# FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 1 of 402 * PUBLIC * > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A1e585699b68f8b40 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 1 of 402 * PUBLIC * PUBLIC UNITED STATES OF AMERICA BEFORE THE FEDERAL TRADE COMMISSION OFFICE OF ADMINISTRATIVE LAW JUDGES In the Matter of ) ) JASON SCOTT, DVM, ) Appellant, ) vs. ) ) THE HORSERACING INTEGRITY & ) SAFETY AUTHORITY, a federal ) administrative agency. ) Appellee. ) Docket No. 9449 APPELLANT’S MOTION TO DISQUALIFY Dr. Scott respectfully requests the recusal of Judge Himes based on (1) Judge Himes’s demonstrable history of prosecutorial bias and dicta commentary regarding his preference for the harshest penalties; (2) his systematic, habitual, and escalating sua sponte interventions against Covered Persons; (3) his advocacy against Dr. Scott in this case; (4) his heavy-handed restrictions on Dr. Scott’s appeal rights; (5) his consistent expansion of HISA’s appeal rights; and (6) his admitted past association with a member of HISA’s board. Though any one of these facts, taken alone, may be insufficient to warrant disqualification, this motion is based on the accumulation of these facts. This motion is supported by the affixed Memoranda and the exhibits attached thereto. Respectfully submitted, /s/ Joseph C. DeAngelis BREWSTER & DEANGELIS, PLLC Clark O. Brewster, OBA #1114 Joseph C. DeAngelis, OBA #34142 2617 East 21st Street Tulsa, Oklahoma 74114 (918) 742-2021, Fax (918) 742-2197 Attorneys for Dr. Jason Scott FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 2 of 402 * PUBLIC * PUBLIC ABBREVIATIONS Shell II - In the matter of Dr. Scott Shell, DVM, Docket No. 9439, Shell II ALJ Decision In the matter of Dr. Scott Shell, DVM, Docket No. 9439, Administrative Law Judge Decision on Application for Review (March 6, 2025) Serpe In the matter of Phil Serpe, Docket No. 9441, Administrative Law Judge Decision on Application for Review (September 12, 2025) Overly In the matter of Dr. Larry Overly, DVM, Docket No. 9443, Overly AuOBr In the matter of Dr. Larry Overly, DVM, Docket No. 9443, The Authority’s Proposed Findings of Fact, Conclusions of Law, and Supporting Legal Brief (December 15, 2025) Overly ALJ Decision In the matter of Dr. Larry Overly, DVM, Docket No. 9439, Administrative Law Judge Decision on Application for Review (January 27, 2026) Kriple – In the matter of Zvi Kriple, Docket No. 9446, Administrative Law Judge Decision on Application for Review (March 4, 2026) FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 3 of 402 * PUBLIC * PUBLIC UNITED STATES OF AMERICA BEFORE THE FEDERAL TRADE COMMISSION OFFICE OF ADMINISTRATIVE LAW JUDGES In the Matter of ) ) JASON SCOTT, DVM, ) Appellant, ) vs. ) ) THE HORSERACING INTEGRITY & ) SAFETY AUTHORITY, a federal ) administrative agency. ) Appellee. ) Docket No. 9449 MEMORANDUM IN SUPPORT OF APPELLANT’S MOTION TO DISQUALIFY The arbitrator side-barred with HIWU’s counsel on a break before Dr. Scott presented even a single witness. Unprompted, he said, “You guys would never try anything with me unless you had a winner.” 1 That arbitrator rejected all of Dr. Scott’s defenses without mention or explanation. Though history rarely repeats, it often rhymes. Judge Himes seems poised to rule against Dr. Scott without even acknowledging Dr. Scott’s arguments in this case. By filing this motion, Dr. Scott means no disrespect, but the following circumstances are concerning and warrant inquiry. LEGAL STANDARD Parties are “entitled to the cold neutrality of an impartial judge.” 2 “The test for disqualification has been succinctly stated as being whether a disinterested observer may conclude that (the agency) has in some measure adjudged the facts as well as the law of a particular case in advance of hearing it.” 3 A judge “should never assume the role of advocate.” 4 Excessive judicial interventions require recusal if the record shows that the judge “was actually biased or that he Ex. 1, Excerpt from Hearing Day 1; See Ex.2, DeAngelis Declaration, ¶ 2 for additional context. Pastrana v. Chater, 917 F. Supp. 103, 105 (D.P.R. 1996) (citation omitted). 3 Cinderella Career & Finishing Schs., Inc. v. F.T.C., 425 F.2d 583, 591 (D.C. Cir. 1970) (citation omitted); see also United States v. Microsoft Corp., 253 F.3d 34, 114 (D.C. Cir. 2001). 4 Warner v. Transamerica Ins. Co., 739 F.2d 1347, 1351 (8th Cir. 1984). 1 2 1 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 4 of 402 * PUBLIC * PUBLIC projected the appearance of advocacy or partiality” 5 or where a judge “visibly and forcefully assumes the prosecution’s role.” 6 Similarly, statements and actions in a judge’s official capacity are not immune from scrutiny. They “will” support disqualification “if they reveal such a high degree of favoritism or antagonism as to make fair judgment impossible.” 7 ARGUMENT I. Judge Himes Has a Prosecutorial Bias, As Demonstrated by His Comments in Dicta and Escalating Sua Sponte Interventions Judge Himes’s pattern of advocating for harsher sanctions and imposing them sua sponte far exceeds what would be expected of a neutral adjudicator and demonstrates systematic bias favoring the regulatory agency. Begin with Shell II (March 6, 2025). The arbitrator permitted a three-month and a $5,000 reduction to the suspension and fine. Judge Himes affirmed the sanction but offered the following commentary: “But if I were the decisionmaker in the first instance, under the totality of the circumstances I would modify the Ineligibility reduction to 1.5 months.” 8 At this point, Judge Himes viewed his review authority as “cabined” and did not modify the penalty. From that posture, Judge Himes’s dicta as to his personal preference for a harsher penalty served no purpose in the opinion other than to reveal his bias for harsher penalties. Next consider Serpe (Sep. 12, 2025). The arbitrator imposed no fine. On review, Judge Himes imposed the maximum fine 9 over the objection of both parties. 10 Perhaps more striking, Judge Himes simultaneously ruled that fines were not mandatory and that the amount was See Van Leirsburg v. Sioux Valley Hosp., 831 F.2d 169, 172 (8th Cir. 1987). United States v. Rivera-Rodriguez, 761 F.3d 105, 121 (1st Cir. 2014). 7 Liteky v. United States, 510 U.S. 540, 555 (1994). 8 Shell II ALJ Decision at 69. 9 Serpe at 65. 10 See Serpe at 56–64. 5 6 2 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 5 of 402 * PUBLIC * PUBLIC “discretionary.” 11 Yet Judge Himes elected sua sponte to exercise a “discretionary” power to its maximum force in the face of unanimous opposition. The pattern continued in Overly (Jan. 27, 2026). HISA alleged error in imposing concurrent penalties but (as in Serpe) alleged no abuse of discretion in a reduction of fault. 12 Judge Himes sua sponte imposed the maximum suspension (four years total) and fine ($50,000 total). 13 Judge Himes did so without finding that the arbitrator’s mere one-month reduction in Ineligibility was an abuse of discretion. 14 Instead, the basis of Judge Himes’s modification was his subjective belief that the one-month reduction was “too lenient.” 15 Judge Himes likewise foreshadowed his willingness to breach the cap on penalties by sua sponte alleging aggravating circumstances, even though the rules place the burden on the Authority (not an ALJ) to establish aggravating factors. 16 Finally, consider Kriple (March 4, 2026). Judge Himes affirmed a two-year suspension of a trainer charged with neglect, finding no abuse of discretion due to a lack of guidance. One would expect that an unbiased adjudicator would simply have noted the lack of guidance and stopped there. But Judge Himes criticized HISA’s two-year penalty (a devastating sanction) as “overly lenient” and advocated for harsher sanctions. 17 That advocacy referenced a case imposing an 18- Id. at 62 (“[T]he arbitrator had discretion to determine the amount of any fine awarded, which, as I noted above, could be as low as $0.”); Id. at 63 (if no fine was awarded, “an explanation for the decision to dispense with any fine at all was necessary . . . I am not holding that an arbitrator in a HIWU-initiated case must always impose a fine.”) 12 Overly AuOBr at 27. 13 Overly ALJ Decision at 95. 14 Id. at 21-22 (“To find an abuse of discretion, there must be “a plain error, discretion exercised to an end not justified by the evidence, a judgment that is clearly against the logic and effect of the facts as are found.”) (citation omitted). 15 Id. at 68 16 Id. at 94. Note that one of the alleged constitutional defects is that HISA does not grant the FTC charging authority. Notwithstanding, Judge Himes appears to claim that he can assume that power for himself. 17 Kriple at 22. 11 3 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 6 of 402 * PUBLIC * PUBLIC year suspension “as a stern warning to others” and emphasized that lesser sanctions were criticized in the media. 18 II. Judge Himes Assumed the Role of Advocate Against Dr. Scott Sua Sponte In the March 17 Order, Judge Himes concludes from a cherry-picked record, that “[t]he papers filed in this review include a prima facie showing of grounds for vacatur and remand” and implies that such reversal is permitted without a showing of prejudice. 19 The March 17 Order contains a three-page narrative articulating a theory of error and prejudice which, in essence, argues that anything less than the maximum penalty is prejudicial to HISA. 20 In that narrative, Judge Himes articulates as many four alleged errors in the assessment of the penalty and provides a roadmap for asserting those errors. 21 Crucially, the Authority makes none of these arguments. The Authority never claims that the “lack of explanation” is a reversible error. The Authority never even requests review of that issue — because it cannot. 22 Judge Himes has, in effect, submitted his own application for review as to the penalty and deemed that such application should supersede Dr. Scott’s challenge to liability. Such application completely transforms the issues presented for appeal without a lawful application raising any challenge to the penalty under 16 CFR § 1.146(a). Indeed, unlike Overly, Shell, and Perez, Dr. Scott raised no challenge to the sanction itself. Like the arbitrator below, Judge Himes never explains why Dr. Scott’s defenses to a threshold issue should be disregarded. Judge Himes simply assumed the role of advocate. Id. at 23-24. March 17 Order at 3. 20 March 17 Order at 4–6 (identifying penalty “less than the mandatory 24-month period” as prejudicial but noting that the imposition of a “maximum” $25,000 fine “does not prejudice the Authority directly.”). 21 March 17 Order at 4–6. 22 In re Shell, Docket No.9439, Order Dismissing HIWU’s Application for Review at 5 (12/06/2024) (“[N]either HIWU nor the Authority may seek ALJ review pursuant to 15 U.S.C. § 3058(b)(1) or FTC Rule 1.146(a) as a ‘person aggrieved’ by civil sanctions imposed by the Authority.”). 18 19 4 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 7 of 402 * PUBLIC * PUBLIC III. Judge Himes’s Heavy-Handed Restrictions on Dr. Scott’s Appeal Rights Judge Himes proposes a remand, which is a dispositive order. 23 Dr. Scott’s inability to justify his opposition to such an order would presumably result in a remand, yet Judge Himes severely restricts Dr. Scott’s ability to oppose. Normally, a decision from the administrative law judge must be “based on a consideration of the whole record.” 24 The parties are provided an opportunity to brief the pertinent issues with simultaneous briefs and simultaneous replies amounting to 10,000 words. 25 But here, Judge Himes permits only a 1500-word brief by Dr. Scott and a 1500-word reply for the Authority. Compared to the normal procedure for disposing of an appeal, Judge Himes restricted Dr. Scott’s briefing by 85%. On the other hand, Judge Himes grants the Authority — and only the Authority — a right of reply that is reduced by a mere 40%. 26 Dr. Scott has no right to respond. Considering that the Authority never raised the asserted errors in its brief, Dr. Scott has no notice as to what the Authority’s argument will ultimately be. IV. The Accumulation of Facts Would Cause a Reasonable Person to Question Judge Himes’s Neutrality Judicial interventions, even if authorized, must be restrained so as to maintain the appearance of neutrality. In the case of Rivera-Rodriguez, the First Circuit found that repeated instances of interventions “conveyed an appearance of judicial bias” where those interventions all had a “common theme — the court helping the government with its case.” 27 These interventions occurred where the court grew “impatient” with the government’s efforts in the case, after which the court would assume “the prosecutor’s role in questioning the cooperating witness.” 28 Jurors 16 CFR 1.146(d)(3)(i). 16 CFR 1.146(d)(2). 25 16 CFR 1.146(c)(3)–(5). 26 A reply is normally limited to 2500 words. Judge Himes permitted 1500. 27 United States v. Rivera-Rodriguez, 761 F.3d 105, 122–23 (1st Cir. 2014) 28 Id. at 123–24. 23 24 5 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 8 of 402 * PUBLIC * PUBLIC are, by definition, random people from the street who have been vetted for neutrality. Thus, they provide a decent metric for when a reasonable person would perceive bias. Translating to the appellate context, the framing of issues is primarily vested with the parties, 29 and the burden of proof is placed primarily on the Authority to sustain the charge. 30 Though a reviewing ALJ has the authority to make “any” finding justified by the record, such interventions should be restrained to maintain the appearance of neutrality. But Judge Himes’s interventions have been anything but restrained. Judge Himes routinely punishes parties for bringing appeals by imposing the harshest possible sanction, even when such action is unanimously opposed. Judge Himes’s consistent practice is to “visibly and forcefully assume[] the prosecution’s role” to override even the Authority’s barest attempts at leniency. 