[Federal Register Volume 83, Number 109 (Wednesday, June 6, 2018)]
[Notices]
[Pages 26308-26310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12138]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Richard Hauser, M.D.; Decision and Order

    On September 26, 2017, the Acting Assistant Administrator, 
Diversion Control Division, Drug Enforcement Administration (DEA), 
issued an Order to Show Cause to Richard Hauser, M.D. (Registrant), of 
Clear Lake, Iowa. The Show Cause Order proposed the revocation of 
Registrant's DEA Certificate of Registration No. BH2140692 ``pursuant 
to 21 U.S.C. 824(a)(5).'' Government Exhibit (GX) 2 to Government's 
Request for Final Agency Action (RFAA), at 1. For the same reason, the 
Order also proposed the denial of ``any pending application to modify 
or renew such registration.'' Id.
    With respect to the Agency's jurisdiction, the Show Cause Order 
alleged that Registrant is the holder of Certificate of Registration 
No. BH2140692, pursuant to which he is authorized to dispense 
controlled substances as a practitioner in schedules II through V, at 
the registered address of Hauser Clinic Consultation Services, 308 14th 
Street, Clear Lake, Iowa. Id.
    Regarding the substantive ground for the proceeding, the Show Cause 
Order alleged that on April 28, 2017, the Office of the Inspector 
General for the U.S. Department of Health and Human Services (HHS) 
notified Registrant of his ``mandatory exclusion from participation in 
all Federal health care programs for a minimum period of five years 
pursuant to 42 U.S.C. 1320a-7(a)'' as a result of his guilty plea in 
the United States District Court for the Southern District of Iowa to 
two counts of Health Care Fraud in violation of 18 U.S.C. 1347. Id. at 
2. As a result, the Order asserted that Registrant's ``[m]andatory 
exclusion from Medicare is an independent ground for revoking a DEA 
registration pursuant to 21 U.S.C. 824(a)(5).'' Id. The Order further 
contended that, although Registrant's underlying conviction is 
``unrelated to [Registrant's] handling of controlled substances, DEA 
has nevertheless found that the underlying conviction forming the basis 
for a registrant's exclusion from participating in federal health care 
programs need not involve controlled substances for revocation under 21 
U.S.C. 824(a)(5).'' Id. (citations omitted).
    The Show Cause Order notified Registrant of (1) his right to 
request a hearing on the allegations or to submit a written statement 
in lieu of a hearing, (2) the procedure for electing either option, and 
(3) the consequence for failing to elect either option. Id. at 2-3 
(citing 21 CFR 1301.43). The Show Cause Order also notified Applicant 
of his right to submit a corrective action plan. Id. at 3-4 (citing 21 
U.S.C. 824(c)(2)(C)).
    The Government states that on October 4, 2017, a DEA Diversion 
Investigator (DI) served Registrant with a copy of the Show Cause 
Order. RFAA, at 3 (citing Declaration of DI attached as GX 4). 
Specifically, a DI assigned to the St. Louis Field Division's Des 
Moines Resident Office stated in a declaration that he was advised by 
Registrant's Attorney that Registrant could be served at his residence 
at 2310 20th Street, SW,

[[Page 26309]]

Mason City, Iowa. GX 4, at 1-2. The DI then stated that he traveled to 
that location, verified Registrant's identity, and ``handed him a copy 
of the September 26, 2017 Order to Show Cause on October 4, 2017.'' Id. 
at 2.
    On February 9, 2018, the Government forwarded its Request for Final 
Agency Action and evidentiary record to my Office. In its Request, the 
Government represents that Registrant ``has not requested a hearing or 
made any other filings in this matter.'' RFAA, at 3. Based on the 
Government's representation and the record, I find that more than 30 
days have passed since the Order to Show Cause was served on 
Registrant, and he has neither requested a hearing nor submitted a 
written statement in lieu of a hearing. See 21 CFR 1301.43(d). 
Accordingly, I find that Registrant has waived his right to a hearing 
or to submit a written statement and issue this Decision and Order 
based on relevant evidence submitted by the Government. See id. I make 
the following findings.

