HOUSTON -- The Texas agency in charge of disciplining doctors has launched its own investigation into the drug testing allegations uncovered by Local 2 Investigates at Cuero Community Hospital.

Former staff members at the publicly funded hospital near Victoria say patients were used as "human guinea pigs" without the patients' knowledge, with a drug that was never approved for trials or use on humans.

The Texas Medical Board was made aware of the allegations nearly two years ago, but the agency's enforcement director said the case had been closed since patient names were not included in the complaint.

Board investigators contacted Local 2 Investigates to seek out specifics from our original report in February, as the agency now re-opens the case. The agency said it could not comment on the new investigation.

The Food and Drug Administration had already launched a criminal investigation in response to the Local 2 Investigates reports.

The FDA said the drugs that Local 2 Investigates found being used on patients had never been approved for testing, and the drugs themselves had never been approved for human use.

FDA investigators arrived to question the former Cuero Community Hospital CEO Jim Buckner last week. He said he approved the purchase of the unapproved drugs, "Providex" or "Durable Closure" at the urging of one of his lead physicians.

That physician, Dr. Daniel Dugi, is an investor with the company that makes the drugs, the Activ Group of Southlake, Texas.

He told Local 2 Investigates he had not earned a dime on the drug since it was not widely used. He also insisted he had "informed consent" or patient permission on every person he treated with the drug.

Dr. Dugi has declined to answer other questions about his use of the drug when approached by Local 2 Investigates.

The FDA declined to comment on the status of its probe, but sources close to the case say investigators have gotten stacks of records about the drug's use. A federal grand jury could consider criminal charges within the next two months.

The FDA is focused on the drug company and the hospital's use of the unapproved drugs, which are intended to heal wounds and sores. The Texas Medical Board can take action against Dr. Dugi if its investigators find proof that he used the unapproved drug without patient consent.

State investigators questioned Local 2 Investigates about promotional literature included in our February report, in which Dr. Dugi details how well the drug worked in "case summary" forms that included photos and other specific details about his patients.

The medical board's lead enforcement official said her agency could now subpoena specific patient files and then contact those patients, based on the Local 2 Investigates report.

The hospital board president said he believes there was no wrongdoing at Cuero Hospital, and he pledged that the hospital would cooperate with state and federal investigators.

The head of Activ Group also denied wrongdoing, but the drugs were ordered removed from the market during the early stages of the FDA investigation.