Source: https://www.federalregister.gov/documents/2011/10/28/2011-28002/linda-sue-cheek-md-decision-and-order
Timestamp: 2017-10-19 20:47:37
Document Index: 201291736

Matched Legal Cases: ['§\u2009823', '§\u2009823', '§\u200954', '§\u2009802', '§\u2009824', '§\u2009824', '§\u2009823', '§\u2009823', '§\u2009823', '§\u2009824', '§\u20091320', '§\u20091320', '§\u20091301', '§\u2009823', '§\u2009824', '§\u2009823', '§\u200954']

Federal Register :: Linda Sue Cheek, M.D., Decision and Order
66972-66986 (15 pages)
https://www.federalregister.gov/d/2011-28002 https://www.federalregister.gov/d/2011-28002
Before proceeding to discuss Respondent's exceptions, a discussion of the ALJ's consideration of “community impact” evidence is warranted. See ALJ at 33-35.[1] Therein, the ALJ acknowledged the recent decision in Gregory Owens, D.D.S., 74 FR 36751 (2009). In Owens, I explicitly declined to extend the holding of Pettigrew Rexall Drugs, 64 FR 8855, 8859-60 (1999), which cited evidence that a pharmacy was “one of two pharmacies in a relatively poor, medically underserved community” as ground for staying a revocation order, to the case of a prescribing practitioner. 74 FR at 36757. As Owens explained, “consideration of the socioeconomic status of a practitioner's patient population is not mandated by the text of either 21 U.S.C. 823(f) or 824(a)(4).” Id. Owens further explained that such a rule is “unworkable” and “would inject a new level of complexity into already complex proceedings and take the Agency far afield of the purpose of the CSA's registration provisions, which is to prevent diversion.” Id.
The ALJ further noted, however, that in Imran I. Chaudry, M.D., 69 FR 62081, 62083-84 (2004), the Agency had “considered and given weight to community impact evidence, without specifically citing Pettigrew.” ALJ at 34. Notwithstanding the lengthy explanation Owens provided as to why community impact evidence is irrelevant in a proceeding involving a prescribing practitioner, the ALJ reasoned that in “[i]n light of [Chaudry], I find that community impact evidence as a threshold matter is not entirely irrelevant.” Id.
The decision in Chaudry did not, however, explain to what factor this evidence—whether cited in mitigation by the registrant or cited in aggravation by the final decision—was relevant. While it is possible to view such evidence as relevant (at least when offered as evidence of an aggravating circumstance) in determining whether a registrant has engaged in “such other conduct as may threaten public health and safety,” 21 U.S.C. 823(f)(5), a practitioner's self-abuse of a controlled substance “threaten[s] public health and safety” without regard to the socioeconomic characteristics of the community in which he or she practices.[2]
Moreover, my review of Chaudry reinforces the correctness of my conclusion in Owens. As I explained in Owens, “[t]he public interest standard of 21 U.S.C. § 823(f) is not a freewheeling inquiry but is guided by the five specific factors which Congress directed the Attorney General to consider; consideration of the socioeconomic status of a practitioner's patient population is not mandated by the text of either 21 U.S.C. §§ 823(f) or 824(a)(4), which focus primarily on the acts committed by a practitioner.” 74 FR at 36757.
As I further explained in Owens (as well as in numerous other cases), “where the Government has made out a prima facie case that a practitioner has committed acts which render [her] registration inconsistent with the public interest, the relevant inquiry is * * * whether the practitioner has put forward `sufficient mitigating evidence to assure the Administrator that he can be entrusted with the responsibility carried by such a registration.' ” Id. (quoting Medicine Shoppe-Jonesborough, 73 FR 364, 387 (2008)). Moreover, in numerous decisions, I have made clear that “this inquiry looks to whether the registrant has accepted responsibility for [her] misconduct and undertaken corrective measures to prevent the re-occurrence of similar acts.” Id. As explained in Owens, “[w]hether a practitioner treats patients who come from a medically underserved community or who have limited incomes has no bearing on whether [she] has accepted responsibility and undertaken adequate corrective measures.[3] ” Id.
In Owens, I also noted that the diversion of prescription controlled substances “has become an increasingly serious societal problem, which is particularly significant in poorer communities whether they are located in rural or urban areas.” Id. (citing George C. Aycock, 74 FR 17529, 17544 n.33 (2009); Laurence T. McKinney, 73 FR 43260 (2008); Paul H. Volkman, 73 Start Printed Page 66973FR 30630 (2008); Medicine Shoppe-Jonesborough, 73 FR 364)). See also id. (citing U.S. General Accounting Office, Prescription Drugs: OxyContin Abuse and Diversion and Efforts to Address the Problem 31-32 (Dec. 2003) (noting that “the Appalachian region, which encompasses parts of Kentucky, Tennessee, Virginia, and West Virginia, has been severely affected by prescription drug abuse, particularly pain relievers * * * for many years”)). As I further explained, “the residents of this Nation's poorer areas are as deserving of protection from diverters as are the citizens of its wealthier communities, and there is no legitimate reason why practitioners should be treated any differently because of where they practice or the socioeconomic status of their patients.” [4] Id.
It is acknowledged that there is no evidence in this record that Respondent was engaged in diverting controlled substances.[5] Rather, the principal allegations involve Respondent's having been mandatorily excluded from participation in Federal health care programs by the Secretary of the Department of Health and Human Services pursuant to 42 U.S.C. 1320a-7(a) following her conviction for having committed Health Care Fraud in violation of 18 U.S.C. 1347, as well as her having issued controlled substance prescriptions without a registration. ALJ Ex. 1, at 1-2 (citing 21 U.S.C. 823(f) & 824(a)(5)).
