Dispensing Controlled Substances from the Office: A Guide for Physicians

Given law enforcement’s current focus on combating the opioid epidemic, controlled substance-dispensing physicians are under increased scrutiny from local, state, and federal governments. Below is a brief overview of the law and regulations covering physicians’ office-based dispensing of controlled substances, specifically those pertaining to prescription drug monitoring, practice management, security, and diversion prevention.

  • Routinely monitor compliance with your state’s dispensing and PDMP laws.

Any physician dispensing controlled substances from their office must ensure their practice complies with the applicable federal laws and regulations, namely the federal Controlled Substances Act. They also must know and be in compliance with their respective state dispensing laws.  Some states prohibit physician dispensing, others restrict which controlled substances can be dispensed (or their quantity and frequency), while some states require dispensing physicians obtain an additional license, as well as follow their Board of Pharmacy regulations. Many states regulate who must hand the medicine to the patient, often mandating that only the physician can do so. 

More importantly, physicians dispensing controlled substances must know and comply with their respective state’s Prescription Drug Monitoring Program (“PDMP”) requirements. PDMPs are electronic databases that collect designated information on dispensed controlled substances. After conducting any PDMP mandated prescriber queries, approved physician dispensers must promptly report certain dispensed controlled substance information to their respective state’s PDMP.  In most states, dispensing physicians can delegate the PDMP query and data input to a few specifically identified practice employees.

State legislatures have also amended their state PDMP laws to make them more rigorous in light of the opioid crisis, and law enforcement and professional licensing boards are increasingly scrutinizing PDMP records to track controlled substance prescribing and dispensing rates.

  • Protect your practice from theft.

Dispensing controlled substances requires the implementation of a strong system of inventory control and medication security. Having these substances in stock places your practice at greater risk of a break-in and increases the possibility of employee theft.

All controlled substance dispensers are required to provide effective controls to guard against theft and diversion of them and must be bolted or cemented to the floor. Additional controls might include: a wall safe or locked steel cabinet; a storage unit alarm system; video surveillance of medicine storage locations; and employing security personnel. How substantial your security measures need to be is based on your practice location, the type of physical buildings it’s in, the type and quantity of controlled substances stored on the premises, the control of public access to the facility, the adequacy of practice’s alarms and detection systems, and the availability of local police protection.

If you do become a victim of theft, the theft must be reported to the DEA immediately, and may, depending on the state, have to be reported to additional regulatory and law enforcement entities, like the state medical board, state pharmacy board, or local law enforcement.   

  • Always prescribe medication for a legitimate medical purpose.

It goes without saying: both prescribers and dispensers are responsible for ensuring that controlled substances are issued for a legitimate medical purpose by a practitioner acting in the usual course of professional practice. A person who knowingly fills a prescription not issued for a legitimate medical purpose and not in the usual course of professional practice can be found civilly or criminally liable under the Controlled Substances Act. Enforcement actions can cost you your medical license, hospital privileges, DEA authorization to prescribe substances, and revocation of panel participation.

Some state courts have permitted individual controlled substance users who admittedly broke laws to obtain controlled substances to bring civil actions against their doctors and pharmacists for negligent prescribing and dispensing that allegedly caused the users’ drug addiction. Of course, a criminal conviction lead to a prison sentence and a hefty fine and possibly a restitution award.

In addition, malpractice insurance might not provide coverage or even a legal defense for a dispensing physician in a dispensing lawsuit because the court may find that the controlled substances were dispensed not for a legitimate medical purpose and not in the usual course of professional practice.  Such illegal conduct is usually not covered by insurance.  Physicians should contact their malpractice insurance carrier before dispensing controlled substances.

  • Check the background of your employees, train yourself and your staff on drug-seeking behavior, and restrict the number of employees with access to controlled substances.

In most cases, physician controlled substance dispensing removes the pharmacist from the prescription review process. Pharmacists often alert physicians to prescribing errors or a patient’s controlled substance prescription history, leading some to conclude that physician dispensing eliminates a crucial second check of the prescribed drug therapy, potentially increasing the chances of diversion. In light of this, physician controlled substance dispensers must be well trained in identifying drug-seeking behavior among their patients and must thoroughly train their employees in how to recognize it. They must screen prospective employees to ensure they do not have past controlled substance and/or theft felony convictions and can be trusted to work in a security stringent office. 

They should also restrict the number of employees who have access to controlled substances and the prescription and dispensing records.  Many instances of diversion start where a physician or the physician’s employee dispenses a controlled substance to a family member, a mistress, or fellow employee “off the books.” Never prescribe a controlled substance to anyone without logging its dispensation. Dispensers must ensure they and their staff are proactive in monitoring the practice’s patients, its drug supply, its PDMP reporting, and its internal records.

And if at all possible, avoid treating and prescribing a scheduled narcotic to anyone near and dear to you.

