59956 Federal Register / Vol. 69, No. 193 / Wednesday, October 6, 2004 / Notices 

Yakima River Basin Water Enhancement 

Project, Yakima, Washington, 

established by the Secretary of the 

Interior, will hold a public meeting. The 

purpose of the Conservation Advisory 

Group is to provide technical advice 

and counsel to the Secretary of the 

Interior and Washington State on the 

structure, implementation, and 

oversight of the Yakima River Basin 

Water Conservation Program.

DATES: Tuesday, October 26, 2004, 9 

a.m.–4 p.m.

ADDRESSES: Bureau of Reclamation 

Office, 1917 Marsh Road, Yakima, 

Washington.

FOR FURTHER INFORMATION CONTACT: Mr. 

James Esget, Manager, Yakima River 

Basin Water Enhancement Project, 1917 

Marsh Road, Yakima, Washington, 

98901; 509–575–5848, extension 267.

SUPPLEMENTARY INFORMATION: The 

purpose of the meeting will be to review 

the option of using the acquired habitat 

lands to mitigate the impacts that occur 

from the planned conservation measures 

and develop recommendations. This 

meeting is open to the public.

Dated: September 29, 2004, 

James A. Esget, 

Program Manager, Pacific Northwest Region.

[FR Doc. 04–22458 Filed 10–5–04; 8:45 am] 

BILLING CODE 4310–MN–M

DEPARTMENT OF JUSTICE

Drug Enforcement Administration 

[Docket No. 02–10] 

Kathy A. Morall, M.D.; Revocation of 

Registration 

I. Background 

On September 28, 2001, the Deputy 

Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration issued an Order to Show 

Cause to Kathy A. Morall, M.D., 

(Respondent), proposing to revoke her 

DEA Certificate of Registration. The 

Basis for the Order to Show Cause was 

that Respondent’s registration would be 

inconsistent with the public interest as 

that term is used 21 U.S.C. 823(f). More 

specifically, the OTSC alleged that in 

November 1998, DEA was alerted that 

Respondent had ordered large amounts 

of phentermine and Meridia (Schedule 

IV controlled substances) for delivery to 

her home address. DEA notified the 

Respondent that she could not have 

controlled substances delivered to her 

home because she was registered 

elsewhere. Respondent then asked for a 

change of address on her registration. 

In December 1998, DEA investigators 

conducted an inspection of 

Respondent’s registered location—her 

home. When the investigators arrived 

and asked Respondent where she kept 

the controlled substances, she initially 

denied having any controlled 

substances at home. When the 

investigators asked her about the 

whereabouts of the phentermine and 

Meridia that she had recently ordered, 

she admitted that the drugs were in her 

home. When shown the location of the 

drugs, the investigators noted that the 

drugs were in a box in a closet, and were 

not stored in a securely locked, 

substantially constructed cabinet, as 

required. 

When the investigators asked for the 

Respondent’s dispensing records, she 

said that they were in her former office 

in Denver. She agreed to send them to 

the investigators, but later changed her 

mind, explaining that she wanted to talk 

to an attorney first. When finally 

received, the dispensing records were 

incomplete. The Respondent failed to 

provide any records of inventories, 

theft/loss reports or drug destruction 

reports. 

On January 5, 1999, during the 

execution of an administration 

inspection warrant, the Respondent 

admitted that her record keeping was 

inadequate and that she had failed to 

maintain any inventories of controlled 

substances. She also admitted that the 

dispensing records that she provided 

had been created from memory. The 

Respondent was also unable to provide 

patient charts, because she had been 

evicted from her offices and no longer 

had access. 

During the inspection, the 

investigators found two phentermine 

vials, one empty and one partially full. 

Both were issued in the name of a 

purported patient. The Respondent told 

the investigators that the drugs were 

prescribed for her uncle. The 

Respondent’s husband told the 

investigators, however, that the ‘‘uncle’’

was really just a friend of the family. 

Accountability audits of the 

Respondent’s handling of phentermine 

and Meridia form 1997 to 1999 showed 

various overages and/or underages of 

the drugs. The investigators also learned 

that Respondent had filed a report with 

the police concerning the theft from her 

offices of controlled substances, but she 

had not notified DEA, as required by 

regulation. 

