DEA Administrative Decisions Update: Has DEA Established New Grounds for Summary Disposition?May 24, 2017
Numerous prior DEA final orders have been based on a summary disposition. Summary disposition is a procedure used by government counsel to seek a recommended decision by the Administrative Law Judge (“ALJ”) to revoke a DEA registration without proceeding to a hearing on the facts. It is similar to summary judgment in federal court, and is used when there are undisputed facts that are dispositive of a matter. The aforementioned DEA cases have all used summary disposition in cases where it is undisputed that a practitioner has lost state authority to handle controlled substances (see our previous post here).
However, a recent administrative decision by the DEA Acting Administrator appears to expand the basis whereby DEA will grant summary disposition to allegations of material falsification of an application for DEA registration. To our knowledge, DEA has never used summary disposition to adjudicate a matter other than loss of state authority. Yet the Administrator’s decision in Richard J. Blackburn, D.O., 82 Fed. Reg. 18669 (Apr. 20, 2017), holds that an allegation of material falsification of an application—at least in that case—can be properly decided on summary disposition.
Material falsification of an application for DEA registration is an independent and discretionary ground for granting an application or revoking a registration. 21 U.S.C. § 824(a)(1). The Administrator’s decision in this case is noteworthy because, unlike loss of state authority where the agency believes state licensing is a prerequisite to maintaining a DEA registration, proof of material falsification can be overcome by acceptance of responsibility by the registrant and remedial actions. See The Lawsons, Inc., 72 Fed. Reg. 74334, 74338-39 (Dec. 31, 2007).
In the present matter, DEA issued an Order to Show Cause to the physician in September 2016, proposing the denial of the physician’s application for DEA registration on two separate grounds: loss of state authority and material falsification of his application. The physician requested a hearing, and explained in his request that “any irregularities in his application were done by mistake.” 82 Fed. Reg. at 18670. DEA moved for summary disposition on both grounds, though it had originally indicated that it believed a hearing was necessary for the material falsification allegation. The physician failed to respond to DEA’s motion, and the ALJ deemed the summary disposition motion as unopposed.
The ALJ granted the summary disposition motion as to the loss of state authority, but declined to grant the motion on the material falsification allegation because the physician had earlier specifically denied this allegation. The government contended in its exceptions to the ALJ’s recommended decision that there was no dispute that multiple answers to the physician’s application were false (the physician had surrendered a state license, but indicated that he had never surrendered a professional license for cause, and had provided a state license number when, in fact, he did not hold a state license).
On review, the Administrator agreed with the ALJ regarding the summary disposition related to loss of state authority. However, finding that the practitioner had falsified his application, he ruled that the ALJ erred in not granting summary disposition on the material falsification allegation, and stated that the “Government was entitled to summary disposition on the allegation that Respondent materially falsified his . . . application.” Id. at 18673. He also held that the physician had waived his right to present evidence refuting the government’s prima facie showing on material falsification and on the issue of remediation by failing to respond to the government’s motion. Id. at 18671-72.
There are a few important takeaways. First, the issue of whether the material falsification allegation should be decided on summary disposition had little immediate practical effect as the Administrator was still going to deny the application on loss of state authority. The government likely sought a ruling on this ground so that the final order could have preclusive effect in a future hearing if the physician ever reobtained his state license and applied again for a DEA registration. So, the intent may not have necessarily been to establish a new standard.
Second, the physician likely would have saved himself from summary disposition on the material falsification ground if he had responded to the government’s summary disposition motion as directed by the ALJ.
Third, and finally, regardless of whether the facts of this case may have been unique in providing a basis for summary disposition on the material falsification issues, all registrants, including manufacturers, distributors, and practitioners, should be on notice of DEA’s potential use of summary disposition on material falsification grounds in future cases. In our opinion, the bright line where a practitioner either does or does not have a current state license is not the same case as responses to DEA liability questions on an application related to whether the applicant has been subject to prior disciplinary actions, suspensions, surrenders, or even convictions. Often, it is not as evident whether the answer to these questions is “Yes” or “No.” Thus, a broad application of summary disposition in cases where DEA believes that an applicant has provided the wrong answer to such questions and where the registrant is not permitted the opportunity to put on evidence of acceptance of responsibility and remedial actions, would shortcut current agency precedent and due process protections.