Petition for Writ of Certiorari — Ajay S. Ahuja, Petitioner v. United States

APPENDIX TABLE OF CONTENTS

Opinion of the Second Circuit

(August 29, 2018) ...............................................la

Opinion of the District Court of Connecticut

(May 5,2017) ......................................................5a

Relevant Statutory Provisions and

Federal Regulations .........................................40a

App.la

OPINION OF THE SECOND CIRCUIT

(AUGUST 29, 2018)

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

UNITED STATES,

V.

AHUJA.

No. 17-2098-cv

We review a district court's award of civil penalties

for abuse of discretion. Advance Pharm., Inc. v. United

States, 391 F.3d 377, 398 (2d Cir. 2004). "A court

abuses its discretion 'when (1) its decision rests on an

error of law (such as application of the wrong legal

principle) or a clearly erroneous factual finding, or (2)

its decision-though not necessarily the product of a

legal error or a clearly erroneous factual findingcannot be located within the range of permissible

decisions." Slupinski v. First Unum Life Ins. Co., 554

F.3d 38, 47 (2d Cir. 2009) (quoting Zervos v. Verizon

New York, Inc., 252 F.3d 163, 169 (2d Cir. 2001)

(footnote omitted)).

The district court did not abuse its discretion by

ordering Ahuja's fine. When determining a civil

penalty for violations of the CSA, the district court

should consider: "(1) the level of defendant's culpability,

(2) the public harm caused by the violations, (3) defendant's profits from the violations, and (4) defendant's

ability to pay a penalty." Advance Pharm., Inc., 391

App. 2a

F.3d at 399. Ahuja challenges the district court's

findings in three of these categories.

A. Culpability

A district court should consider the totality of

the evidence when determining a defendant's culpability, including the "good or bad faith" conduct of a

defendant. Id. Here, the district court's conclusion

that Ahuja was grossly negligent and therefore highly

culpable is supported by the record. Ahuja admitted

committing over 1,000 violations of the CSA in three

years. These consisted of a complete failure to keep

adequate records, conduct inventory, and maintain

the security of the controlled substances in his medical

clinic.1 Although Ahuja kept some records, he admitted

that the records were ineffective as they did not

enable him to keep track of the drugs. Further, Ahuja

could not account for 100 percent of his shipments for

four different drugs. Ahuja asserts that he did not act

willfully or intentionally and therefore was not highly

culpable. But evidence of willfulness is not required

by Advance Pharmaceutical to merit imposition of a

high penalty. Rather, the district court is called upon

to assess the totality of the evidence to determine the

defendant's culpability. See id

1 Ahuja does not challenge the district court's calculation of the

total number of individual violations. Rather, as discussed

below, he challenges only the imposition of a $10,000 fine per

violation. Because he does not argue that the district court's

counting methodology was wrong, he has waived that issue. See

LoSacco v. City of Middletown, 71 F.3d 88, 92-93 (2d Cir. 1995).

We therefore use the district court's calculation of the total

number of violations.

Public Harm

A court must also consider the public harm caused

by the defendant's actions, such as evidence that

drugs have actually been used illegally. Id.; see also

United States v. Glob. Distribs., Inc., 498 F.3d 613,

620-21 (7th Cir. 2007) (conversion of drugs into a

large amount of methamphetamine "cuts in favor of a

stiff penalty"). Other considerations include the risk

of side effects from the controlled substances and

whether a defendant's violation made it impossible to

tell if any drugs were diverted. Here, the evidence

supports the district court's conclusion that Ahuja

warranted a higher fine. Ahuja could not account for

approximately $28,000 worth of controlled substances,

which included over 5,000 pills and a significant percentage of the total amount of the drugs he received.

His failure to keep proper records created a risk that

patients could abuse their prescriptions and, in fact,

did so; the impetus for the investigation was that one

of Ahuja's patients had been "sharing' his aiprazolam

pills. Ahuja's lack of physical security for the drugs

meant that unauthorized persons could easily access

them, a conclusion supported by Ahuja's own theory

that a secretary stole the drugs.

Ability to Pay

A district court must also examine evidence of

the defendant's financial condition and determine if

he has the ability to pay. Advance Pharm., Inc., 391

F.3d at 399-400. The district court's finding that

Ahuja could pay a fine was supported by the record.

Ahuja's salary ranged from approximately $150,000

to $200,000 per year. Although Ahuja argued that the

lower figure was more accurate, he offered conflicting

explanations for his higher 2014 income. Further,

App.4a

Ahuja owned stocks, but he failed to offer any evidence

about the value of those stocks. Although Ahuja stated

he suffered from health problems that would affect

his ability to work, he did not offer any medical

evidence about those problems. Ahuja argues that the

district court erred by requiring him to prove his

inability to pay a fine rather than requiring the

Government to show that he could pay a fine. But Ahuja

bore the burden of showing that he could not pay the

fine. See Motorola Credit Corp. v. Uzan, 509 F.3d 74,

84-85 (2d Cir. 2007) (affirming civil fine imposed in

part because the defendant had not shown an inability

to pay).

We have considered all of Ahuja's remaining arguments and find them to be without merit. For the

reasons stated, the judgment of the district court is

AFFIRMED.

App. 5a

OPINION OF THE

DISTRICT COURT OF CONNECTICUT

(MAY 5, 2017)

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF CONNECTICUT

UNITED STATES,

V.

AHUJA.

Civil Action No. 3:14-CV-1558 (JCH)

Before: Janet C. HALL, U.S District Judge

RULING ON PENALTIES

I. Introduction

On November 22, 2016, Dr. Ajay S. Ahuja, M.D.

("Dr. Ahuja"), the defendant, admitted liability for

twenty-three counts of civil violations of the Controlled

Substances Act ("CSA"), 21 U.S.C. § 801 et. seq.l See

Minute Entry (Doc. No. 126) ("Dr. Ahuja admitted each

of Counts 1-23.1; Am. Compi. (Doc. No. 106) (alleging

twenty-three CSA violations). The plaintiff, the United

States ("the Government"), asks the court to assess

civil penalties against Dr. Ahuja of $496,500,2 see

I Because Dr. Ahuja admitted these violations, jury selection

was cancelled.

2 The Government first suggested this $496,500 figure in the

context of its Motion for Default Judgment (Doc. No. 14). See

Mot. for Default ¶ 10. The Government explained therein that

the $496,500 figure was based on requesting the court impose

$500 per violation for each of the 961 violations that carry a

App. 6a

March 7, 2017 Hearing Transcript ("Tr.") (Doc. No.

153) at 143, and asks the court to order Dr. Ahuja "to

comply with all federal laws and regulations pertaining

to receipts, dispensations, and inventories of controlled

substances" in the future, Am. Compi. at 8. Dr. Ahuja

argues that the amount of penalties should be

$28,462.16. See Tr. at 155.

The court accepted written affidavits in lieu of

direct testimony and held an evidentiary hearing to

hear cross-examination in order to then determine

the amount of penalties.3

maximum penalty of $10,000, and $1,000 per violation for each

of the sixteen violations that carry a maximum penalty of

$25,000. See Ic!. ¶ 10. The court explains the number of violations and maximum penalties below. See infra Section V(01)

(explaining that Counts One through Eighteen constitute 961

violations, each of which carry a maximum penalty of $10,000);

V(02) (explaining that Counts Nineteen through TwentyThree constitute sixteen violations, each of which carry a

maximum penalty of $25,000).

3 While a jury would typically determine liability for a civil CSA

violation, once liability has been decided, the court itself may

determine the penalty amount. See, e.g., Advance Pharmaceutical v. United States, 391 F.3d 377, 389 (2d Cir. 2004)

(describing case in which, after jury found liability, court held

hearing to determine penalty); United States v. Bizga, No. 1:13CV-206, 2014 U.S. Dist. LEXIS 185900, 2014 WL 11370407, at

*1 (N.D. Ohio Apr. 8, 2014) ("The parties stipulated to [the

defendanti's liability for violations of the CSA and accompanying regulations, and agreed that the Court would determine

the civil penalties to be assessed, if any, following a hearing.");

United States v. Paskon, No. 4:07-CV-1161 (CEJ), 2008 U.S.

Dist. LEXIS 91045, 2008 WL 4948458, at *1 (E.D. Mo. Nov. 10,

2008) ("This matter is before the Court for determination of

damages, penalties, and injunctive relief following the jury's

verdict on the claims brought by the United States pursuant

to. the Controlled Substances Act."); United States v.

Salcedo, No. 02-CV-1095 (FB) (VVP), 2003 U.S. Dist. LEXIS

. .

For the reasons that follow, the court ORDERS Dr.

Ahuja to pay $200,000 and to comply with all federal

laws and regulations pertaining to receipts, dispensations, and inventories of controlled substances in the

future.

II. Admitted Violations

Dr. Ahuja is a practitioner registered with the

Drug Enforcement Administration and authorized to

handle controlled substances. See Am. Compi. at 1.

The counts, all of which Dr. Ahuja admits, set forth

the following violations:

Counts One through Eight set forth violations of

section 842(a)(5) of title 21 of the United States

Code4 and section 1304.04(a) of title 21 of the Code of

Federal Regulations,5 based on failure to maintain

controlled substance receipt records for (1) seventeen

shipments of Alprazolam, see Am. Compi. Count I,

(2) eight shipments of Hydrocodone Bitartrate with

Acetaminophen, see Ic!. Count II, (3) seven shipments

of Guaifenesin with Codeine Phosphate, see Id. Count

III, (4) one shipment of Testosterone Cypionate, see

Id. Count IV, (5) one shipment of Zolpidem Tartrate,

see Id. Count V, (6) ten shipments of 75-milligram

8561, 2003 WL 21196843, at *1 (E.D.N.Y. Feb. 19, 2003)

(stating that, after "default judgment against defendant," court

referred matter to magistrate "for determination of the relief to

be granted plaintiff'). The parties agreed that the amount of the

penalty is for the court to determine.

4 Section 842(a)(5) makes it unlawful "to refuse or negligently

fail to make, keep, or furnish any record, report, notification,

declaration, order or order form, statement, invoice, or information required under" the CSA. 21 U.S.C. § 842(a)(5).

5 Section 1304.04(a) requires the keeping of certain records. See

21 C.F.R. § 1304.04(a).

Lyrica tablets, see id. Count VI, (7) eight shipments

of 50-milligram Lyrica tablets, see Id. Count VIII, and

(8) one partially-used vial of Depo-Testosterone, see

id. Count VIII.

Count Nine sets forth a violation of section

1304.04(f)(2) of title 21 of the Code of Federal RegulationsG for failure to separate controlled substance

records for Schedule III, IV, and V substances from

records for non-controlled substances. See Am. Compl.

Count IX.

Count Ten sets forth a violation of section 827(a)(1)

of title 21 of the United States Code7 and section

1304.11(c) of title 21 of the Code of Federal Regulations8

based on failure "to perform and maintain a biennial

inventory of controlled substances." Am. Compl.

Count X.

Counts Eleven and Twelve set forth violations of

section 827(a)(3) of title 21 of the United States

Code,9 and either section 1304.21(a)10 or 1304.22011

6 Section 1304.04(f)(2) states that "[i]nventories and records of

controlled substances listed in Schedules III, IV, and V shall be

maintained either separately from all other records of the registrant or in such form that the information required is readily

retrievable from the ordinary business records of the registrant." 21 C.F.R. § 1304.04(f)(2).

7 Section 827(a)(1) requires a "complete and accurate record of all

stocks [of controlled substances] on hand." 21 U.S.C. § 827(a)(1).

8 Section 1304.11(c) requires a "biennial inventory." 21 C.F.R.

§ 1304.11(c).

9 Section 827(a)(3) requires "a complete and accurate record of

each such substance manufactured, received, sold, delivered, or

otherwise disposed of." 21 U.S.C. § 827(a)(3).

10 Section 1304.21(a) requires "a complete and accurate record

of each substance manufactured, imported, received, sold, delivered,

exported, or otherwise disposed of." 21 C.F.R. § 1304.21(a).

of title 21 of the Code of Federal Regulations, for

failures (ii) "to maintain accurate dispensing records

for" Aiprazolam, resulting in failure to account for 59

bottles, Am. Compi. Count XI, and (12) to properly

complete a dispensation log for 517 bottles of this

drug, see id Count XII.

Counts Thirteen and Fourteen set forth violations

of section 827(a)(3), and either section 1304.21(a) or

1304.22(c), for failures (13) "to maintain accurate

dispensing records for" Hydrocodone Bitartrate with

Acetaminophen, resulting in failure to account for 21

bottles, Am. Compi. Count XIII, and (14) to properly

complete a dispensation log for 92 bottles of this

drug, see Id. Count XIV.

Counts Fifteen and Sixteen set forth violations

of section 827(a)(3), and either section 1304.21(a) or

1304.22(c), for failures (is) "to maintain accurate

dispensing records for" Guaifenesin with Codeine

Phosphate, resulting in failure to account for 58

bottles, Am. Compi. Count XV and (16) to properly

complete dispensation logs for 154 bottles of this

drug, see Id. Count XVI.