The Respondent requested a hearing 

on the issues raised in the Order to 

Show Cause and the matter was placed 

on the docket of Administrative Law 

Judge Mary Ellen Bittner (the ALJ). 

Following prehearing procedures, 

testimony was presented before the ALJ 

on June 19 and 20, 2002, in Arlington, 

Virginia. The Government presented 

testimony from one witness and had 

admitted several exhibits into evidence. 

In addition to her own testimony, the 

Respondent presented two witnesses 

and also had several exhibits admitted 

into evidence. After the hearing, both 

parties submitted Proposed Findings of 

Fact, Conclusions of Law and 

Argument.

On July 24, 2003, the ALJ certified 

and transmitted the record to the Acting 

Administrator of DEA. The record 

included, among other things, the 

Opinion and Recommended Rulings, 

Findings of Fact, Conclusions of Law 

and Decision of the Administrative Law 

Judge, the findings of fact and 

conclusions of law proposed by all 

parties, all of the exhibits and affidavits, 

and the transcript of the hearing 

sessions. In her opinion, the ALJ 

recommended that Respondent’s DEA 

registration not be revoked. 

II. Final Order 

The Deputy Administrator does not 

adopt the Opinion and Recommended 

Ruling, Findings of Fact, Conclusions of 

Law, and Decision of the Administrative 

Law Judge. The Deputy Administrator 

has carefully reviewed the entire record 

in this matter, as defined above, and 

hereby issues this final rule and final 

order prescribed by 21 CFR 1316.67 and 

21 CFR 1301.46, based upon the 

following findings of fact and 

conclusions of law. 

A. Findings of Fact 

On July 9, 1997, the Respondent was 

assigned DEA Certificate of Registration 

number BM5412868, in Schedules II 

through V. The registration was issued 

to the Respondent at 128 Steele Street, 

Suite 200, Denver, Colorado (the Denver 

clinic). That registered location was 

known as the Life-Plan Weight Loss 

Center and was affiliated with the 

Holland Center for Family Health, and 

Arizona professional corporation. The 

Life-Plan Weight Loss Center was 

owned by Joshua Holland, M.D., and 

Arizona based medical practitioner, 

who was also registered with DEA in the 

State of Arizona. Dr. Holland had 

previously operated a successful weight 

loss clinic in Arizona and he sought to 

open a similar clinic in the Denver area. 

To that end, he placed an advertisement 

in a newspaper, seeking a physician to 

run the Denver clinic. The Respondent 

was ultimately hired for the position. As 

the only physician at the Denver clinic, 

the Respondent was responsible for 

ordering controlled substances under 

her DEA registration number. 

Federal Register / Vol. 69, No. 193 / Wednesday, October 6, 2004 / Notices 59957

The Respondent’s business 

arrangement with Dr. Holland dissolved 

sometime during November 1997 based 

upon financial differences between the 

two. Sometime after November 1997, 

the Respondent left the employ of Dr. 

Holland and relocated from Suite 200 to 

Suite 202 of the 128 Steele Street 

location, where she intended to 

maintain her own clinic under the name 

Total Health Care Systems. 

At the hearing, a DEA Diversion 

Investigator (DI) testified about the 

instigation of the investigation of the 

Respondent. She introduced a swore 

statement from a registration technician 

(RT) at DEA’s Denver Division. In the 

statement, the RT stated that on 

November 12, 1998, she received a voice 

mail message from the Respondent. In 

the message, the Respondent stated that 

she needed to obtain the controlled 

substance phentermine as soon as 

possible. Before returning the 

Respondent’s call, the RT was 

instructed by her supervisor to return a 

previous call from a representative of 

Horizon Wholesale (Horizon) 

concerning a request by the Respondent 

to have controlled substances delivered 

to an unregistered address.

On the same day, the RT placed a call 

to Horizon. The Horizon representative 

expressed concern that when the 

Respondent placed an order for 

controlled substances, the return 

telephone number that she gave was for 

an answering service. He expressed 

further concern that Horizon could not 

obtain a business telephone number for 

the Respondent. The RT instructed the 

Horizon representative not to ship 

controlled substances to the Respondent 

at an address different from her 

registered address. The RT also 

requested the telephone number to the 

answering service that was provided by 

the Respondent. 

