[Federal Register Volume 61, Number 200 (Tuesday, October 15, 1996)]
[Notices]
[Pages 53762-53766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26321]
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DEPARTMENT OF JUSTICE
[Docket No. 954-15]
Michael J. Septer, D.O., Grant of Request To Modify Continuation
of Registration With Restrictions
On November 4, 1993, the then-Director, Office of Diversion
Control, Drug Enforcement Administration (DEA), issued an Order to Show
Cause to Michael James Septer, D.O. (Respondent) at two locations in
Tucson, Arizona and one location in Sierra Vista, Arizona, notifying
him of an opportunity to show cause as to why DEA should not revoke his
DEA Certificates of Registration (BS0321454, BS0321430 and BS0321442)
under 21 U.S.C. 824(a)(4), and deny any request to modify such
registrations by changing the registered address, and deny any pending
applications for renewal of such registrations as a practitioner under
21 U.S.C. 823(f), as being inconsistent with the public interest.
By letter dated December 2, 1993, the Respondent filed a timely
request for a hearing, and following prehearing procedures, a hearing
was held in Grand Rapids, Michigan on February 28, 1995, before
Administrative Law Judge Paul A. Tenney. At the hearing, the parties
agreed that two of the DEA registrations that were the subject of the
proceedings (BS0321454 and BS0321442) had terminated as a matter of law
pursuant to 21 CFR 1301.62. Consequently, the scope of the proceedings
was narrowed to determine whether the Respondent's DEA Certificate of
Registration (BS0321430) should be modified or transferred from Arizona
to Michigan, or whether such action should be denied for reasons that
the Respondent's continued registration with DEA as a practitioner is
inconsistent with the public interest as determined pursuant to 21
U.S.C. 823(f) and 825(a)(4). Both parties called witnesses to testify
and introduced documentary evidence. After the hearing, both sides
submitted proposed findings of fact, conclusions of law and argument.
On May 30, 1995, Judge Tenney issued his Findings of Fact, Conclusions
of Law, and Recommended Ruling, recommending that the Deputy
Administrator grant the Respondent's request to modify his DEA
Certificate of Registration (BS0321430) so that it may be transferred
from Arizona to Michigan, and to impose certain conditions on the
registration. Judge Tenney's recommended conditions for the
registration contemplated that the Respondent would continue to be
employed at Hackley Occupational Health Clinic (HOHC), his place of
employment at the time of the hearing, or at another facility approved
by DEA that would provide a structured environment similar to HOHC.
Neither party filed exceptions to the Administrative Law Judge's
decision, and on June 29, 1995, Judge Tenney transmitted the record of
these proceedings to the Deputy Administrator.
By letter dated October 23, 1995, an attorney representing HOHC
notified the Deputy Administrator that the HOHC Vice President, who
testified at the hearing on behalf of the Respondent and who was in
charge of monitoring the Respondent at HOHC, was no longer employed by
HOHC. In addition, the letter indicated that Respondent and HOHC have
voluntarily terminated their employment agreement. On November 1, 1995,
the Deputy Administrator returned the record to the Administrative Law
Judge, along with a copy of the October 23, 1995 letter from the HOHC
attorney, and requested that Judge Tenney reopen the record to add this
letter and to take whatever other actions he deemed necessary to
consider the information contained in the letter. By order dated
November 1, 1995, Judge Tenney included the letter in the record and
allowed the parties to notify him of their recommendations on how to
proceed in light of the HOHC's letter. Respondent was the only party to
file a response and submitted a letter requesting that he be allowed to
continue his DEA registration until the necessary monitors are
available at his new employment. On December 6, 1995, the
Administrative Law Judge issued an Addendum to his Recommended Ruling
dated May 30, 1995, recommending that Respondent be allowed to continue
his DEA registration provided that the nearest DEA office approve the
monitoring conditions at any new place of employment. No exceptions
were filed to the Addendum and the record was again transmitted to the
Deputy Administrator on May 16, 1996.
