Notice2025-19387
Hollywood Medical Rehabilitation Care, Inc.; Decision and Order
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 2, 2025
Issuing agencies
Justice DepartmentDrug Enforcement Administration
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 189 (Thursday, October 2, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 189 (Thursday, October 2, 2025)]
[Notices]
[Pages 47827-47832]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19387]
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
Hollywood Medical Rehabilitation Care, Inc.; Decision and Order
I. Introduction
On November 4, 2024, the Drug Enforcement Administration (DEA or
Government) issued an Order to Show Cause (OSC) to Hollywood Medical
Rehabilitation Care, Inc., of Los Angeles, California (Respondent).
Request for Final Agency Action (RFAA), Exhibit (RFAAX) 1, at 1, 5. The
OSC proposed the revocation of Respondent's DEA registration, No.
RH0554053, alleging that Respondent ``failed to comply with standards
established by 21 U.S.C. 823(h),'' applicable to narcotic treatment
programs. Id. at 1; see 21 U.S.C. 823(a). Specifically, the OSC alleged
that Respondent failed to maintain adequate records, as required by 21
U.S.C. 823(h)(2), and that Respondent's egregious recordkeeping
violations rendered DEA unable to conduct an audit. Id. at 2-4 (citing
21 CFR 1304.11(a)-(c), 1304.11(c), 1304.21(a), (d), 1304.04(a), (f)(2),
1304.24(a), 1305.05).
A DEA Diversion Investigator personally served the OSC on
Respondent on November 6, 2024; accordingly, the Agency finds that
service was proper. RFAA 1, at 1; RFAAX 2. The OSC notified Respondent
of its right to file with DEA a written request for hearing within 30
days of receiving the OSC, and of its obligation to file an answer in
the form set forth in 21 CFR 1316.47. RFAAX 1, at 4 (citing 21 CFR
1301.43). The OSC also notified Respondent that if it failed to file a
request for hearing or answer, it would be deemed to have waived its
right to a hearing and be in default. Id.
On November 26, 2024, Respondent submitted a timely request for
hearing, but did not file an answer. RFAA, at 1-2. The same day, the
assigned Administrative Law Judge (ALJ) issued an Order for Prehearing
Statements (OPS) and reminded Respondent of the statutory requirement
to file an answer ``no later than 30 days following the date of receipt
of the [OSC].'' Id. (21 CFR 1301.37(d)(2)-(3)). The OPS cautioned
Respondent that if it failed to file an answer by the statutory
deadline, it ``w[ould] face an appropriate remedy (e.g., waiver of its
right to a hearing, entry of default, allegations being deemed
admitted, and/or dismissal of its request for hearing).'' OPS, at 1.
Respondent did not file an answer by the statutory deadline of
December 6, 2024, and on December 9, 2024, the Government filed a
Motion to Terminate Proceedings. RFAA, at 1-2. On December 9, 2024, the
ALJ issued an Order to Show Cause for Failure to File an Answer, giving
Respondent a deadline of December 11, 2024, to file an answer and ``a
pleading showing cause for its failure to file a timely Answer and why
this tribunal should not deem Respondent in default, dismiss the
[request for hearing], and terminate these proceedings.'' Order to Show
Cause for Failure to File an Answer, at 2. Respondent failed to file an
answer or any other pleadings by the ALJ's deadline. Id. Accordingly,
on December 12, 2024, the ALJ granted the Government's motion, found
Respondent to be in default, and terminated the proceedings. Order
Denying Respondent's Motion for Relief
[[Page 47828]]
from Final Order (Termination Order), at 2-3; see also RFAAX 4 (citing
21 CFR 1301.43(c)(2)).
On December 31, 2024, 19 days after the ALJ terminated the matter,
Respondent submitted an untimely answer, a Declaration by Respondent's
attorney (Mr. H.W.), and a Motion to Seek Relief from the ALJ's
Termination Order (First Motion to Seek Relief), arguing that there was
``good cause'' to excuse Respondent's untimely answer based on Mr.
H.W.'s inadvertent mistakes and illness. RFAA, at 2; RFAAX 5. On
January 3, 2025, the ALJ denied Respondent's Motion to Seek Relief,
finding that the Tribunal did not have jurisdiction to consider
Respondent's motion because the matter had already been dismissed.
RFAAX 6, at 2 (citing 1301.43(c)(3) (``Upon termination of the
proceeding by the presiding officer, a party may seek relief only by
filing a motion establishing ``good cause'' to excuse its default with
the Office of the Administrator.'')). The ALJ also noted that
Respondent had not demonstrated ``good cause'' for its failure to file
a timely answer. Id. n.1.
