Jeffrey Stein, M.D.; Decision and Order

Uttam Dhillon, DEA Acting Administrator, issued a final order today in the case of the revocation of a New York doctor’s DEA registration. But its implications go well beyond this doctor’s circumstances.

The Facts

Here are the basics. Dr. Jeffrey Stein was convicted of tax-related crimes in the Southern District of New York in 2015. Specifically, Dr. Stein had provided false receipts and other fabricated documents to his accountant to reduce the amount of taxes he would have to pay and, in turn, to mislead the IRS Auditor into believing that the claimed expenses were legitimate. Dr. Stein pled guilty to these charges. Of particular relevance to today’s order, Dr. Stein had used, among the fabricated materials, “the names of four disabled military veterans (including two former patients whose identities he obtained as a result of his work for the V.A, [and] . . . created bogus invoices in the names of those veterans.”


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As I have previously written, there is a long list of regulatory changes coming from DEA in the next few years.  Rather than publish one or more of the long overdue regulations listed on DEA’s Regulatory Agenda, on April 30, 2019, the agency will publish a Final Rule creating a “discretionary review” process allowing the Administrator to review an Administrative Law Judge’s (“ALJ’s”) denial of a request for an interlocutory appeal.  Note that this is a Final Rule, not a Notice of Proposed Rulemaking.  The agency was able to bypass the traditional notice and comment rulemaking process by categorizing this rule as a Rule of Agency, pursuant to the Administrative Procedure Act.  As such, the rule is effective immediately.

Requests for interlocutory appeals can take many forms in a DEA administrative proceeding.  Often, they are a result of a procedural or evidentiary ruling by an ALJ during the prehearing process.  DEA regulations currently give ALJs broad authority to rule on a request to seek an interlocutory appeal.  The ALJ’s decision to deny a request for an interlocutory appeal is not reviewable.  Until now.


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While a great deal of attention is given to DEA Chief Administrative Law Judge Mulrooney’s (“CALJ Mulrooney’s”) opinion regarding the impact of the Ensuring Patient Access and Effective Drug Enforcement Act on DEA enforcement efforts, very little attention has been afforded a shocking and unprecedented attack by a sitting DEA Administrative Law Judge on DEA’s formal administrative hearing process found within the same article.

Hidden in plain sight at the end of CALJ Mulrooney’s and Ms. Katherine Legel’s soon-to-be-published law review article is a thirty page attack on the procedures that govern DEA administrative hearings, substantive decisions in final agency decisions, and the individuals assigned to draft final agency decisions on behalf of the agency.
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On June 30, 2017, the Court of Appeals for the D.C. Circuit issued an order in Masters Pharmaceutical, Inc. v. Drug Enforcement Administration (No. 15-1335). In sum, the Court denied Masters Pharmaceutical, Inc.’s (“Masters”) Petition for Review seeking to overturn the Drug Enforcement Administration’s (“DEA”) revocation of Masters’ DEA registration. This decision has wide-ranging implications for DEA-registered wholesalers, who are required to detect and report suspicious orders of controlled substances.
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An Oklahoma doctor wrote 19 Schedule II controlled substance prescriptions for a patient with low back pain over eight months without thoroughly documenting the patient’s history, confronting the patient over aberrant drug tests, or talking to other doctors who were prescribing the patient controlled substances. The Chief Administrative Law Judge felt the doctor should be granted a new registration, but placed on probation for one year. Acting Administrator Chuck Rosenberg disagreed. He reviewed the case and concluded that DEA proved that the doctor knew the patient was abusing or diverting the drugs and prescribed anyway.  Dr. Wesley Pope’s application for a new DEA registration was denied as inconsistent with the public interest.
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On November 10, 2016, the DEA issued its final decision and order in the case against Jones Total Health Care Pharmacy, L.L.C. (“Jones Pharmacy”) and SND Health Care L.L.C. (“SND”). The
Administrator ordered that the DEA deny Jones Pharmacy’s registration renewal application and also deny SND’s pending registration application. These orders were consistent with the

Pills production Line

On May 11, 2016, the Drug Enforcement Administration filed its brief in Masters Pharmaceutical, Inc. v. Drug Enforcement Administration (Docket No: 15-1335), in the United States Court of Appeals for the District of Columbia. The vast majority of the Government’s brief addresses whether “substantial evidence” (the applicable standard of review) supports Acting Administrator Rosenberg’s decision to revoke Masters’ DEA registration. Curiously, the Government does not dedicate much effort to one of the seminal issues in the case: whether DEA imposed new obligations on registrants in violation of the Administrative Procedure Act.

Rather than attempt to defend the indefensible, the Government invoked a creative reading of the Masters Final Order that is starkly at odds with Administrator Rosenberg’s decision. In its brief, DEA states that Administrator Rosenberg’s decision “did not impose any new duties on distributors.” In defending this position, the Government’s brief goes on to say the following:

Most of the “new duties” that Masters and amici cite in their briefs were obligations that Masters had voluntarily imposed on itself through its own compliance program. [citation omitted] The Administrator cited Masters’ failure to perform many of these duties – such as obtaining utilization reports or asking customers for explanations of unusually large orders – because Masters sought to rely on its compliance program to justify its reporting failures. However, in highlighting Masters’ disregard for its own program’s requirements, the Administrator did not impose those same requirements on all registered distributors.


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On February 18, 2015, the DEA issued its final decision and order in the case against prescriber Hatem M. Ataya (“Ataya”). The Administrator ordered Ataya’s registration to be revoked and his pending applications for additional registrations to be denied on the grounds that Ataya has, since the proceedings began, lost the authority to dispense controlled substances under state law. Still, the Administrator’s decision also details the bases on which he agreed with the Administrative Law Judge’s (ALJ’s) findings that Ataya issued controlled substance prescriptions without a legitimate medical purpose (in violation of 21 CFR § 1306.04(a)) and violated federal and state law when he authorized more than five refills of schedule IV controlled substances, failed to include patients’ addresses on numerous prescriptions, and post-dated a prescription.
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On November 13, 2015, the DEA issued its final decision and order in the case against Perry County Food & Drug (“PCFD”). The Administrator denied PCFD’s pending application to renew its registration based on stipulations by PCFD that its pharmacist-in-charge, who happened to be the son of PCFD’s owner, created and filled fraudulent prescriptions and committed numerous other acts that each amounted to “an outright drug deal.” The Administrator also found that the owner was informed of his son’s diversion activities on multiple occasions by long-standing employees and other family members. With facts like these, the Administrator’s order denying PCFD’s application is not surprising. But the decision is noteworthy for its clarification of DEA precedent concerning “community impact.”

“Community impact” is a factor that respondents have raised to turn the Agency’s “public interest” determination on its head: instead of focusing on whether the respondent’s registration is inconsistent with the public interest, this factor looks at whether the revocation of the respondent’s registration would be inconsistent with the public interest. But when PCFD made its community impact argument based on Pettigrew Rexall Drugs, the CALJ summarily dismissed the argument as having been “rendered irrelevant by Agency precedent,” citing to several cases involving a physician or dentist.
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In the Matter of the Medicine Shoppe (October 2, 2014)

DEA recently revoked the registration of the Medicine Shoppe, a San Antonio, Texas,  pharmacy, based on a finding that the pharmacy violated the Controlled Substances Act in all of the following ways:

  • dispensed controlled substances without a prescription;
  • dispensed controlled substances when the prescription was