After a number of attempts, the RT 

was able to get in touch with the 

Respondent. The Respondent informed 

the RT that she needed to order drugs 

so that they could be shipped to her 

home address. When asked whether she 

was storing controlled substances at her 

home, the Respondent replied in the 

affirmative and told the RT that she had 

a safe at the location to store the 

controlled substances. The DI also 

testified that the Respondent also 

informed another DEA employee that 

she had a safe at her home. 

The RT informed the Respondent that 

she was not allowed to store controlled 

substances at her home for the sake of 

convenience, and could only store 

controlled substances at a registered 

location. The Respondent further added 

that she did not store or dispense 

controlled substances from the Steele 

Street location. 

Following discussions on the proper 

manner to modify a DEA registration, 

the Respondent faxed to the DEA 

Denver office a request to modify her 

registration to reflect her home address, 

8285 South Marion Way, Littleton, 

Colorado (the South Marion Way 

location). The Respondent’s request to 

have controlled substances delivered to 

her home triggered DEA’s investigation. 

Following the modification of the 

Respondent’s DEA registration, the DEA 

investigators received information from 

Horizon that the Respondent ordered 

approximately 3000 dosage units of 

phentermine and 200 dosage units of 

Meridia to be delivered to the 

Respondent’s home. In the interest of 

assessing the security of the ordered 

drugs, and to seek accountability and 

justification for their use, DEA 

investigators went to the Respondent’s 

home on December 1, 1998. 

When they arrived at the 

Respondent’s home, the DEA 

investigators asked to review records of 

the Respondent’s handling of controlled 

substances. Specifically, the 

investigators requested dispensing 

records, records of theft or losses, 

records of drug destructions or any 

disposals of controlled substances. The 

Respondent did not provide any of the 

requested records, including 

inventories. The Respondent informed 

the investigators that all of her records 

were still at her Steele Street office 

location. The Respondent further stated 

that she was in the process of moving 

her practice from the Steele Street 

location to her home address. When 

asked if she was seeing patients at her 

home location, the Respondent 

answered in the negative. 

The investigators then asked to see 

the controlled substances that were 

ordered by the Respondent. She told the 

investigators that the controlled 

substances were at the Steele Street 

location. When reminded that 

controlled substances were to be stored 

at a registered premise, the Respondent 

changed her story, claiming that she was 

not in possession of any controlled 

substances at any location. When the 

investigators asked about the 3,000 

dosage units of controlled substances 

that were shipped to her home by 

Horizon, the Respondent finally 

admitted that the controlled substances 

ere in her home, and retrieved them out 

of an open box in a closet.

The box was small and made of 

cardboard. In addition to the bottles of 

pills, it contained trash, cotton, candy 

wrappers and loose pills. The 

Respondent informed the investigators 

that the loose pills came from a previous 

shipment. Approximately half of the 

controlled substances that Respondent 

had ordered were gone, and some of the 

bottles of phentermine were opened. 

There were also empty bottles of 

Meridia in the box. Investigators then 

asked to see the Respondent’s safe. 

Although she had told RT that she had 

a safe in her home, she admitted that 

she did not have one, but intended to 

get one. 

The Respondent told the investigators 

that she dispensed the missing drugs to 

her patients but that she had not seen 

any patients in the previous few weeks. 

The Respondent then admitted that she 

had not any patients in here home at all, 

but had dispensed the medications by 

mailing them to patients. The 

Respondent also informed investigators 

that her husband and son had access to 

various areas of the house. The DI 

testified that the controlled substances 

were not stored or secured as required 

by DEA laws and regulations. 

The investigators had a discussion 

with the Respondent about the need for 

maintaining proper records, and the 

Respondent agreed that any controlled 

substance records remaining at the 

Steele Street location were to be 

transferred to the new registered 

location. The investigators then 

conducted a physical count of 

controlled substances on hand. 

According to physical count, there were 

735 15mg. phentermine tablets and 785 

30mg. phentermine tablets. 

With respect to controlled substance 

records that were not provided, 

arrangements were made with the 

Respondent to provide the requested 

records the following day. The DI 

further requested that the Respondent 

provide records dating back two years. 