On January 6, 2025, the Government submitted an RFAA to the
Administrator requesting that the Agency issue a final order revoking
Respondent's registration on the basis that Registrant had ``failed to
comply with standards established by 21 U.S.C. 823(h),'' applicable to
narcotic treatment programs. RFAAX 1, at 1; see 21 U.S.C. 823(a). The
Government requested final agency action based on Respondent's failure
to file a timely answer, which resulted in the ALJ's finding that
Respondent was in default. RFAA, at 1 (citing 21 CFR 1301.43(c), (f),
1301.46); see also 21 CFR 1316.67. On January 8, 2025, Respondent
submitted a Motion to Seek Relief from Final Order with the
Administrator (Second Motion to Seek Relief), which presented
substantially similar arguments to the First Motion to Seek Relief.
II. Default Determination
A. Respondent Is in Default Based on Its Failure To File an Answer
The Agency agrees with the ALJ that Respondent is in default based
on its ``fail[ure] to plead (including by failing to file an answer) or
otherwise defend.'' See 21 CFR 1301.43(c)(3); RFAAX 6, at 2. After
Respondent failed to file an answer along with its request for hearing
on November 26, 2024, the ALJ issued an order reminding Respondent that
it was required to file an answer by December 6, 2024. When Respondent
failed to file an answer by this deadline, the ALJ issued an order
giving Respondent an additional five days to file an answer and to show
cause for the missed deadline. Respondent failed to file an answer or
any other pleadings by the ALJ's deadline, and, accordingly, the ALJ
dismissed the matter.
The Agency finds that the ALJ's dismissal of the matter due to
Respondent's noncompliance was an appropriate exercise of her powers
and duties under the Administrative Procedure Act (APA) and the
Controlled Substances Act's (CSA) implementing regulations, which,
among other things, require her to ``regulate the course of the
hearing,'' ``dispose of procedural requests or similar matters,'' and
``take other action authorized by agency rule consistent with this
subchapter.'' 5 U.S.C. 556(c)(5), (9), and (11); see Andrew Konen,
M.D., 90 FR 40,650, 40,651 (2025) (``Accordingly, the Agency concludes
that the Agency ALJ assigned to this matter clearly has the duty and
the power to issue scheduling orders, to rule on matters concerning
those scheduling orders, and ``to take all necessary action to avoid
delay, and to maintain order. 21 CFR 1316.52'').
B. The Factual Basis for Respondent's Motion To Set Aside the Default
The Agency may set aside a default if the respondent demonstrates
``good cause'' for the failures which led to the default. 21 CFR
1301.43(c). Respondent filed two motions (the First and Second Motions
for Relief) seeking to demonstrate ``good cause'' for failing to file a
timely answer. Id. 1301.43(c)(2). According to these motions and the
accompanying filings, Respondent's failure to file an answer along with
his request for hearing on November 21, 2024, was an oversight for
which Respondent's attorney, Mr. H.W., takes full responsibility. Id.
at 2. Respondent asserts that in early December, after the deadline for
filing an answer had passed, ``DEA served additional documents on [Mr.
H.W.'s] office, which were dutifully entered into the client's file by
clerical staff, some of which [Mr. H.W.] was not aware.'' Id. at 6. Mr.
H.W. represents that during the ``critical period of time in December,
2024, he grew increasingly ill with what would ultimately be diagnosed
as a bout with COVID, gradually clouding his cognition and judgment
resulting in large part a failure to calendar critical deadlines.'' Id.
Due to Mr. H.W.'s illness, he ``inadvertently failed to take note of
the Tribunal's [December 9, 2024 Order] and the accompanying deadline
date and therefore, failed to file its response to the [Order]'' by the
December 11 deadline. RFAAX 5, at 2-3. The Agency notes that the
requirement to file an answer existed prior to the December 6, 2024
Order.
Respondent argues that Mr. H.W.'s illness constitutes ``good
cause'' for the Agency to excuse Respondent's failure to file a timely
answer. Id. at 3-4. Respondent believes that it would be greatly
prejudiced by a dismissal, which would be the ``equivalent of a death
knell to Respondent's rehabilitation center.'' Id. at 3-4. On the other
hand, Respondent does not believe that the Government would be
prejudiced if Respondent were permitted to file an untimely answer. Id.
at 2-4. Respondent argues that ``deciding a matter on the merits is
fairer and advances the cause of justice more so than a dismissal based
upon procedural deficiencies, albeit errors caused by its counsel.''
Id. at 3.
