69402 Federal Register / Vol. 69, No. 228 / Monday, November 29, 2004 / Notices 

Xtreme Enterprises, Inc., 67 FR 76195 

(2002). 

With regard to factor five, other 

factors relevant to and consistent with 

the public safety, the Deputy 

Administrator finds this factor weighs 

heavily against granting the application. 

Unlawful methamphetamine use is a 

growing public health and safety 

concern throughout the United States 

and Southeast. Ephedrine and 

pseudoephedrine are precursor products 

needed to manufacture 

methamphetamine and operators of 

illicit methamphetamine laboratories 

regularly acquire the precursor products 

needed to manufacture the drug from 

convenience stores and gas stations 

which, in prior DEA decisions, have 

been identified as constituting the grey 

market for list I chemical products. It is 

apparent that CWK intends on being a 

participant in this market. 

While there are no specific 

prohibitions under the Controlled 

Substances Act regarding the sale of 

listed chemical products to these 

entities, DEA has nevertheless found 

these establishments serve as sources for 

the diversion of large amounts of listed 

chemical products. See, e.g., ANM 

Whilesale, supra, 69 FR 11652; Xtreme 

Enterprises, Inc., supra, 67 FR 76195; 

Sinbad Distributing, 67 FR 10232 

(2002); K.V.M. Enterprises, 67 FR 70968 

(2002). 

The Deputy Administrator has 

previously found that many 

considerations weighed heavily against 

registering a distributor of list I 

chemicals because, ‘‘[v]irtually all of the 

Respondent’s customers, consisting of 

gas station and convenience stores, are 

considered part of the grey market, in 

which large amounts of listed chemicals 

are diverted to the illicit manufacture of 

amphetamine and methamphetamine.’’

Xtreme Enterprises, Inc., supra, 67 FR at 

76197. As in Xtreme Enterprises, Inc.,

lack of a criminal record and intent to 

comply with the law and regulations are 

far outweighed by CWK’s lack of 

experience and the company’s intent to 

sell ephedrine and pseudoephedrine 

exclusively to the gray market. The 

Deputy Administrator is further 

troubled by CWK’s providing DEA 

investigators misleading information, 

indicating the company cannot be 

trusted to handle the responsibilities of 

a registrant. 

Based on the foregoing, the Deputy 

Administrator concludes that granting 

the pending application would be 

inconsistent with the public interest. 

Accordingly, the Deputy 

Administrator of the Drug Enforcement 

Administration, pursuant to the 

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

and 824 and 28 CFR 0.100(b) and 0.104, 

hereby orders the pending application 

for DEA Certification of Registration, 

previously submitted by CWK 

Enterprises, Inc., be, and it hereby is, 

denied. This order is effective December 

29, 2004.

Dated: November 10, 2004. 

Michele M. Leonhart, 

Deputy Administrator.

[FR Doc. 04–26309 Filed 11–26–04; 8:45 am] 

BILLING CODE 4410–09–M

DEPARTMENT OF JUSTICE

Drug Enforcement Administration 

[Docket No. 02–40] 

Dan E. Hale, D.O., Denial of 

Registration 

On March 21, 2002, the Deputy 

Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration (DEA), issued an Order 

to Show Cause to Dan E. Hale, D.O. 

(Respondent) notifying Respondent of 

an opportunity to show cause as to why 

DEA should not deny his application for 

a DEA Certificate of Registration as a 

practitioner pursuant to 21 U.S.C. 

824(a)(1) and (a)(5) and on grounds that 

his registration would be inconsistent 

with the public interest as that term is 

used in 21 U.S.C. 823(f). 

The Order to Show Cause alleged in 

sum that on March 21, 1995, 

Respondent had been convicted by a 

jury in United States District Court, 

Eastern District of Kentucky, of 21 

felony counts related to wrongful billing 

under Medicaid, Medicare and 

TennCare programs from 1980 to 1993. 

On June 20, 1995, Respondent 

surrendered his DEA Certificate of 

Registration AH7753709 and was 

subsequently sentenced to a total of 57 

months confinement, followed by two 

years of supervised release. 

It was also alleged that on March 18, 

1994, the Tennessee Department of 

Health, Board of Osteopathic Medicine 

(Board), issued a Notice of Charges 

alleging, among other things, that 

Respondent improperly allowed a 

physician assistant to dispense and 

prescribe controlled substances without 

supervision and that in several 

instances Respondent and the physician 

assistant, dispensed and prescribed 

controlled substances in violation of 

established treatment protocols. On 

November 8, 1995, he entered into an 

Agreed Order with the Board, whereby 

the Board ordered that he surrender his 

osteopathic medical license and in the 

event his conviction was upheld on 

appeal, his license would be 

automatically revoked. After the 

conviction was affirmed by the Sixth 

Circuit Court of Appeal on January 28, 

1997, the Board revoked Respondent’s 

medical license. That license was 

subsequently reinstated on May 25, 

2001. 

It was further alleged that on January 

26, 1996, as a result of Respondent’s 

convictions, the United States 

Department of Health and Human 

Services notified him that he was 

mandatorily excluded from the 

Medicare program pursuant to 42 U.S.C. 

1320a–7(a). 