Counts Seventeen and Eighteen set forth violations

of section 827(a)(3) and section 1304.21(a) for failure

"to maintain accurate dispensing records for" (17)

Testosterone Cypionate, resulting in failure to account

for two vials, Am. Compi. Count XVII, and (18)

11 Section 1304.22(c) requires records "of the number of units or

volume of [controlled substances in] finished form dispensed,

including the name and address of the person to whom it was

dispensed, the date of dispensing, the number of units or volume

dispensed, and the written or typewritten name or initials of

the individual who dispensed or administered the substance on

behalf of the dispenser." 21 C.F.R. 1304.22(c).

App. l0a

Zolpidem Tartrate, resulting in failure to account for

three bottles, Id. Count XVIII.

Counts Nineteen and Twenty set forth violations

of sections 842(a)(1)12 and 842(c)(1)(A)13 of title 21 of

the United States Code, and section 1306.04(a) of

title 21 of the Code of Federal Regulations,14 for

dispensing "controlled substances outside of the

usual course of [Dr. Ahuja's] professional practice,"

namely, (19) to Dr. Ahuja's ex-wife, Gurpreet Ahuja

("Gurpreet"), either Hydrocodone with Acetaminophen,

or Alprazolam, on a total of four different occasions,

Am Compl. Count XIX; see also Dr. Ahuja Aff. (Def.

Ex. A) ¶ 7(1) (clarifying that "Jane Doe #1," referred

to in this Count, is Gurpreet), and (20) to his son,

12 Section 842(a)(1) makes it unlawful for a registrant "to

distribute or dispense a controlled substance in violation of

section 829 of [1 title [21 of the United States Code]." 21 U.S.C.

§ 842(a)(1).

While the Amended Complaint incorrectly lists section 842(a)(2)

in these counts, the Government clarified via email to the court

on March 3rd, 2017, with copy to defense counsel, that the

Government meant to list section 842(a)(1).

13 Section 842(c)(1)(A) states that "any person who violates"

section 842(a)(1), "shall, with respect to any such violation, be

subject to a civil penalty of not more than $25,000." 21 U.S.C.

§ 842(c)(1)(A).

While the Amended Complaint incorrectly lists section 841(a)(1)

in these counts, the Government clarified in the same email

that the Government meant to list section 842(c)(1)(A).

14 Section 1306.04(a) requires that "[a] prescription for a controlled

substance to be effective must be issued for a legitimate medical

purpose by an individual practitioner acting in the usual course

of his professional practice." 21 C.F.R. 1306.04(a).

While the Amended Complaint incorrectly lists section 1306.21(b)

in these counts, the Government clarified via email to the court

that the Government meant to list section 1306.04(a).

App.11a

Sunny Ahuja, Guaifenesin with Codeine, on two

different occasions, Id. Count XX; see also Sunny

Ahuja ("Sunny") Aff. (Def. Ex. C) ¶ 5 (clarifying that

"John Doe #1," referred to in this Count, is Sunny).

Counts Twenty-One and Twenty-Two set forth

violations of sections 842(a)(1) and 842(c)(1)(A),15 and

section 1306.04(a) of title 21 of the Code of Federal

Regulations, for prescribing "controlled substances

outside of the usual course of [Dr. Ahuja's] professional practice," namely, (21) to his son, Nicholas

Ahuja ("Nicholas"), Zolpidem, on five different occasions,

Am. Compi. Count XXI; see also Nicholas Aff. (Def.

Ex. B) ¶ 5 (clarifying that "John Doe #2" listed in this

Count is Nicholas), and (22) to his brother, Uttam

Ahuja ("Uttam"), either Cheratussin AC, Hydrocodone

Bitartrate, or Hydrocodone Chlorpheniramine, on a

total of three different occasions, Id. Count XXII; see

also Uttam Aff. (Def. Ex. D) ¶ 5 (clarifying that "John

Doe #3" listed in this Count is Uttam).

Count Twenty-Three sets forth violations of section

842(a)(1) and 842(c)(1)(A) of title 21 of the United

States CodelG for illegal possession of two (full or

partial) bottles of Aiprazolam which had previously

been dispensed to Nicholas or Uttam. See Am. Compl.

Count XXIII.

15 Again, while the Amended Complaint incorrectly lists sections

841(a)(1) and 842(a)(2) in these counts, the Government clarified

via email to the court that the Government meant to list sections

842(a)(1) and 842(c)(1)(A).

16 While the Amended Complaint incorrectly lists section

841(a)(1) in Count Twenty-Three, the Government clarified

during the hearing that the Government meant to list section

842(a)(1) and 842(c)(1)(A) here, as well. See Tr. at 3.

App.

12a

Legal Standard

Maximum penalties for the various violations of

law by Dr. Ahuja are set out in the statutes. "[Amy

person who violates" section 842(a)(1), "shall, with

respect to any such violation, be subject to a civil

penalty of not more than $25,000." 21 U.S.C.

§ 842(c)(1)(A). "In the case of a violation of' section

842(a)(5), "the civil penalty shall not exceed $10,000."

21 U.S.C. § 842(c)(1)(B).

The parties agree that the Second Circuit's decision

in Advance Pharmaceutical, Inc. v. United States,

391 F.3d 377 (2d Cir. 2004), provides the standard

for determining the size of a reasonable penalty. See

Pl.'s Mem. (Doc. No. 134) at 1; Def.'s Mem. (Doc. No.

135) at 1. According to Advance Pharmaceutical,

a district court may properly consider a

number of factors in determining the size of

a civil penalty, including the good or bad faith

of the defendants, the injury to the public,

and the defendant['sl ability to pay. Thus, in

determining monetary penalties under § 842

(c), district courts have frequently considered

four factors: (1) the level of defendant's

culpability, (2) the public harm caused by

the violations, (3) defendant's profits from

the violations, and (4) defendant's ability to

pay a penalty.

391 F.3d at 399 (internal quotation marks and citation

omitted); Pl.'s Mem. at 1-2; Def.'s Mem. at 1-2.

Findings of Fact

A. Culpability

The court finds that Dr. Ahuja engaged in the

following conduct, or lack of conduct: (1) Dr. Ahuja

6, pp.

dispensed controlled substances directly from his

practice, despite the fact that most physicians choose

instead to only "write prescriptions" and have "pharmacies dispense the medicines," see, e.g., Marcie L.

Johnson ("Johnson") Aff. (Gov. Ex. 39) ¶ 14, (2) Dr.

Ahuja prescribed controlled substances to family

members, see, e.g., Id. ¶ 11; Dr. Ahuja Aff. ¶ 7(1), (3)

Dr. Ahuja failed to make proper notations in family

members' patient charts when prescribing controlled

substances to them, see, e.g., Tr. at 61-62, (4) Dr.

Ahuja failed to properly record dispensations in his

dispensation log, see Dr. Ahuja Aff. ¶ 7(e),(g),(i), (5)

Dr. Ahuja failed to conduct a biennial inventory of

the controlled substances he had on hand, for three

to four years in a row, see Am. Compi. Count X; Johnson

Aff. ¶ 28; Dr. Ahuja Aff. ¶ 7(d); Tr. at 112; and, as a

result of this failure to conduct a biennial inventory,

Dr. Ahuja lacked a method of noting whether controlled

substances had gone missing, see Tr. at 112, (6) Dr.

Ahuja cannot account for certain medications, see,

e.g., Dr. Ahuja Aff. ¶ 7(d),(O,(h),(j),(m),(k), (7) Dr. Ahuja

consistently failed to upload information to the

Connecticut Prescription Monitoring and Reporting

System (CPMRS) regarding his dispensations of controlled substances to patients, thus preventing other

doctors from knowing whether their patients may

have been receiving controlled substances from more

than one source, see Rodrick J. Marriott ("Marriott")

Aff. (Gov. Ex. 37) ¶ 8; Tr. at 103, and, (8) if Dr. Ahuja's

own theory were to be credited (which it is not),17

17 Dr. Ahuja's testimony and demeanor at the evidentiary hearing

leads the court to discredit most of his testimony. For instance,

while Dr. Ahuja had admitted liability on all counts of the Amended

Complaint at a prior court proceeding, Dr. Ahuja stated during

the evidentiary hearing that he had only admitted liability to

App.14a

due to his insufficient security measures and failure

to properly keep track of his medication, Dr. Ahuja

allowed controlled substances to be stolen by his

former secretary, who presumably used the substances

for an illicit purpose; and Dr. Ahuja then failed to

report this diversion to law enforcement officials, see

Tr. at 95-96, 110-12, 115-16, 121-23.

The court credits and agrees with the opinion of

University of Connecticut School of Medicine Assistant

Clinical Professor in Family Medicine, Dr. Adam Perrin,

M.D. ("Dr. Perrin"), that Dr. Ahuja's behavior reflects

"a blatant disregard for the rigor and careful oversight

required for the safe and proper dispensing and

prescribing of controlled substances." Dr. Perrin

Expert Report at 8. While Dr. Ahuja testified that he

"was making an attempt to keep the required records,"

Dr. Ahuja Aff. ¶ 7, the court views those efforts as

essentially non-existent.

B. Public Harm

The court finds that, with regard to Dr. Ahuja's

family members who were given controlled substances,

(1) the medications were given to treat bona fide

"most" of the Amended Complaint, and. did not admit liability

on every count. See Tr. at 88-89. Dr. Ahuja later acknowledged

that he had in fact admitted liability to the entire Amended

Complaint. See id. at 90-91. He then stated that he wished to

withdraw a portion of his admission of liability. See Id. at 113.

During this same March 7, 2017 evidentiary hearing, and in

connection with changing his mind about the extent of his prior

admission of liability, Dr. Ahuja renounced a portion of the

Affidavit that Dr. Ahuja had signed only six days previously—

on March 1st, 2017. See Id. at 89-90, 113. Dr. Ahuja had sworn

to the accuracy of his Affidavit at the evidentiary hearing, only

moments before renouncing a portion of it. See Id. at 85. During

the hearing, Dr. Ahuja gave several other contradictory answers

as well.

App.15a

illnesses, (2) Dr. Ahuja checked up with them regarding the medications and the illnesses, and (3) the

medications were effective. See Nicholas Aff. ¶ 5,

Sunny Ahuja Aff. ¶ 5, Uttam Aff. 1 6.

However, the court finds that approximately

$28,500 worth of drugs were diverted for non-medical

purposes due to Dr. Ahuja's violations. Dr. Ahuja—in

an apparent attempt to buttress his argument that

he had not taken drugs from his own supply—presented

a theory that his former secretary had stolen the

missing medications from him, under circumstances

that lead to the conclusion that the secretary would

have used or sold the drugs for non-medical purposes.

See Tr. at 95-96; see also Tr. at 111 (clarifying that

Dr. Ahuja believes the secretary took all his missing

medication). According to DEA Diversion Group

Supervisor Leonard Levin ("Levin"), the total street

value for all the unaccounted-for medications is

$28,462.18. See Levin Aff. ¶ 27. The court notes that,

if Dr. Ahuja invented his theory about the secretary

stealing his drugs to deflect attention from his own

malfeasance, the court can only assume that the truth

is something worse than the secretary stealing the

drugs—such as Dr. Ahuja directly diverting this

$28,500 worth of controlled substances by consuming

them himself or distributing them for non-medical

purposes at a price of $4 per Aiprazolam pill, $7 per

Hydrocodone pill, $13.50 per bottle of Guaifenesin

with Codeine, $84.89 per vial of Testosterone Cypionate,

and $20.67 per bottle of Zolpidem tartrate. See Id.

¶J 25-26.

The court finds, as Johnson testified, that "[tihe

failure to report" the dispensation of controlled substances,

App. 16a

allows for the diversion of controlled substances. Specifically, the patient can be seeing

another provider and the other provider would

have no way of knowing that the patient is

also receiving controlled substances from

Dr. Ahuja. This exposes the patient and, if

the patient is not personally using the controlled substances, the community, to harm.

Johnson Aff. ¶ 63. The court further finds, based on

Dr. Perrin's testimony, that, for a practitioner to.

have "controlled substances on site" involves an

"inherent risk of theft and misuse," which "calls for

strict policy and procedure in establishing a protocol

to insure security, proper handling and appropriate

dispensing practices." Dr. Perrin Expert Report at 8.

By failing to exercise proper vigilance, the court finds

that Dr. Ahuja created a volatile situation that put

his patients and family members at risk of harm from

improper use of addictive substances. Id. at 8; see

also Dr. Ahuja Aff. ¶ 11 (stating that Dr. Ahuja does

"not dispute that wide-spread abuse of controlled

substances has reached crisis levels in the United

States at this time").

C. Profit

The court finds that Dr. Ahuja can be expected

to have made a profit of approximately $3,000 from

his CSA violations. As detailed below, this profit

estimation is based on the estimated retail value of

the unaccounted-for drugs, subtracting the estimated

cost Dr. Ahuja paid to buy these drugs. In making a

profit finding, the court was required to decide between

counting either (1) the retail value of the missing

drugs, or (2) their street value. In deciding to use the

retail value, the court does not simply rely on Dr.

