[Federal Register Volume 76, Number 209 (Friday, October 28, 2011)]
[Notices]
[Pages 66972-66986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-28002]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 10-55]
Linda Sue Cheek, M.D., Decision and Order
On December 30, 2010, Administrative Law Judge (ALJ) Timothy D.
Wing issued the attached recommended decision. Thereafter, Respondent
filed exceptions to the decision.
Having reviewed the entire record including Respondent's
exceptions, I have decided to adopt the ALJ's rulings, findings of
fact, conclusions of law, and recommended order, except as discussed
below. Accordingly, I will order that Respondent's application be
denied.
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.
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\1\ All citations to the ALJ's decision are to the slip opinion
as issued by him.
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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.
While in Chaudry, the Agency noted that evidence that the
respondent, who was a cardiologist, practiced in a medically
underserved community ``provide[d] some support for maintaining [his]
registration,'' the Agency further held that this evidence ``also has a
negative implication for continued registration'' because Respondent
placed the community at risk by abusing methamphetamine and
distributing it to another physician. 69 FR at 62084. Thus, in Chaudry,
while the registrant was the only cardiologist in ``a town of
approximately 4,000 people,'' the Agency actually relied on this
evidence to revoke the practitioner's registration.
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\
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\2\ While the decision noted that the registrant had also
distributed methamphetamine to another physician, this conduct would
clearly fall within factor four, ``[c]ompliance with applicable
State, Federal, or local laws relating to controlled substances.''
21 U.S.C. 823(f)(4).
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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. Sec. 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. Sec. Sec. 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.
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\3\ Of course, in determining the appropriate sanction, DEA also
considers the extent and egregiousness of a registrant's misconduct,
the degree of the registrant's candor, as well as the Agency's
interest in deterring others from engaging in similar acts. See
Owens, 74 FR at 36757; Paul Weir Battershell, 76 FR 44359 (2010);
Joseph Gaudio, 74 FR 10083, 10095 (2009); Janet Thornton, 73 FR
50354 (2008).
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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
[[Page 66973]]
FR 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.
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\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.
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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)).
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\5\ To make clear, there was no evidence of diversion in Owens
either.
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Under 21 U.S.C. 824(a)(5), the Attorney General is authorized to
suspend or revoke a registration ``upon a finding that the registrant *
* * has been excluded (or directed to be excluded) from participation
in a program pursuant to'' 42 U.S.C. 1320a-7(a). As I recently
explained, see Terese, Inc., 76 FR 46843, 46846 (2011), this provision
subjects to revocation the registration of a practitioner who has been
mandatorily excluded ``from participation in any Federal health care
program'' based on her conviction for an offense falling within one of
four categories of offenses including a ``[f]elony conviction relating
to health care fraud.'' 42 U.S.C. 1320a-7(a)(3). The consequence of the
exclusion is to prohibit Respondent from participating ``in any
capacity in the Medicare, Medicaid, and all Federal health care
programs as defined in section 1128B(f) of the Social Security Act.''
GX 6 (letter from Reviewing Official, Health Care Program Exclusions,
Office of Counsel to the Inspector General, Department of Health and
Human Services, to Respondent (Sep. 30, 2008)).
In enacting 42 U.S.C. 1320a-7, Congress was obviously aware that
many of the beneficiaries of Medicaid, Medicare, and other health care
programs (such as SCHIP) are residents of medically underserved
communities. Yet Congress made the exclusion of a provider from
participation in these programs mandatory upon conviction of one of the
four categories of offenses enumerated in 42 U.S.C. 1320a-7(a),
including a conviction for Health Care Fraud. Given this, it makes no
sense for the Agency to consider community impact evidence in
exercising its authority under 21 U.S.C. 824(a)(5).
I therefore re-affirm my holding in Owens that community impact
evidence is not relevant in determining whether to grant a prescribing
practitioner's application under 21 U.S.C. 823(f) or to revoke an
existing registration under the various authorities provided in 21
U.S.C. 824(a). I further hold that to the extent Chaudry (or any other
case involving a prescribing practitioner) suggests otherwise, it is
overruled.
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. Sec. 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.
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\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.
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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. Sec. 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's Exceptions
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
[[Page 66974]]
the 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.
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\7\ When asked whether she had written this prescription,
Respondent testified: ``I cannot say that that is my signature.''
Tr. 492. When asked why she could not, Respondent answered:
I cannot say that that is my signature. I am not opposed to the
idea that the government can do a lot of things. And I do not,
without having had this information, and be[ing] able to do some
research on my own, I will not admit to this being my signature or
my prescription.
Id. When then asked whether she was ``asserting that the
government may have falsified this document?,'' Respondent answered:
``Very possible.'' Id.
Respondent's failure to accept responsibility is further
manifested by her contentions 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.'' Resp. Exc. at 10. However,
no one forced Respondent to issue prescriptions without a
registration and DEA's regulation clearly states 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 by the
Administrator to such person.'' 21 CFR 1301.13(a). Also, given
Respondent's exclusion under 42 U.S.C. 1320-7(a), DEA had no
obligation to grant her application.
\8\ Respondent maintained that she did not break any law by
writing prescriptions which were not filled. Tr. 491, 493. However,
under Federal law, the issuance of a prescription constitutes the
constructive transfer of a controlled substance even if a pharmacist
subsequently refuses to fill the prescription. United States v.
Roya, 574 F.2d 386 (7th Cir. 1978); United States v. Tighe, 551 F.2d
18 (3d Cir. 1977).
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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\
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\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.
On June 25, 2009, the same day that the above document was
signed, Respondent discussed with Dr. Schultz her conversation with
the DEA Investigator. Respondent testified:
And when she told me she had said, ``No, I haven't told anybody
they can use my DEA number,'' I said, ``Kathy, you allow us to call
in prescriptions for our patients. That is using your DEA number.''
``Oh, I didn't realize that,'' was her reply.
Tr. 422.
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[[Page 66975]]
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.
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\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.
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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\
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\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.
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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. Sec. 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. Sec. 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.
Order
Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 28
CFR 0.100(b), I order that the application of Linda Sue Cheek, M.D.,
for a DEA Certificate of Registration as a practitioner be, and it
hereby is, denied. This order is effective November 28, 2011.
Dated: October 17, 2011.
Michele M. Leonhart,
Administrator.
Robert W. Walker, Esq., for the Government
Linda Sue Cheek, M.D., Pro se, for the Respondent
Recommended Ruling, Findings of Fact, Conclusions of Law and Decision
of the Administrative Law Judge
Introduction
Timothy D. Wing, Administrative Law Judge. This proceeding is an
adjudication pursuant to the Administrative Procedure Act, 5 U.S.C. 551
et seq., to determine whether the Drug Enforcement Administration
(``DEA'' or ``Government'') should deny Respondent's pending
application for a DEA Certificate of Registration (``COR''). Without
this registration, Respondent, Linda Sue Cheek, M.D. (``Respondent''),
of Dublin, Virginia, would be unable to lawfully possess, prescribe,
dispense, or otherwise handle controlled substances in the course of
her practice.
