: ``Administering means that I 
order myself or I physically give a patient a medication in the 
office'' by ``[d]irect application, orally or through injection or IV 
or what have you.'' Id. Then asked what he understood the term 
``dispense'' to mean, Respondent testified: ``Dispense means to give a 
patient, physically give a patient medication for self-administration 
outside of the office.'' Id. at 407.\18\
---------------------------------------------------------------------------

    \17\ This provision states: ``This Memorandum of Agreement 
(``MOA'') is between [Respondent] and DEA and establishes the terms 
and conditions under which DEA will continue to permit [Respondent] 
to administer, dispense and prescribe any Schedules II through V 
controlled substances. Respondent and DEA agree to the 
following[.]'' GX 4, at 2. The subsequent terms are, however, in 
separately numbered paragraphs. See id. at 2-5.
    \18\ As for the term ``prescribe,'' Respondent testified that it 
``means you're writing prescriptions, sending it to a pharmacy, and 
the patient's filling it at a pharmacy.'' Tr. 407.
---------------------------------------------------------------------------

    Turning to paragraph 8 of the MOA, Respondent testified that the 
clinics never used any schedule II controlled substances and that the 
drugs they used were appetite suppressants (phentermine, 
phendimetrazine, and diethylpropion \19\) and ``bioidentical 
hormones,'' i.e., testosterone. Id. at 407-09. Respondent also 
testified that the clinics always administered ``the same 
concentration'' of testosterone, 200 mg/ml, and did so ``by 
injection.'' Id. at 409-10.
---------------------------------------------------------------------------

    \19\ While Respondent testified that each of these three drugs 
is in schedule III, this is true only of phendimetrazine, as both 
phentermine and diethylpropion are in schedule IV. See 21 CFR 
1308.13(b); see also id. Sec.  1308.14(f).
---------------------------------------------------------------------------

    Respondent was then asked to explain his understanding of his 
obligations under paragraph 8. Id. at 412. As found above, this 
provision stated that ``[i]f controlled substances in [s]chedules II 
through V are purchased for any clinic, to be administered and/or 
dispensed to the clinic patients, [Respondent] shall cause to be made 
and maintained all DEA required documents and information including 
records, reports, and inventories.'' GX 4, at 2-3.\20\ Respondent 
answered: ``That for the patients that I saw and the patients that were 
under my care, that I made sure that there were appropriate records 
being kept.'' Tr. 413. Asked by the CALJ if this applied to ``all the 
patients in all these clinics,'' Respondent answered: ``No, sir. I 
wasn't the caregiver for most of these patients. I was the supervising 
doctor, but every midlevel has their credentials. Every single doctor 
also has their credentials.'' Id.
---------------------------------------------------------------------------

    \20\ This paragraph also provided that ``[a]ll required 
documentation shall be maintained as required by federal and Texas 
laws and regulations, pertaining to the administering, dispensing, 
and prescribing of controlled substances.'' GX 4, at 2-3.
---------------------------------------------------------------------------

    Upon further questioning by his counsel as to his understanding of 
his recordkeeping obligations under the MOA, Respondent testified that 
``there was no dispensing done in any of the practices at all. 
Administering, making sure that the medical assistants recorded the 
administration in the . . . electronic medical record and making sure 
they maintained the log that was consistent with the medical record.'' 
Id. at 418. Respondent also explained that ``every single prescription 
is recorded, because when you save the note, it saves the prescriptions 
that you wrote as part of the note.'' Id.
    Subsequently, Respondent was asked if he fully complied with the 
documentation requirements of paragraph 8. Id. at 431. Respondent 
answered: ``I feel as though I have, because there were logs kept, both 
electronically and written, and there was no diversion.'' Id. at 431-
32. Then asked if he knew ``whether opening inventories were taken . . 
. at these clinics,'' Respondent answered: ``There was hardly any 
testosterone ordered for any of the practices, and--.'' Id. at 432. 
After directing Respondent to answer the question, the CALJ asked: 
``Was there [an] opening inventory taken? And what is the answer to 
that question?'' Id. Respondent testified: ``My answer to the question 
is I don't know what opening inventory means. What does that mean?'' 
Id.
    Respondent was then asked by his counsel what was his 
``understanding of the inventory requirements . . . if any, under the 
MOA?'' Id. at 433. Respondent answered: ``Whenever medication is--
controlled medication is administered to a patient, that their name be 
recorded, the amount of the medication be recorded, the site, the date, 
you know, probably the lot number of the medication, the lot number.'' 
Id.
    Moreover, when asked on cross-examination if he ``acknowledge[d] 
that none of [the] clinics were [sic] able to produce an initial 
inventory,'' Respondent testified: ``No. It's not correct.'' Id. at 
471. Asked ``[w]hy is it not correct,'' Respondent answered: ``when you 
have people coming in, flashing badges and individually interviewing 
staff members, they're scared . . . they're worried, they're like, Oh, 
my God, am I going to get fired? . . . It is an incredible intrusion 
onto the practice. The staff doesn't even know . . . what an inventory 
is.'' Id. at 471-72. When then asked if there were inventories at the 
clinics that were not provided to the DIs, Respondent replied: ``Define 
inventory. There were logs kept of--.'' Id.
    Respondent subsequently admitted that he had neither read the Code 
of Federal Regulation's definition of the term inventory, nor the 
regulations requiring the keeping of inventories. Id.

[[Page 21419]]

at 473. The Government then asked: ``you don't even know what those 
regulations are, do you?'' Id. Respondent testified: ``I assumed that 
the logs were the inventory. Okay? I assumed that, foolishly. 
Admittedly, if that was my mistake, it's my mistake. I did not go 
through the Code and read it, nor did my attorneys or consultant tell 
me that that was what was necessary.'' Id. Respondent nonetheless 
continued to maintain that ``the way'' he saw it, ``the log served as 
the inventory.'' Id. Respondent subsequently maintained that he had not 
read the regulations since being served with the Show Cause Order 
because ``we're not administering anymore'' and ``there is no 
controlled substance at all on the premises,'' and thus, in his view, 
``it's not even relevant for me to read [the regulations] anymore.'' 
Id. at 474.
    Respondent was also asked by his counsel if he agreed ``that at 
least on some of the . . . [testosterone] logs, there was some missing 
information?'' Id. at 433. Respondent agreed, and he also agreed that 
he was not in compliance with these sections of paragraph 8. Id. at 
433-34. Respondent further testified that he accepted responsibility 
for not complying with paragraph 8. Id. at 434.
    Paragraph 8 also required, in relevant part, that ``[i]f any 
controlled substance is administered or dispensed at any [of the] 
clinic[s] . . . the health care provider doing the administering and/or 
dispensing to the patient shall be registered at the clinic as required 
by 21 U.S.C. 822(a)(2) and 21 CFR 1301.12(a).'' GX 4, at 3. Respondent 
explained that he understood his obligation under this provision as to 
``[m]ake sure that . . . the provider seeing the patient, unless it was 
. . . a temporary or a sub or something, that they changed their [sic] 
address on their [sic] DEA certificate to the practice, so they could 
administer. You don't have to have your address changed to prescribe, 
because you can go anywhere just to prescribe. But to administer . . . 
that would be the case.'' Tr. 419.
    Later, on cross-examination, Respondent maintained that the 
instances in which no practitioner was registered at a clinic and yet 
controlled substances were administered to patients ``was an 
oversight,'' and that ``[t]here may have been some mid levels who 
didn't . . . change their address.'' Id. at 464, 491. However, when 
pressed by the Government as to whether he was going to admit that this 
had occurred, Respondent answered: ``I don't know whether it's true or 
not.'' Id. at 465; see also id. at 490. Respondent nonetheless insisted 
that he was accepting responsibility for this misconduct. Id. at 465. 
Respondent also testified to the effect that even if there was no DEA-
registered person registered at a specific clinic, there were ``either 
mid-levels or doctors . . . and everybody was properly credentialed.'' 
Id. at 495.
    Turning to paragraph 9 of the MOA, as found above, it required the 
submission of a quarterly report to the DEA Field Division of ``the 
total number of controlled substances dispensed, to include the date 
dispensed, full name of patient, address of patient, name of controlled 
substance dispensed, quantity dispensed and dispenser's initials.'' GX 
4, at 3; Tr. 419-20. On questioning by his counsel, Respondent admitted 
that 10 of the reports were not timely submitted and that he violated 
paragraph 9. Id. at 420. As for why he backdated the reports when he 
did not submit them until June 19, 2013, Respondent testified he did so 
``[b]ecause they were required to be filed on a quarterly basis, so I 
just dated the correspondence to reflect . . . every particular 
quarter.'' Tr. 421-22.
    As for why he denied that he was subject to the MOA in his June 4, 
2013 email to the DI, see GX 36, Respondent testified that he did so 
``[b]ecause all of this was such an unpleasant experience, [so] I 
blocked it out of my mind.'' Id. at 426. Continuing, Respondent 
maintained:

    It was such an unpleasant experience, I literally blocked it out 
of my mind, so that I didn't, you know, remember, you know, having 
these sorts of things, and I relied on someone to remind me, and 
that didn't happen.
    And so I just, you know, blocked it out, I mean, because it was 
so unpleasant, and it was so humiliating, and it was so degrading, 
and it's--not to mention, you know, costing a fortune. And I 
literally just blocked it out. I mean, that's the--you know, 
athletes do this when they have a bad play. They block out the bad 
play, and they move on.
    And so that's--you know, that was my mindset. And so once I 
realized that, hey, I was wrong and [the DI] was right, I 
immediately sent a letter of apology and I sent in the reports.

    Id. at 426-27. Respondent further maintained that he ``had buried'' 
the events surrounding his entering the MOA ``so deep in my psyche, 
just so I could stay sane and stay working and productive, just like an 
athlete would do, like after a bad play.'' Id. at 427. Respondent then 
noted that ``[p]eople who are victims of crimes, people who are--they 
block out the bad experience, you know, and that's exactly what I did, 
because this was an ordeal, Judge. This was a harrowing, awful, 
horrible experience to go through.'' Id. at 428.
    Asked by his counsel ``what if any efforts'' he had made to prevent 
the recurrence of the issues raised regarding his compliance with the 
MOA, Respondent testified that ``there was obviously no dispensing.'' 
Id. at 436. Continuing, he testified that:

since [the DI's] inspections are so unpleasant and so invasive that 
I told everybody that we were not going to administer any medication 
to any patient anymore, despite the fact that many patients 
appreciated it because they don't feel comfortable self-injecting. 
It's actually a lot of work for the clinics to do that . . . It's 
very tedious. And we did it as a courtesy to the patients.