The ALJ also found that on February 12, 2009, the Virginia Medical Board reinstated Respondent's medical license. ALJ 26. The ALJ further concluded that this action “weigh[s] in favor of a finding that Respondent's registration would not be inconsistent with the public interest, at least as of February 12, 2009.” Id.
However, following the closing of the record, on July 8, 2011, the Virginia Board of Medicine issued an Order following a hearing it conducted on June 24, 2011; I take official notice of the Board's Order.[6] See In re: Linda Sue Cheek, M.D. (Va. Bd. Med., Jul 8, 2011). The Board made numerous findings, the most significant being that Respondent committed unprofessional conduct in violation of Va. Code Ann. § 54.1-2915.A(16) & (17). Id. at 8. The Board also indefinitely suspended Respondent's medical license “for a period of no less than twelve (12) months from entry of [its] Order.” Id.
Under the Controlled Substances Act, a practitioner must possess authority to dispense controlled substances under the laws of the State in which she practices in order to hold a DEA registration. See 21 U.S.C. 823(f) (“The Attorney General shall register practitioners * * * to dispense * * * controlled substances * * * if the applicant is authorized to dispense * * * controlled substances under the laws of the State in which he practices.”); id. § 802(21) (“The term ‘practitioner' means a physician * * * licensed, registered, or otherwise permitted, by the United States or the jurisdiction in which he practices * * * to * * * dispense * * * a controlled substance in the course of professional practice. * * *”); see also 21 U.S.C. 824(a)(3) (authorizing the revocation of a registration where registrant “has had his State license * * * suspended * * * by competent State authority and is no longer authorized by State law to engage in the * * * dispensing of controlled substances”). Accordingly, this development provides a further basis to deny Respondent's application. See Robert Wayne Mosier, D.O., 75 FR 49950 (2010) (citing cases) (“DEA has consistently held that holding authority under state law is a prerequisite for obtaining a registration under the CSA.”). Moreover, even if Respondent had prevailed on the other allegations (or rebutted the Government's prima facie case), the loss of her state authority would still require the denial of her application.
Respondent filed extensive exceptions to the ALJ's decision. Most of these exceptions (which do not comply with DEA's regulations because they do not cite to the transcript or exhibits, see 21 CFR 1316.66(a)), involve challenges to Start Printed Page 66974the ALJ's credibility determinations and what Respondent maintains was the ALJ's “predetermined prejudice against” her, Resp. Exc. at 4, including the ALJ's finding that Respondent lacked candor and gave inconsistent explanations. Id. at 11. The ALJ personally observed the demeanor of the various witnesses and evaluated each witness's testimony for its consistency and inherent probability. See Dewey C. MacKay, 75 FR 49956, 49963 (2010) (citing Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951)). Moreover, having reviewed the entire record, I find no reason to reject the ALJ's various factual findings.
Furthermore, I find no basis to conclude that the ALJ was biased against Respondent. As the Supreme Court has explained, “judicial rulings alone almost never constitute a valid basis for a bias or partiality motion.” Likety v. United States, 510 U.S. 540, 555 (1994). That an ALJ, upon considering the evidence, finds much of a party's evidence either not credible or unreliable, does not establish bias. Accordingly, I reject Respondent's exceptions to the ALJ's factual findings.
Respondent further takes exception to the ALJ's findings that she does not accept responsibility for the various acts of misconduct which were proven on this record. With respect to her Health Care Fraud conviction, Respondent argues that by pleading guilty and complying with the various requirements of her sentence, she has accepted responsibility. Resp. Exc. at 6. With respect to the allegation that she wrote controlled substance prescriptions without a registration, Respondent argues that she admitted to writing two prescriptions by mistake shortly after her medical license was restored by the State and that she “is only aware of [two] prescriptions” which she wrote and “admitted to.” Id. at 8. Respondent also takes exception to the ALJ's finding that she unlawfully used another physician's DEA registration to issue controlled substance prescriptions, arguing that she acted as a nurse practitioner, who was supervised by another physician, who reviewed the patient files and authorized the prescriptions. Id. at 9-10. According to Respondent, there is nothing in either Federal law or the Virginia Board of Medicine's rules that prohibit one physician from supervising another. Id. at 9. Moreover, Respondent argues that if DEA had timely issued her a new registration, “the complaint here would not have any substance” and that DEA's failure to grant her application demonstrates an “abject plan to create the scenario in which to charge [her] with committing a crime.” Id. at 10.
As for the ALJ's finding that Respondent did not accept responsibility for her Health Care Fraud conviction, it is true that pleading guilty and complying with her sentence is probative evidence of whether she has accepted responsibility. However, Respondent did not stop there. Instead, as the ALJ found (and the testimony shows), Respondent maintained that her conviction was “unjust[],” Tr. 386, as it was based on “six billing incidents * * * when I was out of the country,” that “the most I got paid over or extra was $ 11.00 per visit,” and that the U.S. Attorney's Office had brought her down “for $ 66.00.” Id. at 384-85. Moreover, Respondent testified that it was her belief that the prosecution was “purely * * * a result of the fact that I treat pain, and I prescribe opiates, and that the agenda of the United States Government is to stop the treatment of pain in this country.” Id. at 383. Respondent did not explain, however, why, if she had only defrauded the Government of $66, the District Court ordered her to pay more than $24,000 in restitution, including more than $17,000 to the Virginia Medicaid Program and more than $7,000 to Medicare. GX 4, at 2. Moreover, as the ALJ noted, she further testified that “[i]f this is fraud, maybe we need more of it.” Tr. 382. Thus, the ALJ properly held that Respondent did not accept responsibility for her Health Care Fraud conviction.