App.17a

Ahuja's testimony that he sold the drugs at their

retail value, see Dr. Ahuja Aff. ¶ 10, because the

court does not find Dr. Ahuja to be credible. However,

the Government has presented no evidence that Dr.

Ahuja operated his medical office as a "pill factory" or

"pill mill," meaning an illegal prescription drug

dealing business disguised as a medical office, that

exists solely to distribute controlled substances. See,

e.g., United States v. Duprey, 652 F. App'x 107, 10809 (3d Cir. 2016) (describing as "pill factory" doctor's

office where numerous pseudo-patients received weekly,

highly uniform, controlled substance prescriptions,

for the purpose of giving their pills to the doctor's coconspirator; and affirming conviction of co-conspirator,

who drove pseudo-patients to the doctor's office and

to the pharmacist—another co-conspirator—before

collecting pills from pseudo-patients and reselling

them); United States v. Guzman, 571 F. App'x 356,

357-58, 360 (6th Cir. 2014) (agreeing that use of term

"pill mill" accurately described allegations, and

affirming conviction, where defendant ran a purported

pain management clinic, which "bore all the hallmarks

of an illegal operation," such as an unusually high

amount of customer traffic—including customers from

several other states, and customers who arrived in

large groups all to receive the same type of

prescription—, drug deals occurring in the parking

lot, customers lingering in cars outside the clinic in a

semi-conscious state, people "sponsor [ing]" customers

to buy drugs for them, "skyrocket [ting]" prescription

drug use in the county after the business opened, an

emphasis on speed rather than careful patient

examinations, a refusal to accept insurance coupled

with an unusually large amount of business done in

cash, the fact that patients generally had no obvious

App. 18a

symptoms, and the fact that patients often requested

specific forms of drugs—such as drugs with particular

markings). The Government has not argued that Dr.

Ahuja's medical office was run as a pill factory or pill

mill, and it has presented no evidence from which the

court could infer that Dr. Ahuja's business was run in

this way. For instance, the Government has presented

no evidence (1) that every patient received controlled

substances, rather than at least some patients receiving

medical care that did not involve controlled substances,

(2) that patients resold their drugs, (3) that the clinic

had an unusually high number of patients, or attracted

patients in large groups, or from surprisingly far

away, (4) that the clinic failed to properly examine

patients, or (5) that the patients lacked legitimate

medical needs. In the absence of such evidence, the

court concludes that it would be speculative to assume

that Dr. Ahuja ran his business as a pill factory.

Because the Government bears the burden of proof,

see, e.g., Advance Pharmaceutical, 391 F.3d at 391,

the court defaults to the assumption that Dr. Ahuja

ran his business as a legitimate medical operation,

and thus that he sold medications at their retail

value, rather than at their street value.18

Dr. Ahuja claims that any profits he "obtained

through the dispensing of controlled substances have

been negligible." Dr. Ahuja Aff. 1 10. Dr. Ahuja asserts

that he generally dispensed each 90-milligram bottle

18 The court emphasizes that this conclusion does not excuse

the egregiousness of Dr. Ahuja's reckless failure to take precautions to protect against the dangers of prescription drugs.

And Dr. Ahuja's failure to keep records impeded the Government's ability to determine how much profit Dr. Ahuja made

from unlawfully dispensing controlled substances.

App.19a

-

of Alprazolam for $30, which he says is the retail

value. See Dr. Ahuja Aff. ¶ 10. Based on Dr. Ahuja's

numbers, the cost to a patient for one pill of Alprazolam

is $0.33. The Government has not presented alternative

evidence of the retail value of Alprazolam. See Levin

Aff. ¶f 25-26. However, Levin calculates that the

street value of one pill is approximately $4. See Id.

¶ 25. A large discrepancy exists between Dr. Ahuja's

description of the retail value, and Levin's description

of the street value. As discussed above, because the

Government bears the burden of proof, and because

there is no evidence that Dr. Ahuja, if he sold the

missing medications, sold them for the higher street

value, rather than the lower retail value, the court

considers the retail value to be the relevant price. Dr.

Ahuja states that each bottle of Alprazolam cost him

approximately $10. See Dr. Ahuja Aff. ¶ 10. The

Government has not offered any evidence to the contrary. See Levin Aff. ¶ 25. Based on Dr. Ahuja's

figures, he thus generally made a profit of approximately $20 per bottle. In the absence of contrary

evidence regarding the retail value of Alprazolam or

the price Dr. Ahuja paid for Alprazolam, the court

finds that Dr. Ahuja made a profit of approximately

$20 per bottle of Alprazolam sold. Dr. Ahuja failed to

account for 59 bottles of Alprazolam. See Am. Compi.

Count XI. Dr. Ahuja thus would have made a profit of

approximately $1,180 by dispensing the unaccountedfor Alprazolam.

Dr. Ahuja states that he dispensed a 30-tablet

bottle of Hydrocodone for approximately $30, which

he says is the retail value. See Dr. Ahuja Aff. ¶ 10.

The court again considers the retail value to be the

relevant consideration. Again, the Government has

not presented any contrary evidence as to the retail

App.20a

value of Hydrocodone. See Levin Aff. ¶J 25-26. Dr.

Ahuja states that each bottle cost him approximately

$10, thus indicating that he generally made a profit

of approximately $20 per bottle. See Dr. Ahuja Aff.

¶ 10. The Government has not presented any evidence

to the contrary. See Levin Aff. ¶ 25. Dr. Ahuja failed

to account for 21 bottles of Hydrocodone. See Am.

Compl. Count XIII. Dr. Ahuja thus would have made

a profit of approximately $420 by dispensing the

unaccounted-for Hydrocodone.

Dr. Ahuja states that he dispensed a four-ounce

bottle of Guaifenesin with Codeine for approximately

$10, which he says is the retail value. See Dr. Ahuja

Aff. ¶ 10. However, Levin states that the retail value

of a bottle of Guaifenesin with Codeine is $13.50. See

Levin Aff. ¶ 26. The court finds Levin to be more

credible than Dr. Ahuja. Furthermore, Dr. Ahuja states

that Guaifenesin with Codeine cost him approximately

$10 to buy, see Dr. Ahuja Aff. ¶ 10, and Levin does

not dispute this cost, see Levin Aff. ¶ 26. The court

finds that, if Dr. Ahuja sold the unaccounted-for

Guaifenesin with Codeine, he would have sold it for

approximately $13.50 per bottle, making a profit of

approximately $3.50 per bottle. Dr. Ahuja failed to

account for 58 bottles of Guaifenesin with Codeine.

See Am. Compl. Count XV. Dr. Ahuja thus would have

made a profit of approximately $203 by dispensing

the unaccounted-for Guaifenesin with Codeine.

Dr. Ahuja did not testify as to how much he

typically charged clients for, or how much he himself

paid for, Testosterone Cypionate or Zolpidem Tartrate.

See Dr. Ahuja Aff. The court adopts Levin's estimates

of the suggested retail value of these drugs. Levin

estimates that the retail value of all the unaccountedfor Testosterone Cypionate was $169.18, and that the

App.21a

retail value of all the unaccounted-for Zolpidem Tartrate

was $1,860. See Levin Aff. ¶ 26. Assuming that Dr.

Ahuja would have had to pay roughly one-third the

retail cost in order to buy these drugs himself, the

court estimates that Dr. Ahuja could have made a profit

of approximately $112.79 from the unaccounted-for

Testosterone Cypionate and $1,240 from the

unaccounted-for Zolpidem Tartrate.

The total profit Dr. Ahuja would have made by

"legitimately" dispensing the unaccounted-for drugs

is approximately $3,150. The court concludes that

this $3,150 figure is the appropriate amount of profit

to consider in applying the Advance Pharmaceutical

standard. In adopting this profit figure, the court

acknowledges that this figure is necessarily an

estimation, as neither party has presented definitive

evidence that the profit Dr. Ahuja made from his

violations is in fact a function of the retail value of

the unaccounted-for drugs, minus the price Dr. Ahuja

paid for the drugs. For instance, the court lacks

evidence that Dr. Ahuja in fact sold all the unaccountedfor drugs at their retail value and did not give any

away for free, sell any for less than retail value,

consume any himself or, as Dr. Ahuja suggests, have

any stolen from him. In these scenarios, Dr. Ahuja

would have made less than the above-estimated profit

from the unaccounted-for drugs. Similarly, the court

lacks conclusive evidence that Dr. Ahuja sold the

unaccounted-for drugs for only their retail value and

did not sell them for a higher street price, to individuals

who did not have a medical need.19 In this scenario,

19 Dr. Ahuja did not keep, or did not produce to the court,

medical records or other notes regarding his dispensing of the

missing medications.

App. 22a

Dr. Ahuja would have made much more than the aboveestimated profit from the unaccounted-for drugs.

However, in the absence of evidence supporting either

that Dr. Ahuja's profit was less than the retail value

minus the price he paid, or that his profit was more

than this figure, it is most reasonable to estimate

that Dr. Ahuja's profit from his violations was the

retail value of the unaccounted-for drugs minus the

price he paid for them.

D. Ability to Pay

The court finds that Dr. Ahuja's annual adjusted

gross income can be expected to be about $200,000

per year in the coming years, for the reasons that

follow.

Dr. Ahuja's 2015 Individual Income Tax Return

reflects an adjusted gross income of $155,705. See

U.S. Individual Tax Return, 2015 (Def. Ex. EE) at 1;

Stefan Peleschuk ("Peleschuk") Aff. (Def. Ex. E) ¶ 6.

However, his 2014 Individual Income Tax Return

reflects an adjusted gross income of $239,692. See

U.S. Individual Tax Return, 2014 (Def. Ex. DD) at 1;

Peleschuk Aff. ¶ 7. The court does not credit Dr.

Ahuja's insistence that this 2014 income will not be

representative of his income going forward, due to

Dr. Ahuja's general lack of credibility, as well as the

fact that Dr. Ahuja gave two different explanations to

the court for why his 2014 income should be considered

an aberration. Compare Dr. Ahuja Aff. at 10 ¶ 13

(stating that his 2014 income was an aberration because

his ex-wife became too disabled to work, and so he

temporarily took over her responsibilities at Darien

Immediate Medical Center and received additional

compensation for doing so, before passing those

responsibilities on to Nicholas); with Tr. at 119-20

App.23a

(stating that his 2014 income was an aberration because

he sold some property that year, and also because his

ex-wife allowed him to take more money from Darien

Immediate Medical Center that year to help him pay

certain legal expenses, with the understanding that

she would take extra money in the future). However,

the court does acknowledge that Dr. Ahuja's income

in 2014 was higher than in the 2015 and in 2013. Dr.

Ahuja's 2013 Individual Income Tax Return reflects

an adjusted gross income of $215,037. See U.S.

Individual Tax Return, 2013 (Def. Ex. CC) at 1;

Peleschuk Aff. ¶ 8. Taking an average of these three

amounts, the court concludes that Dr. Ahuja's annual

adjusted gross income can be expected to be approximately $200,000 per year.

Dr. Ahuja, who is sixty-three years old, testified

that a variety of health problems, such as high blood

pressure, depression, acid reflux, and poor hearing,

"threaten to impact" his "ability to practice medicine

in the imminent future." Dr. Ahuja Aff. at 11 ¶ 12.

However, in the absence of any evidence as to his

health demonstrating that Dr. Ahuja will likely have

to stop practicing medicine in the imminent future,

the court does not rely on Dr. Ahuja's self-serving

speculation. He is still practicing, and even testified

that he increased his work load when his ex-wife

stopped working. See Id at 10 ¶ 13. The court finds

that Dr. Ahuja has not provided credible evidence

that he will be unable to continue working in the

immediate future.

The court is unable to make a definitive finding

as to the full extent of Dr. Ahuja's assets, due to Dr.

Ahuja's failure to provide certain information. See

Provost v. City of Newburgh, 262 F.3d 146, 163 (2d

Cir. 2001) ("The duty [I is on the defendant to present

App. 24a

evidence. of his limited resources if he wishes that

factor to be weighed in the calculation of punitive

damages."); see also Fowler v. Cal. Highway Patrol,

No. 13-CV-01026 (TEH), 2014 U.S. Dist. LEXIS 112540,

2014 WL 3965027, at *6 (N.D. Cal. Aug. 13, 2014) (in

imposing costs on plaintiff, disregarding plaintiffs

argument "that her financial resources are scarce,"

because "she presents no admissible evidence supporting that she has limited financial resources"); Lazy

Oil Co. v. Witco Corp., 95 F. Supp. 2d 290, 318 (W.D.

