TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-09-00667-CV

Michael C. Scally, M.D., Appellant

v.

Texas State Board of Medical Examiners, Appellee

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 353RD JUDICIAL DISTRICT

NO. D-1-GN-05-001134, HONORABLE DARLENE BYRNE, JUDGE PRESIDING

O P I N I O N

Michael C. Scally, M.D., appeals the district court’s judgment affirming the final

order of the Texas State Board of Medical Examiners (the Board), which revoked his license to

practice medicine in Texas. The Board ordered the license revocation after determining that

Scally violated the Texas Medical Practice Act, Tex. Occ. Code Ann. §§ 151.001-167.202 (West

2004 & Supp. 2010), by prescribing anabolic steroids to patients without a valid medical purpose

and by failing to keep adequate medical records for some of those patients. In six issues, Scally

contends that the district court erred by affirming the Board’s final order. We will affirm the district

court’s judgment because we find no error in the Board’s final order and conclude that it was

supported by substantial evidence.
BACKGROUND

The Board’s staff sought to revoke Scally’s medical license by filing a complaint

against Scally with the Board and at the State Office of Administrative Hearings in August 2002.1

The complaint alleged in essence that Scally had prescribed anabolic steroids to healthy patients for

the improper purpose of bodybuilding. Throughout the proceedings, Scally admitted to prescribing 2

anabolic steroids, but maintained that he only prescribed the drugs to improve the patients’ overall

health and to treat medical conditions like steroid-induced hypogonadism or associated symptoms,

not for the purpose of bodybuilding. 

3

After an unsuccessful mediated settlement conference, the case went to an

administrative law judge (ALJ) for a contested-case hearing. The Board amended its complaint in

July 2003, alleging that Scally violated the Medical Practice Act by improperly prescribing anabolic

steroids to nine patients and failing to keep adequate medical records and to conduct appropriate

testing for those patients. See id. §§ 164.001; .051(a)(1), (3), (6); .052(a)(5); .053(a)(1), (5), (6). At

the contested-case hearing, Scally took the position that prescribing anabolic steroids along with

other medications to stimulate the hypothalamic-pituitary-testicular axis (HPTA) is the proper

The facts recited herein are taken from the administrative record on appeal, including the 1

testimony and exhibits admitted at the contested-case hearing.

Section 481.071 of the health and safety code provides in part that anabolic steroids may 2

only be prescribed for “a valid medical purpose,” and “bodybuilding, muscle enhancement, or

increasing muscle bulk or strength through the use of an anabolic steroid or human growth hormone

listed in Schedule III by a person who is in good health is not a valid medical purpose.” Tex. Health

& Safety Code Ann. § 481.071(b)(1), (c) (West 2010).

The parties defined “hypogonadism” as inadequate function of the reproductive organs 3

(testes in men, ovaries in women), which manifests as deficient sex-hormone secretion. “Steroidinduced hypogonadism” is subnormal or impaired production of sex hormones caused by taking

anabolic steroids. 

2
standard of care for reducing the severity and duration of steroid-induced hypogonadism. He also 4

asserted that he performed the proper diagnostic tests before prescribing anabolic steroids and that

he maintained adequate medical records for these patients.

The ALJ conducted an eleven-day evidentiary hearing, during which the Board

offered the expert testimony of two board-certified endocrinologists, Dr. Harold Werner and

Dr. Jeffrey Jackson. Scally offered his own testimony along with expert testimony from Dr. Mauro

DiPasquale, a doctor licensed in Ontario, Canada, who has practiced sports medicine for thirty

years. In addition, Scally offered testimony from Greg Seal, a patient treated by Scally beginning 5

in 2000 (after most of the patients cited in the Board’s complaint), and Andrew Hodge, Scally’s

assistant as of January 2000. The parties also submitted post-hearing briefing to the ALJ. 

After the record was closed, the ALJissued a proposal for decision that included 271

findings of fact and 25 conclusions of law. For each of the nine patients at issue, the ALJ analyzed

the Board’s factual allegations and whether Scally had violated the Medical Practice Act or the

Board’s rules by (1) prescribing anabolic steroids to the patients outside the standard of care,

(2) failing to keep adequate medical records for them, and (3) failing to conduct appropriate tests to

rule out diagnoses other than hypogonadism. The ALJ concluded that Scally (1) violated the

The hypothalamic-pituitary-testicular axis(HPTA) refers to the interdependent relationship 4

between the glands, hormones, and enzymatic factors involved in the eventual production and

regulation of sex hormones. 

Dr. DiPasquale’s medical-school internship was in general and internal medicine. In

5

addition to his general private practice, he specialized in bariatric medicine and sports medicine. 

Although he has not had formal training in endocrinology, he has been certified by the Medical

Review Officer Certification Council to perform and interpret drug testing in sports. He is the

president of the United World Power Lifting Federation and the Pan American Power Lifting

Federation and is a former medical director of the World Bodybuilding Federation and the World

Wrestling Federation.

3
standard of care by prescribing anabolic steroids to patients M.W., J.S., J.M., T.W., J.B., J.Bi., S.L.,

and S.D. without a valid medical purpose and for the purpose of bodybuilding; (2) failed to practice

medicine in an acceptable professional manner consistent with the public health and welfare;

(3) committed unprofessional or dishonorable acts that were likely to deceive or defraud the public;

and (4) prescribed controlled substances to these patients in a mannerinconsistent with public health

and welfare. See id. §§ 164.051(a)(1), .052(a)(5), .053(a)(1), (5); Tex. Health & Safety Code Ann. 6

§ 481.071 (West 2010). The ALJ concluded that Scally’s conduct was intentional based on his

pattern of marketing to people interested in bodybuilding and providing them with anabolic steroids. 

The ALJ also concluded that Scallyfailed to maintain adequate medical records for T.C., M.W., J.S.,

T.W., J.B., and J.Bi. After considering both the aggravating and mitigating factors provided as

guidelines in the Board’s rules, the ALJ recommended that Scally’s license be revoked and that the

Board assess an administrative penalty against him in the amount of $190,000, as well as

transcription costs of $12,809.50. The Board reviewed the ALJ’s proposal for decision and adopted 7

it in full. Scally sought judicial review of the Board’s order in district court. After a hearing on the

merits, the district court affirmed the Board’s final order. This appeal followed. 

The ALJ determined that the Board did not establish for any of the patients that Scally 6

failed to conduct the appropriate tests to rule out diagnoses other than hypogonadism. 

The ALJrecommended that the Board sanction Scallywith the maximum penaltyof $5,000 7

for each of the 32 times that Scally prescribed anabolic steroids below the standard of care and

$5,000 for each of the six times that Scally failed to maintain adequate medical records, for a total

penalty of $190,000. See Tex. Occ. Code Ann. § 165.003 (West 2004).

4
STANDARD OF REVIEW

The substantial-evidence standard of the Texas Administrative Procedure Act (APA)

governs our review of the Board’s final order. See Tex. Gov’t Code Ann. § 2001.174 (West 2008). 

The APA authorizes reversal or remand of an agency’s decision that prejudices the appellant’s

substantial rights because the administrative findings, inferences, conclusions, or decisions

(1) violate a constitutional or statutory provision, (2) exceed the agency’s statutory authority,

(3) were made through unlawful procedure, (4) are affected by other error of law, or (5) are arbitrary

or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion. 

Id. § 2001.174(2)(A)-(D), (F). 

The APA also authorizes a reviewing court to test an agency’s findings, inferences,

conclusions, and decisions to determine whether they are reasonably supported by substantial

evidence considering the reliable and probative evidence in the record as a whole. Graff Chevrolet

Co. v. Texas Motor Vehicle Bd., 60 S.W.3d 154, 159 (Tex. App.—Austin 2001, pet. denied); see

Tex. Gov’t Code Ann. § 2001.174(2)(E). Under this deferential standard, we presume that the

Board’s orderis supported bysubstantial evidence, and Scallybearsthe burden of proving otherwise. 

Texas Health Facilities Comm’n v. Charter Medical-Dallas, Inc., 665 S.W.2d 446, 453 (Tex. 1984). 

The burden is a heavy one—even a showing that the evidence preponderates against the agency’s

decision will not be enough to overcome it, if there is some reasonable basis in the record for the

action taken by the agency. Id. at 452. Our ultimate concern is the reasonableness of the agency’s

order, not its correctness. Firemen’s &Policemen’s Civil Serv. Comm’n v. Brinkmeyer, 662 S.W.2d

953, 956 (Tex. 1984). 

5
Whether the agency’s ordersatisfies the substantial-evidence standard is a question

of law. Id. Thus, the district court’s judgment that there was substantial evidence supporting the

Board’s final order is not entitled to deference on appeal. Texas Dep’t of Pub. Safety v. Alford,

209 S.W.3d 101, 103 (Tex. 2006) (per curiam). On appeal from the district court’s judgment, the

focus of the appellate court’s review, as in the district court, is on the Board’s decision. See

Montgomery Indep. Sch. Dist. v. Davis, 34 S.W.3d 559, 562 (Tex. 2000); Tave v. Alanis, 109 S.W.3d

890, 893 (Tex. App.—Dallas 2003, no pet.).

