Jury to decide whether Newport Beach doctor was a drug dealer or duped by patients

A jury that began deliberation earlier this week will decide whether a Newport Beach-based doctor used phony diagnoses to justify prescribing powerful medication and then ignored warnings that those drugs were sold on the street, or if he was manipulated by patients he believed were in pain.

More than a dozen relatives and friends of Dr. Jeffrey Olsen sat behind him in a courtroom at the Ronald Reagan Federal Building and U.S. Courthouse in Santa Ana as attorneys gave their closing arguments Monday afternoon. They and his defense team maintain he acted within the scope of his duties as a physician.

Olsen, who played football at Dana Hills High in the 1970s and now resides in Laguna Beach, holds a valid medical license, according to online records reviewed by the Pilot. He has not practiced since he was indicted on 35 felony counts in 2017, one of his attorneys, Reid Rowe of the Federal Public Defender’s office, said Monday.

The physician was charged with selling oxycodone, hydrocodone, Adderall and Xanax without a legitimate medical purpose. He is also accused of lying on an application for authorization from the U.S. Drug Enforcement Administration to distribute controlled substances after he had already relinquished such permission in light of a federal investigation of his practice.

“Dr. Jeffrey Olsen was a drug dealer,” Assistant U.S. Atty. Danbee Kim said during closing statements Monday. “...He turned his prescription pad into a blank check.”

Some of Olsen’s patients were Oregon residents who received multiple prescriptions after each consultation with him, according to logs and text messages presented during trial. They used those to buy hundreds of pills at a time, often filling prescriptions at different pharmacies in order to avoid scrutiny.

James Goodell and Ken Kausler were two of Olsen’s former patients who both testified they were “doctor shopping” to gain access to drugs they wound up selling. The latter said he had been rejected by at least eight other physicians before he started getting prescriptions from Olsen.

Klauson obtained approximately 2,500 pills of oxycodone, Adderall or Xanax between April and November of 2012. Several of his prescriptions were issued by Olsen even after insurance provider Aetna sent a letter to the physician advising that the large amount of medication the patient was receiving was indicative of misuse.

Olsen repeatedly received warnings from pharmacies and insurance companies who suspected that drugs he prescribed were either being abused or diverted to the black market, according to the prosecution. In text messages presented during trial, the physician described vouching for the release of orders withheld from flagged patients as one of the services offered by his practice.

“What do you need?” Olsen wrote in a text to Klauson. “Oxycodone 30’s? How many?”

Olsen’s defense noted he met with patients on a regular basis, and said the doctor issued prescriptions based on what he legitimately believed were cases of severe, chronic pain. The defendant testified that he followed up with the people under his care about their treatment and was trying to convince them to take less medication. In between courtroom proceedings, he told the Daily Pilot he helps manage an addiction recovery support group.

An expert testifying for the defense, Dr. James P. Murphy, said arbitrarily tapering dosages can be dangerous and potentially drive patients toward illicit substance as a replacement. He and Rowe argued that physicians who specialize in the treatment of pain have to rely on the subjective observations of those they care for, and distrust between them potentially undermines the practice of medicine.

“It is not a doctor’s job to say ‘prove it,’” Rowe said. “...that is an impossible position to put doctors in.”

Kim, as well as fellow federal prosecutors Caitlin Campbell and Brett Sagel, said Olsen hardly laid a finger on patients during their visits. They characterized the defendant’s consultations as thinly veiled drug deals.

On several occasions, Klauson exchanged an envelope of cash for prescriptions in the parking lot of Ruby’s Diner in Laguna Beach. The patient testified he was never physically examined by Olsen during those meetings, which lasted only a few minutes.

“Please don’t repeat the Ruby’s thing,” Olsen wrote in texts with Klauson. “You’ll end up causing me to do hard time. And I will end up the bitch to the guy with the most cigarettes.”

Other former patients who took the witness stand include an undercover Irvine police officer and two informants for the DEA who said they lied about their supposed conditions in order to get prescriptions from Olsen. One patient presented a medical imaging test of a different person who other doctors had diagnosed with only mild pain.

The DEA informants recorded their visits with the Olsen. Those videos show him at his desk, scribbling on a prescription pad without ever getting up to perform a physical examination. Prosecutors also claim he coached patients to list symptoms he could use to justify prescriptions for nonexistent ailments.

Rowe and fellow public defender Elena Sadowsky noted that Olsen is heard discussing alternatives to opioids in the footage. He talked to one patient about how he personally managed to get off of painkillers after a back surgery, and said not having to rely on medication would be ideal.

“It’s better than living in pain,” the DEA informant said in response to Olsen’s anecdote.

Murphy testified that visual observations alone can be sufficient basis for a diagnosis from a properly trained physician. However, when prosecutors asked if he himself would prescribe the same types of drugs that Olsen did based on the consultations described during trial, the expert witness said he would likely “need more information.”

After Olsen was indicted almost eight years ago, his attorneys at the time filed numerous continuances to push back his trial date. But in 2020, when federal courts announced plans to suspend proceedings amid the height of the COVID-19 pandemic, his legal team raised complaint over his right to a speedy trial.

On that basis, Judge Cormac Carney dismissed the case. However, the 9th Circuit of Appeals later reversed that decision, describing the dismissal as a “miscarriage of justice.”