    Id. at 436-37. Later, Respondent maintained that the clinics have 
not ``administered anything for over a year.'' Id. at 448.
    As found above, during several of the inspections, the DIs found 
controlled substances that the Empower Pharmacy had shipped to the 
clinics which bore labels indicating that they had been dispensed for 
specific patients. Respondent testified that the clinics engaged in 
this practice ``[a]s a convenience to the patients,'' and ``they would 
act essentially as a delivery service for some of the patients that 
couldn't afford to have the medicines mail-ordered to . . . their 
homes,'' because ``it was an extra $15'' to have the prescription 
shipped to the patient's home Id. at 438. However, Respondent 
acknowledged that the clinics offered this service without regard to 
``a patient's financial status.'' Id. at 439. Respondent subsequently 
testified that the clinics ``don't do it anymore'' and that ``we're 
going to just send it to your home.'' Id. at 446. He also disputed the 
Government's suggestion that the clinics ``had to have a registered 
person at that clinic'' when the clinics accepted delivery and stored 
the prescriptions that were dispensed for specific patients. Id. at 
479-80; see also id. at 481 (testifying that in his view, it is 
``absolutely'' legal for a clinic to accept prescriptions for patients 
when no practitioner is registered at the clinic).\21\
---------------------------------------------------------------------------

    \21\ Notwithstanding that it elicited extensive testimony about 
this practice, the Government made no argument that it is illegal.
---------------------------------------------------------------------------

    Respondent testified that ``[a]t this point,'' the clinics have 
``zero'' physical contact with controlled substances, and that their 
controlled substance activity is limited to prescribing. Id. at 448. He 
also represented that that he does not intend for the clinics to have 
any physical contact with controlled substances ``at least for the 
duration of [his] license.'' Id. at 449.
    Respondent testified that it is permissible to use a prescription 
to

[[Page 21420]]

obtain a stock bottle, but maintained that he had never done so. Id. at 
454. Asked whether the clinic employees had ever done so, Respondent 
asserted that ``they didn't write it but they would order it under the 
DEA number of the person who was registered at that address.'' Id.; see 
also id. at 455 (testifying ``no' to CALJ's questions: ``Have staff 
members in your clinics, have they written prescriptions[?]''). 
However, on follow-up questioning by the CALJ, Respondent admitted that 
the ``mid levels'' had done so. Id. He also asserted that ``[i]t's 
absolutely proper'' for a mid-level practitioner to use a prescription 
to order controlled substances for office use because ``[t]hey have 
their own DEA certificate, and they have their own medical licenses.'' 
Id. at 456-57.
    Subsequently, Respondent's counsel asked him if there is ``anything 
relative to the nature of the investigation that you feel is important 
for the Judge to hear about?'' Id. at 457. Respondent replied:

    I do have a lot to say. Okay. The only reason we're here, Judge, 
the only reason why a senior attorney from the DEA's office flew 
down here on taxpayer money over some logs, okay, that may not have 
been kept correctly is because when--you mentioned yesterday why did 
it take 12 months between the time that you--you know, that you 
approved the registration, renewal registration. Right? Remember you 
asked that? And the time it happened.
    I'll tell you exactly why. I have a friend of mine who's a 
federal agent. He told me that I can make a congressional complaint. 
Okay.

    Id. at 458. Following an objection by the Government which was 
overruled, Respondent added:

    That I can make a congressional complaint against a federal 
agent who I feel has harassed me. And [the DI] has. Not only has she 
been ridiculously invasive in all my practices but she has attempted 
to vandalize and sabotage my relations with my vendors. Okay. And 
tried to ruin my business.
    She left me alone for months and months and months and months. 
As soon as I made the congressional complaint . . . [m]agically two 
months later I'm here with you taking up your time over this 
nonsense.

    Id. at 459. Respondent then asserted that the proceeding was ``pure 
retaliation'' for the ``congressional complaints'' and that ``[w]e made 
all the changes.'' Id. He maintained that ``[t]he only reason'' he had 
been subjected to this proceeding was because he had ``made the 
congressional complaint.'' Id. at 460. And he asserted:

[w]hat is a senior attorney of the DEA flying all the way down here 
arguing over logs? Are you kidding? Why wasn't he here in 2006? Why 
wasn't he here in in 2008? Why wasn't he here in 2010? Because it 
was such a tiny matter; like don't they have better things to do 
than this.
    I mean literally the reason they're doing it, it's a CYA, Judge. 
Okay? It's a CYA, because it's like, oh, my career's on the line, I 
might get fired over this, and so now we have to go full steam 
against this doctor.

    Id. Respondent subsequently testified that he had filed his 
complaints to members of Congress in the spring of 2015. Id. at 488. 
However, on rebuttal, the Government recalled the lead DI who testified 
that she had submitted the documentation requesting the issuance of an 
Order to Show Cause to DEA Headquarters in February 2014, well before 
Respondent complained to his representatives. Id. at 497, 499.
    Respondent further disputed that his clinics had engaged in any 
unlawful practices, testifying that ``[t]here's never anything unlawful 
being done. I've never been accused of doing anything unlawful.'' Id. 
at 476.

Discussion

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

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

    Id.
    ``[T]hese factors are . . . considered in the disjunctive.'' Robert 
A. Leslie, M.D., 68 FR 15227, 15230 (2003). It is well settled that I 
``may rely on any one or a combination of factors, and may give each 
factor the weight [I] deem[ ] appropriate in determining whether'' to 
suspend or revoke an existing registration or deny an application. Id.; 
see also MacKay v. DEA, 664 F.3d 808, 816 (10th Cir. 2011); Volkman v. 
DEA, 567 F.3d 215, 222 (6th Cir. 2009); Hoxie v. DEA, 419 F.3d 477, 482 
(6th Cir. 2005). Moreover, while I am required to consider each of the 
factors, I ``need not make explicit findings as to each one.'' MacKay, 
664 F.3d at 816 (quoting Volkman, 567 F.3d at 222); see also Hoxie, 419 
F.3d at 482.\22\
---------------------------------------------------------------------------

    \22\ In short, this is not a contest in which score is kept; the 
Agency is not required to mechanically count up the factors and 
determine how many favor the Government and how many favor the 
registrant/applicant. Rather, it is an inquiry which focuses on 
protecting the public interest; what matters is the seriousness of 
the registrant's or applicant's misconduct. Jayam Krishna-Iyer, 74 
FR 459, 462 (2009). Accordingly, as the Tenth Circuit has 
recognized, findings under a single factor can support the 
revocation of a registration. MacKay, 664 F.3d at 821. Likewise, 
findings under a single factor can support the denial of an 
application.
---------------------------------------------------------------------------

    Under the Agency's regulation, ``[a]t any hearing for the 
revocation or suspension of a registration, the Administration shall 
have the burden of proving that the requirements for such revocation or 
suspension pursuant to . . . 21 U.S.C. [Sec.  ] 824(a) . . . are 
satisfied.'' 21 CFR 1301.44(e). In this matter, while I have considered 
all of the factors, I conclude that the Government's evidence with 
respect to Factors Two, Four, and Five \23\ supports

[[Page 21421]]

the conclusion that Respondent and the entities he controlled violated 
both provisions of the CSA and DEA regulations, as well as provisions 
of the MOA, which although they do not constitute violations of law or 
regulation, nonetheless constitute actionable misconduct which render 
his continued ``registration inconsistent with the public interest.'' 
21 U.S.C. 823(f), 824(a)(4). Because I further agree with the ALJ's 
finding that Respondent has not accepted responsibility for his 
misconduct, I also agree with the ALJ that he has not rebutted the 
Government's prima facie showing. Because I find that Respondent's 
misconduct is egregious, I will order that Respondent's registration be 
revoked and that any pending application be denied.
---------------------------------------------------------------------------

    \23\ As to factor one, the Government introduced into evidence 
the Texas Medical Board's 2008 Order Granting Temporary Suspension 
of his Texas medical license and the Board's subsequent Termination 
of Temporary Suspension and Entry of Agreed Order. GX 2, at 1-11. 
Moreover, in September 2012, the Board filed a complaint alleging 
various violations with respect to the prescribing of drugs 
including progesterone, testosterone, and phentermine by Respondent 
and mid-level practitioners he supervised. Id. at 13-16. However, 
the complaint was eventually dismissed on the Board's motion after 
the parties resolved the matter. Id. at 21. Thus, Respondent 
currently possesses authority under Texas law to dispense controlled 
substances. Moreover, there is no evidence that the Texas Medical 
Board has made a recommendation to the Agency with respect to 
Respondent. See 21 U.S.C. 823(f)(1). While Respondent is also 
registered in Florida, there is no evidence as to the status of his 
Florida medical license and the Florida Board has likewise made no 
recommendation to the Agency with respect to Respondent.
     In any event, the Government does not rely on factor one at 
all. See Gov. Proposed Findings of Fact, Conclusions of Law, and 
Argument 20-29. However, even assuming that Respondent currently 
possesses authority to dispense controlled substances under Texas 
law and thus meets a prerequisite for maintaining his registration, 
this finding is not dispositive of the public interest inquiry. See 
Mortimer Levin, 57 FR 8680, 8681 (1992) (``[T]he Controlled 
Substances Act requires that the Administrator . . . make an 
independent determination [from that made by state officials] as to 
whether the granting of controlled substance privileges would be in 
the public interest.''). Accordingly, this factor is not dispositive 
either for, or against, the revocation of Respondent's registration. 
Paul Weir Battershell, 76 FR 44359, 44366 (2011) (citing Edmund 
Chein, 72 FR 6580, 6590 (2007), pet. for rev. denied, Chein v. DEA, 
533 F.3d 828 (D.C. Cir. 2008)).
     As to factor three, I acknowledge that there is no evidence 
that Respondent has been convicted of an offense under either 
federal or state law ``relating to the manufacture, distribution or 
dispensing of controlled substances.'' 21 U.S.C. 823(f)(3). However, 
there are a number of reasons why even a person who has engaged in 
criminal misconduct may never have been convicted of an offense 
under this factor, let alone prosecuted for one. Dewey C. MacKay, 75 
FR 49956, 49973 (2010), pet. for rev. denied, MacKay v. DEA, 664 
F.3d 808 (10th Cir. 2011). The Agency has therefore held that ``the 
absence of such a conviction is of considerably less consequence in 
the public interest inquiry'' and is therefore not dispositive. Id.
---------------------------------------------------------------------------

Factor Two--Respondent's Experience in Dispensing Controlled Substances

    The evidence shows that Respondent was previously the subject of an 
agency investigation of several IMC clinics which were allegedly 
``dispensing controlled substances to their patients without a valid 
registration.'' GX 4, at 1. While Respondent was not required to admit 
to liability for any violation of federal law, the Agency agreed to 
grant his renewal application subject to his entering the MOA. The MOA 
specifically states that it ``establishes the terms and conditions 
under which DEA . . . continues to permit [him] to administer, dispense 
and prescribe any [s]chedules II through V controlled substance.'' Id. 
at 2. The MOA also states that Respondent's ``new registration will 
remain subject to applicable law and the terms and condition of this 
Memorandum of Agreement.'' Id. (emphasis added).
    The CALJ acknowledged that a registrant's conduct that violates the 
terms imposed by an MOA can constitute acts rendering a registration 
``inconsistent with the public interest,'' even when the violations do 
not amount to a violation of the CSA or its implementing regulations. 
R.D. at 45 (citing, inter alia, Fredal Pharmacy, 55 FR 53592, 53593 
(1990)). The CALJ, however, asserted that ``[a]gency precedent has been 
less sure-footed about where among the public interest factors an MOA 
violation should be considered.'' Id. The CALJ then discussed several 
agency decisions that considered MOA violations under Factor Two and 
asserted that ``the analyses employed by the Agency in'' these cases--
which he characterized as ``lumping together activities which have no 
direct bearing on dispensing into Factor [Two]'' and as ``analytically 
infirm''--``should be abandoned.'' Id. at 46 (discussing Mark De La 
Lama, 76 FR 20011, 20018 (2011); Erwin E. Feldman, 76 FR 16835, 16838 
(2011); Michael J. Septer, 61 FR 53762, 53765 (1996)).
    I disagree that Factor Two requires that an activity have a 
``direct bearing on dispensing.'' Here, as in previous cases, the MOA 
``established the terms and conditions under which [the Agency] will 
continue to permit [Respondent] to administer, dispense and prescribe 
and [s]chedules II through V controlled substances'' and his new 
registration is subject to the MOA's ``terms and conditions.'' Because 
that registration provides the authority by which Respondent may 
dispense controlled substances, any violation of it is properly 
considered as relevant in assessing his ``experience in dispensing . . 
. controlled substances.'' Indeed, even the various MOA violations 
discussed in other cases, which, in the CALJ's view, do not have a 
``direct bearing on dispensing,'' were indisputably relevant in 
assessing the registrant's experience in dispensing controlled 
substances.
    Discussing Septer, the CALJ asserts that the registrant's violation 
of an MOA provision requiring ``daily audits . . . clearly involve[d] 
no `experience in dispensing.' '' R.D. 46. Quite the contrary, the MOA 
provision at issue in Septer was imposed after both DEA and state-level 
investigators conducted an accountability audit at the practitioner's 
office and found ``a shortage of approximately 190,000 to 203,000 
dosage units of [s]chedule III and IV controlled substances.'' 61 FR at 
53762. Whether these drugs were ordered by Dr. Septer or one of his 
employees, the drugs were ordered under his practitioner's 
registration, pursuant to which he was authorized to dispense 
controlled substances, and thus, his inability to account for the drugs 
was part of his ``experience in dispensing.'' As the MOA's provision 
was clearly intended to prevent a recurrence of this experience, and 
the Agency had an obviously compelling interest in ensuring that his 
more recent experience did not repeat his earlier experience, the MOA 
violation was clearly relevant under Factor Two.\24\
---------------------------------------------------------------------------