We review the Board’s legal conclusions for errors of law and its factual findings for

support by substantial evidence. Heat Energy Advanced Tech., Inc. v. West Dallas Coal. for Envtl.

Justice, 962 S.W.2d 288, 294-95 (Tex. App.—Austin 1998, pet. denied). Substantial evidence

“does not mean a large or considerable amount of evidence, but rather such relevant evidence as

a reasonable mind might accept as adequate to support a conclusion of fact.” Lauderdale v.

Texas Dep’t of Agric., 923 S.W.2d 834, 836 (Tex. App.—Austin 1996, no writ) (quoting Pierce v.

Underwood, 487 U.S. 552, 564-65 (1988))(internal quotation marks omitted). Thus, we will sustain

the agency’s action if the evidence as a whole is such that reasonable minds could have reached the

conclusion that the agencymust have reached in order to justify its action. Texas State Bd. of Dental

Exam’rs v. Sizemore, 759 S.W.2d 114, 116 (Tex. 1988). 

We may not substitute our judgment for that of the Board on the weight of the

evidence on questions committed to agency discretion. Charter Med., 665 S.W.2d at 452; see also

Tex. Gov’t Code Ann. § 2001.174. The ALJ, as factfinder, determines the credibility of witnesses

and the weight of their testimony. Granek v. Texas State Bd. of Med. Exam’rs, 172 S.W.3d 761, 778

(Tex. App.—Austin 2005, no pet.). We may not set aside an agency decision merely because

6
testimony was conflicting or disputed or because it did not compel the agency’s decision. See

Brinkmeyer, 662 S.W.2d at 956. Consequently, if the evidence would support either affirmative or

negative findings on a specific matter, we must uphold the agency’s decision. Charter Med.,

665 S.W.2d at 453.

DISCUSSION

Scally asserts that the district court erred by affirming the Board’s final order for

several reasons. Scally contends in his first issue that the process provided by the APA for judicial

review of the Board’s final order violated his rights to due process and equal protection by denying

him a jury trial and subjecting him to the substantial-evidence standard of review. In his second

issue, Scally argues that the testimony of the Board’s expert witnesses should have been excluded

because the experts were not qualified, and thus their testimony was neither reliable nor relevant. 

Scally asserts in his third issue that substantial evidence does not support the Board’s findings of fact

and the revocation of his license. In this issue, Scally challenges approximately 183 of the 271

findings of fact. In his fourth and fifth issues, Scally challenges an additional 13 of the 271 findings

of fact. He asserts that the Board engaged in ad hoc rulemaking, and its interpretation of the

administrative code exceeded its statutory authority, resulting in an erroneous finding that the

patients’ medical records were inadequate. In his sixth issue, Scally challenges the

Board’s contention in the district court that his motion for rehearing was insufficiently definite to

preserve error.

7
Relevant scientific background and evidence presented

To provide context for the issues raised by Scally, we will briefly explain the nature

of Scally’s practice, how anabolic steroids work and their effect on the human body’s natural

production of sex hormones, and the concepts underlying Scally’s method for treating patients with

steroid-induced hypogonadism. 

Origin of Scally’s practice

The evidence presented at the contested-case hearing reflects that Scally received

undergraduate degrees in life sciences and chemistryfrom the Massachusetts Institute of Technology

in 1975. Scally continued with a post-graduate fellowship at MIT in the division of brain sciences

and neuroendocrinology. Scally graduated from Harvard Medical School in 1980 and received his

medical license in 1981. He specialized in anesthesiology until approximately 1995. 

In September 1995, he opened an office in Houston, the Texas Longevity and

Wellness Center, where his practice focused on preventive medicine. In an introductory letter that

Scally provided to patients, he declared that “[t]urning back the clock on the aging process is now

possible” and “[t]hrough science, technology, and medicine we can attain and maintain a level of

youthfulness previously impossible.” He offered special packages for those interested in multiple

programs and a $50 credit for referring a new patient. Although the marketing materials included

with the patients’ medical records show that the center offered a number of treatment programs,

including among others, BodyBuilding, Weight Loss, Erection Dysfunction, and

Hormone Replacement, Scally did not offer programs for either HPTA normalization or cessation

of anabolic-steroid use. 

8
Scally testified that between 1994 and 1995 he became interested in researching and

developing a method for helping patients suffering from steroid-induced hypogonadism to return

their HPTA to normal. He had begun exercising “a lot”—running, weightlifting, and doing

aerobics—and began hearing from manypeople at the gym about medical problems theywere having

when they tried to stop using illicit anabolic steroids. Although anabolic steroids have certain 8

therapeutic uses, these people were using them to increase their muscle mass and strength. Scally

testified that he was disturbed by their reports of dismissive treatment from doctors when they

sought help stopping their steroid use, so he began discussing the issue with his trainer and

researching the HPTA. 

Anabolic steroids and the HPTA

In his expert report and testimony at the contested-case hearing, Scally explained the

effect of anabolic steroids on the HPTA. The HPTA, as noted earlier, refers to the complex

interdependent relationship between the endocrine glands in the male (hypothalamus, pituitarygland,

and testes), the hormones that the glands secrete, and the enzymatic factors involved in the eventual

production and regulation of sex hormones. Anabolic steroids are a class of drugs that are based

upon the structure of the main sex hormone naturally occurring in men, testosterone, which is

produced by the testes. “Anabolic” means that the drugs promote cell growth, particularly muscle 9

Scally stated in his motion for rehearing that he was training for the Mr. Texas competition 8

during this time period.

Scally also referred to anabolic steroids as “androgenic-anabolic steroids,” “AAS,” and 9

“androgens” in his testimony and briefing, but for clarity we will use only the term “anabolic

steroids.”

9
mass. The Board’s experts testified that this increase in muscle mass and strength is what leads

bodybuilders, weight lifters, and other athletes to seek out black-market steroids. Anabolic steroids

also have androgenic effects, which means that they affect the development and maintenance of

masculine secondarysexual characteristics (e.g., increased growth of bodyand facial hair, thickening

of the vocal cord).10

Taking these drugs disrupts the body’s natural equilibrium, sometimes causing the

body to stop producing testosterone on its own. Scally testified that each individual male has his

own specific equilibrium point for testosterone. If a man takes enough anabolic steroids to meet his

equilibrium point, his HPTA will shut down because the body no longer needs to work to produce

testosterone on its own. Consequently, when the anabolic steroids are stopped, the body may be in

a state of hypogonadism because the sex glands (testes in men; ovaries in women) are producing

little or no hormones.11

The amount of anabolic steroids that it takes to shut down the body’s natural

production of sex hormones is unknown. According to Scally, an individual who stops taking

anabolic steroids will suffer from marked muscle loss and steroid-induced hypogonadism. The

Board’s experts acknowledged that no one knows exactly how long a patient will suffer with

hypogonadism or secondary hypogonadism after taking anabolic steroids and then stopping them. 

The manifestation of these androgenic effects is also referred to as masculinization or 10

virilization. 

Hypogonadotrophic hypogonadism (secondary hypogonadism) can also occur when a

11

person stops taking anabolic steroids. Secondary hypogonadism is a disorder in which the pituitary

gland has ceased functioning properly and is not producing the hormones it normally does, which

stimulate testosterone secretion by the testes.

10
While some research that Scally cited in his expert report has shown that the body’s natural

production of sex hormones will spontaneously return to normal shortly after the anabolic steroids

are stopped, there are other documented cases of steroid-induced hypogonadism lasting from six

months to over two years.

Scally’s HPTA treatment method

Scally testified about his procedure for determining whether a patient had

hypogonadism. Scally would take a history and perform a physical exam, and then he would order

blood tests to check the patient’s thyroid-stimulating hormone level, prolactin level, luteinizinghormone level, and total testosterone level. Depending on the various hormone levels, the patient’s

diagnosis could be primary hypogonadism (testicular dysfunction), secondary hypogonadism

(hypothalamic pituitary dysfunction), or mixed hypogonadism, which is a combination of the two.

When Scally first began treating patients with a history of steroid use for HPTA

dysfunction in 1995, he did not prescribe anabolic steroids. Instead, he prescribed two drugs that

he believed would stimulate the HPTA, human chorionic gonadotropin (hCG) and clomiphene citrate

(commonly known as Clomid). hCG stimulates the testicles or ovaries. Clomid helps stimulate the

pituitary gland. Scally later added tamoxifen to his protocol to further help prevent shut down of the

pituitary function. Scally typically started the hCG, Clomid, and tamoxifen all at the same time, but

only prescribed the hCG for fifteen days, and at that point measured the testosterone to see whether

he could continue treatment without the hCG. He then typically would continue the Clomid and

tamoxifen for about another fifteen days (for a total of about thirty days). 

