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Case number 17-1175, Peter F. Kelly, DPM Petitioner versus Drug Enforcement Administration.

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Mr. Bayer for the petitioner, Ms.

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Gay for the respondent.

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Good morning.

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Good morning, Your Honors.

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My name is Douglas Bayer, counsel for Dr. Peter Kelly.

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Dr. Kelly has joined me this morning at counsel table.

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Dr. Kelly petitions for review of the decision of the DEA acting administrator to suspend for a year his DEA registration based on his failure to immediately terminate his employee, Vicki Mullins, after he caught her misusing his DEA registration.

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Had Dr. Kelly consulted with counsel at the time,

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No one would have anticipated the decision that the acting administrator ultimately reached.

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No one would have concluded that DEA regulations or precedent required that Ms.

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Mullen be immediately terminated, even if she had been involved in only one act of prescription fraud.

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Why do you say that?

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Why do you say no one would have so advised?

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Because if you look at the precedent,

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and you look at the only regulations that relate to employees, none of them anticipate a situation that Dr. Kelly faced.

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None of them address or establish a requirement that you fire an employee that you catch doing something wrong, and certainly, given the precedence that

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A one-year suspension was reserved for cases involving diversion by the registrant himself or herself.

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What about... No one... I'm sorry, just to finish.

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No one would have anticipated that he would have faced a one-year suspension for not firing her immediately.

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I'm sorry, Your Honor.

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What about the regulation cited in footnote 30 of the Administrator's opinion on...

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page 71 of the appendix, that's 1301.76A, which says the registrant shall not employ as an agent or employee who has access to controlled substances any person who has been convicted of a felony offense relating to controlled substances.

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Well, she didn't have access to

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to control substances, she was the insurance clerk.

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The other regulation, the one cited by DEA in the order to show cause, requires the registrant to evaluate the employee, look at the conduct the employee was involved in,

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but look at all the other circumstances in determining how to respond to employee misconduct.

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There's a question about that's non-practitioners.

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Right.

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Ultimately, the administrator said, I'm not sure that applies because it seems to apply to non-practitioners.

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But that was the regulation cited by DEA in its order to show cause, and that's the regulation to which we responded.

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at the hearing.

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What was the supervision situation?

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This is a multi-office outfit with the three employees, right?

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Well, there's Dr. Kelly and two employees, yes.

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Right, with the three individuals, the three personnel.

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What is the supervision situation of Mullen?

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I assume she's working alone a lot.

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Well, prior to this incident, prior to Dr. Kelly's discovery, she would be in the office herself, I believe, two days a week, maybe three days a week, when Dr. Kelly was in other offices.

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So Dr. Kelly and Ms.

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Seenal, who is his

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office manager, et cetera, would go to the satellite offices twice a week.

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So I think he was in the Roanoke office, I think Monday and Thursday, the other two offices, Tuesday and Wednesday, and on Friday was paperwork and other things.

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During the time that this scheme was active, yes, she would be there and not be supervised on Wednesdays, which I think is the primary day that a lot of these facts came in.

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Once Dr. Kelly became aware of this situation, after he reported it to the police and the police had taken no action, after he reported it to DEA and DEA took no action,

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He decided to keep her on temporarily to train his replacement.

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At that point, he took her key away so she couldn't come into the office without someone else letting her in.

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And approximately 10 days to two weeks after he caught her and terminated her, he hired her replacement.

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And from that point forward, her job was to train that replacement, and we can anticipate that they would have been in the office together.

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Ms.

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Sanow, when she was in the office with Ms.

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Mullen, testified that she supervised her much more carefully.

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And we know that Dr. Kelly took the fax machine away, which was the primary methodology through which all the refills were done.

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But do we have evidence squarely saying that she was not alone in the office during that five-week period?

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We don't have evidence either way, and that's the frustrating part from our point of view.

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You know, the case was tried, the government, the DEA was represented by two individuals, by the prosecutor or the DEA counsel as well as the administrative law judge who represents the administrator.

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And what the administrator does, the acting administrator does in his opinion, is he cites the absence of evidence, not the presence of evidence.

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He says, well, you didn't, you know, Ms.

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Hanel testified that she could have done the insurance work.

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And the Acting Administrator says, well, you didn't provide any evidence that she couldn't be replaced.

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But that wasn't an issue with the hearing.

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And if you look at what was testified to, Ms.

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Hinal was the office manager, so she ran the office.

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She interacted with all the patients.

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She was Dr. Kelly's assistant and accompanied him and assisted him in the treatment of patients.

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She traveled with Dr. Kelly.

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and ran the other two offices by herself.

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And another important point, which we didn't emphasize in the brief, and I apologize for that, is she was a licensed x-ray technician.

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So if anybody needed to take x-rays, she was the person to do it.

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And yet... So let me ask you, you say that as far as the situation at the time, no regulation and no case

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would have indicated a one-year suspension.

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As I read the administrator's, acting administrator's decision, his view was that no one in your client's position could reasonably retain in his employ a person who had

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violated the law in such serious ways and admitted it.

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That if DEA is going to register people, it wants to be sure that the entity where the registration applies is as clean as possible.

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So what was DEA to do in your view

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when it issued an order to show cause, saying, here's our evidence.

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Now you tell us why we shouldn't take adverse action against you.

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Well, first of all, the primary focus of this hearing

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was on whether Dr. Kelly was responsible for Ms.

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Mullen's misuse of his DEA registration, and that was the primary focus.

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I would point out that, as the Administrative Law Judge noted, DEA in its post-hearing submissions didn't even address the issue of whether her continued employment was a basis for revoking or suspending his DEA registration.

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It wasn't a big issue for them.

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It wasn't a big issue for us.

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We addressed... Was it any issue?

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Well, yes.

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Yes, Your Honor.

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We addressed the regulation which said...

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When you find out something's wrong, you need to address it.

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And Dr. Kelly testified to how he addressed it.

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And, you know, the acting administrator, who has never run a small private practice, dismisses the fact that this is a practice that exists on insurance, as most doctors' offices do.

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And, you know, there's no evidence of

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the contracts with the insurance companies, but clearly you have to keep up to date or they won't process your claims.

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And Dr. Kelly made what we believe, submit a rational decision that in order to protect his practice, he needed to keep her there long enough to train somebody.

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So let me ask you, what were his options in terms of getting preapproval of retaining her?

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Was there any such option available to him?

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To get preapproval of what, Your Honor?

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Retaining Mullen.

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None that I'm aware of.

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As I say, he reported to DEA, and DEA has taken the position in a different case, one we cited in our brief, the dentist's hearing, that a registrant is required to notify DEA of misuse of a registration because DEA can cancel that registration.

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and issue a new one.

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DEA didn't do that.

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They didn't suggest that.

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They took no positive steps to address this issue.

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He reported it to the police.

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They took no positive steps to address this issue.

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They knew she was in his office.

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They knew she continued in his office, and yet they neither arrested her, as I would have done, or suggested be done, nor had they advised Dr. Kelly that she was such a threat, an obvious threat to the safety of this community.

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that she needed to be terminated immediately.

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And ultimately, judges, I think the problem I have and the really weakness in this decision is there is no evidence that her presence in that office provided her with any additional ability to continue the scheme that she wouldn't have had outside.

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A cell phone.

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Mr. Barrett, that's a very strange argument.

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somebody is in the employ of a doctor with prescribing privileges, they have more access to, I mean, people in Walmart who know her and they know that she's been fired versus know that she's working there, makes a big difference in how much she's able to kind of coast on

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the understanding.

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And she's someone who's done this before, been convicted of a felony, and then persisted.

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So the idea that, oh, well, now she's been caught, things are going to change.

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It's also very strange that he wants her to train her successor.

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I mean, would you want a felon who betrayed your trust to train her successor in your law office?

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The answer is no.

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No, but think of the alternatives.

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He had no problem with her ability to handle the insurance.

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She had done that in a trustworthy way.

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What she had done was the prescription stuff.

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That's different.

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He made a judgment, weighed the evidence, and decided that the

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He couldn't replace her immediately and keep his practice active.

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But in terms of the telephone, Your Honor, first of all, she didn't use her real name when she called in the prescription, so they didn't know who she was.

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And I could call in right now from this office, from this stand, and if I knew Dr. Kelly's DEA registration number, which she did, I could call any pharmacy in Roanoke, and I could call in a prescription saying I was either Dr. Kelly or I was calling on behalf of Dr. Kelly's office.

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I investigated cases where people made up doctors.

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They got a DEA number.

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They got a telephone.

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They would put the telephone in a room where nobody would answer it.

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They would call in a prescription.

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The pharmacy wrote it down, filled it.

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They would try to call, might or might not try to call the number.

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And we pointed out that in this case, there was no phone verification evidence at all.

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No evidence, but presumably if they're calling and Mullen is the only one there, when everything's working as she's designed it to, she picks it up.

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So there's no evidence because she's the one alone in the office who continues to be alone in the office who picks up and confirms when the pharmacies seek verification.

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I mean, isn't that a fair inference?

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There may be an inference that it happened up to the point she got caught, but from that point forward, there's no evidence.

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But the testimony of the... Well, we don't have any evidence of prophylaxis either, do we?

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I'm sorry.