On March 13, 2010, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration, issued an Order to
Show Cause (``OSC'') seeking the denial of Respondent's pending
application as a practitioner for registration in Schedules II through
V, alleging that issuing a registration would be inconsistent with the
public interest as that term is used in 21 U.S.C. 823(f) and that
Respondent has been excluded from participation in a federal health
care program as defined in 21 U.S.C. 824(a)(5). (ALJ Ex. 1 at 1.) The
OSC alleged in substance: (a) Respondent had been excluded from
participation in all federal health care programs for a period of five
years following her guilty plea to one count of health care fraud in
federal district court on February 21, 2008; and (b) Respondent
surrendered her DEA COR number BC4510865 on November 17, 2008, but
thereafter continued to issue numerous prescriptions for controlled
substances using the surrendered COR, as well as the COR of another
practitioner without authorization.
Respondent, acting pro se, timely requested a hearing (ALJ Ex. 2),
which was held in Roanoke, Virginia, between October 5-6, 2010. After
acknowledging that she understood her right to representation, as
codified at 21 CFR 1316.50, Respondent elected to represent herself
during the hearing. (See ALJ Exs. 3 & 4.) Both parties called witnesses
to testify and introduced documentary evidence. After the hearing, both
parties filed proposed findings of fact, conclusions of law and
argument. All of the evidence and post-hearing submissions have been
considered, and to the extent the parties' proposed findings of fact
have been adopted, they are substantively incorporated into those set
forth below.
Issue
Whether the record evidence establishes by substantial evidence
that Respondent's pending application for a DEA COR as a practitioner
in Schedules II through V should be denied because such registration
would be inconsistent with the public interest as that term is used in
21 U.S.C. 823(f) and because Respondent has been excluded or directed
to be excluded from participation in a health care program pursuant to
21 U.S.C. 824(a)(5).
Evidence and Incorporated Findings of Fact
I find, by a preponderance of the evidence, the following facts:
I. Background
Respondent's State Medical License
On June 4, 2008, the Virginia Department of Health Professions
ordered Respondent's medical license
[[Page 66976]]
suspended 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.)
On October 29, 2008, after a formal administrative hearing, the
Virginia Board of Medicine (``Board'') issued an Order denying
reinstatement of Respondent's medical license, which remained on
indefinite suspension. The Order precluded Respondent from petitioning
the Board for reinstatement until Respondent presented satisfactory
written evidence that she had successfully completed a Board-approved
comprehensive physician competency evaluation. (Gov't Ex. 7.)
On January 8, 2009, Respondent petitioned the Board for
reinstatement, after completing the required comprehensive physician
competency evaluation. (Resp't Ex. 17.) On February 12, 2009, the
Virginia Department of Health Professions notified Respondent of the
decision to reinstate Respondent's medical license to full and
unrestricted status with all attendant rights and privileges. (Resp't
Ex. 18.)
Respondent Linda Sue Cheek, M.D.
Respondent graduated from the University of Texas Health and
Science Center at San Antonio, earning a Doctor of Medicine degree on
May 23, 1992. (Resp't Ex. 1.) Respondent completed her first year of
family practice training at the University of Texas Health Science
Center at San Antonio and successfully completed her last two years of
training at Roanoke Memorial Hospital in Roanoke, Virginia in June
1995. The Virginia Department of Health Professions, Board of Medicine,
issued Respondent a license to practice medicine and surgery on July 1,
1993. Respondent has since maintained a family practice to include a
specialty in pain management and alternative medicine. Since 1998,
Respondent has completed a number of medical training activities to
include: Traditional Chinese Medicine, acupuncture, herbal medicine, Qi
Gong, Clinical Issues in Primary Care, evidence-based wellness,
clinical hypnosis, The Psychology of Health, Immunity and Disease,
numerous pain management courses, addiction and drug diversion courses
and homeopathic courses, among others. (Resp't Exs. 7-16.)
Respondent held DEA COR BC4510865 as of July 18, 1995, as a
practitioner in controlled substances in Schedules II through V, at the
registered address 28 Town Center Drive, Dublin, Virginia, which was
last renewed on August 24, 2007. This COR had an expiration date of
August 31, 2010. In a letter dated November 14, 2008, Respondent
voluntarily surrendered her COR after a formal administrative hearing
and denial of reinstatement of Respondent's medical license by the
Virginia Board of Medicine on October 29, 2008. (See Gov't Ex. 8; Tr.
73-76.) On February 16, 2009, Respondent applied for a new registration
with DEA as a practitioner in Schedules II through V, 28 Town Center
Drive, Dublin, Virginia 24084. (Gov't Ex. 1.)
II. Investigation of Respondent
In support of the allegations contained in the OSC, the Government
presented at hearing the testimony of three witnesses: Special Agent
Jeffrey Overbeck, U.S. Department of Health and Human Services, Office
of Inspector General (``SA Overbeck''), Diversion Investigator Steven
Tomaziefski, U.S. Drug Enforcement Administration (``DI Tomaziefski''),
and Special Agent Robert Slease, U.S. Department of Health and Human
Services, Office of Inspector General (``SA Slease'').
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.
---------------------------------------------------------------------------
\12\ Anthem is a health insurance provider. (See Tr. 474.)
---------------------------------------------------------------------------
SA Overbeck also testified that investigative findings revealed
that Respondent's practice, New River Medical Associates, Inc., in
Dublin, Virginia focused on pain management and alternative medicine.
Respondent also employed two family nurse practitioners. Respondent and
the two nurse practitioners each had Medicare, Medicaid and Anthem
provider numbers, which could be billed for the services that each
provided. On a number of occasions, Respondent submitted a bill for
services under Respondent's provider number when Respondent was not
actually present, contrary to the rules and regulations for ``incident
to'' billing. (Tr. at 33-39.) SA Overbeck's testimony was fully
credible. His testimony was internally consistent and the witness was
able to recall factual events with a reasonable level of certainty.
Documentary evidence included Respondent's December 9, 2007, signed
agreement to plead guilty to a one-count information charging health
care fraud in violation of 18 U.S.C. 1347. (Gov't Ex. 3.) On May 27,
2008, the United States District Court for the Western District of
Virginia entered a judgment pursuant to a plea of guilty by Respondent
to one count of health care fraud, 18 U.S.C. 1347, for offense conduct
ending in March 2006. Respondent was sentenced to ``probation for a
term of: Four (4) years,'' with conditions of supervision, a $100.00
assessment, $1,000.00 fine and restitution in the amount of $24,210.37.
(Gov't Ex. 4.)