11
Scally eventually added anabolic steroids to his HPTA treatment protocol and began

alternating a period of treatment with the anabolic steroids for approximately twelve weeks with

another round of the hCG, Clomid, and tamoxifen treatment for thirty days. Scally testified that he

began adding anabolic steroids as part of his treatment protocol to help patients whose blood tests

reflected a normal value for testosterone after the first round of hCG, Clomid, and tamoxifen, but

the value was at the low end of the normal range for their age, and they were still experiencing

hypogonadism symptoms. 

Scally asserted that adding a round of anabolic steroids after stopping the other drugs

is the best way to make the hCG, Clomid, and tamoxifen work better because “the best way to

produce androgen receptor sites is androgens [i.e., anabolic steroids].” Scally maintained that

stimulating these androgen receptor sites would work faster than continuing the Clomid alone. 

Scally acknowledged that the anabolic steroids would shut down the patient’s HPTA (and thus

possibly worsen the hypogonadism he was supposed to be treating), but he knew he would be able

to successfully restart the HPTA loop because he had done so with the initial dose of hCG, Clomid,

and tamoxifen. Nevertheless, Scallywas prescribing steroids to patients with a prior history of illicit

steroid use in a purported effort to help those patients quit taking illicit steroids.12

Typically Scally would give his patients 400 to 600 milligrams of anabolic steroids per 12

week, including testosterone and other pharmaceutical steroids such as Winstrol, Anadrol-50,

oxandrolone, and Halotestin. While patients were taking the steroids, he would prescribe other drugs

to help prevent some of the anabolic steroids’ side effects, including hair loss in men and

masculinization in women.

12
Preservation of error

Before addressing Scally’s points of error, we must first consider the threshold issue

of whether Scally preserved any of these issues for appeal. Scally was required under the APA to

file a motion for rehearing of the Board’s final order before seeking judicial review. See Tex. Gov’t

Code Ann. § 2001.145 (West 2008). The Board argues that Scally’s motion for rehearing filed with

the Board was not sufficiently definite and thus failed to preserve error for appeal. Scally asserts that

his motion for rehearing was sufficiently definite to preserve error. 

The motion for rehearing is a statutory prerequisite to an appeal in a contested case,

see id., and must be sufficiently definite to notify the agency of the error claimed so that the agency

can either correct or prepare to defend the error. Suburban Util. Corp. v. Public Util. Comm’n of

Tex., 652 S.W.2d 358, 365 (Tex. 1983). For each contention of error, the motion must set

forth (1) the fact finding, legal conclusion, or ruling complained of and (2) the legal basis of that

complaint. See Hamamcy v. Texas State Bd. of Med. Exam’rs, 900 S.W.2d 423, 425

(Tex. App.—Austin 1995, writ denied)(citing Burke v. Central Educ. Agency, 725 S.W.2d 393, 397

(Tex. App.—Austin 1987, writ ref’d n.r.e.)). It is not sufficient to set forth these two elements in

generalities, for example, by stating that the findings of fact as a body are “not supported

by substantial evidence.” Burke, 725 S.W.2d at 397. While both elements must be present in

the motion, neither requires a briefing of the law or facts. Id. The standard is one of fair notice.

See id.

In the instant case, after Scally timely filed a motion for rehearing, the Board

challenged the sufficiency of his motion, contending that it lacked sufficient detail to preserve the

alleged errors. The Board contends that Scally has failed to preserve error as to any conclusion of

13
law or any finding of fact. Scally’s motion for rehearing sets forth fourteen “issues presented for

rehearing.” Although he does not identify by specific number any conclusions of law as error, he

specifically identifies 235 of the Board’s 271 findings of fact in connection with his fourteenth issue,

which complains that the cited findings of fact and the Board’s conclusions are not supported by the

evidence in the record or are based on unreliable evidence. Scally further provides detailed reasons

for his objections to the complained-of findings of fact. This pleading was sufficient to preserve

error on the issue of whether substantial evidence supports those findings of fact. Within the

motion’s first thirteen issues, Scally provided the Board with fair notice of the other issues he has

raised on appeal, including the admissibility of the Board’s expert testimony, the Board’s findings

and conclusions regarding the applicable standard of care, the Board’s conclusions that the anabolic

steroids were not prescribed for a valid medical purpose or for therapeutic purposes, the Board’s

conclusion that Scally failed to keep adequate medical records, and the Board’s findings that Scally

did not record a diagnosis for some patients.

Although the better practice would be to identify each complained-of finding and

conclusion by number and to accompany each identified numbered error with the legal basis for the

challenge, Scally’s motion provided the Board with much more specific information than that found

inadequate in cases finding waiver. See, e.g., Texas Alcoholic Bev. Comm’n v. Quintana,

225 S.W.3d 200, 204 (Tex. App.—El Paso 2005, pet. denied) (finding waiver); Hamamcy,

900 S.W.2d at 425 (same); Burke, 725 S.W.2d at 398-99 (same); see also Morgan v. Employees’ Ret.

Sys. of Tex., 872 S.W.2d 819, 822 (Tex. App.—Austin 1994, no writ) (party’s “motion for rehearing

is not a form-book example of such a motion, but it achieves its purpose” of sufficiently informing

14
agency of alleged errors). We find that Scally has sufficiently preserved error in his motion for

rehearing, and thus, we will consider the arguments Scally has presented in his appellate brief.13

Due process and equal protection

In his first issue, Scallyarguesthat the judicial-review process applicable to physician

disciplinary actions violated his constitutional rights to due process and equal protection. See U.S.

Const. amend. XIV. This argument is primarily based on the legislature’s different procedural

treatment of physicians and attorneys subject to disciplinary actions. Among Scally’s various

assertions, he attacks the application of the substantial-evidence standard of review to physicianlicense revocations and the lack of a jury trial de novo in the district court after a physician’s license

is revoked. 

We review claims regarding deprivation of constitutional rights de novo because they

present questions of law. Granek, 172 S.W.3d at 771-72. We begin with the presumption that the

APA is constitutional and that the legislature has acted neither unreasonably nor arbitrarily. See

Pretzer v. Motor Vehicle Bd., 125 S.W.3d 23, 39 (Tex. App.—Austin 2003), aff’d in part and rev’d

in part on other grounds, 138 S.W.3d 908 (Tex. 2004). The constitutional provision that Scally

contends has been violated, the Fourteenth Amendment, provides in relevant part, that “[n]o State

In his sixth issue, Scally asserts that his pleading in the district court, which alleged that 13

he had complied with all conditions precedent before filing suit and was not denied by the Board,

precludes the Board from arguing that Scally’s motion for rehearing was insufficient to preserve

error. Because we find that Scally’s motion for rehearing was sufficiently detailed, we need not

address this argument. See Tex. R. App. P. 47.1 (court of appeals must hand down opinions that are

as brief as possible while addressing those issues necessary to final disposition of appeal). 

15
shall . . . deprive any person of life, liberty, or property, without due process of law; nor deny to any

person within its jurisdiction the equal protection of the laws.” U.S. Const. amend. XIV. 

The procedural due-process safeguards of the federal and Texas constitutions protect

litigants in agency proceedings when the agency “‘deprives an individual of life, liberty, or property

based on resolution of contested factual issues concerning that individual.’” Flores v. Employees

Ret. Sys. of Tex., 74 S.W.3d 532, 539 (Tex. App.—Austin 2002, pet. denied) (quoting 2 Kenneth

Culp Davis & Richard J. Pierce, Jr., Administrative Law Treatise § 9.2 at 3 (3d ed. 1994)) (internal

quotation marks omitted). When analyzing Scally’s due-process claim, we must determine whether

he has a constitutionally protected liberty or property interest at stake, and if so, what process is due

to sufficiently protect that interest. See University of Tex. Med. Sch. v. Than, 901 S.W.2d 926, 929

(Tex. 1995). Liberty or property interests protected under the Due Process Clause “attain this

constitutional status by virtue of the fact that they have been initially recognized and protected by

state law . . . .” Paul v. Davis, 424 U.S. 693, 710-11 (1976). A professional license is a property

right, but it is one that has been created by statute and is subject to the state’s power to

impose conditions upon the granting or revocation of the license for the protection of society. See 14

Adams v. Texas State Bd. of Chiropractic Exam’rs, 744 S.W.2d 648, 652-53 (Tex. App.—Austin

1988, no writ) (citing Sherman v. State Bd. of Dental Exam’rs, 116 S.W.2d 843, 846 (Tex. Civ.

App.—San Antonio 1938, writ ref’d)); see also Dent v. State of W. Va., 129 U.S. 114, 121-22 (1889)

(professional license is property interest but one subject to state regulation). Accordingly, we find

The legislature has found that “the practice of medicine is a privilege and not a natural

14

right of individuals and as a matter of public policy it is necessary to protect the public interest

through enactment of this subtitle to regulate the granting of that privilege and its subsequent use and

control . . . .” Tex. Occ. Code Ann. § 151.003 (West 2004). 