    \24\ DEA has long interpreted Factor Two to encompass not only 
those activities that are included in the statutory definition of 
dispensing but also those that are ancillary to those activities 
such as handling or possessing controlled substances.
---------------------------------------------------------------------------

    The CALJ suggests that in Mark De La Lama, 76 FR 20011, the Agency 
improperly considered MOA violations under Factor Two that included the 
respondent's failure to maintain a prescription log and failure to 
notify the local DEA office that he was transferring his registration 
to another address, asserting that ``neither activity involves 
`experience in dispensing.' '' \25\ R.D. 46. While the MOA's condition 
that the respondent maintain a prescription log exceeded the 
requirements of the CSA and DEA regulations, the respondent's failure 
to comply was clearly relevant in assessing his experience in 
dispensing controlled substances. As for his failure to notify the 
local DEA office when he changed his practice location, the whole point 
of the MOA was to ensure that the Agency ``would be able to monitor 
Respondent's handling [which includes the dispensing] of controlled 
substances.'' 76 FR 20014. As during the period following the issuance 
of the registration which was conditioned on his entering the MOA, the 
respondent would accrue experience in dispensing controlled 
substances--which the Agency had a heightened interest in monitoring 
given his history of controlled substance offenses--Respondent's 
violations of both MOA conditions clearly involved conduct relevant in 
assessing his experience in dispensing controlled substances.
---------------------------------------------------------------------------

    \25\ These conditions were imposed based on the respondent's 
conviction for drug distribution offenses. 76 FR at 20018.
---------------------------------------------------------------------------

    The CALJ also suggests that in Erwin E. Feldman, 76 FR 16835 
(2011), the Agency improperly considered certain violations under 
Factor Two even though they did not involve prescribing. According to 
the CALJ, such violations as failing to maintain a prescription log, 
failing to ``maintain[] specified patient charts for specified periods 
of time,'' failing to ``maintain[ ] state prescription monitoring 
program reports for a specified period of time,'' and not ``notifying 
the DEA about the initiation of any state administrative proceedings'' 
do not involve prescribing and thus ``have no direct bearing on 
dispensing'' under Factor Two. R.D. 46.

[[Page 21422]]

    However, a careful reading of the Agency's findings in Feldman 
shows that the Agency did not even find that the physician violated the 
MOA by failing to maintain patient charts or prescription monitoring 
reports. See 76 FR at 16837-88. However, even if it had, each of the 
MOA's provisions was a condition placed on the physician's authority to 
dispense controlled substances, and thus, subsequent allegations that 
he violated the MOA were clearly relevant in assessing his experience 
in dispensing controlled substances. Moreover, while in general terms 
the MOA's requirement that he notify DEA about the initiation of any 
state administrative proceedings may not have necessarily involved the 
dispensing of controlled substances, the physician was accused by the 
State of both ``prescribing drugs without a lawful diagnostic or 
therapeutic purpose'' and ``prescribing Suboxone to treat opioid 
dependence without having obtained the necessary certification.'' Id. 
at 16837 (int. quotations and citations omitted). Thus, even aside from 
the fact that it was a condition on his registration, the physician's 
violation of this provision was clearly relevant in assessing his 
experience in dispensing controlled substances.
    In any event, misconduct is misconduct whether it is relevant under 
Factor Two, Factor Four,\26\ or Factor Five, or multiple factors. And 
although the CALJ asserts that ``[a]s agency precedent now stands, the 
distinction between the considerations of Factor [Two] are nearly 
imperceptible in this case from those considered under Factor [Four]'' 
and that ``[t]he risk of this approach is that evidence offered against 
the Respondent is considered and weighted twice,'' R.D. 43, the Agency 
has repeatedly explained that it does not mechanically count up the 
factors and determine how many favor the Government versus how many 
favor the respondent. See Krishna-Iyer, 74 FR at 459, 462. Rather, the 
inquiry focuses on protecting the public interest; what matters is the 
seriousness of the registrant's or applicant's misconduct.\27\Id.
---------------------------------------------------------------------------

    \26\ The CALJ opines that ``several of the violations in Feldman 
were also likely violations of applicable state, federal, and/or 
local laws, but there was no mention of Factor 4, even though in an 
earlier case, OTC Distribution Co., 68 FR 70538, 70542 (2003), the 
Agency considered the respondent's failure to comply with the terms 
of the MOA as a failure to comply with applicable law, despite the 
fact that the conduct was not unlawful, but merely a violation of 
the MOA in that case.'' R.D. 46 (footnotes omitted). With respect to 
Feldman, the CALJ speculated that the respondent's ``multiple-
refills scrips most likely violated'' 21 CFR 1306.12, which allows 
practitioners to issue multiple prescriptions to provide up to a 90-
day supply of a schedule II controlled substance. Id. n.106. 
However, in Feldman, the Government made no such allegation and the 
Agency made no such finding. Indeed, with respect to the physician's 
violation of the MOA's condition which limited him to authorizing 
only one refill, the refills were for only schedule III and IV 
controlled substances. 76 FR at 16836-37. Indeed, none of the 
Decision's findings involved schedule II drugs. See id.
     As for the CALJ's discussion of OTC Distribution, I agree that 
the mere failure to comply with the term of an MOA does not 
necessarily establish a violation of an ``applicable . . . law[ ] 
related to controlled substances.'' 21 U.S.C. 823(f). While this 
factor has long been interpreted as encompassing both laws and duly 
enacted regulations, most MOA terms are the product of negotiation 
between the Agency and an applicant/registrant and do not arise from 
either the legislative or rulemaking process. Even where an MOA term 
imposes the same requirements as a law or regulation, a violation of 
that term falls under Factor Four because it is also a violation of 
a duly enacted law or regulation.
    \27\ The CALJ also opines that under Agency precedent, ``where 
the Government produces no evidence of other misconduct over the 
course of a lengthy career as a registrant, it will assume it to be 
benign and not consider under Factor [Two] (as Congress intended), 
but rather, as a matter of sanction discretion.'' R.D. 43. However, 
while the Agency's decisions typically set forth the specific public 
interest factors in discussing the evidence offered by the 
Government in support of its prima facie case, this does not mean 
that a respondent's evidence of a lengthy history of compliance is 
given no weight in the public interest determination. In a 
revocation proceeding, the statute specifically directs the Agency 
to determine whether the registrant ``has committed such acts as 
would render his registration . . . inconsistent with the public 
interest.'' 21 U.S.C. 824(a)(4) (emphasis added). The public 
interest factors of section 823(f) simply shape the scope of the 
relevant evidence in the proceeding, and given the nature of this 
inquiry, the Agency properly considers a respondent's evidence of a 
lengthy history of compliance after the Government makes out its 
prima facie case, as determining what sanction is necessary to 
protect the public interest is the ultimate purpose of these 
provisions.
    As for the CALJ's discussion of Krishna-Iyer v. DEA, 249 Fed. 
App'x 159 (11th Cir. 2007), in which he asserts that this Agency 
failed to follow the Eleventh Circuit's order on remand, as well as 
his assertion that while the Tenth Circuit in MacKay v. DEA ``upheld 
an Agency final order that included the Krishna-Iyer analysis, but 
the Agency's view of Factor [Two] was not a focus of the Court's 
decision,'' R.D. 41, these mistaken contentions have been thoroughly 
addressed and rejected. See Wesley Pope, M.D., 82 FR 14944, 14981-82 
(2017). I therefore decline to re-address the CALJ's discussion.
---------------------------------------------------------------------------

    The Show Cause Order also alleged that Respondent violated various 
provisions of the MOA which do not themselves rise to the level of 
violations of the CSA or DEA regulations. These include the allegation 
that Respondent violated paragraph 8 of the MOA because controlled 
substances ``were dispensed and/or administered'' to patients at 
various clinics when the clinics did not have a practitioner who was 
registered at the clinic. ALJ Ex. 1, at 2. They also include the 
allegation that Respondent violated paragraph 9 of the MOA by failing 
to submit quarterly reports of his controlled substance dispensings to 
the DEA Houston Office.

Failure To Ensure That if Controlled Substances Were Administered or 
Dispensed at a Clinic, the Provider Doing the Administration or 
Dispensing Was Registered at the Clinic

    Under the CSA's registration provisions, ``[a] separate 
registration shall be required at each principal place of business or 
professional practice where the applicant . . . dispenses controlled 
substances.'' 21 U.S.C. 822(e). See also 21 CFR 1301.12(a) (``A 
separate registration is required for each principal place of business 
or professional practice at one general physical location where 
controlled substances are . . . dispensed by a person.''). While by 
regulation DEA has exempted from the separate registration provision 
``[a]n office used by a practitioner (who is registered at another 
location in the State . . .) where controlled substances are prescribed 
but neither administered nor otherwise dispensed as a regular part of 
the professional practice of the practitioner at such office and where 
no supplies of controlled substances are maintained,'' id. 
1301.12(b)(2) (emphasis added), this provision makes plain that if 
controlled substances are administered at a clinic, the practitioner 
must be registered at that location.
    As found above, in paragraph 8 of the MOA, Respondent agreed that 
``[i]f any controlled substance is administered or dispensed at any 
clinic . . . the health care provider doing the administering and/or 
dispensing to the patient shall be registered at the clinic as required 
by 21 U.S.C. 822(a)(2) \28\ and 21 CFR 1301.12(a).'' While the 
Government does not argue that Respondent personally violated the CSA's 
separate registration provision, the evidence is clear that several of 
the clinics administered testosterone to patients during various time 
periods when there was no practitioner registered at the particular 
clinic.
---------------------------------------------------------------------------

    \28\ Under this provision, ``[e]very person who dispenses, or 
who proposes to dispense, any controlled substance, shall obtain 
from the Attorney General a registration issued in accordance with 
the rules and regulations promulgated by him.'' 21 U.S.C. 822(a)(2).
---------------------------------------------------------------------------

    With respect to the Cy-Fair clinic, the evidence shows that one 
testosterone shot was administered when no practitioner was registered 
at the clinic. GX 6, at 1; GX 8, at 5. As for the FM 1960 clinic, the 
evidence shows that one testosterone shot was administered on May 19, 
2012, on which date no practitioner was registered at the clinic and 
five testosterone shots were administered between October 5, 2012 and 
September 11, 2013, during which

