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DEA Issues Six Final Orders

Health Law Alert Larry P. Cote

On June 12, 2012, the Drug Enforcement Administration ("DEA") issued six final orders involving administrative actions initiated by the Agency. The matters decided by DEA involved actions against a Narcotic Treatment Program ("NTP"), a list I chemical importer, and four individual practitioners. A summary of each matter follows:

Application Denied for Lack of State Licensure

On December 2, 2011, the Deputy Assistant Administrator, Office of Diversion Control, DEA, issued an Order to Show Cause ("OTSC") to Serenity Café ("Serenity"), of Chicago, Illinois proposing the denial of Serenity's application for a DEA registration as an NTP. The OTSC specifically alleged that Serenity did not possess the proper licensure with the Illinois Department of Human Services to operate as a NTP; that Serenity had materially falsified its application for DEA registration; and that Serenity's previous failures (while operating as Recovery Café) to adequately account for controlled substances and maintain records required to be kept by the Controlled Substances Act ("CSA") supported a finding that granting Serenity's application would be inconsistent with the public interest.

In denying Serenity's application, the DEA held that "the possession of authority under state law to dispense controlled substances is an essential condition for obtaining and maintaining a DEA registration." Having been denied a license by the Illinois Department of Human Services, Serenity lacked state authorization to dispense controlled substances for maintenance treatment. Therefore, DEA determined that Serenity is not a "practitioner" within the meaning of the CSA, and thus, it is not entitled to be registered.

Proceedings Dismissed as Moot Due to Expired DEA Registration

On November 19, 2010, the Deputy Assistant Administrator, Office of Diversion Control, DEA, issued an OTSC to Donald Brooks Reece II, M.D. ("Dr. Reece"), of Morehead City, N.C. The OTSC proposed the revocation of Dr. Reece's DEA Certificate of Registration as a practitioner.

Without addressing the underlying factual and legal basis for the OTSC, the Agency dismissed the proceedings against Dr. Reece as moot. Specifically, the Administrator took official notice of Dr. Reece's DEA registration record and found that Dr. Reece failed to file a timely renewal application. Under DEA precedent, absent a timely filed renewal application (prior to the expiration date), a DEA registration automatically expires. Thus, the Agency concluded that "because Respondent has allowed his registration to expire and has not filed either a renewal or a new application, this case is now moot and will be dismissed."

Application Denied Based on Multiple Past Violations of the CSA

On September 22, 2011, the Deputy Assistant Administrator, Office of Diversion Control, DEA, issued an OTSC to Bill Alexander, M.D. ("Dr. Alexander"), of Porter, Texas proposing the denial of Dr. Alexander's application for a DEA Certificate of Registration as a practitioner. Specifically, the OTSC alleged that in 2009 Dr. Alexander unlawfully possessed 64 kilograms of marijuana, a schedule I controlled substance, in violation of both federal and state law; that he had transported marijuana for a purported drug dealer on at least 12 prior occasions; and that he also admitted to law enforcement personnel that he was addicted to and abused crack cocaine, a schedule I controlled substance. The OTSC further alleged that Dr. Alexander prescribed controlled substances to individuals without holding a valid Texas Controlled Substances Registration.

DEA denied Dr. Alexander's application for a DEA Certificate of Registration based on Dr. Alexander's misconduct in issuing prescriptions without the requisite state authority, his admitted transportation of marijuana for a drug trafficking organization, and his self-abuse of crack cocaine. In reaching this conclusion, the Administrator reiterated several long-standing principles involving the Agency's interpretation of its oversight responsibilities with respect to DEA registrations. First, the Administrator re-affirmed that it has "a statutory obligation to make its independent determination as to whether the granting of [a registration] would be in the public interest." Thus, a State's failure to take action against a doctor's license and/or whether the individual was actually convicted of a crime involving controlled substances is not dispositive in determining whether the continuation of the registration is in the public interest. Also, prescribing controlled substances without possessing state authority to do so is a violation of the CSA, even if the practitioner maintains a valid DEA registration. Lastly, the Administrator affirmed that a practitioner's self-abuse of controlled substances, by itself, could form the basis to revoke, suspend, restrict or deny a DEA registration, even if there is no evidence that the doctor abused his prescription-writing authority to obtain the controlled substances.

DEA Allows Practitioner to Maintain a DEA Registration Despite Exclusion from Federal Health Programs

On March 29, 2011, the Deputy Assistant Administrator, Office of Diversion Control, DEA, issued an OTSC to Kwan Bo Jin, M.D. ("Dr. Jin"), of Palatine, Illinois proposing the revocation of Dr. Jin's DEA Certificate of Registration as a practitioner. The sole basis for seeking the revocation of Dr. Jin's registration was Dr. Jin's April 30, 2010, five-year exclusion from participation in all federal health programs. This exclusion was premised on his October 2009 conviction for health care fraud.

The Administrator dismissed the proceedings against Dr. Jin and allowed his continued registration with DEA. In reaching this decision, the Administrator concluded that Dr. Jin credibly accepted responsibility for the misconduct, which led to his conviction for health care fraud, that he complied with the terms of his sentence, and also demonstrated that he has undertaken remedial measures. Accordingly, the Administrator adopted the Administrative Law Judge's ("ALJ") conclusion that Dr. Jin's continued registration would be consistent with the public interest.