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The only evidence in the record from the DEA witnesses was that there was only evidence of one phone call over five years.

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That was intercepted by someone other than Mullen?

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No.

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No.

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It was documented in the pharmacy records.

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The pharmacies would document if they, in fact, verified the prescription.

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That wasn't done.

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The other thing is, even though Dr. Kelly notified the Walmart pharmacy that his registration had been compromised, they continued to fill prescriptions.

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These illegal prescriptions.

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And the administrator cites that.

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But how can Dr. Kelly be responsible for the irresponsible and I would say illegal acts of the Walmart pharmacy in filling the prescriptions, having received notice that

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The DEA number had been compromised.

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Why?

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Is she indispensable?

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In other words, why can't you keep the practice running in the five-week period without her?

[00:14:36] Speaker 01:
I guess that's... Because there'd be no income, all of the insurance... Well, what if she... I mean, you know, people are incapacitated all the time through illness or disability, and you have to adjust in workplaces, and that happens constantly, every day, of course.

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Here, there was obviously a recognition that you couldn't have her around long-term, so why not do it immediately?

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And the defense to that seems to be, well, she was indispensable to the

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Does that have a theory to make the transition?

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Certainly, Dr. Kelly's testimony at the hearing was that she was indispensable at the point until he could hire someone to take her place.

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And he hired someone within 10 days or two weeks, and then Ms.

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Mullen took on the responsibility of training that individual to fulfill her responsibility.

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So really, what we're talking about is essentially a 10-day to two-week period, according to the testimony.

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And that's really a judgment call.

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I understand this is a harsh sanction.

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I understand your concern about that and the vagueness of the standard I get too.

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But they're really questioning, I think, the judgment of she's too, you can't have her around, but my practice is so important to keep running that I need to keep her around to train the next person and to keep it running.

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And that's a judgment call that in retrospect looks

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look shaky, I guess.

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It's still a harsh sanction, I agree.

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Yes, and that's really our point.

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We're not saying there shouldn't have been some sanction or some future sanction, but the ultimate question that the Acting Administrator has asked to address is, as I look at his actions in 2012,

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Can he be trusted going forward to conform with the Controlled Substances Act and the requirements of the registration?

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The purpose of the act is not to punish him for making a bad decision, but can he be trusted to comply?

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And we submit, for all the reasons that are outlined in the brief, that this one decision with which the acting administrator disagrees is not such an indicator of future conduct.

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Well, there was, there was a past, was it a consent order?

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Dr. Kelly had a problem back in 2005 and part of that was that he had had some record keeping violations and that he was supposed to

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Right.

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There was a consent order with the state in 2005 over inventory for controlled substances he used in his practice.

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They came in and monitored him.

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They signed off on his inventory practices.

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When DEA came in 2013, they said, no, no, no, that's not right.

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You're doing what's called a perpetual inventory, which means when you take a pill out,

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You record it in your log and indicate that now you've got one fewer, and DEA... So it's his position that the perpetual inventory methodology had been approved by Virginia during the 2005 consent order period?

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Yes, yes, Your Honor.

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The record shows clearly that he was put on probation.

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They sent somebody in to review his practices, and it was approved.

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Also, I would just point out... The perpetual record keeping is distinct from the biennial

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and initial inventory counting?

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I'm sorry?

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Virginia did not require the initial inventory hand count and the biennial hand count?

[00:18:14] Speaker 00:
Well, they required an initial inventory, but that would have happened well before 2000 when he opened his practice.

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So that was water under the bridge.

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There was no way to recreate that.

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But the biennial?

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They did not require a biennial.

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The Virginia did not.

[00:18:29] Speaker 00:
That's correct.

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At least there's no evidence that they did.

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But there's no evidence that they did not.

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Well, Dr. Kelly's testimony was that his practices were consistent and had been reviewed by Virginia, and there's no contrary evidence of that, Your Honor.

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Counsel, let me ask you.

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You know our standard of review gives us very limited scope, particularly in areas of sanction.

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So in thinking about this case,

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You do not suggest, as I read your brief, that had the focus of the hearing been on his failure to terminate Mrs. Mullen immediately, that you could have offered other evidence or made other argument.

[00:19:23] Speaker 03:
As I read your briefs, your case has been presented, so the ALJ,

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ruled in your client's favor, finding your client was a credible persuasive witness and that while it was a lot of blame here on what happened with Mrs. Mowen was not blame that could be attributed to your client.

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The acting administrator takes an entirely different view and the question in my mind then would be

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And I don't see you quite making these arguments that I know your point is it's a new rule.

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You didn't have notice.

[00:20:10] Speaker 03:
It was not notice in common.

[00:20:17] Speaker 03:
But it's not that the acting administrator failed to consider some of the evidence that had been presented.

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Rather, you disagree with his analysis of it.

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Can you disabuse me of that understanding?

[00:20:35] Speaker 00:
Well, I believe there are some points of evidence that he failed to address, such as the fact that Ms.

[00:20:41] Speaker 00:
Sinal was the X-ray technician and necessary to perform that service in the offices that Dr. Kelly has.

[00:20:48] Speaker 00:
I think the other point is, in terms of the substantial evidence, is a lot of what he relies upon is evidence that's not in the record, that was not elicited by either DEA or by Dr. Kelly.

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And from that absence of evidence,

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He draws conclusions, which is not consistent with the standard that his decision to be based on substantial evidence.

[00:21:10] Speaker 03:
And so specifically, you would identify what?

[00:21:13] Speaker 00:
Well, for instance, the question of whether Ms.

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Sainal could have done Ms.

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Mullen's job and someone else could have done her job.

[00:21:26] Speaker 00:
That's a, that's a big one.

[00:21:27] Speaker 00:
There are, you know, whether in fact the questions that Judge Pollard raised, what was the exact level of supervision?

[00:21:38] Speaker 00:
I mean, the administrator, I mean, the acting administrator takes the position where you didn't

[00:21:43] Speaker 00:
put on clear testimony that she was never by herself, therefore I'm going to assume that she had access to the telephone in the office unsupervised.

[00:21:52] Speaker 00:
But there is some testimony that she was supervised by Ms.

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Saino when she was there and she couldn't get into the office by herself as she had done previously because she had the key taken away.

[00:22:05] Speaker 03:
On the inventory... Could I just be clear, is there anything else?

[00:22:08] Speaker 00:
I believe there are, Your Honor.

[00:22:10] Speaker 00:
Unfortunately, I can't recall them all at this time.

[00:22:12] Speaker 00:
I think they're set out in our brief.

[00:22:13] Speaker 00:
But there are other places where he says there's no evidence on this particular point and then goes forward to draw conclusions.

[00:22:20] Speaker 00:
There certainly was not a lot of evidence on how the insurance

[00:22:26] Speaker 00:
I want to say recovery, but how the insurance claims process worked and why Dr. Kelly, you know, might have felt that he couldn't wait a week or two or even longer to keep that process going.

[00:22:41] Speaker 00:
I'm sorry, Your Honor.

[00:22:44] Speaker 02:
So with respect to inventory, what I was thinking of is on page 25 of the appendix, the Virginia Board of Medicine consent decree refers to failure to establish an initial inventory and failure to maintain an accurate current inventory of these controlled substances.

[00:23:04] Speaker 02:
And the failure to maintain an accurate current inventory was precisely

[00:23:08] Speaker 02:
one of the bases here, not the principal basis, but one of the bases, and it just seems that it's more clearly fair to rely on that, where this has been a problem in the past, brought to Dr. Kelly's attention, and where the practices still are nonconforming.

[00:23:27] Speaker 00:
First of all, the acting administrator makes it pretty clear, I believe clear, that the inventory violation and or the other one involving the office manager did not independently support the one-year sanction.

[00:23:44] Speaker 00:
And I think the cases we cite in the brief show that prior inventory violations did not support a sanction of a year.

[00:23:53] Speaker 00:
Second of all,

[00:23:55] Speaker 00:
In terms of Dr. Kelly's inventory practices, that as part of that consent decree, as I pointed out, the state of Virginia came in, they inspected his conduct after the, while he was on the consent decree, found it to be compliant with the state regulations and dissolved the decree.

[00:24:14] Speaker 00:
The issue with inventory, it's a somewhat unique issue because he had an inventory.

[00:24:21] Speaker 00:
The inventory was accurate except for three pills.

[00:24:25] Speaker 00:
The problem was it didn't quite match what DEA required in the sense that he didn't open the bottles that were otherwise sealed and count them every two years.

[00:24:39] Speaker 00:
But if the idea of the inventory is to keep track of what is in the closet, he did that.

[00:24:48] Speaker 00:
And he did it accurately.

[00:24:49] Speaker 00:
And as soon as DEA pointed out the fact that he wasn't quite in compliance with what their regulatory scheme required, he changed.

[00:24:59] Speaker 02:
Go ahead.

[00:25:02] Speaker 03:
What is your understanding then of the legal requirement regarding remorse?

[00:25:08] Speaker 03:
Because the active administrator focuses on that.

[00:25:11] Speaker 03:
And you've written an article about forgetting to say you're sorry.

[00:25:16] Speaker 03:
So the question in my mind is,

[00:25:18] Speaker 03:
Is that what's lacking here and that's what triggered the administrator's view that a year was required?