16
that Scally does have a constitutionally protected property interest at stake that must be afforded

procedural due process. 

We now consider what process is due to protect Scally’s property interest. At a

minimum, due process requires notice and an opportunity to be heard at a meaningful time and in

a meaningful manner. Mathews v. Eldridge, 424 U.S. 319, 333 (1976); Than, 901 S.W.2d at 930. 

We disagree with Scally’s assertion that he is entitled to some higher level of due process because

the contested-case hearing was a quasi-criminal proceeding. This Court has held that disciplinary 15

action by the Board is not a quasi-criminal proceeding; it is civil. Chalifoux v. Texas State Bd. of

Med. Exam’rs, No. 03-05-00320-CV, 2006 WL 3196461, at *12 (Tex. App.—Austin Nov. 1, 2006,

pet. denied) (mem. op.) (addressing specificity of notice provided in Board complaint) (citing

Granek, 172 S.W.3d at 773, 777 (addressing due-process implications of pre-prosecution delays in

agency actions and applicable burden of proof)). 

Scally complains that the burden of proof for attorney disbarment is preponderance of the 15

evidence, which he asserts is a higher standard than the substantial-evidence standard. To the extent

Scally may be arguing that the Board should have been held to a higher burden of proof during the

SOAH proceeding, we note that he has confused the burden of proof applicable to the Board during

the license-revocation proceeding with the standard of review applied to the Board’s final order. We

have previously observed that “in civil cases ‘[n]o doctrine is more firmly established than that

issues of fact are resolved by a preponderance of the evidence.’” Granek v. Texas State Bd. of Med.

Exam’rs , 172 S.W.3d 761, 777 (Tex. App.—Austin 2005, no pet.) (quotingPretzer v. Motor Vehicle

Bd., 125 S.W.3d 23, 38-39 (Tex. App.—Austin 2003), aff’d in part and rev’d in part on other

grounds, 138 S.W.3d 908 (Tex. 2004)). And we have rejected the contention that due process

requires a higher burden of proof (i.e., the clear-and-convincing standard) in license-revocation

proceedings, even when the proceeding involved an allegation of conduct constituting a criminal

offense. See Sanchez v. Texas State Bd. of Med. Exam’rs, 229 S.W.3d 498, 509 (Tex. App.—Austin

2007, no pet.). We conclude that the ALJ held the Board to the appropriate burden of proof in

Scally’s license-revocation proceeding.

17
The legislature has provided that the default for appeal from a contested-case decision

governed by the APA is substantial-evidence review on the agency record and that the right to a trial

de novo in an administrative appeal must be specifically stated in the applicable statute. See Tex.

Gov’t Code Ann. § 2001.174. As the Board points out, the legislature has the constitutional power

to limit the review of the Board’s disciplinary action against physicians to a substantial-evidence

review. See Martinez v. Texas State Bd. of Med. Exam’rs, 476 S.W.2d 400, 404-05 (Tex. Civ.

App.—San Antonio 1972, writ ref’d n.r.e.) (citing Tex. Const. art. II, § 1, art. XVI, § 31). In

addition, physician disciplinary actions do not require trial by jury. Id. at 405 (citingCity of Houston

v. Blackbird, 394 S.W.2d 159, 162-63 (Tex. 1965)); see also Adams, 744 S.W.2d at 651-54 (finding

existing laws when Texas Constitution was adopted in 1876 did not provide for jury trial of

physician’s license revocation). The legislature has constitutionally provided for a non-jury trial

because “a jury trial . . . would be incompatible with the concept of agency adjudication and [would]

interfere substantially with the Board’s role in the statutory scheme” enacted by the legislature for

the protection of the public health, safety, and welfare. Adams, 744 S.W.2d at 653-54 (holding that

article V, section 10 of Texas Constitution does not require jury trial if legislature has determined

jury trial would be unsuitable in particular proceedings). The record reflects that Scally received

notice of the Board’s complaint, as well as a full opportunity to present his case to the ALJ, who, by

statute, is a neutral administrative magistrate. See Tex. Gov’t Code Ann. § 2001.058(a)-(d) (West

2008), § 2003.021(a) (West 2008); Pierce v. Texas Racing Comm’n, 212 S.W.3d 745, 755 (Tex.

App.—Austin 2006, pet. denied). Thus, the required elements of due process—notice, hearing,

and an impartial factfinder—were satisfied at Scally’s contested-case hearing. See Martinez,

476 S.W.2d at 405.

18
We turn next to Scally’s contention that the judicial-review process violated his right

to equal protection by making “unreasoned distinctions” between attorney-license revocations and

physician-license revocations. We conduct a multi-tiered analysis of whether a particular

16

classification violates the Fourteenth Amendment. See Richards v. League of United Latin Amer.

Citizens (LULAC), 868 S.W.2d 306, 310-11 (Tex. 1993). The constitutional guarantee of equal

protection requires only that disparate treatment of different classifications be rationally related to

a legitimate state purpose, unless the classification impinges on the exercise of a fundamental

right or distinguishes between people on a “suspect” basis, such as race or national origin.

17

Barshop v. Medina County Underground Water Conservation Dist., 925 S.W.2d 618, 631-32 (Tex.

1996) (noting that Texas courts apply rational-basis test when analyzing constitutionality of

regulations affecting economic rights); see also Semler v. Oregon State Bd. of Dental Exam’rs,

294 U.S. 608, 610-11 (1935) (holding state was not bound to regulate all professional classes in same

way). Maintaining a medical license is not a fundamental right, and physicians are not a suspect

Scally relies on a number of cases in support of the proposition that these “unreasoned 16

distinctions [between attorneys and physicians] . . . impede open and equal access to the courts,” but

these cases are inapposite here. They all involve equal access to the right to an appeal of a criminal

conviction, once the right to an appeal has been provided. See, e.g., Chaffin v. Stynchcombe,

412 U.S. 17, 24 n.11 (1973).

Classifications that impinge upon the exercise of a fundamental right or distinguish 17

between people on a suspect basis (i.e., race, national origin, and alienage) “are subjected to strict

scrutiny and will be sustained only if they are suitably tailored to serve a compelling state interest.” 

City of Cleburne, Tex. v. Cleburne Living Ctr., 473 U.S. 432, 440 (1985); see also Tex. Const. art.

I, § 3a (recognizing “sex, race, color, creed, [and] national origin” as protected classes). In a few

limited situations, none of which are applicable here, courts review classification under an

intermediate level of review to determine whether the classification is “substantially related to a

sufficiently important governmental interest.” City of Cleburne, 473 U.S. at 440-41 (substantialrelationship test applied primarily in cases involving classifications based on gender and

illegitimacy).

19
class. Consequently, we must determine whether the legislature had a rational basis for 18

differentiating between attorney-license revocations and physician-license revocations. “In so doing,

we must uphold the law if we can conceive of any rational basis for the Legislature’s action.” Owens

Corning v. Carter, 997 S.W.2d 560, 581 (Tex. 1999). 

The legislature has granted the Board the power to protect the public interest by

regulating those physicians who are granted the privilege of practicing medicine. Tex. Occ. Code

Ann. § 151.003. The legislature has also provided that the Board’s decision to revoke a physician’s

license is subject to the substantial-evidence standard of review. See Tex. Gov’t Code Ann. 19

§ 2001.174. The lack of a trial de novo (either a bench or jury trial) for license-revocation appeals

by physicians is rationally related to the legitimate governmental purpose of conservation of judicial

resources. See Pretzer, 125 S.W.3d at 39-40. In addition to conserving judicial resources, the lack

Fundamental rights are rights that are “deeply rooted in this Nation’s history and tradition” 18

and are “implicit in the concept of ordered liberty, such that neither liberty nor justice would exist

if they were sacrificed.” Washington v. Glucksberg, 521 U.S. 702, 720-21 (1997) (citations and

internal quotation marks omitted). Scally cites no authority, and we have found none, to support the

proposition that the right to retain his medical license is a “fundamental right” that implicates strict

scrutiny. See Adams v. Texas State Bd. of Chiropractic Exam’rs, 744 S.W.2d 648, 652-53 (Tex.

App.—Austin 1988, no writ) (license to practice one’s profession is property right subject to

revocation).

We note that the attorney-grievance process differs procedurally from the physician- 19

disciplinary process because attorneys may elect to have a complaint against them heard in a district

court or by an evidentiary panel of the district grievance committee. See Tex. DisciplinaryR. Prof’l

Conduct 2.15, reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G app. A (West 2005). Thus,

although Scally states that attorneys are entitled to a trial de novo in the district court without losing

their right to practice, a disbarment proceeding that the attorney has elected to have heard in the

district court is actually the procedural equivalent of the physician’s contested-case hearing. The

applicable standard of review on appeal depends upon which election is made by the attorney. While

a final judgment of the district court may be appealed as in civil cases generally, id. R. 3.16, an

appeal of an evidentiary panel’s judgment is to the Board of Disciplinary Appeals and subject to the

substantial-evidence standard of review, id. R. 2.24. 

