Frank Joseph Stirlacci, M.D.; Decision and Order

I. Introduction

On April 5, 2017, the then-Assistant Administrator, Diversion Control Division, Drug Enforcement Administration (hereinafter, DEA or Government), issued an Order to Show Cause to Frank Joseph Stirlacci, M.D. (hereinafter, Respondent), of Agawam, Massachusetts and Hammond, Indiana. Administrative Law Judge Exhibit (hereinafter, ALJX) 1 (Order to Show Cause (hereinafter, OSC)), at 1. The OSC proposed the revocation of Respondent's DEA certificate of registration (hereinafter, registration) on the ground that he “materially falsified . . . [his] application for renewal in violation of 21 U.S.C. 823(f) and 824(a)(1).” Id.

The substantive grounds for the proceeding, as more specifically alleged in the OSC, are that Respondent, “[o]n or about February 7, 2017, . . . submitted a renewal application for . . . [his registration number] BS5000411 seeking to change . . . [his] registered address to . . . Hammond, Indiana . . . [and] made two material false statements in . . . [his] renewal application”—(1) answering “no” to whether he had ever been convicted of a crime in connection with controlled substances under state or federal law, or whether any such action is pending, and (2) answering “no” to whether he had ever surrendered (for cause) or had a state professional license revoked, suspended, denied, restricted, or placed on probation, or whether any such action is pending. Id. at 2. Citing 21 U.S.C. 823(f) and 824(a)(1), the OSC concluded that “DEA must revoke . . . [Respondent's registration] based upon . . . [his] material falsifications of . . . [his] renewal application.” Id.

The OSC notified Respondent of his right to request a hearing on the allegations or to submit a written statement while waiving his 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). Respondent timely requested a hearing by letter dated April 29, 2017. ALJX 2 (Request for Hearing).

The matter was placed on the docket of the Office of Administrative Law Judges and assigned to Chief Administrative Law Judge (hereinafter, ALJ) John J. Mulrooney, II. The parties initially agreed to eight stipulations.¹ ALJX 11 (Prehearing Ruling, dated June 22, 2017), at 1-2.

The hearing in this matter lasted one day and took place in Arlington, Virginia on August 22, 2017. The Recommended Rulings, Findings of Fact, Conclusions of Law, and Decision of the Administrative Law Judge (hereinafter, RD) is dated September 29, 2017. Respondent filed exceptions to the RD. ALJX 31 (Respondent's Exceptions to the CALJ's Recommended Decision, dated Oct. 19, 2017). The Government sought and received leave to respond to Respondent's Exceptions over Respondent's objection. ALJX 32 (Government's Request for Leave to File Response to Respondent's Exceptions, dated Oct. 19, 2017); ALJX 34 (Order Granting the Government's Request for Leave to File Response to Respondent's Exceptions, dated Oct. 24, 2017). The Government's response to Respondent's Exceptions is dated November 1, 2017. ALJX 35 (Government's Response to Respondent's Exceptions, dated Nov. 1, 2017).

Having considered the record in its entirety, I agree with the RD's conclusion that the record establishes, by clear, unequivocal, and convincing evidence, that Respondent materially falsified his registration renewal application. I find that Respondent did not accept responsibility for the material falsification. Accordingly, I conclude that I can no longer entrust Respondent with a registration, that his registration should be revoked, and that any pending application by Respondent for registration in Indiana should be denied. I make the following findings.

II. Findings of Fact

A. Respondent's Current Registration

Respondent's current registration, BS5000411, is at the Regional Health Center in Hammond, Indiana. GX 1 (Certificate of Registration), at 1; Tr. 13. Its expiration date is February 29, 2020. GX 1, at 1; GX 2 (Certification of Registration Status), at 1.

B. The Investigation of Respondent

A former employee of Respondent contacted DEA stating that Respondent “authorized the issuing of prescriptions and seeing patients by a medical assistant in his office while he was incarcerated.” Tr. 20, 23. The case Diversion Investigator (hereinafter, DI) followed up on the allegation by obtaining copies of prescriptions that Respondent issued during his incarceration and requesting recordings of telephone conversations between Respondent and his office staff during the same period. Id. at 23-30.

While the hearing testimony's description of the allegation does not specify whether any of the alleged prescriptions were for controlled substances, there is substantial evidence in the record that the allegation did include, at least in part, the prescribing of controlled substances. For example, the DEA employee staffing the DEA tip line referred the allegation to DI. Id. at 20-23. If the allegation had no potential connection to controlled substances, the DEA employee initially receiving the tip would not have referred it to DI for investigation based on DEA's jurisdiction. Further, DI's investigation of the allegation included his request for information from prescription monitoring programs (hereinafter, PDMP). Id. at 23-24. The Massachusetts PDMP was established to “maintain an electronic system to monitor the prescribing . . . of all schedule II to V, inclusive, controlled substances and certain additional drugs . . . determined . . . to carry a bona fide potential for abuse.” Mass. Gen. Laws ch. 94C, § 24A (Current through Chapter 44 of the 2020 2nd Annual Session). Had the tip not included an allegation related to controlled substances, there would not have been any reason for DI to request PDMP information. As such, I find that the allegation by Respondent's staff concerned, at least in part, the unlawful prescribing of controlled substances.

C. The Material Falsification Allegations

As already discussed, the OSC alleges that Respondent submitted a renewal application containing two material falsifications. OSC, at 2. The first alleged material falsification is his negative response to whether he had ever been convicted of a crime in connection with controlled substances under state or federal law, or whether “any such action [is] pending?” Id. According to the Government, Respondent's negative response to this “liability question” was materially false, because the “Commonwealth of Massachusetts had indicted . . . [him] for crimes in connection with controlled substances less than two weeks earlier.” Id.

The second alleged material falsification is Respondent's negative response to whether he had “ever surrendered (for cause) or had a state professional license . . . revoked, suspended, denied, restricted, or placed on probation, or is any such action pending?” Id. The OSC alleges, and the Government sufficiently and timely further explicated, that this negative response was materially false, because Respondent “had just agreed to not practice medicine within the Commonwealth of Massachusetts.” Id.; 5 U.S.C. 554(b)(3); contra ALJX 31, at 1.