  • Don’t be afraid to dispense controlled substances, but be cautious.

Though the potential liability may dissuade practitioners from dispensing controlled substances, it’s possible to do so in a compliant and safe manner that greatly reduces the chances of diversion and law enforcement scrutiny. Consult with experienced counsel or compliance professionals for assistance. There are no ‘do-overs’ when it comes to the DEA so be sure to get it right the first time.

Victims of Business Crimes Aren’t Always Better Off Seeking Prosecution

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A week hasn’t gone by since I left my job as a prosecutor in 1995 (yes, 1995:  Bill Clinton was president, the Dow topped 5,000 for the first time ever, O.J. Simpson was acquitted of murder that year and the iPod wouldn’t come out for another six years) when a client hasn’t called asking how to have someone prosecuted and sent to jail. Businesses find local, state and especially federal law enforcement almost uniformly unresponsive to their victimization at the hands of employees and competitors. Companies often feel victimized a second time by “the system,” when all they really want is what almost no victim ever gets in the way of justice: vindication, to make up for the betrayal of trust.

Before calling 911, though, business crime victims should consider the risks and drawbacks of involving themselves in the criminal justice system.  Investigations and court cases are rarely short or cut-and-dried, especially when the target has significant knowledge of your business and its employees or operations. Meeting with police and prosecutors, going to court and even testifying there can be a major distraction to key personnel. It can risk the confidentiality of company processes or trade secrets, and can even provoke investigation of the business victimized in the first place. The decision to “blow the whistle,” then, even when justified, should be made for good business reasons, and not for emotional ones, and be thought through thoroughly at a high level of policy/decision making.

The exception to the “think before you fink” rule is for highly-regulated business, which are likely required to report thefts or other misconduct by employees, directors and competitors: chiefly banks and financial institutions, health care providers which seek reimbursement of federal or insurance funds, environmental permit holders (mandated to regularly report discharges), and industries which handle classified national security data (e.g., defense contractors, advanced software and computing research, etc.).

Simple embezzlements by employees, additionally, should always be reported when the identity of the culprit is certain.  Reporting to the police is almost always a prerequisite to recovering on a dishonest employee provision to the business’s insurance coverage or employee fidelity bond.  (Note: let this be a reminder to check with your company’s broker or risk managers to ensure that there is dishonest employee coverage, in sufficiently high enough dollars to adequately protect the entity against loss.)

But affirmatively pressing for criminal charges (beyond simple reporting) can be counter-productive. Often a company’s best chance of recovering any restitution informally is before a prosecution, through negotiation. This should be done by experienced counsel consistent with lawyers’ professional conduct rules, to prevent accusations against company personnel of committing extortion and themselves becoming a target of an investigation, and also to ensure the company’s duty under a policy of insurance to cooperate with law enforcement is fulfilled, thereby preserving coverage.

Prosecutors and investigators often see businesses’ reports of crime as pressing them into service for a private entity, and not the public safety.  Trade secret theft allegations are most often ignored by law enforcement.  Federal prosecutors are reluctant to become involved in lengthy disputes between private parties, for which there are civil remedies available, such as the private right of action recently provided by the recent enactment of the Defense of Trade Secrets Act.    The exception, again, is for employees and competitors of banks, government contractors (primarily including health care providers,) and businesses in which there is a national security interest.  And state and local police and prosecutors aren’t set up to bring “white collar” cases that exceed simple fraud/theft matters (even those can tax a district attorney’s office, more comfortable with ‘guns and drugs’ case).

Sophisticated theft prosecutions can harm the victim as well.  Prosecutors may not be sufficiently attuned to protecting confidential security or manufacturing/development processes, and courts may not adequately protect against their disclosure to the defense.   While the Justice Department is getting better at handling trade secret misappropriation cases, early prosecution efforts under the Economic Espionage Act of 1996 risked disclosure of the very trade secrets alleged to have been stolen.

And the unfortunate truth is that former employees and competitors  facing criminal prosecution often retaliate by alleging criminal wrongdoing by the complaining business, rightly or not. This is especially true in small businesses, or small units of larger ones. It does no good to accuse an employee whose wages are not being completely reported of theft, when that employee can in turn complain to the IRS about the employer’s tax fraud.  (That case led to convictions of both the business owner and the former controller). Employers need to understand what they risk in publicizing an internal matter, including in the way of adverse publicity, when it is them who have been ripped off.

Seeking redress as the victim of a theft or other crime shouldn’t be difficult, and it shouldn’t require a business seconding-guessing itself.  But the realities of the justice system, the economics and the politics of what drives it, and especially the fact that desperate persons facing the possibility of criminal conviction and jail will often lead desperate people to desperate acts, to your detriment. Economic crime victims shouldn’t shy away from seeking justice and restitution, if for no other reason than to highlight to others that crimes against them will not be tolerated. But how best to be made whole after being victimized requires a well-thought out decision with the help of counsel experienced in the justice system, and not an emotional response to make senior executives feel better. In the long run, it may only make things much worse.