C. The Agency's Interpretation of ``Good Cause'' in The Default Rule
i. Relevant Authorities for Interpreting ``Good Cause'' in the Default
Rule
Neither the text of the default rule--which became effective on
December 14, 2022--nor the Notice of Proposed Rulemaking (NPRM) for the
rule, defines ``good cause.'' 21 CFR 1301.43; 85 FR 61662. As ``good
cause'' is the same standard used in the prior iteration of 21 CFR
1301.43(d),\1\ the Agency has applied this standard for decades. In
doing so, the Agency has occasionally referenced federal legal
authorities; for example, the Agency has referenced Supreme Court and
Circuit Court decisions addressing and applying the ``good cause''
standard in contexts where, like here, there is noncompliance with a
scheduling order or a missed deadline.\2\ See, e.g., Konen,
[[Page 47829]]
90 FR at 40,654; Keith Ky Ly, D.O., 80 FR 29,025, 29,027 n.2, 29,028
(2015) (explaining that the Agency ``has frequently looked to [federal
procedural] rules for guidance in interpreting its procedural rules'').
---------------------------------------------------------------------------
\1\ ``If any person entitled to a hearing or to participate in a
hearing pursuant to . . . [21 CFR] 1301.32 or . . . [21 CFR]
1301.34-1301.36 fails to file a request for a hearing or a notice of
appearance, or if such person so files and fails to appear at the
hearing, such person shall be deemed to have waived the opportunity
for a hearing or to participate in the hearing, unless such person
shows good cause for such failure.''
\2\ These federal cases interpret the ``good cause'' standard in
the context of Federal Rules of Civil or Appellate Procedure
governing various stages of litigation where important
considerations underlying specific rules--such as a strong
preference for allowing litigants to file a responsive pleading
before a final judgment has been rendered--may impact whether ``good
cause'' is interpreted leniently or strictly. Although these federal
cases may be instructive, the Agency remains responsible for
interpreting and applying the ``good cause'' standard as Congress
intended it to be applied in the context of 21 CFR 1301.43 (a rule
that was intended to ``conserve scarce agency resources and greatly
increase the efficiency of the adjudicatory process,'' NPRM, 85 FR
at 61664), the CSA, and the CSA's implementing regulations. See,
e.g., Kamir Garces-Mejias, M.D., 72 FR 54,931, 54,932 (2007)
(``Agency proceedings brought under section 304 of the [CSA] are not
governed by the Federal Rules of Civil Procedure, but rather, [the
CSA's implementing] regulations and the rules set forth in the
applicable provisions of the [CSA]. . . . Indeed, this Agency has
never held that the ``good cause'' standard of 21 CFR 1301.43(d),
which addresses conduct constituting a waiver of the right to a
hearing, is to be construed in the same manner as the federal courts
interpret the ``good cause'' standard under FRC.P. 55(c) for setting
aside the entry of a default.'').
---------------------------------------------------------------------------
ii. The Agency's Application of the Default Rule's ``Good Cause''
Standard
Although the Agency has occasionally excused an attorney's
inadvertent mistake when the attorney has ``promptly corrected its
omission,'' \3\ the Agency has repeatedly rejected respondents'
requests to excuse multiple missed litigation deadlines due to
inadvertence, illness, or busy schedules. See, e.g., Konen, 90 FR at
40,654 (finding that respondent failed to demonstrate ``good cause''
for missing several deadlines when respondent's attorney's busy
schedule and illness did not preclude him from performing other tasks);
Kamir Garces Mejias, M.D.,72 FR 54,931 (2007) (rejecting respondent's
argument that his attorney's busy schedule constituted ``good cause''
for several missed deadlines), Rene Casanova, M.D., 77 FR 58,150,
58,150 n.2 (2012) (affirming the ALJ's denial of respondent's consent
motion for a ten-day extension--filed the same day the exceptions were
due--because he had been in trial the week before).
---------------------------------------------------------------------------
\3\ Edge Pharmacy, 81 FR at 72,101 (Agency accepted updated
version of Government's declaration originally submitted unsigned);
see also Tony T. Bui, M.D., 75 FR 49,979, 49,980 (2010) (ALJ found
``good cause'' to excuse Respondent's untimely hearing request where
Respondent's counsel promptly re-submitted request returned due to
incomplete mailing address).