There is factual agreement among the witnesses on a number of matters. When there is factual disagreement, I apply my credibility determinations and the credibility recommendations of the Chief ALJ in all but a portion of one instance. Infra Section D.

D. The Government's Case

The Government's admitted documentary evidence consists primarily of Respondent's renewal application (GX 6), the sixty-eight page Hampden County Superior Court criminal indictment of Respondent (GX 5), and the Voluntary Agreement Not to Practice Medicine that Respondent and his attorney signed and that the Massachusetts Board of Registration in Medicine (hereinafter, MBRM) “accepted,” on February 5, 2016 (GX 3) (hereinafter, Mass. Accepted Voluntary No-Practice Agreement). The Government called two witnesses: DI and an Investigator for the MBRM (hereinafter, MBRM Investigator).

DI testified about his investigation-related activities of the “tip” submitted by Respondent's former employee, including, his interaction with Respondent's attorney, Daniel M. Kelly, on February 6, 2017, about the Hampden County Superior Court criminal indictment of Respondent and his request for the surrender of Respondent's registration, and his acquisition of an official copy of the Mass. Accepted Voluntary No-Practice Agreement (GX 3). Tr. 34-40 and 41-43, respectively.

DI testified during the Government's rebuttal case that he investigated whether DEA had a record of Respondent's notification of the Mass. Accepted Voluntary No-Practice Agreement. Tr. 140. DI stated that he checked DEA's “permanent and running database of any activity regarding any registrants or any DEA registration.” Id. at 142. He also testified that he asked the registration specialist for Massachusetts, who is responsible for recording any communication from a registrant, whether DEA had received a communication from Respondent. Id. at 143. Neither the check of the database nor the check with the registration specialist showed any communication from Respondent about the Mass. Accepted Voluntary No-Practice Agreement. Id. at 140-45. DI acknowledged that Respondent could have notified DEA after DI checked the database and spoke with the registration specialist, and that the registration specialist's check may not have been thorough. Id. at 146-48.

I agree with the Chief ALJ that DI's testimony was “sufficiently detailed, internally consistent, and plausible to be granted full credibility” and that he “presented as a credible, objective, dispassionate investigator without any discernible incentive to fabricate or exaggerate.” RD, at 5.

MBRM Investigator testified that he is the lead MBRM investigator assigned to assess the information the MBRM received from DEA about Respondent, that Respondent issued prescriptions when incarcerated in Kentucky, and that the investigation remains open. Tr. 59, 77. MBRM Investigator testified about the multiple oral and written communications he had with Respondent, Respondent's hiring an attorney, Respondent's signing the Mass. Accepted Voluntary No-Practice Agreement, and Respondent's continued lack of permission to practice medicine in Massachusetts due to his signing the Mass. Accepted Voluntary No-Practice Agreement. Tr. 59-75, 74, 74-75, and 75-80, respectively.

MBRM Investigator testified during the Government's rebuttal case that he previously investigated two other cases concerning Respondent. Id. at 150-52. In both instances, MBRM Investigator stated, he notified Respondent of the investigation by phone, by letter, or by both phone and letter. Id. at 152.

MBRM Investigator also testified during the Government's rebuttal case that Respondent “would call and leave . . . messages” about the case, “continually . . . asking what he could do to speed the case along.” Id. at 152-53. According to the MBRM Investigator, Respondent's calls occurred during the summer of 2016. Id. at 153. Respondent did not rebut this aspect of MBRM Investigator's testimony. Id. at 154.

I agree with the Chief ALJ that MBRM Investigator's testimony was “sufficiently detailed, internally consistent, and plausible to be granted full credibility,” except as to the plausibility of MBRM Investigator's interpretation of the legal effect of the Mass. Accepted Voluntary No-Practice Agreement. RD, at 5. I agree with the Chief ALJ that MBRM Investigator “presented as a credible, objective, dispassionate investigator without any discernible incentive to fabricate or exaggerate.” Id.

E. Respondent's Case

Respondent testified and called no other witness. Tr. 81-82.

During his testimony, Respondent recounted his pursuit of a career as a physician since his childhood, discussed his medical licenses and primary care physician practices in Indiana and Massachusetts, and explained that the “immediate cause” of his moving from Massachusetts to Indiana was his “enter[ing] into the voluntary agreement not to practice medicine” on February 5, 2016. Id. at 86-87, 88-93, and 93-95, respectively.

Respondent testified that he first found out from MBRM Investigator that Massachusetts was investigating him on or about January 27, 2016, about a week after he submitted a medical license renewal application. Id. at 131. Respondent testified he entered into the Mass. Accepted Voluntary No-Practice Agreement because the MBRM “had concerns regarding what occurred with . . . [his] divorce, incarceration, contempt,” and because MBRM Investigator asked him to sign it. Id. at 95-96. He testified that he signed it with the assistance of Mr. Kelly, “the attorney who's representing . . . [him] in the indictment in Massachusetts,” that his Massachusetts medical license had not expired, and that the Mass. Accepted Voluntary No-Practice Agreement “is non-disciplinary, there's no violation, so I guess it's a tool that Massachusetts has or a remedy until they can further pursue . . . whatever they have concerns about.” Id. at 96-97.

Respondent confirmed that there are “reporting requirements” associated with the Mass. Accepted Voluntary No-Practice Agreement and certified that he fulfilled them. Id. at 97-98, 155-56. He testified that he received a “return receipt requested” green card from his notification to DEA, but no actual notification of receipt from DEA. Id. at 98-99. He also stated that he did not have a “direct conversation” with anyone at DEA about his entering into the Mass. Accepted Voluntary No-Practice Agreement. Id. at 99.

During cross-examination, Respondent offered his perspective of the Mass. Accepted Voluntary No-Practice Agreement. He testified that the “effect” of the document is “self-contained in the words of the document itself.” Id. at 110. He stated that, although he did not know whether Massachusetts was still investigating him, he “assumed” that its investigation was still open, more likely than not. Id. In response to a question posed by the Chief ALJ, however, Respondent agreed that his signing the Mass. Accepted Voluntary No-Practice Agreement meant that everything was “sort of” held in the status quo. Id. at 134. He again “assumed” that the hold was so MBRM could finish its investigation. Id. at 135. As Respondent continued to say “I don't know” and “I guess” about the status of the MBRM investigation, the Chief ALJ sought clarification, asking, “But your belief wasn't that you were just going to stop practicing medicine forever. Your belief was that until they sort this out, you were in this status?” Id. Respondent answered, “Until, right, right, that they would sort it.” Id. at 135-36.

