Decisions and Orders:

Federal Register Volume 76, Number 209 (Friday, October 28, 2011)


Pages 66965-66968

From the Federal Register Online via the Government Printing Office []

FR Doc No: 2011-27927


Drug Enforcement Administration

Docket No. 11-68

Treasure Coast Specialty Pharmacy Decision and Order

On September 14, 2011, Administrative Law Judge (ALJ) Gail A.

Randall issued the attached recommended decision. There were no exceptions filed to the ALJ's decision.

Having reviewed the record in its entirety including the ALJ's

Page 66966

recommended decision, I have decided to adopt the ALJ's rulings, findings of fact, conclusions of law, and recommended decision to grant the Government's Motion for Summary Decision.


Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 824(a), as well as 28 CFR 0.100(b), I order that DEA Certificate of

Registration, BT9856002, issued to Treasure Coast Specialty Pharmacy, be, and it hereby is, revoked. I further order that any pending application of Treasure Coast Specialty Pharmacy, to renew or modify his registration, be, and it hereby is, denied. This Order is effective immediately.

Dated: October 7, 2011.

Michele M. Leonhart,


Scott Lawson, Esq., for the Government

Richard K. Alan, II, Esq., for the Respondents

Recommended Rulings, Findings of Fact, Conclusions of Law, and Decision of the Administrative Law Judge

  1. Facts

    Gail A. Randall, Administrative Law Judge. On June 27, 2011, the

    Administrator, Drug Enforcement Administration (``DEA'' or

    ``Government''), issued an Order to Show Cause and an Immediate

    Suspension of Registration (``Order''), immediately suspending the DEA

    Certificate of Registration, No. BT9856002, of Treasure Coast Specialty

    Pharmacy (``Treasure Coast''), as a retail pharmacy pursuant to 21

    U.S.C. 824(d) (2006), because Treasure Coast's continued registration constitutes an imminent danger to the public health and safety. The

    Order also proposed to deny any pending DEA registration applications by Treasure Coast and to deny the pending application for DEA registration by Pappy's Drugs d/b/a Prima Vista Pharmacy (``Pappy's

    Drugs'') because their registrations would be inconsistent with the public interest, as that term is used in 21 U.S.C. 823(f).

    Specifically, the Order alleged that Treasure Coast ``has dispensed and continues to dispense controlled substances, primarily Schedule III anabolic steroids and Schedule II narcotics under circumstances demonstrating that [Treasure Coast] knew or should have known'' that those prescriptions were not issued for a legitimate medical purpose.

    Order at 2

    . The Order explains that this knowledge must be inferred from Treasure Coast's association with and filling of prescriptions issued by physicians who have pled guilty in federal court to unlawfully distributing steroids, and who market themselves as providing ``hormone replacement therapy'' and ``anti-aging'' services.


    . In addition, the Order alleges that Treasure Coast dispensed controlled substances based on invalid prescriptions where the prescribing practitioners were not licensed to prescribe controlled substances in the various states where their patients were located.''


    . Further, the Government alleges that despite Treasure Coast being apprised that it is illegal for it to practice in North Carolina without a license, the pharmacy continued to ship anabolic steroids to customers located in that state. [Id. at 3-4].

    Next, the Government alleged that Treasure Coast filled prescriptions for Schedule II controlled substances prescriptions

    ``under circumstances indicating that the drugs are diverted from legitimate channels, misused, or abused.'' [Id. at 4].

    On July 28, 2011, counsel for Treasure Coast and Pappy's Drugs

    (collectively, ``Respondents'') timely filed a request for a hearing in the above-captioned matter.

    On July 29, 2011, the Government filed its Motion For Summary

    Disposition And Motion to Stay Proceedings (``Government's Motion'').

    Therein, the Government moved for summary disposition of the portion of these proceedings that relate to Treasure Coast's registration. The

    Government based its motion on the fact that the State of Florida suspended Treasure Coast's registration as a community pharmacy and, therefore, Treasure Coast currently lacks state authority to handle controlled substances.

    On August 1, 2011, I ordered the Respondents to file a response to the Government's Motion, if any, on or before August 5, 2011.