---------------------------------------------------------------------------
In the context of interpreting various rules of Federal Civil and
Appellate Procedure permitting extensions, some federal courts have
interpreted the ``good cause'' or ``excusable neglect'' \4\ standard
strictly, and disallowed extensions when litigants have failed to
demonstrate that their illnesses were so severe that they prevented
them from requesting an extension or notifying the court of their
inability to meet a deadline. See, e.g., Miller v. Chicago Transit
Authority, 20 F.4th 1148, 1153-54 (7th Cir. 2021) (finding that
counsel's explanations of his medical problems were ``so vague as to be
worthless,'' and noting that it was ``[counsel's] burden to provide the
district court sufficient information to demonstrate that his illness
was of such a magnitude that he could not, at a minimum, request an
extension of time to file his response,'' where counsel also cited a
busy schedule and an office relocation as reasons for the missed
deadline) (internal quotations omitted); Acosta v. DT & C Global Mgmt.,
LLC, 874 F.3d 557, 560-61 (7th Cir. 2017) (upholding the district
court's rejection of a ``health problems'' excuse, given the ``lack of
corroborating information''); Proctor v. Northern Lakes Community
Mental Health, 560 Fed. Appx. 453, 454-55 (6th Cir. 2014) (finding that
the district court did not abuse its discretion in failing to find
excusable neglect when the plaintiff, who was hospitalized for three
days and housebound for three weeks due to ``meningitis that caused
adverse mental and physical effects'' and ``spinal and other physical
pain which compromised her mobility,'' did not demonstrate that her
illness rendered her ``unable to file a notice of appeal'').
---------------------------------------------------------------------------
\4\ The Agency ``has interpreted the `good cause' standard for
assessing the timeliness of hearing requests as encompassing cases
of excusable neglect, mistake or inadvertence.'' John P. Moore, III,
M.D., 82 FR 10,398, 10,400 (2017).
---------------------------------------------------------------------------
D. Respondent Failed To Demonstrate ``Good Cause'' for Setting Aside
the Default
Here, the Agency agrees with the ALJ that Respondent has not
provided ``good cause'' for its failure to file a timely answer. See
RFAAX 6, at 2. Respondent missed two important deadlines: First,
Respondent failed to file an answer by the statutory deadline of
December 6, 2024, despite being notified of the deadline in the OSC on
November 6, and reminded of the deadline in the OPS on November 26.
Second, Respondent failed to respond to the ALJ's Order to Show Cause
for Failure to File an Answer, which set a deadline of December 11,
2024. Respondent's Motion for Relief and Answer was filed 25 days after
the statutory deadline for filing an answer and 20 days after the ALJ's
deadline to show cause. Mr. H.W. asserts that the missed deadlines were
a result of inadvertence and illness. However, Mr. H.W. illness did not
begin until December, so his illness should not have significantly
impacted Respondent's ability to comply with the first statutory
deadline of December 6. See In re President Casinos, Inc., 397 B.R.
468, 473-74 (B.A.P. 8th Cir. 2008) (affirming the district court's
dismissal in part because the creditor's attorney did not provide
sufficient details about the duration of the attorney's incapacity
following an emergency appendectomy, and noting that ``[t]he fact that
[the creditor's attorney] became ill does not excuse the period of time
when [he] was not ill. . . .''). Mr. H.W. did not act quickly to
rectify the mistake. Mr. H.W. did not submit any additional filings
with the Tribunal until December 31, 2024, despite receiving several
notifications of the missed deadline, including in the Government's
motion to terminate on December 9, the ALJ's Order to Show Cause on
December 9, and the ALJ's dismissal order on December 12. Mr. H.W.
represented that ``during th[is] critical period of time'' he was
suffering from ``exhaustion and malaise, which ultimately culminated
into an episode of Covid,'' but he did not provide evidence
demonstrating that he was so ill that he was unable to notify the
tribunal of his inability to respond. RFAAX 5, at 3, 6. Mr. H.W.
represented that he ``request[ed] that the firm's other senior counsel
[] take over the process,'' but ``[t]hat newly-assigned [ ] counsel
took time to familiarize himself with the file, while dealing with his
own pre-holiday deadlines.'' Motion to Seek Relief from Final Order,
Jan. 8, 2025, at 4. However, Mr. H.W. has not explained why the newly-
assigned counsel was unable to notify the Tribunal of Mr. H.W.'s
incapacity and communicate Respondent's intention to continue with
litigation, notwithstanding several critical missed deadlines. Mr. H.W.
also has not explained why his clerical staff--who, according to Mr.
H.W.'s declaration, ``dutifully entered [the additional documents
served on his office] into the client's file''--were unable to notify
the tribunal of Mr. H.W.'s inability to respond. RFAAX 5, at 6.
Moreover, while the Agency appreciates Respondent's arguments that
it would be unfair to hold Respondent accountable for his attorney's
mistakes, the Supreme Court has reaffirmed the common principle that
``clients must be held accountable for the acts and omissions of their
attorneys.'' See Pioneer Inv. Services Co., 507 U.S. at 396. In
Pioneer, the Supreme Court found that the district court had erred in
``suggest[ing] that it would be inappropriate to penalize respondents
for the omissions of their attorney,'' noting instead that ``the proper
focus is upon whether the neglect of respondents and their counsel was
excusable.'' Id. at 397. Accordingly, the Agency finds, in agreement
with the ALJ, that Respondent has not provided ``good cause'' to set
aside the default. See RFAAX 6, at 2.