31 From a review of Judge Himes’s opinions after Shell, he has never modified a penalty in a Covered Person’s favor. His uniform practice has been to impose the maximum possible penalty even where he finds no abuse of discretion in the prior imposition of a lesser penalty, as in Overly. Reviewing Judge Himes’s dicta commentary, a reasonable person would attribute these decisions to bias. Indeed, at least three times in four opinions, he condemned penalties for being “too lenient” and advocated for penalties approaching two decades in length. Such statements served no legitimate purpose in the opinions, yet Judge Himes made them anyways. Notably, HISA leveraged these facts in this very case in their attempt to pressure Dr. Scott to abandon his pending federal case and forego an appeal. 32 That Judge Himes’s prosecutorial advocacy is so obvious and notorious that HISA would leverage it against the Covered Person potentially appearing before him is proof enough that a reasonable observer would find bias. 16 CFR 1.146(a) 16 CFR 1.146(c)(6)(i). 31 United States v. Rivera-Rodriguez, 761 F.3d 105, 121 (1st Cir. 2014). 32 Ex.2, Declaration of Attorney Joseph DeAngelis. 29 30 6 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 9 of 402 * PUBLIC * PUBLIC The pattern of intervention escalated here. Dr. Scott exclusively asked whether he could be found liable for a violation. Judge Himes, without a lawful application, completely disregarded the question presented to him in favor of the Authority’s mere suggestion that the degree of penalty was not “explained.” This decision is suspect for several reasons. First, the Authority has no right to appeal, so it is unclear why Judge Himes is even considering a request for remand. 33 Nothing in the application makes the non-opposition to a stay conditional. 34 Second, the issue presented was whether the undisputed facts foreclose a finding of liability. If Dr. Scott is correct, any “error” in the calculation of the penalty is moot. And third, the Authority waived any objection to the computation or wording of the penalty by not objecting under Rule 7380. 35 Purportedly exercising “de novo” review, Judge Himes effectively resurrected an issue that the Authority waived upon the Authority’s mere suggestion of irregularity. As occurred in Shell and Overly, this dynamic has repeatedly circumvented the Authority’s lack of standing to appeal, and this dynamic has inured yet again exclusively to the Authority’s benefit. Where Judge Himes expanded the Authority’s appellate rights, he restricted Dr. Scott’s. Not only did Judge Himes effectively eliminate Dr. Scott’s appeal in favor of his own single-issue assertion of error, he restricted or outright eliminated the procedures available to Dr. Scott for dispositive briefing. 36 From this context, a reasonable person would view Judge Himes’s escalating and one-sided interventions “project[] the appearance of advocacy or partiality” 37 and, more specifically, a pro- In re Shell, Docket No.9439, Order Dismissing HIWU’s Application for Review at 5 (12/06/2024) (“[N]either HIWU nor the Authority may seek ALJ review pursuant to 15 U.S.C. § 3058(b)(1) or FTC Rule 1.146(a) as a ‘person aggrieved’ by civil sanctions imposed by the Authority.”). 34 Ex.2A, Email to HISA Counsel 35 Ex. 3, Rule 7380 Objections (Withdrawn). 36 See also 16 CFR § 3.22(c). 37 See Van Leirsburg v. Sioux Valley Hosp., 831 F.2d 169, 172 (8th Cir. 1987). 33 7 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 10 of 402 * PUBLIC * PUBLIC Authority prejudgment that sanctions should always be the maximum or higher. The accumulation of the excessive judicial interventions demonstrates a bias that is prosecutorial in nature and confirms that Dr. Scott will be forced to fight this appeal on two fronts: against HISA and against the judge. That deprives him of his right to an impartial adjudicator. From this context, Judge Himes’s disclosed association with a HISA board member deserves a second look. The question is whether a reasonable observer who knows all of the above facts and the disclosed association with a HISA board member would perceive bias. The fact that Judge Himes believed that his contacts with Ms. Mazur were substantial enough to require disclosure is evidence that he believed a reasonable person could perceive bias. A reasonable person could, and likely would, attribute Judge Himes’s excessive pro-Authority interventions to his disclosed association with a high-ranking member of that party, which regularly appears before him. “Appearance may be all there is, but that is enough.” 38 CONCLUSION Dr. Scott has already suffered one proceeding where the outcome was predetermined and his arguments were completely ignored. He should not be made to suffer another. At the very least, Judge Himes’s conduct conveys the impression to any reasonable observer that (1) he has prejudged anything less than the maximum penalty as “overly lenient” and deserving of modification and (2) such bias is so strong that he would sua sponte override a request to review preliminary issues that would moot those concerns. Dr. Scott respectfully requests that Judge Himes recuse. 38 United States v. Microsoft Corp., 253 F.3d 34, 115 (D.C. Cir. 2001) 8 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 11 of 402 * PUBLIC * PUBLIC Dated: April 3, 2026. Respectfully submitted, /s/ Joseph C. DeAngelis BREWSTER & DEANGELIS, PLLC Clark O. Brewster, OBA #1114 Joseph C. DeAngelis, OBA #34142 2617 East 21st Street Tulsa, Oklahoma 74114 (918) 742-2021, Fax (918) 742-2197 Attorneys for Dr. Jason Scott 9 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 12 of 402 * PUBLIC * PUBLIC CERTIFICATE OF SERVICE Pursuant to 16 CFR 1.146(a) and 16 CFR 4.4(b), a copy of the foregoing is being served this 3 day of April, 2026, via First Class mail, e-filing, and/or email upon the following: rd Office of the Secretary Federal Trade Commission 600 Pennsylvania Avenue NW, Suite CC-5610 Washington. DC 20580 Office of Administrative Law Judges Hon. D. Michael Chappell Chief Administrative Law Judge Federal Trade Commission 600 Pennsylvania Avenue, NW Washington, DC 20580 (Via e-mail to oalj@ftc.gov and electronicfilings@ftc.gov) (April Tabor atabor@ftc.gov; Pablo Zylberglait PZYLBERGLAIT@ftc.gov) (Eric Winker ewinker@ftc.gov; Dana Gross dgross@ftc.gov) Horseracing Integrity and Safety Authority Samuel Reinhardt (email samuel.reinhardt@hisaus.org) Michelle Pujals, HIWU General Counsel (email mpujals@hiwu.org) Allison Farrell, HIWU Litigation Counsel (email afarrell@hiwu.org) 401 West Main Street, Suite 222 Lexington, KY 40507 Counsel for Horseracing Integrity and Safety Authority Bryan Beauman (bbeauman@sturgillturner.com) Rebecca C. Price (rprice@sturgillturner.com) Leigh Reed (lreed@sturgillturner.com) Sturgill Turner 333 West Vine St., Ste. 1500 Lexington, KY 40507 /s/ Joseph C. DeAngelis 10 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 13 of 402 * PUBLIC * PUBLIC [11/19/25 at 5:52:25 -5:55:45.] Mr. Hackney: Okay, break, 15 minutes? Mr. Brewster: Will we go to 5.30 if we need to, or… Mr. Hackney: You can go as late as you want. Mr. Brewster: You won't be here, but we’ll be here Mr. Hackney: Oh, no, I'll be here. I'll be here. Look, as an old trial lawyer of over 50 years, I hated it when people made me leave early, then right into a cross. I mean, I'm gonna let you get through what you're doing at the time. [pause – directed to HIWU counsel] And I will apologize to you only because I was waiting for you to say something. About how long he was going. Mr. Greene: Well, I want to give some leeway, so… Mr. Hackney: Well, you were very professional and very ethical, okay? And I appreciate it. Mr. Greene: Ryan [Lipes] was at DOJ before. Ryan was at DOJ before coming to work at our firm, so he's been at the highest levels. Mr. Hackney: Were you a prosecutor? Well, you still are a prosecutor, that's all y'all are. Mr. Lipes: Suck me back into this… Mr. Hackney: Well, are the cases here as set in… you guys would never try anything with me unless you had a winner. Mr. Greene: We hope so. Mr. Lipes: You know, that was pretty… that's crazy to me, just because I think my generation. It was set law. Mr. Greene: I mean, it was set law. Mr. Lipes: Chevron deference to us was… They required a whole class on Chevron for us. And then just one day, we wake up, and it's gone, and I was like, that class and that $200 book was a waste of time. Exhibit 1 exhibitsticker.com Mr. Hackney: No, no, I'm not talking about this case. I'm talking about, you know, you got the rules written by the bureaucrats, and they, you know, they… my God, I mean, I'm looking at it. As an old DOJ lawyer, what do you think about the, Chevron opinion? FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 14 of 402 * PUBLIC * PUBLIC Mr. Hackney: Let me tell you, I know the guys that brought that case took it all the way up. And they're good lawyers, but my God. That was egregious. Mr. Greene: It definitely threw the world into chaos in terms of admin law. Mr. Hackney: What? Mr. Greene: Threw admin law into chaos. Mr. Hackney: Yeah, and, and… I mean, one of the issues I'm gonna raise with you and them — I want somebody to tell me, under the HIWU rule — I'll be damned if I can figure out sometimes, not who has the burden, but what is the burden? Mr. Greene: I'll make sure I talk about that. Mr. Hackney: Is it administrative law? Because it says very… it's, you know, it's… Not based upon, you know – great weight and preponderance of the evidence. What do y'all think? I mean, I don't know. I've asked this question, hell, I've gotten 3 different answers from people at HIWU. Because they asked us to comment on the rules, and that was one of the first things I said is, I mean, you know, there's a lot here, But I told somebody one time I did -- I spent a lot of time in -- in the former Soviet Union in Russia, and I said, you know, I read the constitution of the Soviet Union and it was the greatest document of freedom I ever read. Unfortunately, the implementation sucks. I mean, he can have the greatest rules in the world, but if you can’t interpret them [inaudible]. FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 15 of 402 * PUBLIC * PUBLIC UNITED STATES OF AMERICA BEFORE THE FEDERAL TRADE COMMISSION OFFICE OF ADMINISTRATIVE LAW JUDGES In the Matter of ) ) JASON SCOTT, DVM, ) Appellant, ) vs. ) ) THE HORSERACING INTEGRITY & ) SAFETY AUTHORITY, a federal ) administrative agency. ) Appellee. ) Docket No. 9449 DECLARATION OF JOSEPH C. DE ANGELIS Joseph C. DeAngelis, an attorney licensed in Oklahoma and Texas, submits this declaration in support of Appellant’s Motion to Recuse. See 28 U.S.C. § 1746. 1. I am counsel for Appellant Dr. Jason Scott in this and related matters. I am familiar with the facts and circumstances of this case. By submitting this declaration, I do not intend to waive the attorney-client or work product privileges. 2. I do not specifically recall being present for the conversation between the arbitrator and HIWU’s counsel referenced in the introduction, but I am admittedly unsure. Side-bar conversations were frequent throughout the hearing, and we observed or interrupted several conversations between the arbitrator and HIWU’s counsel and witnesses. That said, I cannot remember if my first encounter with this particular conversation was in person or from reviewing audio. The audio is unclear as to who was present in the room. I asked Mr. Brewster, my cocounsel, if he was present. To his recollection, he left the room during the pause referenced in the transcript. He does not specifically remember the conversation. 3. I initially interposed no objection to Judge Himes’s assignment based on the email Exhibit 2 exhibitsticker.com communication conveyed to us disclosing the professional relationship with Ms. Mazur. I was FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 16 of 402 * PUBLIC * PUBLIC aware of Judge Himes’s recent order denying a motion to disqualify on this basis and believed such a challenge to be premature without additional grounds.1 4. During the arbitration, I was aware of Judge Himes’s decision in the Shell II matter. Judge Himes’s formulation of the “compelling justification” standard formed the basis of HIWU’s theory of the case. I was also generally aware of the Serpe opinion but had not read it closely. 5. After the arbitrator’s award, I contacted the Authority’s counsel and stated my intent to appeal. My purpose was to negotiate a stay of penalties. The Authority proposed that Dr. Scott simply drop the appeal and the pending federal action. The Authority’s counsel specifically referenced the “risk” that this case would be assigned to Judge Himes who, they said, “does his own thing” and tends to impose harsher penalties on appeal. 