Finally, it was alleged that on June 18, 

2001, Respondent materially falsified an 

application for DEA registration by 

failing to disclose the voluntary 

surrender of his previous DEA 

registration and the revocation of his 

State osteopathic medical license. 

Respondent requested a hearing on 

the issues raised by the Order to Show 

Cause and following pre-hearing 

procedures, a hearing was held in 

Arlington, Virginia, on January 7 and 8, 

2003. At the hearing, both parties called 

witnesses to testify and introduced 

documentary evidence. After the 

hearing, both parties submitted written 

proposed findings of fact, conclusions of 

law, and argument. 

On November 26, 2003, Presiding 

Administrative Law Judge Mary Ellen 

Bittner (Judge Bittner) issued her 

Opinion and Recommended Ruling, 

Findings of Fact, Conclusions of Law 

and Decision of the Administrative Law 

Judge (Opinion and Recommended 

Ruling) in which she concluded that 

grounds existed to deny Respondent’s 

application for DEA registration and 

recommended the application be 

denied. On January 14, 2004, 

Respondent filed exceptions to Judge 

Bittner’s Opinion and Recommended 

Ruling and on January 15, 2004, Judge 

Bittner transmitted the record of these 

proceedings to the then-Acting Deputy 

Administrator of DEA. 

By his counsel’s letter dated March 

22, 2004, Respondent asked the Deputy 

Administrator to consider the impact of 

recent changes implemented by the 

State of Tennessee, Bureau of TennCare. 

Counsel for the Government had no 

objection and the submission has been 

considered as a part of the 

administrative record. 

The Deputy Administrator has 

considered the record in its entirety, 

and pursuant to 21 CFR 1316.67, hereby 

issues her final order based upon 

findings of fact and conclusions of law 

as hereinafter set forth. As set forth 

below, the Deputy Administrator adopts 

in whole, the recommended findings of 

Federal Register / Vol. 69, No. 228 / Monday, November 29, 2004 / Notices 69403

fact and conclusions of law of the 

Administrative Law Judge. Her adoption 

is in no manner diminished by any 

recitation of facts, issues, or conclusions 

herein, or of any failure to mention a 

matter of fact or law. 

The record before the Deputy 

Administrator sows that on October 7, 

1977, Respondent, an osteopathic 

physician, was issued DEA Certificate of 

Registration AH7753707, as a 

practitioner. At that time, Respondent 

had recently opened a practice in 

Morristown, Tennessee, had two 

employees and shared office space with 

another physician, Doctor L., at the 

Boulevard Center clinic. Respondent 

later purchased Doctor L.’s practice, 

hired him as an employee and began to 

expand operations. By the early 1990’s, 

Respondent had over 100 employees 

and his clinic was seeing between 225 

to 250 patients per day.

Around 1989, Respondent opened a 

second clinic in Bean Station, 

Tennessee, about eleven miles from 

Morristown. It was primarily staffed by 

Mr. Dean B., a physician assistant. 

Respondent later added a pharmacy and 

dental office to his Bean Station 

operations. Respondent testified that he 

never intended to go to the Bean Station 

clinic on a daily basis to see patients 

and it was overseen by the Rural Health 

Consortium, a government agency 

which oversees clinics run by physician 

assistants. He testified that he had 

consulted with attorneys who advised 

him it was permissible for Mr. B., to 

staff the Bean Station clinic. 

From about 1991 to 1994, respondent 

made four trips to Benin, Africa, where 

he and his team provided humanitarian 

medical assistance to hundreds of 

patients every day. During an early 1991 

trip, he asked Dr. L. to cover for him at 

Bean Station. While Dr. L. discussed 

patients with Mr. B., he did not sign 

medical charts and Respondent signed 

them upon his return. Respondent 

testified he thought it did not make any 

difference whether he or Dr. L. signed 

the charts and that based on his review 

of those charts, all controlled substances 

prescribed at the clinic were 

appropriate. 

On March 18, 1994, the Tennessee 

Division of Health Related Boards, 

Department of Health (Department of 

Health), issued a Notice of Charges 

against Respondent. It alleged, in sum, 

that: Respondent had been improperly 

using physician assistants to supervise 

his clinics since at least 1985, even 

though State legislation authorizing 

osteopathic physicians to utilize and 

supervise physician assistants was not 

enacted until 1992 and it had no 

retroactive effect; that he allowed his 

physician assistants to see, treat and 

diagnose conditions in new patients and 

previously undiagnosed conditions in 

regular patients; that the allowed Mr. B. 

to improperly see patients and render 

treatment that was inappropriate for the 

diagnosed conditions; allowed Mr. B. to 

provide treatment and medications that 

were inconsistent with written protocols 

and allowed him to diagnose conditions 

outside the scope of those protocols 

without first consulting Respondent; 

that between January 1991 until April 

1992, he continuously improperly 

dispensed or prescribed controlled 

substances to numerous patients 

without adequate attempts to diagnose 

their need for the controlled substances 

or attempt alternative methods of 

therapy; and allowed his patients to 

refer to Mr. B. as ‘‘doctor.’’

While Respondent was afforded a 

right to a hearing on the allegations, on 

November 8, 1995, through counsel, he 

entered into an Agreed Order with the 

Tennessee Board of Osteopathic 

Examination (Tennessee Board). 