The Chief ALJ then asked Respondent “who is Daniel Kelly? Where does he come into it?” Id. at 136. Respondent replied that Mr. Kelly represented him in the federal and local criminal matters “from the beginning . . . so he was aware of—he knew the entire situation, I guess,” and that Respondent retained him “a year prior” to the indictment. Id. at 136-37. During this inquiry, the Chief ALJ suggested, and I agree, that Respondent retained a criminal defense attorney because he knew that a criminal investigation was pending. Id.

Respondent stated his understanding that the “or is any such action pending” portion of the third liability question did not call for him to answer yes, even though he assumed that Massachusetts was still investigating him. Id. at 111-12. When asked if he would have had to answer “yes” if he knew about an investigation by Massachusetts, he answered yes, he should have answered “yes” if he were aware of a Massachusetts investigation. Id. at 114-15. He elaborated by reiterating his view that the Mass. Accepted Voluntary No-Practice Agreement is a “tool” of the MBRM. Id. at 112. He stated that it is “non-disciplinary” and that it is “not restriction, probation, all of the things that it has in there pertaining to the question, and my understanding is it's to avoid any action.” Id. Further, on re-direct, Respondent testified that he “answered the question [on the DEA application] honestly at that time . . . to the best of my knowledge.” Id. at 130. On re-cross, Respondent answered “no” when asked whether he thought “putting all those “No's” there, it was more likely that they were going to renew your certificate of registration.” Id. at 133. He responded “not one way or the other. I mean, they're asking questions and then they will make a determination based on the totality of everything. . . . [I]t's up to them.” Id.

Regarding the Hampden County Superior Court criminal indictment, Respondent confirmed that its allegations stem “from that time . . . [he] was incarcerated.” Id. He testified that Mr. Kelly told him about the indictment on Thursday morning, February 9, 2017, a couple days after Respondent submitted the registration renewal. Id. at 100. He stated that he did not know that he had been indicted when he submitted the registration renewal. Id.; see also id. at 102-03 (denying he received personal service of the indictment before he submitted the renewal application).

Respondent testified that he never had a problem with his registration since he first received it in “approximately” 1996, and that he has had a “full unrestricted” medical license since 1996. Id. at 100-01. He stated that his registration and medical licenses have “all been in good standing, unrestricted [in] full with all states that I've ever held licenses in.” Id. at 101. Respondent explained his negative response to the third liability question on the renewal application by testifying that “my license has not been revoked, my license has not been suspended. They did not deny my license. I have my license. It's currently preserved . . . . There's no restriction on my license. It has not been placed on probation. So the answer is no.” Id. at 104. In addition, Respondent confirmed that he did not “consider whether the Massachusetts voluntary agreement not to practice medicine, whether that should cause . . . [him] to answer “Yes” to that particular question.” Id.

Respondent testified that he “honestly believed when . . . [he] completed the application that . . . [his] answers were truthful, to the best of . . . [his] ability,” and that he had “no intent to deceive the DEA. There would be no purpose in that.” Id. at 104-05; see also id. at 109.

I agree with the Chief ALJ's analysis of the credibility of Respondent's testimony.

While the Respondent's testimony was not without some credible aspects, it was also not without some bases for reservation. In addition to the incontrovertible fact that as the subject of these proceedings, the Respondent has the most at stake, his unequivocal assertion that his state licensure has never been the subject of any investigation since the commencement of his medical practice in 1996 was convincingly contradicted by . . . [MBRM Investigator], who credibly testified that he investigated the Respondent regarding a patient complaint and failure to cooperate with that complaint, and that he telephonically informed him about that investigation. . . . Further, . . . [Respondent's] unwillingness to acknowledge that benign responses to the Liability Questions were less likely to raise concern did not enhance his credibility here. The Respondent is an educated professional, and irrespective of his view that his answers in the application were candid, his refusal to accept the proposition that unremarkable responses are generally more likely to result in a favorable outcome in a DEA application was a gratuitous depreciation of his overall credibility.

Moreover, the Respondent's testimony that he forwarded a copy of the . . . [Mass. Accepted Voluntary No-Practice Agreement] to DEA, but failed to keep a shred of paperwork memorializing that act, is implausible. By the Respondent's own account, sending the Agreement to various offices, including DEA, was a term of the Agreement. . . . That he would fail to keep any evidence of his compliance with that term, particularly after he expounded on the importance of such compliance as an integral aspect of his profession, is simply not credible. Although much of the Respondent's testimony is worthy of belief, in instances where that testimony is at variance with other credible testimony, it must be viewed with heightened scrutiny.

RD, at 7-8 [citations and footnotes omitted].

F. Allegation That Respondent Submitted a Materially False Registration Renewal Application

As already discussed, the OSC charged Respondent with submitting a renewal application containing two material false statements. The first alleged material false statement concerns Liability Question No. 1 and Respondent's negative response as to whether he had ever been convicted of a crime in connection with controlled substances under state or federal law, “or [is] any such action pending.” OSC, at 2. The second alleged material false statement concerns Liability Question No. 3 and Respondent's negative response as to whether he had ever surrendered (for cause) or had a state professional license revoked, suspended, denied, restricted, or placed on probation, or whether “any such action [is] pending.” Id.

G. Liability Question No. 1

I find that Respondent answered “no” to the first Liability Question on the registration application. GX 2, at 2; ALJX 11, at 2 (Stipulation Nos. 7 and 8). I find that the Hampden County Superior Court criminal indictment of Respondent is dated January 26, 2017. GX 5. I find that DI informed Respondent's attorney about the Hampden County Superior Court criminal indictment on February 6, 2017. Tr. 34-40. Even if the Hampden County Superior Court criminal indictment is a precursor “action pending” to a possible criminal conviction in connection with controlled substances under state or federal law, I find that there is insufficient evidence in the record that Respondent, himself, as opposed to his attorney, knew about the Hampden County Superior Court criminal indictment on or before February 7, 2017. I, thus find that the evidence the Government submitted does not establish that Respondent's “no” response to the first Liability Question was false, let alone materially false, when he submitted his renewal application to DEA on February 7, 2017.

