Murphy v. DEA ( 1997 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
APR 22 1997
TENTH CIRCUIT
PATRICK FISHER
Clerk
TERRENCE E. MURPHY, M.D.,
Petitioner,
No. 96-9507
v.
(DEA No. 94-19)
DRUG ENFORCEMENT
ADMINISTRATION,
Respondent.
ORDER AND JUDGMENT *
Keith A. Ward and Craig A. Fitzgerald of Tilly & Ward, Tulsa, Oklahoma, for
Petitioner.
John C. Keeney, Acting Assistant Attorney General; Theresa M.B. Van Vliet;
Velina Consuelo Underwood, Department of Justice; Dennis F. Hoffman, Chief
Counsel, Drug Enforcement Administration, Washington, D.C.
Before SEYMOUR, BRORBY and KELLY, Circuit Judges.
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The case is therefore
ordered submitted without oral argument.
Appellant Terrence E. Murphy, M.D., appeals the Drug Enforcement
Administration's revocation of his Drug Enforcement Administration Certificate
of Registration and the denial of any pending applications for renewal. See
Terrence E. Murphy, M.D.; Revocation of Registration, 61 Fed. Reg. 2841 (1996).
Dr. Murphy asserts the decision was not in accordance with law because: the
Drug Enforcement Administration's interpretation of "falsified" is erroneous, he
was entitled to an opportunity to achieve compliance with statutory and regulatory
requirements, and the Drug Enforcement Administration's decision was arbitrary,
capricious, and not supported by substantial evidence.
I. BACKGROUND
Since August 1988, Dr. Murphy has practiced medicine in Oklahoma.
From July 1986 to June 1988, Dr. Murphy practiced in Alabama and Florida. On
June 20, 1988, the Alabama State Board of Medical Examiners filed an
administrative complaint against Dr. Murphy with the Medical Licensure
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Commission of the State of Alabama. The complaint charged Dr. Murphy with,
inter alia, prescribing controlled substances to persons for other than legitimate
medical purposes, knowingly permitting the dispensation of controlled substances
from his medical office while he was absent from the state, refusing to submit to a
blood and urine drug screening test, and having had his staff privileges at a
Florida hospital removed on grounds related to medical incompetence, moral
turpitude, or drug or alcohol abuse. In October 1988, by which time Dr. Murphy
had ceased practicing in Alabama and moved to Oklahoma, he entered into a
stipulation and consent order with the Alabama State Board in which he admitted
prescribing controlled substances to the individuals named in the complaint but
denied that any of the prescriptions were for other than legitimate medical
purposes. Dr. Murphy and the Board also agreed Dr. Murphy refused to submit to
a requested drug screening without the advice of counsel, but that he later did so
with negative results. Dr. Murphy neither admitted nor denied the remaining
allegations, and the Board agreed to disposition of the matter by the Alabama
Medical Licensure Commission "without the necessity of making any further
findings of fact or adjudication of facts with respect to these allegations."
On October 26, 1988, the Alabama Medical Licensure Commission entered
a consent order, which order was based on the facts as set forth in the
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administrative complaint and the stipulation. The Commission fined Dr. Murphy
$500, suspended his Alabama license for one year, and stated that thereafter his
license would be on indefinite probation. Because Dr. Murphy had no intention
of returning to Alabama, he did not contest the results of these proceedings.
In September 1990, the Florida Department of Professional Regulation filed
an administrative complaint against Dr. Murphy, charging him with violating a
Florida statute by having a license to practice medicine revoked, suspended, or
otherwise acted against by the licensing authority of any state, namely Alabama.