A September 30, 2008 letter from the U.S. Department of Health and
Human Services, Office of Inspector General, notified Respondent she
was ``excluded from participation in any capacity in the Medicare,
Medicaid, and all Federal health care programs as defined in section
1128B(f) of the Social Security Act (Act) for the minimum statutory
period of 5 years.'' The exclusion action was effective twenty days
from the date of the letter. (Gov't Ex. 6.)
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
[[Page 66977]]
registration 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 further testified that in April 2009 he received
information from the Virginia Department of Health Professions
pertaining to two prescriptions that were written and signed by
Respondent using her surrendered DEA number. (Tr. 79-80.) One
prescription, for ``Lyrica 75 mg capsule 60 (sixty)'' with two
refills, dated March 20, 2009, was not filled by a pharmacy. (Tr. 81;
Gov't Ex. 9.) The second prescription, for ``Ambien 10 mg tablet
30 (thirty)'' with five refills, dated February 23, 2009, was
filled by a pharmacy in Wytheville, Virginia. (Tr. 82-83; Gov't Ex.
13.) DI Tomaziefski further testified that he next began looking at
different pharmacies for prescriptions that Respondent may have
written. On May 19, 2009, DI Tomaziefski received by facsimile a three-
page letter from Respondent (see Gov't Ex. 18) stating that she was
aware that DEA ``is scouring the area for infractions of scripts for
controlled drugs written by me * * *'' (Gov't Ex. 18 at 1.) She
admitted that on the first day she got her medical license back, she
conducted ``business as I always have, and signed all the scripts for
the patients * * *'' but realized halfway through the morning that she
did not have a DEA COR. (Id.) Respondent also stated ``I am willing to
go to jail for providing the people of Southwest Virginia with relief
from their suffering.'' (Id. at 2.) Respondent also advised in the
letter that she had hired a Dr. Schultz locum tenens to see patients
that needed her, explaining that
Dr. Schultz saw the patients on her own from September, 2008 to
February, 2009. When I got my license in February 2009, I asked her
to continue assisting me with the scheduled medications, since I did
not have my DEA certificate. She had experience with working with
nurse practitioners, so she had no problem supervising me in the
same manner. She also established her own practice in my building,
so that those patients with Medicare, Medicaid, and any other
insurance that I did not associate with, could have a primary care
physician to write orders for them. Every patient that pertains to
has seen her personally. She has personally seen every patient that
receives Schedule II meds. She has approved the medications that
they are receiving. Then they continue to see me and she signs their
scripts. She has also given me instructions to call scripts in for
patients that are schedule III-V. She reviews my notes and signs
them. For her supervisory duties, New River Medical Associates pays
her $100 per week. We are handling things as if I am a physician
extender and she is the supervisory physician * * *
(Id. at 3.)
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.)
---------------------------------------------------------------------------
\13\ As noted below, Respondent's employee [AY] is also a
patient of Respondent. To protect patient privacy, only initials are
used in this Recommended Decision when referring to Respondent's
patients.
---------------------------------------------------------------------------
DI Tomaziefski further testified that on June 2, 2009, he
participated with the CS in a controlled purchase of the above
prescribed hydrocodone from Dublin Pharmacy, and the purchased
prescription drug was seized as evidence by DEA. On June 4, 2009, DI
Tomaziefski and the CS returned for another controlled visit to
Respondent. Respondent and Dr. Schultz confronted the CS with
urinalysis results which revealed the presence of buprenorphine, not
otherwise prescribed or disclosed by the CS to DEA. As a result, DEA
terminated the undercover operation.
DI Tomaziefski next testified to obtaining additional copies of
prescriptions issued under Respondent's name and using Respondent's
surrendered DEA registration number. (Tr. 109.) On June 26, 2009, a
prescription dated May 14, 2009, for ``Ambien 10 mg tablet 30
(thirty)'' with five refills was obtained from Martin's Pharmacy, in
Pulaski, Virginia. DI Tomaziefski concluded the prescription had not
been filled because it did not contain a pharmacy tag on the
prescription. (Tr. 110; see Gov't Ex. 11.) On April 6, 2010, DI
Tomaziefski obtained from Martin's Pharmacy a prescription dated
February 23, 2009, for ``Lortab 7.5-500 mg tablet 120 (one
hundred-twenty)'' with two refills and signed with Respondent's name,
which was crossed out, and the name ``K Schultz'' inserted. DI
Tomaziefski testified this prescription had been filled, as evinced by
the presence of pharmacy tags on the record copies. (Tr. 111; see Gov't
Ex. 12.) DI Tomaziefski further testified that he asked the pharmacist
why Dr. Schultz's name was written on the prescription and was told
that when the prescription was brought into the pharmacy he called New
River and was told by ``someone at New River'' that Dr. Schultz had
authorized the prescription. The pharmacist crossed out Respondent's
name and wrote in Dr. Schultz's name. (Tr. 112.)
DI Tomaziefski next testified that on June 17, 2009, he spoke with
Dr. Schultz by telephone and Dr. Schultz said she was not affiliated
with New River Medical Associates but was just helping out until
Respondent got her medical license back. Dr. Schultz also stated that
she did not allow Respondent to call in prescriptions for any
authorized refills under Dr. Schultz's DEA number. (Tr. 115.) The
record evidence also reflects that Dr. Schultz only worked at New River
Medical Associates on Thursdays. (Tr. 117-18.)
The record evidence includes twenty-two prescription records
obtained by DI Tomaziefski from Dublin Pharmacy, in Dublin, Virginia,
covering the period from March to April 2009, all reflecting ``called-
in'' prescriptions by Respondent or [AY] using Dr. Schultz's DEA
number. (Tr. 119; Gov't Ex. 15.) DI Tomaziefski testified that the
dates on the prescriptions were significant because most of the
prescriptions were called in on dates other than Thursdays. (Tr. 118.)
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.)
[[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.)
DI Tomaziefski further testified that on June 23, 2009, he traveled
to Dr. Schultz's house with a Virginia State Police investigator for
the purpose of serving a subpoena and to clarify information contained
on Schedule II prescriptions that had been obtained during the DEA
investigation. DI Tomaziefski explained that upon identifying
themselves to Dr. Schultz, Dr. Schultz spontaneously stated that ``she
didn't authorize anybody to use her DEA number.'' Dr. Schultz further
stated that she was somewhat retired and worked one day a week at a
clinic ``and that on Thursdays, most Thursdays'' would be at New River
Medical Associates and wrote Schedule II prescriptions for patients.
(Tr. 132.)
DI Tomaziefski further testified that on June 25, 2009, he received
a telephone call from Respondent regarding the status of her
application for a DEA COR. During the call, Respondent put Dr. Schultz
on the line together with Respondent. Respondent and Dr. Schultz
informed DI Tomaziefski that they had a verbal agreement wherein
Respondent could call in prescriptions under Dr. Schultz's DEA number.
(Tr. 134.)