[00:25:28] Speaker 00:
If I had to take a guess, as I read these opinions, quite frankly, I see a lot of anger on the part of the acting administrator in both the decision and order.

[00:25:37] Speaker 00:
So if you ask me what motivated, I would say it was anger at the whole situation.

[00:25:42] Speaker 03:
I wasn't clear then.

[00:25:45] Speaker 03:
What I was focusing on was, what is the case law in terms of, what is an expression of remorse?

[00:25:56] Speaker 03:
I mean, the acting administrator focused on that, and it's not quite a magic words test, but it is something along the nature of acknowledging on the record some acceptance of responsibility.

[00:26:18] Speaker 03:
Is that your understanding of it?

[00:26:20] Speaker 03:
And if it's not, then was the acting administrator holding him

[00:26:26] Speaker 00:
The case law articulates a standard that says that you have to come in and essentially accept responsibility for your wrongful acts.

[00:26:42] Speaker 00:
having practiced in this field for over 30 years and having written a law review article on that exact point, I'll tell you I don't understand it.

[00:26:49] Speaker 00:
Because it seems to me as you read the cases, the acting administrator finds responsibility when the DEA wants to and finds a lack of acceptance when they don't.

[00:27:00] Speaker 00:
As a practitioner, you go into a hearing and you are confronted with an interesting situation.

[00:27:07] Speaker 00:
You have to

[00:27:09] Speaker 00:
defend against the claims in the order to show cause.

[00:27:12] Speaker 00:
But yet, if you don't accept responsibility, and quite frankly, oftentimes the acceptance responsibility is the abject admission that the DEA is correct in what they say you did wrong, and you admit that you did it wrong,

[00:27:31] Speaker 00:
As a practitioner, I'm not sure how you handled that situation.

[00:27:34] Speaker 00:
In this case, Dr. Kelly came forward and he honestly, as the ALJ found, explained what he did and why he did it.

[00:27:42] Speaker 00:
And he didn't deny that he had kept her on.

[00:27:44] Speaker 00:
He didn't deny that those were his inventory practices.

[00:27:48] Speaker 00:
He didn't deny that he gave his nurse the medication to give to the patients.

[00:27:54] Speaker 00:
He accepted, and certainly in the inventory situation, he quickly changed.

[00:28:01] Speaker 00:
Once it was pointed out, it was wrong.

[00:28:02] Speaker 00:
In terms of his nurse's practice, he changed that even before the order of district cause was issued.

[00:28:08] Speaker 02:
Well, he did act as if he did not know the scope of Mullen's diversion when, in fact, he had much broader than... And that clearly was a B in the bonnet of both the ALJ and the administrator in the opinions.

[00:28:25] Speaker 02:
I think they quoted verbatim several different times.

[00:28:30] Speaker 00:
And I think the explanation for that, Your Honor, is this.

[00:28:32] Speaker 00:
I think what Dr. Kelly was trying to communicate is I knew she was involved in illegal activity.

[00:28:37] Speaker 00:
She admitted it to me.

[00:28:38] Speaker 00:
I knew of at least seven prescriptions or I think it was seven at the Walmart and I had checked the PMP and I found a number of prescriptions issued in her name with my DEA registration.

[00:28:50] Speaker 00:
What I think he was trying to say, Your Honor, is I was not aware of the scope of her profidity as demonstrated at the hearing.

[00:29:01] Speaker 00:
that it was so much broader and so much greater than what he knew.

[00:29:04] Speaker 00:
He didn't deny that he knew she was involved in this.

[00:29:07] Speaker 00:
He certainly didn't know she'd been involved in it.

[00:29:09] Speaker 02:
The administrator quotes what he said, which was, it was only with a handful of information that I had, less than a dozen.

[00:29:17] Speaker 02:
And then the administrator says, by August 24th, he knew that she had obtained more than 5,000 dosage units.

[00:29:31] Speaker 02:
10 milligrams, the strongest dosage, and 780 dosage units of Zulpadam.

[00:29:37] Speaker 02:
So it struck, I think, both the ALJ and the administrator as a denial of the, or a failure to really acknowledge and come to grips with the severity of the situation.

[00:29:52] Speaker 02:
And that was worrisome.

[00:29:53] Speaker 02:
Is this person gonna, is he taking this seriously?

[00:29:59] Speaker 00:
I don't think he would have.

[00:30:00] Speaker 00:
He certainly, if you'll excuse the expression, acted as if his hair was on fire when he found out about it.

[00:30:07] Speaker 00:
He called the Commonwealth's attorney's office.

[00:30:09] Speaker 00:
He called DEA.

[00:30:10] Speaker 00:
He called the police.

[00:30:12] Speaker 00:
As soon as the police officer who had previously arrested Ms.

[00:30:15] Speaker 00:
Mullen and failed to do so again this time, or previously prosecuted, I don't know that he'd arrested her, told him about the prior cases, he looked it up.

[00:30:26] Speaker 00:
He looked at his PMP.

[00:30:27] Speaker 00:
He certainly investigated this on his own.

[00:30:29] Speaker 00:
He didn't stick his head in the sand.

[00:30:31] Speaker 00:
He didn't count the number of dosage units, which is what the acting administrator focuses on.

[00:30:37] Speaker 00:
He looked at the number of prescriptions.

[00:30:41] Speaker 00:
But he didn't say that, he didn't testify that those prescriptions weren't illegal or that they didn't disturb him.

[00:30:47] Speaker 00:
He was quite disturbed by the situation.

[00:30:49] Speaker 01:
The odd thing, I suppose, from the other perspective is, because he acted with his hair in the fire and did all those things that you suggested, he obviously knew it was a serious situation.

[00:31:03] Speaker 01:
And yet, leaves her there in place

[00:31:09] Speaker 01:
for another five weeks and that's the that's the part that's at the heart of this and that's that that disconnect between hair on fire and doing all the things you say and leaving someone in place and hiring and firing decisions are very difficult i i get that and uh but when you have someone who's done this and your hair's on fire isn't it reasonable for the

[00:31:33] Speaker 01:
Administrator then to say look we just can't that's too too great a risk to public safety to have someone with that degree of wrongdoing in such a position of responsibility and something should have been done about that and I respond that two ways just given a one

[00:31:50] Speaker 00:
Contrary to what the IT administrator says, I think Dr. Kelly Azuleman has a right to rely on the police to some extent.

[00:31:58] Speaker 00:
Officer Finley, who was part of a DEA task force and a Virginia state trooper, and the man whose responsibility was for diversion of controlled substances in southwest Virginia,

[00:32:14] Speaker 00:
left her in place.

[00:32:16] Speaker 00:
He knew she was still in the office.

[00:32:19] Speaker 01:
But they have a different role, right?

[00:32:20] Speaker 01:
I mean, if you're running an office and you have someone who's been doing that degree of wrongdoing, and we can debate what the degree is, but a degree sufficiently that, in your words, his hair was on fire.

[00:32:35] Speaker 00:
Yeah, but, you know, you've got a police officer whose job is to protect the public.

[00:32:38] Speaker 00:
That is his only job, right?

[00:32:41] Speaker 00:
He's prosecuted her before for similar conduct.

[00:32:45] Speaker 00:
She confessed to a felony, which means he could arrest her without a warrant.

[00:32:51] Speaker 00:
He didn't advise Dr. Kelly at all as to what he might want to do to protect the community, which Officer Finley was obligated to do.

[00:33:00] Speaker 00:
He didn't arrest her and remove her, which would have put her under the jurisdiction of the court.

[00:33:05] Speaker 00:
And she could have been ordered under house arrest.

[00:33:07] Speaker 00:
She could have been ordered to give up her cell phones.

[00:33:09] Speaker 00:
She could have been ordered to turn off her phones.

[00:33:11] Speaker 00:
The court could have put in place

[00:33:14] Speaker 00:
even better strictures than Dr. Kelly could, because once she leaves the office, she can go home, pick up the phone, call the same pharmacy, and call in a prescription.

[00:33:22] Speaker 00:
She's got a lot of interesting things.

[00:33:23] Speaker 01:
I understand, but, you know, at least he could have done more.

[00:33:25] Speaker 01:
This is the counter view, and I'm not saying which one I'm leading, I'm just giving you the counter view so you can respond, is yes, she still could have gotten around

[00:33:37] Speaker 01:
the restrictions, but he could have done more if the theory goes to reduce the risk by firing her immediately.

[00:33:46] Speaker 00:
And that's the theory, Judge, and I don't believe there's any basis for it set out by the acting administrator as he's required to do.

[00:33:54] Speaker 02:
I recognize this is not a basis set out by the ALJ or the administrator, but why didn't Dr. Kelly seek to have a new DEA number reissued?

[00:34:04] Speaker 02:
Is that not something one can do?

[00:34:06] Speaker 00:
I'm not sure he was aware that he could.

[00:34:08] Speaker 00:
He certainly wasn't advised by DEA that they could do that.

[00:34:11] Speaker 02:
Yeah.

[00:34:11] Speaker 02:
No, I recognize that one would think that would primarily be their responsibility.

[00:34:14] Speaker 02:
It's like when you have a credit card fraud and the credit card company is very quick to say... We'll give you a new net card.

