Source: https://www.federalregister.gov/documents/2006/11/17/E6-19400/daniel-koller-dvm-denial-of-application-introduction-and-procedural-history
Timestamp: 2017-08-17 01:05:33
Document Index: 725418571

Matched Legal Cases: ['§\u200911158', '§\u20094883', '§\u200911171', '§\u2009802', '§\u2009822', '§\u2009822', '§\u2009822', '§\u200914']

Federal Register :: Daniel Koller, D.V.M., Denial of Application; Introduction and Procedural History
71 FR 66975
66975-66983 (9 pages)
Docket No. 03-12
E6-19400
Factor Three—Respondent's Record of Drug-Related Convictions
Factor Four—Respondent's Compliance with Applicable Federal, State and Local Laws
https://www.federalregister.gov/d/E6-19400 https://www.federalregister.gov/d/E6-19400
In pertinent part, the Show Cause Order alleged that on December 5, 2001, Respondent submitted an application for a registration as a veterinary practitioner at 3150 NE 82nd Avenue, Portland, Oregon, and that on the application, Respondent had indicated that the State of California had revoked his state license in 1978 for non-drug related conduct but had re-instated his license in 1982. See Show Cause Order at 2. The Show Cause Order alleged that on February 13, 2002, DEA Diversion Investigators (DIs) interviewed Respondent at his proposed registered location. See id. The Show Cause Order alleged that Respondent told the DIs that he had started over 30 veterinary clinics under the name “Companion Pet Clinic” in Oregon, Arizona, Washington and Idaho, and that Respondent obtains a DEA registration for the particular clinic and operates the clinic until he finds a veterinarian to purchase the practice. See id. The Show Cause Order also alleged that Respondent “retain[s] a financial interest in each new clinic.” Id.
The Show Cause Order further alleged that during the interview, Respondent told the DIs that he maintained a law practice in San Diego, California, and that he anticipated hiring temporary veterinarians at the Portland location during the periods in which he returned to San Diego, and that the temporary veterinarians and clinic support staff would have access to the safe in which the controlled substances were stored. See id. at 3. The Show Cause Order alleged “that by affording such access, [Respondent] would not be providing effective controls and procedures against diversion.” Id.
The Show Cause Order alleged that during the on-site inspection, the DIs observed that a partial bottle of Pentobarbital euthanasia solution, a Schedule II controlled substance, was stored in a safe. See id. at 3. The Show Cause Order further alleged that Respondent had a bottle of Ketamine, a Schedule III controlled substance, in his laboratory coat pocket. See id. The Show Cause Order alleged that Respondent told the DIs that he had brought the Ketamine from his registered location in San Diego, and that he had borrowed the Pentobarbital from the Companion Pet Clinic in Forest Grove, Oregon. See id. The Show Cause Order alleged that these acts “constitute[] a violation of 21 CFR 1301.12, which requires each separate location to be registered.” Id. at 3.
The Show Cause Order next alleged that in January 2000, Dr. Parminder Nagra, a friend and business associate of Respondent (who owned a Companion Start Printed Page 66976Pet Clinic located at 8483 SW. Canyon Road, Portland, Oregon, and was a partner in a clinic located at 14292-A SW. Allen Blvd, Beaverton, Oregon) was killed in an automobile accident. See id. at 7-8. The Show Cause Order alleged that in March 2000, Respondent contacted DEA's Portland office seeking an application for a registration at the Canyon Road clinic that was inherited by Dr. Nagra's widow and told a DEA investigator that he was seeking to stock the facility with controlled substances to maintain its operational capacity. See id. at 8. The Show Cause Order further alleged that Respondent told the DEA investigator that he resided in, and practiced law in, San Diego, and that he did not intend “to move to Oregon to be a veterinarian at the Canyon Road clinic.” Id.
The Show Cause Order further alleged that during a telephone conversation on May 26, 2000, Respondent told a DEA investigator that he had been ordering controlled substances that were shipped to his San Diego address, which he then mailed to the Canyon Road facility. See id. The Show Cause Order alleged that Respondent acknowledged that this was a violation of Federal law, but “DEA [was] forcing [Respondent] to operate like this.” Id. The Show Cause Order alleged that during the conversation Respondent again stated that while he lived in San Diego, he had opened numerous clinics in California, Oregon, Washington, and Arizona, that Respondent had obtained DEA registrations for the clinics in order to stock them with controlled substances, and that he maintained each registration until he either sold the clinic or found a permanent veterinarian who would work there and obtain his or her own registration. See id.