[[Page 21423]]

period no practitioner was registered at the clinic. GXs 16, 17.
    With respect to the Woodlands clinic, the evidence shows that no 
practitioner was registered at the clinic from the date it moved (in 
either February or March 2013) to its new location until two days after 
the inspection and that during this period, testosterone was 
administered to patients at least 14 times. GXs 19 & 20. Yet the 
evidence also shows that the two practitioners who worked at the clinic 
had been registered at its previous location, and thus the evidence 
suggests that the practitioners simply forgot to change their 
registered address.
    While these are relatively minor violations, the evidence with 
respect to the Victoria clinic is of considerably greater concern. 
There, testosterone was administered at least 117 times during a more 
than three-month period when no practitioner was registered at the 
clinic.\29\ See GX 26, at 1-5, 7, 12-14, 16; GX 25. Given the scope of 
the controlled substance activities being engaged in by the Victoria 
clinic, Respondent failure to ensure that clinic was in compliance with 
the CSA is an egregious violation of the MOA.
---------------------------------------------------------------------------

    \29\ In some instances, the log entry was missing the date of 
the administration. See, e.g., GX 26, at 4. However, where the 
entries before and after such an entry were dated and those dates 
were within the period in which no practitioner was registered at 
the clinic, those administrations are deemed to have occurred on or 
between the entries which were dated and within the period. 
Moreover, even if I ignored entirely the undated entries, the 
evidence would still support a finding that there were 110 
administrations which occurred during the period in which a 
practitioner was not registered at the clinic.
---------------------------------------------------------------------------

Failure To Timely File Accurate Quarterly Dispensing Reports

    As found above, in the MOA, Respondent also agreed to submit to the 
Houston DEA Field Division Office a report, ``on a quarterly basis, 
[of] the total number of controlled substances dispensed, to include 
the date dispensed, full name of patient, address of patient, name of 
controlled substance dispensed, quantity dispensed and dispenser's 
initials.'' The Government alleged that Respondent violated this 
provision for two reasons: (1) He submitted untimely reports, and (2) 
the reports he submitted contained ``false statements'' because he 
denied ``that controlled substances had been dispensed from his 
clinics.'' Govt. Post-Hrng. Br. 23.
    Neither the Act nor the Agency's regulations require a practitioner 
to file quarterly reports of their dispensings. Nonetheless, the Agency 
has held that a violation of an MOA provision constitutes actionable 
misconduct under the public interest standard even if does not amount 
to a violation of the Act or an agency regulation. See Erwin E. 
Feldman, 76 FR 16835, 16838 (2011) (citing Fredal Pharmacy, 55 FR 
53592, 53593 (1990)).
    Here, Respondent admitted that he did not timely file 10 of the 
reports and that he violated paragraph 9 of the MOA by failing to 
timely file the reports. Tr. 4209. While the CALJ found that the 
evidence only supports a finding that Respondent did not timely file 
eight of the reports, either way, the evidence supports the conclusion 
that Respondent repeatedly violated the MOA by failing to timely file 
the reports.
    I reject, however, the Government's contention that Respondent also 
violated the MOA because the reports falsely stated that the clinics 
had dispensed no controlled substances during the various quarterly 
periods when the clinics were administering testosterone injections to 
various patients. ALJ Ex. 1, at 3, ] 5(c); Gov. Post-Hrng. Br. 21. In 
support of its contention, the Government invokes the CSA's definitions 
of the terms ``dispense'' and ``dispenser.'' Gov. Post-Hrng. Br. 23 
(citing 21 U.S.C. 802(10)). Notably, the CSA defines the term 
``dispense'' to ``mean[ ] to deliver a controlled substance to an 
ultimate user . . . by, or pursuant to the lawful order of, a 
practitioner, including the prescribing and administering of a 
controlled substance,'' and it defines ``[t]he term `dispenser' [to] 
mean[ ] a practitioner who so delivers a controlled substance to an 
ultimate user.'' 21 U.S.C. 802(10).
    The argument is nonetheless unavailing because the Government 
ignores that numerous provisions of the MOA differentiate the terms 
``dispense'' (and ``dispensing'') from the terms ``administer'' (and 
``administering'') and ``prescribe'' (and ``prescribing''). For 
example, paragraph two states that ``DEA continued to allow 
[Respondent] to administer, dispense, and prescribe controlled 
substances,'' GX 4, at 1, ] 2 (emphasis added); and paragraph five 
states that ``[t]his Memorandum of Agreement . . . is between 
[Respondent] and DEA and establishes the terms and conditions under 
which DEA will continue to permit [Respondent] to administer, dispense 
and prescribe any Schedules II through V controlled substance.'' Id. at 
2, ] 5 (emphasis added).
    So too, in paragraph seven, Respondent ``agree[d] to abide by all 
federal and Texas laws and regulations including statutes and 
regulations related to the administering, dispensing and prescribing of 
controlled substances.'' Id. at 2, ] 7 (emphasis added). Likewise, 
paragraph 8 provides that:

    If controlled substances in Schedules II though V are purchased 
for any clinic, to be administered and/or dispensed to clinic 
patients, [Respondent] shall cause to be made and maintained all DEA 
required documents and information including records, reports, and 
inventories. . . . . If any controlled substance is administered or 
dispensed at any clinic . . . the health care provider doing the 
administering and/or dispensing to the patient shall be registered 
at the clinic as required by 21 U.S.C. 822 (a)(2) and 21 CFR 
1301.12(a) and any administering and/or dispensing of a controlled 
substance shall be documented in the patient chart . . . .

    Id. at 2-3, ] 8 (emphasis added). And finally, paragraph 11 states 
that Respondent ``will not administer, dispense, or prescribe a 
controlled substance to any individual without a doctor-patient 
relationship and a treatment plan outlining the purpose for 
administering, dispensing or prescribing a controlled substance for a 
legitimate medical purpose.'' Id. at 3, ] 11 (emphasis added).
    By contrast, the reporting obligation of paragraph 9 makes 
reference only to ``the total number of controlled substances 
dispensed, to include the date dispensed . . . name of controlled 
substances dispensed, quantity dispensed and dispenser's initials.'' 
Id. at 3, ] 9 (emphasis added). While the Government points to the 
statutory definition of the term ``dispense,'' the argument fails 
because the MOA contains no provision which explicitly defines the term 
``dispense'' as encompassing the administration of a controlled 
substance or which incorporates by reference the CSA's definition of 
term.\30\ Thus, given the

[[Page 21424]]

numerous instances, both before and after paragraph 9, in which the MOA 
differentiates between the terms ``dispense'' and ``administer'' (even 
though the latter is expressly included in the CSA's definition of the 
former), the Government cannot persuasively argue that the MOA clearly 
imposed on Respondent the obligation to file a quarterly report of the 
clinic's administrations.
---------------------------------------------------------------------------

    \30\ In its post-hearing brief, the Government notes 
Respondent's testimony to the effect that ``[t]he state and the 
federal definition[s] of . . . administering [ ] and dispensing are 
different.'' Gov. Post-Hrng. Br. 17. Correctly noting that the Texas 
Health and Safety Code defines the term ``dispense'' to `` `include[ 
] the prescribing, administering, packaging, labeling, or 
compounding necessary to prepare the substance for delivery,' '' the 
Government argues that Respondent's claim that he relied on the 
state definition is without merit. Id. at 24 (quoting Tex. Health & 
Safety code Sec.  481.001(12)).
    The Government ignores, however, that the Rules of the Texas 
Medical Board define the term ``[d]ispense'' as only the 
``[p]repairing, packing, compounding, or labeling for delivery a 
prescription drug . . . in the course of professional practice to an 
ultimate user . . . by or pursuant to the lawful order of a 
physician,'' as well as the term ``[a]dminister'' as only ``[t]he 
direct application of a drug by injection, inhalation, ingestion, or 
any other means to the body of a physician's patient.'' Tex. Admin 
Code Sec.  169.2(2) & (4). Other provisions of the Board's rules 
distinguish between the ``[a]dministration of [d]rugs,'' id. Sec.  
169.3, and ``[p]roviding, [d]ispensing, or [d]istributing [d]rugs.'' 
Id. Sec.  169.4. As to the former provision, it states, in part, 
that ``[a] physician may personally administer those drugs to his or 
her patients, which are, in the physician's medical judgment, 
therapeutically beneficial or necessary for the patient's 
treatment.'' Id. Sec.  169.3. As to the latter, it states, in part, 
that ``a physician may provide, dispense, or distribute drugs for 
use or consumption by the patient away from the physician's office 
or after the conclusion of the physician-patient encounter.'' Id. 
Sec.  169.4. Thus, the Board's rules provide some support to 
Respondent's contention.
---------------------------------------------------------------------------

    At most, the Government's reliance on the CSA's definition creates 
an ambiguity as to the meaning of the term as used in the MOA.\31\ Even 
so, ambiguities in contracts are generally resolved against the 
drafter. Here, while there is no direct evidence as to which party 
drafted the MOA or this particular term, the MOA does contain a 
provision pursuant to which Respondent ``waive[d] all rights to seek 
judicial review or to challenge or contest the validity of any terms or 
conditions of'' the MOA, thus suggesting that the Government wrote the 
MOA. Id. at 4. See Restatement (Second) of Contracts Sec.  206, at 105 
cmt. a (1981) (``Where one party chooses the terms of a contract, he is 
likely to provide more carefully for the protection of his own 
interests than for those of the other party.''). Moreover, while there 
may be some negotiation over the specific wording of MOA provisions, 
MOAs are customarily drafted by the Government and the Government has 
produced no evidence that Respondent drafted paragraph nine.
---------------------------------------------------------------------------

    \31\ Indeed, under the Government's broader interpretation, 
Respondent was also required to include each controlled substance 
prescription he wrote. Yet the Government never took issue with 
Respondent's failure to include on the reports the prescriptions 
that were issued at the various clinics.
---------------------------------------------------------------------------

    Thus, I conclude that the Government created the ambiguity as to 
whether the term ``dispense'' as used in paragraph nine was intended to 
include the full scope of the statutory definition which also 
encompasses administering and prescribing or the narrower meaning which 
encompasses only the physical delivery of a controlled substance to an 
ultimate user. Because paragraph 9 does not effectuate compliance with 
any provision of the CSA or DEA regulations, I apply settled principles 
of contract law and resolve the ambiguity against the Government.\32\ 
See Restatement (Second) of Contracts Sec.  206, at 105 (``In choosing 
among the reasonable meanings of a promise or agreement or a term 
thereof, that meaning is generally preferred which operates against the 
party who supplies the words or from whom a writing otherwise 
proceeds.'').
---------------------------------------------------------------------------

    \32\ The Government also alleged that the ``reports submitted . 
. . on July 20, 2012, were back-dated and hence, failed to indicate 
the true date they were prepared.'' ALJ Ex. 1, at 3 ] 5(c). However, 
the Government was well aware of the fact that the reports had not 
been timely submitted, and the Government has offered no evidence 
explaining why Respondent's back dating of the reports was capable 
of influencing the outcome of its investigation given that 
Respondent never represented that he had previously submitted the 
reports. See Roy S. Schwartz, 79 FR 34360, 34363 n.6 (2014).
---------------------------------------------------------------------------

Factor Four--Respondent's Compliance With Applicable Laws Related to 
Controlled Substances

    In the Show Cause Order, the Government alleged that with respect 
to various clinics, Respondent violated both paragraph 8 of the MOA and 
DEA recordkeeping regulations, including the requirements to: (1) Make 
and maintain inventories as required by 21 CFR 1304.11(e)(3); (2) make 
and maintain complete and accurate dispensings records as required by 
21 CFR 1304.22(c); and (3) make and maintain complete and accurate 
records of the receipts of the controlled substances as required by 21 
CFR 1304.22(c) and 1304.22(a)(2). ALJ Ex. 1, at 3. The Show Cause Order 
also alleged that Respondent violated 21 CFR 1306.04(b), by authorizing 
prescriptions to obtained controlled substances ``for the purpose of 
general dispensing to patients.'' Id.

