DEA Administrative Hearings Update: Rethinking DEA’s Summary Disposition Power in “Loss of State Authority” Cases

DEA’s administrative docket is off to a quiet start this year. Since January, the Administrator has issued five final orders, all of which are so-called “loss of state authority” cases. In these cases, the Administrator adjudicates, as a matter of law, that a practitioner’s DEA registration must be revoked on the basis that the practitioner has lost his or her state authority to prescribe controlled substances. These cases are simple, requiring only that the DEA prove that a state agency has revoked or suspended a practitioner’s state license to prescribe controlled substances or that such license has expired without renewal. DEA’s current thinking and practices on this matter, however, are not without concern.

Under agency precedent, the Administrator must revoke a practitioner’s registration as a matter of law if a practitioner has lost state authority to prescribe controlled substances. Accordingly, when a practitioner requests an administrative hearing before a DEA administrative law judge (ALJ) upon receipt of an Order to Show Cause (OSC) seeking to revoke the practitioner’s registration and alleging a loss of state authority, the ALJ will typically decide the matter on summary disposition (similar to summary judgment). The ALJ will recommend that the practitioner’s DEA registration be revoked based on undisputed evidence that a state has suspended or revoked the practitioner’s authority to prescribe controlled substances in that state.

Each of DEA’s 2017 cases to date involves a loss of state authority:

• Gentry Reeves Dunlop, M.D., 82 Fed. Reg. 8432 (Jan. 25, 2017)
• Donald W. Lamoreaux, M.D., 82 Fed. Reg. 8434 (Jan. 25, 2017)
• Richard W. Walker, Jr., M.D., 82 Fed. Reg. 9223 (Feb. 3, 2017)
• Janet Carol Dean, M.D., 82 Fed. Reg. 9224 (Feb. 3, 2017)
• John P. Moore, III, M.D., 82 Fed. Reg. 10398 (Feb. 10, 2017)

All but the Moore case were decided solely on the issue of loss of state authority. In terms of their difficulty, loss of state authority cases are DEA’s “low-hanging fruit.” They require almost no investigative effort on behalf of DEA. Rather, DEA can rely on state agencies to investigate and adjudicate a practitioner’s state license. When DEA learns that a state agency has suspended or revoked a practitioner’s state license, DEA can bring an OSC against the practitioner alleging loss of state authority and seek summary disposition if the practitioner requests a hearing. The only evidence DEA needs to gather is a copy of the state agency’s suspension or revocation order or some other proof that the practitioner can no longer prescribe controlled substances in that state. Because the practitioner no longer meets the state license criteria necessary to hold a DEA registration, the cases require presentation of no other evidence.

In 2016, DEA issued final orders in twenty-eight cases. Over half (fifteen) of these cases were decided solely on the issue of loss of state authority, and the majority of those cases were decided by an ALJ on summary disposition (the other cases lacked a request for hearing, and were decided by the Administrator). At a time when DEA is coming under heavy scrutiny and criticism for its diversion enforcement efforts (see here and here), the fact that the Administrator only issued final orders in thirteen cases last year on grounds other than loss of state authority is surprising.

But DEA’s reasoning in these cases, especially when these cases are decided on summary disposition—almost always over the protest of the practitioner—is also troubling.

Under agency precedent, the Administrator must revoke a practitioner’s DEA registration upon a loss of state authority. This rule is derived from two provisions of the Controlled Substances Act (CSA). First, the CSA defines a practitioner as:

a physician, dentist, veterinarian, . . . or other person licensed, registered, or otherwise permitted, by the United States or the jurisdiction in which he practices . . . to distribute, dispense, [or] administer . . . a controlled substance in the course of professional practice.

21 U.S.C. § 802(21) (emphasis added).

Second, the agency points to 21 U.S.C. § 823(f), which provides that the Administrator shall “register practitioners . . . if the applicant is authorized to dispense . . . controlled substances under the laws of the State in which he practices.” Id. § 823(f) (emphasis added).