6. I proposed that Dr. Scott would hold the federal action in abeyance if the Authority filed a non-opposition to the stay and if that stay was granted. The Authority agreed with this proposal. Following the March 17 Order, I reached out to the Authority’s counsel to confirm that the non-opposition was unconditional. The Authority confirmed that their non-opposition to a stay was simply “pending” the disposition of the appeal. The email confirming this agreement is attached as Exhibit 2A. 7. Upon Judge Himes’s proposed assignment, I further reviewed all past opinions written by him in HISA cases and the briefing in those cases, which are available through the FTC’s online legal library. My primary purpose was to assess for style and arguments. At this time, I discovered the Galvin order and stated my non-objection to the email disclosure. As my 1 See In the Matter of Dr. Michael J. Galvin, Docket No. 9445, Order Denying Motion for Disqualification; see also United States v. Rivera-Rodriguez, 761 F.3d 105, 112 n.8 (1st Cir. 2014) (“An initial intervention by the judge that makes defense counsel uneasy may not justify an objection from counsel, who is sensibly reluctant to challenge the judge prematurely. Over the course of the trial, however, if those one-sided judicial interventions multiply, defense counsel may then realize that he or she must object on the basis of the appearance of judicial bias, citing the cumulative effect of the judge's one-sided interventions.” FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 17 of 402 * PUBLIC * PUBLIC review, I noticed the tendency to which the Authority referred and began documenting what I believed to be statements concerning for bias. 8. In the midst of that review, Judge Himes issued the March 17 Order. The Order was concerning for the reasons discussed in the Memorandum. I discussed with Mr. Brewster and the client. We concluded that the accumulation of facts triggered a duty of inquiry into whether Judge Himes could be neutral in this matter. The objection is made in good faith. Neither Dr. Scott nor his counsel intends any disrespect my making such an inquiry. I declare under penalty of perjury that the foregoing was true and correct. Executed on April 3, 2026. /s/ Joseph C. DeAngelis Joseph C. DeAngelis FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 18 of 402 * PUBLIC * PUBLIC Joey DeAngelis From: Sent: To: Cc: Subject: Paterno, Lide Tuesday, March 17, 2026 11:06 PM Joey DeAngelis; Pitz, Taylor N. (CIV) Sara Sanchez RE: Joint Motion Hi Joey, As discussed, the Authority agrees not to oppose Dr. Scott’s request to the ALJ to stay the arbitrator’s decision pending the ALJ’s review of that decision, in exchange for Dr. Scott’s agreeing to request that the District Court hold the federal litigation in abeyance pending resolution of the FTC proceedings in his case. That way we are not litigating the same issues in two places at the same time. As stated in the Authority’s response to Dr. Scott’s stay application, the Authority does not oppose the requested stay of the arbitrator’s decision pending either (i) vacatur of the Arbitrator’s decision and remand for new arbitration proceedings; or (ii) fulsome review by the ALJ that results in a de novo determination by the ALJ. The bottom line is that, provided that Dr. Scott upholds his agreement to continue to hold the court litigation in abeyance while the FTC proceedings take place, the Authority will not oppose a stay of the arbitrator’s decision by the ALJ until the ALJ issues a final decision—whether that ALJ decision vacates the arbitrator decision and remands for new arbitration proceedings, or whether the ALJ issues his own de novo determination on the Rule violations charged. Hope that helps to clarify things. Lide Lide E. Paterno Akin Direct: +1 202.887.4078 From: Joey DeAngelis S nt: Tuesday, March 17, 2026 6:00 PM To: Paterno, Lide ; Pitz, Taylor N. (CIV) Cc: Sara Sanchez Subj ct: RE: Joint Motion Lide, Exhibit Best, 1 2A exhibitsticker.com Just following up on our phone call. After ALJ Himes’s order, I called to clarify the scope of the Authority’s nonopposition to a stay, and you confirmed that the Authority’s non-opposition to a stay is not contingent upon the immediate vacatur and remand for a new hearing, and that the Authority would not oppose a stay if the FTC continues forward with review of the arbitrator’s decision. So, if the ALJ denies the request for immediate vacatur and moves forward with review, the Authority’s position is that a stay should still be entered so that we are not litigating these issues simultaneously with the FTC and federal court. Let me know if this accurately summarizes our conversation. FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 19 of 402 * PUBLIC * PUBLIC Joseph C. DeAngelis Brewster & DeAngelis, PLLC 2617 E. 21st Street Tulsa, Oklahoma 74114 (918) 742-2021 – Telephone (918) 742-2197 – Facsimile Website: www.brewsterlaw.com Email: JCDeAngelis@brewsterlaw.com Disclaimer: This message and any attachments may contain information that is highly confidential, privileged, and exempt from disclosure, and recipient other than the intended recipient is advised that any dissemination, distribution, copying, or other use of this message is strictly prohibited. If you have received this message in error, please notify the sender immediately. From: Paterno, Lide S nt: Tuesday, March 17, 2026 4:47 PM To: Joey DeAngelis ; Pitz, Taylor N. (CIV) Cc: Sara Sanchez Subj ct: Re: Joint Motion Yes, feel free to call the number below. Thanks. Lide E. Paterno Akin Robert S. Strauss Tower | 2001 K Street N.W. | Washington, DC 20006 |USA | Direct: +1 202.887.4078 Fax: +1 202.887.4288 | lpaterno@akingump.com | akingump.com | Bio From: Joey DeAngelis S nt: Tuesday, March 17, 2026 5:42:52 PM To: Paterno, Lide ; Pitz, Taylor N. (CIV) Cc: Sara Sanchez Subj ct: RE: Joint Motion I can talk 5:45 ET. Shouldn’t take long. Should I call your direct number in your signature block? From: Paterno, Lide S nt: Tuesday, March 17, 2026 4:41 PM To: Joey DeAngelis ; Pitz, Taylor N. (CIV) Cc: Sara Sanchez Subj ct: RE: Joint Motion Hi Joey, I’m surprised by your note. Happy to speak. I could talk this evening from 5:45 to 6:00 ET; tomorrow between 9:00 and 10:00 am ET; or Friday between 9:30 a.m. and 11:45 a.m. ET. Would any of those times work on your end? 2 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 20 of 402 * PUBLIC * PUBLIC Lide Lide E. Paterno Akin Direct: +1 202.887.4078 From: Joey DeAngelis S nt: Tuesday, March 17, 2026 4:21 PM To: Paterno, Lide ; Pitz, Taylor N. (CIV) Cc: Sara Sanchez Subj ct: RE: Joint Motion **EXTERNAL Email** Lide, Upon reviewing your response to the application and the order just entered, I have concerns that the Authority has breached our agreement regarding a stay. Let me know a good time to talk. Best, Joseph C. DeAngelis Brewster & DeAngelis, PLLC 2617 E. 21st Street Tulsa, Oklahoma 74114 (918) 742-2021 – Telephone (918) 742-2197 – Facsimile Website: www.brewsterlaw.com Email: JCDeAngelis@brewsterlaw.com Disclaimer: This message and any attachments may contain information that is highly confidential, privileged, and exempt from disclosure, and recipient other than the intended recipient is advised that any dissemination, distribution, copying, or other use of this message is strictly prohibited. If you have received this message in error, please notify the sender immediately. From: Paterno, Lide S nt: Thursday, March 12, 2026 2:14 PM To: Joey DeAngelis ; Pitz, Taylor N. (CIV) Cc: Sara Sanchez Subj ct: Joint Motion Hi Joey and Taylor, My understanding is that the Authority intends to file a response to Dr. Scott’s stay application shortly after the FTC matter is docketed, which hopefully will occur later today or tomorrow. The response will confirm that the Authority does not oppose the stay application, even though the parties dispute the merits. Consistent with the agreement between the Authority and Dr. Scott, I’ve drafted the attached 3 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 21 of 402 * PUBLIC * PUBLIC joint motion to hold the federal court case in abeyance pending resolution of the FTC proceedings. Can you please let us know if you have any edits? Thanks, Lide Lide E. Paterno Akin Robert S. Strauss Tower | 2001 K Street N.W. | Washington, DC 20006 | USA | Direct: +1 202.887.4078 Fax: +1 202.887.4288 | lpaterno@akingump.com | akingump.com | Bio This email message was sent from Akin Gump Strauss Hauer & Feld LLP. The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message -Filtered by A49WUSA using Country blocking & 76 Threat Intelligence Feeds This email message was sent from Akin Gump Strauss Hauer & Feld LLP. The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message This email message was sent from Akin Gump Strauss Hauer & Feld LLP. The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message This email message was sent from Akin Gump Strauss Hauer & Feld LLP. The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message 4 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 22 of 402 * PUBLIC * PUBLIC Request for Clerical Corrections to Final Decision HIWU vs. Scott, Dr. Jason REF #1501001099 Participants: Sam Reinhardt, Lisa Lazarus, Ryan Lipes, Paul Greene, Kathryn Crouse, Sandy Ballott, Monica Pilarski, Allison Farrell, Joseph DeAngelis, Clark Brewster, Diana Tkaczuk, Hugh Hackney, Jason Scott Ryan Lipes 02/20/2026 9:48 AM Good morning: HIWU is in receipt of the Final Decision in this matter and respectfully requests the following clerical and typographical corrections under Rule 7380: 1. In the Caption on page 1, please correct the Claimant’s name to “Horseracing Integrity & Welfare Unit”. 2. In paragraph 1.1 on page 1, please correct “van” to “truck.” Both terms are used in the decision, but the vehicle was not a van. 3. In paragraph 1.2 on page 1, please correct the Claimant’s name to “Horseracing Integrity & Welfare Unit”. 4. In paragraph 1.2 on pages 1-2, please correct the name of the statute to the “Horseracing Integrity and Safety Act of 2020." 5. In sections 4-6, HIWU requests that the numbered paragraphs continue for the sake of consistency. 6. Under section 5 on page 31 (second paragraph), please correct the spelling of the witness’s name to “Pickard” (instead of Piccard). 7. Under section 6 on page 31, please correct the spelling of “Bret” (instead of Brett; there is only one “t”). 8. Under section 6 on page 32 (second full paragraph), please correct van to “truck." Exhibit 3 exhibitsticker.com 9. Under section 6 on page 33 (fifth full paragraph), please correct van to “truck." FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 23 of 402 * PUBLIC * PUBLIC 10. Under section 6 on page 34 (second full paragraph), please correct the misspelling of veterinarian in the first sentence. 11. Under section 6 on page 34 (third full paragraph), please correct van to “truck." 12. Under section 6 on page 35 (second full paragraph), please correct van to “truck." This request by HIWU is not a waiver of HIWU’s right to contest the tenure of Arbitrator Hackney, and it is not an acknowledgment or acceptance that the decision is the operative or final decision in this matter. To preserve all rights in the event the decision is not vacated, HIWU requests that any final corrected decision be held in abeyance pending the resolution of HIWU’s objection to Arbitrator Hackney’s qualification to preside over this Arbitration. Thank you, Ryan Diana Tkaczuk 03/03/2026 2:15 PM Good afternoon, Does opposing counsel have an response they would like to provide? Thank you. Allison Farrell 03/04/2026 7:51 AM Good Morning, HIWU hereby withdraws its request for clerical corrections to the Final Decision that was issued in this case on February 13, 2026. Thank you, Allison Farrell FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 24 of 402 * PUBLIC * PUBLIC Table Of Contents Shell Order Dismissing HIWU Application for Review.....................................................................2 Shell II ALJ Decision.......................................................................................................................7 Serpe ALJ Decision.......................................................................................................................80 Overly HISA OPN Brief...............................................................................................................210 Overly ALJ Decision....................................................................................................................238 Kriple ALJ Decision.....................................................................................................................337 Galvin Order Denying Motion for Disqualification........................................................................365 0001 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 25 of 402 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 12/06/2024 OSCAR NO 612325 | PAGE Page 1 of 5 * -PUBLIC PUBLIC UNITED STATES OF AMERICA FEDERAL TRADE COMMISSION OFFICE OF ADMINISTRATIVE LAW JUDGES __________________________________________ ) In the Matter of ) ) Dr. Scott Shell, DVM ) ) Appellant. ) __________________________________________) Docket No. 9439 ORDER (1) DISMISSING HIWU’S APPLICATION FOR REVIEW AND (2) DENYING DR. SHELL’S MOTION TO STRIKE AS MOOT I. On October 18, 2024, Dr. Scott Shell and the Horseracing Integrity and Welfare Unit (“HIWU”) each filed an Application for Review of the civil sanctions imposed against Dr. Shell (“Application for Review”) by the Horseracing Integrity and Safety Authority (the “Authority”). The sanctions were imposed by the Authority pursuant to a decision by an arbitrator (“the Decision”) that found Dr. Shell violated Rule 3214(a) of the Authority’s Anti-Doping and Medication Control (“ADMC”) Program by possessing a banned substance. On October 28, 2024, Dr. Shell and HIWU each filed responses to the other’s Application for Review. Also on October 28, 2024, the Authority filed a response in support of HIWU’s Application for Review and filed a response to Dr. Shell’s Application for Review. That same day, Dr. Shell filed a Motion to Strike HIWU’s Application for Review and the Authority’s response in support, contending that HIWU lacks standing to seek review of the Authority’s sanctions by an Administrative Law Judge (“ALJ”) of the Federal Trade Commission (“FTC” or “Commission”). On October 29, 2024, the presiding ALJ ordered HIWU and the Authority each to file a response to Dr. Shell’s Motion to Strike, and to affirmatively demonstrate their right to ALJ review of a civil sanction imposed by the Authority. The October 29 Order also allowed Dr. Shell to file a reply brief, and stayed proceedings on both Applications for Review, pending resolution of the jurisdictional question. On November 12, 2024, HIWU and the Authority each filed a response to Dr. Shell’s Motion to Strike, and Dr. Shell’s reply followed on November 19, 2024. For the reasons set forth below, HIWU’s Application for Review is DISMISSED. Accordingly, Dr. Shell’s Motion to Strike is DENIED AS MOOT. The stay of proceedings on Dr. Shell’s Application for Review is LIFTED. 0002 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 26 of 402 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 12/06/2024 OSCAR NO 612325 | PAGE Page 2 of 5 * -PUBLIC PUBLIC II. By way of background, HIWU is an agency created for the purpose of investigating and enforcing the ADMC Program on behalf of the Authority, pursuant to the Horseracing Integrity and Safety Act of 2020 (“HISA”), 15 U.S.C. §§ 3051-3060, and its implementing regulations (“HISA Rules”). 15 U.S.C. § 3055(c)(4)(B); HISA Rule 3010(e) (stating that the ADMC Program will be implemented and enforced on behalf of the Authority by an agency known as HIWU), (f)(5). 