However, the Agreed Order did not 

specifically address the allegations in 

the Notice of Charges but was, instead, 

based on Respondent’s felony 

convictions of March 21, 1995. 

At the DEA hearing, Respondent 

contested the allegations in the Notice 

of Charges. He testified, in sum, that he 

was appropriately vigilant in 

prescribing controlled substances and in 

supervising Mr. B. Respondent’s son, an 

attorney and medical student who 

worked in the clinic, testified 

Respondent saw Mr. B. each morning 

and they talked on the phone eight to 

ten times a day. The son further testified 

that during 1992 and 1993, the Bean 

Street clinic saw an average of 45 to 55 

patients per day and, while not every 

patient was a subject of discussion 

between Respondent and Mr. B., 

Respondent would review all patient 

notes and ask questions. 

Dr. Maurice R., an osteopath who had 

known Respondent for 26 years, 

testified on Respondent’s behalf. He had 

worked in Respondent’s clinic briefly as 

part of his training and considered 

Respondent his mentor. He testified he 

never saw Respondent over-prescribe 

controlled substances and described the 

difficulties facing doctors in East 

Tennessee in determining patients’

legitimate needs for controlled 

substances. He described Respondent as 

providing care to a medically 

underserved community by accepting 

Medicaid patients. 

With regard to the allegations in the 

Notice of Charges, Dr. R. testified in 

order to determine whether the standard 

of care was met with regard to any 

patient, it would be necessary to review 

the patient’s charts, which were 

unavailable. However, from what was 

contained in the Notice of Charges, he 

saw no deviation from the standard of 

care. With regard to the allegation that 

Respondent utilized a physician’s 

assistant prior to enactment of 

legislation permitting such a practice, 

Dr. R. testified that the Tennessee 

Legislature frequently forgot to include 

physicians with Doctor of Osteopathy 

degrees in legislation addressing 

physicians with Medical Doctor degrees. 

A pharmacist who worked at the 

pharmacy next door to Respondent’s 

Morristown office testified that from 

1985 to 1995, prescriptions issued by 

Respondent made up about thirty 

percent of the pharmacy’s prescription 

business. He further testified 

Respondent did not issue prescriptions 

for controlled substances in greater 

proportions than other area physicians 

or issue prescriptions for abnormal 

quantities of drug. The pharmacist had 

also accompanied Respondent on a 

humanitarian trip to Benin and 

described the good work they 

performed. The pharmacy’s owner, who 

co-owned the building with 

Respondent, testified Respondent issued 

the ‘‘vast majority’’ of prescriptions 

filled at the pharmacy and that he 

prescribed drugs in Schedules III, IV 

and V, but rarely those in Schedule II.

On November 17, 1994, Respondent 

was indicated in the United States 

District Court for the Eastern District of 

Kentucky on 21 felony counts of 

racketeering, conspiracy to engage in 

racketeering, insurance fraud, and 

Medicare and Medicaid fraud. A 22nd 

count contained forfeiture allegations. 

The indictment alleged, in substance, 

that Respondent and his associates 

ordered and performed diagnostic tests 

on patients that were unnecessary, but 

for which medical insurers would pay; 

personnel working for Respondent put 

computer-generated medical histories in 

patient charts to justify diagnostic tests; 

providers at Respondent’s clinic treated 

Medicare and Medicaid patients 

differently from others by, for example, 

requiring them to come to the clinic in 

person to obtain prescription refills, 

thus affording the clinic more 

opportunities to run reimbursable tests; 

although some Medicaid patients 

abused addictive medications, providers 

repeatedly gave such medications to 

those patients because the patients were 

a good source of business and did not 

object to being given numerous 

diagnostic tests as long as they received 

the drugs they wanted; that Respondent 

and Dr. L. had admitted to hospital 

personnel that certain individuals were 

69404 Federal Register / Vol. 69, No. 228 / Monday, November 29, 2004 / Notices 

engaged in an on-going insurance fraud 

to collect on multiple hospital 

supplemental insurance policies and 

were rewarded for this assistance by 

receiving payment for medical services 

and unnecessary diagnostic tests; the 

clinic gave numerous new patients 

complete electrocardiograms, blood 

tests, and X-ray tests before the patients 

saw a physician and without regard for 

medical necessity; clinic personnel 

injected patients with certain drugs 

because there was an abundant supply 

of the drug in the clinic, not because the 

drug was medically necessary; 

injectable medications were diluted 

below the therapeutic dosages to 

increase profits; and when Medicaid 

patients were switched to TennCare in 

January 1994, they were given 

unnecessary comprehensive 

examinations solely because TennCare 

would reimburse the clinic for these 

tests. 

On March 21, 1995, a jury found 

Respondent guilty of all 21 counts. On 

March 21, 1995, Respondent entered 

into an Agreed Order of Forfeiture with 

the United States. On July 3, 1995, the 

court sentenced Respondent to 57 

months of incarceration, followed by 

two years of supervised release and 

ordered him to comply with the Agreed 

Order of Forfeiture and pay a special 

assessment of $1,050.00. 