Finally, the Show Cause Order alleged that Respondent's existing registration should be revoked because Respondent lacked authority under California law to handle controlled substances. Id. at 10. The Order also alleged that Respondent's conduct in overdosing on veterinary controlled substances and failing to adequately safeguard controlled substances at his San Diego location constituted acts which rendered his registration inconsistent with the public interest. Id. As for his pending application for a registration, the Show Cause Order alleged that Respondent “anticipate[d] permitting temporary veterinarians and unregistered technicians to have access to controlled substances at the proposed registered location * * * despite being told that DEA would not permit such access.” Id. at 11. The Show Cause Order concluded by alleging that Respondent's “past experience dispensing controlled substances, [his] failure to comply with pertinent laws and regulations regarding controlled substances, and [his] failure to maintain effective controls against diversion, renders [his] registration * * * inconsistent with the public interest.” Id.
On November 15, 2005, the ALJ submitted her decision. The ALJ held that because Respondent's registration had expired on December 31, 2003, and Respondent had not filed a renewal application, the revocation aspect of the proceeding was moot. See ALJ at 11 n.2. With respect to his pending application, the ALJ held that Respondent “is unable or unwilling to accept the responsibilities inherent in a DEA registration” and therefore recommended that it “be denied.” Id. at 33. Neither party filed exceptions. The record was then transmitted to me for final agency action.
In April 1982, Respondent and his partner Bill Barnett opened the first Companion Pet Clinic in Tigard, Oregon. Sometime thereafter, Respondent and his partner hired Kevin Knighton, D.V.M., to work as a veterinarian at the Tigard clinic. In 1983, Dr. Knighton bought out Mr. Barnett's interest and became Respondent's partner. Between 1983 and 1990, Respondent and Dr. Knighton established about eighteen to twenty clinics. Under their business plan, Respondent and his partner hired young veterinarians who desired to eventually own their own practices. After a period of several years, Respondent and his partner sold the clinics to the veterinarian for a minimal down payment and financed the balance at ten to twelve percent interest. Dr. Knighton testified that while either he or Respondent held a DEA registration for a clinic, both the full time and relief veterinarians they hired did not have registrations. See ALJ at 11-12, Tr. 432-38. Start Printed Page 66977
Mrs. Baldev Nagra testified that in 1989, she and her husband, Parminder Nagra, a veterinarian, emigrated to the United States. In 1991, the Nagras purchased the Companion Pet Clinic which was located in West Slope, Oregon, from Respondent and Dr. Knighton. The Nagras also became limited partners in the Veterinary Investment Group, an entity which Respondent established to construct and develop new clinics. See ALJ at 13.[1] One of the Veterinary Investment Group's projects was the construction of a new clinic in Beaverton, Oregon, which was built for Dr. Nagra, and which Dr. Nagra would take over after selling his West Slope clinic. Tr. 258-60.
Mrs. Nagra testified that the West Slope clinic was a large investment for the Nagras, and that following her husband's death, the clinic could not obtain controlled substances because the clinic did not have a full time veterinarian with a DEA registration for the location. Id. at 221-22. Mrs. Nagra further testified that she contacted Respondent because the clinic needed controlled substances to remain open and that Respondent subsequently ordered controlled substances which he sent to the clinic. Id. at 225. Mrs. Nagra testified that she logged the drugs in and that Respondent supplied her with drugs from San Diego for “probably five months,” at which point the clinic hired a full time veterinarian who obtained a registration for the facility. Id. at 226-27.
With respect to his sending controlled substances to the West Slope clinic, Respondent testified that while “it might be a violation * * * the purpose was honorable” because he did it “to help someone in distress.” Id. at 390. Respondent also testified that it would be “unjust and unfair” if the clinic had been closed down and Mrs. Nagra had lost her investment. Id. Respondent further testified that he did not regret violating the law and that he “would do that again because [he] wasn't hurting anyone.” Id.
Pamela Meyer, a DI from the DEA San Diego Field Division testified that on July 28, 2000, Respondent and his wife Ellen Koller met with her, another DI and their Group Supervisor, to discuss whether Respondent's practices complied with DEA regulations and to interview him regarding an application he had submitted for a registration at the Beaverton, Oregon clinic. Id. at 68-71. Respondent told the DIs that he worked as a relief veterinarian in California about two weeks per month, and that he also practiced law out of his home. Id. at 69. According to the DI, Respondent admitted that he was receiving drugs at his San Diego home and sending them to the Beaverton clinic. Id. at 71. The DI further testified that while Respondent had a registration for his California home, the Beaverton location was not registered. Id. at 72. One of the DIs then informed Respondent “that he could only receive drugs at a registered location,” and the DIs gave Respondent a copy of the Code of Federal Regulations. Id. at 73.
The DIs further advised Respondent that if he practiced as a relief veterinarian and took controlled drugs to another location, he had to document the use of the drugs. Id. Respondent was cooperative and admitted to the DIs that he knew what he was doing was wrong and that was why he was seeking the registration. Id. at 75. The DI also testified that Respondent said he would comply with the regulations and that there was no evidence that Respondent subsequently sent controlled substances to Oregon.[2] Id. at 74.