The Acting Deputy Administrator has considered the record in its
entirety, and pursuant to 21 CFR 1316.67, hereby issues his final order
based upon findings of fact and conclusions of law as hereinafter set
forth. The Acting Deputy Administrator adopts, with noted exceptions,
the opinion and recommended ruling of the Administrative Law Judge, and
his adoption is in no manner diminished by any recitation of facts,
issues and conclusions herein, or of any failure to mention a matter of
fact or law.
The Acting Deputy Administrator finds that on November 25, 1980, a
ten-count indictment was filed against the Respondent in the United
States District Court for the District of Arizona. Six of the ten
counts alleged mail fraud in violation of 18 U.S.C. 1341 with respect
to certain Medicare claims filed by the Respondent. The remaining
counts alleged insurance fraud in violation of 42 U.S.C. Sec. 1395nn,
in that Respondent attempted to secure payment for ``medical services
never performed and medical supplies never placed, rented or purchased
. . . .'' On May 4, 1981, following a jury trial, the Respondent was
convicted of the six mail fraud counts. The court suspended imposition
of sentence for a period of three years, placed the Respondent on
probation during that time, and ordered that he spend one day per week
for one year furnishing community service without compensation. There
is little evidence in the record as to the underlying facts that led to
Respondent's convictions. The Respondent however, testified at the
hearing that the convictions were the result of his making up permanent
placement dates for transcutaneous electrical nerve stimulators (TENS)
to assure prospectively that he was reimbursed when the TENS were
actually placed on his patients.
As a result of his mail fraud convictions, on October 21, 1981, the
Board of Osteopathic Examiners of the State of Arizona placed the
Respondent's license to practice osteopathic medicine on probation for
three years to run concurrently with the criminal probation. Also as a
result of
[[Page 53763]]
his convictions, on December 9, 1981, the Respondent was suspended from
participation in the Medicare program by the United States Department
of Health and Human Services (HHS). Recognizing that the offenses were
not of long duration and there were no adverse impacts on program
patients, Respondent's Medicare privileges were restored.
On July 1, 1981, the United States of America filed a civil
complaint against the Respondent in the United States District Court
for the District of Arizona seeking a judgment in excess of $44,000
based upon Respondent's filing of fourteen false, fictitious, and
fraudulent Medicare claims. On January 11, 1982, the court approved a
consent judgment whereby the Respondent agreed to pay a civil fine of
$8,265.60.
In 1987, based upon reports that Respondent was excessively
purchasing anorectic controlled substances, DEA and the Board of
Osteopathic Examiners of the State of Arizona (BOE) initiated an
investigation of Respondent. On September 28, 1988, pursuant to an
administrative inspection warrant, DEA and BOE investigators conducted
an accountability audit at Respondent's office located at 344 West Ajo,
Tucson, Arizona, covering the period February 1, 1987 through September
28, 1988. The audit revealed a shortage of approximately 190,000 to
203,000 dosage units of Schedule III and IV controlled substances,
recordkeeping deficiencies and security violations. As a result of the
audit, on April 11, 1989, a civil complaint was filed against
Respondent, doing business as Tucson Family Practice Clinic, in the
United States District Court for the District of Arizona, seeking civil
penalties in excess of $375,000 for violations of the Controlled
Substances Act. A consent judgment was approved on December 18, 1989,
in which the Respondent admitted various allegations in the complaint
and the United States agreed to dismiss the other counts with
prejudice. Subsequently, on March 13, 1990, the court ordered that
Respondent pay a civil penalty of $40,000.
After completion of the civil proceedings, on May 4, 1990, DEA
issued an Order to Show Cause proposing to revoke Respondent's DEA
Certificate of Registration. A hearing was held before an
Administrative Law Judge in September 1991. No decision was rendered by
the Administrative Law Judge, since the parties entered into a
Memorandum of Agreement in early 1992. The agreement permitted the
Respondent to retain his DEA registration subject to certain terms and
conditions for a period of two years. For instance, the Respondent was
prohibited from prescribing, administering, dispensing, or possessing
any Schedule II controlled substances for purposes of weight reduction
or control of obesity. The Respondent further agreed that when
prescribing, administering and/or dispensing Schedule III, IV and V
controlled substances for purposes of weight reduction or control of
obesity, he would be limited to periods of time as recommended in the
current Physicians' Desk Reference (PDR), and that the phrase ``short
term'' as used in the PDR will mean up to eight weeks. In addition,
Respondent agreed to conduct accountability audits on a daily basis,
and to notify the DEA investigator of any change in his business
addresses.