The Alleged Violations at Cy-Fair

    The evidence clearly establishes that Respondent was registered at 
the Cy-Fair clinic and that the clinic was in possession of 
testosterone and engaged in the administration of the drug to patients. 
The evidence also shows that the clinic did not have either an initial 
or biennial inventory at the time of the inspection. Respondent thus 
violated the CSA and DEA regulations. See 21 U.S.C. 827(a) (1) (``every 
registrant under this subchapter shall . . . as soon . . . as such 
registrant first engaged in the . . . dispensing of controlled 
substances, and every second year thereafter, make a complete and 
accurate record of all stocks thereof on hand''). See also 21 CFR 
1304.11(b) (``every person required to keep records shall take an 
inventory of all stocks of controlled substances on hand on the date 
he/she first engaged in the . . . dispensing of controlled 
substances''); id. Sec.  1304.11(c) (requiring that ``[a]fter the 
initial inventory is taken, the registrant shall take a new inventory 
of all stocks of controlled substances on hand at least every two 
years'').
    The evidence also shows that while the Cy Fair office manager 
provided the DIs with a log showing its administrations of 
testosterone, the log was missing required information including the 
address of the patient and the name of the finished form dispensed 
(i.e., the strength of the testosterone per ml). This too was a 
violation of the CSA and DEA regulations. See 21 U.S.C. 827(a)(3) 
(``every registrant under this subchapter . . . dispensing a controlled 
substance or substances shall maintain, on a current basis, a complete 
and accurate record of each such substance manufactured, received, 
sold, delivered, or otherwise disposed of by him''); see also 21 CFR 
1304.22(c) (``records shall be maintained of the number of units or 
volume of such finished form dispensed, including the name and address 
of the person to whom it was dispensed, the date of the dispensing, the 
number of units or volume dispensed, and the written or typewritten 
name or initials of the individual who dispensed or administered the 
substance on behalf of the dispenser'').\33\
---------------------------------------------------------------------------

    \33\ See also id. (requiring dispensers to ``maintain records 
with the same information required of manufacturers pursuant to 
paragraph (a)(2)(i), (ii), (iv), (vii), and (ix) of this section.'' 
As relevant to the administration log, this information includes, 
``the name of the substance'' and ``[e]ach finished form (e.g., . . 
. 10-milligram concentration per fluid ounce or milliliter) and the 
number of units or volume of finished form in each commercial 
container (e.g., . . . 3 milliliter vial'').
---------------------------------------------------------------------------

    As for Cy Fair's receipt records, the clinic provided but a single 
page listing nine instances in which it had acquired ``10 Testosterone 
Cypionate 200 mg/ml'' by date. GX 9, at 1. However, this document was 
not ``a complete and accurate record of each such substance . . . 
received . . . by'' the clinic. 21 U.S.C. 827(a)(3). Specifically, 
while the document included the number ``10'' before the drug name, it 
does not indicate whether this number refers to the quantity of the 
drug in the vials or the number of vials. See 21 CFR 1304.22(c) 
(incorporating by reference 21 CFR 1304.22(a)(2)(ii) & (iv) (requiring 
that records list ``each finished form'' and ``the number of units of 
finished forms . . . acquired from other persons''). Moreover, the 
record does not include ``the name, address, and registration number of 
the person from whom the units were acquired.'' 21 CFR 
1304.22(a)(2)(iv). Thus, Respondent

[[Page 21425]]

violated 21 U.S.C. 827(a)(3) for this reason as well.
    The Government further alleged Respondent violated 21 CFR 
1306.04(b), which prohibits the use of ``[a] prescription . . . in 
order for an individual practitioner to obtain controlled substances 
for supplying the individual practitioner for the purpose of general 
dispensing to patients.'' ALJ Ex. 1, at 3, ] 6. As support for the 
allegation that Respondent used prescriptions to order the testosterone 
from the Empower Pharmacy, the Government produced a document created 
by the pharmacy which lists testosterone ``[p]rescriptions filled 
between 8/29/2011 and 8/29/2013'' and the patient as ``CLINIC, 
CYFAIR.'' GX 37, at 2. The document includes an Rx Number for each 
dispensing, the date of the dispensing and the date written, the number 
of refills, and lists both Respondent and several nurse practitioners 
as the ``Doctor.'' Id. The Government also submitted copies of six 
testosterone prescriptions, several of which included Respondent's name 
on the signature line as well as that of one of the mid-level 
practitioners. See id. at 74-79.
    The DI who obtained these documents from the Empower Pharmacy 
testified, however, that the prescription documents were ``generated by 
the pharmacy'' and not the clinic. She further characterized one of the 
documents as ``on a blank--what is commonly used as a call-in 
prescription form.'' Tr. 226. While these documents were created by the 
pharmacy, and standing alone would not have been sufficient to sustain 
the allegation, on direct examination, Respondent admitted that ``the 
office managers would call or send a prescription over to the pharmacy 
to get filled'' for general office use and asserted that ``this is a 
common practice'' in hospitals. Id. at 387-88. See also id. at 311 
(testimony of DI that nurse practitioner who floated between various 
clinics told him that ``the same practice'' was used ``at all 
clinics'').
    Moreover, in his testimony, Respondent never asserted that his 
employees were simply ordering the drugs without issuing prescriptions 
and that it was actually Empower Pharmacy's decision to use a call-in 
prescription form to document the transaction. Id. at 455-56. Indeed, 
he repeatedly defended the practice, asserting that it was ``absolutely 
proper'' for his office staff to use a prescription to obtain a 
controlled substance for office use. Id. at 456-57. Thus, Respondent 
was clearly aware that his various office managers engaged in this 
practice including those at Cy-Fair.
    In his post-hearing brief, Respondent asserts that ``there is no 
evidence that he wrote the prescriptions, knew about them, or 
`authorized' them as the term is commonly understood.'' Resp. Closing 
Argument, at 6. The argument is counterfactual. Respondent clearly knew 
that his clinics (and in particular, the Cy-Fair clinic) were 
administering testosterone to patients and he also knew how his clinics 
were obtaining the drug. Moreover, even if Respondent did not 
personally authorize the Cy-Fair prescriptions, the mid-level 
practitioners who authorized the prescriptions were only able to do so 
because Respondent delegated prescribing authority to them. See Tex. 
Occupations Code Sec.  157.0511 (authorizing a physician to delegate 
prescribing authority for schedule III through V controlled 
substances); id. Sec.  157.0512 (requiring a prescriptive authority 
agreement by which a physician delegates prescribing authority to 
advance practice registered nurses and physician assistants and setting 
rules for such agreements). Thus, with respect to the prescriptions 
issued by Cy-Fair to obtain testosterone, I conclude that Respondent 
violated 21 CFR 1306.04(b).\34\
---------------------------------------------------------------------------

    \34\ As for Respondent's assertion that it is common practice 
that hospitals do not order anesthesia medications for every patient 
and order stock bottles, undoubtedly that is true. While there is no 
evidence in the record as to how hospitals order the drugs they 
administer or dispense to patients, what a hospital cannot do is use 
a prescription to order the drugs for general dispensing. Indeed, 
hospitals typically order the stock from a registered distributor, 
and with respect to the schedule II drugs which are invariably used 
for anesthesia, they must use an Order Form as required under 21 
U.S.C. 828(a) & (c)(2). See also 21 CFR Pt. 1305.
---------------------------------------------------------------------------

    Nor were Respondent's violations of 21 CFR 1306.04(b) confined to 
the Cy-Fair clinic as the Government produced two other testosterone 
prescriptions which were authorized under his registration which were 
for the use of the Oak Hills and FM--1960 clinics. See GX 37, at 70, 
85. Specifically, the Government produced a prescription dated October 
19, 2012 for Scream Cream \35\ ``#5 ml'' which lists Respondent as the 
prescriber and the patient as ``1960--R Zayas.'' GX 37, at 85. The 
Government also produced a prescription dated February 6, 2013 for one 
10 ml bottle of testosterone which again lists Respondent as the 
prescriber and the patient as ``Oak Hills--Dr. R. Zayas.'' Id. at 70. 
Also, each of these prescriptions bears Respondent's registration 
number for his Houston registered address. Thus, the evidence is clear 
that prescriptions were authorized pursuant to Respondent's 
registration, and even if he did not personally call in the 
prescriptions, he is strictly liable for the misuse of his registration 
by any person to whom he entrusted his registration. See Rosemary 
Jacinta Lewis, 72 FR 4035, 4041 (2007).
---------------------------------------------------------------------------

    \35\ Notwithstanding that there was a non-controlled version of 
Scream Cream, the pharmacy assigned a prescription number for this 
dispensing which begins with a C, thus evidencing that this was for 
a product which contained testosterone.
---------------------------------------------------------------------------

Alleged Violations at the Other Clinics

    As discussed above, Respondent was registered only at the Cy-Fair 
clinic at the time of the inspection. Thus, with respect to the 
recordkeeping allegations, Respondent argues that he was ``the DEA 
registered supervising physician at [only] one of'' the clinics (i.e., 
Cy Fair), and that ``the Government is attempting to turn a contractual 
violation into a violation of a statute or regulation which is 
unjustified, unsupported by existing case law, or might be beyond the 
DEA's statutory authority.'' Resp.'s Closing Argument, at 5. Respondent 
further maintains that:

    The case against him is based on [the] unstated (and as yet 
unsupported) assumption that the DEA has authority to sanction a 
registrant for a breach of contract where the contract seeks to 
impose the obligations of a . . . registrant for which [he] was not 
the . . . registrant, on the theory that because he owns the entity 
which has a controlling interest in the operating company which owns 
and manages the clinics, that somehow establishes a violation of 
federal law.
    Id.
    The CALJ found Respondent's argument persuasive to the extent it 
involved his contention that he cannot be held liable for violating the 
CSA and Agency regulations pertaining to recordkeeping at the clinics 
where he was not registered. See R.D. 62. The CALJ explained that:

    Although each dispensing registrant is required to maintain a 
[registration] at the place[s] where administering/dispensing 
occurs, these alleged (and established) administering/dispensing 
events pertained to other individuals, not to the Respondent. The 
same can be said of those portions of the [Show Cause Order] ]5(b) 
allegations pertaining to dispensing, receiving, and inventory 
records at the non-Cy-Fair clinics that dispensers are required to 
create and maintain . . . . Evaluated in a world without the DEA 
MOA, these allegations do not raise evidence within the purview of 
the public interest factors in relation to the Respondent.
    Id. The CALJ did, however, consider the evidence as to the 
recordkeeping violations by the non-Cy Fair clinics as constituting 
``such other conduct which

[[Page 21426]]

may threaten public health and safety.'' See id. at 66-72.\36\
---------------------------------------------------------------------------

    \36\ While I agree with the CALJ that violating a provision of 
an MOA does not necessarily establish a violation of an applicable 
law related to controlled substances which is actionable under 
factor four (``[c]ompliance applicable . . . States, Federal or 
local laws related to controlled substances''), see R.D. 46 (citing 
OTC Distribution Co., 68 FR 70538, 70542 (2003)), for reasons 
explained above, under federal law, Respondent is also liable for 
failing to maintain complete and accurate records at the non Cy-Fair 
clinics. Thus, this conduct is clearly actionable under Factor Four.
---------------------------------------------------------------------------

    I reject Respondent's and the CALJ's conclusion that Respondent is 
not liable for violating the CSA's recordkeeping provisions because he 
was not the registrant at the six other clinics.\37\ Indeed, this 
Agency has previously noted that liability can be imposed on a non-
registrant for failing to keep required records even though that 
conduct is also properly chargeable to a registered practitioner. See 
Moore Clinic Trials, L.L.C., 79 FR 40145, 40156 (2014) (holding non-
registrant clinic owner liable for failure of physician to maintain 
required records). Indeed, in Moore, the Agency explained that under 
the CSA, if controlled substances are dispensed at a clinic, both the 
clinic's owner and the physician it employs or contracts with to 
perform services on the clinic's behalf are responsible for maintaining 
complete and accurate records. See 79 FR at 40156 (citing United States 
v. Clinical Leasing Serv., Inc., 759 F. Supp. 310, 313 (E.D. La. 1990), 
aff'd 925 F.2d 120, 123 (5th Cir. 1991)). As the court explained in 
Clinical Leasing Services:

    \37\ While the Government does not appear to have relied on the 
theory that Respondent, as the owner of the clinics, is liable for 
the recordkeeping violations committed at the non-Cy Fair clinics, I 
conclude that Respondent has raised the issue. See Resp. Closing 
Argument, at 5. And even if I concluded that Respondent did not 
raise the issue of whether he is personally liable under the CSA for 
the record-keeping violations committed at the clinics where he was 
not registered, this would not change the outcome of this matter 
because he still violated the MOA by failing to ``cause to be made 
and maintained all DEA required documents and information including 
records, reports, and inventories.'' GX 4, at 2.