As for the ALJ's finding that Respondent did not accept responsibility for her prescribing without holding a registration, it is acknowledged that she admitted to having written a prescription for Ambien (zolpidem), a schedule IV controlled substance, 21 CFR 1308.14(c)(51), on February 23, 2009, and a prescription for Lyrica (pregabalin), a schedule V controlled substance, id. 1308.15(e), on March 20, 2009. However, when confronted with evidence that she had written other prescriptions such as one for Lortab (hydrocodone), a schedule III controlled substance, id. 1308.13(e)(1), on April 6, 2009, Respondent testified that “I cannot say this is my signature.” Tr. 492. She then suggested that the Government had fabricated the prescription. Id.[7] Respondent also testified that she could not “verify” two other controlled substance prescriptions which bore a signature in her name. Tr. 493-94 (discussing GXs 11 & 12).[8] The ALJ properly found this testimony “palpably incredible.” ALJ at 28.
So too, Respondent asserted that she had an agreement with another physician (Dr. Shultz) under which she acted as a nurse practitioner and evaluated the patients and was supervised by Dr. Schultz; Respondent further claimed that Dr. Schultz would then review her evaluation and authorize a controlled substance prescription for the patients, which was then called in to the patient's pharmacy by Respondent or her staff. See RX 41. However, during an interview with a Diversion Investigator, Dr. Schultz stated that she only went to Respondent's clinic on Thursdays. Tr. 117-18. Dr. Schultz further told the Investigator that she did not give Respondent permission to call in prescriptions under her registration. Id. at 115.[9]
DEA Investigators found numerous controlled substance prescriptions which were called into local pharmacies under Dr. Schultz's DEA registration by either Respondent or her employee, A.Y. Id. at 119; GXs 15-17. Upon reviewing the prescriptions, an Investigator determined that most of them were called in on days other than Thursdays. Tr. 118. Moreover, both the ALJ and Virginia Board (which conducted its own formal hearing) found Respondent's testimony that she was working under the supervision of Dr. Schultz to not be credible and that the arrangement was a sham. ALJ at 28-30; see also In re Linda Sue Cheek, at 4 (“The Board determined that [Respondent's] testimony concerning the arrangement that she had with Individual A [10] to provide patients with controlled substances, whereby Individual A was to establish a practitioner-patient relationship and issue prescriptions for controlled substances, was not credible. The Board finds that [Respondent] intended to circumvent her inability to prescribe Schedule II-V controlled substances as a result of not having a valid DEA registration.”). Thus, I reject Respondent's exception and agree with the ALJ that “[t]he evidence as a whole demonstrates that Respondent's claim that she was working at the direction of Dr. Schultz is not supported by credible evidence.” ALJ at 30.
Under Federal law, it is “unlawful for any person knowingly or intentionally * * * to use in the course of the * * * dispensing of a controlled substance * * * a registration number which is * * * issued to another person.” 21 U.S.C. 843(a)(2). It is also unlawful to dispense a controlled substance without first obtaining a registration to do so. 21 U.S.C. 822(a)(2). The evidence shows that Respondent committed multiple violations of both provisions.[11]
Accordingly, the record establishes three independent grounds for denying Respondent's application: (1) Her loss of state authority, see 21 U.S.C. 823(f); (2) her having violated Federal law by issuing controlled substance prescriptions when she did not possess a registration, see id. § 824(a)(4); and (3) her having been mandatorily excluded from participation in Federal Health Care programs based on her conviction for Health Care Fraud. See id. § 824(a)(5). In addition, the record establishes that Respondent has not accepted responsibility for her misconduct. Therefore, I will order that Respondent's application be denied.
On June 4, 2008, the Virginia Department of Health Professions ordered Respondent's medical license Start Printed Page 66976suspended due to Respondent's felony conviction for health care fraud before the United States District Court for the Western District of Virginia. (Gov't Ex. 5.)
SA Overbeck testified in substance that he has been a special agent for approximately nine years and has approximately twenty-one years of law enforcement experience. In his current position, SA Overbeck specializes in investigating Medicare and Medicaid fraud. SA Overbeck testified that his office began an investigation of Respondent on September 20, 2005, based on information provided by law enforcement agencies regarding concerns with Respondent's prescribing of narcotics and the use of “cleansing sessions” at Respondent's practice. (Tr. 31-32.) SA Overbeck further testified that the investigation revealed the cleansing sessions consisted of a group of patients that were required to either watch a movie or listen to a family nurse practitioner talk, before the patients could obtain prescriptions. If patients required additional medication they would have to repeat the cleansing sessions, which cost patients “up to an additional hundred dollars a month, because they were required to buy supplements, and herbal supplements * * *” before they could obtain prescription medications. (Tr. 42.) Respondent then billed the cleansing sessions as individual office visits, even though Respondent knew from a prior audit that Medicaid, Medicare and Anthem [12] would not pay for cleansing sessions.