1 HIWU is responsible for charging violations of the ADMC Program, which are then adjudicated on behalf of the Authority pursuant to arbitration procedures. 15 U.S.C. § 3055(c)(4)(B); HISA Rule 7000, et seq. The adjudication determines whether the charged violation occurred and, if so, determines an appropriate sanction pursuant to the HISA Rules. HISA Rules 7340, 7350. Once a decision is issued pursuant to these procedures, the Authority is legally bound to impose the civil sanctions determined. HISA Rules 3010(f)(8), 3710(a). The sanctions are subject to ALJ review upon application by the Commission or a “person aggrieved” by the sanctions, pursuant to 16 C.F.R. § 1.146. In his Motion to Strike, Dr. Shell argues that neither HISA nor the rules promulgated by the FTC for its oversight of the Authority (“FTC Rules”) permit either HIWU or the Authority to seek ALJ review of sanctions imposed by the Authority. Dr. Shell argues that HISA and the FTC Rules only allow for ALJ review upon application by the Commission or a “person aggrieved” by the sanctions, and that a proper reading of the statute and rules demonstrates that only the person subject to the sanctions, and not HIWU or the Authority, can be considered a “person aggrieved” by the sanctions. Dr. Shell argues that to read the statute and FTC Rules to permit HIWU or the Authority to qualify as a “person aggrieved” would be illogical, based on the plain language and context of HISA and the FTC Rules and would lead to absurd outcomes, including due process violations. HIWU argues that the arbitrator erred in the Decision by: (1) determining that the period of ineligibility imposed on Dr. Shell should run concurrently with a sanction that he is serving for a separate violation regarding the administration of a banned substance, in contravention of the HISA Rules; and (2) treating the possession of four banned substances as a single antidoping rule violation, in contravention of the HISA Rules. HIWU contends that it has standing as a “person aggrieved” within the meaning of HISA and the FTC Rules based on its interest in the correct application of the HISA Rules, arising out of its HISA mandate. In its response in support of HIWU’s Application for Review, the Authority argues that the Decision is erroneous and that it undermines the predictability and reliability of future outcomes under the ADMC Program. In its response to Dr. Shell’s Motion to Strike, the Authority states that although HIWU enforces the ADMC Program on behalf of the Authority, during the arbitration the Authority is considered only an “interested party” and it is legally bound to impose the civil sanctions that are determined by the arbitrator, with no discretion to modify the arbitrator’s decision. Therefore, the Authority requests that HIWU’s Application for Review be heard in order to correct an improper decision that would otherwise stand. See 88 Fed. Reg. 5070, 5073 (Jan. 26, 2023) (FTC Notice of HISA Proposed Rule and Request for Comment) (explaining that the ADMC “Protocol will be implemented and enforced on behalf of the Authority by . . . the Horseracing Integrity and Welfare Unit” which was created for this purpose). 1 2 0003 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 27 of 402 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 12/06/2024 OSCAR NO 612325 | PAGE Page 3 of 5 * -PUBLIC PUBLIC III. A. HISA Language The starting point in construing a statute is to examine the language of the statute itself. Bartenwerfer v. Buckley, 598 U.S. 69, 74 (2023). Section 3058(b)(1) of HISA provides that a civil sanction imposed by the Authority is subject to de novo review by an FTC ALJ “on application by the [Federal Trade] Commission or a person aggrieved by the civil sanction . . . .” 15 U.S.C. § 3058(b)(1). Nowhere in the statute is HIWU (or the Authority) given the right to obtain ALJ review of an arbitrator’s Decision or imposed sanctions. In contrast, the World AntiDoping Agency (“WADA”) Code, upon which the ADMC Program is in part modeled, 2 expressly grants WADA the “right to appeal” adjudicative decisions “to the [Court of Arbitration for Sport].” WADA Code 13.2.3. When a statute does not include agencies within the category of “person adversely affected or aggrieved,” the conclusion “[t]hat an agency in its governmental capacity is not ‘adversely affected or aggrieved’ is strongly suggested . . . .” Director, Office of Worker’s Comp. Programs v. Newport News Shipbuilding & Dry Dock Co., 514 U.S. 122, 129 (1995). In that same vein, there is a presumption that “when an agency in its governmental capacity is meant to have standing, Congress says so.” Id. (emphasis in original). B. Language in the HISA Rules “[I]t is a common tool of statutory construction to consider what words or phrases mean in nearby statute sections or related regulations.” Barry v. McDonough, 101 F.4th 1348, 1355 (Fed. Cir. 2024) (internal quotations omitted). In that regard, the FTC Rules regarding the review of sanctions imposed under HISA are relevant in determining the meaning of a “person aggrieved by the civil sanction.” FTC Rule 1.146(a), Review of Civil Sanction by an ALJ, requires that an application for ALJ review always “be served on the Authority.” 16 C.F.R. § 1.146(a). This language strongly suggests that the phrase “person aggrieved” refers to the person subject to the sanction, not HIWU or the Authority; otherwise, the rule would permit HIWU to file an appeal without providing any notice to the person subject to the sanction, which would amount to a violation of procedural due process. See Dusenbery v. United States, 534 U.S. 161, 167 (2002) (explaining that procedural due process requires notice and an opportunity to be heard). In addition, the requirement of service on the Authority of its own application for review nonsensically results in the Authority or HIWU serving its own agency or itself, respectively. “[T]o construe statutes so as to avoid results glaringly absurd, has long been a judicial function.” Armstrong Paint & Varnish Works v. Nu-Enamel Corp., 305 U.S. 315, 333 (1938); see United States v. Turkette, 452 U.S. 576, 580 (1981). FTC Rule 1.146(a)(1) further provides: “Within 10 days of being served with the application, the Authority may file a response limited to no more than 1,000 words stating the reasons the sanction should be upheld and whether an evidentiary hearing conducted by the Administrative Law Judge is either unnecessary, or necessary to supplement or to contest facts in the record found by the Authority.” (emphasis added). The Rule thus contemplates the Authority’s role only as the one defending and seeking to uphold the sanctions imposed, not contesting the sanctions as a “person aggrieved.” Additionally, if HIWU or the Authority were 2 See 88 Fed. Reg. 5070 (Jan. 26, 2023). 3 0004 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 28 of 402 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 12/06/2024 OSCAR NO 612325 | PAGE Page 4 of 5 * -PUBLIC PUBLIC deemed to be a “person aggrieved” by sanctions, then the person actually subject to the sanctions would not be permitted to file a response, because the Rule allows only the Authority to do so. Interpreting FTC Rule 1.146(a) to include HIWU or the Authority as a “person aggrieved” by the sanction would therefore lead to an absurd result, which should be avoided. Armstrong Paint & Varnish Works, 305 U.S. at 333. Furthermore, the regulatory history of the HISA Rules also supports the conclusion that the phrase “person aggrieved” refers to the person subject to the sanction, rather than to HIWU or the Authority. In the October 4, 2022 publication on Procedures for Review of Final Civil Sanctions Imposed under HISA, the FTC explained that an ALJ conducts de novo review of a final civil sanction imposed by the Authority “when an application for review [is] filed either by the Commission or by the person subject to the sanction. . . .” 87 Fed. Reg. 60077 (Oct. 4, 2022) (emphasis added). Moreover, in contrast to the FTC Rules regarding an application for review before an ALJ, the FTC Rules regarding an application for review of an ALJ decision explicitly provide that “[t]he Authority or a person aggrieved by the decision of the Administrative Law Judge under § 1.146 may petition the Commission for review of such decision.” 16 C.F.R. § 1.147(b)(1) (emphasis added). This provision, explicitly allowing the Authority to seek review of an ALJ decision, further supports the conclusion that, had it been intended for the Authority or HIWU to be able to file an application for review before the ALJ, the FTC Rules would have expressly provided for it, and that the failure to do so was purposeful. C. Legal Standing “The phrase ‘person adversely affected or aggrieved’ is a term of art used in many statutes to designate those who have standing to challenge or appeal an agency decision, within the agency or before the courts.” Newport News, 514 U.S. at 126. To establish legal standing: (1) “[t]he plaintiff must have suffered or be imminently threatened with a concrete and particularized ‘injury in fact’ that is fairly traceable to the challenged action of the defendant and likely to be redressed by a favorable judicial decision,” Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 125 (2014); and (2) the plaintiff’s asserted interest must fall within the “zone of interests” protected by the statute. Newport News, 514 U.S. at 127; Association of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153 (1970). “Injury in fact [means] an invasion of a legally protected interest which is (a) concrete and particularized, . . . and (b) actual or imminent, not conjectural or hypothetical[.]” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992) (internal quotations omitted). The “mere existence and impairment of . . . governmental interest” does not meet the “person adversely affected or aggrieved” requirement. Newport News, 514 U.S. at 130. “Agencies do not automatically have standing to sue for actions that frustrate the purposes of their statutes.” Id. at 132. HIWU has not specified a concrete, imminent injury based on the sanctions imposed on Dr. Shell. The only injury HIWU claims is based on the nature of the arbitrator’s decision and interpretation of the HISA rules, not the sanctions themselves. Therefore, HIWU has failed to establish an injury-in-fact. 4 0005 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 29 of 402 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 12/06/2024 OSCAR NO 612325 | PAGE Page 5 of 5 * -PUBLIC PUBLIC Even if HIWU had shown an injury-in-fact, however, HIWU has not established that its interest falls within the “zone of interests” protected by HISA. HIWU and the Authority rely on their roles as enforcers of HISA and their interests in ensuring that the regulations are properly interpreted and applied. However, as the Supreme Court held in Newport News, the government’s vindication of a general policy interest alone does not fall within the “zone of interests” required to confer standing under a statute. 514 U.S. at 127-29. IV. As set for above, neither HIWU nor the Authority may seek ALJ review pursuant to 15 U.S.C. § 3058(b)(1) or FTC Rule 1.146(a) as a “person aggrieved” by civil sanctions imposed by the Authority. Accordingly, it is hereby ORDERED: (1) HIWU’s Application for Review is DISMISSED; (2) Dr. Shell’s Motion to Strike is DENIED AS MOOT; and (3) the stay of proceedings on Dr. Shell’s Application for Review is LIFTED. An order for further proceedings on Dr. Shell’s Application for Review pursuant to FTC Rule 1.146(c)(2) will issue separately. ORDERED: D. Michael Chappell Chief Administrative Law Judge Date: December 6, 2024 5 0006 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 1 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 30 of 402 * PUBLIC * PUBLIC UNITED STATES OF AMERICA FEDERAL TRADE COMMISSION OFFICE OF ADMINISTRATIVE LAW JUDGES __________________________________________ ) ) ) Dr. Scott Shell, DVM ) ) Appellant. ) __________________________________________) In the Matter of Docket No. 9439 ADMINISTRATIVE LAW JUDGE DECISION ON APPLICATION FOR REVIEW 0007 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 2 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 31 of 402 * PUBLIC * PUBLIC TABLE OF CONTENTS TABLE OF CONTENTS ............................................................................................................................i TABLE OF ABBREVIATIONS................................................................................................................ii I. INTRODUCTION.......................................................................................................................... 1 II. THE UNDERLYING FACTS....................................................................................................... 2 A. Summary of the Case............................................................................................................... 2 B. Dr. Shell’s Practice and HIWU’s Search................................................................................. 3 C. The Four Banned Substances Charged As Possession Violations........................................... 4 D. The Federal Injunction Covering West Virginia ..................................................................... 7 E. HIWU’s Other “Administration” Case .................................................................................... 8 F. The Arbitration Subject to this Review ................................................................................... 8 1. Compelling Justification.................................................................................................. 9 2. Sanctions........................................................................................................................ 11 III. ISSUES ON REVIEW ................................................................................................................. 12 IV. SCOPE OF REVIEW.................................................................................................................. 