The record establishes that on October 27, 2001, Respondent's daughter observed her mother, Mrs. Ellen Koller, faint in the doorway of the bedroom of their San Diego residence. Fearing that her mother had overdosed, Respondent's daughter called 911 and requested assistance. When the paramedics arrived, they found Mrs. Koller unconscious and lying on the floor; her right arm had a fresh puncture wound from which blood was oozing. When Mrs. Koller did not respond to first aid, including treatment with Narcan, a drug used to treat opiate overdoses, the paramedics took her to the hospital.[3] See ALJ at 15; Gov. Exh. 4, at 3 & 5.
During the search, the officer found a small vial containing a liquid in one of Respondent's pants pockets. The vial was labeled Tiletamine. The vial's rubber top had been punctured and three-quarters of the liquid was missing. Tiletamine (Telazol) is a veterinary anesthetic and a Schedule III controlled substance. See 21 CFR 1308.13(c). Moreover, the officer found that Respondent displayed several symptoms that are indicative of a person who is under the influence of a controlled substance. Gov. Exh. 4, at 6. Start Printed Page 66978
The police subsequently obtained a warrant, and later that night conducted a search of Respondent's residence. During the search, the police found four uncapped needles and syringes on the headboard of the bed in the master bedroom; another needle and syringe was found under the mattress of this bed. In a bathroom drawer over which Respondent's wife exercised dominion and control, the police found twenty-one tablets of controlled substances that were “mostly veterinarian narcotics.” Gov. Exh. 4, at 7. The police also found Dexfenfluramine (a Schedule IV controlled substance, see 21 CFR 1308.14(d)), Diphenoxylate (a Schedule V controlled substance, see 21 CFR 1308.15(c)), and Diazepam (a Schedule IV controlled substance, see 21 CFR 1308.14(c)), in a bathroom vanity drawer over which Respondent's wife exercised dominion and control. Respondent's wife testified, however, that she had a prescription for the Diazepam and that she had purchased Phentermine in Mexico for a neighbor. She also testified that she had obtained the Diphenoxylate in Mexico to treat her dog's diarrhea. ALJ at 16.
Respondent testified that at the time of this incident, he had undergone knee replacement surgery for his left knee in 2000 and his right knee in 2001, that his recovery from the latter procedure was painful, and he took the Tiletamine because it helped him sleep and the drug prescribed by his physician gave him a bad hangover. Tr. 373-74. Respondent explained that there was “no excuse for what I did to myself.” Id. at 374. Respondent added that: “I had to have other reasons. It wasn't just the pain, or it wasn't just the sleep. It had to be other reasons.” Id. at 374.
In his testimony, Respondent disputed the accuracy of the police reports. According to Respondent, when he awoke, he was “confronted with about a half dozen people in my bedroom,” and that as he regained his senses, the police “tried to prevent” him from checking out his wife and that “[s]he was doing fine.” [4] Tr. 375. Respondent also testified that while he was arrested, no charges were ever filed against him. Id.
Subsequently, on August 29, 2002, Ms. Geranen filed an Accusation against Respondent. As relevant here, the Accusation alleged that Respondent had violated Section 4883 of the California Business and Professions Code (Veterinary Medical Practice Act) by illegally using and administering to himself and his wife a controlled substance. See Gov. Exh. 10, at 6. The Accusation further alleged that Respondent violated Cal. Health & Safety Code § 11158(a) by “dispens[ing] a Schedule III controlled substance to himself and his wife without a valid prescription.” Id. at 8. Next, the Accusation alleged that Respondent violated DEA regulations by failing to store in a securely locked and substantially constructed cabinet the various controlled substances that were found in his home by the police on October 27, 2001. Id. 8-9. The Accusation further alleged that during the search of Respondent's home, the police did not find any medical records or any of the records required to be maintained under the Controlled Substances Act's (CSA) implementing regulations. See id. at 9; see also 21 CFR 1304.22(c).
On January 28, 2003, a hearing was held before a state ALJ. The ALJ subsequently found that on October 27, 2001, Respondent had injected himself with Telazol, a drug containing Tiletamine and Zolazepam, a Schedule III controlled substance, and a drug which has been approved only for use in animals. See Gov. Exh. 16, at 2. The state ALJ further found that Respondent did not have a prescription for the drug. Moreover, the state ALJ found that Respondent had “furnished the drug to his wife who injected herself with it.” Id.
The state ALJ found that “Respondent's daughter knew respondent used drugs and left drugs lying around the house,” and that “Respondent's wife knew respondent used Telazol.” Id. at 2. The state ALJ further found that “Respondent's handling of drugs in his home endangered the health, safety and welfare of his wife and daughter.” Id. The state ALJ also made a finding that during the October 27, 2001 incident, the paramedics found Respondent's wife “unconscious and not breathing. Her daughter found her in that condition and called paramedics because she was turning blue.” Id. The state ALJ thus concluded that Respondent's conduct violated Cal. Bus. & Prof. Code § 4883(g)(2)(B), “because he endangered the lives of himself, his wife and his daughter,” as well as Cal. Healthy & Safety Code § 11171, “by furnishing Telazol to his wife.” Id. at 2.