H. Liability Question No. 3

I find from clear, unequivocal, and convincing evidence that Respondent answered “no” to the third Liability Question on the registration application. ALJX 11, at 2 (Stipulation Nos. 6 and 8); GX 2, at 2. I find from clear, unequivocal, and convincing evidence that Respondent and his attorney signed the Mass. Accepted Voluntary No-Practice Agreement on February 5, 2016. GX 3, at 3. I find from clear, unequivocal, and convincing evidence that the MBRM “accepted” and “ratified” the Mass. Accepted Voluntary No-Practice Agreement on February 5, 2016 and February 11, 2016, respectively. Id.

I find from clear, unequivocal, and convincing evidence that the Mass. Accepted Voluntary No-Practice Agreement resulted from the MBRM investigation of the tip DEA received, that the Mass. Accepted Voluntary No-Practice Agreement is still in effect, and that the MBRM investigation was open at least through the date of the DEA administrative hearing. Tr. 76-77. I find from clear, unequivocal, and convincing evidence that the Mass. Accepted Voluntary No-Practice Agreement is the reason Respondent is not permitted to practice medicine in Massachusetts. ALJX 11, at 2 (Stipulation No. 3); Tr. 94-99. I find from clear, unequivocal, and convincing evidence that the terms of the Mass. Accepted Voluntary No-Practice Agreement include Respondent's “immediate” cessation of the practice of medicine in Massachusetts. GX 3, at 2. Based on clear, unequivocal, and convincing evidence, I find that the Mass. Accepted Voluntary No-Practice Agreement is a clear indicator, and is part, of pending action by the MBRM regarding Respondent's Massachusetts medical license. For example, the top of the first page of the Mass. Accepted Voluntary No-Practice Agreement is captioned “In the Matter of” Respondent and shows a docket number starting with the year. Id. The second paragraph clearly states that the Mass. Accepted Voluntary No-Practice Agreement “will remain in effect” until the MBRM modifies it, terminates it, “takes other action against . . . [Respondent's] license to practice medicine,” or “takes final action on the above-referenced matter.” Id. The sixth paragraph of the Mass. Accepted Voluntary No-Practice Agreement warns that “[a]ny violation of this Agreement shall be prima facie evidence for immediate summary suspension of my license to practice medicine.” Id. [italics added]. The last page of the Mass. Accepted Voluntary No-Practice Agreement contains the dates on which the MBRM “accepted” and “ratified,” by vote of the MBRM, the Agreement. GX 3, at 3. These terms and provisions leave no room for doubt that the Mass. Accepted Voluntary No-Practice Agreement evidences, and is part of, pending action by the MBRM regarding Respondent's medical license. Indeed, I find from clear, unequivocal, and convincing evidence that the Mass. Accepted Voluntary No-Practice Agreement envisions the possibility that it could be used as prima facie evidence for the “immediate summary suspension” of Respondent's Massachusetts medical license. GX 3, at 2.

In sum, I find from clear, unequivocal, and convincing evidence that the third Liability Question on the application Respondent submitted to DEA asks whether the applicant ever surrendered (for cause) or had a state professional license or controlled substance registration revoked, suspended, denied, restricted, or placed on probation, “or is any such action pending?” GX 2, at 2. As already discussed, I find from clear, unequivocal, and convincing evidence that, at a minimum, the Mass. Accepted Voluntary No-Practice Agreement shows a pending action exists in Massachusetts concerning Respondent by its explicit warning that “immediate summary suspension” of Respondent's Massachusetts medical license is a possible result of “any violation of this Agreement.” GX 3, at 2. Consequently, I find based on clear, unequivocal, and convincing evidence, that Respondent's “no” answer to the third Liability Question was false. For the same reasons, and based on the same clear, unequivocal, and convincing evidence, I also find that Respondent knew, or should have known, that his answer to the third Liability Question was false. Further, for the same reasons and based on the same evidence in conjunction with the credibility determinations I already made, I find that Respondent falsified his answer to the third Liability Question to help ensure DEA's favorable action on his application and, therefore, that Respondent's falsification indicates an intent to deceive.

III. Discussion

A. The Controlled Substances Act and the OSC Allegations

Pursuant to section 303(f) of the Controlled Substances Act (hereinafter, 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 making the public interest determination, the CSA requires me 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 . . . 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.

Id.

“These factors are . . . considered in the disjunctive.” Robert A. Leslie, M.D., 68 FR 15,227, 15,230 (2003). I “may rely on any one or a combination of factors and may give each factor the weight [I] deem[ ] appropriate in determining whether . . . an application for registration [should be] denied.” Id. Moreover, while I am required to consider each of the factors, I “need not make explicit findings as to each one,” and I “can `give each factor the weight . . . [I] determine[ ] is appropriate.' ” MacKay v. Drug Enf't Admin., 664 F.3d 808, 816 (10th Cir. 2011) (quoting Volkman v. Drug Enf't Admin., 567 F.3d 215, 222 (6th Cir. 2009) quoting Hoxie v. Drug Enf't Admin., 419 F.3d 477, 482 (6th Cir. 2005)). In other words, the public interest determination “is not a contest in which score is kept; the Agency is not required to mechanically count up the factors and determine how many favor the Government and how many favor the registrant. Rather, it is an inquiry which focuses on protecting the public interest; what matters is the seriousness of the registrant's misconduct.” Peter A. Ahles, M.D., 71 FR 50,097, 50,098-99 (2006).