Takeaways from the Annual Pennsylvania White Collar Criminal Defense Lawyers’ Conference

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Newsflash: the Justice Department is still an insider’s club, criminal practice is not for beginners, and courts still penalize defendants who exercise their constitutional right to have criminal charges against them tried by a jury; Western Pennsylvania is the only judicial district in the country regularly prosecuting doctors who prescribe Suboxone, and everyone’s rekindled interest in the Nixon case as a prediction of Special Counsel Robert Muller’s next move.

That’s our “takeaway” from the annual White Collar Criminal Defense seminar featuring top prosecutors, judges, and federal defense practitioners, hosted by the Pennsylvania Association of Criminal Defense Lawyers in Philadelphia this past month. The annual event brings key Justice Department lawyers from Washington, and practice chiefs from the local and neighboring U.S. Attorneys’ Office, together with judges and defense practitioners, to discuss the Government’s enforcement focus and the strategy and tactics to defend them. The program provides insight into current Government initiatives, and a window onto what has changed in the law; what we learned is that the more things change, the more things remain the same.

This year’s program featured the Eastern District of Pennsylvania Federal Judge Wendy Beetlestone, on sentencing practices for criminal defendants in White Collar Cases. The implicit message in her remarks, as well as in those of appellate lawyers at the program following her address, was the implicit bias of the judiciary against criminal defendants who insist on exercising their constitutional right to trial by a jury of their peers on the charges against them. Of course, this sounds counterintuitive to non-lawyers; the federal United States Sentencing Guidelines, however, place an enormous emphasis on having criminal defendants admit their guilt and show remorse, to the extent of rewarding those who plead guilty with a lesser sentence. Unlike plea bargaining in many states, however, federal criminal procedure does not provide for a plea of “no contest,” where the defendant withdraws their plea of not guilty because they believe that taking the prosecution’s offer without a trial “is in their best interest” (California law provides for this in what is known as an Alford plea; in West Virginia it’s referred to as a Kennedy plea).

Sure, the Bill of Rights to the U.S. Constitution provides that every defendant is presumed innocent until proven guilty – but defendants who put the prosecution and the courts through the exercise of a trial are routinely punished for relying on that right.  Since they have not admitted their guilt or shown remorse, this is generally true in practice even if they do not take the stand to testify in their own defense, or present evidence directly disputing that they are guilty of the charge(s), and instead exercise their constitutional right to remain silent.  Indeed, the implicit rule has not changed little: if you must go to trial, be certain that you win because the price of losing is higher than the price of admitting guilt.

And speaking of trials, the overwhelming takeaway from appeals of political trials seems to be that under no circumstances should the defense ever sit quietly while a judge sends an indictment into the jury room, as the “road map” for consideration of the charges. Indictments are in effect the government’s statement of its case, replete with excess and prejudicial allegations which in no instance reflects at all well on the defendant, and further, object strenuously to the judge holding her jury charge conference in chambers, without a court reporter present; there is too much potential to waive legal objections through lack of adequate preservation of the issues. The familiarity and closeness of the government prosecutors and defense lawyers on a personal level emphasized, once again, how many of us as defense lawyers started out as prosecutors, and oftentimes how many prosecutors start out as defense lawyers. 

We hang out together because we speak the same language, we often respect each other, and most of the time we even like each other.  Don’t underestimate the value of personal relationships and familiarity with the system in choosing your criminal defense advocate.  The “Main Justice” Department in Washington and the U.S. Attorneys Office(s), are notorious for being places where “inside baseball” is played, or as we say in Pittsburgh, where only “home cooking” is served.  If your civil lawyer who doesn’t know where the U .S. Attorney’s Office is or who sits in it, tells you they can handle the criminal matter just fine, don’t believe them; this isn’t something you want your attorney to learn at your expense.  

In health care prosecutions, as Buzzfeed recently noted online, the Western District of Pennsylvania seems to remain the only federal judicial district in the country prosecuting doctors who allegedly misprescribed buprenorphine (suboxone).  Doctors beware. 

And finally, what we learned at the White Collar Seminar was that if acting Attorney General Whitaker (or his successor) unseats special prosecutor Mueller, the Chief Judge of the judicial district in the District of Columbia may not maintain an investigation without the Justice Department leading it.  That having been said, former PA Western District U.S. Attorney Harry Littman said just several days ago on TV that, regardless of Special Counsel Mueller’s longevity in office, his plans for the further investigation and possible prosecution of Donald Trump, Jr., the President’s son, Jared Kushner, the President’s his son-in-law, and even the President himself should all be revealed in short order.  Stay tuned!