2022-01112. Daniel R. Nevarre, M.D.; Decision and Order

On June 7, 2021, a former Assistant Administrator, Diversion Control Division, Drug Enforcement Administration (hereinafter, DEA or Government), issued an Order to Show Cause to Daniel R. Nevarre, M.D., (hereinafter, Applicant), of South Jordan, Utah. Order to Show Cause (hereinafter, OSC), at 1. The OSC proposed the denial of Applicant's application No. H21079595C for a DEA Certificate of Registration, because the United States Department of Health and Human Services, Office of Inspector General (hereinafter, HHS/OIG) mandatorily excluded Applicant from participation in Medicare, Medicaid, and all Federal health care programs for a minimum period of 10 years pursuant to 42 U.S.C. 1320a-7(a); and such exclusion “warrants denial of [Applicant's] application for DEA registration pursuant to 21 U.S.C. 824(a)(5).” Id. at 2. The OSC also alleged that Applicant's application “contains material false statements” and thus forms an independent ground for denial. Id. at 2 (citing 21 U.S.C. 824(a)(1)).

The OSC alleged that on May 25, 2018, Applicant “pled guilty to one count of medical assistance fraud in violation of 62 P.S. § 1407(a)(1), and to one count of insurance fraud, in violation of 18 Pa.C.S. § 4117(a)(2).” Id. at 1-2 (citing Commonwealth of Pa. v. Daniel Raymond Nevarre, No. CP-11-CR-0000717-2018 (Pa. Ct. Comm. Pl. May 25, 2018)). The OSC further alleged that, based on such conviction, HHS/OIG “mandatorily excluded [Applicant] from participation in Medicare, Medicaid, and all Federal health care programs” for a minimum period of 10 years pursuant to 42 U.S.C. 1320a-7(a), effective November 20, 2018. Id. The OSC therefore proposed denial of Applicant's application based on 21 U.S.C. 824(a)(5).

The OSC also proposed denial of Applicant's application based on 21 U.S.C. 824(a)(1), because Applicant responded “no” to Liability Question 1 on his DEA application, which asks whether Applicant has ever been excluded from participation in a medicare program. Id. The OSC therefore proposed denial of Applicant's application because his “failure to disclose [his] exclusion from Medicare constitutes material falsification of [his] application for a DEA [registration].” Id.

The Show Cause Order notified Applicant of the right to request a hearing on the allegations or to submit a written statement, while waiving the right to a hearing, the procedures for electing each option, and the consequences for failing to elect either option. Id. at 2-3 (citing 21 CFR 1301.43). The OSC also notified Applicant of the opportunity to submit a corrective action plan. OSC, at 3 (citing 21 U.S.C. 824(c)(2)(C)).

Adequacy of Service

In a signed and sworn Declaration, a Diversion Investigator (hereinafter, DI 2) assigned to the Pittsburg District Office, Philadelphia Field Division, stated that, on June 21, 2021, after receiving a request from the Salt Lake City District Office to assist with service of the OSC, he and a Narcotics Agent from the Pennsylvania Office of the Attorney General traveled to Applicant's residential address in Johnstown, Pennsylvania, where he “personally served [the Applicant] with a copy of the [OSC].” Request for Final Agency Action, dated November 9, 2021 (hereinafter, RFAA), Exhibit (hereinafter, RFAAX) 3 (DI 2 Declaration), at 1-2.

The Government forwarded its RFAA, along with the evidentiary record, to this office on November 9, 2021. In its RFAA, the Government represents that “neither [Applicant] nor any attorney representing [Applicant] has requested a hearing” or filed a written statement. RFAA, at 2; see also RFAAX 3, at 2 & RFAAX 1, at 4. The Government requests “Final Agency Action denying the Application on the grounds that [Applicant] materially falsified his Application and has been excluded from participation in Medicare, Medicaid, and all Federal health care programs pursuant to 42 U.S.C. 1320a-7(a).” Id.

Based on the DI's Declaration, the Government's written representations, and my review of the record, I find that the Government accomplished service of the OSC on Applicant on June 21, 2021. I also find that more than thirty days have now passed since the Government accomplished service of the OSC. Further, based on the Government's written representations, I find that neither Applicant, nor anyone purporting to represent the Applicant, requested a hearing, submitted a written statement while waiving Applicant's right to a hearing, or submitted a corrective action plan. Accordingly, I find that Applicant has waived the right to a hearing and the right to submit a written statement and corrective action plan. 21 CFR 1301.43(d) and 21 U.S.C. 824(c)(2)(C). I, therefore, issue this Decision and Order based on the record submitted by the Government, which constitutes the entire record before me. 21 CFR 1301.43(e).