Pursuant to section 304(a)(1), the Attorney General is also authorized to suspend or revoke a registration “upon a finding that the registrant . . . has materially falsified any application filed pursuant to or required by this subchapter.” 21 U.S.C. 824(a)(1). It is well established that the various grounds for revocation or suspension of an existing registration that Congress enumerated in this section are also properly considered in deciding whether to grant or deny an application under section 303. See Richard J. Settles, D.O., 81 FR 64,940, 64,945 (2016); Arthur H. Bell, D.O., 80 FR 50,035, 50,037 (2015); The Lawsons, Inc., t/a The Medicine Shoppe Pharmacy, 72 FR 74,334, 74,338 (2007); Samuel S. Jackson, D.D.S., 72 FR 23,848, 23,852 (2007); Alan R. Schankman, M.D., 63 FR 45,260, 45,260 (1998); Kuen H. Chen, M.D., 58 FR 65,401, 65,402 (1993).

The Government has the burden of proof in this proceeding. 21 CFR 1301.44.

As already discussed, Respondent submitted a registration renewal application containing a false answer to the question of whether he “ever surrendered (for cause) or had a state professional license . . . revoked, suspended, denied, restricted, or placed on probation, or is any such action pending?” The Supreme Court explained decades ago that “the ultimate finding of materiality turns on an interpretation of substantive law.” Kungys v. United States, 485 U.S. 759, 772 (1988) (citing a Sixth Circuit case involving 18 U.S.C. 1001 and explaining that, even though the instant case concerned 8 U.S.C. 1451(a), “we see no reason not to follow what has been done with the materiality requirement under other statutes dealing with misrepresentations to public officers”). The Supreme Court also clarified that a falsity is material if it is “predictably capable of affecting, i.e., had a natural tendency to affect, the official decision.” Id. at 771.

In this case, application of the Supreme Court's materiality analysis, in the context of the CSA, means that Respondent's false submission was material. Id. Indeed, the falsity Respondent submitted in his renewal application relates to three of section 303(f)'s five factors, which provide the bases for my determination of whether an application is inconsistent with the public interest. 21 U.S.C. 823(f); see JM Pharmacy Group, Inc., d/b/a Farmacia Nueva and Best Pharma Corp., 80 FR 28,667, 28,681 (2015) (stating that a falsity must be analyzed in the context of the application requirements sought by DEA and provided by the applicant, and must relate to a ground that could affect the decision); see also ALJX 30 (Respondent's Proposed Findings of Fact and Conclusions of Law, dated Sept. 21, 2017), at 14; Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 2003 (2016) (hereinafter, Escobar) (stating that “[u]nder any understanding of the concept, materiality `look[s] to the effect on the likely or actual behavior of the recipient of the alleged misrepresentation.'”); Maslenjak v. United States, 137 S. Ct. 1918, 1928 (2017) (concluding that when “there is an obvious causal link between the . . . lie and . . . [the] procurement of citizenship,” the facts “misrepresented are themselves disqualifying” and I “can make quick work of that inquiry”). Respondent's provision of false information deprived me of the ability to carry out my statutorily mandated five-factor analysis concerning the registration of practitioners. 21 U.S.C. 823(f). In other words, there is no doubt that Respondent's falsity was “predictably capable of affecting, i.e., had a natural tendency to affect, the official decision” the CSA instructs me to make. Kungys, 485 U.S. at 771.

The facts in this case clearly demonstrate the connection between one liability question and three of section 303(f)'s five factors. Infra note 30. The first section 303(f) factor is the “recommendation of the appropriate State licensing board or professional disciplinary authority.” 21 U.S.C. 823(f)(1). In this case, the MBRM accepted and ratified Respondent's Mass. Accepted Voluntary No-Practice Agreement on February 5 and 11, 2016, respectively. GX 3, at 2. As already discussed, pursuant to Respondent's Mass. Accepted Voluntary No-Practice Agreement, as accepted and ratified by the MBRM, Respondent admits that his Massachusetts medical license no longer permits him to practice medicine; Respondent's state professional license is restricted to a practical nullity. Tr. 89, 93. Further, as already discussed, the second paragraph of the Mass. Accepted Voluntary No-Practice Agreement explicitly states that the “Matter” of Respondent's Mass. Accepted Voluntary No-Practice Agreement, Docket No. 16-033, remains pending before the MBRM. GX 3, at 2 (“This Agreement will remain in effect until the . . . [MBRM] determines that this . . . [Mass. Accepted Voluntary No-Practice Agreement] should be modified or terminated; or until the . . . [MBRM] takes other action against . . . [Respondent's] license to practice medicine; or until the . . . [MBRM] takes final action on the above-referenced matter.”). In addition, also already discussed, a clear indication of the significance of the Mass. Accepted Voluntary No-Practice Agreement is the document's sixth paragraph that “[a]ny violation . . . shall be prima facie evidence for immediate summary suspension” of Respondent's medical license. Id. [italics added]. Thus, Respondent's false submission implicates the first factor that I am statutorily mandated to consider. John O. Dimowo, M.D., 85 FR 15,800, 15,809-10 (2020).

The second section 303(f) factor is the “applicant's experience in dispensing . . . controlled substances.” 21 U.S.C. 823(f)(2). I already found that DEA and Massachusetts law enforcement were investigating an allegation that Respondent unlawfully issued controlled substance prescriptions when he was incarcerated in Kentucky. Tr. 20-40. Further, the unrefuted record testimony is that Respondent entered into the Mass. Accepted Voluntary No-Practice Agreement after multiple interactions with the MBRM Investigator regarding this allegation. Id. at 93-97, 155-56; GX 5. The fact that this unrefuted record evidence includes unproven allegations does not change the salient point. The CSA requires me to consider Respondent's experience in dispensing controlled substances. Respondent's alleged controlled substance dispensing while incarcerated in Kentucky, which irrefutably led to the Mass. Accepted Voluntary No-Practice Agreement, implicates this CSA-mandated factor regardless of the weight, if any, I give it. The falsity Respondent submitted in his application deprived me of information potentially relevant to factor two, and, therefore, I was unable to carry out my CSA-mandated responsibilities.

The analysis of the same unrefuted record evidence under factor four (compliance with applicable state, federal, and local laws relating to controlled substances) leads to the same conclusion. Respondent's submission of a falsified application deprived me of information potentially relevant to factor four, and, therefore, I was unable to carry out my CSA-mandated responsibilities.