20
of a jury trial is rationally related to the legislature’s legitimate governmental decision that the

adjudicatory function in license-revocation proceedings should be delegated to the Board, so that it

“will exercise its expert knowledge, experience, and special facilities in finding facts, applying law,

and formulating and applying administrative policy to accomplish the particular objectives set for

the agency by the Legislature,” including the protection of the public’s health, safety, and welfare. 

Adams, 744 S.W.2d at 653.

We also find that the Board’s decision that a person may not practice medicine while

his license-revocation appeal is pending is rationally related to its mandate to protect the public

interest in health and safety. SeeTex. Occ. Code Ann. § 164.011(b). Moreover, an appealing license

holder is entitled to seek a stay from the appropriate court to allow him to continue practicing, as

long as the court finds that his continued practice does not present a danger to the public. See id. 20

§ 164.011(b), (c). Accordingly, we conclude that the legislature’s different treatment of physicianlicense revocations and attorney-license revocations does not violate equal protection. See Barshop,

925 S.W.2d at 631-32; see also Pierce, 212 S.W.3d at 757. We overrule Scally’s first issue. 

Admission of expert testimony

Scally contends in his second issue that it was an abuse of discretion to admit the

testimony of the Board’s two experts, Drs. Jackson and Werner, because neither one qualifies as an

Contrary to Scally’s assertion, attorneys who have lost their licenses are subject to a more 20

stringent penalty than physicians because neither a district court judgment of disbarment nor an

evidentiary panel’s order of disbarment can be superseded or stayed during the pendency of any

appeals. See Tex. Disciplinary R. Prof’l Conduct 2.25, 3.14. Only license suspensions may be

stayed pending appeal upon petition to the district court or the evidentiary panel, if the attorney

proves that continued practice does not pose a continuing threat to the welfare of the attorney’s

clients or the public. See id.

21
expert under Texas Rule of Evidence 702, and thus, their opinions were neither relevant nor reliable. 

The Board argues that the ALJ did not err by admitting the doctors’ testimony because both doctors

are more than adequately qualified and their testimony about the standard of care and other issues

is both relevant and reliable.

We review rulings on the admission or exclusion of evidence at the administrative

level under the abuse-of-discretion standard applied to trial courts. City of Amarillo v. Railroad

Comm’n of Tex., 894 S.W.2d 491, 495 (Tex. App.—Austin 1995, writ denied). A court abuses its

discretion if it acts without reference to guiding rules and principles. Downer v. Aquamarine

Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). An ALJ, like a trial court, has broad

discretion when deciding whetherto admit expert testimony in a contested-case hearing, and we will

not disturb that decision on appeal in the absence of an abuse of discretion. See Fay-Ray Corp. v.

Texas Alcoholic Bev. Comm’n, 959 S.W.2d 362, 367 (Tex. App.—Austin 1998, no pet.).

A two-part test governs the admissibility of expert testimony: (1) the expert must be

qualified; and (2) the testimony must be relevant and based on a reliable foundation. E.I. du Pont

de Nemours & Co. v. Robinson, 923 S.W.2d 549, 556 (Tex. 1995). When deciding whether an

expert is qualified, the trial court must insure that the proposed expert “‘truly ha[s] expertise

concerning the actual subject about which [he is] offering an opinion.’” Gammill v. Jack Williams

Chevrolet, Inc., 972 S.W.2d 713, 719 (Tex. 1998) (quoting Broders v. Heise, 924 S.W.2d 148, 152

(Tex. 1996)). The Texas Supreme Court has explained that when assessing reliability, the trial court

must “evaluate the methods, analysis, and principles relied upon in reaching the opinion. . . . [and]

should ensure that the opinion comports with applicable professional standards outside the

courtroom and that it will have a reliable basis in the knowledge and experience of the discipline.” 

22
Id. at 725-26 (internal quotation marks omitted). In Robinson, the court identified six nonexclusive

factors that courts may consider when determining whether an expert’s scientific testimony is

reliable and thus admissible, but noted that courts may consider other factors and that those factors

which a court will find helpful will differ with each particular case. 923 S.W.2d at 557. If expert 21

opinion testimony will help the factfinder understand the evidence or determine a fact at issue, it

should be admitted. Tex. R. Evid. 702; Fay-Ray Corp., 959 S.W.2d at 367.

Drs. Jackson and Werner are both board certified in endocrinology, which is a

medical specialty concentrating on the endocrine system, the hormones produced by the endocrine

glands, and related diseases, and which includes the function of the HPTA. Dr. Jackson testified that

he had been board certified in endocrinology for nearly twenty years and internal medicine for over

twenty years, an associate professor of internal medicine with Texas A&M College of Medicine

Health Sciences Center for approximately fifteen years, and a staff endocrinologist at Scott and

White Clinic and Memorial Hospital, a teaching hospital, for nearly twenty years. Dr. Werner

testified that he had been board certified in endocrinology and internal medicine for over twenty

years, a professor of medicine at Texas Tech University teaching endocrinology and internal

medicine for ten years, and that he continued to see patients in his role as a professor. Both doctors

The six nonexclusive factors identified in Robinson are: “(1)the extent to which the theory 21

has been or can be tested; (2) the extent to which the technique relies upon the subjective

interpretation of the expert; (3) whether the theory has been subjected to peer review and/or

publication; (4) the technique’s potential rate of error; (5) whetherthe underlying theoryor technique

has been generally accepted as valid by the relevant scientific community; and (6) the non-judicial

uses which have been made of the theory or technique.” E.I. du Pont de Nemours and Co., Inc. v.

Robinson, 923 S.W.2d 549, 557 (Tex. 1995) (citation omitted).

23
testified that as part of their medical practice they had medically managed patients with low

testosterone levels and testosterone deficiency. 

The record demonstrates that the ALJ allowed Drs. Jackson and Werner to offer their

expert testimony after voir dire on the issue of their qualifications. Throughout the proceedings, the

ALJ actively participated by asking clarifying questions of the witnesses when necessary, which

allowed her to further assess the witnesses’ expertise and the principles they relied upon in reaching

their opinions. See Olin Corp. v. Smith, 990 S.W.2d 789, 796-97 & n.1 (Tex. App.—Austin 1999,

pet. denied)(finding that “the confluence of the ‘gatekeeper’ and fact-finderfunctions” in bench trial

“served to ventilate fully any Robinson issues”); Fay-Ray Corp., 959 S.W.2d at 367 (noting ALJ

herself questioned expert about his training and experience). As this Court observed in Olin, when

the trial court serves as factfinder, in addition to being the gatekeeper of expert testimony as

described in Robinson and Gammill, our concerns about the potentially prejudicial impact of expert

testimony are reduced. 990 S.W.2d at 796 n.1. Here, as in Olin, the ALJ heard extensive testimony

about the experts’ qualifications as well as their methods, analyses, and the principles upon which

they relied in reaching their opinions. See id. at 796. The ALJ’s dual role in this proceeding allowed

her not only to make a preliminary assessment about the qualifications of the Board’s experts and

the reliability and relevance of their opinions, but also to continue exploring throughout the hearing

whethertheir testimonywould assist her as factfinder in understanding the evidence and determining

the facts at issue. See id. at 796-97. 

Nevertheless, Scallyargues that Drs. Jackson and Werner are not qualified to provide

expert testimony because they lack “knowledge, skill, experience, training, or education” on

(1) anabolic steroids, (2) measurement of serum testosterone, (3) the medical risks of anabolic

24
steroids, (4) hypogonadism, (5) the use of magnetic resonance imaging in diagnosing hypogonadism,

(6) anabolic-steroid-induced hypogonadism, and (7) tamoxifen’s and the aromatization inhibitors’

effect on the HPTA. See Tex. R. Evid. 702. Contrary to Scally’s argument, all of these issues are

encompassed within Drs. Jackson and Werner’s area of expertise—endocrinology. Both doctors

testified that they formed their opinions in this case based on their review and analysis of Scally’s

treatment records for the patients at issue, among other documents. And as mentioned, the ALJ

asked clarifying questions and probed the principles upon which they relied in forming their

opinions. Although Scallyframes this argument in terms of the experts’ qualifications, the substance

of his complaints on these subissues amounts to an attack on the experts’ credibility and the weight

to be afforded their testimony. His disagreement with the Board’s experts’ testimony on specific

medical issues does not render them unqualified to present those opinions. Likewise, his

disagreement with their conclusions does not render the methods, analyses, and principles theyrelied

upon in reaching their opinions unreliable. In a substantial-evidence review, we resolve evidentiary

ambiguities in favor of the administrative order, and we cannot substitute our judgment for the ALJ’s

regarding the weight and credibility of the evidence presented. We overrule Scally’s second issue

because we find no abuse of discretion in the ALJ’s decision that Drs. Jackson and Werner were

qualified as experts and their testimony should be admitted.