    On August 5, 2011, counsel for the Respondents filed their

    Respondents' Response to DEA's Motion For Summary Disposition And

    Motion To Stay Proceedings (``Respondents' Response''). Therein, the

    Respondents argued that the Government is precluded from using Treasure

    Coast Pharmacy's lack of state licensure as a basis for revocation of its DEA registration, through summary disposition or otherwise, as the

    Government failed to state those grounds in its Order to Show Cause.

    Consequently, the Respondents' aver that Treasure Coast's due process rights require the Government ``to serve an Order to Show Cause * * * stating the DEA's new or substituted basis for revocation and calling upon [Treasure Coast] to appear at the time and place stated in the

    Order to Show Cause, but in no event less than thirty days after the date of receipt of this order.'' [Resp. Response at 2]. In addition, the Respondents argue that under applicable Florida law the owner of a pharmacy need not be licensed as such, yet must designate a managerial pharmacist that is so licensed. Further, citing Federgo v. Department of Professional Regulation, 452 So.2d 1063 (Fla. 3rd DCA 1984), the

    Respondents state that alleged wrongdoing of a pharmacist does not trigger nor support the suspension of the pharmacy's state license.

    Id. at 3


    On August 5, 2011, I ordered the Government to reply to the

    Respondents' Response no later than August 12, 2011.

    On August 9, 2011, counsel for Treasure Coast filed its

    Respondents' Supplemental Response to DEA's Motion For Summary

    Disposition And Motion To Stay Proceedings. Therein, the Respondents argue that Treasure Coast has a valid Florida retail pharmacy drug wholesale distribution license, and on that basis summary disposition is inappropriate.

    On August 12, 2011, counsel for the Government filed its

    Government's Reply To Respondent's Initial And Supplemental Responses

    To Government's Motion For Summary Disposition (``Government's

    Reply''). In its Reply the Government argues that its Motion for

    Summary Disposition remains valid. First, the Government addresses the

    Respondents' due process argument in stating

    The Administrative Procedures Act (APA), 5 U.S.C. 551 et seq, does not * * * mandate * * * an inelastic application of the strictures of administrative due process: ``[p]leadings in administrative proceedings are not judged by the standards applied to an indictment at common law.'' Citizens State Bank of Marshfield v. FDIC, 751 F.2d 209, 213 (8th Cir. 1984) (quoting Aloha Airlines v. Civil Aeronautics Bd., 598 F.2d 250, 262 (DC Cir. 1979), cited in

    Liddy's Pharmacy, L.L.C., 76 FR 48887, 48896, fn 15. As noted in

    Liddy's, ``the failure of the Government to disclose an allegation in the Order to Show Cause is not dispositive, and an issue can be litigated if the Government otherwise timely notifies a respondent of its intent to litigate the issue.'' Id. Due process is traditionally measured by the notice accorded respondents not by the contents of the OTSC but by subsequent prehearing statements. Id. citing Darrell Risner, DMD, 61 FR 728, 730 (1996); Nicholas A.

    Sychak, d/b/a Medicap Pharmacy, 65 FR 75959, 75961 (2000); John

    Stafford Noell, 59 FR 47359, 47361 (1994).

    Government's Reply at 3-4

    . Therefore, the Government argues that it accorded

    Page 66967

    the Respondent due process when it notified Treasure Coast of its basis for summary disposition in the Government's prehearing Motion for

    Summary Disposition [Id. at 4].

    Next, the Government addresses the substantive basis for its

    Motion. Specifically, the Government argues that Treasure Coast's possession of a wholesale distributor permit is meaningless, as the loss of its community pharmacy license renders that permit useless.

    Id. at 5-6

    . The Government points to Florida Statute Sections 499.01(2)(f) and 499.003(51) for the proposition that a pharmacy's possession of a wholesale distributor permit is conditioned on that pharmacy's maintenance of a community pharmacy license. [Id. at 5]. The

    Government buttresses this argument via provision of a letter from the

    Chief Legal Counsel for the Emergency Action Unit of the Florida

    Department of Health, stating ``[b]ecause Treasure Coast's community pharmacy permit is presently suspended, Treasure Coast may not operate under either its community pharmacy permit or its wholesale distributor permit.'' [Id.]. Hence, the Government argues that the Respondent currently lacks state authority to handle controlled substances and, therefore, summary revocation of its DEA registration is appropriate.