A formal administrative hearing was held, at which Dr. Murphy contested the
substantive basis for the Alabama allegations, asserting the settlement there
reached was merely one of convenience submitted to upon advice of the
Oklahoma medical licensing authorities. However, he admitted violating the
Florida statute at issue through entry of the Alabama stipulation and consent
order. The hearing officer noted the dearth of factual findings supporting the
Alabama charges and stated:
Not being confident of the nature of the underlying facts in the
violations [Dr. Murphy] has been accused of in Alabama and given
the willingness of that jurisdiction to allow [Dr. Murphy] to deny any
wrongdoing from a factual point of view as a means to dispose of
their case, the reasonable disposition of the present action would be
by the imposition of an administrative fine.
The Florida Board of Medicine accordingly fined Dr. Murphy $500. It
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additionally ordered that if Dr. Murphy reactivated his Florida license, 1 it would
be placed on probation with terms and conditions to be set by the Board.
On October 24, 1988, Dr. Murphy submitted himself to the jurisdiction of
the Oklahoma Board of Medical Licensure and Supervision. The Oklahoma
Board granted Dr. Murphy an Oklahoma Supervised Medical Doctor Certificate
on a five-year probationary status with numerous terms and conditions. In
January 1990, the Board granted Dr. Murphy's application for reinstatement as a
licensed physician and surgeon and placed him on probation for three years. On
May 24, 1990, the Oklahoma Board issued an order restoring an unrestricted
medical license to Dr. Murphy, and "set aside and held for naught" the probation.
In June 1990, Dr. Murphy completed an application for registration with the
Oklahoma State Bureau of Narcotics and Dangerous Drugs Control that
contained questions inquiring whether "a previous registration held by the
applicant [had ever] been surrendered, revoked, suspended [or] denied," and
whether the applicant had "ever been physiologically or psychologically addicted
1
At the time of the Florida proceedings, Dr. Murphy was living and
practicing in Oklahoma. His Florida license had been inactive since December
1989 due to his failure to renew it.
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to controlled dangerous substances." Dr. Murphy answered "no" to both
questions.
In August 1990, the Oklahoma State Bureau of Narcotics and Dangerous
Drugs Control issued an order to Dr. Murphy to show cause why it should not
deny his application, referencing his prior Oklahoma probation, the Alabama
suspension and probation, a brief voluntary entry into a Florida drug rehabilitation
program, and his negative answers to the questions quoted above. Dr. Murphy
and the Bureau entered into a stipulation wherein, solely because of the prior
probationary status of his Oklahoma medical license, the Bureau denied his
registration for a period of three days. The Bureau did not find Dr. Murphy had
abused or been addicted to controlled substances, or that he had provided untrue
answers on the application. It is noteworthy that to date Oklahoma authorities
have made no allegations that Dr. Murphy has in any way abused his medical
license or his authority to write prescriptions.
The instant action centers on Dr. Murphy's registration with the Drug
Enforcement Administration. 2 Dr. Murphy obtained a Drug Enforcement
2
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 every person who dispenses or distributes any controlled substance to
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Administration Certificate of Registration in 1984, and filed a renewal application
in December 1990. Question 2(b) of the renewal application asked:
Has the applicant ever been convicted of a crime in connection with
controlled substances under State or Federal law, or ever surrendered
or had a Federal controlled substance registration revoked,
suspended, restricted or denied, or ever had a State professional
license or controlled substance registration revoked, suspended,
denied, restricted or placed on probation?
(Emphasis added.) Dr. Murphy's renewal application answered "no." Dr.
Murphy's mother, rather than Dr. Murphy, filled out the application. At a 1994
administrative hearing, she stated her main concern in completing the application
was timeliness. Dr. Murphy had already signed the form while blank, and
apparently there was little discussion or attention given to the application. The
administrative law judge found this inattention "was the predominant reason for
the wrong statement, and [Dr. Murphy] 'should have known' of the inaccuracy." 3
obtain a certificate of registration from the Attorney General. 21 U.S.C. §§
822(a), 823(f) (1994). The Attorney General has delegated authority regarding
such registrations to the Drug Enforcement Administration. See Humphreys v.
Drug Enforcement Admin., 96 F.3d 658, 661 (3d Cir. 1996) (citing 21 U.S.C.