12 V. ANALYSIS OF THE ISSUES..................................................................................................... 14 A. The Possession Violation and Compelling Justification Defense.......................................... 14 1. “Compelling Justification” ............................................................................................ 15 2. Dr. Shell’s “Non-Covered Horses” Practice as a Compelling Justification .................. 16 a. Otherwise Covered Horses Physically in West Virginia ........................................ 17 b. Dr. Shell’s Farm Practice Proof .............................................................................. 20 i. Dr. Scollay’s Mahoning Presentation............................................................... 20 ii. Dr. Shell’s Follow-up Conversation................................................................. 22 iii. The Randall Equine Email Exchange............................................................... 23 c. Inadequacy of Dr. Shell’s Proof.............................................................................. 24 i. Dr. Shell’s Records Overall.............................................................................. 24 ii. The Four Banned Substances ........................................................................... 26 d. Overall Assessment of Dr. Shell’s Compelling Justification Proof ........................ 33 B. Dr. Shell’s Estoppel Argument.............................................................................................. 35 C. Dr. Shell’s Constitutional Arguments.................................................................................... 40 1. Rule 3214 Is Not Unconstitutionally Vague..................................................................... 40 2. Prosecution of this Case by the Authority and HIWU is Not Unconstitutional................ 42 VI. SANCTIONS ................................................................................................................................ 44 A. Single or Separate Violations Under Rule 3228(d) ............................................................... 44 B. Consecutive Ineligibility Based on the Administration Case Sanction ................................. 51 C. Applying the No Fault or Negligence (NF) and No Significant Fault or Negligence (NSF) Analyses to the Sanctions ........................................................................ 58 1. Overview ....................................................................................................................... 58 2. NF: Applying Rule 3324................................................................................................ 58 3. NSF: Applying Rule 3225 ............................................................................................. 60 a. Objective Considerations ........................................................................................ 62 b. Subjective Considerations....................................................................................... 64 4. Sanctions Summary .......................................................................................................... 69 VII. CONCLUSION ............................................................................................................................ 70 i 0008 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 3 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 32 of 402 * PUBLIC * PUBLIC TABLE OF ABBREVIATIONS AB1 – Appeal Book Part 1 AB2 – Appeal Book Part 2 ADMC – Anti-Doping and Medication Control ADRV – Anti-Doping Rule Violation AOBr. – Appellant’s Opening Brief ARBr. – Appellant’s Reply Brief ARPFOF – Appellant’s Reply to Authority’s Proposed Findings of Fact AuOBr. – Authority’s Opening Brief AuRPCOL – Authority’s Reply to Appellant’s Proposed Conclusions of Law AuRPFOF – Authority’s Reply to Appellant’s Proposed Findings of Fact HISA – Horseracing Integrity and Safety Act, 15 U.S.C. §§ 3051-60 HIWU – Horseracing Integrity & Welfare Unit The Authority – Horseracing Integrity and Safety Authority ii 0009 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 4 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 33 of 402 * PUBLIC * PUBLIC I. INTRODUCTION This decision arises under the Horseracing Integrity and Safety Act (“HISA”), 15 U.S.C. §§ 3051 et seq., and the Rules implementing the Act. Among other things, HISA created the Horseracing Integrity and Safety Authority (the “Authority”), a private, independent, selfregulatory, nonprofit corporation, to “develop[] and implement[] a horseracing anti-doping and medication control program and a racetrack safety program” throughout the United States. 1 The Authority promulgated, and the Federal Trade Commission approved, rules that include the statutorily-required Anti-Doping and Medication Control (“ADMC”) Program. 2 The HISA and ADMC Program rules address, in summary: (1) the persons and thoroughbred racehorses the Program covers; (2) the substances that are banned outright or subject to threshold presence requirements, or are regulated as controlled medications; (3) the conduct constituting violations and corresponding sanctions; and (4) investigation and enforcement in furtherance of the statute. 3 The Authority has contracted with the Horseracing Integrity & Welfare Unit (“HIWU”) to implement and enforce the ADMC Program on behalf of the Authority. 4 HIWU charges of ADMC Program violations are heard by an Internal Adjudication Panel, which, as 1 15 U.S.C. § 3052(a). 2 15 U.S.C. §§ 3053, 3055, 3057. See generally ADMC Rule 3000 series; 88 Fed. Reg. 5070-5201 (Jan. 26, 2023) (FTC Notice of HISA Proposed Rule and Request for Comment); Order Approving the ADMC Rule Proposed by HISA (Mar. 27, 2023) (https://www.ftc.gov/system/files/ftc_gov/pdf/P222100CommissionOrderAntiDopingMedication.pdf); 88 Fed. Reg. 27894 (May 3, 2023) (FTC Notice of Final Rule, effective May 22, 2023) (available at https://hisaus.org/ regulations?modal-shown=true#equine-anti-doping-and-controlled-medication-protocol-rules). 3 15 U.S.C. §§ 3054(e)(1)(B) & (E), 3055; Rules 3010(e)(1), 5720(a); HISA Announces Selection of Drug Free Sport International as Partner to Build Independent Anti-Doping and Medication Control Enforcement Agency (May 3, 2022), https://www.hiwu.org/news/hisa-announces-selection-of-drug-free-sport-international-as-partner-to-buildindependent-anti-doping-and-medication-control-enforcement-agency. 4 0010 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 5 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 34 of 402 * PUBLIC * PUBLIC here, may consist of a single arbitrator. 5 The FTC has authority to review civil sanctions imposed for ADMC Program Rule violations in HIWU-initiated enforcement proceedings. 6 Under the ADMC Program, the more serious violations are Anti-Doping Rule Violations (“ADRVs”), which include Banned Substances that “should never be in a horse’s system.” 7 To implement the Program, the Authority issued a Prohibited List of Banned Substances. 8 Rule 3214(a), applicable to Covered Persons, prohibits “Possession of a Banned Substance . . . unless there is a compelling justification for such Possession.” II. THE UNDERLYING FACTS A. Summary of the Case As a veterinarian who provides services to Covered Horses, Appellant Dr. Scott Shell is a Covered Person subject to HISA, to the ADMC Program Rules, and to the enforcement system created. 9 HIWU has charged Dr. Shell with Possession of four Banned Substances, discussed more fully below. Possession is undisputed. Therefore, the case turns on whether Dr. Shell had “a compelling justification for such Possession,” as well as on other defenses asserted. Rule 3214(a). One additional wrinkle is worthy of mention at this point. Dr. Shell practices in both Ohio and West Virginia, and services both Covered Horses, subject to HISA, and non-Covered Horses, commonly found on farms. Also, while HISA and the 5 Rules 3360, 7020. 6 15 U.S.C. § 3058; 16 C.F.R. § 1.145 et seq.; see 87 Fed. Reg. 60077 (Oct. 4, 2022) (Final Rule). Rule 3010(c). See also Rules 1020 (definition of ADRV), 3111(a) (Prohibited Substances). Capitalized terms used, but not defined in this decision, are those defined in HISA Rule 1020 of the General Provisions. Other abbreviations are set forth in the Table of Abbreviations. 7 8 Rules 1020 (definition of Prohibited List), 3111(a). 9 15 U.S.C. §§ 3051(6), (21); Rule 1020 (definitions of “Attending Veterinarian” and “Covered Person”). 2 0011 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 6 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 35 of 402 * PUBLIC * PUBLIC Rules apply in Ohio, in 2022 a United States district court issued an order that, in effect, prohibits enforcement by the Authority and HIWU in West Virginia. Although HIWU’s charges against Dr. Shell arise from his Possession of four Banned Substances at an Ohio racetrack, he contends that Possession was permitted as part of his providing services to horses on farms and in West Virginia where enforcement is prohibited. In this review decision, I first set forth the facts forming the basis for HIWU’s charges against Dr. Shell and then summarize the Arbitrator’s ruling, which found HIWU’s charges proven and determined the sanctions to be imposed. After that, I address the issues presented, the scope of the review under HISA, and my analysis of the issues raised and the sanctions ordered. B. Dr. Shell’s Practice and HIWU’s Search Dr. Scott Shell, a licensed Veterinarian in both Ohio and West Virginia, practices in both States under the corporate name, Scott Shell DVM Inc. AB1 at 2012 (¶¶ 1, 3); AB2 at 6672-75, 6680 (Shell). His practice includes two other veterinarians, Dr. Barbara Hippie and Dr. Maggie Smyth, and a head veterinary assistant, Janet Duhon. AB1 at 2012 (¶ 3); AB2 at 6756-57 (Shell). Dr. Shell is a Covered Person under the ADMC Program, administered by the Authority. AB1 at 1784 (¶ 13); ARPFOF at 1 (¶ 2). Besides servicing Covered Horses, Dr. Shell has a farm practice where he provides veterinary services to non-Covered Horses. AB2 at 6675, 6682-83 (Shell). On September 28, 2023, HIWU investigators conducted searches of: (1) Dr. Shell’s office at the JACK Thistledown Racino racetrack in Ohio (“Thistledown”); (2) Dr. Shell’s veterinary truck; and (3) a veterinary truck registered to Dr. Shell’s practice, operated by Dr. Hippie. AB1 at 622-37. The search uncovered four substances that the ADMC Program prohibits as Banned Substances: Carolina Gold (sometimes referred to as “GABA”) Sarapin (“Pitcher Plant”) 3 0012 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 7 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 36 of 402 * PUBLIC * PUBLIC Isoxsuprine, and Osphos. AB1 at 507-08, 607-609, 642; AB2 at 6834-35. HIWU charged Dr. Shell with—and he admits— Possession of the four Banned Substances. See HISA Rule 3214(a); AB1 at 507, 607 (EAD Charge Letters), 1784-85. 10 C. The Four Banned Substances Charged As Possession Violations The four Banned Substances may be summarized as follows: Carolina Gold (GABA): HIWU’s search found two bottles of Carolina Gold, a Category S0 Banned Substance on the ADMC Program’s Prohibited List. Carolina Gold is also prohibited at West Virginia racetracks under West Virginia Racing Commission Rules. AB1 at 642 (¶ 6), 1174; AB2 at 6836-37 (Shell), 7209 (Benson). Carolina Gold contains Gamma Aminobutyric Acid (“GABA”), an endogenous neurotransmitter, which exerts an inhibitory effect on the central nervous system and thus has a calming effect on a horse. AB2 at 6710-11, 6837 (Shell), 7087 (Scollay). If Carolina Gold is given to a racehorse, “it can be performance limiting, if not, potentially fatal, depending on the severity of its effect [‘in preventing exercise induced pulmonary hemorrhage’].” AB2 at 7090 (Scollay). GABA has a half-life of approximately 22 minutes when given intravenously and ceases to be detected between six and eight hours later. AB2 at 7524 (Benson). Carolina Gold is not FDA-approved, which means that “[i]t is an illicitly manufactured, illegal, unapproved new animal product.” AB2 at 7088 (Scollay), 7209 (Benson). A compounded substance, Carolina Gold does not comply with FDA guidance for compounding. AB2 at 7091 HIWU originally charged Dr. Shell with Possession of three Banned Substances and Dr. Hippie with one, for Possession of Pitcher Plant. After the Provisional Suspension of Dr. Hippie was lifted, HIWU added Possession of Pitcher Plant to the charges against Dr. Shell. 