[00:34:20] Speaker 02:
You can't keep that one even if you think you may find it in your trench coat pocket tomorrow.

[00:34:24] Speaker 00:
You know, as we read the newspaper, we see DEA holding all sorts of other people responsible for criminal activity except themselves.

[00:34:31] Speaker 00:
I mean, you've got the, you know, they lean on the drug distributors because they're not adequately supervising the pharmacies.

[00:34:38] Speaker 00:
They get the pharmacies because they're filling prescriptions they shouldn't fill.

[00:34:42] Speaker 01:
What do you think the maximum appropriate sanction would be, given your view of the facts?

[00:34:51] Speaker 00:
Based on the cases that we've cited, I would say the maximum would probably be six months, and that may even be too long.

[00:34:59] Speaker 01:
Six months of suspension.

[00:35:02] Speaker 00:
I mean, the ALJ suggested a one-year suspension, but essentially a probationary period to allow him to avoid that.

[00:35:11] Speaker 02:
What is at stake for him now?

[00:35:12] Speaker 02:
I mean, he served most of the suspension.

[00:35:16] Speaker 02:
What else is at stake?

[00:35:18] Speaker 00:
His participation in insurance, as we indicated to the court in our emergency motion for a stay.

[00:35:26] Speaker 00:
He's been notified by Blue Cross Blue Shield that they are in the process of terminating his participation.

[00:35:36] Speaker 02:
Has that happened or not?

[00:35:38] Speaker 00:
He got the letter saying we're going to move to Terminate.

[00:35:42] Speaker 00:
It gave him the right to file an appeal.

[00:35:44] Speaker 00:
He filed an appeal.

[00:35:45] Speaker 00:
He's waiting for a final decision.

[00:35:47] Speaker 03:
Why don't we hear from DEA, and then we'll give you some time on rebuttal.

[00:35:52] Speaker 00:
I'm sorry, you're on?

[00:35:53] Speaker 03:
Could we hear from DEA, and then we'll give you some time on rebuttal.

[00:36:06] Speaker 04:
Good morning.

[00:36:07] Speaker 04:
Good morning.

[00:36:08] Speaker 04:
May it please the court?

[00:36:09] Speaker 04:
Anita Gay on behalf of DEA.

[00:36:14] Speaker 04:
The acting administrator's decision is supported by substantial evidence.

[00:36:18] Speaker 04:
The evidence established that Dr. Kelly employed a serial diverter who had diverted 127,000 doses of hydrocodone, 5,000 doses of Ambien.

[00:36:28] Speaker 04:
She had a prior criminal history for the same conduct in 2009.

[00:36:33] Speaker 04:
that she continued to work for him and divert while she was on probation for her 2009 state charges.

[00:36:40] Speaker 04:
He learned all of this within four days of finding about the two suspicious prescriptions

[00:36:48] Speaker 04:
in August, and on August 20th, he learned about the fax, the fax refill that was sent over.

[00:36:55] Speaker 04:
Within four days of that, he looked at the PMP system, the Prescription Monitoring Program for Virginia, learned the scope and the breadth of her diversion,

[00:37:03] Speaker 04:
He also found out about her state case, saw that she had no regard for the law, because during the time that she had been under state prosecution and, in fact, on state probation, she had worked for him and continued to divert and continued to obtain fraudulent prescriptions.

[00:37:18] Speaker 01:
But don't... He recognizes that she can't work there anymore.

[00:37:25] Speaker 01:
And the question I gather is, in such a situation, and this happens in workplaces every day all over the country,

[00:37:33] Speaker 01:
You know someone's committed some wrongdoing and can't work there anymore.

[00:37:36] Speaker 01:
Do you march them out immediately, or is there some minor transition period before you march them out?

[00:37:44] Speaker 01:
And arguably, in retrospect, an error in judgment in allowing her to stay there, even with the precautions.

[00:37:52] Speaker 01:
But is that rise to the level of a one-year suspension, I guess, is the question before us.

[00:37:58] Speaker 01:
Because you're coloring the facts,

[00:38:01] Speaker 01:
I don't know that that's really in dispute, that what's in dispute is, is it reasonable to have someone around for five weeks after you know they shouldn't be there permanently anymore?

[00:38:13] Speaker 04:
No, it was not reasonable to have her around for five weeks given the scope of her misconduct and also his additional misconduct that was found, his record-keeping violations.

[00:38:23] Speaker 04:
And as the court pointed out, these were the same record-keeping violations that he had

[00:38:27] Speaker 03:
in 2005 when he had entered into the... I know, but the administrator said the only reason he was imposing this sanction was Dr. Kelly's decision to retain her.

[00:38:42] Speaker 04:
Yes, the administrator gave the greatest weight to the retention of Ms.

[00:38:46] Speaker 03:
Mullen.

[00:38:46] Speaker 03:
So it's like other crimes evidence is out of the equation here as far as... I know

[00:38:52] Speaker 03:
I found the acting administrator's decision interesting in that regard.

[00:38:56] Speaker 03:
He says, the only reason I'm doing it, and then these other things sort of support what I'm doing.

[00:39:01] Speaker 03:
But if the only reason is because he retained her, then the regulation, which now says you should assess this misconduct, has to now be read to say, and if there's been any prior diversion, you must immediately

[00:39:23] Speaker 03:
terminate your employment of that person.

[00:39:27] Speaker 04:
Well, the acting administrator specifically did not apply that regulation.

[00:39:31] Speaker 03:
I understand, but I'm talking about a practitioner who's out there in the real world trying to comply and the regulation says assess, that's the best you can figure out.

[00:39:43] Speaker 03:
And so he assesses and he calls everybody you can reasonably think of and tells them

[00:39:52] Speaker 03:
about this person.

[00:39:54] Speaker 03:
And then he says, now what am I going to do?

[00:39:58] Speaker 03:
And so he basically puts her in a gilded cage so she can train this other person.

[00:40:04] Speaker 04:
Well, actually, she was not in a cage.

[00:40:06] Speaker 04:
She was left unattended.

[00:40:07] Speaker 03:
Well, that was a figure of speech.

[00:40:09] Speaker 03:
I mean, he locked up the fax machine.

[00:40:11] Speaker 03:
He had his other secretaries supervising her in the sense that they were rarely alone.

[00:40:19] Speaker 03:
That's all I meant.

[00:40:20] Speaker 04:
Well, there is no record support for that statement.

[00:40:23] Speaker 03:
What would happen?

[00:40:25] Speaker 04:
That she was supervised by the other employee.

[00:40:30] Speaker 04:
The other employee is the office manager and she travels with Dr. Kelly to his other offices.

[00:40:37] Speaker 04:
So Ms.

[00:40:37] Speaker 04:
Mullen was left unattended.

[00:40:39] Speaker 03:
Is there any evidence?

[00:40:40] Speaker 03:
that during that five week period she was actually traveling and therefore Mrs. Mullen was unattended.

[00:40:48] Speaker 04:
Yes, her testimony was that she would go to the other offices with him.

[00:40:52] Speaker 04:
She would assist him.

[00:40:53] Speaker 03:
During this five week period.

[00:40:54] Speaker 04:
Was left unattended and that she was left there.

[00:40:57] Speaker 04:
Now while the fax machine.

[00:40:59] Speaker 02:
Can you give us your best record site on that because that's kind of important.

[00:41:04] Speaker 02:
You can, you can, your associate may be able to get that to you.

[00:41:08] Speaker 04:
Okay, I will have to provide your colleague the site on that.

[00:41:15] Speaker 04:
What happened, as I said, is that the acting administrator did not rely on the regulation, instead was looking to factor five under the five factor test of such other conduct which may threaten the public health and safety.

[00:41:28] Speaker 02:
The whole point of the Controlled Substances Act is to protect the public health and safety.

[00:41:35] Speaker 02:
At some level, any violation of any part of it could be found by the administrator to

[00:41:42] Speaker 02:
to be something that may pose a risk to the public health and safety.

[00:41:47] Speaker 02:
Why isn't that argument just vastly overbroad?

[00:41:50] Speaker 04:
Well, you're correct that the entire purpose of the Controlled Substance Act is to have a closed system so that illegal and legal dispensing of controlled substances may be monitored, detected by the DEA.

[00:42:01] Speaker 04:
And that is why a registrant has a duty to protect the public and to protect the registration, which Dr. Kelly failed here.

[00:42:08] Speaker 04:
What sets us apart from

[00:42:12] Speaker 04:
what your honor is asking, saying that, oh, there's a technical violation, so therefore you violated, and therefore you lose your registration.

[00:42:18] Speaker 04:
You have to look at all of the evidence.

[00:42:20] Speaker 04:
And when you look at all of the evidence under the very differential standard of review by this court, you will see that there is substantial evidence supporting.

[00:42:30] Speaker 04:
As I was explaining, the actions of Ms.

[00:42:33] Speaker 04:
Mullen, Dr. Kelly's prior conduct in 2000 with his own state

[00:42:39] Speaker 04:
state controlled substance issues, which again, was given little weight, but then you also look at his record keeping.

[00:42:45] Speaker 04:
He had had prior issues in 2005, and then he had exact same issues several years later.

[00:42:50] Speaker 04:
He had allowed his office manager to dispense.