§ 824 (1994); 28 C.F.R. § 0.100(b) (1995)).
3
Dr. Murphy argues he suffers from a reading and learning disability,
which prevented him from properly understanding the question and resulted in the
inaccuracy. However, we accept the administrative law judge's finding that the
inaccuracy resulted from Dr. Murphy's failure to devote proper attention to the
application, rather than his disability.
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In November 1993, after renewing Dr. Murphy's 1991 certificate, the Drug
Enforcement Administration issued an order to show cause why his registration
should not be revoked and any pending applications be denied. The Drug
Enforcement Administration proffered two grounds for such action: (1) Dr.
Murphy materially falsified his 1990 registration application by denying he had
ever had a state professional license or controlled substance registration
suspended, restricted or placed on probation, see 21 U.S.C. § 824(a)(1) (1994 &
Supp. 1997), and (2) his continued registration would be inconsistent with the
public interest, see 21 U.S.C. §§ 823(f), 824(a)(4) (1994 & Supp. 1997).
A formal hearing was held before an administrative law judge who found
Dr. Murphy's negative answer to question 2(b) constituted a material falsification,
although his continued registration would not be inconsistent with the public
interest. The administrative law judge recommended the Drug Enforcement
Administration issue Dr. Murphy a formal reprimand, but permit him to retain his
registration.
Both the Drug Enforcement Administration and Dr. Murphy appealed the
decision to the Deputy Administrator of the Drug Enforcement Administration.
See 61 Fed. Reg. 2841, 2842. Like the administrative law judge, the Deputy
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Administrator found Dr. Murphy materially falsified his renewal application. Id.
at 2845. Furthermore, although he agreed with the administrative law judge's
factual findings, he felt registration of Dr. Murphy with the Drug Enforcement
Administration would be contrary to the public interest. Id. at 2845-2847. The
Deputy Administrator sanctioned Dr. Murphy substantially beyond that
recommended by the administrative law judge, revoking his Drug Enforcement
Administration Certificate of Registration and denying any pending applications
for registration. Id. at 2847.
II. ANALYSIS
Dr. Murphy attacks the Deputy Administrator's finding he materially
falsified his application, the finding his registration would be inconsistent with
the public interest, and the severity of the sanction. Our standard of review is
limited. We may set aside the Deputy Administrator's determination only if it is
arbitrary, capricious, an abuse of discretion, unsupported by substantial evidence,
or otherwise not in accordance with law. 5 U.S.C. § 706(2) (1994); Rapp v.
United States Dep't of Treasury, 52 F.3d 1510, 1514-15 (10th Cir. 1995). Under
the arbitrary, capricious, or abuse of discretion standard we may not substitute our
own judgment for that of the agency; rather, "we must uphold the agency's action
if it has articulated a rational basis for the decision and has considered relevant
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factors." Colorado Dep't of Soc. Servs. v. United States Dep't of Health & Human
Servs., 29 F.3d 519, 522 (10th Cir. 1994); Northwest Pipeline Corp. v. Federal
Energy Regulatory Comm'n, 61 F.3d 1479, 1486 (10th Cir. 1995). Evidence is
substantial "if it is enough to justify, if the trial were to a jury, refusal to direct a
verdict on a factual conclusion." Rapp, 52 F.3d at 1515.
Furthermore, "'where Congress has entrusted an administrative agency with
the responsibility of selecting the means of achieving the statutory policy "the
relation of remedy to policy is peculiarly a matter for administrative
competence."'" Butz v. Glover Livestock Comm'n Co., 411 U.S. 182, 185 (1973)
(quoting American Power & Light Co. v. SEC, 329 U.S. 90, 112 (1946)).
Accordingly, our review of the Drug Enforcement Administration's choice of
remedy is equally deferential; we may set it aside only if it is unwarranted in law
or without justification in fact. Id. at 185-86.