``A default, unless excused, shall be deemed to constitute a waiver
of the registrant's/applicant's right to a hearing and an admission of
the factual allegations of the [OSC].'' 21 CFR 1301.43(e). Further,
``[i]n the event that a registrant . . . is deemed to be in
[[Page 47830]]
default . . . DEA may then file a request for final agency action with
the Administrator, along with a record to support its request. In such
circumstances, the Administrator may enter a default final order
pursuant to [21 CFR] 1316.67.'' Id. Sec. 1301.43(f)(1).
III. Applicable Law
A. The Alleged Statutory and Regulatory Violations
As discussed above, the OSC alleges that Respondent violated
multiple provisions of the CSA and its implementing regulations. As the
Supreme Court stated in Gonzales v. Raich, ``the main objectives of the
CSA were to conquer drug abuse and to control the legitimate and
illegitimate traffic in controlled substances. . . . To effectuate
these goals, Congress devised a closed regulatory system making it
unlawful to . . . dispense[ ] or possess any controlled substance
except in a manner authorized by the CSA.'' 545 U.S. 1, at 12-13
(2005). In maintaining this closed regulatory system, ``[t]he CSA and
its implementing regulations set forth strict requirements regarding
registration, . . . drug security, and recordkeeping.'' Id. at 14.
Here, the OSC's allegations concern the CSA's ``strict requirements
regarding registration[,] . . . drug security, and recordkeeping'' and,
therefore, go to the heart of the CSA's ``closed regulatory system''
specifically designed ``to conquer drug abuse and to control the
legitimate and illegitimate traffic in controlled substances.'' Id.
B. Improper Dispensing, Recordkeeping, and Unaccounted for Controlled
Substances
According to DEA's implementing regulations, narcotic treatment
programs ``shall maintain, on a current basis, a complete and accurate
record of each controlled substance . . . received, sold . . . or
otherwise disposed of . . . .'' 21 CFR 1304.21(a).\5\ These records
must include ``the date on which the controlled substances are actually
received, distributed, otherwise transferred, or destroyed.'' Id.
1304.21(d). Narcotic treatment programs also must maintain an ``initial
inventory . . . of all stocks of controlled substances on hand on the
date [the pharmacy] first engages in the . . . dispensing of controlled
substances,'' as well as a ``biennial inventory . . . of all stocks of
controlled substances on hand.'' Id. 1304.11(a)-(c). These inventories
and records must be retained in a readily retrievable manner ``for at
least 2 years from the date of such inventory or records, for
inspection and copying.'' Id. 1304.04(a).
---------------------------------------------------------------------------
\5\ Pursuant to 21 CFR 1304.03, 1304.21, every registrant,
unless exempted, must comply with the recordkeeping and inventory
requirements outlined in DEA's implementing regulations. Narcotic
treatment programs are explicitly named in 21 CFR 1304.04(f) as a
registrant that must maintain records.
---------------------------------------------------------------------------
Additionally, narcotic treatment programs must maintain a
dispensing log with the following details about each narcotic
controlled substance dispensed: ``(1) Name of substance; (2) Strength
of substance; (3) Dosage form; (4) Date dispensed; (5) Adequate
identification of patient (consumer); (6) Amount consumed; (7) Amount
and dosage form taken home by patient; and (8) Dispenser's initials.''
Id. 1304.24(a). Finally, if a narcotic treatment program wishes to
authorize a non-registered individual to order schedule I and II
controlled substances on its behalf, it must execute a power of
attorney for that individual, which ``must be available for inspection
together with other order records.'' Id. 1305.05(a).
IV. Findings of Fact
The Agency finds that, in light of Respondent's default, the
factual allegations in the OSC are deemed admitted. Respondent is
deemed to have admitted that during two scheduled inspections, on April
21, 2023, and May 20, 2024, DEA investigators discovered numerous
recordkeeping violations that prevented DEA from conducting an audit.