Pa. 1997) (in class action settlement context, where

sole evidence offered as to defendant's ability to pay

larger judgment had "little bearing" on the issue, presuming that defendants "have the financial resources

to pay a larger judgment"). The court does not put

much weight in Dr. Ahuja's assertion that he has

"virtually no financial assets." Id. at 9 ¶ 12. First, the

court notes that, while Dr. Ahuja testified that he

owns "no real estate, except for" his "1% share in the

assets of Ahuja Holdings, LLC," Dr. Ahuja does not

state in his Affidavit the value of any other property

he owns, such as stocks. See Dr. Ahuja Aff. at 9-10

¶ 12. Dr. Ahuja did not state in his Affidavit or at the

hearing that he owns no stocks or other such property. See Id. ¶ 12; Tr. at 108-10, 118-21. Dr. Ahuja's

accountant, Peleschuk, and Dr. Ahuja, both indicated

that Dr. Ahuja at times has owned stocks. See

Peleschuk Aff. ¶ 61 8 ("He took losses from the stocks

He gained a profit of $65K in

he owns in [20151

earnings from stocks that he owned in [20131.1; Tr.

at 119, 166-67 (containing, first, testimony by Dr.

Ahuja that, "I believe I sold some property," and,

later, in response to this court's comment that "I

heard testimony that he had sold real estate," a

response by defense counsel that the earlier testimony

.

.

.

.

.

App .2 5a

containing the term "property" "was referring to stock").

While Dr. Ahuja did not mention cars in his

Affidavit, see Dr. Ahuja Aff., Dr. Ahuja admitted on

cross-examination that he owns both a BMW and a

Mercedes, see Tr. at 107-08. Dr. Ahuja states that he

has "two IRA retirement accounts, each with an

approximate value of $10,000.00," and "two bank

accounts, one.. with a present balance of approximately $1,500.00 and the other. with a present

balance of approximately $4,000.00." Dr. Ahuja Aff. at

10 ¶ 12. The court notes that Dr. Ahuja has not

stated whether he transferred funds away from himself in order to be able to make this statement to the

court regarding the "present balance" of his bank

accounts. Id. at 10 ¶ 12. Dr. Ahuja has been known to

transfer a large quantity of real property away from

himself in the past, see Id. at 10 ¶ 12 (stating that

Dr. Ahuja conveyed a 99% interest in a trust containing

all the real estate he "acquired over the course of' his

life to his son, Nicholas, in 2009), although there is

no evidence before this court that Dr. Ahuja made

those transfers for improper motives.

Due to the lack of convincing evidence that Dr.

Ahuja will become unable to work in the immediate

future, or that Dr. Ahuja has no assets, the court

concludes on the record before it that Dr. Ahuja has

significant earning capacity and some other financial

resources.

.

.

V.

.

Conclusions of Law

A. Number of Violations and Maximum Penalties

As described in more detail below, Dr. Ahuja has

engaged in a substantial number of violations of

subsections 842(a)(1) and 842(a)(5) of title 21 of the

United States Code. The maximum combined penalty

App. 26a

that Dr. Ahuja faces for these violations is

$10,010,000.20 At the hearing, and in a Motion for

Default Judgment (Doc. No. 14), the Government asked

the court to impose a $496,500 penalty. See Tr. at

143; Mot. for Default ¶ 10.

1. Counts One through Eighteen

As detailed below, Counts One through Eighteen

involve 961 violations, each of which carry a maximum

penalty of $10,000.

The Amended Complaint sets forth in Counts One

through Eight violations of section 842(a)(5), for

failure to maintain controlled substance receipt records

for various shipments. See Am. Compl. Counts 1-VIII.

The maximum penalty for a violation of section 842

(a)(5) is $10,000. See 21 U.S.C. § 842(c)(1)(B). Thus,

the maximum penalty for each of the violations in

these Counts is $10,000. See 21 U.S.C. § 842(c)(1)(B);

see also Am. Compl. at 7. Absent evidence suggesting

that multiple shipments represented a single purchase,

20 In its original Complaint (Doe. No. 2), the Government asked

the court to impose a total penalty of $10,010,000—the

maximum penalty allowable. See Compl. at 7-8 (asking court to

impose penalty of $9,610,000 for violations in Counts I through

XVIII, and $400,000 for violations in Counts XIX through XXV).

However, the Amended Complaint inexplicably asked the court

to impose a total penalty of $10,015,000. See Am. Compl. at 7-8

(asking court to impose penalty of $9,640,000 for violations in

Counts I through XVIII, and $375,000 for violations in Counts

XIX through XXV). The Government did not explain in its

Motion to Amend (Doe. No. 97) or Memorandum in Support of

Motion to Amend (Doe. No. 97-1) that it was changing the

requested penalty amount, nor why. To the contrary, the

Government stated that it sought to make "technical and nonsubstantive amendments. to clarify the charges," and that

Dr. Ahuja was "not materially impacted by the amendments to

the complaint." Mem. in Supp. of Mot. to Am. at 1.

. .

App .27a

see United States v. Bizga, No. 1:13-CV-206, 2014

U.S. Dist. LEXIS 185900, 2014 WL 11370407, at *2

(N.D. Ohio Apr. 8, 2014) ("When assessing penalties

for failure to record or report purchases of controlled

substances, each purchase counts as a separate

violation."), the court considers each shipment in these

Counts to be a separate violation,, see United States

v. Stidham, 938 F. Supp. 808, 816 (S.D. Ala. 1996)

("[Flailure to record the number and dates of the

items received as to each of the seventeen shipments

amounts to seventeen [1 violations."). Counts One

through Eight involve fifty-three shipments. See Am.

Compi. Counts 1-VIII. Counts One through Eight thus

involve fifty-three violations combined, and the maximum penalty for these counts, combined, is $530,000.

The Amended Complaint does not explicitly

describe Counts Nine through Eighteen as section

842(a)(5) violations.21 See Am. Compi. Counts IX-XVTII.

However, each of Counts Nine through Eighteen

describes conduct that violates section 842(a)(5),

which makes it unlawful to "refuse or negligently fail

to make, keep, or furnish any record, report, notification, declaration, order or order form, statement,

invoice, or information required under" the CSA. 21

U.S.C. § 842(a)(5).22 Thus, the maximum penalty for

21 However, the Amended Complaint asked the court to enter

"a civil penalty of $10,000 for each of the violations and

occurrences set forth in" these Counts, citing section 842(c)(1) of

title 21 of the United States Code. Am. Compi. at 7. Section

842(c)(1) lists this $10,000 figure as the penalty for a violation

of section 842(a)(5). See 21 U.S.C. § 842(c)(1)(B).

22 Count Nine, which is failure to keep separate records for

certain controlled substances, see Am. Compi. Count IX; Count

Ten, which is failure "to perform and maintain a biennial

inventory of controlled substances," Am. Compl. Count X; and

App. 28a

each of the violations in Counts Nine through Eighteen

is $10,000 per violation.

The court treats Count Nine and Count Ten as

each involving a single violation, because each of

these two Counts allege an overall failure to create or

keep one type of record. Counts Nine and Ten thus

involve a total of two CSA violations, and the maximum

penalty for these two Counts combined is $20,000.

As for Counts Eleven through Eighteen, the court

treats each individual dispensation as a separate

violation. See United States v. Paskon, No. 4:07-CV1161 (CEJ), 2008 U.S. Dist. LEXIS 91045, 2008 WL

4948458, at *2 (E.D. Mo. Nov. 10, 2008) (treating one

unlawful prescription as one violation); United States

v. Salcedo, No. 02-CV-1095 (FB) (VVP), 2003 U.S. Dist.

LEXIS 8561, 2003 WL 21196843, at *2 (E.D.N.Y.

Feb. 19, 2003) ("The issuance of each of the [1 prescriptions constituted a separate violation."); United

States v. Akhtar, 95 F. Supp. 2d 668, 669, 673 (S.D.

Tex. 1999) (treating four unlawful sales as "four

violations"). However, because Dr. Ahuja did not

maintain accurate dispensing records or properly

complete dispensation logs, see Am. Compl. Count XIXVIII, the court does not know how many drugs were

dispensed at one time in Counts Eleven through

Eighteen, and thus does not know how many separate

dispensations are represented by these counts. Where

"the defendant's own failure to keep any records makes

it impossible to determine [the] number of violations,"

Counts Eleven through Eighteen, which are either failures to

maintain accurate dispensing records or failures to properly

complete dispensation logs, see Am. Compi. Count XI-XVIII, all

constitute failures "to make, keep, or furnish any record, report,

notification, declaration, order or order form, statement, invoice,

or information required," 21 U.S.C. § 842(a)(5).

App. 29a

a court in the Northern District of Ohio decided it was

"fair that all inferences be drawn against defendant

and that the Court assume the worst-case scenario"

with regard to the number of violations. United States

v. Heim, No. 5:13-CV-210,2014 U.S. Dist. LEXIS 7673,

2014 WL 245357, at *5 (N.D. Ohio Jan. 22, 2014).23

Here, Counts Eleven through Eighteen involved 141

bottles and 2 vials of drugs unaccounted for, and 763

bottles of drugs dispensed without proper logging.

See Am. Compl. Counts XI-XVIII. The court thus treats

Counts Eleven through Eighteen as 906 violations.

The maximum penalty for Counts Eleven through

Eighteen combined is $9,060,000. The court thus finds

that the maximum penalty for all violations in Counts

One through Eighteen is $9,610,000.

2. Counts Nineteen through Twenty-Three

Counts Nineteen through Twenty-Three allege

violations of section 842(a)(1). The maximum penalty

for the violations in each of these Counts is $25,000.

See 21 U.S.C. § 842(c)(1)(A); see also Am. Compl. at

7-8. Counts Nineteen through Twenty-Three involved

four dispensations to Gurpreet, see Am. Compl.

Count XIX; two dispensations to Sunny, see Id. Count

XX; five prescriptions to Nicholas, see Id. Count XXI;

three prescriptions to Uttam, see id. Count XXII; and

23 Helm treated each individual tablet as a separate violation,

for a total of 11,500 violations, in light of the facts of the

particular case. 2014 U.S. Dist. LEXIS 7673, 2014 WL 245357

at *5• The court finds that, to charge Dr. Ahuja with a separate

violation for every individual pill involved in his violations

would be excessive here, but accepts the general principal that

uncertainty resulting from Dr. Ahuja's failure to keep records

should lead to assumptions in the Government's favor. The

court thus treats each bottle or vial in these Counts as a

separate violation.

App.30a

two dispensations to either Nicholas or Uttam, see Id.

Count XXIII. The court thus treats Counts Nineteen

through Twenty-Three as sixteen CSA violations. The

court thus finds that the maximum penalty for all the

violations in Counts Nineteen through Twenty-Three

combined is $400,000.

B. Culpability

Culpability can be conceptualized as the "good or

bad faith of the defendant[ 1," see Advance Pharmaceutical, 391 F.3d at 400 (internal quotation marks

omitted), "the willfulness of the violations," United

States v. Queen Village Pharmacy, 1990 U.S. Dist.

LEXIS 14425, 1990 WL 165907 at *2, or whether the

unlawful acts were "deliberate," 1990 U.S. Dist.

LEXIS 14425, [WL] at *3

The number of violations and the length of time

involved affects the determination of culpability.

"[Tihe level of culpability of the defendant" was

found "to be relatively high in view of the numerous

repeated violations of the [Controlled Substances]

Act over an extended period of time." United States

v. Salcedo, No. 02-CV-1095 (FB) (VVP), 2003 U.S. list.

LEXIS 8561, 2003 WL 21196843, at *2 (E.D.N.Y. Feb.

19, 2003). The defendant in Salcedo had engaged in

thirty-two violations over a span of one year and nine

months. See 2003 U.S. Dist. LEXIS 8561, [WL] at *2.

Here, Dr. Ahuja has engaged in over 1,000 violations,

spanning a three-year period from February 21, 2011,

to February 21, 2014. See Am. Compi. Counts I-XXIII.

Even where the "raw number of unaccounted for [1

tablets seems shockingly high," however, a court may

"compare{ 1" that number "to the total number of tablets

received" by the defendant, to determine the percentage

of drugs unaccounted for. Queen Village, 1990 U.S.

App.31a

Dist. LEXIS 14425, 1990 WL 165907 at *3• A lower

percentage of drugs unaccounted for suggests less

culpability. See 1990 U.S. Dist. LEXIS 14425, [WLI

at *3• Here, the unaccounted-for Aiprazolam represented 9.83% of Dr. Ahuja's supply, see Am. Compi.

Count XI; the unaccounted-for Hycirocodone Bitartrate

with Acetaminophen represented 17.5% of his supply,

see Id. Count XIII; the unaccounted-for Guaifenesin

with Codeine Phosphate represented 27.36% of his

supply, see Id. Count XV; the unaccounted-for Testosterone Cypionate represented 100% of his supply, see

id. Count XVII; and the unaccounted-for Zolpidem

Tartrate also represented 100% of his supply, see id.

Count XVIII. These are significant percentages, a

fact which weighs in favor of a stiff penalty.