A. Findings of Fact

1. Applicant's DEA Application and Former Registrations

On February 1, 2021, DEA received an application from Applicant for a DEA Certificate of Registration as a practitioner in Schedules IIN ^[1] through V with a proposed registered address of 881 Baxter Drive, Suite 100, South Jordan, Utah 84095. RFAAX 1 (DI 1 Declaration) (Appendix, hereinafter, App.) 1 (Applicant's Application). Applicant's application was assigned Control No. H21079595C. RFAAX 1, at 1.

DI 1 submitted a Declaration, dated September 13, 2021, which stated that Applicant had previously surrendered for cause DEA Certificates of Registration numbered FN7029487 and BN5130290 on September 5, 2018, and October 15, 2018, respectively, after losing his state authority to practice medicine in Pennsylvania. RFAAX 1 (DI 1 Declaration) at 2. DI 1 further stated that Applicant's third previous DEA Certificate of Registration numbered FN5716420 in New York expired on October 31, 2018. Id. at 2-3.

2. Applicant's Exclusion (21 U.S.C. 824(a)(5))

The Government's uncontroverted evidence demonstrates that Applicant pled guilty to false information/claims and insurance fraud on or about May 25, 2018, in the Court of County Pleas in Cambria County, Pennsylvania. RFAAX 1, at App. C (Applicant's Guilty plea). In a letter from the HHS/OIG, dated October 31, 2018, HHS excluded Applicant from Medicare, Medicaid, and all federal health care programs under 42 U.S.C. 1320a-7(a) for a minimum period 10 years based on Applicant's conviction. RFAAX 1, App. E (hereinafter, HHS Exclusion), at 1. The HHS Exclusion stated that the exclusion would become effective twenty days from the date of the letter. Id. at 1.

Accordingly, I find clear, unequivocal, and convincing record evidence that HHS excluded Applicant from Medicare, Medicaid, and all federal health care programs under 42 U.S.C. 1320a-7(a) for a minimum of 10 years, effective November 20, 2018.

3. Material Falsification of Applicant's Application (21 U.S.C. 824(a)(1))

I find clear, unequivocal, and convincing record evidence that Applicant answered “N” to the first Liability question on the registration renewal application that was received by DEA on or about February 1, 2021. RFAAX 1, App. 1, at 2. I find clear, unequivocal, and convincing record evidence that the text of the first Liability question on the registration renewal application that Applicant submitted on or about February 1, 2021, asked whether Applicant had “ever been . . . excluded or directed to be excluded from participation in a medicare or state health care program, or is any such action pending.”  ² Id. Accordingly, I find clear, unequivocal, and convincing record evidence that Applicant's “N” response to the first Liability question on his application that he submitted on or about February 1, 2021, was false, because the record evidence clearly establishes that on October 31, 2018, Applicant was excluded from Medicare, Medicaid and all federal healthcare programs by HHS. See RFAAX 1, App. E.

B. Discussion

In its OSC, the Government relied upon grounds Congress provided to support revocation/suspension, not denial of an application. Prior Agency decisions have addressed whether it is appropriate to consider a provision of 21 U.S.C. 824(a) when determining whether or not to grant a practitioner registration application. For over forty-five years, Agency decisions have concluded that it is. Robert Wayne Locklear, M.D., 86 FR 33,738 33,744-45 (2021) (collecting cases); see also, William Ralph Kincaid, M.D., 86 FR 40,636, 40,641 (2021). A provision of section 824 may be the basis for the denial of a practitioner registration application and allegations related to section 823 remain relevant to the adjudication of a practitioner registration application when a provision of section 824 is involved. See Robert Wayne Locklear, M.D., 86 FR at 33,744-45.

Accordingly, when considering an application for a registration, I will consider any actionable allegations related to the grounds for denial of an application under 823 and will also consider any allegations that the applicant meets one or more of the five grounds for revocation or suspension of a registration under section 824. Id. See also Dinorah Drug Store, Inc., 61 FR 15,972, 15,973-74 (1996).