Respondent appealed the judgment to 

the United States Court of Appeals for 

the Sixth Circuit, which affirmed the 

convictions on January 28, 1997. See, 

United States v. Hale, No. 95–5915 (6th 

Cir. January 28, 1997). The Court of 

Appeal described the hospital 

admission aspect of the case as follows:

The fraud worked simply. Participants would 

buy numerous hospital indemnity policies 

that paid a sum certain in the event of a 

hospital admission. They would then fake 

injuries, present themselves to a 

‘‘sympathetic’’ doctor, and gain admission to 

a hospital, typically for a soft tissue injury. 

The participants then filed claims for 

coverage with numerous insurance 

companies. Id.

The Court stated that the issue on 

appeal was whether Respondent knew 

of the fraud. It concluded he did, relying 

on testimony from Russell R., who had 

directed many of the scheme’s 

participants, that Respondent had 

advised that patients should ‘‘bend over 

in pain, use a wheelchair, and request 

pain medication.’’ Respondent ‘‘also 

discouraged [Russell R.’s] fondness for 

staging car accidents because they 

involved police; rather, ‘a bathtub was 

a good place to have an accident.’ ’’ The 

court also relied on the testimony of a 

hospital administrator that he had been 

warned his hospital was being used to 

perpetuate fraud, the he discussed the 

fraud with Respondent, and Respondent 

indicated he knew about it. Id.

With respect to overbilling, the court 

noted testimony that Respondent’s ‘‘goal 

was to see as many patients and perform 

as many tests as the government would 

pay for’’ and that Respondent used an 

egg timer to time himself and 

challenged the staff to increase the 

number of tests they performed. In sum, 

the court found, ‘‘the testimony at trial 

from former employees, including 

doctors, nurses, and staff about the 

unnecessary testing and dubious billing 

was overwhelming.’’ Id.

During the DEA hearing, Respondent 

testified about the conduct leading to 

his convictions. He testified that several 

patients came to him ‘‘faking injuries’’

and ‘‘wanting to be put into the hospital 

for physical therapy,’’ and that these 

patients used supplemental insurance to 

pay for their hospitalization and had 

bribed one of Respondent’s insurance 

clerks to stamp forms for multiple (as 

many as 25) different companies, and 

would then collect on all of their 

policies. According to Respondent, ‘‘I 

was guilty of participating in that 

because I was the physician.’’

Respondent testified that ‘‘I know that 

there were things going on that 

shouldn’t be there and I should have 

taken action to have changed it.’’ He 

admitted to the conduct alleged in 

various counts of the indictment, but 

denied providing addictive medications 

to patients who abused them in return 

for the patients agreeing to undergo 

diagnostic tests and that he felt they 

needed the diagnostic tests he ordered 

for them. 

Notwithstanding the allegations in the 

indictment relating to providing drugs 

to persons who abused them and 

likewise, notwithstanding the jury’s 

verdicts, Respondent also testified at the 

DEA hearing that he had never been 

charged with any crime relating to the 

unlawful prescribing or dispensing of 

controlled substances. 

On June 20, 1995, Respondent 

surrendered his DEA Certificate of 

Registration AH7753709 and signed a 

DEA form preprinted with language that 

he was surrendering the registration 

‘‘[i]n view of my alleged failure to 

comply with the Federal requirements 

pertaining to controlled substances, and 

as an indication of my good faith in 

desiring to remedy any incorrect or 

unlawful practices on my part.’’

As previously noted, on November 8, 

1995, Respondent entered into an 

Agreed Order with the Tennessee Board. 

The Agreed Order cited the Tennessee 

Board’s policy of disciplining 

osteopathic physicians convicted of 

felonies and ordered Respondent to 

surrender his license to practice 

osteopathic medicine in Tennessee. It 

did not address the specific allegations 

in the Notice of Charges. 

The Agreed Order further stated that 

if Respondent’s conviction was upheld 

on appeal, his license would be 

automatically revoked and if the 

conviction was reversed, the Tennessee 

Board would hear the matters in the 

Notice of Charges on their merits. 

Respondent commenced his sentence 

on July 24, 1995. On January 26, 1996, 

the Director, Health Care Administrative 

Sanctions, U.S. Department of Health 

and Human Services, wrote Respondent 

advising him that because of his felony 

convictions, he was excluded from 

participating in Federal health care 

programs, including Medicare and 

Medicaid, for a period of fifteen years. 

Respondent was released from 

incarceration on May 19, 1998. In early 

2000, he applied to the Tennessee Board 

for relicensure. After taking and passing 

a Board ordered national examination, 

Respondent’s medical license was 

reinstated on May 25, 2001.

On June 18, 2001, Respondent 

executed the application for DEA 

registration at issue in this matter. The 

form included several standard liability 

questions asking about prior convictions 

or adverse actions being taken against 

Federal or State licenses. Question 4(c) 

asked, ‘‘Has the applicant ever been 

convicted of a crime in connection with 

controlled substances under State or 

Federal law?’’ Question 4(d) asked, ‘‘Has 

the applicant ever surrendered or had a 

Federal controlled substance 

registration revoked, suspended, 

restricted or denied?’’ Question 4(e) 

asked, ‘‘Has the applicant ever had a 

State professional license or controlled 

substance registration revoked, 

suspended, restricted, or placed on 

probation?’’ The application further 

directs the applicant to explain any 

affirmative answers. Respondent 

answered ‘‘no’’ to all three questions 

and left the explanation section blank. 