On cross examination, DI Tomaziefski testified that the normal time
to render a decision on an application for a DEA COR is approximately
four to six weeks, but DEA is not obligated to adhere to that time
period and the time period is longer when there are issues with the
applicant. (Tr. 142-43.)
DI Tomaziefski's testimony was fully credible. The witness
testified consistently with regard to facts, and his testimony as a
whole reflected a recollection of factual events with a reasonable
level of certainty.
III. Respondent's Evidence
Respondent testified at hearing and also presented testimony from
former patients [AZ], [DS] and [ET]. [ET] testified by telephone, with
consent of the parties, because [ET] was incarcerated at the time of
hearing. Additionally, Respondent presented testimony from an employee
and patient, [AY].
[AZ] testified in substance that [AZ] is a resident of Elliston,
Virginia and had been a patient of Respondent for approximately three
years before Respondent lost her medical license. [AZ] testified to
being able to maintain a quality of life and function with pain
medications, and believed that [AZ] ``wouldn't be here today if it
wasn't for Dr. Cheek helping'' with [AZ]'s pain. (Tr. 178.) [AZ]
further testified that after Respondent lost her medical license it was
a very difficult time and a constant worry as to how [AZ] would obtain
medication. (Tr. 181.) In 2008 [AZ] contacted Respondent's office and
learned that Dr. Schultz was available. [AZ] returned to the office as
a patient, at first seeing Dr. Schultz. [AZ] further testified that
Respondent is not an easy doctor to get medications from, has rules to
follow, and expects patients to maintain a healthy diet. [AZ] explained
that [AZ] participated in ``cleansing groups'' and last participated
several years prior to the hearing. (Tr. 187-88.)
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.
---------------------------------------------------------------------------
\14\ [AZ] testified that [AZ] gets three months' worth of
prescriptions, paying $110.00, ``which comes out to be cheaper than
if I would have went monthly, and it is the green thing to do,
because I'm not running up and down the road burning gas to get back
and forth to the office.'' (Tr. 214.)
---------------------------------------------------------------------------
Patient [DS] testified in substance to being a patient of
Respondent since September 10, 2009, having previously been treated at
a VA hospital. [DS] stated that [DS] left the VA hospital after it
stopped managing [DS]'s pain for no reason. After discharge from the VA
hospital and prior to treating with Respondent [DS] stated that [DS]
was ninety percent disabled, suffering from withdrawal, and did not
believe [DS] would live another two weeks without treatment. (Tr. 237.)
After discharge from the VA hospital [DS] had difficulty finding a
physician that would take [DS] given [DS]'s financial means. [DS]
further testified that after treating with Respondent and Dr. Schultz,
[DS]'s life improved ninety percent or more and [DS] was able to
continue attending college. [DS] explained that Respondent is not an
easy doctor and only gives pain medicine to someone actually in pain.
On cross examination [DS] indicated that [DS] lives approximately
twenty-two miles from Respondent's office. While at the VA hospital
[DS] was prescribed methadone and Percocet together, along with
Neurontin. [DS] explained that [DS]'s frequency of visits to
Respondent's office is once every three months, with the last visit
being August 26, 2010. [DS] saw Dr. Schultz in September 2009, which
[DS] described as a sit-down discussion. [DS] explained that [DS]
believed Respondent was [DS]'s primary care physician. Respondent
performed the first physical examination on [DS]'s first visit. (Tr.
254.) I find [DS]'s testimony credible in that it was generally
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
[[Page 66979]]
from May 2008 to October 2008 many patients called stating they were
having a hard time finding physicians to care for them.
On cross examination and redirect examination [AY] further
explained that [AY] has called in prescriptions as part of [AY]'s job
and on a date uncertain Dr. Shultz gave [AY] verbal permission to call
in prescriptions, later reduced to writing in June 2009. (Tr. 272-73.)
[AY] further testified that [AY] is prescribed controlled substances by
New River Medical Associates, is paid eleven dollars per hour, and the
cost of [AY]'s visits is offset as part of [AY]'s employment, in that
[AY] does not pay for office visits. (Tr. 277-78, 285-86.) [AY]'s
Schedule II medications are prescribed by Dr. Schultz but Dr. Schultz
has not performed a physical examination of [AY], only a patient
history. (Tr. 278.) [AY] stated that she has only seen Dr. Schultz as a
patient ``one time'' within the past year, but did not recall the date.
(Tr. 279.) Dr. Schultz only comes into the office one day a week, on
Thursdays. [AY] explained that all of the patients at New River Medical
Associates are pain patients and all or most pay cash, which includes
credit card payments and money orders, ranging from $55.00 to $110.00.
[AY] stated that a patient paying $110.00 ``would get their examination
of three month's worth of medication.'' (Tr. 284.) [AY] provided
contradictory testimony with regard to insurance and Medicare patients,
first testifying on cross examination that ``about ten percent'' are
insurance patients but on redirect examination that the office does
``not accept insurance.''
[AY]'s testimony at times was not internally consistent and [AY]'s
testimony is evaluated in light of [AY]'s employment status with
Respondent at the time of hearing. Additionally, [AY] is a patient of
Respondent, receiving services at reduced cost. [AY]'s testimony with
regard to Dr. Schultz's presence at the office only on Thursdays is
consistent with other objective record evidence and credible. [AY]'s
testimony with regard to ``call-in'' prescription authority from Dr.
Schultz largely mirrors that of Respondent and, as more fully explained
below, I do not find that testimony entirely credible.
Patient [ET] testified in substance that [ET] was a patient of
Respondent before Respondent lost her medical license in 2008. [ET]
began seeing Respondent again in February 2009. [ET] testified that
while Respondent was without a medical license [ET] received treatment
at a health center in Pulaski, Virginia for depression, and also
received heart medication and ibuprofen for pain. Upon returning to
Respondent for treatment in February 2009, [ET] testified to receiving
prescriptions from Respondent, but later learned from Respondent's
office that [ET] had to return the prescription because it needed to be
issued by a Dr. Schultz. [ET] further testified that Respondent was a
good doctor. (Tr. 296-346.) On cross-examination [ET] testified that
[ET] did not think that [ET] ever received a physical examination by
Dr. Schultz. [ET] further testified that as of the date of hearing [ET]
was taking only ibuprofen for pain. (Tr. 350-51.) I find [ET]'s
testimony credible in that it was internally consistent and the witness
was able to recall factual events with a reasonable level of certainty.
Respondent testified in substance that she is a resident of Dublin,
Virginia, and began her family practice rotation at the University
Health Science Center before transferring to Roanoke Memorial Hospital
Family Practice Residency. (Tr. 359-60.) Respondent applied for a DEA
COR while in residency but did not really use it until becoming a
practicing physician in 1995. Respondent stated that she chose family
practice in part because of the variety of the work and wanted to work
in a rural area where good doctors were needed. Respondent explained
that after beginning practice on her own she began studying alternative
medicine and saw her first pain patient in the late 1990s. (Tr. 362.)