[00:42:54] Speaker 04:
And instead of coming in and saying,

[00:42:57] Speaker 04:
You're correct, this was wrong and this is how I've remedied it.

[00:43:00] Speaker 04:
He came in with excuses, with justifications.

[00:43:03] Speaker 02:
To some extent, I mean he's explaining his situation, but he also did say this is wrong and he did correct.

[00:43:08] Speaker 02:
Let me ask you about, I had a question about the retroactivity holding.

[00:43:16] Speaker 02:
The administrator says that it would be retroactive to hold Dr. Kelly accountable for having to show due diligence regarding his federal DEA registration, potentially having been subject to abuse, based on the fact that he had reason to believe that there was abuse of his state prescribing authority.

[00:43:38] Speaker 02:
So they said, that is going forward.

[00:43:40] Speaker 02:
You have that affirmative obligation to do due diligence, but we're not going to apply that because you didn't have reasons to now

[00:43:46] Speaker 02:
Why isn't it equally a new duty or retroactive to construe the duty of acting in the public interest as requiring the immediate firing of someone like Mullen?

[00:43:59] Speaker 02:
I mean, it seems like to me maybe neither of those is particularly retroactive or both of them might be.

[00:44:05] Speaker 02:
I'm not sure I see the distinction.

[00:44:08] Speaker 04:
Well, looking under factor five, there is nothing different that was applied to Dr. Kelly that hadn't been applied to other registrants.

[00:44:16] Speaker 04:
And that is to look at whether there is acknowledgement that something had been done wrong.

[00:44:21] Speaker 02:
But that's at a very high level of generality.

[00:44:23] Speaker 02:
What about they're saying, you should have fired someone who's a serial diverter.

[00:44:29] Speaker 02:
What should have put him on notice that he should have immediately fired someone who was a serial diverter?

[00:44:36] Speaker 04:
Once he found out about the two fraudulent refill requests through the facts on August 20th, and then within four days he knew that she had the prior state charges, that she had been on probation and had no regard for the law because she continued to divert while she was on probation, and that

[00:44:58] Speaker 04:
And so she had no regard to law, but he was willing to assume this risk and keep her.

[00:45:03] Speaker 04:
I mean, he put his own self-interest over the interest of the public in his obligations.

[00:45:08] Speaker 02:
You really haven't answered the question about why, what should he, what should put him on?

[00:45:12] Speaker 02:
I mean, and the other thing is, it's true that other people's failure to fulfill their obligations don't excuse Dr. Kelly's failure

[00:45:23] Speaker 02:
to fulfill his, I understand that.

[00:45:25] Speaker 02:
On the other hand, put yourself in Dr. Kelly's shoes.

[00:45:29] Speaker 02:
How obvious is it that he is supposed to treat her like someone who's really dangerous and needs to be out of his office when the police on her first felonies fail to even notify him?

[00:45:42] Speaker 02:
The pharmacies don't really check on the prescriptions.

[00:45:46] Speaker 02:
There's missing DEA number, they still fill them.

[00:45:50] Speaker 02:
The DEA doesn't cancel his DEA number when they know it's been abused.

[00:45:56] Speaker 02:
The sentencing judge of Mullen in the first criminal case apparently knew she was working for Dr. Kelly and let her go back to work there without any warning.

[00:46:05] Speaker 02:
So the notion that it's supposed to be crystal clear to him what you do in this situation clamped down.

[00:46:12] Speaker 02:
Nobody else is clamping down.

[00:46:16] Speaker 04:
Well, one of the things is that the pharmacies did check on the prescriptions.

[00:46:20] Speaker 04:
What they would do is Ms.

[00:46:21] Speaker 04:
Mullen would call them in and would not have to give the DEA registration.

[00:46:25] Speaker 04:
There was testimony from one of the pharmacists who testified that she would call them in, and we had Dr. Kelly's DEA registration number in our computer on our file, so that didn't need to be there.

[00:46:37] Speaker 04:
On the refills, they would fax a refill request to the office.

[00:46:40] Speaker 04:
Ms.

[00:46:40] Speaker 04:
Mullen was in the office alone every day of the week except one, and she would

[00:46:46] Speaker 04:
she would stamp them with his signature stamp and then send them back authorizing the refill, which is how she was able to divert the 127,000 doses of hydrocodone to herself, her son.

[00:46:59] Speaker 02:
How is that responsive to my question, which is how was Dr. Kelly supposed to know how decisively

[00:47:08] Speaker 02:
and harshly to treat Ms.

[00:47:11] Speaker 02:
Mullins when nobody else who had interacted with her over drug-related felonies and diversion reacted in a commensurate way.

[00:47:22] Speaker 02:
DA did not cancel and reissue the number.

[00:47:25] Speaker 02:
Why not?

[00:47:27] Speaker 04:
In the 2008, there were tramadol prescriptions, which at the time, it was not a federal controlled substance.

[00:47:32] Speaker 04:
But I mean, in this situation, 2012.

[00:47:35] Speaker 04:
In this situation, DEA began an investigation.

[00:47:39] Speaker 04:
But the argument today seems to be, well, they did not take her into custody.

[00:47:42] Speaker 04:
And there are a host of restrictions.

[00:47:43] Speaker 02:
No, or they didn't cancel his registration number.

[00:47:46] Speaker 02:
Why didn't they do that?

[00:47:47] Speaker 02:
Credit card fraud, cancel number, issue new one.

[00:47:50] Speaker 02:
Here, as everyone seems to be saying, there's a lot of diversion that goes on without rechecking.

[00:47:57] Speaker 02:
So cancel number, put it on a blacklist, give a new number.

[00:48:02] Speaker 02:
Isn't that going to help the DEA in its mission?

[00:48:04] Speaker 02:
I'm just curious why that's not the action.

[00:48:06] Speaker 04:
It could have helped the DEA.

[00:48:07] Speaker 04:
He did not ask them.

[00:48:08] Speaker 04:
He asked the pharmacy to shut down his DEA registration.

[00:48:11] Speaker 02:
Seriously?

[00:48:11] Speaker 02:
Talk about not taking responsibility.

[00:48:14] Speaker 04:
No, he asked the pharmacy.

[00:48:16] Speaker 04:
When he talked to the Walmart pharmacist, he asked her, upon discovery of the two fraudulent, he asked the pharmacist to shut down his DEA registration.

[00:48:24] Speaker 04:
But despite that,

[00:48:25] Speaker 04:
they still refilled 10 to 12 of the prescriptions that were outstanding.

[00:48:30] Speaker 04:
So there were additional scripts issued after the time that he became aware of her misconduct.

[00:48:40] Speaker 04:
He could have asked for it, DEA could have changed it, but that still, even if they had shut down his DEA registration, that does not take care of his failure to terminate Ms.

[00:48:57] Speaker 01:
Mullen at the time.

[00:48:58] Speaker 01:
On the fair notice point that Judge Pillard is raising,

[00:49:02] Speaker 01:
If there had been a rule in place that said, if you discover a serial diverter working for you, you must immediately terminate.

[00:49:12] Speaker 01:
If there had been a rule to that effect and he had violated that rule, that would be pretty easy kicks.

[00:49:19] Speaker 01:
But the problem, I think, is that you have this vague factor

[00:49:25] Speaker 01:
factor five, such other conduct which may threaten the public health and safety, and you're not necessarily on notice that you have to march someone out that day

[00:49:41] Speaker 01:
when you discover them having committed something like this.

[00:49:45] Speaker 01:
So there's a fair notice, I mean, I guess we're Sessions versus DeMaia, aftermath of vague laws that don't put you on fair notice of what you're supposed to do in a particular situation.

[00:50:01] Speaker 01:
And then when you guess wrong, you're sanctioned.

[00:50:05] Speaker 01:
How do you respond to all that?

[00:50:07] Speaker 04:
Well, there's definitely, I mean, he's entitled to have due process.

[00:50:11] Speaker 04:
He's entitled to know what the requirements are, what the rules are.

[00:50:16] Speaker 04:
And he knew that he had a duty to protect the public.

[00:50:19] Speaker 01:
Yeah, absolutely.

[00:50:21] Speaker 01:
But that's, again, a level of generality that's very high.

[00:50:23] Speaker 01:
And he knew, I can't employ her anymore.

[00:50:27] Speaker 01:
But he also thought she's not such a daily risk, not like a ticking bomb in the office that I need to

[00:50:35] Speaker 01:
throw her out immediately.

[00:50:37] Speaker 01:
And the question is, is that such a, what would have put him on notice that that's wrong, or is it just so obvious that any rational factor would have, I mean that's really what you're saying, is any rational person in that circumstance would have known you have to get rid of her that day.

[00:50:54] Speaker 04:
Right.

[00:50:54] Speaker 04:
First of all, she was such a ticking bomb that she should have been terminated immediately.

[00:50:59] Speaker 04:
The scope of her diversion, which he tried to minimize.

[00:51:02] Speaker 04:
He tried to say, I didn't know about it until later.

[00:51:04] Speaker 04:
But let me just go briefly to the issue of the notice.

[00:51:08] Speaker 04:
And under Dr. Kelly's standard,

[00:51:13] Speaker 04:
He would request that DEA codify or that Congress codify every specific instance of what could occur.