The State ALJ further found that Respondent did not have any medical records in his home and also “did not have any controlling logs indicating the purchase of, use of, or storage of the controlled substances that were recovered in his home.” Id. at 3. The State ALJ found that “[n]one of the controlled substances were locked in a secure cabinet” as required by 21 CFR 1301.75(b), that Respondent was “not authorized to have controlled substances * * * at his home * * * without meeting federal regulations,” and that Respondent “did not lawfully possess the controlled substances” that were found by the San Diego police. Id.
Upon reviewing Respondent's evidence as to his rehabilitation, the State ALJ also found that Respondent had “failed to establish that he no longer represents a threat to the public.” Gov. Exh. 16, at 5. The state ALJ thus upheld the interim order and suspended Respondent's California veterinary license pending a further hearing. See Gov. Exh. 3.
Ms. Geranen testified that a further hearing had been scheduled for September 2003, but was canceled pending the negotiation of a settlement agreement. Respondent introduced into evidence a copy of the agreement. See Resp. Exh. 8. In this document, Respondent admitted that on October 27, 2001, he “illegally used and administered to himself a controlled substance,” that he “appeared to be under the influence of a narcotic drug,” and that the responding officials found that Respondent had “pin point pupils and blood from a fresh injection site.” Id. at 7. Respondent further admitted that the authorities found a used syringe next to him and a vial of Telazol with its top punctured and 3/4 of its contents missing in his pant's pocket. Id. Moreover, “[t]he vial was clearly labeled ‘for animal use only' and ‘not for human use.’ ” Id. Respondent admitted that a blood sample that was taken from him by the San Diego Police Department Start Printed Page 66979tested positive for Zolazepam, a Schedule III controlled substance that is used in Telazol. Id. Respondent also admitted that “he dispensed a Schedule III controlled substance to himself without a valid prescription.” Id. at 8.
Moreover, Respondent admitted that the paramedics found that his wife was “not breathing,” that she was “lying unconscious on the floor in the doorway to the master bedroom” with “pin point pupils,” and that she had a “fresh injection site in her left arm, which was bleeding.” Id. at 6. Respondent also admitted that his wife “was under the influence of a narcotic or narcotic type drug and was experiencing a possible narcotic overdose.” Id. at 7.
Respondent further admitted that he “violated federal statutes regulating controlled substances” by failing “to store a controlled substance [Telazol] at his home in a securely locked, substantially constructed cabinet.” Id. at 8. Moreover, Respondent admitted that he “violated federal statutes regulating controlled substances” by “failing to maintain records regarding controlled substances in his possession” such as medical records and controlling logs. Id. at 9.
According to the testimony of Heidi Lang, D.V.M., who started working at the clinic in August 2002, a controlled substance (euthanasia solution) was then being stored at the facility. Tr. 495-96. Dr. Lang further testified that she obtained a DEA registration at the facility's location shortly after starting work at the clinic. Id. at 500. The record does not, however, specify on what date this occurred. Id. at 500.
On December 5, 2001, Respondent applied for a registration at the 82nd Avenue location. ALJ at 20. On his application, Respondent was asked whether he had “ever had a state professional license or controlled substance registration revoked, suspended, denied, restricted, or placed on probation?” Gov. Exh. 2, at 2. Respondent answered “yes.” Id.[5] Respondent explained that his California veterinary license had been “revoked in 1978 for non drug related conduct” and “was reinstated in 1982.” Id.
The DIs discussed with Respondent the issue of who would have access to the controlled substances while he was in California. Id. at 113. Respondent told the DIs that he would staff the clinic with relief veterinarians. Id. One of the DIs testified that it was DEA's position that the relief veterinarians would have to be employees of Respondent (assuming he obtained a registration) and that if the relief veterinarians were not employees but rather independent contractors, they could not act under Respondent's registration for that facility unless Respondent “was there to provide adequate security.” Id. at 114. According to the DI, a relief veterinarian who was an independent contractor would have to have their own registration for the location either to dispense or to administer a controlled substance at the location. Id. at 114-15. The DI further testified that his investigation did not find any incidents of diversion at other Companion Pet Clinics. ALJ at 22.