Respondent further testified that she was not taught pain management in
residency. Respondent began self-study in alternative medicine in 2000,
attending numerous training courses and lectures on a variety of
subjects. (Resp't Exs. 7-16.) Respondent further testified that she has
become noted well enough as a pain management expert that she has been
invited twice by two different drug companies to attend review sessions
on how the drug companies could present drugs to the Food and Drug
Administration (FDA), and how to market them. (Tr. 375.)
Respondent also testified to developing a multidisciplinary
facility called New River Medical Associates, in Dublin, Virginia,
which was designed to help fix problems and help people heal. (Tr. 377-
78.) Respondent testified that she developed ``cleansing sessions''
which consisted of thirty minutes of exercise or counseling, with
remarkable results. (Tr. 378-79.) Respondent explained that she decided
to ``simply bill the simplest ENM code * * * because if you bill too
simple, the insurance company can say, `This was worth more than that,'
and they can get you for fraud either way. Laws are basically built to
cause doctors to be charged with fraud * * *.'' (Tr. 379-80.)
Respondent further testified to ending the cleansing sessions in
October 2005, after a conversation with an insurance investigator, who
told Respondent the sessions were not billable. Respondent stated that
as a result of the cleansing sessions taxpayers saved hundreds of
thousands or even millions of dollars through improved patient health,
concluding: ``If this is fraud, maybe we need more of it.'' (Tr. 382.)
Respondent testified that she signed a plea agreement and pled
guilty due to six billing incidents when she was out of the country,
stating that the most she was paid extra because of the billings was
eleven dollars per hour or a total loss of $66.00. (Tr. 384-85.)
Respondent further explained that following her guilty plea in 2008,
she lost her medical license and ``[n]inety-nine percent of my patients
were unable to find another physician to take care of them, even though
I tried to communicate to my colleagues that these people needed a
physician * * *.'' (Tr. 388.)
Respondent further testified that her medical license was
reinstated on February 13, 2008, and she thereafter resumed seeing
patients. Respondent testified that she was aware the Government had
sent individuals to her practice, identified herein as confidential
sources. In August 2005 Respondent declined to provide treatment to a
confidential source after discovering that the individual's medical
history was false. More recently, she instructed another confidential
source to complete a detoxification program after a drug screen
revealed multiple positive results. Respondent described having strict
rules and procedures, including drug screens. (Tr. 391-93.)
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
[[Page 66980]]
number. 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.
Respondent also testified that on June 25, 2009, a written document
was created reflecting a February 23, 2009 verbal agreement, along with
a June 25, 2009 addendum further describing the arrangement between
Respondent, Respondent's staff and Dr. Schultz. (Resp't Ex. 41; Tr.
424.) Respondent also introduced a letter dated July 20, 2009, from
Kathleen Schultz authorizing [AY] to call in Schedule III to V
medications. (Resp't Ex. 36.)
Respondent further testified that since June 2010 a webcam service
was added to allow Dr. Schultz to connect with Respondent's office and
has offered Dr. Schultz a service to review computer information or
patient records, but this service has not been set up. Dr. Schultz does
not have a key to Respondent's practice location. Respondent further
admitted to writing two prescriptions in twenty months that she should
not have written, and due to a ``comedy of errors'' one prescription
was filled. Respondent maintains that ``two prescriptions were written
by me for patients on my first day back to work,'' stating that she
``had just completely forgotten in my head about the fact that I could
not write the controlled drugs, and I did, luckily to only those two
patients.'' (Tr. 432-33.)
On cross examination, Respondent stated that she did not engage in
the treatment of patients between May 28, 2008, and February 13, 2009.
(Tr. 477.) The evidence also included a Notice of Denial letter dated
February 1, 2009, with a facsimile date of February 1, 2009, addressed
to Respondent, denying a payment request for enrollee [AZ]. (Gov't Ex.
19.) The evidence also included a Medicare prior authorization for
patient [AZ], dated January 30, 2009, signed by Respondent and listing
Respondent as the prescribing physician with a fax notation of February
2, 2009 (hereinafter ``Prior Authorization Form''). (Gov't Ex. 20.)
Respondent testified that the signature on page two of the Prior
Authorization Form was her signature. (Tr. 482; see Gov't Ex. 20.)
Respondent admitted it was wrong that she signed it and that Dr.
Schultz either authorized her to sign or Respondent assumed Dr. Schultz
would have authorized her to sign. (Tr. 482-84.)
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).
I find that prior to hearing, the Government did not disclose the
substantive information relating to the January 30, 2009 Medicare Prior
Authorization Form for patient [AZ] in the OSC, subsequent pre-hearing
statements or list of exhibits. Accordingly, for purposes of this
Recommended Decision, I give no weight to that evidence and related
testimony other than to evaluate Respondent's credibility.
On further cross-examination, Respondent was shown a prescription
dated March 20, 2009, to patient [JB] for ``Lyrica 75 mg capsule
60 (sixty),'' (see Gov't Ex. 9), and admitted the prescription
was hers and contained her signature. (Tr. 492.) Respondent was shown a
prescription dated April 6, 2009, to patient [JS] for ``Lortab 7.5-500
mg tablet 60 (sixty),'' (see Gov't Ex. 10), and testified that
she could not say it was her prescription or signature. (Tr. 491-92.)
Respondent explained that she could not identify the prescription and
signature as hers because she suggested it was ``very possible'' the
Government may have falsified the document. Respondent further stated
that she recalled writing the March 20, 2009 prescription for patient
[JB] but not the April 6, 2009 prescription for patient [JS]. (Tr. 491-
92; see Gov't Exs. 9 & 10.) Respondent moreover testified with regard
to a May 14, 2009 prescription to patient [VY] for ``Ambien 10 mg
tablet 30 (thirty),'' (see Gov't Ex. 11), that she could not
verify it as a prescription that she wrote. (Tr. 493.) And with regard
to a February 23, 2009 prescription to patient [RL] for ``Lortab 7.5-
500 mg tablet 120 (one hundred twenty),'' (see Gov't Ex. 12),
Respondent equivocated as to whether her signature appeared on the
prescription. (Tr. 493-94.)
In a letter dated January 13, 2010, (Resp't Ex. 40 at 1),
Respondent stated that Respondent wrote a prescription dated March 20,
2009, to patient [JB] for Lyrica. Respondent further wrote that she did
not know Lyrica was a controlled substance. (Id.) Respondent testified
at hearing that she did not check any resources at the time she wrote
the prescription and acknowledged being mistaken. (Tr. 497-99.)
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.)
---------------------------------------------------------------------------
\15\ Respondent timely objected to the admission of this
unnoticed and undisclosed evidence. For purposes of this Recommended
Decision, I have only considered this exhibit on the issue of
Respondent's credibility.