A DEA Diversion Investigator was 

assigned to investigate the application 

after a routine check of the NADDIS 

system indicated he had surrendered a 

previous DEA registration. The 

investigator testified at the hearing that 

Respondent’s answer to question 4(d) 

was false because he had surrendered 

his DEA registration in 1995 and that 

his answer to question 4(e) was also 

false because he was ordered to 

surrender his State license as a result of 

his felony conviction and when the 

conviction was affirmed on appeal, the 

license was automatically revoked. 

Federal Register / Vol. 69, No. 228 / Monday, November 29, 2004 / Notices 69405

Respondent testified that while his 

answer to question 4(d) was false, he 

had simply forgotten he had 

surrendered his previous DEA 

registration and his answer had not been 

an intentional misrepresentation. He 

attributed the error to stress, anxiety and 

depression he was suffering at the time 

of the surrender emanating from the 

criminal proceedings and loss of his 

practice. Respondent’s son also testified 

regarding the stress his father had been 

suffering at the time and the possibility 

that he had genuinely forgotten about 

surrendering the registration when he 

executed the application. 

With regard to the answer pertaining 

to revocation of his State license, 

Respondent testified that his thencounsel had signed the Agreed Order, as 

Respondent had begun serving his 

prison sentence. He testified he 

answered question 4(e) in the negative 

because he knew he had surrendered his 

license and in his mind, at the time, he 

thought it was ‘‘gone’’ and thus not 

revoked. 

Two months after applying for 

registration, Respondent called a 

diversion investigator to inquire as to its 

status. When told he had falsified the 

application, he did not claim he had 

simply forgotten surrendering the prior 

registration. Instead, he argued with the 

investigator that he had never 

surrendered his prior registration. 

Respondent testified that when he had 

made that phone call, he still believed 

he had never surrendered the 

registration. 

Following Respondent’s State 

relicensure, he was certified as a 

Medical Review Officer and passed 

examinations for certifications in 

pediatric acute life support and acute 

cardiac life support. He was designated 

a Civil Surgeon by the United States 

Immigration and Naturalization Service, 

authorizing him to perform medical 

examinations of aliens seeking 

permanent residence in the United 

States. 

A pastor of a local church, whose 

congregants are mostly Spanish 

speakers from Central and South 

America, testified in Respondent’s 

behalf. He described Respondent’s close 

involvement with the church, its 

humanitarian assistance efforts and 

missions and Respondent’s practice of 

conducting health fairs for congregants 

where he screened and treated them at 

no charge. He described Respondent as 

one of the few local physicians fluent in 

Spanish and that with his ability to 

communicate to Spanish speaking 

patients and his low fees, Respondent’s 

contribution to the Latino community 

was invaluable. When questioned on 

cross-examination as to the reasons for 

the fraud convictions, the pastor 

attributed them to the size of 

Respondent’s practice and his lack of 

management skills to ‘‘stay on top of the 

bookkeeping and reports that were 

made.’’

An assistant plant manager for a local 

poultry plant, whose employees are 

mostly Latino, testified for Respondent. 

He described how the company sends 

employees covered by workman’s 

compensation to Respondent, which is 

cost effective and where they receive 

good medical treatment. He would like 

to send employees covered by the 

company’s health insurance to 

Respondent, but the carrier requires that 

all covered physicians be able to 

prescribe any requisite medications, 

including controlled substances. 

A reverend who was a missionary to 

Benin submitted a declaration 

describing Respondent and his wife’s 

humanitarian efforts in Africa during 

1991 through 1994, where they brought 

medical supplies and treated patients on 

four two-week trips, which were 

performed at their own expense. These 

activities were further testified to by a 

Licensed Practical Nurse who had 

worked for Respondent and 

accompanied him on the humanitarian 

missions. 

In letters of support, a local doctor 

who had been the chief of the family 

practice service at the local hospital, 

described Respondent as a 

compassionate, hard working and 

competent general practitioner whose 

practice fills ‘‘a necessary niche.’’

Respondent’s head nurse between 

1985 and 1994 testified she was aware 

of the circumstances behind the 

convictions and that Respondent, Mr. B. 

and Dr. L. had all prescribed narcotics 

‘‘in a careful and responsible manner’’

and that his registration should be 

granted.

Respondent testified that he now has 

a small practice, where his wife works 

as the receptionist and there is only one 

nurse. He sees about 20 patients per day 

and very few are covered by insurance. 

He testified that he needs a DEA 

registration in order to be a provider for 

various insurance plans, but that he had 

little need to prescribe controlled 

substances. However, he did have some 

patients suffering from pain and without 

registration, he has to send them to a 

pain clinic which is very expensive for 

the mostly low income patients. He 

further testified that whenever he calls 

a prescription into a pharmacy, he is 

asked for a DEA registration number, 

even when it is not a prescription for a 

controlled substance. Because the local 

pharmacy computer systems use DEA 

registration numbers for tracking 

purposes, whenever he writes any 

prescription, the pharmacy has to 

override its program in order to fill a 

prescription issued by Respondent. 

Regarding acceptance of 

responsibility for his misconduct, 

Respondent testified he is not the same 

person as before and that he had made 

a number of errors in judgment, 

including turning management of his 

practice over to other people instead of 

‘‘keeping my hand on the pulse.‘‘Asked 

if he took ‘‘full responsibility for the 

actions, your actions, that led to the 

indictment and conviction,’’

Respondent replied, ‘‘Absolutely, I 

mean, * * * it was plain old outright 

horrible mistakes, and I take full 

responsibility. That’s one thing that the 

prison did teach me, is that I can’t pass 

it off on anyone else. It was me.’’

