Pubdate: Wed, 26 Dec 2012
Source: Wall Street Journal (US)
Copyright: 2012 Dow Jones & Company, Inc.
Contact:  http://www.wsj.com/
Details: http://www.mapinc.org/media/487
Author: Timothy W. Martin

FLORIDA 'PILL MILL' CRACKDOWN SETS OFF A RUSH INTO GEORGIA

TUCKER, Ga.-After his Florida used-car dealership failed two summers
ago, Jeffrey Gonzalez decided to switch careers. So he moved to
Georgia and opened a clinic prescribing opioid painkillers.

He picked this Atlanta suburb because while Florida law stipulates
that only doctors can own such facilities, Georgia imposes no such
restrictions. Within a few months, Mr. Gonzalez was open for business.
To staff up, he hired two physicians through a Craigslist ad. His lead
doctor wasn't a pain specialist, but a gynecologist.

"The laws are minimal at best," said Mr. Gonzalez, 46 years old. "We
had a green light from every agency that we spoke to."

Previously, Florida to the south was home to much of the "pill mill"
trade, attracting drug dealers and addicts from thousands of miles
away to stock up on prescriptions of oxycodone or hydrocodone they
could either sell or use to get high themselves. But a Florida
crackdown is sending the business sprinting across the border to Georgia.

The rapid cross-border shift reflects how quickly operators can
migrate when the business environment sours-and why it is difficult to
fight the prescription-drug epidemic on a national scale. Today
Georgia is home to more than 125 clinics, up from fewer than 10 in
2010, according to Rick Allen, director of the state's Drugs and
Narcotics Agency. Per capita prescription sales of oxycodone tripled
between 2000 and 2010. Within months of opening in 2011, Mr.
Gonzalez's clinic, Southern Health Management Inc., was seeing up to
50 patients a day. But his fortunes came crashing down on a steamy
afternoon this past June when police and Drug Enforcement
Administration agents wearing ski masks stormed the clinic, looking
for evidence it had prescribed painkillers that made their way onto
the black market.

Mr. Gonzalez was led out in handcuffs. DEA agents loaded dozens of
boxes of medical records into big white trucks and seized $180,000 in
cash and assets. Two weeks later, law enforcement returned and
arrested a doctor. "I had no idea this was going on right under our
nose," said Robert James, the DeKalb County district attorney,
referring to his state's pain-clinic problems.

Other states could be caught off guard in the coming years, says Sam
Olens, Georgia's attorney general. "Once the pill mills leave Georgia,
they'll simply go north of us," says Mr. Olens, looking for other
states with looser regulations.

Mr. Gonzalez's clinic, which stood next door to DeKalb County's police
headquarters, hasn't reopened. Mr. Gonzalez and two employees face
charges of conspiracy to distribute oxycodone. A trial date hasn't yet
been set, according to Mr. Gonzalez.

The company and Southern Health workers deny any wrongdoing.
"Everything we did was by the book. We didn't come close to breaking
any laws, we didn't bend any. It was perfect," says Mr. Gonzalez.

He believes he was an "easy target" because he came from Florida and
has a prior criminal arrest, for allegedly late payments to his auto
supplier. That allegation is still being settled in court. Mr.
Gonzalez denies wrongdoing and hasn't been indicted.

Harry Sommers, the special agent in charge of the DEA's Atlanta field
division, declined to comment on the specifics of the Southern Health
case. Speaking about DEA cases in general, he said, "We're not
randomly out there doing anything. There is nothing random about it."

The White House says prescription painkillers are the nation's No. 1
drug epidemic. More than 16,500 people die annually in the U.S. from
opioid painkillers, more than from heroin and cocaine combined. To
combat abuse, drug and law-enforcement officials are relying on a
patchwork of state laws. Only eight states restrict pain-clinic
ownership to medical professionals. While 42 states have
prescription-drug monitoring programs, they don't all track the same
information. Only 10 are actively sharing data with other states.
Others aren't linked in part because of patient-privacy concerns and a
lack of funds.

Without uniform regulations across all states, "efforts to crack down
on pill mills become like a game of Whac-A-Mole-as soon as one
disappears, another one pops up," U.S. Sen. Sherrod Brown (D., Ohio)
wrote in a letter to Georgia Gov. Nathan Deal in July.