Following execution of the Memorandum of Agreement, in September
1992, Respondent moved to Mississippi and commuted to his practice in
Arizona. On October 8, 1992, Respondent sought medical licensure in the
State of Mississippi. On the licensure questionnaire, Respondent denied
ever having his DEA Certificate of Registration revoked or restricted
even though his DEA registration was restricted approximately eight
months earlier when the Memorandum of Agreement was executed. As a
result of his responses, the Mississippi State Board of Medical
Licensure (Mississippi Board) issued a letter to Respondent dated
December 18, 1992, advising him that if he wished to pursue his
application for licensure in Mississippi an ``Order to Show Cause''
would be issued. Respondent testified at the hearing that he attempted
to honestly complete the Mississippi licensure questionnaire, however,
in light of the Mississippi Board's letter, he decided to move to
Michigan rather than pursue medical licensure in Mississippi.
On October 20, 1992, Respondent contacted DEA and expressed concern
that one of his employees at his Arizona office may have diverted
controlled substances. Consequently, DEA investigators went to
Respondent's Arizona clinic on October 26, 1992, to conduct an
accountability audit. The employee present during the audit indicated
that she had been instructed by Respondent to cooperate fully in the
investigation. The audit covered an approximate 10 month period in 1992
and revealed a shortage of 56 dosage units. At the hearing in this
matter, the DEA investigator described the shortage as ``very good for
that length of time with the quantity that he was dispensing; very
good.'' The investigator also indicated that he was ``very satisfied'',
and felt no further action was necessary.
By November of 1992, the Respondent decided not to return to
Arizona, since a bench warrant had been issued for spousal maintenance
and child support arrearages. Respondent testified at the hearing
before Judge Tenney that all attempts to obtain physician coverage for
his Arizona practice were unsuccessful. He then contacted the Arizona
Nursing Board (Nursing Board) and based upon information from the
Nursing Board, Respondent believed that it was permissible for a nurse
practitioner to dispense controlled substances without a physician
present. According to the Respondent the Nursing Board stated that: (1)
a nurse practitioner, duly licensed in the State of Arizona, is
permitted to prescribe and dispense controlled substances; (2) the
presence of a physician on site would not be required; and (3) nurse
practitioners are able to conduct their own practices without the
supervision of a physician. Respondent then hired a nurse practitioner,
who was left in charge of his Arizona office, and controlled substances
were dispensed without the direct supervision of the Respondent.
On December 7, 1992, investigators of DEA and BOE went to
Respondent's Arizona office to investigate whether controlled
substances were being dispensed without a physician on the premises. An
individual, identified as Respondent's advisor, was present and the
investigators provided him with a copy of Arizona Revised Statutes
Sec. 32-1871(D) which states that a physician ``shall provide direct
supervision of a nurse or attendant involved in the dispensing
process.'' The section further provides that the term `` `direct
supervision' means that a physician is present and makes the
determination as to the legitimacy or the advisability of the drugs . .
. to be dispensed.'' The investigators advised the individual that
Respondent's office should be shut down since controlled substances
were being dispensed without a physician present. The individual stated
that he and Respondent had done extensive research and did not believe
that there was any violation of the law.
Based upon conversations with Respondent's advisor, members of
Respondent's staff, and a review of the records maintained at
Respondent's office, the investigators discovered that controlled
substances had in fact been dispensed from Respondent's Arizona office
without a physician present; that anorectics had been dispensed for
periods longer than eight weeks in violation of the Memorandum of
[[Page 53764]]
Agreement; and that audits were not consistently taken on a daily basis
also in violation of the Memorandum of Agreement. In addition, the
investigators discovered that in Respondent's absence, employees were
dispensing controlled substances to each other and to family members.