In sum, the falsity Respondent submitted relates to three of section 303(f)'s five factors. Based on an analysis of the CSA, Respondent's falsity directly implicates my statutorily mandated analysis and decision by depriving me of legally relevant facts. Escobar, 136 S. Ct. at 2002 (“Under any understanding of the concept, materiality `look[s] to the effect on the likely or actual behavior of the recipient of the alleged misrepresentation.'”). Consequently, I must find, based on the CSA and the analysis underlying multiple Supreme Court decisions involving materiality, that the falsity Respondent submitted was material.

B. Respondent's Arguments and Exceptions

Respondent posited many arguments during the administrative hearing and in exceptions to the RD. Some have already been addressed. Others are addressed below.

Respondent argues that a recent Supreme Court decision's treatment of “materiality” in a False Claims Act case is “particularly unfavorable to the Government's attempt to prove materiality in light of DEA's informed inaction.” ALJX 30, at 16 (citing Escobar). According to Respondent, “[i]n terms of . . . [False Claims Act] liability, the [Supreme] Court held that evidence that the government knew about an alleged regulatory violation that caused a claim submitted to the government to be false yet continued to pay those claims was `very strong evidence' that the underlying conduct was not material.” Id. at 17. Since the Supreme Court “utilized the same definition of `material' set forth by the [Supreme] Court in Kungys,” Respondent argues, the Government “cannot prevail in light of its inaction despite knowledge of the alleged past conduct underlying the indictment.” Id.

The RD rejects this argument, as do I. RD, at 16-17.

First, Respondent's reasoning, based on the appearance of the same root word, “material,” for applying Escobar's False Claims Act analysis to the CSA is not convincing. The Supreme Court in Escobar ties its analysis to “other federal fraud statutes” and to the common law. It connects its discussion of federal fraud statutes with the common law by stating that the “common law could not have conceived of `fraud' without proof of materiality.” Escobar, 136 S. Ct. at 2002 (citing Neder v. United States, 527 U.S. 1, 22 (1999). It emphasizes the similarity of the definitions of “materiality” in the False Claims Act and in the common law by stating that “[w]e need not decide” whether the False Claims Act's “materiality requirement is governed by . . . [the False Claims Act] or derived directly from the common law.” Escobar, 136 S. Ct. at 2002. Thus, Respondent's invitation that I apply the Supreme Court's Escobar analysis of the False Claims Act to the CSA more broadly than only to the definition of “materiality” goes beyond the clear boundaries of Escobar and is without merit. As the RD states, “Whether the Government decides to pay a [contract] claim despite knowledge that certain conditions of payment are not satisfied simply does not implicate the same considerations as the decision of the Government to delay (or even to forgo) bringing . . . [a CSA] action against a . . . [registrant] despite knowledge of alleged conduct which could support a sanction.” RD, at 16-17. I reject Respondent's invitation to equate the CSA with the False Claims Act. I agree with the RD that these two statutes share no commonality that would legally support, let alone require, such a correlation.

Second, Respondent's argument takes Escobar beyond the parameters of the Supreme Court's opinion. Respondent argues that the Government “cannot prevail in light of its inaction, despite knowledge of the alleged past conduct underlying the indictment.” ALJX 30, at 17 [emphasis added]. The Supreme Court, however, merely warned that “if the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.” Escobar, 136 S. Ct. at 2003 [emphasis added]. Respondent's argument that the Government “cannot prevail in light of its [prior] inaction” against Respondent, is not only inapposite, it also carries the Escobar decision beyond the Court's clear terms that inaction is “very strong evidence,” but not dispositive.

Third, Respondent's argument incorrectly assumes that no crime or violation has occurred unless law enforcement has initiated a criminal prosecution or a civil or administrative enforcement action. According to Respondent, “[i]f [Respondent's] alleged past conduct were material, DEA could have brought an order to show cause against . . . [him] based on this conduct at some point over the last two years. Instead, DEA has allowed . . . [Respondent] to maintain his COR.” ALJX 30, at 17. Respondent's position is untenable.

Section 304 of the CSA states that the Attorney General “may” revoke or suspend a registration. 21 U.S.C. 824(a). The discretion the CSA affords the Attorney General regarding his initiation of a revocation or suspension enforcement action is unfettered. According to the Supreme Court, in situations such as the one presented by the CSA, “an agency's decision not to prosecute or enforce, whether through civil or criminal process, is a decision generally committed to an agency's absolute discretion.” Heckler v. Chaney, 470 U.S. 821, 831 (1985); see also 5 U.S.C. 701(a) and Heckler v. Chaney, 470 U.S. at 831-32 (discussing reasons why there is generally no judicial review of agency decisions not to enforce).

Fourth, Agency decisions have addressed section 304(a)(1), including the meaning of “materially,” on multiple past occasions. Relying on those interpretations of the CSA, as opposed to taking the novel approach that Respondent proposes, is important to the Agency's mission.

An Agency decision from 1986 noted that the Agency “processes thousands of practitioner registrations each year” and that there is “no feasible method . . . [for the Agency] to make an investigation into the accuracy of each application submitted.” William M. Knarr, D.O., 51 FR 2772, 2773 (1986) (noting that the falsifications were discovered by accident). This decision and others interpreting section 304(a)(1) concluded that the submission of falsified applications is a serious offense that cannot be tolerated because it renders the Agency “unable to meaningfully pass on the fitness of the applicant.” Id.; see also Carl E. Darby, M.D., 53 FR 51,330, 51,331 (1988); Ronald H. Futch, M.D., 53 FR 38,990, 38,991 (1988). The questions on the registration application “serve a purpose which cannot be overlooked by the Administrator” and, had the applicant submitted accurate responses, “an investigation could have taken place.” Ezzat E. Majd Pour, M.D., 55 FR 47,547, 47,548 (1990) (finding finalized or pending medical license revocation/suspension proceedings in three states even though applicant provided a “no” answer to the relevant liability question on the application). In carrying out its statutory mission to authorize the dispensing of controlled substances in the public interest, the Agency must be able to rely on the truthfulness of applicants' submissions. Anne D. DeBlanco, M.D., 62 FR 36,844, 36,845 (1997) (“Since DEA must rely on the truthfulness of information supplied by applicants in registering them to handle controlled substances, falsification cannot be tolerated.”); Leonel Tano, M.D., 62 FR 22,968, 22,972 (1997) (same); Linwood T. Townsend, D.D.S., 59 FR 32,224, 32,225 (1994) (same); Bobby Watts, M.D., 58 FR 46,995, 46,995 (1993) (same); Carl E. Darby, M.D., 53 FR at 51,331 (same); Ronald H. Futch, M.D., 53 FR at 38,991 (same); William M. Knarr, D.O., 51 FR at 2773 (concluding that the Agency “must rely on the truthfulness of every applicant”).