Substantial evidence

In his third issue, Scally contends that substantial evidence does not support the

findings of fact underlying the Board’s order revoking his license. He asserts that the findings of 22

Scally also argues that because the Board’s two experts are not qualified, their testimony 22

was neither reliable nor relevant, and thus, provided no support for the order. We have disposed of

25
fact are contradictory and irreconcilable with “sound medical principles, properly admitted judicial

admissions, and other [findings of fact].”

We must uphold the Board’s order “if (1) the findings of underlying fact in the order

fairly support the [Board’s] findings of ultimate fact and conclusions of law, and (2) the evidence

presented at the hearing reasonably supports the findings of underlying fact.” Texas Water Comm’n

v. Lakeshore Util. Co., 877 S.W.2d 814, 818 (Tex. App.—Austin 1994, writ denied). Resolving

factual conflicts and ambiguities is the agency’s function, and the purpose of substantial-evidence

review is to protect that function. Brinkmeyer, 662 S.W.2d at 956. In this case, the Board’s findings

of ultimate fact and conclusions of law challenged by Scally on substantial-evidence grounds

concern the issue of whether Scally prescribed anabolic steroids to patients in violation of the

standard of care without a valid medical purpose.

The ultimate conclusions which support the Board’s decision to revoke Scally’s

license based on his prescribing anabolic steroids to the eight patients at issue include conclusions

of law fifteen, eighteen, and nineteen, which state that Scally “violated the medical standards of care

by prescribing anabolic steroids without a valid medical reason,” “administered anabolic steroids to

[the eight patients] for non-therapeutic reasons in violation of the [Medical Practice Act],” and

“administered Schedule III anabolic steroids to [the eight patients] for purposes of bodybuilding in

violation of the Texas Health and Safety Code, thereby violating the [Medical Practice Act].” See

Tex. Occ. Code Ann. §§ 164.051(a)(1), .052(a)(5), .053(a)(1), (5); Tex. Health & SafetyCode Ann.

§ 481.071. 

that argument with our conclusion that the ALJ’s decision to admit the experts’ testimony was not

an abuse of discretion. 

26
Scally challenges numerous fact findings, but the heart of his argument is that the

evidence does not support the factual findings underlying the Board’s ultimate conclusions because

the eight patients for whom he prescribed anabolic steroids were hypogonadal. Thus, he contends

he had a valid medical purpose and therapeutic reasons for prescribing the drugs to these patients,

whom he asserts were not in good health. The Board, on the other hand, contends that substantial

evidence supports the ALJ’s conclusion that Scally breached the standard of care because Scally

prescribed anabolic steroids: (1) to healthy individuals (patients whose testosterone levels had

returned to normal after possibly being hypogonadal because of prior use of illicit steroids for nontherapeutic reasons); (2) for the purpose of bodybuilding; including (3) to a patient, J.Bi.,

who exhibited signs of steroid abuse; and (4) to a patient, S.L., who was at an increased risk for

prostate cancer. 

For purposes of our discussion, we will group the findings of fact that Scallycontends

are not supported by substantial evidence into two topics: the applicable standard of care and

whether Scallyprescribed anabolic steroids for bodybuilding. The ALJ’s ultimate conclusions about

Scally’s improper prescription of anabolic steroids depend upon her resolution of these issues. To

the extent that Scally argues that other inconsistencies and contradictions can be found within the

Board’s experts’ testimony and the final order itself, we again note that our concern is only the

overarching question of whether substantial evidence existed to support the ALJ’s ultimate

conclusions. See Lakeshore Util. Co., 877 S.W.2d at 818. The ALJ, as judge of the weight to be

accorded to witnesses’ testimony, may rely upon part of the testimony of one witness and disregard

the remainder. See Southern Union Gas Co. v. Railroad Comm’n of Tex., 692 S.W.2d 137, 141-42

(Tex. App.—Austin 1985, writ ref’d n.r.e.).

27
Evidence of standard of care

The Board’s experts testified about the standard of care for treating patients who want

to stop taking anabolic steroids and those who have steroid-induced hypogonadism. Both Drs.

Werner and Jackson testified that the appropriate procedure is to have the patient stop using all

anabolic steroids and wait to see whether the patient’s system will return to its natural equilibrium

on its own, while watching for what they termed “withdrawal symptoms,” i.e., hypogonadism

symptoms, which are addressed if the patient develops them. Both doctors agreed that if withdrawal

symptoms developed and the patient had a persistent problem with the production of testosterone,

they would treat the symptoms by placing the patient on a replacement dose of testosterone for

several months and then slowly decreasing the amount to let the patient’s system return to normal. 

The replacement dose is a physiological dose comparable to what the body normally makes, as

opposed to a pharmacological dose, which would be a higher dose than the body normally makes. 

Dr. Werner further explained that he would engage in “watchful waiting” if the patient had been on

steroids for only a short time, but that if the patient had been on high doses for a long time and his

whole HPTA was suppressed, he would keep him on the replacement dose of testosterone for

approximately two to four months and then slowly decrease the dose.

Dr.Werner testified that therewould be no valid medical purpose for placing a patient

who had been taking black-market steroids on a prescriptive anabolic steroid. He also opined that

it is outside the standard of care to treat mental health problems, such as depression, with anabolic

steroids, as Scally’s expert, Dr. DiPasquale, testified that Scally was doing. Based on his review 23

 Dr. DiPasquale acknowledged that treating HPTA dysfunction with anabolic steroids is 23

not a generally accepted practice in the medical community, but he opined that it is proper to use

28
of the patients’ records, Dr. Werner concluded that Scally was prescribing anabolic steroids to the

patients in this case for bodybuilding purposes, which is outside the standard of care and not a

legitimate medical purpose. Dr. Jackson likewise testified that it violates the standard of care to

place a patient who has been using black-market steroids on prescriptive anabolic steroids. As he

explained, “[a]ny additional androgenic agent is going to continue suppression of the [HPT]

axis . . . . [R]esuming high dose androgen or anabolic steroid therapy when you’re trying to get the

axis to recover makes no sense.”

Both Drs. Werner and Jackson testified that there are a number of medical dangers

associated with the use of the anabolic steroids (i.e., Anadrol-50, oxandrolone, Winstrol, Halotestin)

that Scally prescribed to his patients. Dr. Jackson testified that he will not use them to treat

testosterone deficiency because of the liver side effects (liver damage, jaundice, and elevations of

liver enzymes), among others, including cholesterol effects related to arteriosclerosis and heart

disease, enlargement of the prostate, and possible stimulation of prostate and other cancers. Dr.

Werner testified that these are only the known, measurable side effects, but as steroid use is further

studied, there are likely to be more long-term problems discovered that are associated with their use. 

Both Board experts testified that because of these dangers, they would only use replacement doses

of testosterone agents not associated with these side effects to treat patients trying to stop using

anabolic steroids who were experiencing sufficient testosterone-deficiency symptoms. Similarly,

anabolic steroids to treat the “psychological physiological” concerns of men and women who have

used illicit steroids. He also confirmed, however, that the medical records of the patients at issue

do not document those sorts of problems. Dr. DiPasquale testified that he has never prescribed

anabolic steroids as part of his own practice. Dr. DiPasquale agreed with the other three doctors that

giving a patienttestosterone or other anabolic steroids will increase the testosterone level and depress

the HPTA.

29
Dr. DiPasquale testified that prescribing anabolic steroids is not the appropriate method for

normalizing a patient’s testosterone level.

Dr. Jackson testified that the normal dose of testosterone for replacement therapy is

100 milligrams per week, 200 milligrams every two weeks, or 300 milligrams every three weeks

(depending on the form). He explained that the dosage Scally prescribed to these patients of 200

milligrams per week is twice as much as the normal replacement dose. In addition, Scally would 24

prescribe other anabolic steroids, like Anadrol, oxandrolone, and sometimes Winstrol, at the same

time as he was prescribing twice the normal replacement dose of testosterone. Dr. Jackson explained

the similarity between this practice and “stacking,” a practice in which bodybuilders use multiple

different anabolic steroids in pharmacological doses at the same time to increase the drugs’ anabolic

effects. Dr. Jackson testified that there is no justification for Scally’s practice of adding other

anabolic agents to the testosterone dose. He explained that the anabolic steroids would further

suppress the axis, leading Scallyto prescribe another course of his hCG-Clomid-tamoxifen protocol

“to wake up the system.” Jackson observed that Scally’s justification noted in the records for this

repeating “yo-yo” cycle of the hCG-Clomid-tamoxifen protocol followed by a round of anabolic

steroids was to “increase lean body mass” (nonfat mass, including muscle, water, bone, connective

tissue, and internal organs), which Jackson viewed as a catch phrase for increasing muscle

enhancement.

