US v. Clinical Leasing Service, Inc., Civ. A. No. 89-3041.

• Decision Date: 15 February 1990
• Docket Number: Civ. A. No. 89-3041.
• Citation: 759 F. Supp. 310
• Parties: UNITED STATES of America v. CLINICAL LEASING SERVICE, INC., et al.
• Court: U.S. District Court — Eastern District of Louisiana

759 F. Supp. 310

UNITED STATES of America v. CLINICAL LEASING SERVICE, INC., et al.

Civ. A. No. 89-3041.

United States District Court, E.D. Louisiana.

February 15, 1990.

Thomas Landers Watson, U.S. Attorney's Office, New Orleans, La., for plaintiff.

Lawrence Blake Jones, Schevermann & Jones, New Orleans, La., for Clinical Leasing Service, Inc., d/b/a Delta Womens Clinic, Inc. d/b/a Delta Women's Clinic and Delta Women's Clinic, Inc., Roy Claude Wood, Jr., M.D. and Richardson B. Glidden, M.D.

William F. Wessel, Wessel, Bartels & Ciaccio, New Orleans, La., for Kiat Varnishung.

ORDER AND REASONS

DUPLANTIER, District Judge.

Before the court is a motion for partial summary judgment filed on behalf of the plaintiff, United States of America, against "defendants Clinical Leasing Service, Inc., Delta Women's Clinic, Kiat Varnishung, Roy Claude Wood, Jr., and Richardson B. Glidden," and a motion for summary judgment filed on behalf of "defendants, Clinical Leasing Service, Inc., d/b/a Delta Women's Clinic (the clinic), Richardson B. Glidden, M.D., and Roy Claude Wood, Jr., M.D."¹ For the following reasons, the defendants' motion is DENIED, and the government's motion is GRANTED.

MATERIAL FACTS AS TO WHICH THERE IS NO GENUINE ISSUE

On August 22, 1988, Drug Enforcement Administration investigators received information that controlled substances were being dispensed from Delta Women's Clinic, located at 1406 St. Charles Avenue, New Orleans, Louisiana. On that date, no physician or other person was registered to dispense controlled substances from that location.

On August 24, 1988, DEA investigators visited the clinic and warned the office manager, Toni Scott, and the clinic coordinator, Betty Lou Ward, that in order to dispense controlled substances the clinic must have a practitioner registered with the DEA at that location. The investigators provided them with a registration application and copies of the pertinent provisions of the Code of Federal Regulations.

On December 2, 1988, DEA investigators returned to the clinic to interview Dr. Kiat Varnishung and Ms. Scott regarding Dr. Varnishung's pending application for registration to dispense controlled substances at the clinic address. At this meeting, the investigators reviewed the pertinent federal regulations with Dr. Varnishung and Ms. Scott. Ms. Scott was warned to include the addresses of the patients in the clinic's drug log.

On March 16, 1989, Dr. Roy Claude Wood, Jr. became registered to dispense controlled substances at the clinic address, 1406 St. Charles Avenue.

On May 10 and 12, 1989, DEA compliance investigators conducted a follow-up investigation at the clinic. This investigation revealed numerous instances in which controlled substances had been dispensed from the clinic between August 24, 1988 (the date of the first warning) and March 16, 1989 (the date of Dr. Wood's registration). This investigation also revealed that even after registration, the clinic's drug log did not contain the addresses of each of the patients to whom controlled substances were dispensed. However, most of the addresses could be obtained by reviewing all the patient records.

During the course of the follow-up investigation, it was discovered that Dr. Wood had obtained thirty-eight tablets of Diazepam (Valium) by issuing a prescription to Toni Scott. Dr. Wood admitted that the Valium was not for Ms. Scott, nor was she under his professional care. Dr. Wood stated that he obtained the Valium in order to dispense it to patients at the clinic. Twenty-two of the thirty-eight Valium tablets remained in the bottle; they were seized by DEA.

The government instituted the present litigation against the clinic and the three doctors associated with the clinic, seeking civil penalties for violations of the Controlled Substances Act, 21 U.S.C. § 801, et seq. Specifically, the clinic and the doctors are charged with having violated the Act by refusing or failing to make, keep or furnish records required by law. The doctors are also charged with failure to properly register to dispense controlled substances at the clinic. Finally, Dr. Wood is charged with illegally issuing the prescription for Valium to Toni Scott.

We now address the legal issues involved in each of the charges against each defendant.

