Humphreys v. Drug Enforcement Admin.

• Decision Date: 17 September 1996
• Docket Number: No. 96-3099,96-3099
• Citation: 96 F.3d 658
• Parties: Earl A. HUMPHREYS, M.D., Petitioner, v. DRUG ENFORCEMENT ADMINISTRATION, Respondent.
• Court: U.S. Court of Appeals — Third Circuit

Page 658

96 F.3d 658

Earl A. HUMPHREYS, M.D., Petitioner, v. DRUG ENFORCEMENT ADMINISTRATION, Respondent.

No. 96-3099.

United States Court of Appeals Third Circuit.

Argued July 26, 1996.

Decided Sept. 17, 1996.

Robert A. Felkay (argued), John A. Tumolo, Pittsburgh, PA, for Earl A. Humphreys, M.D.

John C. Keeney, Theresa M.B. Van Vliet, Hope P. McGowan (argued), Narcotic and Dangerous Drug Section, Criminal Division, Washington, D.C., for Drug Enforcement Administration.

Before: BECKER, STAPLETON, and MICHEL, ^* Circuit Judges.

OPINION OF THE COURT

MICHEL, Circuit Judge.

Earl A. Humphreys, M.D. ("Humphreys") appeals from an order of the Drug Enforcement Administration ("DEA"), dated January 23, 1996, in which the Deputy Administrator of the DEA ordered that Humphreys' DEA certificate of registration be revoked and any pending application for renewal of the registration be denied. Earl A. Humphreys, M.D.; Revocation of Registration, 61 Fed.Reg. 2840 (1996). Because the DEA abused its discretion in failing to consider Humphreys' privacy defense and, on the present record, arbitrarily revoked his registration, we vacate and remand.

BACKGROUND

Humphreys is a Pittsburgh doctor specializing in gastroenterology and internal medicine and who, prior to this proceeding, had practiced for over 35 years without any disciplinary actions being taken against him. On April 12, 1995, a Deputy Assistant Administrator of the DEA issued to Humphreys an Order to Show Cause why the DEA should not revoke Humphreys' certificate of registration under 21 U.S.C. § 824(a)(4) and deny any pending application under 21 U.S.C. § 823(f) as being inconsistent with the public interest. Specifically, the Order to Show Cause alleged that "from the early 1980s to mid-1993, [Humphreys] prescribed controlled substances to at least four individuals without a legitimate medical need and with knowledge that these individuals were not the ultimate recipients of the controlled substances."

The DEA's action was precipitated by Humphreys' personal and professional relationship with former Pennsylvania Supreme Court Justice Rolf Larson ("Larson") and the criminal investigation of Larson. Humphreys acted as Justice Larson's personal physician for approximately the past 20 years. In 1993, based on the findings and recommendations of a grand jury, Larson was charged with one count of conspiracy to commit "Acquisition or Obtaining of Possession of a Controlled Substance by Misrepresentation, Fraud, Forgery, Deception, or Subterfuge" and numerous other violations of law. Humphreys was named as an unindicted co-conspirator in the conspiracy count and received immunity in return for his testimony against Larson.

The criminal conspiracy charge against Larson, and DEA's regulatory investigation of Humphreys, stemmed from Larson's attempts to keep his mental health problems out of public sight. Beginning in the 1960's, Larson visited psychiatrists and psychologists for the treatment of clinical depression and anxiety. These doctors prescribed various tranquilizers and antidepressants, which Larson paid for out of his own pocket in order to preserve his privacy. Beginning in 1981, however, Larson revised his method of assuring his privacy: he asked Humphreys to prescribe various controlled drugs for Larson in the name of certain of Larson's employees (secretaries and a law clerk). From the early 1980's to mid-1993, Humphreys wrote approximately 34 prescriptions for drugs in this manner, including prescriptions for Valium, Diazepan, Ativan, and Serax. It is undisputed that the individuals named on the prescriptions always gave the prescription drugs to Larson and did not take the medications themselves or resell them. It is also undisputed that Humphreys was aware of Larson's diagnosed condition, that he believed each medication he prescribed was for an appropriate medical purpose, and that he prescribed the substances in appropriate medical dosage amounts and at acceptable time intervals. Moreover, although Humphreys did not examine Larson each time he prescribed drugs, Humphreys did examine Larson before the first prescription and approximately every six months thereafter. Although Humphreys was aware that Larson was continuing to see other doctors, Humphreys was not aware of any other medications prescribed by Larson's other doctors and did not attempt to coordinate his prescriptions with those of these other doctors. Humphreys received no money for writing these prescriptions.