Govt. Exh. 6, at 1.[6]
In the letter, Respondent argued that the DIs were unwarranted in their “concerns about tracking the scheduled drugs and having too many people [with] access to the scheduled drugs.” Id. Respondent also maintained that “the DEA Registrant is responsible for any diversion of the scheduled drugs in his hospital.” Id. at 1-2. Respondent further contended that “[t]he fact that I am a dual professional, with a law office in San Diego should not have an effect on the certification process either. I am a resident of this state while I am here. I own two homes in this state.” Id. at 2. Start Printed Page 66980Finally, Respondent sought to have DEA either give him a registration for his new facility or transfer his California registration to the 82nd Ave. facility. In the event DEA decided not to grant him a new registration, Respondent demanded a hearing.[7]
According to the ALJ's report, Respondent's wife “testified that as of October 2001, Respondent was planning on opening the 82nd [Ave.] clinic and had been trying for two years to obtain a DEA registration for it.” ALJ at 22. Moreover, Respondent's wife “testified that as part of that effort, she and Respondent had met with DEA personnel at the agency's office in San Diego, and that DEA personnel had told them that Respondent could not ship drugs from California to Oregon and that he could not have registrations in both Oregon and California.” Id. at 22-23. Respondent's wife further testified that “the delay could not be attributed to the October 2001 incident because Respondent's efforts to change his registered address were ‘way before that happened.’ ” Id. at 23 (quoting Tr. 513).
The ALJ did not specifically credit this testimony. As ultimate factfinder, I expressly decline to credit the testimony that asserts that Respondent had been trying to obtain a registration for the 82nd Avenue clinic “for two years,” and that Respondent had attempted to obtain a registration at this address “way before” the October 27, 2001 incident. While it is clear that the testimony was offered in an attempt to show that DEA officials dragged their feet with respect to Respondent's application for the 82nd Avenue clinic and/or to justify his violations of the CSA, see Tr. at 367,[8] the record contains substantial evidence that refutes this claim.
Respondent's application for the 82nd Avenue clinic was dated December 5, 2001, and the date stamp indicates that DEA received the application on December 14, 2001. See Gov. Exh. 2, at 2. Furthermore, Respondent submitted a response to the Show Cause Order. In that document, Respondent asserted that he “first requested” a modification of his registration “from California to the 82nd Avenue practice” on “December 12, 2001 and again on February 19, 2002.” ALJ Exh. 2, at 5.; see also id. at 1 (“Daniel Koller requested this modification prior to opening this clinic [on] December 12, 2001.”); id at 2 (“Dr. Koller requested a registration at the 82nd Location on December 12, 2001.”). Thus, the documentary evidence establishes that Respondent did not apply for the registration until December 2001, shortly before he opened the clinic.
With respect to the opening of the 82nd Avenue facility, Respondent testified that “I brought up Euthasol * * * because I had a bottle, and I brought up Ketamine.” Tr. 378. Respondent also testified that “you don't close down operations. You don't stop businesses and put 12 people on the unemployment line because of a registration that is being withheld at that time unreasonably.” Id. at 379.
Respondent further testified that it was “an absurdity” to “claim that I'm violating the law by taking drugs from California [by] carrying them to Oregon,” and that “I can take those drugs anywhere I want as long as I have a valid DEA registration, which I did” when he transported the drugs to the 82nd Avenue clinic. Id. at 393. Respondent then maintained that “the fact that I'm working out of a non-registered facility with my drugs that I pull from a registered facility and it's registered to me, there's no violation there. It just simply is not a violation of any act or any statute or any regulation.” Id. at 394.
Dr. McCleary testified that Respondent did not have a history of drug and alcohol abuse and had “conscientiously addressed” the problems that led to his abuse of controlled substances. Tr. 349. Dr. McCleary testified that Respondent had been “very direct” in admitting his abuse of controlled substances, id. at 348, and that he had “no reason to believe that the behavior has repeated itself and will be at all likely to repeat itself.” Id. at 347. Dr. McCleary further testified that “he saw no danger in [Respondent's] full reinstatement to veterinary practice,” and that “there is an extraordinarily low probability that [Respondent] will ever” re-abuse controlled substances. Id. at 349-50. Dr. McCleary further testified that he thought Respondent had been going to AA meetings but did not know whether he had received any other treatment. Id. at 352.
Respondent also introduced into evidence a letter from a psychiatrist, Dr. Mark Kalish, which apparently was prepared for the State hearing discussed above. The letter reports the result of a psychiatric examination of Respondent that was performed on January 27, 2003. According to the letter, Respondent reported that he had not used any controlled substances since a previous examination by Dr. Kalish a year earlier, “and that he [had] submitted to random drug tests, which have confirmed his abstinence.” Resp. Exh. 2, at 3. Dr. Kalish also conducted a clinical examination and reviewed available documents (although the letter does not state what documents were reviewed). See id. The letter concluded with Dr. Kalish's opinion that Respondent “does not represent a danger to the public should he be allowed to practice veterinary medicine.” Id.