RFAAX 3, at 2-3. Respondent admits that DEA's inspections revealed the
following recordkeeping violations: (1) a failure to maintain a
complete and accurate record of all controlled substances on hand, (2)
a failure to take an accurate initial inventory of all controlled
substances on hand, (3) a failure to provide biennial inventory reports
of all stocks of controlled substances on hand, (4) a failure to
maintain complete and accurate continuing records of all controlled
substances on hand, (5) a failure to record dates of the receipt,
distribution, transfer, or destruction of controlled substances, (6) a
failure to maintain records for two years, (7) a failure to maintain
records in a readily retrievable manner, (8) a failure to abide by
recordkeeping requirements for maintenance treatment programs, and (9)
a failure to execute a power of attorney for individuals to issue
orders for controlled substances on Respondent's behalf. Accordingly,
the Agency finds substantial record evidence of each of these nine
recordkeeping violations.\6\
---------------------------------------------------------------------------
\6\ The OSC also alleges, and it is deemed admitted, that
Respondent entered into two Memoranda of Agreement (MOA) with DEA--
one on July 22, 2019 (2019 MOA), and one on June 26, 2023 (2023
MOA). The OSC further alleges, and it is deemed admitted, that
Respondent violated the terms of these MOAs by failing to update DEA
regarding changes in its employees' information and failing to
comply with all recordkeeping requirements referenced in 21 CFR
1304.11, 1304.24, 1304.25, and all other sections related to
narcotic treatment facilities. The OSC does not allege that these
MOA violations constitute an additional ground for revoking
Respondent's registration. Accordingly, the Agency considers these
factual allegations as background information.
---------------------------------------------------------------------------
V. Discussion
A. The Controlled Substances Act and Implementing Regulations
Under Section 304 of the CSA, ``a registration pursuant to section
823(h)[ ] of this title to dispense a narcotic drug for maintenance
treatment or detoxification treatment may be suspended or revoked by
the Attorney General upon a finding that the registrant has failed to
comply with any standard referred to in section 823(h)[ ] \7\
[[Page 47831]]
of this title.'' 21 U.S.C. 824(a). Section 823(h) outlines three
prerequisites for a practitioner applying for a registration to
dispense narcotic drugs for maintenance treatment or detoxification
treatment:
---------------------------------------------------------------------------
\7\ The subsection of 21 U.S.C. 823 applicable to narcotic
treatment programs was modified on December 2, 2022, and again on
December 28, 2022. Prior to the modifications, the relevant
subsection applicable to narcotic treatment programs was designated
as 21 U.S.C. 823(g)(1), and it had three subparts, A-B, which
outlined the prerequisites for registration as a narcotic treatment
program. On December 2, 2022, the subsection was redesignated as 21
U.S.C. 823(h)(1), and it retained the same three subparts as the
previous version, A-B. On December 28, 2022, the subsection was
again redesignated as 21 U.S.C. 823(h), and the three subparts
outlining the registration prerequisites were redesignated as 1-3.
The December 28, 2022, citation is used throughout this decision.
21 U.S.C. 824(a), which authorizes the Attorney General to
suspend or revoke the registration of a narcotic treatment if the
registration prerequisites are not met, references back to the
relevant subsections of 21 U.S.C. 823. Prior to December 2, 2022,
the revocation provisions of Sec. 824(a) referred to the
registration prerequisites in Sec. 823(g)(1)(A-B). On December 2,
2022, 21 U.S.C. 824(a) was modified to reference the registration
prerequisites in Sec. 823(h)(1)(A-B). However, 21 U.S.C. 824(a) was
not modified again to reflect the December 28, 2022 redesignation
from 823(h)(1) to 823(h). As explained below, this was clearly an
unintentional technical error.
As currently written, 21 U.S.C. 824(a) would only authorize the
Attorney General to revoke a registration if the applicant is not
``qualified . . . to engage in the treatment with respect to which
registration is sought,'' because it only references 823(h)(1), and
not (h)(2) or (h)(3). However, there have not been any substantive
changes to Sec. 823 or Sec. 824 that reflect an intent to limit
the Attorney General's authority to revoke or suspend. Section
823(h) continues to clearly state that a registrant is not qualified
to possess a registration unless all three subparts are met.
Therefore, the Agency concludes that the failure to modify Sec.
824(a) on December 22, 2022, was an oversight, and that Congress
intended for the Attorney General to retain authority to suspend or
revoke a registration if a registrant fails to adhere to any of the
three registration prerequisites or standards referred to in section
823(h). See Dept. of Def., Army Air Force Exchange Serv. v. Fed.
Labor Relations Auth., 659 F.2d 1140, 1160 (D.C. Cir. 1981), cert.
denied, 455 U.S. 945 (1982) (A statute should be read in a ``manner
which effectuates rather than frustrates the major purpose of the
legislative draftsmen.'').