During the course of the investigation, it was also revealed that
between March 1, 1993, and August 26, 1993, while in Michigan, the
Respondent wrote or authorized 96 prescriptions for controlled
substances using DEA Certificate of Registration BS0321430 issued to
him in Arizona. Respondent failed to notify DEA of his change of
address to Michigan in violation of the Memorandum of Agreement and
failed to obtain a modification of his registration to change the
address to Michigan before writing or authorizing these prescriptions.
Respondent testified at the hearing in this matter that he thought
``that all of his credentials were in place for practicing medicine and
prescribing'' in Michigan, and that he ``would never have written any
of those prescriptions at Sparta Health Center [in Michigan] had I
known my control [sic] substance number was not yet valid.''
Subsequently, in August 1993, the DEA investigators contacted the
Respondent and advised him of the violations of the Memorandum of
Agreement. During the conversation, Respondent denied responsibility
for what had occurred at the Arizona clinic when he was not present. At
the hearing before Judge Tenney however, Respondent partly blamed
incorrect advice of counsel for his actions, but also admitted failing
to focus on his responsibilities, and that he ``should have kept a
closer look over . . . the control logs.'' Almost immediately after
being contacted by DEA, the Respondent requested modification of his
DEA registrations to Michigan.
During the hearing, the DEA investigator acknowledged that he and
the Respondent have always had a good working relationship, and have
exhibited a spirit of cooperation and forthrightness in their dealings
with one another. He further indicated that they have ``always tried to
accommodate each other.''
On the day of the hearing, the Arizona Board of Osteopathic
Examiners served a complaint upon the Respondent. The complaint was
based, in part, on the Respondent's failure to directly supervise his
employees in late 1992. However, there is nothing in the record to
indicate the disposition of this complaint.
At the time of the hearing before Judge Tenney, Respondent was
working at HOHC. The Vice President of Operations for HOHC (Vice
President) testified on behalf of Respondent at the hearing, and
candidly stated that ``[the Respondent] has made a lot of glaring
mistakes * * *. I would even go so far as to say they've been real
dumb.'' Nonetheless, the Vice President testified that he was impressed
with Respondent's abilities; that Respondent ``does occupational
medicine very well''; that Respondent is a ``quality physician''; that
Respondent ``relates to people [and h]e knows what he's doing''; and
that his diagnoses are ``fine''.
The Vice President testified that Respondent's lack of a DEA
registration is ``somewhat limiting'', and if Respondent's request for
modification were granted, HOHC would be willing to comply with any
type of auditing or monitoring systems that would enable Respondent to
handle controlled substances at HOHC. Respondent, when testifying about
his past and current employment, stated that he was not interested in
dispensing controlled substances anymore and he will ``never again''
take on that degree of responsibility that was associated with his
former position as medical director of a multi-location facility.
However, subsequent to the hearing, an attorney representing HOHC
informed DEA in a letter dated October 23, 1995, that the Respondent
and the Vice President were no longer employed by HOHC.
Documentary evidence is in the record that indicates that
Respondent falsified two of his applications filed with DEA. On his
December 18, 1990 application for registration, and his February 13,
1992 renewal application, Respondent answered ``No'' to the question
which asks whether his State professional license was ever ``revoked,
suspended, denied, restricted or placed on probation,'' when in fact
his license to practice osteopathic medicine had been placed on
probation for three years in 1981. In addition, on his February 13,
1992 renewal application, Respondent answered ``No'' to the question
which asks whether his Federal controlled substance registration was
``revoked, suspended, restricted or denied''. Technically, there was no
falsification regarding this answer since the Memorandum of Agreement
which imposed restrictions on Respondent's DEA registration, while
signed by Respondent on January 7, 1992, was not actually fully
executed until February 24, 1992, after the renewal application was
submitted.