Because the black market for painkillers is driven by a huge volume of
purchases that cross state lines, state officials say they can't
overcome the epidemic without federal direction and dollars,
particularly when their own budgets have tightened. "It's not like we
can have border checks from Kentucky. We border seven states," says
Kentucky Attorney General Jack Conway. "This is the type of issue that
cries out for investment by the federal government."

For its part, the DEA is focused on trying to stifle black-market
sales. In states where pill mills are flourishing, the DEA is
arresting pain-clinic owners and seizing assets, since doctors and
dealers are easily replaced. The DEA has also been investigating large
wholesalers like Cardinal Health Inc., McKesson Corp. and
AmerisourceBergen Corp., which together distribute more than 95% of
the nation's prescription drugs. This year the DEA suspended
Cardinal's controlled-substance license for two years at a Florida
warehouse for repeatedly overlooking escalating oxycodone orders
placed by pharmacies. In August, AmerisourceBergen disclosed that
federal prosecutors and agents had issued two subpoenas over how the
wholesaler monitored the distribution of narcotic painkillers and
other drugs. McKesson and AmerisourceBergen declined to comment. In an
email, Cardinal's CEO, George Barrett said, "Real and lasting change
in the fight against prescription drug abuse requires clear guidelines
and doctors, pharmacists, manufacturers, distributors and regulators
working together in a coordinated and timely manner."

Florida started cracking down in 2010, creating strike forces to close
illicit pain clinics and tracking controlled-substance sales. The
efforts cut Florida's number of pain clinics in half by the end of
this past June. In contrast, Georgia failed to vote this year on a
proposed law requiring pain clinics to be owned by medical
professionals. It has no law that empowers the state's medical board
to close shady operators and suspend the licenses of unscrupulous
doctors. The Peach state also lacks a database that tracks the number
of prescriptions each clinic writes, though it plans one for next spring.

Georgia has only five police detectives solely pursuing
prescription-drug cases statewide. By comparison, Broward County,
Fla., has eight to itself. Mr. Gonzalez said his Florida used-car
dealership failed because of the tough economy and because his former
supplier took him to court on criminal charges of grand larceny for
late payments on three cars. Before trying his hand at used cars, Mr.
Gonzalez was briefly a "hurricane chaser," racing into the heart of
storms and compiling early damage reports to sell to oil companies or
commodities traders. But in 2006 and 2007, he says, there weren't any
major storms. So the business went under. "We had half a million
dollars worth of stuff and weren't able to do anything with it," says
Mr. Gonzalez. He said the money went toward cutting-edge meteorology
equipment-and Hummers.

He became interested in pain clinics after observing one across the
street from his used-car lot, Hurricane Motors. "I hate pill mills,"
says Mr. Gonzalez. He says he tears down advertisements for pain
clinics from telephone poles and keeps them in a pile.

To help run Southern Health, he enlisted Loree Nichols, a friend from
Tampa whom he had known after she sold his house years before. Ms.
Nichols, 42, has no previous experience in health care.

He chose metro Atlanta over Kentucky or Tennessee because it was
populous. "In Atlanta, I expected not to be targeted for doing
something that wasn't illegal, but was controversial," says Mr. Gonzalez.

For startup funding, he sold some of his personal belongings and borrowed
from friends, cobbling together around $40,000. He found what he considered
a perfect location: a two-story former hospital, separated from DeKalb
County police headquarters by just a parking lot and some shrubs. He says he
figured the proximity to cops would scare away addicts and dealers.
In November 2010, Mr. Gonzalez posted an ad on Craigslist:
"Anesthesiologist, General Practitioner, Medical Doctor Needed." The ad said
doctors could work between two and 12 hours daily, and pick their days.
Southern Health opened with two doctors, one computer, a filing cabinet and
some basic examination equipment. For the first month, it was open three
days a week and saw five or six patients daily.

The company charged $200 per patient, with discounts to veterans,
senior citizens and the disabled. About 90% of patients paid in cash
and 10% with credit card, Ms. Nichols says. Few had insurance.

Southern Health spent 10% of its revenue on paying for advertisements
using Google's Ad Word service. "If you punched in 'pain management
Atlanta' or 'pain clinic Atlanta,' we would come up," says Mr.
Gonzalez. After six months, Southern Health averaged about 30 patients
a day. That translated to about $30,000 of pretax revenue a week, of
which Mr. Gonzalez said he took home 10%.