Respondent also noted the conviction 

on his resume, which he prepared in 

2001. In it he stated: ‘‘I was convicted 

of insurance fraud. I lost my license to 

practice medicine. I steadfastly assert 

my innocence, but I readily accept 

responsibility for what happened. The 

crime occurred in my office under my 

nose and I did not take appropriate 

steps to correct the situation (emphasis 

added).’’

Respondent also testified that ‘‘I did 

not have a criminal intent to commit a 

crime, but I did commit a crime. So I’m 

guilty. I’m guilty of committing a crime. 

I accept full responsibility for it, and I 

agree with the Government and 

everything that they did to me. I have 

no bad feelings at all about anything 

that happened to me (emphasis added).’’

He further testified that the had no 

intent to build his practice like he 

previously had and that if he received 

a DEA registration, he would treat it as 

a privilege and not abuse it. 

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

Deputy Administrator may deny any 

pending applications for renewal of 

DEA registration, if she determines that 

the continued registration would be 

inconsistent with the public interest. 

Section 823(f) requires that the 

following factors be considered in 

determining the public interest: 

(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. 

69406 Federal Register / Vol. 69, No. 228 / Monday, November 29, 2004 / Notices 

(5) Such other conduct which may 

threaten the public health or safety.

The Controlled Substances Act further 

specifies in 21 U.S.C. 824(a), that the 

Deputy Administer may revoke a DEA 

Certificate of Registration if the 

registrant: 

(1) has materially falsified any 

application for a DEA registration; 

(2) has been convicted of a felony 

under Federal or State law relating to a 

controlled substance; 

(3) has had his State license or 

registration suspended, revoked, or 

denied and is no longer authorized to 

handle controlled substances in the 

State in which he maintains a DEA 

registration; 

(4) has committed acts that would 

render his registration inconsistent with 

the public interest as determined 

pursuant to 21 U.S.C. 823(f); or 

(5) has been excluded from 

participation in a program pursuant to 

42 U.S.C. 1320a–7(a). 

As a theshold matter, Judge Bittner 

noted that although the grounds listed 

under 21 U.S.C. 824(a) pertain to 

revocation or suspension of a 

registration, ‘‘[t]he agency has 

consistently held that the Administrator 

may also apply these bases to the denial 

of a registration, since the law would 

not require an agency to indulge in the 

useless act of granting a license on one 

day only to withdraw it the next.’’ See 

Kuen H. Chen, M.D., 58 FR 65,401, 65, 

402 (1993) (citing Sterling Drug Co. and 

Detroit Prescription Wholesaler, Inc., 40 

FR 11918 (1975). 

Further, the factors specified in 

section 823(f) are to be considered in the 

disjunctive; the Deputy Administrator 

may rely on any one or a combination 

of factors and may give each factor the 

weight she deems appropriate in 

determining whether a registration 

should be revoked or an application for 

registration See Henry J. Schwartz, Jr., 

M.D., 54 FR 16422 (1989). 

The Administrative Law Judge found 

three grounds to deny Respondent 

registration under section 824(a). First, 

pursuant to 21 U.S.C. 824(a)(1), Judge 

Bittner found he materially falsified his 

application for registration and rejected 

Respondent’s assertions to the contrary, 

primarily on credibility grounds. DEA 

has previously held that in finding that 

there has been a material falsification of 

an application, it must be determined 

that the applicant knew or should have 

known that the response given to the 

liability question was false. See Merlin 

E. Shuck, D.V.M., 69 FR 22566 (2004); 

James C. LaJavid, D.M.D., 64 FR 55962 

(1999); Martha Hernandez, M.D., 62 FR 

61145 (1997). 

The Deputy Administrator agrees with 

Judge Bittner’s finding, made after 

observing Respondent’s demeanor, that, 

‘‘In the instant case, and contrary to 

Respondent’s assertions, I do not find 

that his misstatements were 

unintentional. Although Respondent 

did not sign the Agreed Order, he did 

sign the DEA form surrendering his 

previous Certificate of Registration and 

I do not credit his testimony that he did 

not know he had done so. I therefore 

find that Respondent materially falsified 

his application for registration and that 

under 21 U.S.C. 824(a)(1) this conduct 

is grounds to deny his application.’’

Respondent was also convicted of a 

felony relating to controlled substances 

and the Deputy Administrator agrees 

with Judge Bittner’s conclusion that 

Respondent’s convictions for mail fraud 

and racketeering were based, in part, on 

his conduct in providing controlled 

substances to patients who were abusing 

them, so that those patients would 

acquiesce to unnecessary diagnostic 

tests. While Respondent denied this 

activity at the hearing, it is a long 

standing principle that facts established 

by criminal convictions are res judicata 

and cannot be relitigated in a DEA 

administrative forum. See, e.g., Robert 

A. Leslie, M.D., 64 FR 25908–25910 

(1999); Shahid M. Siddiqui, M.D., 61 FR 

14818 (1996). Respondent’s convictions 

constitute grounds for denying the 

application under 21 U.S.C. 824(a)(2). 

