Drug diversion administrative revocation and application hearings for medical and pharmacy practitioners: a primer for navigating murky, drug-infested waters.

• Author: Mulrooney, John J.
• Position: IV. Application Cases through Conclusion, with footnotes, p. 362-396

IV. Application Cases

Under 21 U.S.C. [section] 823(f), the Administrator may deny an applicant's request for a DEA registration if the granting of the registration "would be inconsistent with the public interest." (218) Just as with revocation cases, the government bears the burden of proof to show that it is not in the public interest to grant an application. (219) In order to determine the public interest, the CSA provides that the following five factors must be considered:

(1) The recommendation of the appropriate [sjtate 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 [f]ederal or [s]tate laws relating to the manufacture, distribution, or dispensing of controlled substances.

(4) Compliance with applicable [s]tate, [f]ederal, or local laws relating to controlled substances.

(5) Such other conduct which may threaten the public health and safety. (220)

In practice, the interpretation and application of these five factors in application cases mirrors the application of those factors in revocation cases, discussed supra Part III. (221)

Agency precedent has extended the CSA revocation grounds to also constitute bases for the denial of applications under the theory that the law would not require, from the beginning, the granting of a registration that should be revoked. (222) These other separate bases are (1) material falsification in a registration application; (2) conviction relating to a violation of state or federal controlled substance laws; (3) state action against state-issued controlled substance license (or recommendation); and (4) exclusion from participation in Medicare. (223) The Agency has denied applications for registration based on these revocation factors.

Once an order to show cause has been issued regarding an application, it may only be withdrawn with the permission of the Administrator. (224) Permission will only be granted upon a showing of good cause or if the withdrawal is in the public interest. (225) While there is no requirement to do so, it is not uncommon for the ALJ to grant a continuance or even a stay of proceedings while the Agency is deliberating over a withdrawal request submitted by an applicant. Although the authority to approve an application withdrawal at DEA has historically been vested in the discretion of the Deputy Assistant Administrator for Diversion Control (DAA/OD), a recent Agency case reviewed and reversed a withdrawal denial issued by the DAA/OD, notwithstanding the regulatory absence of a basis for appeal on this ground. (226) In its final order, the Agency created a new test by which it would evaluate the discretion exercised by the DAA/OD in accepting or rejecting an applicant's request to withdraw an application. In this new, Agency-created right of review, DEA will consider the following factors: (1) the egregiousness of the misconduct established by the record, (227) (2) the extent of government resources that have been expended in the litigation and review of the case, and (3) any potential prejudice to the government's case regarding a registration application that could be filed subsequently on related facts. (228)

V. IMMEDIATE SUSPENSION CASES

The CSA authorizes the DEA Administrator, upon a finding of "imminent danger to the public health or safety," to immediately suspend a registration "simultaneously with the institution of [administrative] proceedings." (229) The regulations provide that where the Administrator issues an immediate suspension order, that order will be issued contemporaneously with the service of an order to show cause on a registrant and "shall contain a statement of his findings regarding the danger to public health or safety." (230) Unlike an order to show cause proceeding, an immediate suspension order issued by the Administrator is final when issued, is not reviewed by a DEA ALJ, and "continue[s] in effect until the conclusion of [formal administrative] proceedings, including judicial review thereof, unless sooner withdrawn by the [Administrator] or dissolved by a court of competent jurisdiction." (231) The immediate suspension order may be issued and executed without a pre suspension hearing, (232) so long as post-deprivation proceedings are conducted in a prompt fashion. (233)

An immediate suspension order will not be sustained in the absence of a sustained finding of an imminent danger to public health and safety (234) "supported by and in accordance with ... reliable, probative, and substantial evidence." (235) A suspended registrant may seek relief through a petition for injunctive relief through the cognizant United States District Court (236) or by petition for a review of the Agency's (final) immediate suspension order "in [either] the United States Court of Appeals for the District of Columbia or for the circuit in which [the registrant's] principal place of business is located." (237)