10 4 0013 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 8 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 37 of 402 * PUBLIC * PUBLIC (Scollay), 7491, 7494 (Roberts). As Dr. Scollay explained: It has not been examined by the FDA for safety, efficacy, purity, stability, any of that stuff, and so it qualifies essentially as administering an unknown. .... Has it been contaminated with bacteria, with fungus, with other substances? I mean, you’d have to do a pretty serious risk benefit analysis to put that into a horse when, if you’re trying to calm it down . . . AB2 at 7088, 7089. Dr. Shell’s expert veterinarian witness, Dr. Andrew Roberts, testified similarly: “what is actually in the bottle, it would be of interest to know.” AB2 at 7492 (Roberts). Dr. Roberts has never used Carolina Gold in his practice and has never kept it on his truck. AB2 at 7492, 7501 (Roberts). There is no significant, legitimate use for Carolina Gold on non-Covered Horses. AB2 at 7088-90, 7112 (Scollay). Nor is it life-saving or needed for emergency use. AB2 at 6891 (Shell), 7088-89 (Scollay). FDA-approved substances having a similar calming effect are available. AB2 at 7087, 7089 (Scollay). Indeed, Dr. Roberts “agreed” that there are “no recognized medical uses” for a product, such as Carolina Gold, that contains GABA. AB2 at 7489 (Roberts). Pitcher Plant: HIWU investigators found a bottle of Sarapin, also known as “Pitcher Plant,” during their search of a truck operated by Dr. Hippie, which Dr. Shell owned. AB1 at 643; AB2 at 6704 (Shell). Pitcher Plant is a Category S6 Banned Substance on the Prohibited List and is also prohibited at West Virginia racetracks under the West Virginia Racing Commission Rules. AB1 at 1202, 3396; AB2 7224-25 (Benson), 7505 (Roberts). Pitcher Plant is an herbal analgesic that reduces inflammation and relieves pain. AB1 at 1202; AB2 at 6713 (Shell), 7091-92 (Scollay). Its use is not limited to emergencies. AB2 at 7092-93 (Scollay). Pitcher Plant was, but no longer is, FDA-approved. AB2 at 7225 (Benson). There are multiple FDA-approved analgesics that can be used instead. AB2 at 7093 (Scollay). There is no 5 0014 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 9 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 38 of 402 * PUBLIC * PUBLIC approved analytical method to detect administration of the substance in a horse. AB2 at 7225 (Benson), 7504-05 (Roberts). Isoxsuprine: During their search of Dr. Shell’s truck, HIWU investigators also found a tub of Isoxsuprine powder. AB1 at 642, 654; AB2 at 6703-04 (Shell). Isoxsuprine also is a Category S0 Banned Substance on the Prohibited List, as well as prohibited under the West Virginia Racing Commission Rules. AB1 at 1178; AB2 at 7231 (Benson). Dr. Shell testified he uses Isoxsuprine to vasodilate the feet of older horses and horses that have navicular disease or founder (lameness). AB2 at 6707 (Shell). A chronic condition, navicular disease is “a degenerative disorder of a small bone in the horse’s foot and results in foot pain, lameness . . . .” AB2 at 7094 (Scollay), 7223 (Benson). Isoxsuprine’s use is not limited to emergencies. AB2 at 7100 (Scollay), 7224 (Benson). The FDA’s previous approval of Isoxsuprine for use in humans has since been withdrawn as lacking a pain-relieving effect. AB2 at 6990 (Shell); 7094 (Scollay). To treat these conditions in horses, there are FDA-approved, HISA-permitted Controlled Medication Substances. AB2 at 7096-97 (Scollay). Osphos: During their search, HIWU investigators also recovered two boxes of Osphos, a bisphosphonate, from Dr. Shell’s office located on the backside of Thistledown. AB1 at 643 (¶ 11); AB2 at 6996 (Shell). Bisphosphonates are a Category S6 Banned Substance on the Prohibited List. AB1 at 1159. Osphos is used to strengthen bones and to treat navicular disease, repairing bone erosion. AB2 at 6709-10 (Shell), 7223 (Benson); see also AB2 at 7098-99 (Scollay) (describing the effect of bisphosphonates to clean and rebuild bone). Since the underlying condition is chronic, Osphos has uses in circumstances that are non-urgent and nonemergency. AB2 at 6997 (Shell), 7223-24 (Benson). 6 0015 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 10 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 39 of 402 * PUBLIC * PUBLIC Unlike the other three Banned Substances found, Osphos is FDA-approved for treatment of horses that are more than four years old. AB2 at 7099 (Scollay), 7363 (Roberts). However, it should not be administered to young, growing horses or to racehorses because it “makes the bone too brittle” and risks fracture. AB2 at 6710 (Shell), 7099-100 (Scollay). If administered to young horses, Osphos will remain in the body, able to act, for years. AB2 at 7100 (Scollay). D. The Federal Injunction Covering West Virginia A specific issue in this case arises from Dr. Shell’s practice in West Virginia. In 2022, the United States District Court for the Western District of Louisiana held that the Authority violated the Administrative Procedure Act in the process of promulgating the HISA Rules. The Court thus issued a preliminary injunction against enforcement of the Rules against the plaintiffs, one of whom was the State of West Virginia. Louisiana v. Horseracing Integrity & Safety Auth. Inc., 617 F.Supp.3d 478 (W.D. La. 2022), remanded, No. 22-30458, 2022 WL 17074823 (5th Cir. 2022). As a result of the district court’s injunction, the Authority and HIWU do not enforce HISA in West Virginia. AuRPCOL ¶ 10; AB2 at 7125-26 (Scollay). Dr. Shell thus argues that Covered Horses under HISA—those that are authorized to run in races subject to HISA—become “non-Covered Horses” while in West Virginia. Even though three of the four Banned Substances found in Dr. Shell’s Possession in Ohio are also prohibited in horseracing in West Virginia (Osphos is the exception), Dr. Shell contends that he may dispense or administer them to otherwise Covered Horses while they are in West Virginia. This outlier circumstance, he further maintains, provides a compelling justification for his Possession of these substances in Ohio. The Arbitrator rejected this argument, as do I in the analysis that follows. 7 0016 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 11 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 40 of 402 * PUBLIC * PUBLIC E. HIWU’s Other “Administration” Case Another matter also gives rise to an issue I must decide. Besides this Possession case, HIWU charged Dr. Shell with administering, by injecting into many racehorses, a Banned Substance that Dr. Shell believed was an unregulated vitamin and thus permissible to use. The arbitrator in that case—referred to as the “Administration Case”—upheld HIWU’s charges, and, among other things, determined that Dr. Shell should be subject to a two-year period of Ineligibility, during which he may not offer services to Covered Horses or Covered Persons. On review, I upheld the sanctions imposed. 11 The possible effect of the Ineligibility arising from the Administration Case is an issue in this proceeding. F. The Arbitration Subject to this Review Upon service of HIWU’s EAD Charge Letter in October 2023, a Provisional Suspension was imposed on Dr. Shell. See Rule 3247(a)(3); AB2 at 6593. He sought to lift the Suspension pending the arbitration hearing to resolve the merits of HIWU’s charges, but the hearing officer denied his request. AB1 at 1136, 1138-39; AB2 at 6593-94. During the pre-hearing phase of the arbitration, HIWU moved for an order directing Dr. Shell to produce documents relating to his compelling justification defense. See AB1 at 2046-59, 2090-107. While the Arbitrator directed limited production, she also wrote: Dr. Shell has made the nature of his practice relevant, and has placed at issue whether he had a noncovered horse practice that required the carrying of the Targeted Banned Substances. . . . Dr. Shell opened the door to this line of inquiry by raising the defense that the Targeted Banned Substances were only used in non-covered horses. Accordingly, Dr. Shell has the burden of supporting that defense with his veterinary records for covered and non-covered horses. As such, the complete veterinary medical records for all horses in his practice from the implementation of HIWU’s regulations until he was charged are relevant and material to the defense. AB1 at 99-136 (HIWU v. Shell, JAMS Case No. 1501000708 (June 11, 2024)), aff’d, FTC No. 9435 (ALJ Oct. 31, 2024). 11 8 0017 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 12 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 41 of 402 * PUBLIC * PUBLIC AB1 at 2278 (emphasis added); see also AB1 at 2044-128. In response, Dr. Shell produced additional—albeit, still limited—documents. See AB1 at 2297. In April 2024, a multi-day arbitration hearing was held, during which Dr. Shell and other fact and expert witnesses testified, and numerous exhibits were received in evidence. The parties made voluminous post-hearing submissions, and the Arbitrator heard closing arguments in August 2024. AB2 at 3892-6567, 7528-613. After requesting additional papers on an issue regarding sanctions, discussed further below, the Arbitrator issued her decision. See AB2 at 6571-82, 6588-622. 1. Compelling Justification The Arbitrator concluded that Dr. Shell failed to prove a compelling justification to possess any of the Banned Substances, holding that Dr. Shell’s records and other evidence were inadequate to justify Possession under Rule 3214(a). Despite the admonition from her discovery order, the Arbitrator noted that Dr. Shell produced only “limited” records, which “showed some dispensation of the Banned Substances to farm horses and Thoroughbreds in West Virginia, but [these were] not complete records sufficient to justify the possession of the Banned Substances at the Ohio racetrack.” AB2 at 6613 (¶ 7.18). The Arbitrator rejected Dr. Shell’s “convenience” argument for Possession of Banned Substances. Additional travel time, needed to avoid Banned Substances at an Ohio racetrack, was unpersuasive unless the “medications [were] needed on a regular basis for time-sensitive emergency treatment.” AB2 at 6614 (¶ 7.21). The Banned Substances found in Dr. Shell’s truck and office at Thistledown, however, “were not emergency medications required for lifethreatening injuries . . . .” AB2 at 6614 (¶ 7.22). Analyzing each individual substance, the 9 0018 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 13 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 42 of 402 * PUBLIC * PUBLIC Arbitrator held that Dr. Shell failed to show compelling justification. AB2 at 6615-16 (¶¶ 7.2833). The Arbitrator recognized that a federal court injunction “suspended HIWU’s operations” in West Virginia. AB2 at 6591 (¶ 2.14); see also AB2 at 6601, 6603 (¶¶ 6.7, 6.24). Accordingly, she agreed with Dr. Shell that the Authority and HIWU could not legally regulate the dispensation of Banned Substances in West Virginia, or charge a Veterinarian with a HISA Rule violation for treating a Covered Horse in West Virginia. AB2 at 6614 (¶ 7.25). However, that “does not mean that having a clientele of Thoroughbred horse trainers in West Virginia is a compelling justification for possessing Banned Substances at Ohio racetracks.” AB2 at 6614 (¶7.25). The Banned Substances in Dr. Shell’s Possession were not “emergency medications that Dr. Shell needed to have at the ready to dash to West Virginia.” AB2 at 6614 (¶ 7.25). The Arbitrator further found it significant that Dr. Shell testified that he no longer carries the four Banned Substances on his truck and, despite this changed practice, he is able to meet his ethical obligations as a veterinarian. AB2 at 6616 (¶ 7.34). The Arbitrator also rejected Dr. Shell’s argument that, as a result of HISA’s nonenforcement in West Virginia, otherwise Covered Horses automatically became non-Covered Horses while in West Virginia. The Arbitrator held that allowing Dr. Shell to possess Banned Substances in Ohio in order to treat Covered Horses located in West Virginia would create a “loophole” that would “undermine[] the integrity of the ADMC Program and is not justified, much less compelling.” AB2 at 6614-15 (¶ 7.25). Finally, Dr. Shell argued that HIWU made various statements regarding compelling justification, as applied to Veterinarians with farm practices, such as Dr. Shell. He argued that he relied on these statements and thus kept the substances on his trucks and at his Thistledown 10 0019 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 14 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 43 of 402 * PUBLIC * PUBLIC facility as a result. Therefore, he maintained, HIWU should be precluded (“estopped”) from prosecuting him for Possession. Analyzing the facts, the Arbitrator rejected Dr. Shell’s argument. AB2 at 6616-17 (¶¶ 7.37-41). 2. Sanctions Having concluded that Dr. Shell was liable for Possession, the Arbitrator considered the sanctions to be imposed. The HISA Rules set forth detailed, often intricate, provisions regarding sanctions, which include a two-year period of Ineligibility, during which a Covered Person may not participate in HISA-covered activity, as well as fines and costs. Sanctions can, however, be eliminated or reduced if the Covered Person establishes either No Fault or Negligence (“NF”) or No Significant Fault or Negligence (“NSF”). Rules 3224 & 3225. The Arbitrator held that Dr. Shell failed to establish NF. Dr. Shell admitted Possession of the four Banned Substances and displayed a sufficient lack of appropriate care as to preclude an NF finding. AB2 at 6617 (¶¶ 7.44-48). For NSF, the Arbitrator concluded that Dr. Shell should receive a three-month reduction of the maximum two-year Ineligibility period, resulting in one 21-month period of Ineligibility for all four Possession violations, beginning as of the date of his Provisional Suspension in October 2023. AB2 at 6618-20, 6622 (¶¶ 7.49-60, 8.1). The Arbitrator further imposed a total fine of $20,000, less than $25,000 per violation permitted under the Rules, while declining to direct Dr. Shell to bear any costs of the arbitration. AB2 at 6620-21, 6622 (¶¶ 7.65-66, 8.1). In ruling on sanctions, the Arbitrator rejected two HIWU arguments: (1) that sanctions should be imposed for each of the four Possession charges; and (2) that Dr. Shell’s Ineligibility period should run consecutively after the two-year Ineligibility period arising from the 11 0020 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 15 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 44 of 402 * PUBLIC * PUBLIC Administration Case ended, and not concurrent with that other sanction. AB2 at 6621-22 (¶¶ 7.67-7.74). III. ISSUES ON REVIEW The following issues are presented for review: (1) Did Dr. Shell show compelling justification for Possession of any of the four Banned Substances? (2) Is HIWU, and therefore the Authority, estopped from prosecuting the Possession charges against Dr. Shell? (3) Does the “compelling justification” defense, recognized in Rule 3214(a), violate the Due Process provision of the Fifth Amendment as unconstitutionally vague? (4) Is HISA unconstitutional under the private non-delegation doctrine? (5) Is Dr. Shell subject to either (a) individual sanctions for each of the four Possession violations, or (b) consecutive periods of Ineligibility arising from the Administration Case? (6) Is Dr. Shell entitled, under the No Fault or Negligence or No Significant Fault or Negligence provisions in Rules 3224 or 3225, to elimination or reduction of the two-year Ineligibility period applicable to Possession violations or to any other part of the sanctions? IV. SCOPE OF REVIEW HISA civil sanctions, imposed for rule violations, are reviewable by an FTC Administrative Law Judge (ALJ) upon application of the person aggrieved and thereafter by the Commission itself on a discretionary basis. 