In the late 1990s, the Agency elaborated on its earlier decisions and distinguished between finding the existence of a material falsification and determining the appropriate sanction. Martha Hernandez, M.D. (hereinafter, Hernandez) repeated the observation from earlier Agency decisions that “the Respondent knew, or should have known, that his DEA registration had been revoked.” 62 FR 61,145, 61,146 (1997) (citing Bobby Watts, M.D., 58 FR at 46,995 and Herbert J. Robinson, M.D., 59 FR 6304, 6304 (1994)). Hernandez, though, characterized this observation as a necessary part of the analysis of the existence of a material falsification. According to Hernandez, again referencing Bobby Watts, M.D. and Herbert J. Robinson, M.D., “DEA has previously held that in finding that there has been a material falsification of an application, it must be determined that the applicant knew or should have known that the response given to the liability question was false.” 62 FR at 61,146. The Agency then “conclude[d] that there is no question that . . . [respondent] materially falsified two of her applications for DEA registration” and stated that this was “extremely troubling since DEA relies on accurate information being submitted by its applicants.” Id. at 61,148.

Admitting to the inaccuracy of the answers on her DEA application, the Hernandez respondent argued that she submitted no “materially” false statement, that she had no intent to deceive or mislead DEA, that her underlying misconduct was not related to controlled substances, and that she responded correctly to similar questions on a state application after someone explained the proper way to interpret the application question. Id. at 61,146. The Agency did not fully embrace her arguments. In addition to concluding that the falsifications were material, Hernandez made clear that a misinterpretation of the application does “not relieve [respondent] . . . of her responsibility to carefully read the question and to honestly answer all parts of the question.” Id. at 61,147. While the decision may be interpreted to agree with the Hernandez respondent that she did not intend to deceive DEA, the decision states that “negligence and carelessness in completing an application could be a sufficient reason to revoke a registration.” Id. Regarding the Hernandez respondent's argument that the falsification did not involve controlled substances, the Agency agreed with the Government that it had “in fact revoked registrations in the past based upon the material falsification of an application that was not related to the mishandling of controlled substances.” Id. at 61,148 (citing Ezzat E. Majd Pour, M.D.).

Hernandez, then, drew the distinction between finding a material falsification and the next inquiry—whether “revocation is the appropriate sanction in light of the facts and circumstances of this case.” Id. The decision appears to credit as “credible,” while also stating it is “clearly an incorrect interpretation,” the Hernandez respondent's explanation for the falsity. Id. Further, the decision calls “troubl[ing]” the Hernandez respondent's “carelessness in failing to carefully read the question on the applications.” Id. Nevertheless, the decision finds “significant” that, prior to the issuance of the OSC, the Hernandez respondent “answered a similar liability question correctly on her . . . Illinois application . . . after discussing the matter with an Illinois official.” Id. The decision notes that the Illinois Department of Professional Regulation “has seen fit to allow . . . [her] to continue to practice medicine as long as she continues to repay her loan.” Id. Thus, the decision concludes, the state medical boards' handling of the Hernandez respondent's student loan repayment challenges was “relevant, although not dispositive, in determining the appropriate sanction.” Id. After considering all of the facts and circumstances, the decision concludes that “revocation would be too severe a sanction given the facts and circumstances of this case.” Id. at 61,148. Instead, it reprimands the Hernandez respondent “for her failure to properly complete her applications for registration,” and required her, for three years, “to submit to the DEA . . . , on an annual basis, documentation from . . . [the] medical licensing authorities certifying that her medical licenses remain in good standing . . . and that there is no impediment to her handling controlled substances at the state level.” Id.

Some Agency decisions incorporate both pre-Hernandez and Hernandez analyses. Other Agency decisions apply the material falsification elaborations and distinctions articulated in Hernandez, and continue developing the application of 21 U.S.C. 824(a)(1). For example, in 2005, the Agency confirmed the “knew or should have known” determination for whether there had been a “material falsification” and the consideration of all the facts and circumstances in determining the appropriate sanction. Felix K. Prakasam, M.D., 70 FR 33,203, 33,205-06 (2005). When faced with a respondent whose “explanations for the misstatements and his continued insistence that his answers were correct are disingenuous at best,” the Agency bluntly stated that respondent's answers were not accurate. Id. The Agency then stated clearly what it had introduced in a 1993 decision—its “concern regarding Respondent's on-going refusal or inability to acknowledge a registrant's responsibility to provide forthright and complete information to DEA, when required to do so as a matter of law or regulation. This attitude . . . does not auger well for his future compliance with the responsibilities of a registrant.” Id. Thus, the Agency revoked respondent's registrations based on a finding of a violation of 21 U.S.C. 824(a)(1) and respondent's lack of legally mandated forthrightness and transparency. Id.

The Agency continued to develop the Felix K. Prakasam, M.D. forthrightness and transparency analysis for 21 U.S.C. 824(a)(1) in Peter A. Ahles, M.D. According to that decision, “it is clear” and “indisputable” that respondent materially falsified his application by not disclosing that California placed his medical license on probation three times. 71 FR at 50,098. After finding that respondent materially falsified his application, the decision, citing the Sixth Circuit, stated that the Agency considers candor to be an “important factor when assessing whether a physician's registration is consistent with the public interest” and, therefore, “falsification cannot be tolerated.” Id. at 50,099 (citing Hoxie v. Drug Enf't Admin., 419 F.3d at 483).