On December 2, 1998, the mail message 

from the Respondent saying that she 

had the requested records and that they 

were in the mail. However, on 

December 4, the DI received a second 

voice mail from the Respondent in 

which the Respondent stated that she 

wished to consult with an attorney 

before turning over the records. 

The Respondent eventually sent what 

she called controlled substance records 

to DEA on December 21, 1998. Although 

DEA requested records dating back two 

years, the Respondent only provided 

records dating back two months, and 

only covering the shipments from 

Horizon. The investigators found that 

some of the records sent by Respondent 

appeared to have been 

‘‘manufactured.’’For example, they 

found that receipt date of the drugs was 

incorrect and that the dates of 

dispensation were in chronological 

59958 Federal Register / Vol. 69, No. 193 / Wednesday, October 6, 2004 / Notices 

order up until December 11, 1998, when 

the next entry reflected a date of 

December 3, 1998. In addition, the totals 

of the drugs on the date of the December 

1, 1998, inventory did not match the 

records provided by the Respondent on 

December 21. Again, the Respondent 

failed to provide an initial inventory, 

and her controlled substance records 

were incomplete and inaccurate. 

Upon receipt and inspection of the 

copied records received from the 

Respondent, the DI called the 

Respondent and requested original 

records. When the Respondent did not 

respond to the request, the DI applied 

for an administrative inspection warrant 

to inspect the Respondent’s new 

registered location. The DI sought the 

inspection warrant in order to verify the 

correctness of inventories, records, 

reports and other documents required to 

be kept under the CSA. 

On January 5, 1999, the DEA 

investigators returned to the 

Respondent’s registered location to 

execute the administrative inspection 

warrant. The investigators found that 

Respondent’s records were 

intermingled; patient sheets were found 

among personal papers, financial data, 

and the like. The investigators also 

found a yellow notepad where 

Respondent had apparently attempted 

to reconcile the quantities of drugs 

given to patients. 

The investigators also found loose 

pieces of paper entitled ‘‘Medication 

Accountability’’ in a desk, and in a box 

in the closet. These records were not 

part of the patient charts. The 

investigators also collected 15 patient 

charts for inspection. Two of the charts 

had no information in them. In many of 

the other charts, the last entry for the 

patients was either September or 

October 1997. In addition, these records 

were not of patients who purportedly 

received dispensations over the 

previous two months. 

The investigators also found a 

prescription bottle for phentermine for 

Carl Ousley, which listed the 

Respondent as the prescribing 

physician. When the investigators asked 

the identity of Mr. Ousley, the 

Respondent said he was her uncle. The 

Respondent’s husband, however, stated 

that Mr. Ousley was only a friend. 

In the garage of the Respondent’s 

home, the investigators found an empty 

bulk manufacturer’s bottle of 100-count 

tablets of phentermine. Although the 

investigators attempted to obtain from 

the Respondent the name of the supplier 

of the drugs, they were never able to 

determine its origins. The Respondent 

could not even provide the names of 

wholesalers from whom she purchased 

controlled substances. Although the 

Respondent informed the investigators 

that she had dispensed these 

medications to patients, she could not 

provide documentation to support this 

claim. There were no original receipts 

for drug purchases and the Respondent 

did not know where they could be 

located. 

The DEA investigators found 

prescription vials for various controlled 

substances in different parts of the 

Respondent’s home. Investigators also 

inspected a filing cabinet in which 

controlled substances were stored. The 

cabinet was not locked and it contained 

two empty bottles of Meridia and three 

opened bottles of phentermine. The 

investigators also found an empty 

prescription vial in the master bedroom 

closet. The investigators could not 

determine the identity of the drug, the 

patient or the prescriber because the 

label had been peeled off.

DEA investigators asked the 

Respondent if she personally used 

phentermine. The Respondent 

acknowledged that she had been given 

a prescription from her previous 

business partner, Dr. Holland, and had 

taken the drug during the previous 

holiday. The Respondent further stated 

that she didn’t have any more pills from 

that prescription, but doubted that Dr. 

Holland would vouch for the 

prescription because of the bad breakup 

of their business arrangement. The 

Respondent further denied any personal 

use of any phentermine from bottles and 

vials found around her home. 