The dose Scally prescribed is a lower dose than what is often used in competitive 24

bodybuilding, although no studies demonstrate exactly what dose is needed to build muscle. 

30
Scally’s challenge to standard-of-care evidence

Scally contends that the findings of fact related to the standard of care applicable to

the patients at issue are not supported by substantial evidence. As discussed above, both Board 25

experts provided their opinions that the appropriate standard of care for patients with steroid-induced

hypogonadism or a dysfunctional HPTA who want to stop anabolic steroids involves watchful

waiting, and if necessary, testosterone replacement in physiological doses. Scally insists that 26

because the Board’s experts did not provide citation to peer-reviewed literature for this standard, the

ALJ should not have relied on this testimony because it was based only on the experts’ unsupported

opinions. See Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 712 (Tex. 1997). While

Scally is correct that “an expert’s bald assurance of validity is not enough,” id., more than that was

Scally also argues that the proposal for decision states that the Board “failed to articulate 25

the standard of care in diagnosing the patients,” and thus it is not possible to articulate a standard of

care for treatment. Contrary to Scally’s assertion, the ALJfound that the Board did not establish that

Scally had conducted inappropriate testing, not that it failed to articulate the standard of care for

diagnosis of hypogonadism or secondary hypogonadism. Scally’s actual contention appears to be

that the Board failed to establish when it is medically appropriate to treat a patient for hypogonadism

or secondary hypogonadism, and thus, that it is not possible for the Board to have determined that

Scally inappropriately treated his patients for these conditions. But as part of the Board’s experts’

testimony regarding the standard of care for steroid-induced hypogonadism, they explained that the

appropriate course of action is to monitor the patient who has stopped using anabolic steroids for

both testosterone deficiency and development of associated symptoms for some time before

prescribing any drugs, so that the HPTA has a chance to return to normal on its own. They also

testified that it is never appropriate to treat steroid-induced hypogonadism by prescribing anabolic

steroids other than replacement doses of testosterone.

J.Bi., the only woman patient at issue, was taking veterinary-grade Winstrol when she had 26

her initial appointment with Scally. She was exhibiting symptoms of masculinization including

facial hair growth, an enlarged clitoris, cessation of menstrual periods, and a deepening of her voice. 

Scally recorded a rule-out diagnosis of perimenopause for her. Although Scally had her discontinue

the use of veterinary-grade Winstrol, he prescribed human-grade Winstrol. Scally later prescribed

her oxandrolone, too. The Board’s experts testified that it was outside the standard of care to

prescribe Winstrol and other anabolic steroids to a female patient experiencing masculinization. 

31
provided by the Board’s experts here. The experts provided the underlying scientific rationale for

the standard of care, explaining the medical risks associated with the anabolic steroids that Scally

was prescribing and the medical reasons why those drugs are not typically prescribed to someone

who is attempting to stop taking them. They also explained the medical reasons for prescribing the

most minimal dose of testosterone possible, if replacement testosterone is warranted by a patient’s

complaints. In addition, although Scally insists—without citation to authority—that peer-reviewed

publication is necessary to establish the Board’s standard of care, his own treatment protocol has not

been subjected to peer review before publication. Scally also asserts that the Board’s experts

developed this theory solely for this litigation, but that assertion is contrary to the experts’ testimony

that this is the methodology they use when treating patients and teaching medical students. For all

these reasons, we conclude that substantial evidence supports the ALJ’s factual findings related to

the standard of care.

Evidence of prescription of anabolic steroids to healthy patients for bodybuilding

The ALJ provided a detailed analysis of each patient’s treatment in the proposal for

decision, based on the medical records and the expert testimony. As part of her analysis, the ALJ

considered the reason each patient was seeking treatment, whether Scally was providing another

source of anabolic steroids to patients who were already known to have used illicit steroids, and what

condition Scally treated. We will summarize the facts most pertinent to the Board’s ultimate

conclusion that Scally prescribed anabolic steroids to healthy patients for bodybuilding. 

All nine of the patients indicated an interest in Scally’s BodyBuilding program when

they came in for their initial visit. All eight to whom Scally prescribed anabolic steroids were either

32
currently using anabolic steroids when they came in for their initial or a subsequent visit or they had

a history of prior steroid use. Nothing in their medical records indicates they sought help with 27

stopping steroid use. Nothing in their medical records indicates that Scally counseled those patients

using illicit steroids to stop.

As Scally explained in his expert report, hypogonadism may manifest through a

number of different symptoms, including among others, erectile dysfunction, loss of libido,

depression, decreased appetite, decreased cognitive abilities, sleep disturbances, mood disturbances,

fatigue, and decreased muscle mass and strength. T.C., M.W., J.S., J.B., and J.Bi. reported none of

these symptoms at their initial appointments. J.M. reported irritabilityand difficultystaying asleep, 28

T.W. reported some hypogonadism symptoms (poor libido and sex drive, sleep disturbances, mood

disturbances), and S.L. reported only “fair” libido and sex drive and occasional erectile problems. 

Scally noted that S.D. had decreased testicular size at his initial appointment. 

Significantly, most of the patients were never diagnosed with hypogonadism. For

M.W., J.S., and T.W., Scally issued only rule-out diagnoses of hypogonadism and/or secondary

hypogonadism and did not issue definitive diagnoses after testing. For J.B., Scally did not indicate

that he suspected secondary hypogonadism; instead, his goals were to increase J.B.’s lean bodymass

and libido. For J.Bi., the only woman patient at issue, Scally indicated a rule-out diagnosis of

perimenopause. For S.D., Scally originally issued a definitive diagnosis of gynecomastia

T.C. was the only patient for whom Scally did not prescribe steroids. It appears from the 27

record that T.C. never returned after his initial visit.

Although the medical records do not reflect symptoms reported by these patients, the 28

Board pled in its complaint that M.W. had libido problems and decreased testicle size, J.S. had low

libido and energy, and J.B. had decreased libido and weight loss.

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(abnormally enlarged breast tissue in a male, which can be a side effect of steroid use), for which he

prescribed tamoxifen. For J.M. and S.L., Scally issued definitive diagnoses of hypogonadism. 29 30

Finally, one of the most compelling pieces of evidence is the fact that Scally

prescribed anabolic steroids to M.W., J.S., J.M., T.W., S.L., and S.D. after their testosterone levels

had returned to within the normal range, as defined by the lab that performed the blood tests. In

31

some cases, Scally also prescribed anabolic steroids to patients when they had high levels of total

testosterone.32

S.D. was a bodybuilder who told Scallythat he was involved in bodybuilding competitions 29

and used illicit anabolic steroids. S.D. refused to quit taking steroids and was actively preparing for

a bodybuilding competition when Scallyprescribed the tamoxifen to reduce the gynecomastia, which

is a side effect of steroid use. S.D.’s visits to Scally were intermittent, and three years later, when

S.D. had a normal total testosterone level, Scally prescribed anabolic steroids to him.

 S.L. had a prior history of anabolic-steroid use and was being treated by another doctor, 30

a urologist, for his elevated PSA level, which indicates a possibility of prostate cancer. He was

already taking replacement testosterone prescribed by the urologist when he came in to see Scally

and had a high level of total testosterone. Scally prescribed testosterone cypionate to continue S.L.’s

replacement therapy, but also prescribed Winstrol and other anabolic steroids. Drs. Werner, Jackson,

and DiPasquale all testified that prescribing anabolic steroids to S.L. exposed him to a greater risk

of cancer growth.

In addition, Scally prescribed testosterone and other anabolic steroids to J.B. over a period 31

of several months while his total testosterone level was noted as “pending.” Scally also prescribed

anabolic steroids to J.Bi., a woman already showing signs of masculinization at her initial visit.

For example, Scally continued prescribing testosterone cypionate to J.M. on at least two 32

occasions when his total testosterone levels were high. On one occasion, he prescribed testosterone

cypionate to J.M. before receiving the laboratory results, which later showed J.M.’s level to be high. 

Nothing in the medical records indicates he advised J.M. to stop the testosterone after receiving the

laboratory results. 

34
Scally’s challenge to bodybuilding evidence 

Scallyasserts that the anabolic steroids he prescribed were propermedications for the

conditions he diagnosed and that there is no reliable evidence that he prescribed them for the

nontherapeutic purpose of bodybuilding. When we consider the record as a whole, there is

substantial evidence in the record that supports the ultimate conclusions that Scally prescribed the

anabolic steroids without a valid medical reason for the nontherapeutic purpose of bodybuilding. 

Scally’s marketing materials show that he offered a program for bodybuilding, but not one for HPTA

normalization or cessation of steroid use. The medical records reflect that all nine of the patients at

issue indicated an interest in the BodyBuilding program, and none indicated they were there to stop

taking anabolic steroids. 