Findings of Fact

    Registrant is a physician who is registered with the DEA as a 
practitioner in schedules II-V pursuant to Certificate of Registration 
BH2140692, at the registered address of Hauser Clinic Consultation 
Services, 308 14th Street, Clear Lake, Iowa.\1\ Respondent's DEA 
Certificate of Registration (attached to RFAA as GX 1). Although not 
alleged in the Show Cause Order, I also find that Registrant is the 
holder of DATA-Waiver Identification Number XH2140692, see id., which 
authorizes Registrant to dispense or prescribe schedule III-V narcotic 
controlled substances which ``have been approved by the Food and Drug 
Administration . . . specifically for use in maintenance or 
detoxification treatment'' for up to 100 patients. 21 CFR 1301.28(a) & 
(b)(1)(iii). Registrant's DEA registration and DATA-Waiver authority do 
not expire until October 31, 2019. Id.
---------------------------------------------------------------------------

    \1\ In his January 24, 2018 Declaration, the DI stated that 
Registrant ``indicated that he would surrender his DEA Certificate 
of Registration, but has thus far failed to do so.'' GX 4, at 2. 
Likewise, the Government stated in its RFAA (dated Feb. 8, 2018) 
that Registrant had not surrendered his DEA registration. RFAA, at 
2. Thus, I find that the record reflects that Registrant has not 
surrendered his DEA registration, despite any prior statement by him 
of his intention to do so.
---------------------------------------------------------------------------

    On October 19, 2016, Registrant entered a guilty plea in the United 
States District Court for the Southern District of Iowa to a criminal 
information charging him with two counts of Health Care Fraud in 
violation of 18 U.S.C. 1347.\2\ As part of his plea, Registrant entered 
into a plea agreement in which he admitted to knowingly executing a 
scheme with the intent to defraud the State of Iowa Medicaid program 
(hereinafter ``Iowa Medicaid'') and Wellmark Blue Cross and Blue Shield 
(hereinafter ``Wellmark'') into paying him for the delivery of 
healthcare services that he did not actually perform between November 
2011 and December 2012. See GX 3, at 2-6. Specifically, in his role as 
a board-certified psychiatrist, Registrant ``up-coded'' his billing to 
a more expensive (and unperformed) service than the service he actually 
performed for the purpose of receiving a higher reimbursement from Iowa 
Medicaid and Wellmark. See id. at 4-6. In his plea agreement, 
Registrant admitted that Wellmark ``over-reimbursed'' him ``as a result 
of his [fraudulent] conduct'' by a net amount of $25,965.72. Id. at 6. 
Due to similarly fraudulent conduct, Registrant also admitted that Iowa 
Medicaid ``over-reimbursed'' him by $4,913.60. Id. In exchange for his 
guilty plea, the Government agreed to recommend that Registrant receive 
credit for acceptance of responsibility pursuant to United States 
Sentencing Guideline Sec.  3E1.1. Id. at 8.
---------------------------------------------------------------------------

    \2\ See Oct. 19, 2016 Plea Agreement, attached as GX 3 to RFAA, 
at 1. In its RFAA, the Government states that Registrant ``entered a 
guilty plea'' on October 19, 2016, citing ``Exhibit 3 (October 19, 
2016 Guilty Plea).'' However, Exhibit 3 to the RFAA is only the plea 
agreement, establishing Registrant's agreement to enter into a 
guilty plea but not when he entered the plea nor when the court 
accepted it. I have reviewed the publicly available docket for this 
case, and it states that the plea agreement was accepted on October 
19, 2016. Thus, I take official notice that Registrant in fact 
entered his guilty plea (and that the court accepted the plea) on 
October 19, 2016.
     Under the Administrative Procedure Act (APA), an agency ``may 
take official notice of facts at any stage in a proceeding--even in 
the final decision.'' U.S. Dept. of Justice, Attorney General's 
Manual on the Administrative Procedure Act 80 (1947) (Wm. W. Gaunt & 
Sons, Inc., Reprint 1979). In accordance with the APA and DEA's 
regulations, Registrant is ``entitled on timely request to an 
opportunity to show to the contrary.'' 5 U.S.C. 556(e); see also 21 
CFR 1316.59(e). To allow Registrant the opportunity to refute the 
facts of which I take official notice, Registrant may file a motion 
for reconsideration within 15 calendar days of service of this order 
which shall commence on the date this order is mailed.
---------------------------------------------------------------------------