On the other hand, in assessing a doctor's culpability for failure to keep biennial inventories, the fact

that the doctor attempted to keep these inventories

can weigh in his favor. See 1990 U.S. Dist. LEXIS

14425, [WL] at *3 Dr. Ahuja claims that he attempted

to keep records. See Dr. Ahuja Aff. 1 7. However, the

court views his attempts as almost non-existent.

The court concludes that Dr. Ahuja's level of

culpability is extremely high in this case. While Dr.

Ahuja's culpability is not as high as that of a physician

who intentionally sells controlled substances to drug

addicts for non-medical uses, Dr. Ahuja's negligence

is about as gross as the court can imagine. The admitted

violations, and the evidence adduced, show that Dr.

Ahuja engaged in behaviors which combine to demonstrate gross negligence, indeed recklessness, in dealing

with controlled substances.

C. Public Harm

"[Tihe public harm caused by the violations,"

App. 32a

also phrased as "the injury to the public," includes

considerations such as the extent to which a doctor's

actions "facilitate[ed] the diversion of' pharmaceuticals

to improper uses. Advance Pharmaceutical, 391 F.3d

at 399. Such a diversion to improper uses is especially

problematic if the particular drug "would cause" a

great deal of harm "in the illegal [drug] market," and

if this diversion to improper users could have been

largely prevented by the doctor following the law.

United States v. Global Distributors, 498 F.3d 613,

620-21 (7th Cir. 2007). However, the mere fact that

"prescription drug abuse" is "harmful to the public"

will not weigh in favor of a stricter penalty where

there is no evidence that the doctor's improper behavior

has played a role in such drug abuse. See United States

v. Butterbaugh, No. C14-515 (TSZ), 2015 U.S. Dist.

LEXIS 102808, 2015 WL 4660096, at *7 (W.D. Wash.

Aug. 5, 2015). While the risk of prescription drug

abuse is present here, as discussed above, the court

does not find that Dr. Ahuja was running purely a

"pill factory." See, e.g., Duprey, 652 F. App'x at 10809. It appears that he ran a clinic with patients other

than those requiring the medications in question..

The Government initially asserted that, "[in order

to quantify the harm to the public, courts have

permitted the United States to include [] an estimate

of the United States' investigative costs." Pl.'s Mem.

at 3. However, the Government's Memorandum does

not cite any cases supportive of this assertion. See id.

at 3. The court is aware of a Northern District of New

York case that, in calculating a civil penalty for

failure to comply with an Environmental Protection

Agency information request, held that "[d]elaying

[an] investigation. constitute[s] injury to the public."

United States v. Timmons Corp., No. C]IV-103-CV.

.

App. 33a

951 (RFT), 2006 U.S. Dist. LEXIS 7642, 2006 WL

314457 at *16 (N.D.N.Y. Feb. 8, 2006). The court

does not consider Timmons to be on point, however.24

At a pre-hearing conference, the court asked the Government to support its assertion, and the Government

asked for more time to do so. However, the

Government did not submit additional briefing on

this topic. At the hearing, Government counsel

admitted that, "there is not a specific reference that

I'm aware of that allows specifically investigative

costs." Tr. at 4. The court thus does not consider the

cost of the investigation in assessing the public harm

in this case.25

The Government also asserts that, "[i]n order to

quantify the harm to the public, courts have permitted

the United States to include. an estimate of the

street value of the controlled substances in the illegal

drug trade." Pl.'s Mem. at 3. This is true (i) where

the evidence supports a finding that drugs were

diverted to illegal uses, and (2) where, although the

evidence is insufficient to support a finding that

diversion occurred, there is nonetheless a significant

risk that such a diversion may have occurred.

Where drugs are diverted to illegal uses, courts

.

.

24 In calculating a civil penalty for refusal to allow state officials

on property, the Sixth Circuit listed "injury to the public" and

"cost to the state of prosecuting," separately, United States v.

Taylor, 8 F.3d 1074, 1078 (6th Cir. 1993), thus suggesting that

at least the cost of prosecuting is excluded from the meaning of

injury to the public, at least in that context.

25 While Dr. Ahuja's contradictory answers may not have been

calculated to facilitate the investigation, the Government has

failed to present evidence that Dr. Ahuja actually delayed the

investigation, such as evidence that Dr. Ahuja caused investigators to spend time on false leads.

App. 34a

consider the street value of the drugs in determining

an appropriate penalty. For instance, the Seventh

Circuit found that the fact that drugs were "converted

into almost half a million dollars' worth of

methamphetamine .. cut[ I in favor of a stiff penalty."

Global Distributors, 498 F.3d at 620-21 (internal

quotation marks omitted). Similarly, a court in the

Eastern District of New York assessed a penalty for

civil CSA violations which was calculated to match a

high estimate of the approximate street value of all

drugs prescribed in violation of the CSA. See Salcedo,

2003 U.S. Dist. LEXIS 8561, 2003 WL 21196843, at *2.

Specifically, where a doctor prescribed 3,200 tablets

and a witness testified that "each tablet can be sold

on the street for between $5 and $8," the court assessed

a penalty of $25,600, calculated by multiplying the

number of tablets by the higher estimate of eight

dollars. 2003 U.S. Dist. LEXIS 8561, [WL] at *2. In

Salcedo, while the court did not say so explicitly, the

defendant presumably diverted the drugs to improper

purposes: "[Tihe prescriptions were issued in the

name of a patient who was not under the direct care

of the defendant," and "the address listed by the

defendant on each prescription was not the proper

address for the patient; the address listed was in

Queens, New York, but the purported patient was living

in the Philippines throughout the time when the

prescriptions were written." 2003 U.S. Dist. LEXIS

8561, EWLI at *2. The court did not explicitly state

that the doctor's prescribing of drugs in the name of a

non-patient who lived outside of the country, coupled

with the use of a false address, evidenced that the

drugs were diverted. 2003 U.S. Dist. LEXIS 8561, [WL]

at *2. However, the court implied that the defendant

had likely sold the drugs on the street, by stating,

.

App.35a

after mentioning the street value, that the defendant

"could have grossed as much as $25,600 from the sale"

of the tablets. 2003 U.S. Dist. LEXIS 8561, [WLI at

*2. Lastly, where drugs disappeared from pharmacies,

a court in the District of Massachusetts assessed the

"harm to the public" in part by discussing the street

value of the missing drugs. United States v. Poulin,

926 F. Supp. 246, 254-55 (D. Mass. 1996). In Poulin,

the drugs were "reported stolen." Id. at 249. Again,

while the court did not explicitly state that the fact of

the drugs being stolen supported a finding that they

were diverted, the court implied that the stolen drugs

were diverted, by stating that "[tihe disappearance of

these drugs constitutes a serious public health risk,"

due to the danger of drug abuse. Id. at 254.

A court may also consider the street value of the

drugs in determining an appropriate penalty where,

although the evidence is insufficient to support a

finding that diversion occurred, there is nonetheless

a significant risk that such a diversion may have

occurred. A court in the Northern District of Ohio

found a "significant risk that [1 tablets of hydrocodone"—which the court noted is "a highly abused

and highly controlled substance"—were diverted to

illegal channels and rendered untraceable. Bizga,

2014 U.S. Dist. LEXIS 185900, 2014 WL 11370407, at

*6. The court determined "that a fine which treble [d]

the street value of the [I drugs would certainly be

reasonable for the recording violations relating to the

dispensing of theE] tablets." 2014 U.S. Dist. LEXIS

185900, EWLI at *6 (nonetheless assessing lower

penalty, due to insufficient ability to pay). However,

a court in the Western District of Washington has

refused to consider the street value of improperlyprescribed drugs in its assessment • of harm to the

App.36a

public, where there was no evidence that the drugs

were distributed or dispensed for non-medical purposes.

Butterba ugh, 2015 U.S. Dist. LEXIS 102808, 2015 WL

4660096, at *7•

Here, while there is insufficient evidence to find

by a preponderance of the evidence that any drugs

were in fact diverted or abused, the court concludes

that there is a significant risk that such diversion

may have occurred. For instance, if Dr. Ahuja is

correct that his drugs were stolen, it is clear that

they were distributed illegally.

In assessing harm to the public, courts also

consider the dangerousness of the drugs involved in

the CSA violations. As mentioned above, a court in

the Northern District of Ohio considered the fact that

Hydrocodone is "highly abused" in weighing the harm

to the public. Bizga, 2014 U.S. Dist. LEXIS 185900,

2014 WL 11370407, at *6. Similarly, a court in the

District of Massachusetts assessed the "harm to the

public" in part by discussing the fact that "the drugs

that disappeared from the [1 pharmacies are drugs

with a very high abuse potential," and that the abuse

of some of the missing drugs "can cause serious trauma

and even death to abusers." Poulin, 926 F. Supp. at

254-55. "Highly abused" Hydrocodone, Bizga, 2014

U.S. Dist. LEXIS 185900, 2014 WL 11370407, at *6,

is one of the drugs involved in the violations here.

See Am. Compi. Counts II, XIII, XIX, XII. It does not

require a citation to conclude that the illicit sale of

controlled substances has enormous costs to individuals

and society.

The court finds that the level of public harm

weighs in favor of imposition of a severe penalty,

because (1) Dr. Ahuja dispensed drugs that had a high

App.37a

potential for abuse, without any, let alone the requisite

degree of, care to ensure that the drugs would not be

misused, and (2) a risk of diversion of these drugs is

present.

Profit

Courts consider the extent of "defendant's profits

from the violations" in setting the penalty for civil

CSA violations. Advance Pharmaceutical, 391 F.3d

377, 399 (2d Cir. 2004). For instance, a court acts

"well within its discretion" when it selects a civil

penalty designed to "divest defendants of all profits

made in connection with the [unlawful] transactions."

Id. at 399-400.

Here, the court does not consider profit to be a

major factor in determining Dr. Ahuja's penalty,

because the evidence does not support a finding that

Dr. Ahuja made a large profit as a result of his violations.

Ability to Pay

In setting the penalties amount, a court considers

whether the "defendant['s] financial condition evidence[s] an ability to pay" the penalty under consideration. Advance Pharmaceutical, 391 F.3d at 400.

For example, in Advance Pharmaceutical, the district

court reasonably determined that the defendant's

operations had not "been so adversely affected by the

enforcement action that they could not pay" the

amount that the district court was considering and

properly credited "expert opinion indicating the

company's ability to continue operating profitably as

well as evidence that defendants had engaged in a

series of suspicious loans to shield" some assets. Id.

at 400. The Circuit thus concluded that the district

court's penalty was not excessive. See id. at 400. Con-

versely, where a doctor had only a "moderate ability

to pay a civil fine," a court in the Northern District of

Ohio decided to assess a fine that only doubled the

street value of the drugs involved in the doctor's

violations—even where a fine that trebled the street

value of these drugs would "certainly" have been

"reasonable." Bizga, 2014 U.S. Dist. LEXIS 185900,

2014 WL 11370407, at *6.

The burden is on the defendant to produce evidence

of an inability to pay. See Motorola Credit Corp. v.

Uzan, 509 F.3d 74, 84 (2d Cir. 2007) ("The

incompleteness of the record as to [a defendant's] net

worth is not a basis for reducing the punitive damages

award against him, for it is the defendant's burden to

show that his financial circumstances warrant a

limitation of the award.. [Tihe decided cases and

sound principle require that a defendant carry the

burden of showing his modest means—facts peculiarly

within his power—if he wants this considered in

mitigation of damages."); Provost, 262 F.3d at 163

("The duty [] is on the defendant to present evidence

of his limited resources if he wishes that factor to

be weighed in the calculation of punitive damages.").

Dr. Ahuja introduced some evidence about his

financial ability, or lack thereof. However, the court

is not persuaded that he is incapable of paying a

substantial penalty. He has substantial future earnings

and appears to have some assets. The court finds that

Dr. Ahuja has not met his burden of showing an

inability to pay the penalty that the court will impose

upon him.

.

•

.

.

VT. Conclusion

The court finds that Dr. Ahuja's level of culpability

weighs in favor of imposition of a substantially stringent

App. 39a

penalty, because Dr. Ahuja engaged in numerous violations over several years demonstrated gross negligence, even reckless conduct, and provided misleading

information to investigators. The court finds that the

level of public harm weighs in favor of imposition of a

severe penalty, as well. The court finds that the profit

factor weighs in favor of imposition of a lighter penalty,

because there is inadequate evidence to support a

finding that Dr. Ahuja made a substantial profit from

his violations. Lastly, the court finds that Dr. Ahuja

has the ability to pay a substantial penalty, that the

court plans to impose. The court considers and weighs

these factors together in assessing its penalty.

Dr. Ahuja is hereby ORDERED to pay a civil

penalty of $200,000, and to comply with all federal

laws and regulations pertaining to receipts, dispensations, and inventories of controlled substances in the

future.

SO ORDERED..

Dated at New Haven, Connecticut this 5th day of

May, 2017.

