U.S. Attorney’s Office, Eastern District of Tennessee Press Release
On May 2, 2024, United States Attorney Francis M. Hamilton III announced that State of Franklin Healthcare Associates, PLLC (SOFHA), which operates a multispecialty physician-led medical group consisting of more than 30 clinics in Tennessee and Virginia, has agreed to pay civil monetary penalties to resolve allegations that the company violated the Controlled Substances Act (CSA) by failing to make, keep, and furnish essential documents and records pertaining to the acquisition, transfer, and disposition of Schedule III and Schedule IV controlled substances.
Pursuant to the terms of the settlement agreement, SOFHA agreed to pay $200,000 to resolve allegations that from October 2020 to January 2023, SOFHA violated 21 U.S.C. ‘ 842(a)(5) by failing to create or retain and could not furnish required documentation and information. The United States contends that during this time SOFHA did not make and could not produce records pertaining to: the transfers of Schedule III and Schedule IV controlled substances from SOFHA physicians to an unregistered SOFHA supply warehouse; the transfers of Schedule III and Schedule IV controlled substances from SOFHA physicians to other SOFHA physicians; the transfers of Schedule III and Schedule IV controlled substances from the SOFHA supply warehouse to unregistered SOFHA clinics for dispensing by registered SOFHA physicians; and the loss or theft of a Schedule III controlled substance.
The CSA requires that DEA registrants make and retain documents and records detailing the acquisition, dispensing, and disposition of controlled substances. The investigation revealed that SOFHA failed to implement procedures for making and preserving crucial records itemizing controlled substances acquired by SOFHA physicians and transferred to and from unregistered SOFHA clinics and a warehouse and could not provide required information to DEA when requested.
“When medical providers fail to follow the record-keeping requirements of the CSA, it significantly contributes to the risk of diversion of controlled substances from legitimate purposes to improper usage, causing harm to our citizens and communities,” said United States Attorney Francis M. Hamilton III. “This settlement agreement demonstrates that the United States Attorney’s Office, the DEA, federal, state, and local law enforcement partners, are using all tools available to enforce the requirements of the CSA and degrade the diversion of controlled substances.”
“DEA registrants have an obligation to adhere to the strict recordkeeping rules in accordance with the Controlled Substances Act in order to reduce the potential for the diversion of licit drugs with a high potential for abuse,” said Erek Davodowich, acting special agent in charge of the Drug Enforcement Administration’s Louisville Division. “State of Franklin Health Care failed to meet their obligation, resulting in a substantial financial penalty in this case.”
The DEA conducted the investigation of this matter. SOFHA cooperated with the DEA inquiry. Assistant United States Attorney Alan G. McGonigal and Ben D. Cunningham represented the United States. The claims settled by this agreement are allegations only, and there has been no determination of liability.