    The clinic is charged with failure to maintain proper records. 
The law clearly requires every ``person'' (including a corporation) 
to maintain proper records if that person dispenses controlled 
substances. By employing physicians to dispense drugs in connection 
with its operation, the clinic is a dispenser of controlled 
substances. Therefore, the clinic, as well as the physicians it 
---------------------------------------------------------------------------
employs, must maintain the proper records required by law.

    759 F. Supp. at 312 (emphasis added).
    The court expressly rejected the clinic's contention that ``it was 
not required to maintain records,'' because ``the record keeping 
requirements pertain only to `registrants,''' noting that 21 U.S.C. 
842(a)(5) ``does not require that one who refuses or fails to make, 
keep, or furnish records be a `registrant,''' but applies to ``any 
person,'' including ```an individual, corporation . . . business trust, 
partnership, association, or other legal entity.''' Id. at 313 (quoting 
21 CFR 1301.02(j)).
    Multiple federal courts have likewise rejected the contention that 
the CSA's recordkeeping requirements do not apply to non-registrant 
owners of clinics that dispense controlled substances. See United 
States v. Robinson, 2012 WL 3984786, *6-7 (S.D. Fla., Sept. 11, 2012) 
(holding non-registrant owner of cosmetic surgery clinic liable for 
recordkeeping violations under section 842(a)(5); statute ``includes 
the broader term of `any person' and does not limit application of the 
subsection to registrants''); id. at * 7 (``Where corporate officers 
have been in a position to prevent or correct the violations at issue, 
courts have found that there is individual liability under the 
subsection, which plainly applies to all `persons.'''). See also United 
States v. Stidham, 938 F.Supp. 808, 813-15 (S.D. Ala. 1996) (holding 
non-registrant owner of methadone clinic liable for recordkeeping 
violations); United States v. Poulin, 926 F.Supp. 246, 250-51 (D. Mass. 
1996) (``The recordkeeping provisions of the [CSA] apply to all persons 
who dispense drugs, even if they have not registered as required under 
the Act'' and holding both pharmacy's owner/proprietor and corporate 
entity liable for recordkeeping violations); see also 21 U.S.C. 
842(a)(5).
    Notwithstanding the various arrangements and entities used by 
Respondent to hold the clinics, the record clearly establishes that 
Respondent was the real owner and operator of the clinics. See GX 4, at 
13 (settlement agreement with United States Attorney signed by 
Respondent as President of Z Healthcare Systems, Inc.); see also Tr. 
381-82, 384-87, 392, 394-96 (Respondent's testimony discussing his role 
in overseeing the clinics). Thus, with respect to the six other 
clinics, he is also a ``person'' within the meaning of 21 U.S.C. 
842(a)(5) and 21 CFR 1301.02(j), and as such, he is liable for any 
recordkeeping violations committed by the other clinics even if those 
clinics had a practitioner who was registered at the clinic.\38\
---------------------------------------------------------------------------

    \38\ As found above, nearly every clinic had a substantial 
period in which it did not have a practitioner who was registered at 
it. Respondent does not explain who, but him, was responsible for 
the respective clinic's recordkeeping violations in these periods.
---------------------------------------------------------------------------

    As for the other six clinics, the evidence shows that each of these 
clinics was either entirely missing certain records or failed to 
maintain complete and accurate records as required by the CSA and DEA 
regulations. With respect to the Woodlands clinic, the clinic did not 
have any inventories and receipt records. Tr. 155-56. Thus, Respondent 
is liable for violating 21 U.S.C. 827(a)(1) (requiring inventories) and 
Sec.  827(a)(3) (requiring records of receipts) with respect to this 
clinic. Moreover, while the clinic presented the DI with its 
Testosterone Shot Log, the log was missing various items of required 
information including the patients' addresses, the finished form of the 
substance (e.g., the concentration per milliliter), and the volume 
administered to the patient. Thus, Respondent is liable for failing to 
``maintain a complete and accurate record'' of its testosterone 
administrations at this clinic. See 21 U.S.C. 827(a)(3) and 21 CFR 
1304.22(c).
    As for the Victoria clinic, it did not have an initial or biennial 
inventory. Thus, Respondent is liable for violating 21 U.S.C. 
827(a)(1). While the clinic provided its testosterone injection log to 
the DIs, none of the entries included the patient's address and a 
number of entries were not dated. See GX 26. And while the entries on 
some pages of the log did include both the concentration of the 
finished form (``200 mg'') and the dose, nearly all of the other 
entries were missing the drug's concentration. Compare GX 26, at 2-5, 
15, with id. at 1, 6-14, 16. Thus, Respondent is liable for failing to 
``maintain a complete and accurate record'' of the Victoria clinic's 
testosterone administrations. See 21 U.S.C. 827(a)(3) and 21 CFR 
1304.22(c).
    While the Victoria clinic provided receipt records, which appears 
to be a printout from a pharmacy, the records are illegible with 
respect to the name of the supplier, its address, and its DEA 
registration. GX 32; see 21 CFR 1304.22(c) (incorporating by reference 
21 CFR 1304.22(a)(2)(iv)). Thus, Respondent is also liable for the 
clinic's failure to ``maintain a complete and accurate record'' of its 
testosterone receipts. 21 U.S.C. 827(a)(3).
    The Corpus Christi clinic also did not have an initial or biennial 
inventory. Tr. 194. Thus, Respondent is liable for violating 21 U.S.C. 
827(a)(1). And while the clinic produced records of its 
administrations, with a separate log sheet for each patient, none of 
the records included the patient's address

[[Page 21427]]

and most of the records did not even list the name of the controlled 
substance. See GX 28; 21 CFR 1304.22(c); id. Sec.  1304.22(a)(2)(ii). 
Moreover, while some of the log sheets bore the heading of 
``TESTOSTERONE,'' the sheets did not list the drug concentration. See 
id. (incorporating by reference 21 CFR 1304.22(a)(2)(ii)). Thus, 
Respondent is liable for the clinic's failure to ``maintain a complete 
and accurate record'' of the controlled substances it dispensed. 21 
U.S.C. 827(a)(3).
    As for the Corpus Christi clinic's receipt records, these consisted 
of a ``Log of Scripts'' which appears to have been created and provided 
by the Empower Pharmacy. GX 28, at 62. This record was also missing 
required information in that while it listed the drug and finished form 
(200 mg/ml injectable), as well as a quantity, it did not list the 
volume of the finished form and the record does not specify whether the 
quantity figure referred to the number of vials or the number of 
milliliters shipped by the pharmacy. Id.; 21 CFR 1304.22(c) 
(incorporating by reference 21 CFR 1304.22(a)(2)(ii) & (iv)). Moreover, 
while the Log indicates the date the drugs were ``dispensed'' by 
Empower, the clinic did not record on the document ``the date on which 
the controlled substances are actually received.'' 21 CFR 
1304.21(d).\39\ Thus, Respondent is liable for the clinic's failure to 
``maintain a complete and accurate record'' of the controlled 
substances it dispensed. 21 U.S.C. 827(a)(3).
---------------------------------------------------------------------------

    \39\ Indeed, the record states that it was ``[p]rinted'' on 
August 29, 2013, three weeks after the date on which the last 
prescription listed was dispensed by Empower Pharmacy, and lists 15 
prescriptions going back February 14, 2012. GX 28, at 62. However, 
both the CSA and DEA regulations require that receiving records be 
maintained ``on a current basis.'' 21 U.S.C. 827(a)(3); 21 CFR 
1304.21(a). This record clearly did not comply with this 
requirement.
---------------------------------------------------------------------------

    Similarly, the FM 1960 West clinic also did not have either an 
initial or biennial inventory. Tr. 288, 305. Thus, Respondent is liable 
for the clinic's failure to comply with 21 U.S.C. 827(a)(1). The clinic 
also did not have receipt records on hand; instead, it had Empower 
Pharmacy fax a report which listed the clinic as the patient and the 
``dispensings'' to it. GX 15. As before, the report was not ``a 
complete and accurate record'' because it did not list the number of 
units or volume of the testosterone products (both injectables and the 
Scream Cream) the clinic received and did not document the date the 
drugs were received. 21 CFR 1304.21(d); 1304.22(c). Moreover, given 
that the clinic did not have the receipt records on hand, it clearly 
violated 21 U.S.C. 827(a)(3) and 21 CFR 1304.21(a) by failing to 
maintain these ``on a current basis.'' Respondent is thus liable for 
these violations.
    As for the testosterone shot log, each entry was missing the 
patient's address, the dosage form, and the volume administered. GX 17. 
Thus, this record was not ``a complete and accurate record'' as 
required under 21 U.S.C. 827(a)(3). See 21 CFR 1304.22(c); see also id. 
Sec.  1304.22(a)(2)(ii). Respondent is therefore liable for these 
violations as well.
    The Oak Hills clinic provided the Investigators with its 
``Testosterone Daily Drug Inventory Log.'' This document did include 
the required information including the dosage form (on some but not all 
of the log's pages) and quantity on hand; the log also included counts 
that had been taken within the last two years. GX 13, at 4-28. Thus, 
this record largely complied with 21 U.S.C. 827(a)(1).
    The clinic also provided a testosterone log, which listed 
administrations. The log did not, however, include the patients' 
addresses or the dosage form (concentration) of the testosterone. Id. 
at 1-3. Moreover, the administration log only included administrations 
between April 3, 2013 and August 24, 2013, id., even though the daily 
drug inventory shows that testosterone was dispensed on numerous 
occasions within the two-year period preceding the inspection. Id. at 
12-22. Thus, Respondent is liable for the clinic's failure to maintain 
``a complete and accurate record'' of the administrations. 21 U.S.C. 
827(a)(3); see also 21 CFR 1304.22(c); id. Sec.  1304.22(a)(2)(ii); 21 
U.S.C. 827(b) (``Every . . . record required under this section . . . 
shall be kept and be available, for at least two years, for inspection 
and copying by officers or employees of the United States . . . .'').
    Upon the request of the Investigators, the Southwest Clinic did not 
provide either inventory records or receipt records. Tr. 326. Moreover, 
while a clinic employee told an Investigator that controlled substances 
had been transferred to the clinic from another clinic that had closed, 
Southwest had no record documenting the transfer. Id. at 331. Thus, 
Respondent is liable for the clinic's failure to take initial or 
biennial inventories, see 21 U.S.C. 827(a)(1), as well as the clinic's 
failure to ``maintain, on a current basis, a complete and accurate 
record of each [controlled] substance . . . received . . . by'' it. Id. 
Sec.  827(a)(3).
    As for the testosterone log, it was also missing the patients' 
addresses and the dosage form (concentration) of the testosterone. See 
21 CFR 1304.22(c); id. 1304.22(a)(2)(ii). Moreover, the earliest 
dispensing record in the testosterone log was dated September 4, 2012. 
GX 23, at 4. Yet a prescription report obtained from Empower Pharmacy 
shows that injectable testosterone was ``dispensed'' to the clinic (as 
the ``patient'') on April 24, 2012, June 5, 2012, July 19, 2012, August 
18, 2012 and September 1, 2012, thus supporting the inference that the 
clinic was regularly administering testosterone prior to the first 
entry in its testosterone log without documenting the administrations. 
See GX 37, at 3. I therefore conclude that Respondent is liable for the 
clinic's failure to ``maintain, on a current basis, a complete and 
accurate record of each [controlled] substance . . . delivered by'' it. 
21 U.S.C. 827(a)(3); 21 CFR 1304.22(c).