THE CLINIC

COUNT 7(a)

In Count 7(a), the government alleges that on one hundred occasions between August 24, 1988 and March 16, 1989, while the clinic was not registered with the DEA to dispense controlled substances from 1406 St. Charles Avenue, controlled substances were in fact dispensed from that location without record keeping required by law.

The clinic is not charged with failing to obtain a registration; indeed, only physicians may do so. The clinic is charged with failure to maintain proper records. The law clearly requires every "person" (including a corporation) to maintain proper records if that person dispenses controlled substances. By employing physicians to dispense drugs in connection with its operation, the clinic is a dispenser of controlled substances. Therefore, the clinic, as well as the physicians it employs, must maintain the proper records required by law.

Congress has made it "unlawful for any person — to refuse or fail to make, keep, or furnish any record, report, notification, declaration, order or order form, statement, invoice, or information required...." 21 U.S.C. § 842(a)(5).

The records must contain such relevant information as may be required by the regulations of the Attorney General and must be made available for inspection by designated government officers or employees:

Every inventory or other record required under this section (1) shall be in accordance with, and contain such relevant information as may be required by, regulations of the Attorney General, (2) shall (A) be maintained separately from all other records of the registrant, or (B) alternatively, in the case of non-narcotic controlled substances, be in such form that information required by the Attorney General is readily retrievable from the ordinary business records of the registrant, and (3) shall be kept and available, for at least two years, for inspection and copying by officers or employees of the United States authorized by the Attorney General.

21 U.S.C. § 827(b).

Additionally, 21 C.F.R. § 1304.24 sets forth exactly what records and information must be kept and be made available for inspection by the DEA. It provides:

Each person registered or authorized (by § 1301.22(b) of this chapter) to dispense or conduct research with controlled substances and required to keep records pursuant to § 1304.03 shall maintain records with the following information for each controlled substance:

(a) The name of the substance;

(b) Each finished form (e.g., 10-milligram tablet or 10-milligram concentration per fluid ounce or milliliter) and the number of units or volume of finished form in each commercial container (e.g., 100-tablet bottle or 3-milliliter vial);

(c) The number of commercial containers of each such finished form received from other persons, including the date of and number of containers in each receipt and the name, address, and registration number of the person from whom the containers were received;

(d) The number of units or volume of each finished form dispensed, including the name and address of the person to whom it was dispensed, the date of dispensing, the number of units or volume dispensed, and the written or typewritten name or initials of the individual who dispensed or administered the substance on behalf of the dispenser; and

(e) The number of units or volume of such finished forms and/or commercial containers disposed of in any other manner by the registrant, including the date and manner of disposal and the quantity of the substance in finished form disposed.

The clinic contends that it was not required to maintain records, arguing that the record keeping requirements pertain only to "registrants." Since it was not a "registrant," it was not required to keep records.

However, 21 U.S.C. § 842(a)(5), the statute under which the clinic is charged, does not require that one who refuses or fails to make, keep, or furnish records be a "registrant." On the contrary, 21 U.S.C. § 842(a)(5) provides that "it shall be unlawful for any person to refuse or fail to make, keep, or furnish" records. emphasis added. 21 C.F.R. § 1301.02(j) defines "person" as "any individual, corporation, government or governmental subdivision or agency, business trust, partnership, association, or other legal entity."

In order to monitor the flow of controlled substances within the United States, Congress made it unlawful for "any person" to either refuse or fail to make, keep or furnish records. Congressional intent is clear upon review of the other provisions of § 842(a). 21 U.S.C. §§ 842(a)(2) and (3) provide:

It shall be unlawful for any person —

* * * * * *

(2) who is a registrant to distribute or dispense a controlled substance not authorized by his registration to another registrant or other authorized person or to manufacture a controlled substance not authorized by his registration (3) who is a registrant to distribute a controlled substance in violation of section 825 of this title.

Had Congress intended to limit the applicability of § 842(a)(5) to registrants only, it would have done so, as it did in §§ 842(a)(2) and (3). See United States v. Moore, 423 U.S. 122, 96 S.Ct. 335, 46 L.Ed.2d 333 (1975).

COUNT 7(b)

In Count 7(b), the government charges that from March 16, 1989 until May 10, 1989, a period during which a physician was registered to dispense controlled substances at the clinic, the clinic failed to include in its drug log the addresses of the individuals to whom controlled substances were administered. The government submits that although this occurred on hundreds of occasions, it chose to charge a single violation for each of the thirty-seven pages of...