12 The ALJ reviews: “whether— (i) a person has engaged in such acts or practices, or has omitted such acts or practices, as the Authority has found the person to have engaged in or omitted; 12 15 U.S.C. §§ 3058(b) & (c); FTC Rules 1.146 & 1.147. 12 0021 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 16 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 45 of 402 * PUBLIC * PUBLIC (ii) such acts, practices, or omissions are in violation of this chapter or the anti-doping and medication control or racetrack safety rules approved by the Commission; or (iii) the final civil sanction of the Authority was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 15 U.S.C. § 3058(b)(2)(A); see also 16 C.F.R. § 1.146(b)(1)-(3). The ALJ’s review is de novo, as though the issue had not been heard before, and no decision had previously been rendered. 15 U.S.C. § 3058(b)(1); FTC Rule 1.146(b)(3); Adirondack Med. Center v. Sebelius, 740 F.3d 692, 696 (D.C. Cir. 2014), and Agyeman v. INS, 296 F.3d 871, 876 (9th Cir. 2002) (both describing scope of de novo review of agency’s interpretations of statute). 13 Thus, the ALJ must determine the merits of the ADRV charged, and whether the sanctions the Authority imposed were “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 14 “[T]o pass muster under the arbitrary and capricious standard,” a court must only find a “rational connection between facts and judgment.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 56 (1983). “To make this finding, the court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971). Judicial review under the arbitrary and capricious standard ensures that “the agency has acted within a zone of reasonableness and, in particular, has reasonably considered the relevant See also Barrientos v. Wells Fargo Bank, N.A., 633 F.3d 1186, 1188 (9th Cir. 2011), and Aquarius Marine Co. v. Pena, 64 F.3d 82, 87 (2d Cir. 1995) (both holding that, on de novo review by an appellate court, there is no deference to the district court); Coalition for Competitive Electricity, Dynergy Inc. v. Zibelman, 906 F.3d 41, 48 (2d Cir. 2018), and Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006) (both describing de novo review by an appellate court of district court dismissal of complaint under Federal Rule of Civil Procedure 12(b)(6)). 13 14 15 U.S.C. § 3058(b)(2)(A); FTC Rule 1.146(b)(1)-(3). 13 0022 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 17 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 46 of 402 * PUBLIC * PUBLIC issues and reasonably explained the decision.” FCC v. Prometheus Radio Project, 592 U.S. 414, 423 (2021). To find an abuse of discretion, there must be “a plain error, discretion exercised to an end not justified by the evidence, a judgment that is clearly against the logic and effect of the facts as are found.” Nat’l Wildlife Fed’n v. Nat’l Marine Fisheries Serv., 422 F.3d 782, 798 (9th Cir. 2005). Finally, whether the sanctions are in accordance with the law is determined with reference to the substantive law embodied in HISA and the implementing regulations, summarized above. In exercising its review authority, the ALJ may “affirm, reverse, modify, set aside, or remand for further proceedings, in whole or in part” and “make any finding or conclusion that, in [their] judgment . . . is proper and based on the record.” 15 V. ANALYSIS OF THE ISSUES A. The Possession Violation and Compelling Justification Defense Rule 3214(a) provides that “Possession of a Banned Substance” is an “Anti-Doping Rule Violation” “unless there is compelling justification for such Possession.” The violation imposes strict liability. 16 Both equine sporting association codes and those in sports generally include analogous provisions. See e.g., Federation Equestre Internationale (FEI) Equine Anti-Doping and Controlled Medication Regulations, Article 3.1 (4th ed. 2025); World Anti-Doping Agency (WADA) Code, Article 3.1 (2021). 15 15 U.S.C. § 3058(b)(3)(A); FTC Rule 1.146(d)(3). See, e.g., USADA v. Drummond, Case No. AAA 01-14-000-6146, at 19 (Dec. 17, 2014) (“The Panel rejects Drummond’s contention that actual possession requires his specific intent to have under his custody and control a particular banned substance whose characteristics were fully known to him.”); Eder v. International Olympic Committee (IOC), CAS 2007/A/1286, 1288 & 1289, at ¶¶ 42, 52 (Jan. 4, 2008) (possession does not require proving “subjective intent,” or “intent to use”); Diethart v. IOC, CAS 2007/A/1290, at ¶ 40 (Jan. 4, 2008) (possession “constitutes in itself an antidoping rules violation”). 16 14 0023 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 18 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 47 of 402 * PUBLIC * PUBLIC Dr. Shell has the burden of providing that defense “by a balance of probability (i.e., a preponderance of the evidence) . . . .” Rule 3121(b). Since he does not dispute Possession of the four Banned Substances, his liability turns on the defense of “compelling justification.” 17 1. “Compelling Justification” While a defense of “compelling justification” to possession is common in sports law antidoping codes generally, as in the HISA Rules the expression is invariably undefined. Further, decisions considering the defense typically arise under a rule that prohibits a human athlete from failing to provide a test sample “without compelling justification.” 18 Thus, these sports world decisions, arising in a different factual context, offer only limited guidance. In any event, “[w]hen interpreting a statute, we begin with the text.” Lackey v. Stinnie, No. 23-621, slip op. at 5 (U.S. Feb. 25, 2025). Dictionaries reflecting ordinary word usage can be helpful. An authoritative dictionary’s definition of “justification” is: 1. A lawful or sufficient reason for one’s acts or omissions; any fact that prevents an act from being wrongful. 2. A showing, in court, of a sufficient reason why a defendant acted in a way that, in the absence of the reason, would constitute the offense with which the defendant is charged. BLACK’S LAW DICTIONARY (12th ed. 2024). And for that “reason” to be “compelling,” it must be “both powerful and convincing. See [WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY OF THE ENGLISH LANGUAGE UNABRIDGED 462] (defining ‘compelling’ as ‘forcing, impelling, [or] driving [circumstance]’ and as ‘tending to convince or convert by or as if by forcefulness of 17 The arbitrator found that Dr. Shell has failed to prove compelling justification to her “comfortable satisfaction.” AB2 at 6616 (¶ 7.35). That was error. On this review, the parties recognize that the preponderance standard applies. AuRPCOL at 13 (¶ 3). 18 See, e.g., Klein v. ASADA, CAS A4/2016 (May 25, 2017), cited by both Shell and the Authority. 15 0024 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 19 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 48 of 402 * PUBLIC * PUBLIC evidence’) . . . .” United States v. Canales-Ramos, 19 F.4th 561, 567 (1st Cir. 2021) (construing the federal “compassionate release” statute, applicable to incarcerated individuals). 19 Of necessity, this defense is fact-driven and thus case-specific. Moreover, we should not lose sight of the forest. Rule 3214(a)’s Possession violation is part of a regulatory scheme directed to banishing doping from thoroughbred horseracing; compelling justification, excusing Possession, is the exception and should, accordingly “be interpreted restrictively.” WADA v. Contreras, CAS 2013/A/3341, at 20 (¶ 116) (May 28, 2014). 2. Dr. Shell’s “Non-Covered Horses” Practice as a Compelling Justification As described above, Dr. Shell practices in both Ohio and West Virginia. He provides veterinary services not only to Covered Horses regulated under HISA, but also to farm horses that do not run in Covered Horseraces. Dr. Shell contends that he had the Banned Substances that HIWU seized in Ohio because he needed them in his farm practice to treat these non-Covered Horses in both Ohio and West Virginia. For his West Virginia practice, Dr. Shell makes still another argument. The federal court’s preliminary injunction prevents HIWU and the Authority from enforcing the HISA Rules in West Virginia. Accordingly, Dr. Shell maintains, any otherwise Covered Horse is “nonCovered” while in that State and, therefore, he may dispense or administer Banned Substances to those horses in West Virginia. Since the Banned Substances are part of his practice in West Virginia, according to Dr. Shell, he had a compelling justification to possess them at Ohio’s Thistledown racetrack. I consider this argument, applicable to otherwise Covered Horses in West Virginia, first. See also https://dictionary.cambridge.org/us/dictionary/english/compelling.& /justification. I do not suggest that dictionary definitions are always useful, much less dispositive. However, particularly where other sources of guidance are limited, they can assist the analysis. 19 16 0025 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 20 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 49 of 402 * PUBLIC * PUBLIC Then, I address his other argument that the four Banned Substances are necessary for his farm practice. 20 a. Otherwise Covered Horses Physically in West Virginia Rule 1020 defines “Covered Horse” to mean: [A]ny Thoroughbred horse, or any other horse made subject to the Act by election of the applicable State Racing Commission or the breed governing organization for such horse under section 3054(l), during the period: (A) beginning on the date of the horse’s first Timed and Reported Workout at a Racetrack that participates in Covered Horseraces or at a training facility; and (B) ending on the date on which the horse is deemed retired pursuant to Rule 3050(b). (Emphasis added). Rule 3050(b)(1) provides that: “If an Owner wishes to retire a Covered Horse such that it is no longer made available for Testing, the Owner must provide written notice of such retirement to the Agency, in accordance with its procedures.” (Emphasis added). Other subsections in Rule 3050(b) establish processes for “unretiring” a Covered Horse, and limitations once unretirement is accomplished. See AB2 at 7101-07 (Scollay) (explaining operation of the definition and the retirement process). No HISA Rule recognizes an automatic change from Covered to non-Covered that occurs if a Covered Horse is moved from a jurisdiction subject to HISA to one that is not. As Dr. Mary Scollay, HIWU’s chief scientist since October 2022, explained: Q: Can you help us understand exactly what a covered horse is, what the definition is? A: Sure, it is a thoroughbred from the time that it has generated its first published work or made its first start until it is either retired or it is deceased. .... Q: And so if someone were to attempt to cover their horse and then uncover the horse and then cover their horse and uncover their horse, that’s simply not permissible under the regs., is it? A: No. AB2 at 7101, 7106 (Scollay). Many records Dr. Shell produced in this case contain hand notations such as “non-covered” or “farm horse.” Dr. Shell testified that his secretary made the notations, but did not explain why. AB2 at 6853. I infer these hand notations were made simply for production purposes in this case, not as ordinary course business records. 20 17 0026 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 21 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 50 of 402 * PUBLIC * PUBLIC Although Dr. Shell testified that he met with Dr. Scollay after a presentation she made at Mahoning racetrack in Ohio, it is undisputed that he never asked her whether he could dispense Banned Substances to horses in West Virginia; nor is there any evidence he asked anyone else from HIWU or the Authority. See AB2 at 6822-25 (Shell). He similarly offered no evidence that he sought advice concerning the effect of the Western District of Louisiana preliminary injunction. Instead, he testified, without corroboration, that trainers “unregister” and “re-register” Covered Horses when transporting them from a State subject to HISA, such as Ohio, to one not subject to HISA, such as West Virginia. AB2 at 6792-98 (Shell). The Arbitrator concluded that holding otherwise Covered Horses located in West Virginia as no longer covered would “undermine[] the integrity of the ADMC Program and is not justified, much less compelling.” AB2 at 6614-15 (¶ 7.25). I agree. If accepted, Dr. Shell’s position would permit evasion of the ADMC Program. Covered Persons, such as owners or trainers, who may be in West Virginia could receive and use Banned Substances with otherwise Covered Horses, or have them administered in West Virginia. Their racehorses could then be transported to run out of the State in Covered Horseraces. Any such result would fly in the face of a core principle of the ADMC Program: “Covered Horses should compete only when they are free from the influence of medications, other foreign substances, and treatment methods that affect their performance.” Rule 3010(d)(1). And, since three of the four Banned Substances here also are prohibited by the West Virginia Racing Commission, permitting their dispensation in West Virginia could impair the integrity of races in that State as well. This case illustrates the potential for evasion of the ADMC Program. Dr. Shell dispensed Carolina Gold—often identified in his records as for “farm use”—to various West Virginia 18 0027 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 22 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 51 of 402 * PUBLIC * PUBLIC trainers, who ran thoroughbred racehorses throughout the country in HISA-covered States. Lack of individual horse identification in the records Shell produced makes it impossible to determine whether—or which of—those horses had received Carolina Gold in West Virginia. See AB1 at 3451-98; AB2 at 6868-74, 6920-30 (Shell). Moreover, Dr. Shell dispensed the Carolina Gold in a vial, sometimes with instructions to the trainer for its use, rather than treating the horse himself. See AB2 at 6761-62, 6852 (Shell). For example: • Dr. Shell dispensed Carolina Gold to a Covered Trainer in West Virginia for a thoroughbred racehorse that thereafter raced at Mahoning Valley in Ohio, and previously at Monmouth Park in New Jersey. AB1 at 3451-52; AB2 at 6878-83 (Shell). • Dr. Shell dispensed Carolina Gold to Covered Trainers for thoroughbred racehorses with the instructions:  “Give 5cc IM [in the muscle] before race at Mountaineer [in West Virginia] for calming/relaxation.” AB1 at 3426-27; AB2 at 6845-47, 6853-55 (Shell).  “Give 5cc IM night before race or work for nerves Give IM.” AB1 at 342930; AB2 at 7214 (Benson).  “Give 5cc IM night before training or race for nerves.” AB1 at 3442-43; AB2 at 6872-73 (Shell). • Dr. Shell dispensed Carolina Gold to a Covered Trainer in Ohio for a thoroughbred racehorse stabled in West Virginia that raced at Mountaineer. AB1 at 3445, 3447; AB2 6874-77 (Shell). Once the Banned Substance is dispensed in West Virginia to a trainer with administration instructions, the opportunity to inject the Covered Horse for races elsewhere is obvious. I reject 19 0028 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 23 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 52 of 402 * PUBLIC * PUBLIC Dr. Shell’s loophole argument: that he was entitled to provide Banned Substances to thoroughbred racehorse trainers in West Virginia to use as they pleased. Covered Horses that are not “retired” in accordance with Rule 3050(b)(1) remain Covered Horses while in West Virginia for purposes of Rule 3214(a) charges of Possession of Banned Substances at HISA-covered locations in Ohio. b. Dr. Shell’s Farm Practice Proof Dr. Shell also argues that his farm practice, often involving non-Covered Horses, required his Possession of the Banned Substances that HIWU seized. The factual backdrop for his defense revolves around remarks by HIWU’s Dr. Scollay to educate industry participants on the HISA Rules during the period after the law’s enactment, but prior to the ADMC Program taking effect in May 2023. Dr. Scollay’s remarks, Dr. Shell argues, informed his view of the proof he would need to demonstrate compelling justification. i. Dr. Scollay’s Mahoning Presentation Besides serving as HIWU’s chief scientist, Dr. Scollay is a regulatory veterinarian with 37 years of industry experience. AB2 at 7056-57 (Scollay). After HISA’s enactment, she made public presentations throughout the country to educate horserace industry participants on the new, not yet effective, ADMC Program. AB2 at 7059-60 (Scollay). The presentations were themselves substantially the same, and each afforded those attending an opportunity to ask questions. AB2 at 7060-62, 7065 (Scollay). Discussion of compelling justification as a defense to Banned Substance possession charges under Rule 3214(a) typically arose in response to audience questions: I’d had several questions at different presentations about non-covered horses or mixed populations in some race tracks, trainers have populations of thoroughbreds which are covered horses and quarter horses which are not under HISA jurisdiction. And so they asked questions about a trainer possessing a 20 0029 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 24 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 53 of 402 * PUBLIC * PUBLIC banned substance in his barn if it were prescribed for a non-covered horse. And I explained that HISA regulations do not have authority over non covered horses. AB2 at 7066 (Scollay); see also ARPFOF at 9 (¶ 34). One of Dr. Scollay’s presentations took place in March 2023 at the Will Rogers Downs Racetrack in Oklahoma, where an audience member recorded her remarks. AB2 at 7062-63 (Scollay). During discussion of Banned Substances, an audience member asked whether the “banned possession” rule applied to veterinarians. 21 Dr. Scollay replied that veterinarians were covered and “you don’t need that on your truck.” 22 She continued: the “caveat I will tell you is: … [i]f the veterinarians are practicing also on a population of non-Covered horses, they’re taking care of quarter horses or they’ve got a country practice parttime they are able to possess a Banned Substance because we don’t have control over those horses, and so to the extent that they want to use bisphosphonates on a Non-Covered horse, we can’t ban them from possessing them … we can’t penalize people for something that we don’t have control over so, you know, let’s just say because we have the ability to investigate, if the story starts to get a little weird or a little extreme, you’re going to get more than a raised eyebrow. But at the end of the day if someone is practicing out in the country, we don’t have the authority to control the medications they administer or carry for Non-Covered Horses … the regulation addresses if there is justification for them to be in Possession of a Banned Substance and certainly a practice that incorporates NonCovered horses. AuRPFOF at 3 (¶ 9) (emphasis added); AB1 at 1547-48; AB2 at 7117-18 (Scollay) (the recorded remarks “[s]ound[] exactly like what I said.”). 23 Although Dr. Shell did not attend the Will Rogers Downs presentation, he testified to attending one at Mahoning racetrack in Ohio, where Dr. Scollay spoke. AB2 at 6687, 6789, https://www.facebook.com/Traoracing/videos/891125828812595/?extid=CL-UNK-UNK-UNK-AN_GK0TGK1C&mibextid=2Rb1fB&ref=sharing (Video Mark ≈24:40-50). See also AB1 at 2576 (Scollay witness statement). 21 22 Id. See also HIWU v. Perez, JAMS Case No. 1501000589, aff’d, FTC No. 9420 (ALJ Decision on Application for Review, Feb. 7, 2024), https://www.ftc.gov/system/files/ftc_gov/pdf/609612_d09420administrative_law_judge_decision_on_application_for_review_-_public.pdf, review denied, 2024 WL 3824065 (F.T.C. Aug. 8, 2024). 23 21 0030 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 25 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 54 of 402 * PUBLIC * PUBLIC 6813-15 (Shell). Dr. Scollay gave substantially the same prepared remarks as at other racetracks, “absent the spontaneous exchanges that occur[red] at each racetrack . . . .” AB2 at 7083 (Scollay). According to Dr. Shell, Dr. Scollay made “it clear that it was prohibited to possess or prescribed [sic] banned substances to a covered horse.” AB2 at 6815 (Shell). The subject of compelling justification, as applied to veterinarians, again came up. Dr. Scollay’s response echoed those given at Will Rogers Downs. AB2 at 6693-94 (Shell). Dr. Shell further testified: [Dr. Scollay] said that we were allowed to carry banned substances on our vehicles. In fact, she said you do not have to unload and reload your truck every time you leave the track to go to a farm. .... She said, as long as you have a farm practice, that with justification, you are allowed to carry them. AB2 at 6693, 6816 (Shell). During her Mahoning presentation or those at other racetracks, Dr. Scollay “did not” say that “veterinarians have carte blanche to carry banned substances on their trucks at racetracks if they claim to have a farm practice.” AB2 at 7083, 7144-45 (Scollay). She also made “it clear that HIWU would have the ability to investigate any possession of a banned substance,” and said “you have to be able to support why you had medication on your truck.” AB2 at 6821 (Shell). Thus, as the parties agree: [During her presentations] Dr. Scollay would confirm that the ADMC Program has no authority over non-Covered Horses but explain[ed] that Possession needed to be justified and would be further investigated where suspicions or inconsistencies arose. ARPFOF at 9 (¶ 34). ii. Dr. Shell’s Follow-up Conversation Having heard Dr. Scollay’s Mahoning remarks, Dr. Shell was, nevertheless, “a little antsy.” AB2 at 6694, 6822 (Shell). He testified that, after the presentation had concluded, he 22 0031 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 26 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 55 of 402 * PUBLIC * PUBLIC spoke to Dr. Scollay. Dr. Shell sought further information regarding his practice of servicing non-Covered horses. According to Dr. Shell: “She reassured me . . . after the meeting that there were [sic] absolutely no reason that I would have to remove banned substances and put them back on my truck every time I drove off the racetrack.” AB2 at 6694 (Shell). Dr. Shell further testified: Q: And you never asked her the question of whether or not you could have banned substances on your truck to provide to race horses in West Virginia on a farm or otherwise, you never asked her, right? A: No, I did not ask her. AB2 at 6823 (Shell). Dr. Shell had no other contacts with Dr. Scollay after the Mahoning racetrack presentation and follow-up, nor any further “guidance” on compliance with Rule 3214(a). AB2 at 6695-69 (Shell), 7070 (Scollay). Dr. Scollay, who did not know Dr. Shell, did not recall any conversation with him at Mahoning, although she did not deny it could have occurred; nor did she have any calls or emails with him. AB2 at 7071, 7084-85, 7153-54 (Scollay). iii. The Randall Equine Email Exchange After the Mahoning presentation, Dr. Meghan Naylor, who practices with Randall Equine Vet Group, emailed Dr. Scollay “to confirm that banned substances legal in non-covered horses such as thyro l were allowed to be carried by veterinarians that practice off track as well.” AB1 at 2601; AB2 at 7070-71 (Scollay). After quoting Rule 3214, Dr. Scollay wrote: The regulation above provides for the ability to justify the possession of Banned Substances. To the extent that your practice provides veterinary care to non-Covered horses—and can demonstrate (through records, day sheets, etc.) the need to carry those substances you can establish compelling justification. AB1 at 2601 (emphasis added); see also AB2 at 7072-73 (Scollay). Dr. Shell reviewed this email exchange in June 2023. AB2 at 6804, 6806-07 (Shell). There is no evidence that he thereafter 23 0032 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 27 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 56 of 402 * PUBLIC * PUBLIC made any outreach to Dr. Scollay, or anyone. See AB2 at 6824-25, 6827-28 (Shell). Dr. Shell argues that Dr. Scollay’s Mahoning remarks and response to Dr. Naylor guided him in accommodating his practice servicing non-Covered Horses to the requirements of the HISA’s Rules. More specifically, he came away with the view that “compelling justification” would be met if he “show[ed] through any records, need to carry the Charged Banned Substances for use or intended in Non-Covered practice.” AOBr. at 5 (emphasis added); see also ARBr. at 1. That “need,” Dr. Shell maintains, “resides in Non-Covered use,” without more. ARBr. at 3. This argument, however, disregards that compelling justification calls for strong proof by Dr. Shell. He must demonstrate, through veterinarian practice records or other evidence, that his non-Covered Horse practice requires him to keep Banned Substances on his truck while at racetracks in Ohio, a HISA-covered jurisdiction. c. Inadequacy of Dr. Shell’s Proof Whether considered overall or for the four Banned Substances individually, Dr. Shell’s proffered proof fails to establish compelling justification. i. Dr. Shell’s Records Overall In Discovery Order No. 1, the Arbitrator made clear that, by undertaking to prove compelling justification, Dr. Shell “opened the door” to showing Banned Substances were “only used in non-covered horses . . . . [T]he complete veterinary medical records for all horses in his practice . . . are relevant and material to the defense.” AB2 at 5974 (emphasis added). Dr. Shell read and understood the Order. AB2 at 6831-32. Instead of heeding the Arbitrator’s advice, his compelling justification proof consisted of a self-selected slice of documents. See, e.g., AB2 at 6893 (Arbitrator), 6959-62, 6964-65 (Shell). Even then, many documents reflect shoddy 24 0033 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 28 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 57 of 402 * PUBLIC * PUBLIC recordkeeping practices, often lacking the information Ohio and West Virginia law require veterinarians to keep, include inaccurate entries, and fail to show diagnosed conditions appropriate for dispensing Banned Substances. See pp. 27-33, below. A veterinary medical record should contain the thoughts and impressions of a veterinarian, including any examination, diagnosis, or treatment administered to a specific horse. AB2 at 7184-85 (Benson). It should have sufficient detail so that “somebody else with appropriate training could pick up that record, read it, review it, understand all that had been done, and whether they agreed with it or not, they could carry on with care for that patient because they had the full history on the animal up to the point where they received it.” AB2 at 7076 (Scollay); see also AB2 at 7075-81 (Scollay) (describing recordkeeping generally). A properly created and maintained veterinary record is, therefore, distinct from a billing record. AB2 at 7184-85 (Benson). Yet, the documents Dr. Shell produced to show the medications he prescribed to horses “were mostly billing records . . . they didn’t have the detail that would be required of a medical record.” AB2 at 7181-82 (Benson). The records typically would not enable continuity of care, indicating only the substance Dr. Shell billed for, often without any medical justification for using the substance. AB2 at 5631, 6096-97, 7181-82, 7188-92, 7205-07, 7212, 7249-50 (Benson). Licensed in both Ohio and West Virginia, and an Attending Veterinarian under HISA Rules, Dr. Shell is obliged to follow prescribed recordkeeping provisions. AB1 at 2728 (Ohio requirements), 2729-30 (West Virginia requirements); HISA Rules 1020 (definitions), 2251, and 3040(d). Dr. Shell knows these rules. See AB2 at 6780-83 (Shell). However, overall, records 25 0034 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 03/06/2025 OSCAR NO. 612947 -PAGE Page 29 of 73 * PUBLIC * FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 04/03/2026 OSCAR NO. 615188 -PAGE Page 58 of 402 * PUBLIC * PUBLIC relating to the four Banned Substances that he offered pale by comparison to those expected of veterinary professionals. Dr. Shell’s frequent argument—that HIWU has not charged him with a recordkeeping violation—misses the point. Both the absence of complete medical documentation, and the state o [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A1e585699b68f8b40. Public record. Not legal advice.