DEA Affirms Immediate Suspension of Doctor's DEA Registration

On May 25, 2010, the Deputy Administrator, DEA, issued an OTSC and Immediate Suspension Order ("ISO") to Darryl J. Mohr, M.D. ("Dr. Mohr") of Phoenix, Arizona. The OTSC/ISO proposed the revocation of Dr. Mohr's DEA Certificate of Registration as a practitioner. Specifically, the OTSC/ISO alleged that Dr. Mohr materially falsified his applications for renewal of his DEA Certificates of Registration in January 2005, and January 2008, by answering "no" to the liability questions despite the fact that his state medical license was suspended in November 2001. Moreover, the OTSC/ISO alleged that Dr. Mohr prescribed and dispensed inordinate amounts of controlled substances, primarily hydrocodone compounds, under circumstances where Dr. Mohr knew or should have known the prescriptions were not for legitimate medical purposes.

Rather than rule on the underlying merits of the case, the Administrator took judicial notice of Dr. Mohr's DEA registration record, and found that Dr. Mohr failed to file a timely renewal application. Thus, because Dr. Mohr's registration expired shortly after the ALJ issued his decision, the Administrator rejected the ALJ's recommendation to revoke Dr. Mohr's registration. Rather, the Administrator determined that there was no DEA registration to revoke and no pending renewal application to deny. Nonetheless, the Administrator did analyze the underlying misconduct alleged against Dr. Mohr and concluded that the ISO should be affirmed because Dr. Mohr committed such acts that were inconsistent with the public interest and posed an imminent danger to public health and safety.

The Administrator agreed with the ALJ's factual determination that Dr. Mohr prescribed narcotic controlled substances to two undercover law enforcement officers even though he did not obtain a patient history or perform a bona fide physical exam during any of the four undercover visits. Such conduct violates Arizona law, which explicitly provides that it is unprofessional conduct to prescribe, dispense or furnish a prescription medication to a person unless the doctor first conducts a physical examination of that person or has previously established a doctor-patient relationship. Moreover, the Administrator found that there was ample evidence establishing that Dr. Mohr knew that the undercover officers were not legitimate patients but were seeking the controlled substances to abuse them.

The Administrator did, however, conclude that Dr. Mohr did not materially falsify his application for DEA registration by failing to disclose a prior action by the Arizona Medical Board which placed Dr. Mohr's medical license on probation. While the Administrator acknowledged that Dr. Mohr did in fact falsify his application by not answering the liability question truthfully, she concluded that the falsification was not material because the underlying basis for the probation related to Dr. Mohr's prescribing practices regarding a noncontrolled substance, Viagra. Accordingly, she concluded that Dr. Mohr's misconduct regarding Viagra was not capable of influencing the Agency's decision as to whether to allow Dr. Mohr to maintain a DEA registration.

Applicant for Importer Registration Failed to Demonstrate Proposed Importation Was Necessary to Provide for Any Legitimate Purpose

On April 6, 2010, the Deputy Assistant Administrator, DEA, issued an OTSC to 4 OTC, Inc. ("4 OTC"), proposing to deny 4 OTC's application for a DEA Certificate of Registration as an importer of finished form ephedrine products that the company intended to sell in the United States via the Internet. The factual and legal basis for the OTSC primarily focused on allegations of past misconduct on the part of the owners of 4 OTC with respect to their handling of other schedule listed chemical products.

The Administrator agreed with the ultimate conclusion of the ALJ and denied 4 OTC's application. Specifically, the Agency found that as the proponent of the proposed importation and thus, the party carrying the burden of proof, 4 OTC failed to establish by a preponderance of the evidence that its proposed importation of its combination ephedrine/guaifenesin product was "necessary to provide for medical, scientific, or other legitimate purposes" as required by 21 U.S.C. § 952(a)(1). "Indeed, [4 OTC] offered no evidence that importation of its combination product is necessary to provide for any legitimate purpose." Although the Administrator found that this reason alone could support the denial of 4 OTC's application, she nonetheless also agreed with the ALJ ultimate conclusion that 4 OTC's registration would also be inconsistent with the public interest. In reaching this conclusion the Agency relied on several factors including, but not limited to: (1) one of the owner's past sales of ephedrine products to a company that had unlawfully exported ephedrine to three stores in Arizona, and the owner's insistence at the hearing that he has no control over what his customers do with his products; (2) that on multiple occasions, a different owner of 4 OTC sold ephedrine under circumstances which provided reason to believe that the ephedrine would be diverted into the illicit manufacture of methamphetamine; (3) that even as of the date of the hearing, 4 OTC's standard operating procedures still did not accurately reflect various State laws prohibiting its proposed method of distribution.

For more information on the DEA's Final Orders, please contact Larry Cote at (202) 372-9524 / [email protected], D. Linden Barber at (312) 715-5219 / [email protected] or your Quarles & Brady attorney.