---------------------------------------------------------------------------
(1) ``the applicant . . . is determined by the Secretary to be
qualified . . . to engage in the treatment with respect to which
registration is sought;''
(2) ``the Attorney General determines that the applicant will
comply with standards established by the Attorney General respecting
(A) security of stocks of narcotic drugs for such treatment, and (B)
the maintenance of records (in accordance with section 827 of this
title) on such drugs''; and
(3) ``the Secretary determines that the applicant will comply with
standards established by the Secretary . . . respecting the quantities
of narcotic drugs which may be provided for unsupervised use by
individuals in such treatment.''
As the Agency has previously observed, ``in contrast to every other
category of registration set forth in section 823, Congress did not
characterize these three provisions as `factors' to be considered and
given discretionary weight `[i]n determining the public interest.' . .
. Rather, the three subparagraphs of section 823[h] are conditions for
registration.'' Turning Tide, Inc., 81 FR 47,411, 47,413 (2016).
In this matter, the Government's evidence in support of its prima
facie case relates to Respondent's failure to comply with the
requirements of 21 U.S.C. 823(h)(2) regarding ``maintenance of
records'' for narcotic drugs. RFAAX 3, at 1-4. The Government has the
burden of proof in this proceeding. 21 CFR 1301.44.
Here, the Agency finds that the Government's evidence satisfies its
prima facie burden of demonstrating that Respondent has failed to
comply with the requirements of 823(h)(2) regarding ``maintenance of
records'' for narcotic drugs. 21 U.S.C. 823(a).
A. Allegation That Registrant Has Failed To Comply With the
Requirements of Section 823(h)
Evidence is considered under section 823(h)(2) when it reflects a
failure to comply with ``standards established by the Attorney General
respecting . . . the maintenance of records (in accordance with [21
U.S.C.] 827[\8\] of this title) on such drugs.'' 21 U.S.C. 823(h)(2).
Here, based on Respondent's admissions and the findings above, the
Agency finds substantial evidence that Respondent: (1) failed to
maintain a complete and accurate record of all controlled substances on
hand, (2) failed to take an accurate initial inventory of all
controlled substances on hand, (3) failed to provide biennial inventory
reports of all stocks of controlled substances on hand, (4) failed to
maintain complete and accurate continuing records of all controlled
substances on hand, (5) failed to record dates of the receipt,
distribution, transfer, or destruction of controlled substances, (6)
failed to maintain records for two years, (7) failed to maintain
records in a readily retrievable manner, (8) failed to abide by
recordkeeping requirements for maintenance treatment programs, and (9)
failed to execute a power of attorney for individuals to issue orders
for controlled substances on Respondent's behalf. Therefore, the Agency
finds substantial record evidence that Respondent violated federal law,
namely 21 CFR 1304.11(a)-(c), 1304.11(c), 1304.21(a), (d), 1304.04(a),
(f)(2), 1304.24(a), 1305.05.
---------------------------------------------------------------------------
\8\ The CSA's regulations implementing 21 U.S.C. 827 are found
in 21 CFR 1304, Records and Reports of Registrants.
---------------------------------------------------------------------------
Accordingly, the Agency finds that Respondent has failed to comply
with the requirements for registration under 21 U.S.C. 823(h)(2), and
thus finds that the Agency is authorized to revoke Respondent's
registration under 21 U.S.C. 824(a). The Agency further finds that
Respondent failed to provide any evidence to rebut the Government's
prima facie case.
VI. Sanction
Here, the Government has met its prima facie burden of showing that
the Agency is authorized to revoke Respondent's registration due to
Respondent's numerous recordkeeping violations, which disqualify it
from registration under 21 U.S.C. 823(h)(2). Accordingly, the burden
shifts to Respondent to show why it can be entrusted with registration.
Morall, 412 F.3d. at 174; Jones Total Health Care Pharmacy, LLC v. Drug
Enf't Admin., 881 F.3d 823, 830 (11th Cir. 2018); Garrett Howard Smith,
M.D., 83 FR 18,882, 18,904 (2018.
The issue of trust is necessarily a fact-dependent determination
based on the circumstances presented by the individual registrant.
Jeffrey Stein, M.D., 84 FR 46,968, 46,972 (2019); see also Jones Total
Health Care Pharmacy, 881 F.3d at 833. Moreover, as past performance is
the best predictor of future performance, DEA Administrators have
required that a registrant who has committed acts inconsistent with the
public interest must accept responsibility for those acts and
demonstrate that he will not engage in future misconduct. Jones Total
Health Care Pharmacy, 881 F.3d at 833; ALRA Labs, Inc. v. Drug Enf't
Admin., 54 F.3d 450, 452 (7th Cir. 1995). A registrant's acceptance of
responsibility must be unequivocal. Jones Total Health Care Pharmacy,
881 F.3d at 830-31. In addition, a registrant's candor during the
investigation and hearing has been an important factor in determining
acceptance of responsibility and the appropriate sanction. Id. Further,
the Agency has found that the egregiousness and extent of the
misconduct are significant factors in determining the appropriate
sanction. Id. at 834 & n.4. The Agency has also considered the need to
deter similar acts by the registrant and by the community of
registrants. Jeffrey Stein, M.D., 84 FR at 46,972-73.
