Handling DEA Action PART V: What is an OTSC and What Do You Do if Served One?

By Scott Brinks & Hunter DeKoninck

This post is part of a 7-part blog series designed to outline various types of DEA enforcement action registrants need to understand and prepare themselves for. This series will discuss how registrants should:

• Consider the types of DEA personnel they may encounter

• Handle DEA inspections

• Engage bad DIs (or DIs who misunderstand/misapply DEA’s regulations)

• Respond to LOAs

• React to MOAs

• Defend against OTSCs

• Engage DOJ after receiving a pre-filing letter threatening civil action.

When DEA issues an Order to Show Cause (OTSC) against a registrant—whether a physician, pharmacy, distributor, or manufacturer—it’s an extremely serious matter that threatens detrimental legal consequences. The OTSC is the first step in an administrative process seeking to suspend or revoke a DEA registration. Losing your registration can be detrimental to a business because it shuts down your ability to prescribe, dispense, or handle controlled substances, so an OTSC must be handled with great care. If you’ve received an OTSC, here’s what you need to know and do—immediately.

What is an OTSC?

DEA is authorized to revoke, suspend, or deny a person’s DEA registration if it has determined the registrant has submitted a falsified application, has been convicted of a felony related to controlled substances, has lost its state license or “has committed such acts as would render his registration … inconsistent with the public interest.” 21 U.S.C. § 824. However, before DEA can take such action against the registration, it must issue an order for the registrant to “show cause why registration should not be denied, revoked, or suspended”—an OTSC. 21 U.S.C. § 824(c)(1).

The OTSC gives you the opportunity to respond to DEA’s allegations and present your case at an administrative hearing in front of an Administrative Law Judge before DEA can take final action against the registration. For it to be lawful, the OTSC must:

(1) Contain a statement of the basis for the denial, revocation, or suspension, including specific citations to any laws or regulations alleged to be violated by the applicant or registrant;

(2) Direct the applicant or registrant to appear before the Attorney General at a time and place stated in the order, but not less than 30 days after the date of receipt of the order; and

(3) Notify the applicant or registrant of the opportunity to submit a corrective action plan on or before the date of appearance.

21 U.S.C. § 824(c)(2).

An OTSC issued under 21 U.S.C. § 824 ‘s “inconsistent with the public interest” criterion presents the greatest threat and risk to registrants who are otherwise authorized to continue their business activities. When determining whether registration is “inconsistent with the public interest,” DEA is free consider a number of different factors. Among them, the registrant’s past violations, non‑compliance, diversion risk, failure to implement effective controls, or problematic prescribing/distribution patterns are treated as particularly relevant because a registration is a matter of trust for DEA—can the registrant be expected to comply going forward? See Jones Total Health Care Pharmacy v. DEA, 881 F.3d 823 (11th Cir.) (the court held that past performance is the best predictor of future performance); Masters Pharmaceutical Inc. v. DEA, 860 F.3d 1178 (D.C. Cir. 2017).

In addition, to the extent it believes the registrant presents an “imminent danger to the public health or safety” and “there is a substantial likelihood of an immediate threat that death, serious bodily harm, or abuse of a controlled substance will occur” before final action can be taken on the OTSC, DEA can also issue an immediate suspension order (“ISO”). 21 U.S.C. § 824(d). An ISO immediately suspends a registration until an administrative hearing can be held on the OTSC.

Step 1: Take It Seriously—But Don’t Panic

Receiving an OTSC can feel overwhelming, but panic is counterproductive. Instead, registrants should take a beat to digest DEA’s allegations and proceed with thoughtful, organized action. An OTSC is not a warning—it’s a legal proceeding that could lead to the revocation of your DEA registration, so how you react when one is issued is critical to your business.

Step 2: Note the Deadline to Respond

You must respond in writing to the DEA within 30 days of receiving the OTSC to request a hearing before an ALJ. If you fail to do so, DEA may proceed ex parte—without your participation—and revoke your registration by default.

Step 3: Consult Legal Counsel Immediately

Never handle an OTSC without engaging experienced DEA attorney like DeKo Law and another firm like it. DEA administrative proceedings are complex and governed by a combination of DEA regulations, the CSA, the Administrative Procedure Act (“APA”) and federal case law. A lawyer experienced in DEA matters are essential for registrants to: evaluate the allegations, prepare an appropriate response, request a hearing and negotiate with DEA counsel. With the right legal representations, cases are often settled without going through a full hearing.

Step 4: Request the Hearing

If you want to contest the allegations, your attorney will typically recommend requesting a hearing. This starts a formal administrative litigation process before the DEA’s ALJ. During this process, both sides can present evidence, call witnesses, and make legal arguments. The ALJ will issue a recommended decision, but the final decision rests with the DEA Administrator.

Step 5: Preserve Evidence and Review Your Compliance Records

While the legal process unfolds, begin preparing your case:

• Gather relevant documentation (prescription records, inventory records, invoice records, SOPs)

• Identify witnesses or experts who can support your position

• Review any prior communications with the DEA and state regulators

You may also want to conduct an internal compliance audit to assess your position and correct any deficiencies.

Step 6: Stay in Compliance

Even while under investigation or during proceedings, you are still authorized to operate. During this period, it is absolutely critical that you are in full compliance with DEA’s regulations and avoid any actions that could become an aggravating factor for DEA’s case. Any missteps during this period can be used against you in the DEA proceedings.

Consider engaging a DEA consultant to assist with compliance efforts during this window of time. It is critical to select a credible DEA consultant with relevant and adequate expertise, such as Brinks DEA Consulting.

Step 7: Explore Settlement Options

In some cases, the DEA may be willing to settle the matter through a Memorandum of Agreement (MOA) or other negotiated resolution, allowing you to retain your registration under specific conditions. These might include enhanced compliance measures, audits, or a probationary period. Your attorney can advise whether settlement is a viable or advisable option based on the facts of your case.

Final Thoughts

An OTSC is not the end of the road—but it is a serious fork in the path. Taking swift, informed action is essential to preserving your ability to work with controlled substances and protecting your professional reputation.

If you receive an OTSC, don’t delay: seek legal counsel, respond on time, and begin building your defense. With the right approach, it is often possible to negotiate terms that allow you to avoid revocation of your DEA registration.