The DEA investigators also discussed 

with the Respondent the last time she 

dispensed controlled substances from 

her new registered locations. The 

Respondent informed investigators that 

she had not dispensed from that 

location since December 1, 1998. The 

Respondent also informed investigators 

that they were free to inspect the Steele 

Street location because that was where 

the remainder of her dispensing records 

were maintained. 

The Respondent was asked about 

inconsistencies in the records that she 

had previously mailed to DEA. When 

asked how she planned to reconcile 

these inconsistencies, the Respondent 

stated that she could do it from memory. 

As noted above, during the January 5 

inspection, the Respondent informed 

DEA investigators that she had not 

dispensed controlled substances from 

her new registered location since 

December 1, 1998. However, the results 

of the physical count performed during 

that inspection revealed different totals: 

for example, the December 1, 1998, 

physical count for phentermine 735 

tables; on January 5, 1999, the physical 

count was 542. The physical count for 

December 1 should have matched that 

for January 5. 

The investigators further noted that 

when comparing the records mailed by 

the Respondent to those seized by 

investigators on January 5, the records 

did not match as well. For example, the 

mailed records for phentermine 30mg. 

showed one full bottle of 1,000 tablets 

and one partial bottle of 220, for a 

balance of 1,220 on hand. However, the 

physical count that day was 735 tablets. 

Following the January 5 inspection, 

DEA performed two accountability 

audits of controlled substances handled 

by the Respondent. The first audit 

period chosen was from November 1, 

1998 to December 1, 1998, and covered 

the drugs phentermine (30mg. and 

15mg.) and Meridia (15mg. and 10mg.). 

The audit resulted in a shortage of 740 

dosage units of phentermine products. 

DEA investigators performed a second 

accountability audit, covering the 

period of November 1, 1998 to January 

5, 1999. The audit for that time period 

reflected shortages and overages of 

phentermine products. 

The investigators had ongoing 

discussions with the Respondent to 

inspect the Steele Street location, in 

order to acquire the remaining 

dispensing records that Respondent said 

were there, and reconcile the 

discrepancies found in DEA’s audits. 

However, the Respondent failed to 

inform the DEA investigators that she 

had been evicted from that location. 

Some time in January 1999, the building 

manager of the Steele Street location 

informed DEA that Respondent had 

been evicted for ‘‘nonpayment.’’ Despite 

the Respondent’s assurances that she 

was agreeable to a meeting at that 

location, she never actually agreed to a 

meeting there on a set date. 

In light of the Respondent’s refusal to 

cooperate with the investigators, they 

applied for a search warrant for the 

Steele Street location (Suite 202). The 

warrant was executed on May 6, 1999. 

During the inspection of Suite 202, the 

investigators took photos of the 

premises. Various controlled substances 

were found at that location as well as 

miscellaneous records.

The investigators generated an 

inventory of controlled substances 

found in Suite 202. These drugs were 

found on a cart, which had been secured 

by the building manager. The cart had 

no locking mechanism, and the drugs in 

the cart were not secured in any fashion 

when found by the building manager. 

The Investigators also determined that 

these controlled substances were 

ordered under the Respondent’s DEA 

registration number from Quality Care 

Federal Register / Vol. 69, No. 193 / Wednesday, October 6, 2004 / Notices 59959

1Most of the conduct at issue regarding the 

Respondent’s experience dispensing controlled 

substances while not complying with DEA 

recordkeeping requirements also involve and 

further demonstrate Respondent’s history of failing 

to comply with state and federal laws concerning 

controlled substances. Therefore, the Government’s 

analysis under 21 U.S.C. § 823(f)(2) and (4) has been 

combined. See Service Pharmacy, Inc., 61 FR 

10,791, 10,795 (1996).

Pharmaceuticals, a controlled substance 

distributor. The investigators found that 

these drugs had expired. They were 

counted, treated as abandoned, and put 

aside for destruction. These drug 

products were identified as 

phentermine 30mg. in various quantities 

and number of containers. 

Copies of ‘‘Dispense-Quick-Log’’

sheets (labels) had been provided with 

vials of drugs from Quality Care 

Pharmaceuticals. The labels did not 

meet DEA record keeping requirements 

because they did not list which drug 

was dispensed or the quantity 

dispensed. These log sheets were found 

tossed in miscellaneous boxes 

throughout the office. 