DI Tomaziefski testified in substance that he has been a diversion investigator with DEA for approximately five years, and following initial training was assigned to Roanoke, Virginia. DI Tomaziefski's experience includes participation as a lead investigator in approximately thirty regulatory investigations, and his duties also include reviewing pending applications for DEA registration. DI Tomaziefski testified to becoming aware of Respondent in August of 2008, and learning that Respondent had previously pled guilty and had her medical license suspended. (Tr. 68-70.) In September 2008 he contacted Respondent regarding her DEA registration but decided not to take any action regarding surrender of her DEA Start Printed Page 66977registration because of a pending petition by Respondent for reinstatement of her medical license. DI Tomaziefski further testified to contacting Respondent in November 2008 following the indefinite suspension of Respondent's medical license by the Commonwealth of Virginia, and discussing the surrender of her controlled substances privileges. In a letter to DI Tomaziefski dated November 14, 2008, Respondent relinquished her DEA COR. (Gov't Ex. 8; see Tr. 75.)
DI Tomaziefski also testified that the dates of the prescriptions written by Respondent that he had obtained and seized as evidence did not match the date that Respondent had her medical license reinstated. DI Tomaziefski testified that on May 28, 2009, he sent a confidential source (“CS”) into New River Medical Associates to meet with Respondent as a patient. As a result of that visit, Respondent's office assistant, [AY],[13] called in a prescription for hydrocodone in the name of the CS to Dublin Pharmacy, Dublin, Virginia. (Tr. 99-100.) The record evidence contains a Dublin Pharmacy record with a handwritten notation including the names “[AY]” and “Schultz,” and the typed name of the CS, address, cost and quantity of the drug prescribed, along with the name “Dr. Linda Cheek.” DI Tomaziefski further testified that the CS wore a “wire” during the visit, which DI Tomaziefski listened to and learned that Dr. Schultz did not see the CS, even though the prescription was called in under Dr. Schultz's DEA number. (Tr. 101, 105; Gov't Ex. 14.)
The record evidence also includes ten prescription records obtained by DI Tomaziefski from Martin's Pharmacy in Dublin, Virginia, covering the period from May to June 2009, all reflecting “called-in” prescriptions using Dr. Schultz's DEA number. All but one contained a handwritten notation of either Respondent or [AY]. (Gov't Ex. 16.) DI Tomaziefski testified that he knows these prescriptions are “call-ins” because an original prescription would have the identifying prescriber information, including DEA number, and signature of the provider. (Tr. 564.)Start Printed Page 66978
The record evidence further reflects seven prescription records obtained by DI Tomaziefski from a Rite Aid pharmacy covering the period May to June 2009, with all but one record reflecting “called-in” prescriptions using Dr. Schultz's DEA number. The prescription dated June 29, 2009, is a “non-called in” prescription bearing a signature consistent with K. Schultz and written on a prescription form in the name of Kathleen Schultz, D.O., 28 Town Center Drive, Dublin, VA. (Tr. 126-27; see Gov't Ex. 17 at 7.)
On cross examination, [AZ] testified that it is approximately a twenty minute drive from [AZ]'s home to Respondent's office, and there are no other pain management physicians in the area. [AZ] had been referred to Respondent by another physician who had prescribed the same pain medication that [AZ] has taken for approximately fifteen years, including from Respondent. [AZ] explained that at no time did Respondent double up on [AZ]'s pain medication but was not sure if Respondent may have written extra prescriptions during May or June 2008. [AZ] explained that after returning to Respondent's practice in October 2008, [AZ] saw Dr. Schultz approximately once every three months, obtaining three months' worth of prescriptions per visit, because it was more cost- and environmentally effective than monthly visits.[14] (Tr. 214.) [AZ] stated that Dr. Schultz is [AZ]'s physician but [AZ] also sees Respondent. The last time Dr. Schultz had given [AZ] a physical examination was nine months to a year ago. [AZ] further testified that [AZ] did not make Dr. Schultz [AZ]'s full time physician because “she has been practicing since back in the `50s, so I know she—but she is also kind of getting up there in age * * * but you know, she is 75 years old, or so. Well I'm not sure about her exact age is.” (Tr. 220.) I find [AZ]'s testimony credible to the extent that it was internally consistent and the witness was able to recall factual events with a reasonable level of certainty.
[AY] testified in substance that [AY] is a certified nursing assistant and receptionist, hired by Respondent on February 5, 2002, initially working as a receptionist. [AY] testified that [AY] currently works as a receptionist and also assists patients. [AY] further testified to being laid off from work in October 2008 and returning to employment with Respondent in February 2009. [AY] stated that Dr. Schultz told [AY] that [AY] could call in prescriptions for the patients based on recommendations of Respondent. [AY] explained that in May 2009 Dr. Schultz put in writing that [AY] was authorized to call in controlled substances under Dr. Schultz's name. (Tr. 261-62.) [AY] further testified that Start Printed Page 66979from May 2008 to October 2008 many patients called stating they were having a hard time finding physicians to care for them.
Respondent next testified to hiring Dr. Kathy Schultz locum tenans to work with patients on her own from the “fall of ‘08 to February 23rd of '09.” (Tr. 407.) Respondent testified that Respondent acted in the manner of a family nurse practitioner during this time, to continue the plan established by Dr. Schultz, who “simply established a continuation of my plan from the previous year.” (Tr. 412.) Respondent testified to an agreement with Dr. Schultz that Dr. Schultz would see all patients receiving Schedule II drugs and Dr. Schultz did not need to see patients receiving Schedule III to V drugs. On or about June 25, 2009, Respondent had a conversation with Dr. Schultz, who told Respondent that she had a conversation with DEA and told DEA that she had not given anyone permission to use her DEA Start Printed Page 66980number. Respondent testified she informed Dr. Schultz that “you allow us to call in prescriptions for our patients * * *” and Dr. Schultz replied that she “didn't realize that.” (Tr. 422.) Respondent then asked Dr. Schultz to call DI Tomaziefski to rectify the situation.