[00:51:23] Speaker 04:
And there's no requirement under the five factors public interest test to do that.

[00:51:28] Speaker 02:
I agree.

[00:51:29] Speaker 02:
I'm just curious.

[00:51:30] Speaker 02:
I mean, I understand your point.

[00:51:32] Speaker 02:
I follow your point.

[00:51:33] Speaker 02:
But I'm just curious why that wouldn't be the same with respect to the due diligence analysis, that once you find out that a subordinate is abusing your state prescription privileges, it would stand to reason.

[00:51:47] Speaker 02:
without any precedent or regulation or that you might want to check up on diversion more generally, including by checking into the abuse of your DEA registration.

[00:51:59] Speaker 02:
And yet, I'm just curious about what your logic is, because that's a DEA decision to treat that as not flowing as a matter of course from the general responsibility to protect the public interest.

[00:52:12] Speaker 04:
He did have an obligation to

[00:52:13] Speaker 04:
to find out the scope of the misuse of his DA registration, which he did, but then in the hearing, he minimized what that was.

[00:52:22] Speaker 04:
He said, I didn't understand.

[00:52:23] Speaker 02:
But my question was, why, given what you say about the duty to fire Mullen, flowing from the more general duty to protect the public health and safety, why is that same logic not adequate

[00:52:40] Speaker 02:
to support a duty applicable to Dr. Kelly to, once he knows of state diversion, check into possible misuse of his DEA registration.

[00:52:53] Speaker 02:
Same logic.

[00:52:54] Speaker 02:
Why hesitation to apply it in this case?

[00:52:56] Speaker 02:
Because doing so would be retroactive.

[00:52:58] Speaker 02:
If you are right, then it's enough notice that that's an obviously risk to public safety.

[00:53:05] Speaker 04:
Well, the acting administrator was very, as you can tell from the lengthy opinion, was very thorough and very cautious about what he gave weight to.

[00:53:13] Speaker 04:
I mean, he did not give weight to... A distinction?

[00:53:15] Speaker 02:
Do you have a distinction for me between those two situations?

[00:53:19] Speaker 04:
No.

[00:53:20] Speaker 04:
It appeared that the acting administrator was being very cautious and not holding him to a burden that is going to be prospective to say, one must do this in the future, and wanted to make sure that

[00:53:31] Speaker 04:
that is setting forth standards for guidance, which is what the published opinions do.

[00:53:38] Speaker 04:
But it still does not alleviate the misconduct of Dr. Kelly and how he failed to acknowledge that.

[00:53:46] Speaker 04:
I mean, every turn he had an excuse.

[00:53:48] Speaker 04:
When he let his office manager dispense, he tried to claim that there was an exception under the dispensing rule.

[00:53:56] Speaker 04:
When he failed on the record keeping, and I think Judge Rogers had

[00:54:01] Speaker 04:
I had asked about that on the record keeping.

[00:54:06] Speaker 04:
under footnote 30 of the decision, and it specifically addresses the record keeping and the misconduct of Ms.

[00:54:17] Speaker 04:
Mullen.

[00:54:18] Speaker 04:
One of the things the ALJ did not do is did not consider the minimization that Dr. Kelly testified about, how he said, oh, I didn't know about the scope of her diversion until after I'd seen it on the news later.

[00:54:31] Speaker 02:
Do you agree with Mr. Baer's characterization of why the administrator didn't rely more on the regulation 1301.76 in that she didn't have access to control substances and that's why the administrator didn't focus on that regulation?

[00:54:51] Speaker 02:
That's the regulation in footnote 30 of the opinion that you just referred to.

[00:54:56] Speaker 04:
Yes.

[00:54:56] Speaker 04:
Well, that is the one that also is

[00:54:59] Speaker 04:
That's where a registrant may seek an exemption from DEA to hire someone who has been convicted of a felony, of a controlled substance-related offense.

[00:55:08] Speaker 04:
And she did not have that.

[00:55:10] Speaker 04:
She had been prosecuted in state court, and she had completed probation.

[00:55:14] Speaker 04:
So she had not been adjudicated guilty.

[00:55:17] Speaker 02:
But if somebody pleads guilty to a felony, they have a conviction of a felony.

[00:55:21] Speaker 02:
And she did, did she not?

[00:55:23] Speaker 04:
Well, she had pled guilty, but she had completed her probation.

[00:55:27] Speaker 04:
And it was my understanding that they did not adjudicate her guilty.

[00:55:31] Speaker 04:
So she was not convicted of it.

[00:55:33] Speaker 04:
She was not adjudicated guilty of it.

[00:55:35] Speaker 04:
She had been prosecuted for it.

[00:55:36] Speaker 04:
But it was essentially a withhold of adjudication that was imposed at the end.

[00:55:42] Speaker 03:
So do you want to respond at all to counsel's suggestion about the procedural difficulty

[00:55:52] Speaker 03:
under the scheme as he was suggesting, he understands it.

[00:55:57] Speaker 03:
In other words, you're conceived in order to show cause.

[00:56:02] Speaker 03:
And the acting administrators suggest that unless you come in and say, I'm guilty, please be lenient.

[00:56:15] Speaker 03:
you have not acknowledged or expressed remorse.

[00:56:18] Speaker 03:
We had this situation in another context, a criminal context about parole, where the board required people to admit their guilt.

[00:56:26] Speaker 03:
And this person said, but I'm not guilty.

[00:56:28] Speaker 03:
So I'm interested in this notion about what remorse means.

[00:56:34] Speaker 03:
If you, in good faith, and the ALJ had credited Dr. Kelly's testimony,

[00:56:42] Speaker 03:
believe that your record keeping is in accordance with what is required, because the state people have told you that.

[00:56:52] Speaker 03:
Then you find out, in fact, that the federal requirements are different and you change.

[00:57:00] Speaker 03:
Is DEA saying you have to also say on the record, I was wrong not to

[00:57:12] Speaker 03:
carefully read the federal regulations or something and understand that I had to do something different with my records.

[00:57:22] Speaker 04:
Well, the cases that discuss acceptance of responsibility and remorse, and as Your Honor is aware, what happens is after the government presents a prima facie case that acts have been committed that are inconsistent with the public interest, the burden shifts to the registrant.

[00:57:38] Speaker 03:
I know it's not the same, but in a criminal context, you're charged, you defend vigorously.

[00:57:47] Speaker 03:
If you're found guilty, and then you come before the judge for sentencing,

[00:57:52] Speaker 03:
That's when you express remorse.

[00:57:55] Speaker 03:
You don't say, you know, or acknowledgement that you shouldn't have done what you did.

[00:58:01] Speaker 03:
This system is set up apparently, and that's what I'm trying to understand.

[00:58:05] Speaker 04:
I would refer the court to the decision of the 10th Circuit in McKay.

[00:58:10] Speaker 04:
In McKay, Dr. McKay had administrative proceedings pending for misusing his DA registration.

[00:58:17] Speaker 04:
He was a practitioner.

[00:58:19] Speaker 04:
Simultaneously had a criminal case pending.

[00:58:22] Speaker 04:
And he wanted to invoke his Fifth Amendment rights in the civil and the administrative proceeding.

[00:58:27] Speaker 04:
And the court stated that there do not have a Fifth Amendment right in the administrative proceeding.

[00:58:32] Speaker 04:
And they distinguished it and distinguished why in this setting,

[00:58:35] Speaker 04:
it you can be required just tell me what happens I'm a physician I get an order to show cause I go to the hearing and I have to say what I confess you you have to say when I when I let my assistant office manager dispense control substances it was wrong not that I've changed my process because

[00:59:00] Speaker 04:
a patient questioned it.

[00:59:02] Speaker 03:
Suppose I say, I thought I was in compliance with the law, and here's why I thought that.

[00:59:09] Speaker 03:
But you're telling me I'm mistaken, I'm wrong, so I changed.

[00:59:16] Speaker 04:
Yes, and then you could say, and here's what I've done to indicate that change.

[00:59:22] Speaker 04:
I've taken these courses, I've put in a save.

[00:59:25] Speaker 03:
No, no, no, no.

[00:59:25] Speaker 03:
You tell me I've been keeping my records,

[00:59:29] Speaker 03:
on yellow paper and the feds want me to keep it on green paper.

[00:59:34] Speaker 03:
So I change from yellow to green.

[00:59:36] Speaker 03:
Do I also have to say I acknowledge I was wrong?

[00:59:41] Speaker 03:
Isn't my action sufficient?

[00:59:45] Speaker 03:
Isn't that the inference from my action?

[00:59:47] Speaker 03:
Because I didn't make the change.

[00:59:50] Speaker 03:
That would be the problem, but if I've made the change.

[00:59:53] Speaker 04:
But you also have to acknowledge what it was that led you to make the change.

[00:59:58] Speaker 03:
So it is magic words.

[01:00:00] Speaker 03:
I just want to be clear about this, because if you change once you're notified that you need to make the change, you still have to say, I should have known before,

[01:00:12] Speaker 04:
Well, you have to say what I did was wrong.

[01:00:16] Speaker 03:
But suppose you honestly didn't believe it was wrong, because the state had told you you could do it this way.

[01:00:23] Speaker 04:
Well, the reason that one has to do that is the administrator has to know, has to be confident.