After receiving the Order to Show Cause, Humphreys and his attorney each filed a response to the Order. Humphreys' primary defense was that, by prescribing the medication in the names of Larson's close associates, he was attempting to protect Larson's privacy in a manner common and acceptable in standard medical practice for famous patients with mental conditions. Humphreys waived his right to a hearing, as he was recovering from a stroke.

On January 23, 1996, the Deputy Administrator entered his Final Order, based on the investigative record and Humphreys' written statement. The Deputy Administrator acknowledged that he could revoke Humphreys' registration only if continued registration would be inconsistent with the public interest pursuant to the five factors set forth in 21 U.S.C. § 823(f). The Deputy Administrator considered, discussed and relied upon each of the five factors except for factor three--Humphreys' conviction record under Federal or State laws relating to controlled substances, which, because he had none, was not a relevant factor--and, based upon these factors, determined that the public interest would be best served by revoking Humphreys' registration. The Deputy Administrator did not discuss, and apparently did not consider, Humphreys' privacy defense. Humphreys appealed, and this court granted a stay of the Order pending our disposition of this appeal. We have jurisdiction to hear this appeal under 21 U.S.C. § 877 (1994).

ANALYSIS

The Standard of Review

Agency decisions, such as the Deputy Administrator's Order, may be set aside only if arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law. 5 U.S.C. § 706(2)(A) (1994). "As a reviewing court, we must accord proper deference to the DEA's expertise but must nonetheless make a 'searching and careful inquiry' of the record to determine whether the agency's decision was based on a consideration of the relevant factors and whether there was a clear error of judgment." Trawick v. DEA, 861 F.2d 72, 76 (4th Cir.1988) (affirming revocation of registration) (citation omitted).

The Regulatory Framework

The Controlled Substances Act, as amended by the Dangerous Drug Diversion Control Act of 1984, Pub.L. No. 98-473, Title II, § 511, 98 Stat.2073, requires that any person who dispenses controlled substances must first obtain a certificate of registration from the Attorney General. 21 U.S.C. §§ 822(a) Prior to 1984, the DEA could revoke a registration for only three reasons: (1) falsification of an application; (2) felony conviction related to controlled substances; and (3) suspension, revocation or denial of a state license. In 1984, with the enactment of the Dangerous Drug Diversion Control Act, Congress added a fourth reason for which a registration could be revoked, namely, a finding that the physician had committed "such acts as would render his registration under section 823 of this title inconsistent with the public interest as determined under such section...." 21 U.S.C. § 824(a) (1994). In determining whether registration would be inconsistent with the public interest, the DEA must consider the following factors:

823(f) (1994). The Attorney General has delegated the authority to deny, revoke or suspend registrations to the Administrator of the DEA. 21 U.S.C. § 824 (1994); 28 C.F.R. § 0.100(b). ¹

(1) The recommendation of the appropriate State licensing board or disciplinary authority.

(2) The applicant's experience in dispensing, or conducting research with respect to controlled substances.

(3) The applicant's conviction record under Federal or State laws relating to the manufacture, distribution, or dispensing of controlled substances.

(4) Compliance with applicable State, Federal, or local laws relating to controlled substances.

(5) Such other conduct which may threaten the public health and safety.

21 U.S.C. § 823(f) (1994). The five factors are independent, and the Deputy Administrator may revoke a registration based on one factor or a combination of several factors. Henry J. Schwartz, M.D., 54 Fed.Reg. 16,422, 16,424 (1989).

The DEA bears the burden of proving that registration would not be in the public interest. See Shatz v. United States Dep't of Justice, 873 F.2d 1089, 1091 (8th Cir.1989) ("We think the burden of persuasion and production on the issue whether registration would be in the public interest was correctly placed on the Administrator as an initial matter. Once the Administrator produced evidence of the state medical board's actions, the DEA investigation and the drug-related felony conviction, the burden of production only then shifted to Shatz to rebut this evidence.").

Applicability of the Statute to Humphreys and its Application

Humphreys raises two primary issues on appeal: whether 21 U.S.C. § 824(a) can apply to the facts of this case and, if so, whether the DEA properly applied the five public interest factors to his case and properly considered his privacy defense.

Initially, we may easily dispose of Humphreys' contention that 21 U.S.C. § 824(a) was never meant to apply to physicians in his circumstances. Citing Trawick, 861 F.2d at 76, Humphreys argues that the legislative history of the 1984 amendment indicates it was meant to apply only in egregious cases and was specifically directed to those physicians who prescribed controlled substances to addicts, who then could either use the drugs themselves or resell them in order to...