The DEA investigators also seized 

patient files from Suite 202. The 

investigators tried but failed to find 

current dispensing records of what 

drugs the Respondent had purchased 

from Horizon. An example in this regard 

was the patient record for patient S.S. 

The patient file did not contain 

dispensing information for controlled 

substances, i.e., quantities, etc. The 

other patient files seized were fairly 

representative of the record keeping in 

all of the files, in that the last entries in 

the files were dates in 1997 and early 

1998. 

Following the execution of the search 

warrant, further accountability audits 

were conducted. These audits covered 

the period of November 25, 1997 and 

January 5, 1999, and again, the 

controlled substances audited were 

phentermine (30mg. and 15 mg.) and 

Meridia (5, 10 and 15mg.). [Id.] The 

revised audits were designed to include 

information obtained from the 

inspection of the Steele Street location, 

the Respondent’s new registered 

location, and information obtained from 

a second drug supplier, Quality Care 

Pharmaceuticals. These audits were also 

conducted to give the Respondent credit 

for the miscellaneous papers, receipts, 

and dispensation notes, even though 

these items did not meet DEA record 

keeping requirements. 

The results of DEA’s initial audit 

(excluding records that were not 

maintained pursuant to DEA 

requirements) revealed that the 

Respondent was unable to account for 

11,148 dosage units of controlled 

substances. Through the use of the 

records that the Respondent supplied, 

DEA found that Respondent was unable 

to account for 7,154 dosage units of 

controlled substances. 

DEA’s investigation also revealed that 

Respondent did not maintain a record of 

the transfer of controlled substances. In 

a call to Quality Care Pharmaceuticals, 

DEA investigators learned that 

quantities of Redux and Pondimin (both 

Schedule IV controlled substances) were 

transferred from Respondent’s Steele 

Street office to Quality Care. The 

Respondent had previously told 

investigators that she had not destroyed 

or returned any drugs. 

B. Conclusions of Law 

Pursuant to 21 U.S.C. 823(f) and 

section 824(a)(4) the Deputy 

Administrator of the Drug Enforcement 

Administration may revoke a DEA 

Certificate of Registration if she 

determines that the continued 

registration of the registrant would be 

inconsistent with the public interest. 

Pursuant to 21 U.S.C. 823(f), in 

determining the public interest, the 

following factors will be considered:

(1) The recommendation of the appropriate 

state licensing board or professional 

disciplinary authority. 

(2) The applicant’s experience in 

dispensing controlled substances. 

(3) The applicant’s conviction record under 

Federal or State laws relating to the 

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.

These factors are to be considered in 

the disjunctive; the Deputy 

Administrator may relay on any one or 

combination of factors and may give 

each factor the weight she deems 

appropriate in determining whether a 

registration should be revoked or 

application for registration be denied. 

See Henry J. Schwarz, Jr., M.D., 54 FR 

16,422 (1989). 

In this case, factors two, four and five 

are relevant in determining whether 

Respondent’s DEA Certificate of 

Registration should be revoked and her 

pending application for renewal of that 

registration should be denied. 

1. Factors Two and Four—Experience in 

Dispensing Controlled Substances and 

Compliance With Applicable State and 

Federal Law 1

Factors two and four are also relevant 

with respect to Respondent’s: (1) Failure 

to maintain a record of her return of 

Schedule IV controlled substances to a 

supplier, as required by 21 CFR 1307.12; 

(2) failure to obtain a DEA registration 

for the South Marion location prior to 

dispensing controlled substances from 

that location, as required by 21 CFR 

1301.11 and 1301.12; (3) failure to store 

Schedule IV controlled substances in a 

securely locked, substantially 

constructed cabinet at her former 

registered location at 128 Steele Street 

location, Suite 202, as well as the 

modified registered location at South 

Marion Way, as required by 21 CFR 

1301.75(a); (4) failure to maintain 

complete and accurate records with 

respect to the receipt and dispensing of 

controlled substances, as required by 21 

U.S.C. 827(a)(3), and 21 CFR 1304.03, 

1304.04 and 1304.21(a) (these statutory 

provisions are further relevant to 

Respondent’s failure to account for 

between 7,000 to over 11,000 dosage 

units of Schedule IV controlled 

substances); (5) failure to take an initial 

inventory of controlled substances on 

hand on the date she engaged in the 

dispensing of controlled substances as 

required by 21 U.S.C. 827(a)(1) and 21 

CFR 1304.11; and (6) failure to maintain 

inventories and records of controlled 

substances, either separately from all 

other records, and in a readily 

retrievable fashion, as required by 21 

CFR 1304.04(f)(2) and (g). 