Pursuant to 21 U.S.C. 823(f) and 824(a)(4), the Deputy
Administrator may revoke a DEA Certificate of Registration and deny any
pending applications, if he determines that the continued registration
would be inconsistent with the public interest. Section 823(f) requires
that the following factors be considered:
(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 or
safety. These factors are to be considered in the disjunctive; the
Deputy Administrator may rely on any one or a combination of factors
and may give each factor the weight he deems appropriate in determining
whether a registration should be revoked or an application for
registration be denied. See Henry J. Schwarz, Jr., M.D., Docket No. 88-
42, 54 FR 16,422 (1989).
In this case, factors one, two, four and five are relevant in
determining whether the Respondent's continued registration would be
inconsistent with the public interest. As to factor one,
``recommendation of the appropriate licensing board * * *,'' in 1981,
the Arizona Board of Osteopathic Examiners placed Respondent's license
on probation for three years, based upon his mail fraud convictions.
However, the Acting Deputy Administrator attaches very little
significance to this action since it occurred approximately 15 years
ago and did not involve his handling of controlled substances. The
State of Arizona did file a complaint against the Respondent in 1995,
however, there is no evidence in the record as to the disposition. In
addition, there is no evidence in the record that the State of Michigan
has taken any action against Respondent's license to practice
osteopathic medicine in that state. Thus the Acting Deputy
Administrator concludes that factor one is of little relevance in
determining the public interest in this case.
As to factor two, the Respondent's ``experience in dispensing * * *
controlled substances,'' the Acting Deputy Administrator agrees with
Judge Tenney's conclusion that ``[i]t is readily apparent from the
evidence that the Respondent has demonstrated an
[[Page 53765]]
inability to dispense controlled substances as part of his medical
practice.'' The 1988 audit revealed significant overages and shortages
of various Schedule III and IV substances, as well as other
recordkeeping and security violations, resulting in Respondent's
payment of a $40,000 civil penalty. Although, a subsequent audit in
1992 revealed a shortage of 56 dosage units over a 10 month period,
which according to the DEA investigator, who testified at the hearing,
was ``very good for that length of time with the quantity [Respondent]
was dispensing,'' Respondent continued to have other problems with his
dispensing of controlled substances. He violated the Memorandum of
Agreement by failing to conduct daily audits of the dispensing of
controlled substances from his Arizona office, and by dispensing
controlled substances to individuals for weight reduction or control of
obesity for longer than eight weeks. Additionally, he allowed the
employees at his Arizona office to dispense controlled substances
without adequate supervision. Respondent testified at the hearing that
based upon advice he received from the Arizona Nursing Board he did not
think that he needed to be present when controlled substances were
dispensed and thought that it was permissible to leave a nurse
practitioner in charge of his Arizona practice. This however does not
justify his cavalier behavior. In fact, the Respondent himself readily
concedes that he ``should have kept a closer look over * * * the
control logs.'' Thus, factor three is significant in evaluating the
public interest in this case.
As to factor four, the Respondent's ``[c]ompliance with applicable
State, Federal, or local laws relating to controlled substances'', the
Respondent violated Arizona Revised Statutes Sec. 32-1871, by failing
to provide direct supervision to his employees that dispensed
controlled substances. In addition, the Acting Deputy Administrator
finds that Respondent violated 21 CFR 1301.71 by failing to ``provide
effective controls and procedures to guard against theft and diversion
of controlled substances.'' In evaluating a registrant's practice, a
consideration is ``[t]he adequacy of supervision over employees having
access to * * * storage areas.'' 21 CFR 1301.71(b)(11). Consequently,
factor four is relevant in determining whether Respondent's continued
registration is inconsistent with the public interest.
As to factor five, the Government argues that Respondent has ``not
demonstrated an ability to accept the responsibilities of a DEA
registration,'' and that he ``has attempted to shift the blame to
[others] for his predicament.'' However, as Judge Tenney noted in his
opinion, ``[a]lthough the Respondent partly blamed improper advice of
counsel for his decisions, he also admitted failing to focus on his
responsibilities, and that he `should have kept a closer look over * *
* the control logs.' '' In addition, the Respondent's testimony at the
hearing indicated that he recognizes that he had problems with
dispensing controlled substances, and consequently is not interested in
dispensing controlled substances in the future. The Acting Deputy
Administrator concludes that the evidence does not support the
Government's contentions regarding factor five.