[01:00:29] Speaker 03:
I understand.

[01:00:29] Speaker 03:
But if you had a procedure like the criminal procedure, and I acknowledge it's not the same, where first it's a determination of liability,

[01:00:38] Speaker 03:
then it's a determination of what the sanction is.

[01:00:41] Speaker 03:
But that's not the way your procedure works, I gather.

[01:00:43] Speaker 04:
Well, it's similar in that first, the government has to present a prima facie case.

[01:00:48] Speaker 03:
So that's your order to show cause.

[01:00:51] Speaker 04:
Well, the order to show cause and then the evidence at the hearing.

[01:00:53] Speaker 03:
Well, the order to show cause says to me, here's the evidence the government has.

[01:00:58] Speaker 04:
It's comparable to a charging document, yes.

[01:01:00] Speaker 03:
And then you go through the- It's more than a charging document, all right?

[01:01:03] Speaker 03:
It doesn't say I violated section four or factor five.

[01:01:07] Speaker 03:
It says,

[01:01:09] Speaker 03:
in detail what it is the government will prove.

[01:01:13] Speaker 03:
Yes.

[01:01:13] Speaker 03:
And it may prove more.

[01:01:15] Speaker 03:
But here's what it has so far.

[01:01:17] Speaker 03:
So tell me why the government shouldn't act on that evidence.

[01:01:21] Speaker 04:
And then it goes to a hearing.

[01:01:23] Speaker 04:
And at the hearing, the government has to support those.

[01:01:25] Speaker 04:
And you'll see in the very- Fun.

[01:01:27] Speaker 03:
And so the government puts it in, and Dr. Kelly makes his best defense.

[01:01:33] Speaker 03:
But then there's not a separate proceeding.

[01:01:36] Speaker 03:
that gives him the opportunity to say, now that the government has determined I did all these things wrong, what is the appropriate sanction?

[01:01:46] Speaker 03:
And then Dr. Kelly could say, you know, I beg for mercy here.

[01:01:51] Speaker 03:
I thought I was doing the right thing.

[01:01:56] Speaker 04:
And here's what I've changed.

[01:01:58] Speaker 04:
And here's what I will do differently.

[01:01:59] Speaker 04:
Here's what I am doing differently.

[01:02:01] Speaker 04:
And here's how I will ensure that the public safety will be protected.

[01:02:04] Speaker 03:
So it is magic words.

[01:02:06] Speaker 03:
Actions don't speak loudly enough.

[01:02:10] Speaker 04:
But if he came in with evidence of his actions, which he did not, he did not come in and say, I terminated Ms.

[01:02:16] Speaker 04:
Mullen as soon as I learned the breadth of her diversion.

[01:02:19] Speaker 04:
I learned that she was a serial diverter.

[01:02:21] Speaker 03:
So it all turns on who makes the decision about what is in.

[01:02:26] Speaker 03:
the public interest here.

[01:02:27] Speaker 03:
And that's a judgment call that Congress has delegated to the Attorney General who's delegated it to the DEA Administrator.

[01:02:38] Speaker 03:
And that's really the end of the discussion because as a practical matter,

[01:02:42] Speaker 03:
The facts in this case are undisputed.

[01:02:45] Speaker 03:
It's a judgment underlying the actions taken.

[01:02:49] Speaker 04:
Well, there were credibility findings made by both the ALJ and by the acting administrator.

[01:02:54] Speaker 03:
Well, the acting administrator wasn't hearing the testimony.

[01:02:57] Speaker 03:
But in reviewing the record... I know, but he didn't say,

[01:03:04] Speaker 03:
overrule the credibility determinations of the... No, but concurred that Dr. Kelly didn't minimize.

[01:03:12] Speaker 04:
And I understand it's not a bifurcated system like you would have with a trial and then a sentencing phase in some situations.

[01:03:20] Speaker 04:
But at the same time, the case law is thorough and the agency decisions are certainly set out that... Well, I think it's different.

[01:03:29] Speaker 03:
Let me just suggest this.

[01:03:31] Speaker 03:
The cases everybody's citing are cases where the physician himself was violating the Control Substance Act, right?

[01:03:41] Speaker 03:
He's diverting or she's diverting and that person is the subject of the DEA action.

[01:03:49] Speaker 03:
So here we have an employee and whether this regulation applies or not, it does signal that at least in some circumstances, the employer has some leeway

[01:04:02] Speaker 03:
to assess, and if the employer makes the wrong decision, the question is, does he lose his license for a year, his registration for a year, and basically his business is shut down, so far as the record shows.

[01:04:19] Speaker 04:
Well, there's also no indication that the business shut down, and I'd also refer you to the testimony of Ms.

[01:04:25] Speaker 04:
Casey, who was brought in.

[01:04:26] Speaker 04:
She was a former insurance clerk who had worked for Dr. Kelly.

[01:04:31] Speaker 04:
She came in to specifically rebut paragraph 18 of the unsworn affidavit that was prepared by Ms.

[01:04:36] Speaker 04:
Mullen that set out what she understood Dr. Kelly's knowledge of her prior and her ongoing diversion.

[01:04:43] Speaker 04:
That affidavit was not given weight by the acting administrator because it was unattested.

[01:04:51] Speaker 04:
However, Ms.

[01:04:52] Speaker 04:
Casey was called in as a defense witness prior to that decision by the ALJ and the acting administrator to rebut a claim that was in the affidavit that Dr. Kelly had had them doctor some inventory records.

[01:05:05] Speaker 04:
But what is interesting and pertinent to this court and this discussion today is that

[01:05:10] Speaker 04:
She had worked for Dr. Kelly for a number of years as an insurance clerk and described the process.

[01:05:15] Speaker 04:
It is not a sophisticated process talking about the explanation of benefits, submitting the bills.

[01:05:21] Speaker 04:
She had worked for him for a number of years.

[01:05:22] Speaker 04:
She then left.

[01:05:23] Speaker 04:
She came back on a part-time basis while she worked at a church.

[01:05:27] Speaker 04:
She left for two years from 2010 to 2012, came back again on a part-time basis.

[01:05:31] Speaker 04:
So there's no indication that someone like that was not available.

[01:05:34] Speaker 04:
The office manager testified that she could handle it.

[01:05:37] Speaker 03:
He advertised the vacancy.

[01:05:40] Speaker 04:
Yes, but he also could have put his office manager in the position.

[01:05:44] Speaker 03:
She said she would quit.

[01:05:47] Speaker 04:
She's his ex-wife.

[01:05:48] Speaker 04:
Who knows what she would do?

[01:05:49] Speaker 04:
I mean, she may quit.

[01:05:50] Speaker 03:
Wait, wait, wait, counsel.

[01:05:51] Speaker 03:
With all due respect, that's what's in the record.

[01:05:56] Speaker 04:
Yes, she worked with him for 28 years.

[01:05:58] Speaker 04:
It's unlikely that she would quit.

[01:06:00] Speaker 04:
Yes, it's all in the record.

[01:06:01] Speaker 03:
No, no.

[01:06:02] Speaker 03:
The record is she said she would quit.

[01:06:04] Speaker 04:
She did say that, but she's also... So that's all we're dealing with.

[01:06:07] Speaker 01:
You think she was lying?

[01:06:09] Speaker 04:
No one ever, I don't know if she was joking, I don't know if that was, I don't know, but there's no indication.

[01:06:18] Speaker 03:
Anyway, she advertised the job.

[01:06:20] Speaker 04:
Yes.

[01:06:21] Speaker 03:
And presumably picked the best applicant.

[01:06:26] Speaker 04:
But he could have terminated Ms.

[01:06:29] Speaker 04:
Mullen, who had this

[01:06:31] Speaker 04:
wide conspiracy of diversion.

[01:06:34] Speaker 01:
He did terminate her.

[01:06:35] Speaker 01:
I mean, he just gave her, that's why, I mean, this one sentence in the administrator's decision, proof that Mullin had committed a single act of prescription fraud should have resulted in her immediate termination.

[01:06:51] Speaker 01:
Well, she was terminated.

[01:06:52] Speaker 01:
The question was, can, I'm repeating myself, but the question really is, do you have to march someone out the day of?

[01:07:00] Speaker 01:
And in workplaces all over the country, there are people who are found to have committed wrongdoing, but then somehow hang on for a week or two or three before they're actually marched out or put off the payroll or what have you.

[01:07:13] Speaker 01:
It's pretty rare that someone's marched out day up.

[01:07:17] Speaker 01:
Not pretty rare is too strong, but it happens both ways, right, in the real world.

[01:07:24] Speaker 01:
Could have been marched out that day, but terminated and then said, you know, stick around with some precautions.

[01:07:31] Speaker 01:
The gilded cage until until I get a replacement.

[01:07:35] Speaker 01:
Is that a year?

[01:07:37] Speaker 01:
I mean, a year suspension.

[01:07:40] Speaker 01:
From that misjudgment, and that's that's just harsh.

[01:07:44] Speaker 04:
Well, given his prior history of his disregard for the laws and the rules, and also even if he had not done it on the 20th, if he had waited four days later until he had a complete picture of what Ms.