Thus, the Respondent committed 

numerous violations of the Controlled 

Substances Act by failing to adhere to 

proper record-keeping. The importance 

of the DEA system of record-keeping is 

well settled. The purpose of the 

enactment of the 1970 Uniformed 

Controlled Substances Act (the ‘‘Act’’) 

was to provide a system for the control 

of drug traffic and to prevent the abuse 

of drugs. The statutory scheme 

envisioned by the Act is one of control 

through record-keeping. United States v. 

Stidham, 938 F. Supp. 808, 814 (S.D. 

Ala. 1996). Congress sought measures to 

monitor the drug transactions of 

registrants, who, with authority to 

dispense drugs, have the greatest access 

to controlled substances, and therefore 

the greatest opportunity for diversion. 

United States v. Moore, 423 U.S. 122, 

135, (1975). 

In some cases, revocation of a DEA 

registration is an appropriate measure 

for failure to maintain adequate 

controlled substance records and 

inventories. Compliance with Federal 

laws and regulations relating to the 

handling, record keeping, reporting, and 

security of controlled substances are 

essential to assure that adequate control 

is maintained to prevent the diversion 

of controlled substances from legitimate 

channels. North American Medical, Inc., 

53 FR 39,543 (1988). DEA has also 

found grounds for revocation of a DEA 

59960 Federal Register / Vol. 69, No. 193 / Wednesday, October 6, 2004 / Notices 

2While the Deputy Administrator in RX Returns

found revocation appropriate, the revocation was 

stayed and a one year period of probation was 

imposed. [Id. at 37,090]

registration in situations involving poor 

record keeping practices, even where no 

personal use or criminal convictions 

involving controlled substances were 

determined. RX Returns, Inc., 61 FR 

37081 (1996).2

2. Factor Five—Conduct Which May 

Threaten the Public Health and Safety 

The Respondent testified at the 

hearing concerning the reasons for her 

very poor record-keeping. She had no 

assistance to help with record-keeping 

and during the period at issue, she was 

going through extremely stressful 

circumstances. She developed a 

condition involving her pituitary gland 

that lowered her voice, caused her to 

grow a beard and lose hair. She thought 

that she might have to have brain 

surgery. At the same time, her son had 

a seizure and was diagnosed with a 

disease related to sickle cell anemia. 

Several friends died, included one 

suicide. She was very depressed during 

this period, and as a result, her 

recordkeeping suffered.

These circumstances may very well 

partly excuse some of the Respondent’s 

record-keeping failures. The Deputy 

Administrator is particularly disturbed, 

however, by the numerous occasions 

that the Respondent provided false 

information to DEA investigators and 

repeatedly frustrated their attempts to 

conduct their investigation. At the 

hearing, the Respondent claimed that 

she had never meant to mislead the 

investigators and denied making false 

statements. The Deputy Administrator 

finds, however, that the Respondent has 

no credibility, because it is absolutely 

clear that she lied to the investigators on 

numerous occasions. 

The Respondent lied about possessing 

controlled substances at her house. She 

lied about having a safe in her house in 

which to store controlled substances. 

She lied about treating patients from her 

home. She lied about the true identity 

of a friend for whom she had written 

prescriptions for controlled substances. 

She misled the investigators about the 

existence of patient records. She 

continually maintained that she had 

controlled substance records at her 

office, when in truth she did not. She 

later admitted that she had tried to 

create the records from memory. The 

Respondent’s refusal to cooperate with 

DEA investigators led DEA to request 

the issuance of an administrative 

inspection warrant of her South Marion 

Way location and subsequently, the 

Steele Street location. 

Moreover, the Respondent agreed to 

assist DEA investigators in their 

inspection of the Steele Street location, 

without telling them that she had been 

evicted from that location. The 

Respondent’s failure to cooperate with 

the investigators in their efforts to 

inspect the former registered location 

necessitated the execution of a search 

warrant. The Respondent also made 

false statements regarding the transfer of 

drugs. Despite her denials the 

investigators discovered that the 

Respondent had transferred Schedule IV 

controlled substances to Quality Care 

Pharmaceuticals. 