The Acting Deputy Administrator agrees with Judge Tenney's
conclusion that factors one and five are of little significance, but
that the Government has established a prima facie case regarding the
relevance of factors two and four in determining the public interest.
Therefore, grounds exist to revoke or suspend the Respondent's
registration as inconsistent with the public interest. In addition,
based upon Respondent's material falsification of his December 18, 1990
and February 13, 1992 applications for DEA registration, grounds exist
to revoke his registration pursuant to 21 U.S.C. 824(a)(1).
The Acting Deputy Administrator concludes that neither complete
revocation nor any unrestricted registration is in the public interest
at this time. Respondent has clearly had problems with the handling of
controlled substances in the past, however, most, if not all of those
problems stemmed from his significant responsibilities at his prior
private practice or from his dispensing of controlled substances. Judge
Tenney recommended that Respondent's registration not be revoked, but
instead be restricted, inter alia, to the closely monitored prescribing
of Schedule III, IV and V controlled substances at HOHC, or at another
DEA approved facility. As the letter HOHC attorney indicated, the
Respondent is no longer employed at HOHC. The Acting Deputy
Administrator agrees that strict controls must be imposed upon the
Respondent's registration. This ``will allow the Respondent to
demonstrate that he can responsibly handle controlled substances in his
medical practice, yet simultaneously protect the public by providing a
mechanism for rapid detection of any improper activity related to
controlled substances.'' Steven M. Gardner, M.D., Docket No. 85-26, 51
Fed. Reg. 12,576 (1986). However, the Acting Deputy Administrator
concludes that with these restrictions in place, it is unnecessary for
the Respondent to obtain DEA's prior approval regarding the specific
setting in which he handles controlled substances as was recommended by
Judge Tenney.
The Acting Deputy Administrator concludes that the modification of
Respondent's DEA Certificate of Registration (BS0321430) from Arizona
to Michigan is in the public interest with the following limitations
placed upon the registration:
(1) The Respondent's controlled substance handling authority shall
be limited to the writing of prescriptions for Schedule III, IV and V
controlled substances only. He shall not dispense, administer, possess,
or store any controlled substances. The only exception to this
limitation is that the Respondent may possess controlled substances
which are medically necessary for his own use and which he has obtained
lawfully from another duly authorized physician.
(2) The Respondent shall maintain a log of all prescriptions that
he issues. At a minimum, the log shall indicate the date that the
prescription was written, the name of the patient for whom it was
written, and the name and dosage of the controlled substance(s)
prescribed. The Respondent shall maintain this log for a period of
three years from the effective date of this final order. Upon request
by the Special Agent in Charge of the DEA Detroit Field Division, or
his designee, the Respondent shall submit or otherwise make available
his prescription log for inspection.
(3) By the effective date of this final order, the Respondent shall
notify the Special Agent in Charge of the DEA Detroit Field Division,
or his designee, of his place of employment at that time. Thereafter,
the Respondent shall immediately notify the Special Agent in Charge of
the DEA Detroit Field Division, or his designee, of any changes in his
employment.
(4) These restrictions shall remain in effect for three years from
the effective date of this final order.
Accordingly, the Acting Deputy Administrator of the Drug
Enforcement Administration, pursuant to the authority vested in him by
21 U.S.C. 823 and 824 and 28 CFR 0.100(b) and 0.104, hereby orders that
DEA Certificate of Registration BS0321430, issued to Michael J. Septer,
D.O., be modified by transferring it to Michigan, and any pending
applications be granted, with the above restrictions. This order is
effective November 14, 1996.
[[Page 53766]]
Dated: October 8, 1996.
James S. Milford,
Acting Deputy Administrator.
[FR Doc. 96-26321 Filed 10-11-96; 8:45 am]
BILLING CODE 4410-09-M