Finally, Respondent submitted a letter documenting a May 7, 2002 examination that was conducted by Dr. Walton E. Byrd, a psychiatrist who examined him at the request of the Oregon Board of Veterinary Medicine. See Resp. 4, at 1. The assessment found that Respondent had “dissociative anesthetic abuse—Telazol, in remission,” and further noted that a urinalysis conducted that day was free of illicit substances. Id. at 4. The letter concluded with Dr. Byrd stating that he “would support [Respondent's] continued licensure” subject to his continuing therapy with his psychologist, his attendance at weekly twelve-step meetings, his meeting “with a monitoring professional designated by the Veterinary Board,” and his undergoing random urine testing “over a two- to five-year period.” Id.
Respondent also introduced into evidence ten reports of drug tests conducted at a Kaiser Permanente Facility in Portland, Oregon. See Resp. Exh. 5. While all the reports are negative, many of the tests occurred only days apart and there is no evidence in the record establishing how the dates were chosen and whether they were bona fide random tests.[9]
Section 303(f) of the Controlled Substances Act provides that an application for a practitioner's registration may be denied upon a Start Printed Page 66981determination “that the issuance of such registration would be inconsistent with the public interest.” 21 U.S.C. 823(f). In making the public interest determination, the Act requires the consideration of the following factors:
“[T]hese factors are * * * considered in the disjunctive.” Robert A. Leslie, M.D., 68 FR 15227, 15230 (2003). I “may rely on any one or combination of factors, and may give each factor the weight [I] deem[] appropriate in determining whether * * * an application for registration [should be] denied.” Id. Moreover, case law establishes that I am “not required to make findings as to all of the factors.” Hoxie v. DEA, 419 F.3d 477, 483 (6th Cir. 2005); see also Morall v. DEA, 412 F.3d 165, 173-74 (DC Cir. 2005).
As an initial matter, I note that the ALJ found that Respondent's Registration, BK5633525, expired on December 31, 2003, and that Respondent did not file a renewal application, let alone a timely one, for this registration. See 21 CFR 1301.36(i). DEA precedents establish that where “a registrant has not submitted a timely renewal application prior to the expiration date, then the registration expires and there is nothing to revoke.” Ronald J. Riegel, D.V.M., 63 FR 67132, 67133 (1998); see also Cadiz Thrift-T Drug, Inc., 64 FR 15803, 15805 (1999). Therefore, the revocation portion of this proceeding is moot and only Respondent's application for a registration at the 82nd Avenue location remains a live controversy.
The ALJ found that at the time of the hearing, Respondent's California veterinary license was suspended. It is undisputed, however, that Respondent has a valid veterinary license in Oregon. Therefore, I agree with the ALJ that this factor “carries little weight,” ALJ at 32, in the analysis of whether granting Respondent's application would be consistent with the public interest.
The ALJ found that Respondent misused this controlled substance because of “a medical condition that has since ameliorated,” and that Respondent had proved by a preponderance of the evidence that he was not likely to re-abuse the drug. ALJ at 32. I agree and note in particular the testimony of Respondent's psychologist, Dr. Standish McCleary, that in his opinion, Respondent was unlikely to re-abuse controlled substances. The Government's cross-examination of Dr. McCleary does not lead me to question his conclusion and the Government offered no evidence to rebut it.
As the Supreme Court recently explained, the CSA creates “a closed regulatory system making it unlawful to manufacture, distribute, dispense, or possess any controlled substance except in a manner authorized by the [Act].” Gonzales v. Raich, 545 U.S. 1,—(2005) (citing 21 U.S.C. 841(a)(1) & 844(a)). As relevant here, “[t]he CSA and its implementing regulations set forth strict requirements regarding registration, * * * drug security, and recordkeeping.” Id.
Under the Act, a veterinarian falls within the definition of a “practitioner,” and upon obtaining a registration, a veterinarian has legal authority to prescribe, administer or distribute a controlled substance to an “ultimate user,” the latter being a person who has lawfully obtained a controlled substance “for an animal owned by him or a member of his household.” 21 U.S.C. 802(21); id. § 802(27). The Act provides that “[p]ersons registered * * * to manufacture, distribute, or dispense controlled substances * * * are authorized to possess, manufacture, distribute, or dispense such substances * * * to the extent authorized by their registration and in conformity with the other provisions of the [Act].” Id. § 822(b).
Under the CSA's implementing regulations, the various controlled substance activities recognized by the Act “are deemed to be independent of each other.” 21 CFR 1301.13(e). Moreover, “[a]ny person who engages in more than one group of independent activities shall obtain a separate registration for each group of activities” unless the activity is a permitted coincident activity under a particular category of registration.[10] Id. Furthermore, the CSA requires that a registrant obtain “a separate registration * * * at each principal place of Start Printed Page 66982business or professional practice where the applicant, manufactures, distributes, or dispenses controlled substances.” Id. § 822(e). Having provided this background, I next address the various instances in which Respondent's conduct violated the CSA.