At hearing, Respondent timely objected to the admission of Government Exhibits 19 and 20, arguing lack of proper notice. (Tr. 485.) To comport with due process requirements, the DEA must “provide a Respondent with notice of those acts which the Agency intends to rely on in seeking the revocation of its registration so as to provide a full and fair opportunity to challenge the factual and legal basis for the Agency's action.” CBS Wholesale Distributors, 74 FR 36,746, 36,749 (DEA 2009) (citing NLRB v. I.W.G., Inc., 144 F.3d 685, 688-89 (10th Cir. 1998) and Pergament United Sales, Inc., v. NLRB, 920 F.2d 130, 134 (2d Cir. 1990)). Although non-noticed evidence may not be used for purposes of imposing a sanction, it can be the proper subject of cross-examination to impeach credibility. Mark J. Berger, D.P.M., 62 FR 5842, 5844 (DEA 1997).
The Government's evidence included eight prescriptions for various medications to [ET], all dated May 27, 2010, in the name of Dr. Schultz.[15] (Gov't Ex. 21.) Respondent testified that she recognized the prescriptions, was [ET]'s primary care physician, and would have consulted Dr. Schultz regarding the prescriptions. The evidence also included sixteen different prescriptions for eleven different patients covering the time period from April 29, 2010, to June 10, 2010.[16] (Gov't Ex. 22.) All were issued in the name of Dr. Schultz. Respondent testified she could not necessarily testify that the signatures on the prescriptions were Dr. Schultz's, although she confirmed that all the prescriptions were written to patients at New River Medical Associates. (Tr. 520-21, 525.) During the Government's rebuttal case, DI Tomaziefski testified that those prescriptions were seized pursuant to a search warrant of Respondent's office on June 14, 2010, and were found in Respondent's office in a printer. (Tr. 567-68.)
In rebuttal, SA Slease testified that he has been employed as a Special Agent with the Department of Health and Human Services since 2005 and has experience in approximately twenty-five fraud related investigations. SA Slease further testified that he is familiar with Respondent's practice location and very familiar with the southwestern Virginia area, to include Dublin, Virginia. SA Start Printed Page 66981Slease testified to having conducted an Internet and government Web site search for pain management providers within one hour's drive of Dublin, and located seven providers in the surrounding area that specialize in pain management. (Tr. 540-42.)
The Government argues that Respondent's application for registration should be denied due to her mandatory five-year exclusion from Medicare and Medicaid, pursuant to 21 U.S.C. 824(a)(5). Additionally, the Government argues that Respondent's registration would be inconsistent with the public interest pursuant to 21 U.S.C. 823(f) and 824(a)(4). The Government maintains that factor one of § 823(f), the recommendation of the appropriate state licensing board or professional disciplinary authority, is applicable based on the suspension and later reinstatement of Respondent's Virginia medical license but factor three, the applicant's conviction record relating to the manufacture, distribution or dispensing of controlled substances, is not applicable. As to factors two and four, the applicant's experience in dispensing or conducting research with respect to controlled substances and compliance with applicable laws relating to controlled substances, the Government maintains that Respondent issued prescriptions for controlled substances using her surrendered DEA COR. Additionally, the Government argues Respondent caused controlled substances prescriptions to issue under the DEA COR of another doctor, without permission. The Government further argues that Respondent executed pre-signed prescriptions for Schedule II controlled substances from 2003 through February 2006, in violation of 21 CFR 1306.05(a). Finally, the Government maintains that Respondent has refused to accept responsibility for past misconduct and was not forthright at hearing.
Respondent maintains that her reinstatement by the Virginia Board of Medicine weighs in her favor as to factor one of § 823(f), the recommendation of the appropriate state licensing board or professional disciplinary authority. As to factor two, the applicant's experience in dispensing, or conducting research with respect to controlled substances, Respondent maintains that she has extensive experience and training in pain management, and has been recognized by other pain management specialists as well as pharmaceutical companies. In the case of factor five, Respondent maintains there is no allegation or evidence that any conduct by Respondent would threaten the public health and safety.
The Controlled Substances Act (“CSA”) provides that any person who dispenses (including prescribing) a controlled substance must obtain a registration issued by the DEA in accordance with applicable rules and regulations.[17] Except when dispensed directly by a non-pharmacist practitioner to an ultimate user, controlled substances that are prescription drugs under the Food, Drug and Cosmetic Act must be dispensed pursuant to a prescription issued by a practitioner.[18] Furthermore, it is unlawful for any person knowingly or intentionally to use an expired registration number in the dispensing of a controlled substance to another person.[19] A prescription for a controlled substance may be issued only by an individual practitioner who is licensed to practice and is either registered or exempted [20] from registration.[21] A prescription issued by an individual practitioner may be communicated to a pharmacist by an employee or agent of the individual practitioner.[22] All prescriptions for controlled substances must be signed on and dated as of the date issued and must bear the full name and address of the patient, the drug name, strength, dosage form, quantity prescribed, directions for use and the name, address and registration number of the practitioner.[23]
The CSA specifies in 21 U.S.C. 824(a) five factors that the Deputy Administrator may consider when suspending or revoking a DEA registration.[24] Despite the lack of an explicit provision applying these factors to a denial of an application:
[t]he agency has consistently held that the Administrator may also apply these bases to the denial of a registration, since the law would not require an agency to indulge in the Start Printed Page 66982useless act of granting a license on one day only to withdraw it on the next.[25]
In addition, I conclude that the reference in § 823(f)(5) to “other conduct which may threaten the public health and safety” would as a matter of statutory interpretation logically encompass the factors listed in § 824(a).[26]
In an action to deny an application for a DEA COR, the Government has the burden of proving that the requirements for granting such registration are not satisfied.[27] The burden of proof shifts to the respondent once the Government has made its prima facie case.[28]
Under Section 1320a-7(a), the Secretary of the Department of Health and Human Services is required to exclude from participation in any federal health care program any individual convicted of a criminal offense “related to the delivery of an item or service under [42 U.S.C. 1395 et seq.] or under any State health care program,” § 1320a-7(a)(1), as well as any individual “convicted for an offense * * * in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program * * * [or a] criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other financial misconduct,” § 1320a-7(a)(3).