As part of his protocol, Scally prescribed anabolic steroids to patients after their

testosterone levels came back within normal range, even though returning the testosterone level to

normal was the purported goal of restarting the HPTA feedback loop. In other words, Scally was 33

prescribing anabolic steroids to otherwise healthy patients. He also typically prescribed testosterone

at two times the normal replacement dose and at the same time as he prescribed other anabolic

steroids. Scally admitted that “[r]einitiating androgens will only continue to suppress the [HPTA]

and potentially worsen the condition for which they were stopped.” In addition, all three of the other

Scally contends that whether he prescribed the anabolic steroids for a valid medical reason 33

should be controlled by a long list of factors that he derives from primarily federal case law. While

we need not determine whether those factors are applicable here, we note that even if they are, one

of the factors Scally cites is the lack of a logical relation between the drugs prescribed and the

treatment of the alleged condition. See, e.g., United States v. Rogers, 609 F.2d 834, 838-39 (5th Cir.

1980).

35
experts, including Scally’s own, opined that Scally prescribed anabolic steroids for purposes of

bodybuilding.34

We overrule Scally’s third issue because we find that substantial evidence supports

the findings of fact underlying the ultimate conclusions in the Board’s order.

Adequacy of medical records

Scally asserts in his fourth and fifth issues that the Board erred by finding that Scally

failed to maintain adequate medical records for T.C., M.W., J.S., T.W., J.B., and J.Bi. because Scally

did not provide a “diagnosis” for these patients as required by rule 165.1(a). See 22 Tex. Admin.

Code § 165.1(a) (1997) (Tex. Med. Bd., Med. Records). Scallymaintains that his medical records 35

were sufficient because they included a “rule-out diagnosis” for each patient. A “rule-out diagnosis”

is merely a possible diagnosis, not a definitive diagnosis. The Board does not agree that a “rule-out

diagnosis” is a “diagnosis” under the rule. It interprets the term “diagnosis” to mean a definitive

diagnosis that is justified bythe patient’s symptoms. Scallychallenges this interpretation of the rule. 

Dr. DiPasquale agreed that Scally prescribed anabolic steroids to M.W., J.S., J.B., J.Bi., 34

and S.L. for bodybuilding purposes. Scally contends that Dr. DiPasquale testified otherwise based

on Dr. DiPasquale’s testimony that Scally was prescribing the steroids not only to increase muscle

mass and strength, but also to treat the “psychopathology” that Dr. DiPasquale described as a

potential problem for Scally’s patients. Dr. DiPasquale explained that “certain people

psychologically or emotionally . . . feel better with bigger muscles.” Dr. DiPasquale acknowledged,

however, that the medical community at large would not find it acceptable to prescribe drugs or

anabolic steroids for the purpose of making these people feel better. He also acknowledged that

Scally did not document in the patients’ medical records the existence of this type of problem.

Instead, he based his testimony that this psychopathology was a factor in Scally’s prescription of

anabolic steroids on his discussions with Scally.

Although the Board has amended the rule several times, all citations to rule 165.1(a) herein 35

refer to the 1997 rule that was in effect at the time Scally treated the patients at issue.

36
Although Scallychallenges the Board’s findings and conclusions on statutory-construction grounds,

we briefly summarize the evidence admitted at the hearing about the condition of Scally’s medical

records to provide context for our discussion of these issues.

Evidence that Scally’s recordkeeping was inadequate

As discussed above, Scally never actually diagnosed most of the patients with

hypogonadism, and for several patients, Scally’s records do not include a diagnosis even after he

received lab results ordered on the basis of his rule-out diagnosis. Both Board experts testified that

a rule-out diagnosis is not the same as a true diagnosis. Dr. Werner explained that it is merely a

tentative diagnosis, also known as a differential diagnosis. In other words, a doctor makes a rule-out

diagnosis based on the patient’s symptoms and complaints and then tests to determine whether he

can eliminate the rule-out diagnosis from his mental list of possible diagnoses. Both Board experts

testified that it is below the standard of care to fail to provide a diagnosis. Dr. DiPasquale

acknowledged that he had to confer with Scally about his treatment of each patient because the

medical records were so incomplete and difficult to read. 

The ALJ concluded that the records of M.W., J.S., T.W., J.B., and J.Bi. were

inadequate because theylacked a diagnosis, and T.C.’s records were inadequate because the recorded

symptoms did not support Scally’s rule-out diagnoses or his treatment plan.

Scally’s challenge to the Board’s findings that his records were inadequate

Scallycontends that the Board impermissiblyengaged in ad hoc rulemaking and acted

in excess of its statutory authority and in violation of Scally’s constitutional rights to due process and

against enforcement of an ex post facto law by its interpretation of formerrule 165.1(a). See 22 Tex.

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Admin. Code § 165.1(a). We construe administrative rules in the same manner as statutes. 

Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248, 254 (Tex. 1999). Statutory construction is

a matter of law, subject to de novo review. City of Rockwall v. Hughes, 246 S.W.3d 621, 625 (Tex.

2008). When we construe administrative rules, “‘[a]n administrative agency’s interpretation of its

own rules is entitled to great weight and deference; it controls unless plainly erroneous

or inconsistent with the agency’s enabling statute.’” Cities of Dickinson v. Public Util. Comm’n of

Tex., 284 S.W.3d 449, 452 (Tex. App.—Austin 2009, no pet.) (quotingAckerson v. Clarendon Nat’l

Ins. Co., 168 S.W.3d 273, 275 (Tex. App.—Austin 2005, pet. denied)). 

The version of rule 165.1(a) in effect for the contested-case hearing provided that

Board-licensed physicians “shall maintain adequate medical records for each patient. For purposes

of this section, ‘adequate medical record’ shall mean any records documenting or memorializing the

history, diagnosis, and treatment of the patient.” 22 Tex. Admin. Code § 165.1(a). In findings of

fact 52-54, 62, 96, 97, 104, 178, 179, 200, and 217, the Board found that:

• medical records are inadequate without a diagnosis;

• a rule-out diagnosis is not a diagnosis, but only a possible diagnosis that the

doctor wants to investigate to determine if the patient has that condition;

• many of Scally’s records were illegible;

• the records of M.W., J.S., T.W., J.B., and J.Bi. were inadequate because they

lacked a diagnosis; and

• T.C.’s records were inadequate because they contained an unsupported

diagnosis.

 Scally contends that the Board’s interpretation of the rule to exclude rule-out

diagnoses is impermissible ad hoc and ex post facto rulemaking. He further argues that this

38
interpretation is inconsistent with the federal Health Insurance Portability and Accountability Act

of 1996 (HIPAA), Pub. L. No. 104-191, 110 Stat. 1936 (codified primarily in Titles 18, 26, and 42

U.S.C.), which he alleges uses the term “diagnosis” to include rule-out diagnoses, and with Medicare

diagnosis coding, which he alleges allows listing of a chief complaint, sign, or symptom as an

alternative to a diagnosis. In his fourth and fifth issues, he argues that under these guidelines, the

patients’ medical records are adequate. As the Board points out, even if HIPAA and Medicare allow

a rule-out diagnosis or a description of complaints instead of an actual diagnosis, the Board is

entitled to require more of its licensees. The Board’s rule is not contrary to HIPAA because a doctor

who complies with the Board’s rule will also be in compliance with HIPAA. See 45 C.F.R.

§ 160.202 (2010).

We must defer to the Board’s interpretation unless it is plainly erroneous or

inconsistent with the rule. Cities of Dickinson, 284 S.W.3d at 453 (citing Public Util. Comm’n of

Tex. v. Gulf States Utils. Co., 809 S.W.2d 201, 207 (Tex. 1991)). Under this deferential standard,

we cannot say that the Board’s interpretation of “diagnosis” is either plainly erroneous or

inconsistent with the rule’s language. We overrule Scally’s fourth and fifth issues. 36

 To the extent that Scally’s arguments regarding the medical records’ adequacy could be 36

construed as argumentsthat substantial evidence does not support the findings of inadequate records,

we note that each of the cited patients except T.C. had nothing more than a rule-out diagnosis in their

records. While Scally recorded a diagnosis of hypogonadism for T.C. after he received the results

of T.C.’s lab tests, rather than merely a rule-out diagnosis, T.C.’s medical records did not refer to

any symptoms justifying Scally’s original rule-out diagnosis and the tests ordered, rendering the

records inadequate. T.C. had stated that his libido and sex drive were good, he exercised every day,

and he had no prostate or erection problems. Scally did not indicate in T.C.’s record that T.C. had

any prior history of steroid use. As the ALJ explained, “the term ‘adequate’ must mean something,

otherwise nonsensical symptoms could support any form of treatment ordered by a doctor.” We

conclude that substantial evidence supports the Board’s findings of inadequate records.

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CONCLUSION

Having overruled all of Scally’s issues on appeal, we affirm the district

court’s judgment.

__________________________________________

Diane M. Henson, Justice

Before Justices Pemberton, Henson and Goodwin

Affirmed

Filed: August 4, 2011

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