\16\ Respondent initially objected to the admission of this
exhibit on grounds other than notice. Respondent's objection was
initially sustained for lack of foundation, but the exhibit was
later admitted without objection. As this exhibit was un-noticed
prior to hearing, for purposes of this Recommended Decision, I have
only considered it on the issue of Respondent's credibility.
---------------------------------------------------------------------------
Respondent further testified that with regard to the process of
preparing prescriptions for patients, Respondent is ``the expert in
pain management. Dr. Schultz is not the expert in pain management. I
am. So, she relies on me to--to tell her what is needed for the
patient.'' (Tr. 523.) Respondent then testified that she is
``recommending'' to Dr. Schultz and ``in many cases'' Dr. Schultz makes
the decisions. (Tr. 524.)
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
[[Page 66981]]
Slease 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 Parties' Contentions
I. The Government's Argument
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 Sec.
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.
II. Respondent's Argument
Respondent argues that she only wrote one prescription for
controlled substances on her first day back to work after her medical
license was reinstated, a mistake due to habit. Respondent maintains
that she has shown professional responsibility by calling the first
patient to have the prescription returned, but after learning that it
had already been filled ``there wasn't anything else she could do.''
Respondent also argues that she showed professional responsibility by
calling the second patient and directing the patient to return the
prescription before filling it. Respondent further argues that if ``DEA
had done their job in a timely manner and approved Respondent's
certificate within the timeframe listed on the DEA certificate Web
site, that prescription would not have been a problem.'' Respondent
maintains that over a twenty-month time span, only two prescriptions
were written, and none in the past eighteen months, demonstrating
Respondent's professionalism and accordance with the law. Respondent
further argues that the called-in prescriptions for Dr. Schultz were
done at Dr. Schultz's direction and not done illegally.
With regard to 21 U.S.C. 824(a)(5), Respondent argues that this
particular exclusion from Medicare should not be the sole cause for
denying her application for a COR because billing issues are very
complex; the billing issues were based on ``incident-to billing by her
nurse practitioners when Respondent was out of the country'' for which
Respondent took responsibility; and denial of a COR ``on the most
minimal felony conviction that could be assessed would be a gross
injustice.''
Respondent maintains that her reinstatement by the Virginia Board
of Medicine weighs in her favor as to factor one of Sec. 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.
Respondent further argues that denying her application for a DEA
COR would prevent her patients from receiving pain management treatment
in Respondent's geographic area. Respondent questions whether the
Government's ``real goal is to deny patient care to the
underprivileged, poor, disabled, and elderly,'' among other charges.
Discussion and Conclusions
I. The Applicable Statutory and Regulatory Provisions
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\
---------------------------------------------------------------------------
\17\ 21 U.S.C. 822(a)(2).
\18\ 21 U.S.C. 829(a) (2006 & Supp. 2010).
\19\ Id. 843(a)(2).
\20\ The exemptions from registration identified in 21 CFR
1301.22(c) (agent or employee of hospital) and 1301.23 (military and
certain other personnel) are inapplicable to the facts of this case.
\21\ 21 CFR 1306.03(a) (2010).
\22\ Id. 1306.03(b).
\23\ Id. 1306.05(a).
---------------------------------------------------------------------------
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:
---------------------------------------------------------------------------
\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 Sec. 824(a) contains a reciprocal
reference incorporating the public interest factors from Sec.
823(f). See 21 U.S.C. 824(a)(4).
[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
[[Page 66982]]
useless act of granting a license on one day only to withdraw it on
the next.\25\
---------------------------------------------------------------------------
\25\ Kuen H. Chen, M.D., 58 FR 65,401, 65,402 (DEA 1993) (citing
Serling Drug Co. & Detroit Prescription Wholesaler, Inc., 40 FR
11918, 11,919 (DEA 1975)); accord Scott J. Loman, D.D.S., 50 FR
18,941 (DEA 1985); Roger Lee Palmer, D.M.D., 49 FR 950 (DEA 1984).
In addition, I conclude that the reference in Sec. 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 Sec. 824(a).\26\
---------------------------------------------------------------------------
\26\ See Chen, 58 FR at 65,402.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\27\ 21 CFR 1301.44(d) (2010).
\28\ Medicine Shoppe--Jonesborough, 73 FR 364, 380 (DEA 2008);
see also Thomas Johnston, 45 FR 72,311, 72,311 (DEA 1980).
---------------------------------------------------------------------------
II. Exclusion From Medicare
The CSA, 21 U.S.C. 824(a)(5), provides, insofar as pertinent to
this proceeding, that the Deputy Administrator may revoke or deny a
registration if an applicant has been excluded from participation in a
program pursuant to 42 U.S.C. 1320a-7(a).
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,'' Sec.
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,'' Sec. 1320a-7(a)(3).
I find that Respondent's Medicare fraud conviction and subsequent
exclusion from Medicare are supported by substantial evidence. The
evidence at hearing includes a plea agreement and judgment pertaining
to Respondent's conviction for violating 18 U.S.C. 1347. (Gov't Exs. 3
& 4.) Additionally, the evidence includes a letter from the Department
of Health and Human Services dated September 30, 2008, excluding
Respondent from all federal health care programs for the minimum
statutory period of five years. (Gov't Ex. 6.) Consequently, exclusion
from Medicare is an independent ground for denying or revoking a DEA
registration in this case. See Johnnie Melvin Turner, M.D., 67 FR
71,203, 71,204 (DEA 2002).
Respondent does not dispute the evidence of conviction or
exclusion, but argues, correctly, that denial of an application for
registration on this ground is a matter of discretion. See Dinorah Drug
Store, Inc., 61 FR 15,972-03, 15,973 (DEA 1996) (denial of registration
under Section 824(a)(5) discretionary so long as granting registration
not inconsistent with public interest).
Accordingly, on these facts, the Government has met its burden of
proving its Section 824(a)(5) claim, see 21 CFR 1301.44(d), placing the
burden on Respondent to show that despite her conviction, granting her
a COR would not be contrary to the public interest, see Medicine
Shoppe--Jonesborough, 73 FR 364, 380 (DEA 2008) (burden of proof shifts
to Respondent once Government puts on prima facie case); see also
Thomas Johnston, 45 FR 72,311, 72,311 (DEA 1980) (same).
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.
---------------------------------------------------------------------------
\29\ Resp't post-hearing br. at 9.
\30\ Respondent's testimony pertaining to the offense conduct
included the statement: ``If this is fraud, maybe we need more of
it.'' Respondent later stated her belief in the ``unjustness'' of
her conviction, claiming overbilling for only $66.00. (Tr. 382, 384-
86.)
---------------------------------------------------------------------------
III. The Public Interest Standard
Pursuant to 21 U.S.C. 823(f), the Deputy Administrator may deny an
application for a DEA registration if she determines that such
registration would be inconsistent with the public interest. In
determining the public interest, the Deputy Administrator is required
to consider the following factors:
(1) The recommendation of the appropriate state licensing board or
professional disciplinary authority.