Here, although Respondent initially requested a hearing, it was
deemed to be in default based on its ``fail[ure] to plead (including by
failing to file an answer) or otherwise defend.'' See 21 CFR
1301.43(c)(3); RFAA, at 1-2. Respondent has thus not availed itself of
the opportunity to refute the Government's case.\9\ As such, Respondent
has not convinced the Agency as to its future compliance with the CSA
\10\ nor made any demonstration
[[Page 47832]]
that it can be entrusted with a registration. Moreover, the evidence
presented by the Government shows that Respondent violated the CSA,
further indicating that Respondent cannot be entrusted.
---------------------------------------------------------------------------
\9\ Respondent filed an untimely Answer which admits to many of
the allegations in the OSC, including that it ``(c) failed to
provide biennial inventory of all stacks of controlled substances;
(f) failed to keep records for two years; (g) failed to keep records
in a readily retrievable manner; (h) generally, failed to abide by
recordkeeping requirements for maintenance treatment programs, and
(i) failed to execute a power of attorney for individuals to issue
orders for controlled substances.'' Respondent's Proposed Answer,
December 31, 2024, at 4. The Answer also ``acknowledg[es] that it
failed to maintain complete and accurate record of many controlled
substances on hand and take an accurate initial inventory of many
controlled substances on hand.'' Id. at 3.
\10\ Respondent's hearing request states that Respondent will
take actions to come into compliance with the CSA, such as tasking
two different individuals with maintaining and reconciling records,
and requests that DEA allow it to operate for a probationary period
during which time DEA may conduct unannounced visits. RFAAX 3, at 1.
Respondent's Motion to Seek Relief from Final Order asserts that it
``intended for these statements to provide the corrective action
plan afforded to respondents by 21 [ ] 824(c)(3), which requires the
Attorney General to review any corrective action plan submitted and
determine whether the relevant proceedings `should be discontinued
or deferred for the purposes of modification, amendment, or
clarification of such plan.' '' RFAAX 5, at 3. Respondent's motion
further asserts that it ``ha[s] not received any response by the
Attorney General regarding the proposed corrective action.'' Id.
The Agency does not consider Respondent's remediation
statements in its hearing request to be a corrective action plan.
The OSC instructed that any corrective action plan ``should be
clearly labeled `Corrective Action Plan''' and submitted by email to
Thomas W. Prevoznik, Assistant Administrator, Diversion Control
Division.'' RFAAX 1, at 4. The OSC further instructed that the
corrective action plan should be submitted separately from the
answer and request for hearing. Id. at 5. Respondent's request for
hearing does not constitute a corrective action plan because it was
not properly submitted or properly labeled as a corrective action
plan. Nevertheless, in light of Respondent's default and the
extensive nature of Respondent's recordkeeping violations,
Respondent has not ensured the Agency that it can be entrusted with
a registration.
---------------------------------------------------------------------------
Accordingly, the Agency will order the revocation of Respondent's
registration.
Order
Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21
U.S.C. 824(a) and 21 U.S.C. 823(g)(1), I hereby revoke DEA Certificate
of Registration No. RH0554053 issued to Hollywood Medical
Rehabilitation Care. Further, pursuant to 28 CFR 0.100(b) and the
authority vested in me by 21 U.S.C. 824(a) and 21 U.S.C. 823(g)(1), I
hereby deny any pending applications of Hollywood Medical
Rehabilitation Care to renew or modify the named registrations, as well
as any other pending application of Hollywood Medical Rehabilitation
Care for additional registration in California. This Order is effective
November 3, 2025.
Signing Authority
This document of the Drug Enforcement Administration was signed on
September 30, 2025, by Administrator Terrance Cole. That document with
the original signature and date is maintained by DEA. For
administrative purposes only, and in compliance with requirements of
the Office of the Federal Register, the undersigned DEA Federal
Register Liaison Officer has been authorized to sign and submit the
document in electronic format for publication, as an official document
of DEA. This administrative process in no way alters the legal effect
of this document upon publication in the Federal Register.
Heather Achbach,
Federal Register Liaison Officer, Drug Enforcement Administration.
[FR Doc. 2025-19387 Filed 10-1-25; 8:45 am]
BILLING CODE 4410-09-P
</pre></body>
</html>Indexed from Federal Register on October 2, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.