    On February 28, 2017, a federal court entered judgment and 
sentenced Registrant to a term of imprisonment of two months on each 
count, but provided that the sentences would ``be served 
concurrently.'' United States v. Hauser, No. 16-CR-00157, ``Judgment in 
Criminal Case'' (S.D. Iowa filed Feb. 28, 2017), at 2.\3\ The 
sentencing judge also ordered Registrant to make restitution payments 
in the amounts of $25,965.72 and $4,913.60 to Wellmark and to Iowa 
Medicaid, respectively, in addition to a $200 assessment. Id. at 5-7. 
The judge further imposed on Registrant a term of supervised release 
for three years after the conclusion of his sentence. Id. at 3.
---------------------------------------------------------------------------

    \3\ The Government did not include a copy of the final judgment 
in Registrant's criminal case. Consequently, I take official notice 
of the facts set forth in this publicly available final judgment 
under the authority already set forth supra in footnote 2.
---------------------------------------------------------------------------

    The record also includes an April 28, 2017 letter from HHS 
notifying Applicant that he was ``being excluded from participation in 
any capacity in the Medicare, Medicaid, and all Federal health care 
programs as defined in section 1128B(f)'' of the SSA ``for the minimum 
statutory period of five years.'' Attachment to GX 4 (hereinafter HHS 
Letter or HHS Ltr), at 1 (emphasis in original). The letter explained 
that Registrant was being excluded ``due to [his] conviction . . . in 
the United States District Court for the Southern District of Iowa, of 
a criminal offense related to the delivery of an item or service under 
the Medicare or a State health care program.'' Id. The letter states 
that ``[t]his action is being taken under section 1128(a)(1) of the 
[SSA] \4\ and is effective'' on May 18, 2017. Id. (citing 42 U.S.C. 
1320a-7(a)).\5\
---------------------------------------------------------------------------

    \4\ Section 1128(a)(1) of the SSA is codified at 42 U.S.C. 
1320a-7(a)(1).
    \5\ In his Declaration, the DI stated that when he took over the 
investigation, he noticed that ``the case file contained an April 
28, 2017 letter from'' HHS to Registrant. GX 4, at 1. To 
authenticate the HHS Letter, the DI ``verified with the prior case 
agent that this was a true and correct copy of the exclusion letter 
that he received'' and then attached it to his Declaration. Id. The 
Declaration in the record reflects no other statements establishing 
the authenticity or accuracy of the HHS Letter. Nor does the record 
contain a declaration from the DI who actually received the HHS 
Letter. However, I have reviewed the official website of HHS, which 
contains a publicly available verification of mandatory exclusions 
that reflects the same (1) Registrant name, (2) address, (3) 
exclusion type (``1128(a)(1)--Program-Related Conviction''), and (4) 
exclusion date (May 18, 2017) as in the HHS Letter attached to the 
Declaration. I take official notice of the foregoing facts set forth 
on the HHS official website regarding Registrant's mandatory 
exclusion (pursuant to the authority set forth supra in footnote 2), 
and I find that it sufficiently corroborates the HHS Letter attached 
to the DI's Declaration for me to accept the HHS Letter into the 
record as a true and correct copy of the HHS Letter sent to 
Registrant and as an accurate reflection of the mandatory exclusion 
that HHS imposed on Registrant.
---------------------------------------------------------------------------