The Deputy Administrator further 

agrees that Respondent has been 

excluded by the United States 

Department of Health and Human 

Services from participating in Medicare, 

Medicaid and Maternal and Child 

Health Services Block Grants to States 

for Social Services programs for a period 

of fifteen years. This constitutes an 

independent ground for denying the 

application under 21 U.S.C. 824(a)(5). 

The Deputy Administrator further 

finds, in agreement with Judge Bittner, 

that under 21 U.S.C. 823(f), granting 

Respondent’s application would not be 

in the public interest. 

As to factor one, the recommendation 

of the appropriate state licensing board 

or professional disciplinary authority, 

the Deputy Administrator finds that 

Respondent has regained his license to 

practice osteopathic medicine in 

Tennessee and this weighs in favor of 

registration. However, as noted by Judge 

Bittner, inasmuch as State licensure is a 

necessary but not sufficient condition 

for DEA registration, this factor is not 

determinative. See Edson W. Redard, 

M.D., 65 FR 30616, 30619 (2000); James 

C. LaJevic, D.M.D., 64 FR 55962, 55964 

(1999). 

As to factor two, the Administrative 

Law Judge noted that despite 

Respondent’s assertions that he always 

properly handled substances, he was 

convicted of charges that he provided 

controlled substances to drug abusers 

because those persons were willing to 

undergo unnecessary diagnostic tests if 

they received the drugs they wanted. 

Additionally, Respondent permitted his 

physician assistant to provide 

controlled substances to patients prior 

to the effective date of legislation 

permitting such activity. The Deputy 

Administrator agrees with Judge Bittner 

that his factor weighs in favor of a 

finding that Respondent’s registration 

would not be in the public interest.

As to factor four, his compliance with 

applicable laws relating to controlled 

substances, his unauthorized utilization 

of a physician assistant to provide 

controlled substances and his provision 

of controlled substances to drug abusing 

patients so they would submit to 

unnecessary medical tests, violated laws 

relating to controlled substances. The 

Deputy Administrator also agrees with 

Judge Bittner that this factor weighs 

against registration. 

As to other conduct that may threaten 

the public health and safety, the 

Administrative Law Judge found that 

Respondent’s felony convictions for 

racketeering and mail fraud fall within 

this factor. The Deputy Administrator 

also agrees that the jury in Respondent’s 

criminal case found that as a part of the 

racketeering scheme, Boulevard Center 

patients were given injections of drugs 

based on the abundance of the drug at 

the clinic, rather than medical necessity 

and that some injectable medications 

were diluted below their therapeutic 

dosages. The Deputy Administrator 

agrees that this factor also weighs in 

favor of denying registration. 

The Administrative Law Judge 

concluded that the record established 

grounds to deny the application for 

registration. However, as Judge Bittner 

notes in her Opinion and Recommended 

Ruling, the governing statute is 

discretionary. See Mary Thomson, M.D.

65 FR 75969 (2000). In exercising her 

discretion in determining the 

appropriate remedy in any given case, 

the Deputy Administrator should 

consider all the facts and circumstances 

of the case. See Martha Hernandez, 

M.D., 62 FR 61145 (1997). 

In recommending against 

Respondent’s application, Judge Bittner 

took particular note that,

As discussed above, Respondent claims that 

he has taken ‘‘full responsibility’’ for the 

actions that led to his convictions. This 

assertion is, however, belied by the evidence. 

For example, and as also noted above, 

Federal Register / Vol. 69, No. 228 / Monday, November 29, 2004 / Notices 69407

Respondent denied that he engaged in some 

of the conduct for which he was convicted, 

including providing addictive medications to 

patients who abused them, and also testified 

that he felt that the patients needed the 

diagnostic examinations he ordered for them. 

I also note that in his resume Respondent 

‘‘steadfastly assert[s]’’ his innocence, and that 

he testified that although he was guilty, he 

had no ‘‘criminal intent to commit a crime.’’

Based on the record, Judge Bittner 

could not ‘‘find that Respondent 

recognizes his own misconduct, or that 

he is yet in a position to accept the 

responsibilities inherent in a DEA 

registration.’’ She therefore concluded 

that granting Respondent’s application 

for DEA registration would not be 

consistent with the public interest and 

recommended that the application be 

denied. The Deputy Administrator 

agrees. 

Respondent filed exceptions to the 

Opinion and Recommended Ruling. 

First, he asserted the ruling was 

arbitrary and capricious in comparison 

to prior decisions in which grants of 

restricted registration were 

recommended by the Administrative 

Law Judge and approved by the agency. 

However the facts and circumstances of 

the five cases cited by Respondent are 

distinguishable from the facts and 

circumstances of this matter. See, Mark 

Binette, M.D., 64 FR 42977 (1999); 

Michael Alan Patterson, M.D., 65 FR 

5682; Robert M. Golden, M.D., 65 FR 

5663; Nick M. Higgins, D.D.S., 54 FR 

53388 (1989); Jane W. Wuchinich, M.D.,

56 FR 4081 (1991). 

As opposed to several cases cited by 

Respondent, he engaged in his criminal 

misconduct for pecuniary gain, not 

because he suffered from an addiction 

or dependency which was later 

demonstrated to have been successfully 

mitigated by rehabilitation, therapy or 

careful monitoring. While neither is 

desirable, depending on the facts, greed 

can be viewed as a more serious 

personal motivator for criminal activity 

than addiction or dependency. 