    For the reasons set forth below, I will grant the Government's

    Motion and recommend that the Deputy Administrator revoke Treasure

    Coast's DEA Certificate of Registration and deny any currently pending applications to renew its registration.

  2. Discussion a. Procedural Due Process

    First, I reject Treasure Coast's argument that it will not be afforded procedural due process if its registration is revoked due to its lack of state licensure, as that basis was not noticed in the

    Government's Order. As correctly stated by the Government, the confines of this administrative proceeding are not defined by the Government's

    Order to Show Cause, but rather the Government's prehearing disclosures, in toto. [See George Mathew, M.D., 75 FR 66,138, 66146

    (DEA 2010)]. Further, the DEA has consistently followed Goldberg v.

    Kelly, 397 U.S. 254, 270 (1970), by writing: ``In Goldberg, the Supreme

    Court held that `where governmental action seriously injures an individual, and the reasonableness of the action depends on fact findings, the evidence used to prove the Government's case must be disclosed to the individual so that he has an opportunity to show that it is untrue.' '' [Beau Boshers, M.D., 76 FR 19,401, 19,403 (DEA 2011)

    (citing Goldberg, 397 U.S. at 270 (quoting Greene v. McElroy, 360 U.S. 474, 496 (1959))]. The Court has further explained that ``[a] party is entitled * * * to know the issues on which [the] decision will turn and to be apprised of the factual material on which the agency relies for decision so that he may rebut it. Indeed, the Due Process Clause forbids an agency to use evidence in a way that forecloses an opportunity to offer a contrary presentation.'' [Id. (citing Bowman

    Transp., Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 288 n.4 (1974))].''

    Here, the Government put the Respondent on notice through its

    Motion for Summary Disposition. Accordingly, Treasure Coast's due process rights are not violated because the Government, through its prehearing Motion, timely notified Treasure Coast of its intent to pursue revocation of its registration on the basis of the pharmacy's lack of state licensure. In its Response, Treasure Coast had the opportunity to rebut the factual basis upon which the Government based its Motion. For this reason, Treasure Coast's due process argument fails. b. Wholesale Distribution Permit and State Authority

    The DEA will not maintain a controlled substances registration if the registrant is without state authority to handle controlled substances. The Controlled Substances Act (``CSA'') provides that obtaining a DEA registration is conditional on holding a state license to handle controlled substances. [See 21 U.S.C. 823(f) (``the Attorney

    General shall register practitioners (including pharmacies * * *) * * * if the applicant is authorized to dispense * * * controlled substances under the laws of the State in which he practices''). See also 824(a)(3) (stating ``a registration may be suspended or revoked by the

    Attorney General upon a finding that the registrant has had his State license or registration suspended, revoked or denied by competent State authority'')]. The DEA, therefore, has consistently held that the CSA requires the DEA to revoke the registration of a registrant who no longer possesses a state license to handle controlled substances. [See e.g. Joseph Baumstarck, 74 FR 17,525, 17,527 (DEA 2009) (stating the

    ``ALJ applied the Agency's long-settled ruled [sic] that a practitioner may not maintain his DEA registration if he lacks authority to handle controlled substances under the laws of the state in which he practices''); Roy Chi Lung, M.D., 74 FR 20,346 (DEA 2009); Gabriel

    Sagun Orzame, M.D., 69 FR 58,959 (DEA 2004); Alton E. Ingram, Jr.,

    M.D., 69 FR 22,562 (DEA 2004); Graham Travers Schuler, M.D., 65 FR 50,570 (DEA 2000); Dominick A. Ricci, M.D., 58 FR 51,104 (DEA 1993)].

    The parties do not dispute that the State of Florida suspended

    Treasure Coast's retail pharmacy registration. Therefore, Treasure

    Coast no longer possesses authority under that license to handle controlled substances. However, Treasure Coast argues that it currently possesses other state authority to handle controlled substances, through its maintenance of a wholesale distributor permit.