My analysis shows that the approach to section 304(a)(1) taken by most past Agency decisions aligns with the instruction Kungys and its progeny provide concerning the meaning of “material” absent a definition in the relevant statute. As already discussed, the approach of Kungys and its progeny to materiality is consistent with the CSA. The Supreme Court's interpretation and analysis rest on the “most common formulation . . . that a concealment or misrepresentation is material if it `has a natural tendency to influence, or was capable of influencing, the decision of' the decisionmaking body to which it was addressed.” 485 U.S. at 770. The Court emphasized that the test for materiality “has never been” that the “misrepresentation or concealment would more likely than no t have produced an erroneous decision, or even that it would more likely than not have triggered an investigation.” Id. at 771 [emphases in original]. According to the Court, the materiality test “must be met, of course, by evidence that is clear, unequivocal, and convincing.” Id. at 772.

Thus, following the Supreme Court, I conclude that the falsification of any of the liability questions is “material” under 21 U.S.C. 824(a)(1). My conclusion flows directly from the fact that each of the liability questions is connected to at least one of section 303(f) factors that, according to the CSA, I “shall” consider as I analyze whether issuing a registration “would be inconsistent with the public interest.” 21 U.S.C. 823(f). I am unable to discharge the responsibilities of the CSA every time I am given false information in response to a liability question. Thus, each falsification of a liability question has a natural tendency to influence, or is capable of influencing my decision and is therefore material.

After finding the existence of a material falsification, I then determine the appropriate sanction. My determination involves considering all the facts and circumstances before me.

This Kungys/Maslenjak-based two-step analysis is consistent with the provisions of the CSA. It is consistent with the statutory requirements under section 303 (“the following factors shall be considered” emphasis added), and the discretion afforded under section 303(f) (“may deny an application” emphasis added) regarding whether to deny a registration application or modification. In addition, my analysis and conclusion that this Respondent submitted a materially false renewal application are in line with the weight of past Agency decisions. Some of the cases that Respondent urges me to follow are not.

In sum, I carefully considered all of Respondent's arguments and conclude, based on

clear, unequivocal, and convincing record evidence, that Respondent materially falsified his registration renewal application.

IV. Sanction

Where, as here, the Government has established by clear, unequivocal, and convincing evidence that a respondent materially falsified his registration renewal application, the respondent must then “present[ ] sufficient mitigating evidence” to show why he can be entrusted with a registration. Garrett Howard Smith, M.D., 83 FR 18,882, 18,910 (2018). Further, as past performance is the best predictor of future performance, Agency decisions require the respondent unequivocally to accept responsibility for his actions and demonstrate that he will not engage in future misconduct. ALRA Labs, Inc. v. Drug Enf't Admin., 54 F.3d 450, 452 (7th Cir. 1995); Jayam Krishna-Iyer, M.D., 74 FR 459, 463 (2009) (collecting cases); Jeffrey Stein, M.D., 84 FR 46,968, 46,972-73 (2019). In addition, a registrant's candor during the investigation and hearing has been an important factor in determining acceptance of responsibility and the appropriate sanction. Garrett Howard Smith, M.D., 83 FR at 18,910 (collecting cases). The Agency has decided that the egregiousness and extent of the misconduct are significant factors in determining the appropriate sanction. Id. The Agency has also considered the need to deter similar acts by the respondent and by the community of registrants. Id. Consistent with past Agency decisions, I consider the totality of the facts and circumstances before me to determine the appropriate sanction. See, e.g., Hernandez, 62 FR at 61,147-48 (finding material falsification, but denying the Government's request for revocation as “too severe” given the facts and circumstances of the case).

Respondent's misconduct proven by the record evidence is one falsity on one application. However, the falsity was not the result of confusion or inadvertence, but a deliberate attempt to hide the existence of the Mass. Accepted Voluntary No-Practice Agreement. RD, at 20. The record evidence regarding that falsity clearly demonstrates to me that Respondent does not take his responsibility of candor to the Agency seriously. Id. Accomplishing the scope of DEA's law enforcement responsibilities would be extraordinarily difficult if the Agency could not rely on the candor of applicants and those in the regulated community. Id.

I agree with the Chief ALJ that Respondent, through counsel, explicitly stated that Respondent did not accept responsibility and did not offer any remedial measures during his testimony. Id. at 18; Tr. 179. In his Posthearing Brief, Respondent reiterated that he does not prescribe controlled substances in his current position, yet needs a registration to continue to qualify for that position. ALJX 30, at 23; Tr. 92, 105. The Posthearing Brief argues that revoking Respondent's registration would deprive the low-income and homeless patients he currently serves of his medical services. ALJX 30, at 23. This argument is not consistent with recent Agency decisions concerning community impact evidence. I decline to accept Respondent's community impact argument.

As the Chief ALJ concluded, Respondent acknowledged no deficiency and offered no plan to conform his future conduct. RD, at 19. “In his view,” the RD observes, Respondent “did nothing wrong and would presumably enter the same false response on a future renewal application if faced with like circumstances.” Id. In this situation, revocation is appropriate to avoid another proceeding charging material falsification “because the Respondent believes his conduct to have been appropriate.” Id.

I agree with the Chief ALJ that “[c]onsiderations of specific and general deterrence militate in favor of revocation.” Id. Failing to sanction Respondent in this case would send a message to Respondent and others in the registrant community that Respondent is vindicated, and that his false answer to Liability Question No. 3 is the “benchmark of exactly how candid . . . [one] ever needs to be in providing information to DEA.” Id. at 19-20. I decline to create a “perverse incentive on registrants and applicants to withhold requested application information any time where the withheld information may lead to an adverse decision on a DEA registration or renewal application.” Id. at 20.

I agree with the former Acting Assistant Administrator of the Diversion Control Division, that Respondent's proposed Corrective Action Plan provides no basis for me to discontinue or defer this proceeding. Its insufficiencies include Respondent's failure to accept responsibility, to institute remedial measures, and to convince me to entrust him with a registration. 21 U.S.C. 824(c)(3).

Accordingly, 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. 824(a), I hereby revoke DEA Certificates of Registration BS5000411 issued to Frank Joseph Stirlacci, M.D. Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 823(f), I further hereby deny any pending application of Frank Joseph Stirlacci, M.D., to renew or modify this registration, as well as any other pending application of Frank Joseph Stirlacci, M.D. for registration in Indiana. This Order is effective August 26, 2020.