Although the ALJ designated to preside at the administrative hearing is without authority over the immediate suspension order, it is worthy of note that any seizures of controlled substances that take place based on the immediate suspension order are forfeited upon the issuance of an Agency final revocation order. (238) Indeed, DEA precedent has held this relationship between the forfeiture of seized controlled substances and a final order of revocation may present a collateral consequence of sufficient moment to preclude a finding of mootness where a registration has expired without timely application to renew. (239)

VI. THE PARTIES' BURDENS AND THE EXERCISE OF DISCRETION

In all cases involving practitioner and pharmacy sanctions, the government enters the fray as the burdened party. Where the case involves a revocation/suspension, the government must establish

that the requirements for sanction are satisfied, (240) and where the issue is an application, the government bears the burden to prove that an application should be denied. (241) The respondent may choose to contest the government's evidence, but the burden rests on the government in the first instance to demonstrate that the requirements for sanction that have been alleged have been satisfied. (242)

Under a long line of established Agency precedent, once the government has established a prima facie case for sanction, the burden shifts to the registrant/applicant to demonstrate that he/she/ it should be (or continue to be) "entrusted with a DEA registration." (243) To successfully rebut the government's prima facie case, the respondent must (1) accept responsibility for the proven misconduct, and (2) demonstrate corrective measures. (244) Agency precedent has made it clear that, when the government meets its burden, the acceptance of responsibility and a demonstration of remedial action aimed at the avoidance of reoccurrence are hard and fast prerequisites to escape sanction. (245) Further, these mandatory features must be demonstrated together for either to be relevant, and proffered evidence of one without the other has been held to be irrelevant. (246) The reliance placed by the Agency on the importance of acceptance of responsibility and remedial action(s) has been sustained on review. (247)

The imposition of sanctions by the Agency is an act of discretion under the CSA. (248) Thus, while the government may meet its prima facie case against a respondent, the Agency is still empowered and required to determine whether/how much, sanction is appropriate. Accordingly, the Agency may choose to outright deny an application (249) or revoke a registration, (250) or it may allow a registrant/applicant to continue/commence regulated activity under conditions. (251) Where the Agency imposes conditions on a registration, those conditions "must be related to what the government has alleged and proved in any case." (252) The Agency has held that in its assessment of whether/how much sanction is appropriate, it will always consider (1) "the egregiousness and extent of a registrant's misconduct," and (2) the Agency's interest in both specific deterrence (on the registrant/applicant) as well as general deterrence (among members of the regulated community). (253)

VII. PREHEARING PROCEDURES

The authority of the Administrative Law Judge at DEA administrative hearings is authorized and circumscribed by the APA. (254) The authority and enumerated powers vested by the APA in the ALJ flow "without the necessity of express agency delegation [and] an agency is without power to withhold such powers from [the ALJ]." (255) The APA affords the presiding officer at an administrative hearing significant control over the course of the hearing and specified prehearing procedures, (256) as well as authority to "take other action authorized by agency rule consistent with this subchapter." (257) The DEA regulations supply authority to the ALJ to, inter alia, direct and schedule litigation and conferences, direct the filing of prehearing statements, direct the exchange of proposed evidence, sign and issue subpoenas, handle witnesses, evidence and procedural matters that arise, and "[t]ake any action permitted ... as authorized by [the regulations] or by the provisions of the [APA]." (258)

1. Prehearing Statements

   As soon as practicable after an ALJ is designated, he/she will issue an order directing the parties to file prehearing statements (259) and scheduling a telephonic or in-person prehearing conference. The respective theories of the parties, their proposed evidence, potential motions, areas of possible stipulation(s), respective positions as to hearing venue, and other issues specified by the ALJ in the order for prehearing statements will be addressed in the parties' prehearing statements. (260)

2. Prehearing Conference

   After receipt of the parties' prehearing statements, the ALJ will conduct a prehearing conference. (261) The...