A. Material Falsity
28 U.S.C. § 824(a)(1) authorizes the Drug Enforcement Administration to
suspend or revoke a controlled substance registration upon a finding that the
registrant has materially falsified a registration application. Dr. Murphy argues
the Drug Enforcement Administration's decision to revoke his registration on the
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grounds that he materially falsified 4 his application was not in accordance with
law because the agency applied an erroneous interpretation of "falsified." The
Drug Enforcement Administration interpreted "falsified" to include both falsities
of which Dr. Murphy knew, and those of which he should have known. 61 Fed.
Reg. 2841, 2844. Dr. Murphy argues the statute authorizes sanction only if he
had actual knowledge his application contained false statements, which
knowledge he vigorously disclaims. He makes the somewhat inconsistent claims
that he did not read question 2(b), which his mother incorrectly answered, and
that his reading and learning disability prevented him from properly
understanding the question.
The parties dispute the standard of review governing our interpretation, and
application, of § 824(a)(1)'s reference to "falsified." The Drug Enforcement
Administration asserts our determination of the appropriate reading is governed
by Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837 (1984), and its progeny, such as Rapp, 52 F.3d 1510. Under that standard, we
must give considerable deference to an agency's interpretation of a statute it is
charged with administering if the statute is silent or ambiguous with respect to a
4
Dr. Murphy does not contest the materiality of his negative answer.
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specific issue; our review is limited to determining whether the agency's
construction of the statute is reasonable. Chevron, 467 U.S. at 843-44; Rapp, 52
F.3d at 1518. Dr. Murphy, however, claims our review is de novo. He reasons
that deference to an agency's statutory interpretation is appropriate only where the
agency has particular expertise concerning the matter or terms interpreted, or
where Congress has delegated to the agency the task of interpreting or elaborating
on the statute. See Cellwave Tel. Servs., L.P. v. Federal Communications
Comm'n, 30 F.3d 1533, 1536-37 (D.C. Cir. 1994). Here, he asserts, the Drug
Enforcement Administration has no special expertise as to what constitutes a
"falsified" application, and Congress has not delegated to the Drug Enforcement
Administration the authority to elaborate on or interpret the meaning of the term
"falsified."
However, we find this debate to be immaterial. Even were we to engage in
de novo review, we would uphold the agency interpretation and resulting decision.
Dr. Murphy had a responsibility to ensure his signed application was correct in all
material respects prior to its submission to the Drug Enforcement Administration.
The Drug Enforcement Administration relies heavily on the truthfulness of
registrants, see Bobby Watts, M.D.; Revocation of Registration, 58 Fed. Reg.
46995 (1993), and Dr. Murphy cannot escape his duty of accuracy and honesty
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through the pen of another. We agree § 824(a)(1) references both those falsities
of which registrants know and those of which they should know. In the instant
case it is undisputable that Dr. Murphy should have known the correct answer to
question 2(b) was "yes." Accordingly, we affirm the Drug Enforcement
Administration's finding Dr. Murphy materially falsified his application. 5
Dr. Murphy further contends that, even if he materially falsified his
application, 5 U.S.C. § 558(c)(2) (1994) prevents the Drug Enforcement
Administration from revoking his registration without providing him an
opportunity to repair the application, which it did not do. In pertinent part,
§ 558(c) provides:
Except in cases of willfulness or those in which the public health,
interest, or safety requires otherwise, the withdrawal, suspension,
revocation, or annulment of a license is lawful only if, before the
institution of agency proceedings therefor, the licensee has been
given ...
....
(2) opportunity to demonstrate or achieve compliance with all
lawful requirements.
5
Dr. Murphy also asserts the Deputy Administrator's finding that he
materially falsified his application is not supported by substantial evidence.
However, this argument is premised on the assumption "falsified" as used in
§ 824(a)(1) does not include falsities of which Dr. Murphy should have known.
Because we have held to the contrary, this argument too fails.