Is! Janet C. Hall

U.S. District Judge

App.40a

RELEVANT STATUTORY PROVISIONS

AND FEDERAL REGULATIONS

STATUTORY PROVISIONS

21 U.S.C. § 827—Records and Reports of Registrants

(a) Inventory. Except as provided in subsection

(c)—

every registrant under this title shall, on the

effective date of this section, or as soon thereafter as such registrant first engages in the

manufacture, distribution, or dispensing of controlled substances, and every second year thereafter, make a complete and accurate record of all

stocks thereof on hand, except that the regulations prescribed under this section shall permit

each such biennial inventory (following the initial

inventory required by this paragraph) to be prepared on such registrant's regular general physical

inventory date (if any) which is nearest to and

does not vary by more than six months from the

biennial date that would otherwise apply;

on the effective date of each regulation of

the Attorney General controlling a substance that

immediately prior to such date was not a controlled

substance, each registrant under this title manufacturing, distributing, or dispensing such substance shall make a complete and accurate record

of all stocks thereof on hand; and

on and after the effective date of this section, every registrant under this title manufacturing, distributing, or dispensing a controlled

substance or substances shall maintain, on a

current basis, a complete and accurate record of

each such substance manufactured, received, sold,

App .41 a

delivered, or otherwise disposed of by him, except that this paragraph shall not -require themaintenance of a perpetual inventory.

Availability of records. Every inventory or

other record required under this section (1) shall be

in accordance with, and contain such relevant information as may be required by, regulations of the

Attorney General, (2) shall (A) be maintained separately

from all other records of the registrant, or (B) alternatively, in the case of nonnarcotic controlled substances, be in such form that information required by

the Attorney General is readily retrievable from the

ordinary business records of the registrant, and (3)

shall be kept and be available, for at least two years,

for inspection and copying by officers or employees of

the United States authorized by the Attorney General.

Nonapplicability. The foregoing provisions

of this section shall not apply—

(1)

to the prescribing of controlled substances

in schedule II, III, IV, or V by practitioners

acting in the lawful course of their professional practice unless such substance is prescribed in the course of maintenance or

detoxification treatment of an individual; or

to the administering of a controlled substance in schedule II, III, IV, or V unless the

practitioner regularly engages in the dispensing or administering of controlled substances and charges his patients, either

separately or together with charges for other

professional services, for substances so dispensed or administered or unless such substance is administered in the course of main-

App. 42a

tenance treatment or detoxification treatment

of an individual;

(2)

to the use of controlled substances, at establishments registered under this title which

keep records with respect to such substances,

in research conducted in conformity with an

exemption granted under section 505(i) or

5120) of the Federal Food, Drug, and Cosmetic Act [21 U.S.C. § 355(i) or 360b(j)];

to the use of controlled substances, at establishments registered under this title which

keep records with respect to such substances,

in preclinical research or in teaching; or

(3) to the extent of any exemption granted to

any person, with respect to all or part of such

provisions, by the Attorney General by or pursuant

to regulation on the basis of a finding that the

application of such provisions (or part thereof) to

such person is not necessary for carrying out the

purposes of this title.

Nothing in the Convention on Psychotropic Substances shall be construed as superseding or

otherwise affecting the provisions of paragraph

(1)(B), (2), or (3) of this subsection.

(d) Periodic reports to Attorney General.

(1) Every manufacturer registered under section

303 [21 U.S.C. § 8231 shall, at such time or times

and in such form as the Attorney General may

require, make periodic reports to the Attorney

General of every sale, delivery, or other disposal

by him of any controlled substance, and each distributor shall make such reports with respect to

narcotic controlled substances, identifying by the

App.43a

registration number assigned under this title the

person or establishment (unless exempt from registration under section 302(d) [21 U.S.C. § 8220])

to whom such sale, delivery, or other disposal

was made.

(2) Each pharmacy with a modified registration

under section 303(f) [21 U.S.C. §823(f)] that

authorizes the dispensing of controlled substances

by means of the Internet shall report to the

Attorney General the controlled substances it

dispenses, in the amount specified, and in such

time and manner as the Attorney General by

regulation shall require, except that the Attorney

General, under this paragraph, may not require

any pharmacy to report any information other than

the total quantity of each controlled substance that

the pharmacy has dispensed each month. For

purposes of this paragraph, no reporting shall be

required unless the pharmacy has met 1 of the

following thresholds in the month for which the

reporting is required:

100 or more prescriptions dispensed.

5,000 or more dosage units of all controlled

substances combined.

(e) Reporting and recordkeeping requirements

of drug conventions. In addition to the reporting and

recordkeeping requirements under any other provision

of this title, each manufacturer registered under section 303 [21 U.S.C. § 8231 shall, with respect to narcotic and nonnarcotic controlled substances manufactured by it, make such reports to the Attorney General,

and maintain such records, as the Attorney General

may require to enable the United States to meet its

obligations under articles 19 and 20 of the Single

App. 44a

Convention on Narcotic Drugs and article 16 of the

Convention on Psychotropic Substances. The Attorney

General shall administer the requirements of this

subsection in such a manner as to avoid the unnecessary imposition of duplicative requirements under

this title on manufacturers subject to the requirements of this subsection.

(f)

(1) The Attorney General shall, not less frequently than quarterly, make the following information available to manufacturer and distributor registrants through the Automated Reports

and Consolidated Orders System, or any subsequent automated system developed by the Drug

Enforcement Administration to monitor selected

controlled substances:

The total number of distributor registrants

that distribute controlled substances to a

pharmacy or practitioner registrant, aggregated by the name and address of each

pharmacy and practitioner registrant.

The total quantity and type of opioids distributed, listed by Administration Controlled

Substances Code Number, to each pharmacy

and practitioner registrant described in subparagraph (A).

(2) The information required to be made available

under paragraph (1) shall be made available not

later than the 30th day of the first month following

the quarter to which the information relates.

(3)

(A) All registered manufacturers and distributors shall be responsible for reviewing the

information made available by the Attorney

App. 45a

General under this subsection.

(B) In determining whether to initiate proceedings under this title. against a registered

manufacturer or distributor based on the

failure of the registrant to maintain effective

controls against diversion or otherwise comply

with the requirements of this title or the

regulations issued thereunder, the Attorney

General may take into account that the

information made available under this subsection was available to the registrant.

Investigational uses of drugs; procedures.

Regulations under sections 505(i) and 5120) of the

Federal Food, Drug, and Cosmetic Act [21 U.S.C.

§§ 355(i) and 360b(j)], relating to investigational use

of drugs, shall include such procedures as the Secretary,

after consultation with the Attorney General, determines are necessary to insure the security and accountability of controlled substances used in research to

which such regulations apply.

Change of address. Every registrant under

this title shall be required to report any change of

professional or business address in such manner as

the Attorney General shall by regulation require.

(1) Reporting requirements for GHB. In the case

of a drug product containing gamma hydroxybutyric

acid for which an application has been approved under

section 505 of the Federal Food, Drug, and Cosmetic

Act [21 U.S.C. § 3551, the Attorney General may, in

addition to any other requirements that apply under

this section with respect to such a drug product,

establish any of the following as reporting requirements:

(1) That every person who is registered as a

App. 46a

manufacturer of bulk or dosage form, as a packager, repackager, labeler, relabeler, or distributor

shall report acquisition and distribution transactions quarterly, not later than the 15th day of the

month succeeding the quarter for which the report

is submitted, and annually report end-of-year

inventories.

That all annual inventory reports shall be

filed no later than January 15 of the year following

that for which the report is submitted and include

data on the stocks of the drug product, drug

substance, bulk drug, and dosage forms on hand as

of the close of business December 31, indicating

whether materials reported are in storage or in

process of manufacturing.

That every person who is registered as a

manufacturer of bulk or dosage form shall report

all manufacturing transactions both inventory

increases, including purchases, transfers, and

returns, and reductions from inventory, including

sales, transfers, theft, destruction, and seizure,

and shall provide data on material manufactured, manufactured from other material, use in

manufacturing other material, and use in manufacturing dosage forms.

That all reports under this section must

include the registered person's registration number

as well as the registration numbers, names, and

other identifying information of vendors, suppliers,

and customers, sufficient to allow the Attorney

General to track the receipt and distribution of the

drug.

That each dispensing practitioner shall maintain for each prescription the name of the pre-

App.47a

scribing practitioner, the prescribing practitioner's Federal and State registration numbers,

with the expiration dates of these registrations,

verification that the prescribing practitioner

possesses the appropriate registration to prescribe

this controlled substance, the patient's name and

address, the name of the patient's insurance

provider and documentation by a medical practitioner licensed and registered to prescribe the

drug of the patient's medical need for the drug.

Such information shall be available for inspection and copying by the Attorney General.

(6) That section 310(b)(3) [21 U.S.C. § 830(b)(3)1

(relating to mail order reporting) applies with

respect to gamma hydroxybutyric acid to the

same extent and in the same manner as such

section applies with respect to the chemicals and

drug products specified in subparagraph (A)(i) of

such section.

(j) All of the reports required under this section

shall be provided in an electronic format.

21 U.S.C. § 801—Congressional Findings and Declarations: Controlled Substances

The Congress makes the following findings and

declarations:

Many of the drugs included within this title

have a useful and legitimate medical purpose and

are necessary to maintain the health and general

welfare of the American people.

The illegal importation, manufacture, distribution, and possession and improper use of controlled substances have a substantial and detrimental effect on the health and general welfare

of the American people.

(3) A major portion of the traffic in controlled

substances flows through interstate and foreign

commerce. Incidents of the traffic which are not an

integral part of the interstate or foreign flow, such

as manufacture, local distribution, and possession,

nonetheless have a substantial and direct effect

upon interstate commerce because—

after manufacture, many controlled substances are transported in interstate commerce,

controlled substances distributed locally usually have been transported in interstate

commerce immediately before their distribution, and

controlled substances possessed commonly

flow through interstate commerce immediately prior to such possession.

(4) Local distribution and possession of controlled

substances contribute to swelling the interstate

traffic in such substances.

(5) Controlled substances manufactured and

distributed intrastate cannot be differentiated from

controlled substances manufactured and distributed interstate. Thus, it is not feasible to distinguish, in terms of controls, between controlled substances manufactured and distributed interstate

and controlled substances manufactured and distributed intrastate.

(6) Federal control of the intrastate incidents of

the traffic in controlled substances is essential to

the effective control of the interstate incidents of

such traffic.

(7) The United States is a party to the Single

Convention on Narcotic Drugs, 1961, and other

international conventions designed to establish

effective control over international and domestic

traffic in controlled substances.

21 U.S.C. § 842—Prohibited acts B

(a) Unlawful acts. It shall be unlawful for any

person—

who is subject to the requirements of part C

[21 U.S.C. §§ 821 et seq.] to distribute or dispense

a controlled substance in violation of section 309

[21 U.S.C. § 8291;

who is a registrant to distribute or dispense

a controlled substance not authorized by his

registration to another registrant or other authorized person or to manufacture a controlled substance not authorized by his registration;

who is a registrant to distribute a controlled

substance in violation of section 305 of this title

[21 U.S.C. § 8251;

to remove, alter, or obliterate a symbol or

label required by section 305 of this title [21

U.S.C. § 8251;

to refuse or negligently fail to make, keep,

or furnish any record, report, notification, declaration, order or order form, statement, invoice, or

information required under this title or title III;

to refuse any entry into any premises or

inspection authorized by this title or title III;

to remove, break, injure, or deface a seal

placed upon controlled substances pursuant to

section 304(f) or 511 [21 U.S.C. § 824(f) or 8811

or to remove or dispose of substances so placed

under seal;

to use, to his own advantage, or to reveal,

App. 50a

other than to duly authorized officers or employees

of the United States, or to the courts when relevant

in any judicial proceeding under this title or title

III, any information acquired in the course of an

inspection authorized by this title concerning any

method or process which as a trade secret is

entitled to protection, or to use to his own

advantage or reveal (other than as authorized by

section 310) any information that is confidential

under such section;

who is a regulated person to engage in a

regulated transaction without obtaining the

identification required by [section] 310(a)(3) [21

U.S.C. § 830(a)(3)1;

negligently to fail to keep a record or make

a report under section 310 [21 U.S.C. § 8301 or

negligently to fail to self-certify as required under

section 310 [21 U.S.C. § 8301;

(ii) to distribute a laboratory supply to a person

who uses, or attempts to use, that laboratory

supply to manufacture a controlled substance or a

listed chemical, in violation of this title or title

III, with reckless disregard for the illegal uses to

which such a laboratory supply will be put;

(12) who is a regulated seller, or a distributor

required to submit reports under subsection (b)(3)

of section 310 [21 U.S.C. § 8301—

(A) to sell at retail a scheduled listed chemical

product in violation of paragraph (1) of subsection (d) of such section, knowing at the

time of the transaction involved (independent of consulting the logbook under subsection (e)(1)(A)(iii) of such section) that the

transaction is a violation; or

App.51a

(B) to knowingly or recklessly sell at retail such

a product in violation of paragraph (2) of

such subsection (d);

who is a regulated seller to knowingly or

recklessly sell at retail a scheduled listed chemical

product in violation of subsection (e) of such

section;

who is a regulated seller or an employee or

agent of such seller to disclose, in violation of

regulations under subparagraph (C) of section

310(e)(1) [21 U.S.C. § 830(e)(1)], information in

logbooks under subparagraph (A)(iii) of such section, or to refuse to provide such a logbook to

Federal, State, or local law enforcement authorities;

to distribute a scheduled listed chemical

product to a regulated seller, or to a regulated

person referred to in section 310(b)(3)(B) [21 U.S.C.