    Nevertheless, I am persuaded by the Government's argument that the

    State of Florida did not intend a pharmacy, who lacks authority to handle controlled substances under a retail pharmacy registration, to be permitted to handle controlled substances under a wholesale distribution permit. Not only is the alternative plainly inconsistent with Florida law, it renders an absurd interpretation of those laws.

    See Fla. Stat. 499.01(2)(f) (2010) (only permitting a retail pharmacy to obtain a wholesale distribution permit); 499.003(51) (defining

    ``retail pharmacy'' as ``a community pharmacy licensed under chapter 465''); Durr v. Shinseki, 638 F.3d 1342, 1348 (11th Cir. 2011)

    (``[b ecause the legislature is presumed to act with sensible and reasonable purpose, statute should, if at all possible, be read so as to avoid unjust or absurd conclusion.'')].

    This interpretation is consistent with the letter from the Chief

    Legal Counsel, Emergency Action Unit, Florida Department of Health, who wrote that, ``[b]ecause Treasure Coast's community pharmacy permit is presently suspended, Treasure Coast may not operate under either its community pharmacy permit or its wholesale distributor permit.''

    Government's Reply, attachment 3

    . Therefore, because, as a matter of law, Treasure Coast no longer possesses state authority to handle controlled substances, its DEA registration must be revoked. c. Respondents' Other Arguments

    Treasure Coast's other arguments for denial of the Government's

    Motion are irrelevant to this proceeding. First, the Respondent's argument that Florida law does not require the owner of a retail pharmacy to be registered as a pharmacist, but instead permits a pharmacy to designate managerial authority to a registered pharmacist, is irrelevant because despite the truth or

    Page 66968

    falsity of that assertion, the DEA registers pharmacies, not pharmacists,\1\ and Treasure Coast as a retail pharmacy currently lacks state authority to operate.

    \1\ 21 U.S.C. 823(f).

    In addition, the Respondents' argument that the State of Florida may not revoke a pharmacy's registration on the basis of its pharmacist's wrongdoing is equally irrelevant. Upon a motion for summary disposition due to lack of state licensure, the DEA will not consider whether the State has a valid basis for revoking the

    Respondent's registration; it will only consider whether the Respondent currently possesses state authority. As Treasure Coast does not, its registration must be revoked.

  3. Conclusion, Order, and Recommendation

    It is well-settled that when no question of fact is involved, or when the material facts are agreed upon, a plenary, adversarial administrative proceeding is not required under the rationale that

    Congress does not intend administrative agencies to perform meaningless tasks. [See Layfe Robert Anthony, M.D., 67 FR 35,582 (DEA 2002);

    Michael G. Dolin, M.D., 65 FR 5,661 (DEA 2000); see also Philip E.

    Kirk, M.D., 48 FR 32,887 (DEA 1983), aff'd sub nom. Kirk v. Mullen, 749

    F.2d 297 (6th Cir. 1984); Puerto Rico Acqueduct & Sewer Auth. v. EPA, 35 F.3d 600, 605 (1st Cir. 1994)]. Consequently, there is no genuine dispute of material fact as the Respondent currently lacks state authority to handle controlled substances. Therefore, summary disposition for the Government is appropriate.\2\

    \2\ This opinion does not reach the other factual issues made in the Order to Show Cause. Rather, this opinion solely addresses

    Treasure Coast's loss of ability to handle controlled substances in the State of Florida, and, thus, ability to maintain a DEA registration.

    Accordingly, I hereby grant the Government's Motion for Summary


    I also forward the portion of this case that relates to Treasure

    Coast's registration to the Deputy Administrator for final disposition.

    I recommend that Treasure Coast's DEA Certificate of Registration,

    Number BT9856002, be revoked and any pending renewal applications for this registration be denied.

    Dated: August 16, 2011.

    Gail A. Randall,

    Administrative Law Judge.

    FR Doc. 2011-27927 Filed 10-27-11; 8:45 am

    BILLING CODE 4410-09-P

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