The circumstances surrounding the 

Respondent’s treatment of patients from 

her home is also troubling. As noted 

above, the Respondent was unable to 

account for between 7,000 and 11,000 

dosage units of controlled substances. 

While the Respondent asserted that the 

controlled substances were legitimately 

dispensed to patients, she had no 

records to support her assertion. The 

Respondent’s attempts at creating 

controlled substance records could not 

reconcile the shortages. Even the 

Respondent’s own patient records did 

not bear out her assertions that she 

continued to dispense drugs to patients 

throughout 1998, as many of the records 

showed entries which ended in 1997 

and early 1998. 

The Deputy Administrator does not 

necessarily find that these controlled 

substances were diverted. Nevertheless, 

the lack of proper documentation to 

account for the shortage of large 

quantities of drugs; the Respondent’s 

admission to the use of phentermine; 

her demonstrated lack of candor; empty 

drug vials around her home of which 

she was unable to account for their 

origins or disposition, all suggest 

possible drug use on the Respondent’s 

part, or by someone close to her. 

III. Conclusion 

The preponderance of evidence 

demonstrates that the Respondent’s 

continued registration would be 

contrary to the public interest. If the 

Respondent’s only failures involved 

record-keeping, the Deputy 

Administrator might find it appropriate 

to impose a lesser sanction than 

revocation of the Respondent’s DEA 

registration. The Respondent’s false and 

misleading statements, however, cannot 

be excused. DEA cannot maintain the 

integrity of its regulatory system if its 

registrants, when asked to provide 

information required by law, provide 

false information. Accordingly, the 

Deputy Administrator, pursuant to the 

authority vested in her by 21 U.S.C. 823 

and 824 and 28 CFR 0.100 and 0.104, 

hereby orders that the Respondent’s 

DEA Registration be, and it hereby is, 

revoked, and that any requests for 

renewal or modification be, and hereby 

are, denied. This order is effective 

November 5, 2004.

Dated: September 28, 2004. 

Michele M. Leonhart, 

Deputy Administrator.

[FR Doc. 04–22422 Filed 10–5–04; 8:45 am] 

BILLING CODE 4410–09–M

DEPARTMENT OF JUSTICE

Drug Enforcement Administration 

Michael J. Schwartz, MD.; Revocation 

of Registration 

On January 5, 2004, the Deputy 

Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration (DEA), issued an Order 

to Show Cause to Michael J. Schwartz, 

M.D. (Dr. Schwartz) who was notified of 

an opportunity to show cause as to why 

DEA should not revoke his DEA 

Certificate of Registration, BS5860590, 

pursuant to 21 U.S.C. 824(a)(3). 

Specifically, the Order to Show Cause 

alleged that Dr. Schwartz was without 

State license to handle controlled 

substances in the State of Louisiana. 

The Order to Show Cause also notified 

Dr. Schwartz that should no request for 

a hearing be filed within 30 days, his 

hearing right would be deemed waived. 

The Order to Show Cause was sent by 

certified mail to Dr. Schwartz at his 

registered location in Kenner, Louisiana, 

with a second copy sent to Dr. 

Schwartz’ legal counsel in New Orleans. 

The order sent to Dr. Schwartz’ address 

of record was subsequently returned to 

DEA by the United States Postal Service 

with a stamped notation: ‘‘attempted, 

not known.’’ According to the return 

receipt of the second order sent to the 

registrant’s attorney, it was accepted on 

Dr. Schwartz’ behalf on or around 

January 15, 2004. DEA has not received 

a request for hearing or any other reply 

from Dr. Schwartz or anyone purporting 

to represent him in this matter. 

Therefore, the Deputy Administrator 

of DEA, finding that (1) thirty days 

having passed since the attempted 

delivery of the Order to Show Cause to 

the registrant’s address of record, as 

well as to a second address, and (2) no 

request for hearing having been 

received, concludes that Dr. Schwartz is 

deemed to have waived his hearing 

right. See David W. Linder, 67 FR 12579 

(2002). After considering material from 

the investigative file in this matter, the