§ 830(b)(3)(B)1, unless such regulated seller or

regulated person is, at the time of such distribution, currently registered with the Drug Enforcement Administration, or on the list of persons

referred to under section 310(e)(1)(B)(v) [21 U.S.C.

§ 830(e)(1)(B)(v)1;

to violate subsection (e) of section 825 of

this title [21 U.S.C. § 82511; or

in the case of a registered manufacturer or

distributor of opioids, to fail to review the most

recent information, directly related to the customers of the manufacturer or distributor, made

available by the Attorney General in accordance

with section 307(f) [21 U.S.C. § 827(f)].

As used in paragraph (ii), the term "laboratory

supply" means a listed chemical or any chemical,

App.52a

substance, or item on a special surveillance list

published by the Attorney General, which contains

chemicals, products, materials, or equipment used

in the manufacture of controlled substances and

listed chemicals. For purposes of paragraph (ii),

there is a rebuttable presumption of reckless disregard at trial if the Attorney General notifies a

firm in writing that a laboratory supply sold by

the firm, or any other person or firm, has been used

by a customer of the notified firm, or distributed

further by that customer, for the unlawful production of controlled substances or listed chemicals

a firm distributes and 2 weeks or more after the

notification the notified firm distributes a laboratory supply to the customer. For purposes of paragraph (15), if the distributor is temporarily unable

to access the list of persons referred to under section 310(e)(1)(B)(v) [21 U.S.C. § 830(e)(1)(13)(01,

the distributor may rely on a written, faxed, or

electronic copy of a certificate of self-certification

submitted by the regulated seller or regulated

person, provided the distributor confirms within 7

business days of the distribution that such regulated seller or regulated person is on the list

referred to under section 310(e)(1)(B)(v) [21 U.S.C.

§ 830(e)(1)(B)(v)].

(b) Manufacture. It shall be unlawful for any

person who is a registrant to manufacture a controlled

substance in schedule I or II, or ephedrine, pseudoephedrine, or phenyipropanolamine or any of the salts,

optical isomers, or salts of optical isomers of such

chemical, which is—

(1) not expressly authorized by his registration

and by a quota assigned to him pursuant to section

306 [21 U.S.C. § 8261; or

App.53a

(2) in excess of a quota assigned to him pursuant

to section 306 [21 U.S.C. § 8261.

(c) Penalties.

(1)

Except as provided in subparagraph (B),

(c), or (D) of this paragraph and paragraph

(2), any person who violates this section

shall, with respect to any such violation, be

subject to a civil penalty of not more than $

25,000. The district courts of the United

States (or, where there is no such court in

the case of any territory or possession of the

United States, then the court in such territory or possession having the jurisdiction of a

district court of the United States in cases

arising under the constitution and laws of

the United States) shall have jurisdiction in

accordance with section 1355 of title 28 of

the United States code [28 U.S.C. § 13551 to

enforce this paragraph.

Except as provided in clause (ii), in the

case of a violation of paragraph (5),

(10), or (17) of subsection (a), the civil

penalty shall not exceed $ 10,000.

In the case of a violation described in

clause (i) committed by a registered

manufacturer or distributor of opioids

and related to the reporting of suspicious

orders for opioids, failing to maintain

effective controls against diversion of

opioids, or failing to review the most

recent information made available by

the Attorney General in accordance with

App.54a

section 307(f) [21 U.S.C. § 827(f)], the

penalty shall not exceed $ 100,000.

(c) In the case of a violation of paragraph (16)

of subsection (a) of this section by an importer,

exporter, manufacturer, or distributor (other

than as provided in subparagraph (D)), up

to $ 500,000 per violation. For purposes of

this subparagraph, a violation is defined as

each instance of importation, exportation,

manufacturing, distribution, or possession

with intent to manufacture or distribute, in

violation of paragraph (16) of subsection (a).

(D) In the case of a distribution, dispensing, or

possession with intent to distribute or dispense in violation of paragraph (16) of subsection (a) of this section at the retail level,

up to $ 1000 per violation. For purposes of

this paragraph, the term "at the retail level"

refers to products sold, or held for sale,

directly to the consumer for personal use.

Each package, container or other separate

unit containing an anabolic steroid that is

distributed, dispensed, or possessed with

intent to distribute or dispense at the retail

level in violation of such paragraph (16) of

subsection (a) shall be considered a separate

violation.

(2)

(A) If a violation of this section is prosecuted by

an information or indictment which alleges

that the violation was committed knowingly

and the trier of fact specifically finds that

the violation was so committed, such person

shall, except as otherwise provided in sub-

App.55a

paragraph (B) or (D) of this paragraph, be

sentenced to imprisonment of not more than

one year or a fine under title 18, United

States Code, or both.

If a violation referred to in subparagraph

(A) was committed after one or more prior

convictions of the offender for an offense

punishable under this paragraph (2), or for

a crime under any other provision of this

title or title III or other law of the United

States relating to narcotic drugs, marihuana,

or depressant or stimulant substances, have

become final, such person shall be sentenced

to a term of imprisonment of not more than

2 years, a fine under title 18, United States

Code, or both.

In addition to the penalties set forth elsewhere in this title or title III, any business

that violates paragraph (ii) of subsection

(a) shall, with respect to the first such violation, be subject to a civil penalty of not more

than $ 250,000, but shall not be subject to

criminal penalties under this section, and

shall, for any succeeding violation, be subject to a civil fine of not more than $ 250,000

or double the last previously imposed penalty,

whichever is greater.

In the case of a violation described in subparagraph (A) that was a violation of paragraph (5), (10), or (17) of subsection (a) committed by a registered manufacturer or distributor of opioids that relates to the reporting

of suspicious orders for opioids, failing to

maintain effective controls against diversion

App.56a

of opioids, or failing to review the most recent

information made available by the Attorney

General in accordance with section 307(f)

[21 U.S.C. § 827(f)], the criminal fine under

title 18, United States Code, shall not exceed

$ 500,000.

Except under the conditions specified in

paragraph (2) of this subsection, a violation of this

section does not constitute a crime, and a judgment

for the United States and imposition of a civil

penalty pursuant to paragraph (1) shall not give

rise to any disability or legal disadvantage based

on conviction for a criminal offense.

If a regulated seller, or a distributor required

to submit reports under section 310(b)(3)

[21 U.S.C. § 830(b)(3)1, violates paragraph

(12) of subsection (a) of this section, or if a

regulated seller violates paragraph (13) of

such subsection, the Attorney General may

by order prohibit such seller or distributor

(as the case may be) from selling any

scheduled listed chemical product. Any sale

of such a product in violation of such an

order is subject to the same penalties as

apply under paragraph (2).

An order under subparagraph (A) may be

imposed only through the same procedures

as apply under section 304(c) [21 U.S.C.

§ 824(c)] for an order to show cause.

App. 57a

REGULATORY PROVISIONS

21 C.F.R. § 1304.04—

Maintenance of Records and Inventories

(a) Except as provided in paragraphs (a)(1) and

(a)(2) of this section, every inventory and other

records required to be kept under this part must be

keptby the registrant and be available, for at least 2

years from the date of such inventory or records, for

inspection and copying by authorized employees of

the Administration.

(1) Financial and shipping records (such as

invoices and packing slips but not executed order

forms subject to §§ 1305.17 and 1305.27 of this

chapter) may be kept at a central location, rather

than at the registered location, if the registrant

has notified the Administration of his intention to

keep central records. Written notification must be

submitted by registered or certified mail, return

receipt requested, in triplicate, to the Special Agent

in Charge of the Administration in the area in

which the registrant is located. Unless the

registrant is informed by the Special Agent in

Charge that permission to keep central records is

denied, the registrant may maintain central

records commencing 14 days after receipt of his

notification by the Special Agent in Charge. All

notifications must include the following:

The nature of the records to be kept centrally.

The exact location where the records will be

kept.

The name, address, DEA registration number

and type of DEA registration of the registrant whose records are being maintained

centrally.

(iv) Whether central records will be maintained

in a manual, or computer readable, form.

A registered retail pharmacy that possesses

additional registrations for automated dispensing

systems at long term care facilities may keep all

records required by this part for those additional

registered sites at the retail pharmacy or other

approved central location.

A collector that is authorized to maintain a

collection receptacle at a long-term care facility

shall keep all records required by this part relating

to those collection receptacles at the registered

location, or other approved central location.

(b) All registrants that are authorized to maintain

a central recordkeeping system under paragraph (a)

of this section shall be subject to the following conditions:

The records to be maintained at the central

record location shall not include executed order

forms and inventories, which shall be maintained at each registered location.

If the records are kept on microfilm, computer

media or in any form requiring special equipment to render the records easily readable, the

registrant shall provide access to such equipment with the records. If any code system is used

(other than pricing information), a key to the code

shall be provided to make the records understandable.

The registrant agrees to deliver all or any

part of such records to the registered location

within two business days upon receipt of a written

request from the Administration for such records,

and if the Administration chooses to do so in lieu

App.

59a

of requiring delivery of such records to the

registered location, to allow authorized employees

of the Administration to inspect such records at the

central location upon request by such employees

without a warrant of any kind.

(4) In the event that a registrant fails to comply

with these conditions, the Special Agent in Charge

may cancel such central recordkeeping authorization, and all other central recordkeeping authorizations held by the registrant without a hearing

or other procedures. In the event of a cancellation

of central recordkeeping authorizations under this

paragraph the registrant shall, within the time

specified by the Special Agent in Charge, comply

with the requirements of this section that all

records be kept at the registered location.

Registrants need not notify the Special Agent

in Charge or obtain central recordkeeping approval

in order to maintain records on an in-house computer

system.

ARCOS participants who desire authorization

to report from other than their registered locations

must obtain a separate central reporting identifier.

Request for central reporting identifiers will be submitted to the ARCOS Unit. See the Table of DEA

Mailing Addresses in § 1321.01 of this chapter for the

current mailing address.

All central recordkeeping permits previously

issued by the Administration expired September 30,

1980.

Each registered manufacturer, distributor,

importer, exporter, narcotic treatment program and

compounder for narcotic treatment program shall maintain inventories and records of controlled substances

App. 60a

as follows:

Inventories and records of controlled substances listed in Schedules I and II shall be maintained separately from all of the records of the

registrant; and

Inventories and records of controlled substances listed in Schedules III, IV, and V shall be

maintained either separately from all other records

of the registrant or in such form that the information required is readily retrievable from the

ordinary business records of the registrant.

Each registered individual practitioner

required to keep records and institutional practitioner

shall maintain inventories and records of controlled

substances in the manner prescribed in paragraph (f)

of this section.

Each registered pharmacy shall maintain the

inventories and records of controlled substances as

follows:

Inventories and records of all controlled

substances listed in Schedule I and II shall be

maintained separately from all other records of the

pharmacy.

Paper prescriptions for Schedule II controlled

substances shall be maintained at the registered

location in a separate prescription file.

Inventories and records of Schedules III, IV,

and V controlled substances shall be maintained

either separately from all other records of the

pharmacy or in such form that the information

required is readily retrievable from ordinary business records of the pharmacy.

Paper prescriptions for Schedules III, IV,

and V controlled substances shall be maintained at

App.61a

the registered location either in a separate prescription file for Schedules III, IV, and V controlled substances only or in such form that they

are readily retrievable from the other prescription records of the pharmacy. Prescriptions will be

deemed readily retrievable if, at the time they

are initially filed, the face of the prescription is

stamped in red ink in the lower right corner with

the letter "C" no less than 1-inch-high and filed

either in the prescription file for controlled substances listed in Schedules I and II or in the

usual consecutively numbered prescription me for

non-controlled substances. However, if a pharmacy

employs a computer application for prescriptions

that permits identification by prescription number

and retrieval of original documents by prescriber

name, patient's name, drug dispensed, and date

filled, then the requirement to mark the hard copy

prescription with a red "C" is waived.

(5) Records of electronic prescriptions for controlled substances shall be maintained in an

application that meets the requirements of part

1311 of this chapter. The computers on which the

records are maintained may be located at another

location, but the records must be readily retrievable

at the registered location if requested by the

Administration or other law enforcement agent.

The electronic application must be capable of

printing out or transferring the records in a format

that is readily understandable to an Administration or other law enforcement agent at the registered location. Electronic copies of prescription

records must be sortable by prescriber name,

patient name, drug dispensed, and date filled.