I further find that the record evidence fully supports denying Respondent's application for registration on this ground alone. Respondent's conduct pertaining to her conviction for health care fraud related in substance to improper billing of services. Respondent's sentence included restitution in the amount of $24,210.37. (Gov't Ex. 4 at 2; see generally Tr. 45-46, 57, 392.) Respondent argues in part that she “took responsibility for this action [and] exclusion should not be used as the sole cause of denial of a certificate.” [29] To the contrary and as discussed below, Respondent's testimony demonstrated a complete lack of acceptance of responsibility,[30] among other things, and I find that granting Respondent a COR would be inconsistent with the public interest.
As described in the Evidence and Incorporated Findings of Fact Section of this Recommended Decision, Respondent holds a valid state medical license but Respondent's state medical license has been suspended in the past. The suspension of Respondent's medical license, between June 4, 2008, and February 12, 2009, included several findings of fact by the Virginia Board of Medicine regarding Respondent's conduct, her credibility and her conviction for health care fraud. The Board also found that “[f]rom approximately 2003 until on or about February 28, 2006, at which time a search warrant executed at her practice produced a prescription pad with numerous pre-signed blank prescription sheets, Dr. Cheek pre-signed blank prescription sheets for use by the nurse practitioners if she was not in the office.” (Gov't Ex. 7 at 3.) Additionally, the Board did not find credible Respondent's testimony at formal hearing that the pre-signed forms were not for medications. The Board also found that Respondent “continued to prescribe Kadian 20 mg (morphine sulfate, C-II)” to a patient despite the fact that a urine drug screen was negative for opiates during the relevant timeframe. (Id. at 3.) The Board further Start Printed Page 66983found Respondent in her testimony “demonstrated little insight into the practice management and ethical issues regarding fraudulent billing that led to the suspension of her license and the additional patient care concerns. Specifically, Dr. Cheek did not take responsibility for her actions and felt that there was a government conspiracy against her because she practices pain management.” (Id. at 4.)
“Every person who manufactures, distributes, dispenses, imports or exports any controlled substance or who proposes to [do so] * * * shall obtain a registration unless exempted by law or pursuant to §§ 1301.22-1301.26.” 21 CFR 1301.11(a) (2010). Although a person may apply for registration at any time, “[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 by the Administrator to such person.” Id. (emphasis supplied).
Respondent's conduct with regard to compliance with applicable federal, state or local laws relating to controlled substances since regaining her medical license in February 2009 has been dismal, at best. On the same day as her medical license was restored, Respondent admittedly wrote at least two prescriptions without authority. Respondent's testimony at hearing explaining that she had forgotten she was unauthorized to write prescriptions and wrote prescriptions by “habit” is simply not credible. The evidence at hearing reflects numerous prescriptions that Respondent wrote in her own name on and after February 13, 2009. The objective evidence of record reflects five prescriptions to different patients for Scheduled controlled substances, signed by Respondent between February 23, 2009, and May 14, 2009. (Gov't Exs. 9-13.) Finally, Respondent wrote a prescription for Lyrica on March 20, 2009, admitting that she did not know or research whether Lyrica was a controlled substance.[31] (Tr. 497-99; Resp't Ex. 40 at 1.)
The evidence with regard to whether Dr. Schultz knowingly authorized Respondent and Respondent's assistant [AY] to call in prescriptions under Dr. Schultz's DEA registration number is mixed. DI Tomaziefski testified that in an initial conversation with Dr. Schultz, Dr. Schultz stated she did not authorize anyone to use her number. In a later call initiated by Respondent and with Respondent on the line, Dr. Schultz Start Printed Page 66984stated she had authorized the use of her DEA number. Additionally, Respondent introduced a written agreement bearing signatures in the names of Dr. Schultz and Respondent, purporting to memorialize an agreement for Respondent to act under Dr. Shultz's direction for all Schedule II to IV medications, noting in part that Dr. Schultz does not need to see patients receiving Schedule III to V medications. (Resp't Ex. 41.) The written document purports to memorialize a verbal understanding between Dr. Schultz and Respondent as of February 23, 2009. An addendum dated June 25, 2009, notes Dr. Schultz will see “all patients one time” because of an inability “to determine the legality” of the original agreement. (Id.) While the evidence lends some support to a finding that Dr. Schultz may have authorized in some instances the “call-in” of Dr. Schultz's prescriptions by Respondent and [AY], as well as the supervision of Respondent, the evidence as a whole demonstrates that this arrangement was used primarily to allow Respondent to issue numerous controlled substance prescriptions with little if any substantive input by Dr. Schultz.