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The Drug Enforcement Administration retorts that Dr. Murphy's incorrect
response was willful, and therefore § 558(c) does not afford him an opportunity to
achieve compliance prior to revocation of his license.
The Deputy Administrator found Dr. Murphy's material falsification was
willful because "he acted with 'careless disregard' for ... statutory and regulatory
requirements when he submitted his ... renewal application with the incorrect
response to question 2(b)." Terrence E. Murphy, M.D., 61 Fed. Reg. at 2845.
However, "careless disregard" is not the proper test for willfulness under
§ 558(c). Rather, in the Tenth Circuit, willfulness for purposes of § 558(c) means
"an intentional misdeed or such gross neglect of a known duty as to be the
equivalent thereof." See Capitol Packing Co. v. United States, 350 F.2d 67, 78-79
(10th Cir. 1965) (examining a precursor statute to § 558(c)); see also Hutto
Stockyard, Inc. v. United States Dep't of Agriculture, 903 F.2d 299, 304 (4th Cir.
1990) (quoting Capitol Packing). This is a more stringent standard than mere
negligence or "careless disregard." See Capitol Produce Co. v. United States, 930
F.2d 1077, 1079-80 (4th Cir. 1991); Hickey v. Dep't of Agriculture, 1993 WL
128889, at *4 (No. 91-70169) (9th Cir. Apr. 23, 1993).
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Nonetheless, we too find Dr. Murphy's conduct was willful. See United
States v. Sandoval, 29 F.3d 537, 542 n.6 (10th Cir. 1994) (appellate court can
affirm district court on grounds not relied upon by the district court). By failing
to give proper attention to his registration application, Dr. Murphy grossly
neglected his duty to complete it truthfully and accurately. Given the various
actions taken against his medical licenses and registrations in three states, it is
inconceivable that Dr. Murphy would not have known the correct answer to
question 2(b) was "yes" had he taken the time to review it. Accordingly, § 558(c)
did not entitle Dr. Murphy to an opportunity to correct his application.
B. Public Interest
As we discuss in part II.C., infra, Dr. Murphy's material falsification of his
application is itself sufficient grounds for revocation of his Drug Enforcement
Administration registration. Accordingly, we need not, and therefore do not,
address whether the Deputy Administrator was correct in finding Dr. Murphy's
registration to be inconsistent with the public interest.
C. Sanction
Finally, Dr. Murphy claims the Drug Enforcement Administration's choice
of remedy is far too harsh and therefore should be set aside. However, Congress
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has specifically authorized the Drug Enforcement Administration to revoke the
registrations of registrants who submit materially false registration applications.
21 U.S.C. § 824(a)(1). In light of the importance both Congress and the Drug
Enforcement Administration place on truthfulness by applicants seeking to handle
controlled substances, see id.; Bobby Watts, M.D., 58 Fed. Reg. at 46995, and the
deference we must accord the agency's chosen remedy, see Butz, 411 U.S. at 185-
86, we cannot say the Drug Enforcement Administration was unjustified in
revoking Dr. Murphy's registration for falsely stating he had never had a state
medical license or registration revoked, suspended, denied, restricted, or placed
on probation. Accordingly, we will not overrule the agency's choice of sanction.
However, after thorough review of the record, we do note that the sanction
is, on the facts of this case, troublesomely severe. 6 Accordingly, as have other
courts before us when faced with similar concerns, we suggest the Drug
Enforcement Administration give careful consideration to any new applications by
Dr. Murphy seeking registration with the agency. See, e.g., Shatz v. United States
6
We note in passing that the Deputy Administrator's analysis finding Dr.
Murphy's continued registration to be contrary to the public interest is somewhat
questionable.
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Dep't of Justice, 873 F.2d 1089, 1092 (8th Cir. 1989); Sokoloff v. Saxbe, 501 F.2d
571, 576-77 (2d Cir. 1974).
Entered for the Court
WADE BRORBY
United States Circuit Judge
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