Respondent’s reasons for violating the 

law and risking reputation and his 

growing livelihood also reflect a cavalier 

attitude toward his responsibilities as a 

physician and DEA registrant. 

As opposed to other cases relied upon 

by Respondent, he has also failed to 

adequately acknowledge personal 

responsibility for the actions leading to 

his convictions and lengthy prison 

sentence. He also knowingly made 

material misrepresentations on his DEA 

application and was excluded from 

participating in Federal health care 

programs for 15 years, both of which are 

additional independent grounds for 

denying registration. 

Finally, DEA has previously revoked 

registrants for actions and on grounds 

comparable to Respondent’s. See, 

Johnnie Melvin Turner, M.D., 67 FR 

71203 (2002) (revocation based on 

exclusion from Medicare program after 

Federal fraud conviction); Stanley 

Dubin, D.D.S., 61 FR 60727 (1996) 

(revocation for exclusion from Federal 

health programs after State fraud 

conviction).

In sum, the facts of this matter are 

unique and the cases cited by 

Respondent simply do not demonstrate 

that the recommended action is a 

departure from agency practice and 

policy or was rendered either arbitrarily 

or capriciously. 

Respondent also contends in 

numerous exceptions that the 

Administrative Law Judge’s ruling 

‘‘failed to take into account’’ or 

‘‘ignores’’ or ‘‘disregards’’ or 

‘‘erroneously discounted’’ or ‘‘failed to 

credit’’ or ‘‘refused to consider’’ or 

‘‘placed improper emphasis’’ on certain 

evidence in reaching her findings and 

recommendations. These include: 

Respondent’s degree of contrition and 

acceptance of responsibility; the 

opinions of several witnesses as to 

Respondent’s prescribing activities; his 

monitoring of the physician assistant at 

the secondary clinic; his postincarceration medical education; his 

value to the local, humanitarian efforts 

and opinions of charter witnesses; his 

professed intended limited use of the 

registration were it to be granted; the 

nature of his current and intended 

medical practice; and the adverse 

impact denying registration will have 

upon Respondent and his practice. 

The Opinion and Recommended 

Ruling clearly demonstrates that the 

Administrative Law Judge admitted and 

carefully considered Respondent’s 

evidence on all of the foregoing issues. 

While Respondent would prefer Judge 

Bittner arrived at a different outcome, 

his objectives are really just a reargument as to the weight which should 

be assigned certain testimony and 

documentary evidence introduced 

during the hearing and the credibility 

which the fact finder should give 

Respondent’s explanations for his 

misrepresentations, the extent and 

sincerity of his remorse and his 

acceptance of personal responsibility. 

Given the record supporting Judge 

Bittner’s conclusions, these arguments 

are insufficient to alter the outcome. 

Finally, in the letter received by the 

Deputy Administrator after the Opinion 

and Recommended Ruling was 

transmitted to this office by Judge 

Bittner, Respondent notes recent 

changes in TennCare Products which 

will have the effect of limiting his 

ability to prescribe even non-controlled 

substances for TennCare patients, 

should DEA registration be denied. He 

submits this ‘‘hardship could neither 

have been intended, nor anticipated by 

Judge Bittner’s Report.’’

However, while this particular 

consequence was not addressed at the 

hearing, when Judge Bittner 

recommended denial she was well 

aware of the multiple hardships 

befalling any physician denied DEA 

registration. She was also aware of 

numerous specific hardships that would 

impact Respondent and practice, were 

the application denied. Nevertheless, 

these consequences were insufficient for 

Judge Bittner to warrant recommending 

the application be granted and the 

Deputy Administrator does not consider 

the additional information on adverse 

collateral consequences sufficient to 

alter the conclusion that registration 

would not be in the public interest. 

The Deputy Administrator has 

examined the record and finds that the 

facts and credibility determinations of 

Judge Bittner are well supported by the 

evidence. Respondent materially 

falsified his application for DEA 

registration and has been excluded from 

participating in Federal health care 

programs for fifteen years, both of which 

constitute independent grounds for 

denying registration. It has also been 

sufficiently established that 

Respondent’s registration would not be 

in the public’s interest. 

Accordingly, the Deputy 

Administrator of the Drug Enforcement 

Administration, pursuant to the 

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

and 28 CFR 0.100(b), and 0.104, hereby 

orders the Respondent’s pending 

application for registration be, and it 

hereby is, denied. This order is effective 

December 29, 2004.

Dated: November 10, 2004. 

Michele M. Leonhart, 

Deputy Administrator.

[FR Doc. 04–26310 Filed 11–26–04; 8:45 am] 

BILLING CODE 4410–09–M

DEPARTMENT OF JUSTICE

Drug Enforcement Administration 

Prachi Enterprises, Inc.; Denial of 

Registration 

On July 23, 2004, the Deputy 

Assistant Administrator, Office of 

Diversion Control, Drug Enforcement 

Administration (DEA), issued an Order 

to Show Cause to Prachi Enterprises, 

Inc. (Prachi) proposing to deny its 

September 9, 2003, application for DEA