Factor Five--Such Other Conduct Which May Threaten the Public Health 
and Safety

    The Government also argues that Respondent has engaged in other 
conduct which is actionable under Factor Five.\40\ Of specific 
relevance here, the Government argues that ``Respondent's false 
statement and obstructionist behavior towards [the DI] are also 
applicable under Factor Five insofar as they constitute the failure to 
maintain effective controls against diversion.'' Id. (citing Island 
Wholesale, Inc., 68 FR 17406, 17407 (2003) \41\ and Leonel Tano, 62 FR 
22968, 22971 (1997)).
---------------------------------------------------------------------------

    \40\ The Government also argues that ``[t]o the extent 
Respondent's multiple failures to comply with the . . . MOA is [sic] 
not actionable under Factor Four, it would be actionable under 
Factor Five.'' Gov. Post-Hrng. Br. at 25. It then points to the 
allegations regarding the quarterly dispensing reports, the failure 
to ensure that the clinic practitioners were properly registered, 
and that the clinics were not maintaining proper records. Id. at 26. 
As each of these allegations has been addressed under either Factor 
Two or Factor Four, they do not constitute ``other conduct.''
    \41\ This case did not, however, involve a practitioner, but 
rather a list I chemical distributor. See 68 FR 17407. The ``catch-
all'' factor for list I distributor only requires a showing that the 
factor is ``relevant to and consistent with the public health and 
safety.'' 21 U.S.C. 823(h)(5). This is a considerably lower bar than 
``such other conduct which may threaten the public health and 
safety.'' Id. Sec.  823(f)(5).
---------------------------------------------------------------------------

    Here, the evidence shows that Respondent made a false statement and 
obstructed the DI who was assigned to review his renewal application. 
Specifically, when asked by the DI in an email to forward to her copies 
of the quarterly reports of his dispensings which were required under 
the MOA, Respondent denied that he was even under an MOA. Respondent's 
statement was clearly false and while the DI

[[Page 21428]]

obviously knew that the statement was false, the statement nonetheless 
had the capacity to influence the Agency's decision as to whether to 
grant his renewal application and was made with fraudulent intent as 
Respondent obviously knew that his registration was subject to the MOA 
and that he had failed to comply with the requirement that he submit 
the quarterly reports. See United States v. Alemany Rivera, 781 F.2d 
229, 234 (1st Cir. 1985) (``It makes no difference that a specific 
falsification did not exert influence so long as it had the capacity to 
do so.''); United States v. Norris, 749 F.2d 1116, 1121 (4th Cir. 1984) 
(``There is no requirement that the false statement influence or effect 
the decisionmaking process of a department of the United States 
Government.''). This is actionable misconduct under Factor Five. See 
Shannon L. Gallentine, 76 FR 45864, 45866 (2011); see also Hoxie v. 
DEA, 419 F.3d at 483 (``The DEA properly considers the candor of the 
physician and his forthrightness in assisting in the investigation . . 
. important factors in determining whether the physician's registration 
should be revoked.'').
    So too, in response to the DI's request to ``describe [his] current 
medical practice'' and to ``please include all locations and the names 
and DEA numbers of any Physician Assistants . . . or Nurse 
Practitioners that [he] currently supervise[d],'' he replied that 
``this is irrelevant to the renewal of my DEA certificate.'' GX 36, at 
2. The information requested by the DI was, however, relevant to the 
renewal of his registration because it was fully within the 
Government's authority to investigate whether Respondent had complied 
with the MOA. See Hoxie, 419 F.3d at 483.
    Moreover, at the hearing, Respondent offered the excuse that he had 
``blocked'' the events surrounding his entering into the MOA out of his 
mind because it was such an ``unpleasant'' and ``humiliating'' 
experience. Tr. 426-27. The CALJ did not find his testimony credible, 
characterizing his testimony as a ``dubious account of a variety of 
amnesia that deprived him of any memory of even the existence of the 
highly-detailed . . . MOA'' that ``was simply implausible.'' R.D. 33. 
The CALJ further noted that Respondent's ``memory lapse commenced and 
ended at points that were conveniently tailored to his narrative and 
[was] entirely unsupported by any medical diagnosis.'' Id. As the CALJ 
concluded, ``it is clear that he made it up.'' R.D. 33. I agree with 
the CALJ's assessment that Respondent's testimony regarding his failure 
to comply with the MOA was false; his provision of false testimony also 
constitutes actionable misconduct under Factor Five. Thus, I conclude 
that an adverse finding is warranted under Factor Five.

Summary of the Government's Prima Facie Case

    As found above, the Government's evidence with respect to Factors 
Two and Four establishes that Respondent has committed multiple 
violations of the CSA and DEA regulations, as well as the MOA. The 
Government's evidence shows that Respondent repeatedly failed to comply 
with the MOA's provision which required that any clinic that either 
administered or dispensed controlled substances have a practitioner who 
was registered at the clinic, as well as the provision that he timely 
file quarterly reports of the clinics' dispensings.
    The Government's evidence further shows that Respondent violated 
various recordkeeping requirements under the CSA and DEA regulations, 
including the requirements that he: (1) Make and maintain initial and 
biennial inventories, (2) make and maintain complete and accurate 
dispensing records, and (3) make and maintain completed and accurate 
records of receipts of controlled substances. See, e.g., 21 U.S.C. 
827(a) & (c). Moreover, as the real owner of the clinics, Respondent is 
liable for these violations of the CSA and DEA regulations, 
notwithstanding that he was registered at only the Cy-Fair clinic. 
Also, the evidence shows that Respondent violated 21 CFR 1304.22(c), by 
authorizing prescriptions to obtain controlled substances for ``general 
dispensing to patients.''
    The evidence further shows that Respondent made a materially false 
statement to the DI and attempted to obstruct her investigation. And 
finally, the evidence shows that Respondent gave false testimony in the 
proceeding.
    I therefore conclude that the Government has satisfied its prima 
facie burden of showing that Respondent ``has committed such acts as 
would render his registration . . . inconsistent with the public 
interest.'' 21 U.S.C. 824(a)(4), and which support the revocation of 
his Florida registration and the denial of his pending application for 
his Texas registration. See id. Sec.  823(f).

Sanction

    Where, as here, the Government has established grounds to revoke a 
registration or deny an application, a respondent must then ``present[ 
] sufficient mitigating evidence'' to show why he can be entrusted with 
a new registration. Samuel S. Jackson, 72 FR 23848, 23853 (2007) 
(quoting Leo R. Miller, 53 FR 21931, 21932 (1988)). `` `Moreover, 
because `past performance is the best predictor of future performance,' 
ALRA Labs, Inc. v. DEA, 54 F.3d 450, 452 (7th Cir. 1995), [DEA] has 
repeatedly held that where [an applicant] has committed acts 
inconsistent with the public interest, the [applicant] must accept 
responsibility for [his] actions and demonstrate that [he] will not 
engage in future misconduct.'' Jayam Krishna-Iyer, 74 FR 459, 463 
(2009) (citing Medicine Shoppe, 73 FR 364, 387 (2008)); see also 
Jackson, 72 FR at 23853; John H. Kennedy, 71 FR 35705, 35709 (2006); 
Cuong Tron Tran, 63 FR 64280, 64283 (1998); Prince George Daniels, 60 
FR 62884, 62887 (1995).
    However, while an applicant must accept responsibility for his 
misconduct and demonstrate that he will not engage in future misconduct 
in order to establish that his registration is consistent with the 
public interest, DEA has repeatedly held that these are not the only 
factors that are relevant in determining the appropriate disposition of 
the matter. See, e.g., Joseph Gaudio, 74 FR 10083, 10094 (2009); 
Southwood Pharmaceuticals, Inc., 72 FR 36487, 36504 (2007). Obviously, 
the egregiousness and extent of an applicant's misconduct are 
significant factors in determining the appropriate sanction. See Jacobo 
Dreszer, 76 FR 19386, 19387-88 (2011) (explaining that a respondent can 
``argue that even though the Government has made out a prima facie 
case, his conduct was not so egregious as to warrant revocation''); 
Paul H. Volkman, 73 FR 30630, 30644 (2008); see also Paul Weir 
Battershell, 76 FR 44359, 44369 (2011) (imposing six-month suspension, 
noting that the evidence was not limited to security and recordkeeping 
violations found at first inspection and ``manifested a disturbing 
pattern of indifference on the part of [r]espondent to his obligations 
as a registrant''); Gregory D. Owens, 74 FR 36751, 36757 n.22 (2009).
    So too, the Agency can consider the need to deter similar acts, 
both with respect to the respondent in a particular case and the 
community of registrants. See Gaudio, 74 FR at 10095 (quoting 
Southwood, 71 FR at 36503). Cf. McCarthy v. SEC, 406 F.3d 179, 188-89 
(2d Cir. 2005) (upholding SEC's express adoption of ``deterrence, both 
specific and general, as a component in analyzing the remedial efficacy 
of sanctions'').
    The CALJ found that Respondent's acceptance of responsibility ``was