The record establishes that on October 27, 2001, paramedics found Respondent's wife unconscious and lying on the floor; her right arm had a fresh puncture wound with blood oozing from it. According to the police report, Respondent's daughter “believed that her mother was dead from a drug overdose,” Gov. Exh. 4, at 3, and Respondent's wife did not respond to first aid. At the hearing, Respondent's wife testified that she had taken Telazol. Tr. 507. Moreover, Respondent's own evidence (the proposed California stipulation) includes the admission that his wife “was under the influence of a narcotic or narcotic type drug and was experiencing a possible narcotic overdose.” Resp. Exh. 8, at 6-7.
I do not have to find that Respondent dispensed Telazol to his wife to conclude that Respondent violated the CSA. Even crediting the testimony of Respondent's wife that she decided to try the Telazol on her own initiative, it is clear that she would not have been able to do so if Respondent had complied with the requirement that the drug be “stored in a securely locked, substantially constructed cabinet.” 21 CFR 1301.75(b). Indeed, in the stipulated agreement which Respondent entered into evidence he admitted as much.
Under the CSA's regulations, Mr. Nagra's registration terminated with his death. 21 CFR 1301.52(a). Respondent's distribution of controlled substances to the clinic violated federal law for two reasons: 1) Respondent was not registered as a distributor, See id. 1301.13(e), and 2) the Nagras' facility was no longer registered. Id. 1307.11(a). (requiring separate registrations for independent activities). While DEA regulations allow a practitioner to distribute a limited amount of a controlled substance to another practitioner, the practitioner who receives the distribution must be “registered under the Act to dispense that controlled substance.” Id.[11] Respondent therefore cannot avail himself of this exemption.
To justify his violation of the CSA, Respondent asserted that his purpose in distributing the drugs was “honorable,” and that it would have been “unjust and unfair” if the clinic had closed down and Mrs. Nagra had lost her investment. Respondent's reasons are not a valid excuse for his violations of the Act.
Nationwide, there are thousands of solo practitioners who administer controlled substances in the course of their professional practices.[12] Unfortunately, some die while they are still actively practicing medicine. In enacting the CSA, Congress did not, however, recognize the prevention of economic loss to the heirs of a registrant as grounds for an exemption from the Act's requirements. See 21 U.S.C. 822(c); Cf. United States v. Oakland Cannabis Buyers' Cooperative, 532 U.S. 483, 491 (2001) (rejecting medical necessity exception to the CSA and noting that a defense of legal necessity “cannot succeed when the legislature itself had made a determination of values”) (citation omitted). Excusing Respondent's distribution to an unregistered location would undermine the closed system of distribution and the principle that at each registered location, there is an individual registrant who is accountable for the proper security, record keeping and use of controlled substances.
As to these events, Respondent testified that it was “an absurdity” to claim that he violated the law by taking controlled substances from California to Oregon, and that because he had a DEA registration for his San Diego residence he could “take those drugs anywhere [he] want[ed].” Tr. 393. Respondent further contended that “the fact that I'm working out of a non-registered facility with my drugs that I pull from a registered facility and it's registered to me, there's no violation there. It just simply is not a violation of any * * * statute or regulation.” Id. at 394.
Contrary to the understanding of Respondent, the CSA expressly prohibits this conduct. Section 302(e) provides that “[a] separate registration shall be required at each principal place of business or professional practice where the applicant * * * distributes[] or dispenses controlled substances.” 21 U.S.C. 822(e); see also 21 CFR 1301.12(a). Respondent's 82nd Avenue clinic was a “principal place of business or professional practice” where he “dispensed controlled substances.” Respondent clearly failed to comply with the Act by storing controlled substances at the clinic for approximately eight months without first obtaining a registration for the location. See 21 U.S.C. 841(a)(1). Start Printed Page 66983
Respondent's testimony regarding his various violations is especially disturbing. With respect to his conduct in distributing controlled substances to the Nagras' clinic, Respondent testified that he didn't “have any regrets” and that he “would do that again because I wasn't hurting anyone.” Tr. at 390. As for his conduct at the 82nd Avenue clinic, Respondent explained that “you don't close down operations. You don't stop businesses and put 12 people on the unemployment line because of a registration that is being withheld at that time unreasonably.” [13] Id. at 379.
Respondent's statements reflect a stunning disregard for the requirements of Federal law. The CSA's implementing regulations expressly provide that “[n]o person required to be registered shall engage in any activity for which registration is required until the application for registration is granted and a Certificate of Registration is issued * * * to such person.” 21 CFR 1301.13(a). Contrary to Respondent's understanding, he was required to comply with the Act and its regulations even if it interfered with his business plan or violated his sense of fairness.
In sum, Respondent's repeated violations of the CSA provide ample grounds to deny his application. Moreover, Respondent's attitude leaves me with the firm impression that, if given the opportunity, he will violate the Act again. Moreover, Respondent's rehabilitation from drug abuse does not mitigate the violations of the Act he committed by distributing controlled substances to the Nagras' clinic, an unregistered location, and commencing operations at the 82nd Avenue clinic without obtaining a registration. I thus conclude that this factor is dispositive and compels a finding that granting Respondent a new registration would be inconsistent with the public interest.[14]
1. Other members of the partnership were John Madigan and his wife, Sheri Morris, D.V.M., who owned Companion Pet Clinics in West Linn, Clackamas and Tigard, Oregon.