The Government has introduced evidence and argued that Respondent's history of non-compliance with applicable laws is evident from the October 29, 2008, findings of fact by the Virginia Board of Medicine. The Board found that from “approximately 2003 until on or about February 28, 2006, at which time a search warrant executed at her practice produced a prescription pad with numerous pre-signed blank prescription sheets, Dr. Cheek pre-signed blank prescription sheets for use by the nurse practitioners if she was not in the office.” (Gov't Ex. 7 at 3.) Such conduct is contrary to DEA regulations which require prescriptions for controlled substances to be “dated as of, and signed on, the day when issued * * *” as well as Virginia law.[32]
As an initial matter, this issue of Respondent's pre-signing of prescription pads between 2003 and 2006 was not specifically noticed by the Government in the OSC or pre-hearing statements. It was, however, addressed in Government Exhibit 7, an exhibit that was provided to Respondent prior to hearing, presumably on or before the September 13, 2010 deadline set by the Prehearing Ruling (ALJ Ex. 4 at 2), and filed on September 27, 2010. At hearing Respondent did not object to the admission of the exhibit. (Tr. 72.) To comport with due process requirements, the DEA must “provide a Respondent with notice of those acts which the Agency intends to rely on in seeking the revocation of its registration so as to provide a full and fair opportunity to challenge the factual and legal basis for the Agency's action.” CBS Wholesale Distributors, 74 FR 36,746, 36,749 (DEA 2009) (citing NLRB v. I.W.G., Inc., 144 F.3d 685, 688-89 (10th Cir. 1998) and Pergament United Sales, Inc., v. NLRB, 920 F.2d 130, 134 (2d Cir. 1990)). The DEA has previously held that an issue cannot be the basis for a sanction when the Government has failed to “disclose `in its prehearing statements or indicate at any time prior to the hearing' that an issue will be litigated.” Id. at 36,750 (citing Darrell Risner, D.M.D., 61 FR 728, 730 (DEA 1996)). The DEA has also previously found, however, that a respondent may waive objection to the admission of evidence not noticed by the Government prior to the hearing when the respondent does not timely object and when the respondent also raises the issue. Gregory D. Owens, D.D.S., 74 FR 36,751, 36,755 (DEA 2009).
Additionally, the evidence of Respondent's dispensing practice includes an instance on May 20, 2009, when she issued to a patient a prescription for Lyrica, a Schedule V controlled substance, admitting that she Start Printed Page 66985did not know or research whether Lyrica was a controlled substance. Respondent maintained that the “drug company did not do a very good job of informing” her of the controlled status of the drug, elaborating that “I fail to see why it had a controlled status.” (Resp't Ex. 40 at 1; see also Tr. 497-99.) The applicable regulations are specific in placing the “responsibility for the proper prescribing and dispensing of controlled substances” on the practitioner, with a corresponding responsibility on the pharmacist.[33] Respondent's conduct in this instance was contrary to applicable regulations and inconsistent with the public interest.
As to factor five, “Respondent's lack of candor and inconsistent explanations” may serve as a basis for denial of a registration. John Stanford Noell, M.D., 59 FR 47,359, 47,361 (DEA 1994). Additionally, where a registrant [34] has committed acts inconsistent with the public interest, a registrant must accept responsibility for her actions and demonstrate that she will not engage in future misconduct. Patrick W. Stodola, 74 FR 20,727, 20,735 (DEA 2009).[35] Also, “[c]onsideration of the deterrent effect of a potential sanction is supported by the CSA's purpose of protecting the public interest.” Joseph Gaudio, M.D., 74 FR 10,083, 10,094 (DEA 2009).
Respondent at hearing sought to introduce testimony from several witnesses on the issue of “community impact,” maintaining that a denial of her DEA COR would leave southwestern Virginia medically underserved by pain management practitioners.[36] As a threshold matter, there is some question as to whether this issue is relevant at all in a DEA administrative proceeding regarding the registration of a practitioner. Agency precedent has found community impact testimony and evidence relevant with regard to pharmacies but has also rejected community impact evidence altogether in more recent cases. For example, the agency has considered and credited a respondent's argument that loss of registration would severely and adversely impact the local community by eliminating one of two pharmacies serving the poor. Pettigrew Rexall Drugs, 64 FR 8855, 8859-60 (DEA 1999). In recent cases, the agency held that “DEA has never applied [the Pettigrew] rule in a subsequent case * * * it would be ill-advised to extend it to the case of a prescribing practitioner.” Gregory Owens, D.D.S., 74 FR 36,751, 36,757 (DEA 2009); see also Steven M. Abbadessa, D.O., 74 FR 10,077, 10,078 (DEA 2009) (rejecting community impact evidence).
Although not discussed in Owens, there are cases since Pettigrew that have considered and given weight to community impact evidence, without specifically citing Pettigrew. For example, in a 2004 decision the Deputy Administrator explained that “regardless of any demographic showing as to what proportion of Louisiana's population is medically underserved[,] such information does not detract from the fact that Respondent provides needed medical services to such an area * * * while this provides some support for maintaining registration under the facts of this case, it also has a negative implication for continued registration.” Imran I. Chaudry, M.D., 69 FR 62,081, 62,083-84 (DEA 2004).
I find the Government has established by substantial evidence a prima facie case in support of denying Respondent's application for registration. I conclude by a preponderance of the evidence that the Government has proved independent grounds for denying Respondent's application for registration pursuant to 21 U.S.C. Start Printed Page 66986824(a)(5), and alternatively, that the balance of the other factors in this case weighs heavily in favor of a finding that Respondent's registration would be inconsistent with the public interest under § 823(f).