As business improved, Mr. Gonzalez decorated the space with new
carpeting and fresh paint, along with an Atlanta-skyline picture from
Ikea and some art bought oneBay -four aluminum panels arranged on the
walls. To screen out addicts or dealers, Mr. Gonzalez says new
patients were required to fill out a 17-page application that he wrote
himself and included a waiver that read, "The physician assumes no
liability." Patients also agreed to provide their medical histories so
Southern Health staff could call other doctors, dentists, hospitals
and pharmacies to make sure they weren't visiting multiple physicians
or falsifying their records, he says. Only about 13% of the 6,800
patients Southern Health treated became patients who returned on a
monthly basis, says Mr. Gonzalez, a fact he cites as evidence his
facility wasn't a pill mill.

Southern Health had its growing pains, Mr. Gonzalez says. One
part-time physician wasn't given another shift after he asked Mr.
Gonzalez and Ms. Nichols, "What could I do to make this patient
happy?" he says. "We didn't like the doctor asking us anything to do
with what he was prescribing," he says. "I had zero input on what
anybody was prescribed." The doctor couldn't be reached for comment.

About half of the Southern Health's patients came from out of state,
mostly Kentucky and Tennessee, according to Mr. Gonzalez. According to
law enforcement, clinics that treat many out-of-state patients and
accept cash payments are red flags for a pill mill.

Ms. Nichols says the facility followed state laws. "Sure, there are
red flags here, but you got to check them out. Just because there are
red flags doesn't mean anything is wrong," she says. Among other
things, she says, Southern Health doctors tried to wean patients off
high-dosage oxycodone, typically never prescribing more than 120 pills
at a time. It is unclear when the DEA started investigating Southern
Health. The clinic attracted on-site inspections from the cops and
state pharmacy regulators in early 2011 when it tried installing a
pharmacy on-site, Mr. Gonzalez says. Mr. Gonzalez's ties to Florida,
as well as the criminal charge for grand larceny tied to his
auto-supplier dispute, made him a target, he says. He also believes
his clinic was "harassed" because doctors didn't write prescriptions
for extended-release painkillers like Purdue Pharma LP's OxyContin or
Endo Pharmaceuticals Inc.'s Opana. Both branded drugs have safety
features that make abuse more difficult. Southern Health's mostly
uninsured clientele couldn't afford those drugs, which are about eight
times more expensive, Mr. Gonzalez says.

Nick Stabile, a family friend of Mr. Gonzalez's from Tampa, came to
the clinic in November 2011 to oversee some remodeling there. "He'd
just tell me what needed to be done," said Mr. Stabile, who earned
about $500 a week. Over time, Mr. Stabile began helping with patient
paperwork. He also would walk around several times a day with a bowl
of oatmeal bars, crackers, pretzels and snack bags and offer them to
waiting patients. He was at the clinic in June when about 50 masked
DEA agents stormed in and walked out Mr. Gonzalez and Ms. Nichols in
handcuffs. Mr. Stabile stood up against a wall for 45 minutes with
some co-workers. "It was a nightmare," says Mr. Stabile. "They made us
all feel like criminals." Mr. Stabile was neither arrested nor accused
of wrongdoing. He has moved back to Florida. "They came in with an
army," says Mr. Gonzalez. He believes Southern Health was made an
example of in order to serve as a warning to Georgia pain clinics. Now
the building is being subleased to an urgent-care clinic. Following
the first DEA raid in June, Mr. Gonzalez posted $50,000 bond on
charges of conspiracy to distribute oxycodone. Ms. Nichols was booked
for the same charge and released on $35,000 bond. She denies
wrongdoing. Southern Health briefly reopened, though with fewer
patients. About two weeks later, DEA officials returned. When the
clinic's lead doctor, state-licensed gynecologist Michael Assevero,
arrived for work, he was arrested on charges of conspiring to
distribute oxycodone. Mr. Assevero declined to comment. None of the
arrests has led to indictments. Mr. Gonzalez says he has no regrets
and still hopes to operate a pain clinic. "I knew pill mills were a
problem," he says. "I saw the market for people with actual issues.

He doesn't believe his inexperience in the medical field is a
hindrance, comparing himself to a restaurant owner who never worked as
a cook. "We're called entrepreneurs for a reason," Mr. Gonzalez says.

A version of this article appeared Dec. 26, 2012, on page A1 in some
U.S. editions of The Wall Street Journal, with the headline: Florida
'Pill Mill' Crackdown Sets Off a Rush Into Georgia.
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