According to agency precedent, these two provisions support the position that a practitioner’s DEA registration must be revoked as a matter of law upon a loss of state authority:

Because Congress has clearly mandated that a practitioner possess state authority in order to be deemed a practitioner under the [CSA], DEA has held repeatedly that revocation of a practitioner’s registration is the appropriate sanction whenever he is no longer authorized to dispense controlled substances under the laws of the State in which he practices medicine.

Dunlop, 82 Fed. Reg. at 8433.

While DEA’s interpretation of the CSA that every practitioner applicant it registers must hold state authority to prescribe controlled substances may be correct, its conclusion that these provisions require that the Administrator suspend or revoke a practitioner’s registration upon loss of state authority as a matter of law seems to be contradicted by the CSA itself.

21 U.S.C. § 823(f) (one of the two provisions relied on by DEA) governs whether the Administrator should grant a registration upon an application by a practitioner. 21 U.S.C. § 824(a) lists the discretionary factors that the Administrator “may” consider when determining whether to suspend or revoke an existing registration. Under this provision, the Administrator “may . . . suspend[] or revoke[]” a practitioner’s registration upon a finding that the registrant has:

had his State license or registration suspended, revoked, or denied by competent State authority and is no longer authorized by State law to engage in the . . . dispensing of controlled substances . . . .”

21 U.S.C. § 824(a)(3).

The plain reading of this provision appears to say that a loss of state authority is only one of several factors that may result in suspension or revocation of a practitioner’s DEA registration—not an automatic basis as a matter of law. But DEA’s interpretation contradicts this plain reading of the CSA. A reasonable interpretation of the provisions in question would be that § 802(21) and § 823(f) require state authority in order for the Administrator to grant an application for registration, but that § 824(a)(3) only renders a loss of state authority a discretionary factor in determining whether to suspend or revoke an existing registration. To hold otherwise would violate one of the canons of statutory interpretation by making the language of § 824(a)(3) of absolutely no “effect.” Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 100 (1992) (holding that it is the Court’s “duty to give effect, if possible, to every clause and word of a statute” (quoting United States v. Menasche, 348 U.S. 528, 538-39 (1955))).

While the Administrator can certainly suspend or revoke a practitioner’s registration due to loss of state authority as one of the discretionary factors of § 824(a), and DEA’s website guidance plainly states that state authority is required to maintain a registration, the Agency’s interpretation permitting a summary disposition on this issue is arguably inconsistent with the CSA. One could argue that DEA’s practice of deciding these cases on summary disposition without giving a practitioner the opportunity to present other evidence supporting continued registration may violate the CSA and the practitioner’s due process rights spelled out in the Administrative Procedure Act.

Notwithstanding, in support of its position that these practitioner summary dispositions are appropriate, DEA often points to two unpublished federal appeals decisions, Hooper v. Holder, 481 Fed. App’x 826 (4th Cir. 2012), and Maynard v. DEA, 117 Fed. App’x 941 (5th Cir. 2004), that deny petitions for review and discuss the issue of loss of state authority. While both cases appear to support the agency’s position, neither addresses the statutory interpretation concerns or the potential constitutional implications of summary disposition.

What does any of this mean, in reality? The ALJ and the Administrator have significant discretion in determining the weight of the factors they must consider when determining to suspend or revoke a registration. Even if the Administrator determines not to suspend or revoke a practitioner’s registration as a matter of law on summary disposition based solely on loss of state authority, it is likely that the Administrator could easily find, on his own, this factor to be a discretionary basis for suspension or revocation. Is it also highly likely that a practitioner that has lost state authority to handle controlled substances will lose his or her DEA registration as well? Of course. Nonetheless, in order to protect the due process rights of practitioners facing an OSC, DEA could consider observing the nuances of the CSA and giving meaningful effect to each of its provisions by evaluating loss of state authority as just one of several factors that the ALJ and Administrator may consider when determining whether suspension or revocation is appropriate under 21 U.S.C. § 824(a).