[[Page 21429]]

equivocal, at best, and was entirely self-serving.'' R.D. 77. The CALJ 
further found that ``[h]e begrudgingly accepted responsibility when his 
counsel led him to do so, but . . . in response to questions by 
Government's counsel, he approached the topic with a tenor that 
bordered on hostile sarcasm.'' Id. The CALJ specifically noted 
Respondent's testimony that the proceeding was ``nonsense,'' that it 
was ``arguing over logs,'' and that this ``we're not even talking about 
that much medicine.'' Id. Moreover, Respondent continued to insist that 
it is ``absolutely proper'' for his employees to use prescriptions to 
order controlled substances for office use. Tr. 456. And when asked 
whether he was going to admit to violating the MOA provision which 
required that if any clinic dispensed or administered a controlled 
substance, the dispensing/administering was to be done by a 
practitioner who was registered at the clinic, he asserted that he did 
not ``know whether it's true or not'' while nonetheless insisting that 
he was accepting responsibility for this misconduct. Id. at 465.
    In his Exceptions, Respondent points to his testimony that he 
``changed the business of his clinics such that they no longer handled 
controlled substances, thus avoiding the recordkeeping and inventory 
problems which led to the MOA violations.'' Resp. Exceptions, at 5. He 
argues that ``there is DEA precedent that in some conditions, 
acceptance of responsibility is not absolutely required.'' Id. (citing 
Rosalind A. Cropper, 66 FR 41040 (2001)). He correctly notes that in 
Cropper, the Agency granted the respondent's application 
notwithstanding her failure to admit to any of the proven misconduct, 
which involved treating patients for opiate addiction with methadone 
for more than three days without being registered as a narcotic 
treatment program. 66 FR at 41048. Respondent argues ``[t]he Cropper 
case appears [to] show[ ] that there are exceptions to the acceptance 
of responsibility requirement in cases like this one where the 
Respondent has changed his circumstance and business to avoid a 
recurrence of the problems which are the subject of the DEA action.'' 
Exceptions, at 5-6.
    Relying on Cropper, Respondent argues that even if I agree with the 
CALJ that ``there was not complete acceptance of responsibility by the 
Respondent . . . revocation is not required because of the changed 
circumstance.'' Id. Addressing the CALJ's statement that ``[t]he tenor 
of the Respondent's declaration that his clinics will no longer 
directly handle controlled substances strikes less as a remedial step 
than it does as a tantrum,.'' R.D. 77 n.197, he argues that the CALJ 
``is reading . . . an intentionality element which does not exist in 
the case law'' and that ``[a]ll that is required is that a registrant 
take actions to ensure that the violative conduct does not recur.'' Id. 
at 6. He further argues that ``[t]he important point'' to be taken from 
Cropper ``was that [Dr. Cropper's] job didn't put her near the drug 
[methadone] and that was enough . . . to conclude that remedial efforts 
were adequate.'' Id. And Respondent argues that regardless of what the 
CALJ ``feels is his motivation for the change'' in his practice, ``it 
should be enough that [he] had made sure that the recordkeeping and 
inventory problems/violations which are at the heart of this case will 
not recur.'' Id. at 6-7. Finally, he maintains that his change in the 
clinics' practices ``can be viewed as a manifestation of his 
acceptance; for even in an acceptance of responsibility analysis, 
actions should speak louder than words.'' Id. at 7.
    I reject Respondent's contentions. While it true that there are 
some cases besides Cropper in which the Agency imposed a sanction less 
than revocation or outright denial notwithstanding the respondent's 
less than unequivocal acceptance of responsibility, those cases have 
generally involved less egregious misconduct than that engaged in by 
Respondent. For example, in Gregory Owens, 74 FR 36751 (2009), the 
Agency imposed a three-month suspension, notwithstanding the 
respondent's equivocal evidence as to his acceptance of responsibility. 
Id. at 36757-78. However, the proven misconduct was limited to failing 
to report a state board disciplinary order and failing to submit a 
quarterly drug activity log during a four-month period.\42\ Id. at 
36757.
---------------------------------------------------------------------------

    \42\ To be sure, there are also cases predating the Agency's 
decision in Jayam Krishna-Iyer, 74 FR 459, 464 (2009), in which even 
a respondent who knowingly diverted controlled substances and who 
failed to accept responsibility for his misconduct was granted a new 
registration. See, e.g., Anant N. Mauskar, 63 FR 13687, 13689 
(1998). However, in Krishna-Iyer, the Agency explicitly overruled 
any case which suggests that a physician who has engaged in knowing 
diversion is entitled to remain registered absence a credible 
acceptance of responsibility. See Krishna-Iyer, 74 FR at 464 n.9.
---------------------------------------------------------------------------

    To be sure, in Jeffrey Martin Ford, 68 FR 10750 (2003), the Agency 
granted a new registration to a dentist who had been convicted of four 
felony counts of violating the Controlled Substances Act including 
conspiracy to possess with intent to distribute cocaine, possession 
with intent to distribute cocaine and marijuana, and the use of the 
mail to facilitate a narcotics transaction. Id. at 10751. Moreover, the 
Agency granted the respondent a new registration, notwithstanding that 
it found perplexing ``the [r]espondent's apparent willingness to accept 
responsibility for past actions on the one hand . . . and his seeming 
refusal to acknowledge wrong doing in other respects,'' as well as its 
concern ``that the [r]espondent has apparently failed to learn from the 
negative experiences surrounding his drug use.'' 68 FR at 10753. While 
the decision apparently excused the respondent's failure to 
unequivocally accept responsibility based on his having attended drug 
rehabilitation and remained sober for more than 10 years, as well his 
having satisfied the conditions for reinstatement of his state license, 
the decision does not even address whether he accepted responsibility 
for his criminal conduct. Because I find the reasoning of this case 
unpersuasive, were a case with similarly egregious misconduct presented 
to me, I would not grant a registration absent a clear and unequivocal 
acceptance of responsibility for all of misconduct that was proven on 
the record.
    In sum, while there may be some instances in which the proven 
misconduct is not so egregious as to warrant revocation or a lengthy 
suspension (see, e.g., Owens), and a respondent, while offering a less 
than unequivocal acceptance of responsibility nonetheless offers 
sufficient evidence of adequate remedial measures to rebut the 
Government's proposed sanction, this is not such a case. Here, 
Respondent agreed to abide by all federal laws and regulations related 
to the administering, dispensing and prescribing of controlled 
substances, as well as that he ``shall cause to be made and maintained 
all DEA required . . . records, reports, and inventories'' at any 
clinic that administered or dispensed controlled substances''; he also 
agreed to ``abide by [the MOA's] contents in good faith.''
    The evidence, however, suggests that Respondent had no intention of 
abiding by the MOA in good faith but rather entered the agreement 
simply to get the Government off his back. Tr. 359 (Respondent's 
testimony that he entered the MOA because it was ``the easiest and best 
way'' to keep his registration'' and avoid a ``protracted fight''). For 
example, notwithstanding that he promised to ensure that his clinics 
would maintain proper inventories (which he was legally obligated to do 
even in the absence of the MOA), Respondent testified that he had not 
even read the applicable regulations which require the keeping of 
inventories. Tr. 473. Indeed, even as of the hearing, he still had not 
read the

[[Page 21430]]

regulations. Id. at 474. While he attempted to shift the blame to his 
attorneys and consultant for failing to tell him what was required 
under the MOA, Respondent offered no testimony that he asked either his 
attorneys or consultant to explain what was required. Id. at 473-74. So 
too, while Respondent submitted the first two quarterly reports in a 
timely fashion, thereafter, he blew off this requirement until he was 
confronted by the DI.
    So too, even acknowledging that the absolute amounts of the 
testosterone being handled by the various clinics were not especially 
large, it is notable that six of the clinics had recordkeeping 
violations including missing inventories, missing receipt records, and 
missing required information related to the clinics' administration of 
the drug. And notwithstanding his legally erroneous contention that he 
cannot be held to have violated the CSA's recordkeeping requirements at 
the non-Cy Fair clinics because he was not the registrant at those 
clinics, there were recordkeeping violations even at the Cy-Fair 
clinic, where he was registered.
    Likewise, while he agreed that if his clinics engaged in 
administration or dispensing, the provider would be registered at the 
clinic, here again, Respondent breached the agreement. Particularly 
egregious is his failure to ensure that there was a registered provider 
at the Victoria clinic, where testosterone was administered at least 
117 times during a three-month period when no practitioner was 
registered at the clinic.
    I thus conclude that Respondent's misconduct was egregious (a 
conclusion which is buttressed by my findings with respect to Factor 
Five), and given his failure to offer a credible and meaningful 
acceptance of responsibility, I hold that he has not refuted the 
conclusion that his continued registration ``is inconsistent with the 
public interest'' and that both the revocation of his Florida 
registration and the denial of his Texas renewal application are 
warranted.\43\
---------------------------------------------------------------------------

    \43\ I have also considered Respondent's argument that 
``[r]evocation is too severe and [is] not required.'' Resp. 
Exceptions, at 7. Therein, Respondent maintains that ``it seems 
clear that recordkeeping violations of the type found in this case 
are rarely if ever a reasons [sic] to revoke a provider's DEA 
registration.'' Id. He also contends ``that the conduct proven in 
this case seems far less egregious than any of the 2015 cases 
including the two (Corbett and Zina), which did not result in . . . 
revocation.'' Id. at 7-8.
    Contrary to Respondent's understanding, recordkeeping violations 
alone can support the revocation of a registration or the denial of 
an application, and in this case, there were violations of multiple 
requirements at nearly every one of the clinics. See Keith Ky Ly, 80 
FR 29025, 29035 (2015) (citing Paul H. Volkman, 73 FR 30630, 30644 
(2008)). Nor is the evidence in this matter confined to the 
recordkeeping violations, as it also includes his failure to file 
the required quarterly reports, his failure to ensure that there was 
a provider who was registered at the clinics which were dispensing 
or administering controlled substances, his use of prescriptions to 
obtain controlled substances for general dispensing to patients, his 
false statement in denying that he was subject to the MOA, his 
obstructionist behavior when the DI requested certain information, 
and his giving false testimony as to the reason why he denied to the 
DI that he was under the MOA.
    As for Respondent's reference to the ``Corbett'' case, 
Respondent did not provide a citation and I am unaware of any case 
involving a respondent with this name. As for his reference to the 
``Zina'' case, even assuming that this was typographical error and 
that Respondent was referring to Abbas E. Sina, 80 FR 53191 (2015), 
a self-abuse case, the case provides no comfort to Respondent 
because Dr. Sina fully admitted to his misconduct. Id. at 53201. 
(Dr. Sina also offered credible evidence of his rehabilitation, 
including four years of compliance with his monitoring contract with 
no failed drug tests, as well as the testimony of two physicians who 
attested to his commitment to his recovery and compliance with his 
monitoring contract. See id. at 53201-202). I thus reject's 
Respondent's contention.
    Finally, while Respondent also invokes Morall v. DEA, he ignores 
that, in that case, there were findings that the respondent's 
recordkeeping violations ``occurred over a fairly short period of 
time'' and that the respondent ``appeared to regret'' her 
misconduct. 412 F.2d at 166; see also id. at 183. Here, by contrast, 
Respondent's recordkeeping violations are not confined to a fairly 
short period and involve multiple clinics, and as the CALJ 
concluded, Respondent has not offered a credible acceptance of 
responsibility.
---------------------------------------------------------------------------

    I further agree with the CALJ that the Agency's interests in both 
specific and general deterrence support the revocation of his Florida 
registration and the denial of his Texas application. As for the 
Agency's interest in specific deterrence, Respondent is not barred from 
reapplying in the future, and were Respondent to do so and offer a 
credible acknowledgement of his misconduct (to go along with his 
remedial measures) and be granted a new registration, the sanctions I 
impose in this Decision and Order would hopefully deter him from 
engaging in future misconduct. As for the Agency's interest in general 
deterrence, not only does the Agency have an obvious and manifest 
interest in deterring violations of the CSA and regulations by members 
of the regulated community, the Agency also has a manifest interest in 
ensuring that those members to whom it extends the forbearance of an 
MOA will comply with the terms of those agreements.
    I therefore conclude that Respondent has not refuted the 
Government's prima facie showing that his registrations are not 
consistent with the public interest. 21 U.S.C. 823(f), 824(a) (4). 
Accordingly, I will order that Respondent's Florida registration be 
revoked and that his application to renew his expired Texas 
registration be denied.

Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 
824(a)(4), as well as 28 CFR 0.100(b), I order that DEA Certificate of 
Registration FZ2418401 issued to Roberto Zayas, M.D., be, and it hereby 
is, revoked. I also order that any pending application of Roberto 
Zayas, M.D., to renew or modify this registration, be, and it hereby 
is, denied.
    I further order that that the pending application of Roberto Zayas, 
M.D., to renew DEA Certificate of Registration FZ2249743, be, and it 
hereby is, denied. I further order that any other pending application 
of Roberto Zayas, M.D., for a DEA Certificate of Registration, be, and 
it hereby is, denied. This Order is effective June 7, 2017.

    Dated: April 28, 2017.
Chuck Rosenberg,
Acting Administrator.
[FR Doc. 2017-09285 Filed 5-5-17; 8:45 am]
BILLING CODE 4410-09-P