App. 62a

21 C.F.R. § 1304.11—Inventory Requirements

General requirements. Each inventory shall

contain a complete and accurate record of all controlled

substances on hand on the date the inventory is taken,

and shall be maintained in written, typewritten, or

printed form at the registered location. An inventory

taken by use of an oral recording device must be

promptly transcribed. Controlled substances shall be

deemed to be "on hand" if they are in the possession

of or under the control of the registrant, including

substances returned by a customer, ordered by a

customer but not yet invoiced, stored in a warehouse

on behalf of the registrant, and substances in the

possession of employees of the registrant and intended

for distribution as complimentary samples. A separate

inventory shall be made for each registered location

and each independent activity registered, except as

provided in paragraph (e)(4) of this section. In the

event controlled substances in the possession or under

the control of the registrant are stored at a location

for which he/she is not registered, the substances

shall be included in the inventory of the registered

location to which they are subject to control or to

which the person possessing the substance is

responsible. The inventory may be taken either as of

opening of business or as of the close of business on

the inventory date and it shall be indicated on the

inventory.

Initial inventory date. Every person required

to keep records shall take an inventory of all stocks

of controlled substances on hand on the date he/she

first engages in the manufacture, distribution, or

dispensing of controlled substances, in accordance

with paragraph (e) of this section as applicable. In

the event a person commences business with no

App.63a

controlled substances on hand, he/she shall record

this fact as the initial inventory.

Biennial inventory date. After the initial

inventory is taken, the registrant shall take a new

inventory of all stocks of controlled substances on

hand at least every two years. The biennial inventory

may be taken on any date which is within two years

of the previous biennial inventory date.

Inventory date for newly controlled substances. On the effective date of a rule by the Administrator pursuant to §§ 1308.45, 1308.46, or 1308.47

of this chapter adding a substance to any schedule of

controlled substances, which substance was, immediately prior to that date, not listed on any such schedule,

every registrant required to keep records who possesses

that substance shall take an inventory of all stocks of

the substance on hand. Thereafter, such substance

shall be included in each inventory made by the registrant pursuant to paragraph (c) of this section.

Inventories of manufacturers, distributors,

registrants that reverse distribute, importers, exporters, chemical analysts, dispensers, researchers, and

collectors. Each person registered or authorized (by

§§ 1301.13, 1307.11, 1307.13, or part 1317 of this

chapter) to manufacture, distribute, reverse distribute,

dispense, import, export, conduct research or chemical

analysis with controlled substances, or collect controlled

substances from ultimate users, and required to keep

records pursuant to § 1304.03 shall include in the

inventory the information listed below.

(1) Inventories of manufacturers. Each person

registered or authorized to manufacture controlled

substances shall include the following information

in the inventory:

App. 64a

(i) For each controlled substance in bulk form

to be used in (or capable of use in) the manufacture of the same or other controlled or

non-controlled substances in finished form,

the inventory shall include:

The name of the substance and

The total quantity of the substance to

the nearest metric unit weight consistent

with unit size.

(ii) For each controlled substance in the process

of manufacture on the inventory date, the

inventory shall include:

The name of the substance;

The quantity of the substance in each

batch and/or stage of manufacture,

identified by the batch number or other

appropriate identifying number; and

The physical form which the substance

is to take upon completion of the manufacturing process (e.g., granulations,

tablets, capsules, or solutions), identified

by the batch number or other appropriate

identifying number, and if possible the

finished form of the substance (e.g., 10milligram tablet or 10-milligram concentration per fluid ounce or milliliter)

and the number or volume thereof.

(iii) For each controlled substance in finished

form the inventory shall include:

The name of the substance;

Each finished form of the substance (e.g.,

10-milligram tablet or 10-milligram concentration per fluid ounce or milliliter);

App.65a

The number of units or volume of each

finished form in each commercial container (e.g., 100-tablet bottle or 3-milliliter vial); and

The number of commercial containers

of each such finished form (e.g., four 100tablet bottles or six 3-milliliter vials).

(iv) For each controlled substance not included

in paragraphs (e)(1) (i), (ii) or (iii) of this section (e.g., damaged, defective or impure substances awaiting disposal, substances held

for quality control purposes, or substances

maintained for extemporaneous compoundings) the inventories shall include:

The name of the substance;

The total quantity of the substance to the

nearest metric unit weight or the total

number of units of finished form; and

The reason for the substance being maintained by the registrant and whether

such substance is capable of use in the

manufacture of any controlled substance

in finished form.

Inventories of distributors. Each person

registered or authorized to distribute controlled

substances shall include in the inventory the same

information required of manufacturers pursuant to

paragraphs (e)(1)(iii) and (iv) of this section.

Inventories of registrants that reverse distribute. Each person registered or authorized to

reverse distribute controlled substances shall

include in the inventory, the following information:

The name of the substance, and

The total quantity of the substance:

App. 66a

For controlled substances in bulk form,

to the nearest metric unit weight consistent with unit size;

For each controlled substance in finished form: Each finished form of the

substance (e.g., 10-milligram tablet or

10-milligram concentration per fluid

ounce or milliliter); the number of units

or volume of each finished form in each

commercial, container (e.g., 100-tablet

bottle or 3-milliliter vial); and the number of commercial containers of each

such finished form (e.g., four 100-tablet

bottles or six 3-milliliter vials); and

For controlled substances in a commercial

container, carton, crate, drum, or other

receptacle that has been opened: If the

substance is listed in Schedule I or II,

make an exact count or measure of the

contents; or if the substance is listed in

Schedule III, IV, or V, make an estimated

count or measure of the contents, unless

the container holds more than 1,000

tablets or capsules in which case an

exact count of the contents shall be

made; or

For controlled substances acquired from collectors and law enforcement: The number

and size (e.g., five 10-gallon liners, etc.) of

sealed inner liners on hand, or

For controlled substances acquired from law

enforcement: the number of sealed mailback packages on hand.

(4) Inventories of importers and exporters.

App.67a

Each person registered or authorized to import or

export controlled substances shall include in the

inventory the same information required of

manufacturers pursuant to paragraphs (e)(1) (iii)

and (iv) of this section. Each such person who is

also registered as a manufacturer or as a distributor shall include in his/her inventory as an

importer or exporter only those stocks of controlled substances that are actually separated from

his stocks as a manufacturer or as a distributor

(e.g., in transit or in storage for shipment).

Inventories of chemical analysts. Each person

registered or authorized to conduct chemical

analysis with controlled substances shall include

in his inventory the same information required of

manufacturers pursuant to paragraphs (e)(1) (iii)

and (iv) of this section as to substances which have

been manufactured, imported, or received by such

person. If less than 1 kilogram of any controlled

substance (other than a hallucinogenic controlled

substance listed in Schedule I), or less than 20

grams of a hallucinogenic substance listed in

Schedule I (other than lysergic acid diethylamide),

or less than 0.5 gram of lysergic acid diethylamide,

is on hand at the time of inventory, that substance

need not be included in the inventory. Laboratories

of the Administration may possess up to 150 grams

of any hallucinogenic substance in Schedule I

without regard to a need for an inventory of those

substances. No inventory is required of known or

suspected controlled substances received as

evidentiary materials for analysis.

Inventories of dispensers and researchers.

Each person registered or authorized to dispense or

conduct research with controlled substances shall

include in the inventory the same information

required of manufacturers pursuant to paragraphs

(e)(1)(iii) and (iv) of this section. In determining

the number of units of each finished form of a

controlled substance in a commercial container that

has been opened, the dispenser or researcher shall

do as follows:

If the substance is listed in Schedules I or

II, make an exact count or measure of the

contents; or

If the substance is listed in Schedule III, IV,

or V, make an estimated count or measure

of the contents, unless the container holds

more than 1,000 tablets or capsules in which

case he/she must make an exact count of the

contents.

(7) Inventories of collectors. Each registrant

authorized to collect controlled substances from

ultimate users shall include in the inventory the

following information:

(i) For registrants authorized to collect through

a mail-back program, the record shall include

the following information about each unused

mail-back package and each returned mailback package on hand awaiting destruction:

The date of the inventory;

The number of mail-back packages; and

The unique identification number of

each package on hand, whether unused

or awaiting destruction.

(ii) For registrants authorized to collect through

a collection receptacle, the record shall include

the following information about each unused

inner liner on hand and each sealed inner

liner on hand awaiting destruction:

The date of the inventory;

The number and size of inner liners

(e.g., five 10-gallon liners, etc.);

21 C.F.R. § 1304.21—

General Requirements for Continuing Records

Every registrant required to keep records

pursuant to § 1304.03 shall maintain, on a current

basis, a complete and accurate record of each substance

manufactured, imported, received, sold, delivered, exported, or otherwise disposed of by him/her, and each

inner liner, sealed inner liner, and unused and

returned mail-back package, except that no registrant

shall be required to maintain a perpetual inventory.

Separate records shall be maintained by a

registrant for each registered location except as provided in § 1304.04 (a). In the event controlled substances are in the possession or under the control of a

registrant at a location for which he is not registered,

the substances shall be included in the records of the

registered location to which they are subject to control

or to which the person possessing the substance is

responsible.

Separate records shall be maintained by a

registrant for each independent activity and collection

activity for which he/she is registered or authorized,

except as provided in § 1304.22(d).

In recording dates of receipt, distribution,

other transfers, or destruction, the date on which the

controlled substances are actually received, distributed, otherwise transferred, or destroyed will be used

as the date of receipt, distribution, transfer, or destruction (e.g., invoices or packing slips, or DEA Form 41). In

App.70a

maintaining records concerning imports and exports,

the registrant must record the anticipated date of

release by a customs official for permit applications

and declarations and the date on which the controlled

substances are released by a customs officer at the

port of entry or port of export for return information.

(e) Record of destruction. In addition to any

other recordkeeping requirements, any registered

person that destroys a controlled substance pursuant

to § 1317.95(d), or causes the destruction of a controlled substance pursuant to § 1317.95(c), shall maintain a record of destruction on a DEA Form 41. The

records shall be complete and accurate, and include

the name and signature of the two employees who

witnessed the destruction. Except, destruction of a

controlled substance dispensed by a practitioner for

immediate administration at the practitioner's registered location, when the substance is not fully exhausted (e.g., some of the substance remains in a

vial, tube, or syringe after administration but cannot

or may not be further utilized), shall be properly

recorded in accordance with § 1304.22(c), and such

record need not be maintained on a DEA Form 41.

21 C.F.R. § 1306.04—Purpose of Issue of Prescription

(a) A prescription for a controlled substance to

be effective must be issued for a legitimate medical

purpose by an individual practitioner acting in the

usual course of his professional practice. The responsibility for the proper prescribing and dispensing of

controlled substances is upon the prescribing practitioner, but a corresponding responsibility rests with

the pharmacist who fills the prescription. An order

purporting to be a prescription issued not in the

usual course of professional treatment or in legiti-

App.71a

mate and authorized research is not a prescription

within the meaning and intent of section 309 of the

Act (21 U.S.C. § 829) and the person knowingly

filling such a purported prescription, as well as the

person issuing it, shall be subject to the penalties

provided for violations of the provisions of law relating

to controlled substances.

A prescription may not be issued in order

for an individual practitioner to obtain controlled

substances for supplying the individual practitioner

for the purpose of general dispensing to patients.

A prescription may not be issued for "detoxification treatment" or "maintenance treatment," unless

the prescription is for a Schedule III, IV, or V narcotic

drug approved by the Food and Drug Administration

specifically for use in maintenance or detoxification

treatment and the practitioner is in compliance with

requirements in § 1301.28 of this chapter.

21 C.F.R. § 1306.21

(a) A pharmacist may dispense directly a controlled substance listed in Schedule III, IV, or V that

is a prescription drug as determined under section

503(b) of the Federal Food, Drug, and Cosmetic Act

(21 U.S.C. § 353(b)) only pursuant to either a paper

prescription signed by a practitioner, a facsimile of a

signed paper prescription transmitted by the practitioner or the practitioner's agent to the pharmacy, an

electronic prescription that meets the requirements

of this part and part 1311 of this chapter, or an oral

prescription made by an individual practitioner and

promptly reduced to writing by the pharmacist containing all information required in § 1306.05, except

for the signature of the practitioner.

App.72a

An individual practitioner may administer or

dispense directly a controlled substance listed in

Schedule III, IV, or V in the course of his/her professional practice without a prescription, subject to § 1306.07.

An institutional practitioner may administer

or dispense directly (but not prescribe) a controlled

substance listed in Schedule III, IV, or V only pursuant

to a paper prescription signed by an individual

practitioner, a facsimile of a paper prescription or

order for medication transmitted by the practitioner

or the practitioner's agent to the institutional

practitioner-pharmacist, an electronic prescription

that meets the requirements of this part and part

1311 of this chapter, or an oral prescription made by

an individual practitioner and promptly reduced to

writing by the pharmacist (containing all information

required in § 1306.05 except for the signature of the

individual practitioner), or pursuant to an order for

medication made by an individual practitioner that is

dispensed for immediate administration to the ultimate user, subject to § 1306.07.

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