Additionally, where a potential registrant has committed acts inconsistent with the public interest, she must accept responsibility for her actions and demonstrate that she will not engage in future misconduct. See Patrick W. Stodola, 74 FR 20,727, 20,735 (DEA 2009). Also, “[c]onsideration of the deterrent effect of a potential sanction is supported by the CSA's purpose of protecting the public interest.” Joseph Gaudio, M.D., 74 FR 10,083, 10,094 (DEA 2009). An agency's choice of sanction will be upheld unless unwarranted in law or without justification in fact. A sanction must be rationally related to the evidence of record and proportionate to the error committed. See Morall v. DEA, 412 F.3d 165, 181 (DC Cir. 2005). Finally, an “agency rationally may conclude that past performance is the best predictor of future performance.” Alra Laboratories, Inc. v. DEA, 54 F.3d 450, 452 (7th Cir. 1995).
4. In Owens, the ALJ relied on the fact that roughly ten percent of the practitioner's patients were from an underserved community and that a majority of his patients had limited finances. 74 FR at 36757 n.22. I rejected this evidence noting that “the ALJ's reasoning begs the question of how many patients from underserved areas would a practitioner have to treat to claim the benefit of the rule.” Id. I also rejected the ALJ's reliance on the fact that a majority of the registrant's patients had limited incomes, because determining what constitutes a patient with a limited income or finances and how many patients (or what percentage of patients) a practitioner must have to claim entitlement to this rule was unworkable. Id.
While the evidence adduced here (which the ALJ rejected as insufficient) was primarily limited to Respondent's assertion that she “was the only pain management doctor reasonably available in southwestern Virginia,” ALJ at 34; here again, there are no workable standards for determining whether other doctors are reasonably available. Moreover, the CSA's primary purpose is to prevent the diversion of controlled substances and nothing in the respective statutes (21 U.S.C. 823(f) & 824(a)) directs the Agency to consider community impact evidence in determining whether to grant an application for registration or to continue an existing registration.
6. Under the Administrative Procedure Act (APA), an agency “may take official notice of facts at any stage in a proceeding—even in the final decision.” U.S. Dept. of Justice, Attorney General's Manual on the Administrative Procedure Act 80 (1947) (Wm. W. Gaunt & Sons, Inc., Reprint 1979). In accordance with the APA and DEA's regulations, Respondent is “entitled on timely request, to an opportunity to show to the contrary.” 5 U.S.C. 556(e); see also 21 CFR 1316.59(e). Respondent can dispute the facts of which I take official notice by filing a properly supported motion for reconsideration within twenty days of service of this Order, which shall begin on the date it is mailed.
Id. When then asked whether she was “asserting that the government may have falsified this document?,” Respondent answered: “Very possible.” Id.
9. Against this evidence is a document signed on June 25, 2009, which purports to be a memorialization of a verbal contract entered into on February 23, 2009 between Respondent and Dr. Schultz. RX 41. Among this document's terms are that Dr. Schultz “will approve medications as recommended by Dr. Cheek and allow Dr. Cheek or her staff to call them into the pharmacy in her name.” Id. Continuing, the document states: “Basically, Dr. Cheek is acting as a nurse practitioner would, under Dr. Schultz's supervision. Dr. Schultz reviews and signs the records of all patients receiving scheduled drugs on a regular basis.” Id.
10. The Board identified Individual A as “a practitioner of osteopathic medicine who held [a DEA] registration, under which Individual A authorized prescriptions for controlled substances for Respondent's patients.” In re Linda Sue Cheek, at 2. The Board's findings make clear that Individual A is Dr. Schultz.
11. As noted above, Respondent analogized her relationship with Dr. Schultz to that of a nurse practitioner who is supervised by a physician. Apparently, the Virginia Board did not find the analogy persuasive as it found Respondent guilty of unprofessional conduct. See In re Linda Sue Cheek, at 2-4, 8. It is also noted that while the Virginia Board's rules allow a nurse practitioner to prescribe controlled substances, “a practice agreement between the nurse practitioner and the supervising physician” must be submitted and approved by both the Board of Medicine and the Board of Nursing. 18 VAC90-40-30; id. 90-40-40(3). In addition, the State's rules require that “[t]he nurse practitioner shall include on each prescription written or dispensed his signature and prescriptive authority number as issued by the board and the Drug Enforcement Administration (DEA) number, when applicable.” Id. 90-40-110.
18. 21 U.S.C. 829(a) (2006 & Supp. 2010).
24. That subsection provides that a DEA registration may be revoked upon a finding that the registrant: (1) Has materially falsified an application for DEA registration; (2) has been convicted of a felony under the CSA or any other federal or state law relating to any controlled substance; (3) has had a state license or registration suspended, revoked or denied and is no longer authorized by state law to handle controlled substances; (4) has committed such acts as would render registration inconsistent with the public interest; or (5) has been excluded from participation in a program pursuant to 42 U.S.C. 1320a-7(a). It should also be noted that § 824(a) contains a reciprocal reference incorporating the public interest factors from § 823(f). See 21 U.S.C. 824(a)(4).
32. 21 CFR 1306.05(a) (2010). Requirements for prescriptions in Virginia include, among other things, that “[e]ach written prescription shall be dated as of, and signed by the prescriber on, the day when issued.” Va. Code Ann. § 54.1-3408.01(A) (2010).