1. 21 U.S.C. 823(f): The Five Public Interest Factors

Pursuant to section 303(f) of the Controlled Substances Act (hereinafter, the CSA), “[t]he 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.” 21 U.S.C. 823(f). Section 303(f) further provides that an application for a practitioner's registration may be denied upon a determination that “the issuance of such registration . . . would be inconsistent with the public interest.” Id.

In this case, there is no indication that Applicant does not hold a valid state medical license or is not authorized to dispense controlled substances in the State of Utah, where he has applied for a registration.

Because the Government has not alleged that Applicant's registration is inconsistent with the public interest under section 823, and although I have considered 823, I will not analyze Applicant's application under the public interest factors. Therefore, in accordance with prior agency decisions, I will move to assess whether the Government has proven by substantial evidence that a ground for revocation exists under 21 U.S.C. 824(a). Supra B.

2. 21 U.S.C. 824(a)(5): Mandatory Exclusion From Federal Health Care Programs Pursuant to 42 U.S.C. 1320a-7(a)

Under Section 824(a) of the CSA, a registration “may be suspended or revoked” upon a finding of one or more of five grounds. 21 U.S.C. 824. The ground in 21 U.S.C. 824(a)(5) requires that the registrant “has been excluded (or directed to be excluded) from participation in a program pursuant to section 1320a-7(a) of Title 42.” Id. Here, the undisputed record evidence demonstrates that HHS mandatorily excluded Applicant from federal health care programs. RFAAX 6. Accordingly, I will sustain the Government's allegation that Applicant has been excluded from participation in a program pursuant to section 1320a-7(a) of Title 42 and find that the Government has established that a ground for revocation exists pursuant to 21 U.S.C. 824(a)(5).^[3] Although the language of 21 U.S.C. 824(a)(5) discusses suspension and revocation of a registration, for the reasons discussed above, it may also serve as the basis for the denial of a DEA registration application. See Dinorah Drug Store, Inc., 61 FR at 15,973 (interpreting 21 U.S.C. 824(a)(5) to serve as a basis for the denial of an application for registration because it “makes little sense . . . to grant the application for registration, only to possibly turn around and propose to revoke or suspend that registration based on the registrant's exclusion from a Medicare program”). Applicant's exclusion from participation in a program under 42 U.S.C. 1320a-7(a), therefore, serves as an independent basis for denying his application for DEA registration.

3. 21 U.S.C. 824(a)(1): Material Falsification

As already discussed, I find clear, unequivocal, and convincing evidence that Applicant submitted a registration application containing a false answer to the first Liability question. Supra section A.3. Applicant's false submission implicated Applicant's “exclu[sion] . . . from participation in a program pursuant to section 1320a-7(a) of Title 42.” 21 U.S.C. 824(a)(5). As a result, Applicant's false response to the first Liability question directly implicated my analysis related to the CSA's statutory grounds for revocation of a controlled substances registration, which as explained in supra B.1 and B.2, the agency has consistently interpreted to be equally relevant to its assessment of an application for a controlled substances registration. See Robert Wayne Locklear, M.D., 86 FR at 33,744-45 (collecting cases). Therefore, Applicant's false submission affected my decision by depriving me of legally relevant facts when I evaluated Applicant's registration application. RFAAX 2, at 1; see also Frank Joseph Stirlacci, M.D., 85 FR 45,229, 45,235 (2020). Accordingly, I find, based on the CSA, agency decisions, and the analysis underlying multiple Supreme Court decisions explaining “materiality,” that the falsity Applicant submitted was material. Frank Joseph Stirlacci, M.D., 85 FR at 45,235.

I find that there is clear, convincing, and unequivocal evidence in the record supporting denial of Applicant's application based on his having “materially falsified any application filed pursuant to or required by this subchapter or subchapter II.” 21 U.S.C. 824(a)(1).^[4]