Discussion

    Pursuant to 21 U.S.C. 824(a)(5), the Attorney General is authorized 
to suspend or revoke a registration issued under section 823 of Title 
21, ``upon a finding that the registrant . . . has been excluded . . . 
from participation in a program pursuant to section 1320a-7(a) of Title 
42.'' Under Sec.  1320a-7(a)(1), HHS is required to exclude from 
participation

[[Page 26310]]

in any federal health care program any individual who has been 
convicted of a criminal offense ``related to the delivery of an item or 
service under [42 U.S.C. 1395 et seq.] or under any State health care 
program.'' The Agency has long held that the underlying conviction 
forming the basis for a registrant's mandatory exclusion from 
participation in federal health care programs need not involve 
controlled substances for the Agency to revoke a DEA registration 
pursuant to Sec.  824(a)(5). E.g., Orlando Ortega-Ortiz, M.D., 70 FR 
15122, 15123 (2005); Juan Pillot-Costas, M.D., 69 FR 62084, 62085 
(2004); Daniel Ortiz-Vargas, M.D., 69 FR 62095, 62095-62096 (2004); KK 
Pharmacy, 64 FR 49507, 49510 (1999); Stanley Dubin, D.D.S., 61 FR 
60727, 60728 (1996); Nelson Ramirez-Gonzalez, M.D., 58 FR 52787, 52788 
(1993).
    Here, Registrant was convicted of two counts of felony Health Care 
Fraud related to billing for services that were not rendered. The 
Agency has previously held that a mandatory exclusion based on a felony 
fraud conviction for overbilling warranted revocation of a Registrant's 
registration pursuant to 21 U.S.C. 824(a)(5). E.g., Johnnie Melvin 
Turner, M.D., 67 FR 71203, 71203-71204 (2002) (revocation where 
mandatory exclusion was based on guilty plea to one felony count of 
mail fraud ``by billing for services that were not rendered''); Dubin, 
61 FR at 60728 (revocation where mandatory exclusion ``based upon 
fraudulent billing''); Ramirez-Gonzalez, 58 FR at 52788 (revocation 
where mandatory exclusion based on submission of false claims). 
Moreover, Registrant has failed to come forward with any evidence 
explaining or mitigating his overbilling conduct or otherwise 
explaining why his registration should not be revoked, and the record 
reflects no such evidence. See Joseph M. Piacentile, M.D., 62 FR 35527, 
35528 (1997) (revoking DEA registration where Registrant ``did not 
offer any evidence into the record regarding why his registration 
should not be revoked'' pursuant to Sec.  824(a)(5)).
    Based on the 2017 HHS letter, I find that the evidence shows that 
HHS excluded Registrant from participation in any federal health care 
program based on his federal convictions for health care fraud related 
to overbilling. Registrant has thus been excluded pursuant to the 
mandatory exclusion provisions of 42 U.S.C. 1320a-7(a), and I hold that 
this unchallenged basis for his mandatory exclusion is sufficient to 
warrant revocation of his DEA registration pursuant to 21 U.S.C. 
824(a)(5).
    Accordingly, I will order that his registration be revoked and deny 
any pending applications to renew or to modify his registration, as 
requested in the Show Cause Order. Order to Show Cause, at 1. Finally, 
because Registrant's DATA-Waiver authority is contingent on Registrant 
being a practitioner with a valid DEA registration, see 21 U.S.C. 
823(g)(2)(A); 21 CFR 1301.28(a), I will revoke his DATA-Waiver 
authority as well.

Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 
824(a), as well as 28 CFR 0.100(b), I order that DEA Certificate of 
Registration No. BH2140692 and DATA-Waiver Identification Number 
XH2140692, issued to Richard Hauser, M.D., be, and they hereby are, 
revoked. I further order that any pending application of Richard Hauser 
to renew or to modify the above registration, be, and it hereby is, 
denied. This Order is effective July 6, 2018.

    Dated: May 25, 2018.
Robert W. Patterson,
Acting Administrator.
[FR Doc. 2018-12138 Filed 6-5-18; 8:45 am]
BILLING CODE 4410-09-P