(2) The applicant's experience in dispensing or conducting research
with respect to controlled substances.
(3) The applicant's conviction record under federal or state laws
relating to the manufacture, distribution or dispensing of controlled
substances.
(4) Compliance with applicable state, federal or local laws
relating to controlled substances.
(5) Such other conduct which may threaten the public health and
safety.
As a threshold matter, the factors specified in Section 823(f) are
to be considered in the disjunctive: The Deputy Administrator may
properly rely on any one or a combination of those factors, and give
each factor the weight she deems appropriate, in determining whether a
registration should be revoked or an application for registration
denied. See David H. Gillis, M.D., 58 FR 37,507, 37,508 (DEA 1993); see
also D & S Sales, 71 FR 37,607, 37,610 (DEA 2006); Joy's Ideas, 70 FR
33,195, 33,197 (DEA 2005); Henry J. Schwarz, Jr., M.D., 54 FR 16,422,
16,424 (DEA 1989).
IV. The Factors To Be Considered
Factor 1: The Recommendation of the Appropriate State Licensing Board
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
[[Page 66983]]
found 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.)
In mitigation, the Virginia Medical Board reinstated Respondent's
medical license on February 12, 2009. (Resp't Ex. 18.) While not
dispositive, this reinstatement does weigh in favor of a finding that
Respondent's registration would not be inconsistent with the public
interest, at least as of February 12, 2009. The weight accorded to the
reinstatement of Respondent's medical license, however, is tempered by
the fact that on the first day of practice following reinstatement
Respondent wrote prescriptions for controlled substances without a DEA
registration. (See, e.g., Gov't Ex. 18 at 1.)
Factor 3: Respondent's Conviction Record
As noted above, one of the factors in determining whether
Respondent's registration would be inconsistent with the public
interest is ``[t]he applicant's conviction record under federal or
state laws relating to the manufacture, distribution, or dispensing of
controlled substances.'' 21 U.S.C. 823(f)(3). Respondent argued at
hearing, and I find, that Respondent has not been convicted of any laws
relating to the manufacture, distribution or dispensing of controlled
substances. I therefore find that the third factor under Section
823(f), while not dispositive, does weigh in favor of a finding that
Respondent's registration would be consistent with the public interest.
Factors 2 and 4: Respondent's Experience in Dispensing Controlled
Substances; and Compliance With Applicable State, Federal or Local Laws
Relating to Controlled Substances
``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 Sec. Sec.
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.)
---------------------------------------------------------------------------
\31\ Pregabalin (Lyrica) is a Schedule V controlled substance.
21 CFR 1308.15(e)(1) (2010); Schedules of Controlled Substances:
Placement of Pregabalin Into Schedule V, 70 FR 43,633-01 (DEA 2005).
---------------------------------------------------------------------------
Respondent's conduct with regard to issuing controlled substance
prescriptions under the direction and authority of Dr. Kathleen Schultz
was also unlawful. As an initial matter, Respondent's explanation of
her arrangement with Dr. Shultz is not credible. Respondent maintains
in substance that she reached a verbal and later written agreement with
Dr. Schultz for Respondent to prescribe controlled substances,
including pain medications, at the direction of Dr. Schultz. Respondent
further testified that Dr. Schultz was present at Respondent's practice
on Thursdays to see Respondent's patients and issue prescriptions. That
testimony stands in sharp contrast to the objective evidence of record
reflecting that a significant majority of prescriptions issued at
Respondent's practice occurred on other days of the week. For example,
DI Tomaziefski testified that ``most of the prescriptions were called
in on days other than Thursdays.'' (Tr. 118; see Gov't Exs. 15 & 17.)
Additionally, patients [DS], [AZ] and [AY] all testified to seeing Dr.
Schultz rarely and that Respondent was effectively their primary care
physician.
Respondent's testimony with regard to identification of her own
signature as well as Dr. Schultz's signature on prescriptions issued
from Respondent's office was notably contrived. Respondent testified
that she recognized her own signature on a prescription for Lyrica with
two refills issued on March 20, 2009. (Tr. 491; see Gov't Ex. 9.)
Respondent further volunteered that the ``prescription is mine. It is
signed. It was not filled. I do not therefore consider a law has been
broken.'' (Tr. 491.) Respondent then testified that she did not
recognize her signature on a prescription for Lortab issued on April 6,
2009, that had been filled. (Tr. 491-92; see Gov't Ex. 10.) Respondent
offered that ``I cannot say this is my signature. I am not opposed to
the idea the government can do a lot of things . * * *'' (Tr. 492.)
Respondent testified she could not ``verify'' a prescription for Ambien
dated May 14, 2009, bearing a signature in Respondent's name. (Tr. 493;
see Gov't Ex. 11.) Respondent testified she could not recognize her
signature on a prescription for Lortab dated February 23, 2009. (Tr.
494; see Gov't Ex. 12.) Finally, Respondent testified with regard to a
prescription dated February 23, 2009, for Ambien, that the signature
was hers and that she recalled writing the prescription. (Tr. 495; see
Gov't Ex. 13.) This testimony as a whole was palpably incredible.
Respondent also testified that she could not recognize the
signature of Dr. Schultz with regard to sixteen prescriptions. (Tr.
519-20; see Gov't Ex. 22.) This testimony is inconsistent with
Respondent's prior testimony and assertion that she was working at the
direction of Dr. Schultz, presumably following Dr. Schultz's written
and oral directions. This testimony is also markedly at odds with the
fact that sixteen prescriptions, eleven of which bore ``a do not fill
before'' date in the name of Dr. Kathleen Schultz, were found in a
printer in Respondent's office during the execution of a DEA search
warrant on June 14, 2010.
The record as a whole supports by substantial evidence a finding
that Respondent knowingly wrote prescriptions without authority on and
after February 13, 2009, in her own name. Additionally, the record
further supports a finding by substantial evidence that Respondent
wrote prescriptions unlawfully using Dr. Schultz's DEA registration.
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
[[Page 66984]]
stated 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 transparency of the arrangement was quite apparent even from
the testimony of Respondent. Respondent testified at one point that she
was the pain management expert, not Dr. Schultz. (Tr. 523.) The
testimony of Respondent's patients also undermined Respondent's story.
All of Respondent's patients who testified indicated that they saw
Respondent for treatment and only rarely did Dr. Schultz perform
physical examinations or see patients. For example, patient [AZ]
testified to last having a physical examination from Dr. Schultz nine
months to a year ago, yet visited Respondent's practice approximately
once every three months. (Tr. 214.) Patient [ET] testified that [ET]
had been a patient of Respondent until Respondent lost her medical
license in 2008. [ET] began treatment with Respondent again on February
23, 2009. (Tr. 340.) [ET] further testified that [ET] does not recall
having a physical examination by Dr. Schultz. (Tr. 350.) Patient [AY]
testified that Dr. Schultz was only present in Respondent's practice on
Thursdays. (Tr. 280.) [AY] further testified that Dr. Schultz has never
performed a physical examination of [AY] while a patient and that [AY]
has only seen Dr. Schultz as a patient one time. (Tr. 278-79.)