4. Summary of Government's Prima Facie Case

Where, in section 824(a)(5) cases, the applicant offers no mitigating evidence upon which the Administrator can analyze the facts, the agency has consistently held that revocation/suspension/denial is warranted. See, e.g., Sassan Bassiri, D.D.S., 82 FR 32,200, 32,201 (2017); Richard Hauser, M.D., 83 FR 26,308, 26,310 (2018) (revocation was sought under Section 824(a)(5) and the registrant's certificate of registration was revoked “based on the unchallenged basis for his mandatory exclusion”). Additionally, in this case, there is evidence on the record that Applicant materially falsified his application. When the basis for revocation/suspension/denial is clear and the registrant/applicant has had notice and the opportunity to present evidence, whether in a hearing or a written statement in accordance with 21 CFR 1301.43, but has chosen not to present any such evidence that could inform the Administrator's decision, it is reasonable that the Administrator should revoke or suspend, or deny. See KK Pharmacy, 64 FR 49,507, 49,510 (1999); Orlando Ortega-Ortiz, M.D. 70 FR 15,122 (2005); Lazaro Guerra, 68 FR 15,266 (2003) (basis for revocation was both (a)(3) and (a)(5)).

Accordingly, I find that there is clear, convincing, and unequivocal evidence in the record supporting denial of Applicant's application based on his exclusion from federal health care programs. 21 U.S.C. 824(a)(5). I further find that there is clear, convincing, and unequivocal evidence in the record supporting denial of Applicant's application based on his material falsification of his application. 21 U.S.C. 824(a)(1).

C. Sanction

Here, there is no dispute in the record that Applicant is mandatorily excluded pursuant to Section 1320a-7(a) of Title 42, and, further that Applicant materially falsified his application for a controlled substance registration, and therefore, that grounds for the denial of Applicant's application exist. Where, as here, the Government has met its prima facie burden of showing that grounds for denial exist, the burden shifts to the Applicant to show why he can be entrusted with a registration. Garrett Howard Smith, M.D., 83 FR 18,882, 18,910 (2018) (collecting cases).

In this case, Applicant failed to respond to the Government's Order to Show Cause and did not avail himself of the opportunity to refute the Government's case. See RFAA, at 2. Therefore, Applicant has not provided any remorse or assurances that he would implement remedial measures to ensure such conduct is not repeated. Such silence weighs against the Applicant's registration. Zvi H. Perper, M.D., 77 FR at 64,142, citing Medicine Shoppe, 73 FR at 387; see also Samuel S. Jackson, 72 FR at 23,853. Further, due to the lack of a statement or testimony from Applicant, it is unclear whether Applicant can be entrusted with a DEA registration; and therefore, I find that sanction is appropriate to protect the public from a recurrence of Applicant's unlawful actions in the context of his CSA registration. See Leo R. Miller, M.D., 53 FR 21,931, 21,932 (1988).

Consequently, I find that the factors weigh in favor of sanction and I shall order the sanctions the Government requested, as contained in the Order below.

Order

Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 823(f) and 21 U.S.C. 824(a), I hereby deny the pending application for a Certificate of Registration, Control Number H21079595C, submitted by Daniel R. Nevarre, M.D., as well as any other pending application of Daniel R. Nevarre, M.D. for additional registration in Utah. This Order is effective [insert Date Thirty Days From the Date of Publication in the Federal Register ].

Anne Milgram,

Administrator.

Footnotes

1.  Applicant only applied for schedule II non-narcotic (IIN).

2.  Although Applicant submitted evidence in his application related to his conviction and the circumstances of his surrender for cause of his previous DEA registrations, he did not include any discernable information on the HHS/OIG exclusion. RFAAX 1, App. 1 (Application).

3.  It is noted that this Agency has concluded repeatedly that the underlying crime requiring exclusion from federal health care programs under Section 1320a-7(a) of Title 42 does not require a nexus to controlled substances in order to be used as a ground for revocation or suspension of a registration or denial of an application. Narciso Reyes, M.D., 83 FR 61,678, 61,681 (2018); KK Pharmacy, 64 FR at 49,510 (collecting cases); Melvin N. Seglin, M.D., 63 Red. Reg. 70,431, 70,433 (1998); Stanley Dubin, D.D.S., 61 FR 60,727, 60,728 (1996). In this case, the HHS ALJ applied aggravating factors to extend Applicant's exclusion period due to circumstances such as, the amount of restitution ($288,900) and the length of the criminal activity, which continued over a period of approximately seven years. RFAAX 1, App. E, at 3. Applicant's extensive unlawful activity over the course of seven years and his falsification on his application demonstrate a serious lack of honesty such that I cannot entrust him with a controlled substances registration.

4.   See supra B.1 finding that a ground for revocation can serve as a basis for denial of an application.