2. At the hearing, the government did not pursue any potential violations arising out of Respondent's sending controlled substances to the Beaverton clinic.
3. According to the testimony of Mrs. Koller, Respondent “had taken some Telazol and gone to sleep, and I decided that I wanted to try it too, but I had been drinking earlier, and so I didn't know the dosage. And I took some* * *.” Tr. 507.
4. The ALJ did not specifically credit the testimony that Respondent's wife “was doing fine.” As ultimate factfinder, I decline to credit it based on the record as whole including the police reports and Respondent's Exh. 8, in which Respondent admitted that his wife was “unconscious” and “not breathing.” Id. at 6.
5. The application asked a similar question of applicants that are corporations, associations, and partnerships. Respondent also answered “yes” to this question. Gov. Exh. 2, at 2.
6. The record contains extensive evidence regarding the practices of veterinary clinics with respect to the handling of controlled substances, as well as the need of practice owners to hire relief veterinarians who work under the DEA registration of the owner. See ALJ at 23-28. The record also contains extensive testimony on the issue of whether relief veterinarians are properly considered agents of the facility owner and what procedures are in place to protect against the diversion of controlled substances. See id.
7. In a subsequent letter dated April 10, 2002, Respondent complained to one of the DIs that DEA's “delay is causing me and my clients a great deal of inconvenience and harm” and threatened “to petition the courts to make [DEA] act one way or the other.” Gov. Exh. 7.
8. Respondent testified: “I asked for that way before I abused drugs. I asked for it a year before.” I likewise decline to credit this testimony.
9. The Government did not, however, introduce any evidence rebutting Respondent's assertion of rehabilitation.
10. The regulations impose different security requirements based on the activity. Thus, distributors are subject to more extensive requirements than practitioners. See generally 21 CFR 1301.71—1301.76.
11. The security requirements applicable to non-practitioners expressly require that “[b]efore distributing a controlled substance to any person who the registrant does not know to be registered to possess the controlled substance, the registrant shall make a good faith inquiry with [DEA] or with the appropriate State controlled substances registration agency, if any, to determine that the person is registered to possess the controlled substance.” 21 CFR 1301.74(a). A practitioner who distributes under 21 CFR 1307.11(a), must comply with this regulation. See id. 1301.76(c).
12. According to testimony in this case, there are 24,000 veterinary clinics in the United States and more than half of them are run by solo practitioners. See ALJ at 23.
13. As I have previously found, the evidence in the record establishes that Respondent did not apply for a registration for this location until December 2001, shortly before opening the clinic. Furthermore, Respondent indicated on his application that his state license had previously been suspended thus triggering a more detailed investigation. DEA personnel subsequently determined that Respondent had previously been investigated for distributing controlled substances to the Nagras' clinic, that he was storing controlled substances at the 82nd Ave. clinic, and became aware of the events surrounding Respondent's abuse of Telazol and the State of California's suspension of his license. As this proceeding has established, it was not unreasonable to withhold Respondent's registration. What was unreasonable was Respondent's commencement of operations without obtaining a registration in violation of Federal law.
14. In light of Respondent's numerous violations of the CSA discussed above, it is unnecessary to decide whether Respondent's practice of employing relief veterinarians to run his clinic in Oregon while living in San Diego (more than 1,000 miles away) complied with the CSA. I note, however, that at the hearing, the Government asserted that if a relief veterinarian is an independent contractor, the relief vet. cannot act as an agent of the clinic owner/registrant under 21 CFR 1301.22. According to the Government, the relief vet. must be an employee of the clinic owner in order to comply with the regulation.
This position is incorrect. Neither the CSA nor the regulation precludes a relief veterinarian who is an independent contractor from acting as the agent of the registrant. In the CSA, Congress defined the term “agent” to mean “an authorized person who acts on behalf of or at the direction of a manufacturer, distributor, or dispenser.” 21 U.S.C. 802(3). Moreover, the CSA further exempts from registration “[a]n agent or employee of any registered manufacturer, distributor, or dispenser of any controlled substance * * * if such agent or employee is acting in the usual course of his business or employment.” Id. § 822(c). The plain language of the statute thus demonstrates that Congress did not limit the exemption to the employees of a practitioner. Furthermore, in appropriate circumstances, an independent contractor may act as an agent. See, e.g., I Restatement of the Law (Second) Agency § 14 N, at 80 (1958) (“One who contracts to act on behalf of another and subject to the other's control except with respect to his physical conduct is an agent and also an independent contractor.”). The status of the person acting under the registration as an employee or independent contractor is thus not determinative of compliance with the CSA.