[01:07:58] Speaker 04:
Mullen had done, which at that point he had her state case, he had information that she had been on probation and continued to divert,

[01:08:05] Speaker 04:
He knew that there were the tens of thousands of doses units of hydrocodone that had been dispensed.

[01:08:12] Speaker 04:
He had a lot more information after looking at the prescription monitoring program, after looking at her criminal case.

[01:08:19] Speaker 04:
that he did not have at the time when he first had the facts about the two questionable prescriptions.

[01:08:25] Speaker 04:
So certainly, it would be understandable.

[01:08:27] Speaker 04:
And we would not be here saying, well, it was unreasonable for him to keep her for four more days.

[01:08:34] Speaker 04:
I mean, we would never have gotten to this point.

[01:08:37] Speaker 04:
But to keep her for five weeks and to leave her unattended in the office when what she would do is phone in scripts and then confirm on the facts renewals,

[01:08:48] Speaker 04:
that the scripts were legitimate.

[01:08:51] Speaker 01:
And that didn't happen, to state the obvious.

[01:08:54] Speaker 01:
I mean, I know your point is the risk was too much, but it didn't, just so we nail that down, that did not happen during the five weeks.

[01:09:01] Speaker 04:
There were a dozen refills that were issued, but there were no new prescriptions that came to light.

[01:09:07] Speaker 04:
But it was a risk that the acting administrator found to be significant, and there are facts to support that.

[01:09:14] Speaker 02:
Ms.

[01:09:15] Speaker 02:
Kaye, does the DEA have a kind of a watch list of abused DEA registration numbers?

[01:09:22] Speaker 02:
Is there like an anti-fraud?

[01:09:24] Speaker 02:
mechanism so that if I'm a pharmacy and I'm receiving what look like valid prescriptions, I can look at the list and see if it's actually a number that's been canceled by the DEA or is there a check in a pharmacy system that would prevent them from filling a prescription on a legacy DEA number that had been canceled?

[01:09:49] Speaker 04:
Well, once a DEA number is deactivated, if the pharmacy checks that, it would not come up as an active number.

[01:09:56] Speaker 02:
But if the pharmacy doesn't check it, they can continue to prescribe under that number.

[01:10:00] Speaker 04:
Right, which would be a violation of their corresponding responsibility to confirm that it's a legitimate script issued in the normal course of medical practice.

[01:10:09] Speaker 02:
Presumably they're required in their system to have a flagging to be able to input deactivated numbers so that they get an alert.

[01:10:19] Speaker 04:
Yes, and they also, I mean, there are red flags that they will be looking for as far as the doses, narcotics that are contraindicated, having long-term doses of OxyContin.

[01:10:32] Speaker 02:
Right, but I'm just asking at a much less subtle level if the number is something that the DEA can use as an important control.

[01:10:41] Speaker 04:
I'm not aware that the DEA has a suspicious DEA registration number list or anything like that.

[01:10:48] Speaker 02:
Or canceled number list.

[01:10:51] Speaker 04:
It's my understanding that the canceled numbers would come up if there is a check in the system, that if the number has been canceled or revoked or is inactive that that would come up.

[01:11:01] Speaker 04:
But it would not.

[01:11:03] Speaker 04:
it would not there's not a list of these are suspicious like you might have heard of suspicious orders where distributors have suspicious orders and and they have to report those there's nothing like that anything further just in conclusion that the the evidence and under the very differential standard there was substantial evidence and that the the sanction was well within the agency

[01:11:29] Speaker 04:
realm and it was not arbitrary and capricious and we ask you to affirm.

[01:11:33] Speaker 04:
Thank you.

[01:11:35] Speaker 03:
All right, council.

[01:11:39] Speaker 03:
Give you a few minutes here.

[01:11:41] Speaker 00:
Thank you, Your Honor.

[01:11:43] Speaker 00:
I just point out to Judge Pollard a case we cited at page 28 of our brief DEA decision.

[01:11:49] Speaker 00:
Kevin Dennis in our elliptical reference notes that Dr. Dennis's failure to notify DEA of the misuse of his registration was cited as one reason for holding him responsible.

[01:12:05] Speaker 00:
for its continued misuse.

[01:12:07] Speaker 00:
So DEA has taken the affirmative position in 2003.

[01:12:11] Speaker 00:
You have to notify us, because then we can cancel your registration.

[01:12:14] Speaker 00:
But when Dr. Kelly notified him, the DEA acting administrator didn't give him much credit for that.

[01:12:21] Speaker 00:
I'd like to correct a small misstatement that Ms.

[01:12:26] Speaker 00:
Gaye made.

[01:12:27] Speaker 00:
Even though the pharmacy has the registration number in its records, excuse me.

[01:12:33] Speaker 00:
Anybody calling in a prescription is required by DEA regulation to provide the registration number for the registrant.

[01:12:42] Speaker 00:
So the absence of obtaining the registration on the phone in prescription makes that prescription illegal under DEA regulations and to fill the prescription by the pharmacy is a criminal violation of the CSA.

[01:12:58] Speaker 02:
Which is distinct from the practice that is

[01:13:01] Speaker 02:
is testified to in the record that they don't always do that, but you're saying that as a formal matter they are required.

[01:13:06] Speaker 00:
They are required.

[01:13:07] Speaker 00:
The case law is very clear.

[01:13:08] Speaker 00:
The DEA decisions involving pharmacies are very clear.

[01:13:11] Speaker 00:
The criminal law is very clear.

[01:13:12] Speaker 00:
It's an indication.

[01:13:14] Speaker 00:
To respond to Judge Rogers,

[01:13:16] Speaker 00:
The DEA order to show cause does have some detail, but it is essentially a charging document.

[01:13:22] Speaker 00:
It's no different than an indictment.

[01:13:24] Speaker 00:
It is what they intend to try to prove.

[01:13:26] Speaker 00:
DEA puts on its evidence at the hearing.

[01:13:28] Speaker 00:
The respondent puts on his evidence at the hearing.

[01:13:33] Speaker 00:
There is no, it's not even like a criminal trial where there's a finding by the judge at the close of the government's case that they've made out a case.

[01:13:43] Speaker 03:
It's not bifurcated, that's my point.

[01:13:46] Speaker 00:
Right, it's not bifurcated at all.

[01:13:47] Speaker 00:
There's no indication that they've satisfied their burden.

[01:13:51] Speaker 00:
That burden is just part of the analysis that the administrative law judge makes in his recommendations.

[01:13:58] Speaker 03:
So you filed a motion for reconsideration and a motion to stay.

[01:14:04] Speaker 00:
Correct.

[01:14:05] Speaker 03:
So that was your opportunity to present what I'll call the sentencing plea.

[01:14:16] Speaker 00:
Not really, because the case was still to be decided on the record at the AOJ.

[01:14:22] Speaker 00:
First of all, there's no provision in the DEA regulations for such a motion.

[01:14:29] Speaker 00:
And it's just like we cannot bring to your honor any additional evidence.

[01:14:35] Speaker 00:
I don't believe you could do that in that proceeding.

[01:14:40] Speaker 00:
So that's the problem.

[01:14:44] Speaker 00:
And to respond to one other point, Ms.

[01:14:46] Speaker 00:
Gay said she doesn't believe we'd be here if four days after Dr. Kelly reported Ms.

[01:14:54] Speaker 00:
Mullen, he had ultimately terminated her completely.

[01:14:57] Speaker 00:
I don't believe that's the case.

[01:14:58] Speaker 00:
The acting administrator held in his decision that he needed to terminate her immediately.

[01:15:05] Speaker 00:
And any concession that he could wait four days, I believe, is a concession that he could wait essentially two weeks till her replacement was found.

[01:15:12] Speaker 02:
I think she was saying because that was when the PMP, he had access to the PMP and sought the scope of the diversion.

[01:15:20] Speaker 00:
I understand that, Your Honor.

[01:15:21] Speaker 00:
I'm just saying that the written decision says terminate immediately based on the knowledge of even one false prescription.

[01:15:31] Speaker ?:
Right.

[01:15:31] Speaker 00:
And so at least this decision doesn't allow for even four days.

[01:15:36] Speaker 02:
It is a little mystery at the heart of this case how someone would keep someone on to train a new employee who had so fundamentally betrayed his trust and abused his professional privilege.

[01:15:49] Speaker 00:
I understand that, but I would point out that a lot of what he says in this decision goes to how Dr. Kelly should have been running his office, the decisions he should have made

[01:16:00] Speaker 00:
And the Acting Minister never ran a medical practice.

[01:16:04] Speaker 00:
On the one instance, this is this person.

[01:16:06] Speaker 00:
And the other instance, he's saying, well, you could have hired somebody to replace this person or to fill in their responsibilities while you shifted this employee from this responsibility to that responsibility.

[01:16:17] Speaker 00:
And we would submit it's all on speculation.

[01:16:20] Speaker 00:
There's no substantial evidence to support that.

[01:16:22] Speaker 00:
There was no testimony on how medical practices are run.

[01:16:26] Speaker 00:
Dr. Kelly testified the way he runs his practice, decisions he made within the constraints that he faced.

[01:16:32] Speaker 03:
All right.

[01:16:33] Speaker 03:
We will take the case under advisement.

[01:16:35] Speaker 00:
Thank you, Your Honor.