The evidence also includes testimony from DI Tomaziefski regarding
an undercover visit by a confidential source (``CS'') to Respondent's
practice on May 28, 2009. DI Tomaziefski testified in substance that
the CS was wearing a ``wire'' and DI Tomaziefski listened to the office
visit and learned that the CS was treated by Respondent and not seen by
Dr. Schultz. Respondent gave the CS a prescription for hydrocodone,
which Respondent's office assistant called in to a local pharmacy using
Dr. Schultz's DEA number. (Tr. 99-100; see Gov't Ex. 14.)
There is additional evidence of record reflecting inconsistencies
with regard to Respondent's claim that she was working at the direction
of Dr. Schultz, but further elaboration is unnecessary. The 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. To
the contrary, the evidence as a whole reflects a pattern of conduct by
Respondent aimed at unlawfully circumventing her lack of a DEA COR to
prescribe controlled substances in violation of 21 U.S.C. 822(a)(2) and
843(a)(2).
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\
---------------------------------------------------------------------------
\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. Sec. 54.1-3408.01(A) (2010).
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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).
I find in this case that the issue of Respondent's pre-signing of
prescription pads between 2003 and 2006 was sufficiently noticed to
Respondent in advance of hearing, because the matter was provided to
Respondent as an exhibit prior to hearing. Respondent's failure to
object to the admission of the exhibit further supports its
consideration on the issue of sanction. I find that Respondent's
history of pre-signing blank prescription sheets from 2003 to February
2006 to be supported by substantial evidence and contrary to DEA
regulation and Virginia law.
The action of the Virginia Medical Board appears to consider issues
directly related to this proceeding and therefore should be afforded
significant weight. In particular, the Board's consideration of
Respondent's lack of responsibility for her actions and belief in a
government conspiracy against her practice of pain management was very
consistent with the testimony of Respondent at the proceedings in the
above-captioned case. It is also noteworthy that the Board did not find
Respondent's testimony with regard to material issues to be credible.
Respondent's clear disregard of applicable law and regulations
prohibiting such conduct over an extended period of time weighs heavily
against Respondent's application for registration.
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
[[Page 66985]]
did 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.
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\33\ 21 CFR 1306.04(a) (2010).
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The evidence of Respondent's experience in dispensing controlled
substances and compliance with applicable law and regulations weigh
heavily in favor of a finding that Respondent's registration would be
inconsistent with the public interest.
Factor 5: Such Other Conduct Which May Threaten the Public Health and
Safety
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).
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\34\ Although Respondent is not presently a registrant, she was
a registrant in the past. (See Gov't Ex. 8; Tr. 73-76.) In any
event, the extent of Respondent's acceptance of responsibility is
unquestionably relevant to the question of whether her pending
application should be granted. See, e.g., Morall v. DEA, 412 F.3d
165, 182-83 (DC Cir. 2005) (discussing several DEA decisions to
continue registrations where physician cooperated with DEA
investigators).
\35\ See also Hoxie v. DEA, 419 F.3d 477, 484 (6th Cir. 2005)
(Decision to revoke registration ``consistent with the DEA's view of
the importance of physician candor and cooperation.'') .
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Respondent's testimony at hearing repeatedly and clearly
demonstrated that she does not accept responsibility for her actions.
For example, Respondent testified that she
do[es] not know why the government targets me. For some reason or
other, the government has it in for Linda Cheek, M.D. It might be
why. I am a renegade. I admit it. I always have been. If it weren't
for people like me, changes would never be made, and I'm proud of
that, and I'll stand by it.
(Tr. 389.) Respondent's testimony about a ``government conspiracy''
against her was also noted by the Virginia Board of Medicine in its
Order dated October 29, 2008. ``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.'' (Gov't
Ex. 7 at 4.)
Respondent's testimony at hearing regarding her ``mistaken''
issuance of prescriptions because of ``habit,'' along with her
testimony regarding the arrangement with Dr. Schultz to issue
prescriptions at the direction of Dr. Schultz, is not credible; it is
moreover contrary to other objective evidence of record. Equally
incredible is Respondent's ability to recognize her signature in one
instance, but not in another, for no apparent reason. Further examples
permeate the record. I find that Respondent's lack of credibility
during numerous material portions of her testimony weighs heavily in
favor of denying Respondent's application.
V. Community Impact Evidence
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).
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\36\ I allowed Respondent to call two of four proposed witnesses
on this specific issue, because additional testimony would be
unnecessarily duplicative. See 21 CFR 1316.59(a) (2010).
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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).
In light of this precedent, I find that community impact evidence
as a threshold matter is not entirely irrelevant. That said, the
evidence adduced at hearing does not support a finding that denying
Respondent's application for registration would have any appreciable
adverse community impact. The testimony offered by Respondent and three
patient witnesses claimed in substance that Respondent was the only
pain management doctor reasonably available in southwestern Virginia.
Respondent also introduced an Internet search results query to support
her assertion. (Resp't Ex. 43.)
This testimony and evidence was rebutted by testimony from SA
Slease, Department of Health and Human Services, who credibly testified
that he was very familiar with the southwestern Virginia area to
include Dublin, Virginia, and based on an Internet and government Web
site search for pain management providers, located seven pain
management specialists in the area.
While I have admitted and considered testimony with regard to
community impact for the reasons set forth above, I find in this
instance that the denial of Respondent's application for registration
would have little if any adverse community impact with regard to the
availability of pain management physicians.
Conclusion and Recommendation
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.
[[Page 66986]]
824(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 Sec.
823(f).
Once DEA has made its prima facie case for revocation or denial,
the burden shifts to the respondent to show that, given the totality of
the facts and circumstances in the record, revoking or denying the
registration would not be appropriate. See Morall v. DEA, 412 F.3d 165,
174 (DC Cir. 2005); Humphreys v. DEA, 96 F.3d 658,661 (3d Cir. 1996);
Shatz v. United States Dep't of Justice, 873 F.2d 1089, 1091 (8th Cir.
1989); Thomas E. Johnston, 45 FR 72,311 (DEA 1980).
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).
I recommend denial of Respondent's application. I find the evidence
as a whole demonstrates that Respondent has not accepted
responsibility. To the contrary, Respondent maintains without
credibility that she is being unfairly persecuted because of her pain
management practice. Respondent's past performance, including a felony
conviction for health care fraud, past and recent history of non-
compliance with applicable laws and regulations, and overall lack of
candor while testifying at hearing is fully consistent with a denial of
Respondent's application for a DEA COR.
Dated: December 30, 2010.
Timothy D. Wing,
Administrative Law Judge
[FR Doc. 2011-28002 Filed 10-27-11; 8:45 am]
BILLING CODE 4410-09-P