[Federal Register Volume 61, Number 70 (Wednesday, April 10, 1996)]
[Notices]
[Pages 15972-15974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8927]
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DEPARTMENT OF JUSTICE ANTITRUST DIVISION
Drug Enforcement Administration
[Docket No. 95-13]
Dinorah Drug Store, Inc.; Grant of Application
On December 12, 1994, the Deputy Assistant Administrator, Office of
Diversion Control, Drug Enforcement Administration (DEA), issued an
Order to Show Cause to Dinorah Drug Store, Inc., (Respondent) of
Hialeah, Florida, notifying it of an opportunity to show cause as to
why DEA should not deny its application for registration as a retail
pharmacy under 21 U.S.C. 823(f) and 824(a)(5). Specifically, the Order
to Show Cause alleged that:
(1) Between May and June 1991, while doing business as Dinorah
Pharmacy Corporation (Dinorah Pharmacy), its owner Luz B. Abad
unlawfully sold samples and complimentary packages of non-controlled
drug products to Medicaid recipients, and submitted claims for
payment to the Florida Medicaid Program.
(2) On June 4, 1992, in the Eleventh Judicial Circuit of Florida
(Dade County), Dinorah Pharmacy and Luz B. Abad pled guilty to one
felony count of selling samples or complimentary packages of drug
products. Dinorah Pharmacy and Ms. Abad were ordered to pay court
costs, fines and to reimburse the State of Florida Office of the
Auditor General for investigative cost.
(3) On February 24, 1993, Dinorah Pharmacy was notified by the
Department of Health and Human Services of its five=year mondatory
exclusion from participations in the Medicare program pursuant to 42
U.S.C. 1320a-7(a). Such exclusion constitutes a basis for the denial
of [the Respondent's] application for DEA Certificate of
Registration.
Pursuant to a telephone conference on August 31, 1995, with
Administrative Law Judge Paul A. Tenney, the parties agreed to accept a
decision based upon an agreed statement of facts. The statement of
facts was to consist of the prehearing statements submitted by each
party, and any exhibits that the parties timely submitted consistent
with those statements. It was also stipulated that Ms. Luz B. Abad is
the predominant owner of the Respondent, Dinorah Drug Store, Inc.
(Dinorah Drug Store). Subsequently, the Government submitted ten
exhibits and each party submitted proposed findings of fact,
conclusions of law, and argument.
On October 11, 1995, Judge Tenney issued his Findings of Fact,
Conclusions of Law and Recommended Ruling, recommending that the
Respondent's application for registration be granted. Neither party
filed exceptions to his decision, and on November 16, 1995, Judge
Tenney transmitted the record of these proceedings to the Deputy
Administrator.
The Deputy Administrator has considered the record in its entirety,
and pursuant to 21 CFR 1316.67, hereby issues his final order based
upon findings of fact and conclusions of law as hereinafter set forth.
The Deputy Administrator adopts, in full, the Findings of Fact,
Conclusions of Law, and Recommended Ruling of the Administrative Law
Judge, and his adoption is in no manner diminished by any recitation of
facts, issues and conclusions herein, or of any failure to mention a
matter of fact or law.
The Deputy Administrator finds that Ms. Luz Abad is licensed as a
pharmacist with the Board of Pharmacy for the State of Florida. She is
the predominant owner of the Respondent, Dinorah Drug Store, and she
was also the predominant owner and sole pharmacist of Dinorah Pharmacy
until its dissolution in late 1992.
In June of 1991, the Office of the Auditor General for the State of
Florida conducted an investigation of Dinorah Pharmacy and Ms. Abad
regarding possible Medicaid fraud. The Regional Drug Inspector for the
Department of Health and Rehabilitative Services informed the Office of
the Auditor General that a large quantity of samples of non-controlled
substances were found during a routine pharmacy inspection of Dinorah
Pharmacy. Subsequent investigation revealed that Dinorah Pharmacy had
dispensed sample medications to two Medicaid recipients and submitted
claims to Medicaid for those samples. As a result, Dinorah Pharmacy had
received $162.40 from Medicaid for the sample medications that had been
dispensed.
Dinorah Pharmacy and Ms. Abad were both individually charged with
one felony count of Selling Samples or Complimentary Packages of Drug
Products in violation of Florida Statute 465.015(2)(d). On June 4,
1992, Dinorah Pharmacy pled guilty to the above charge. However,
pursuant to a Pre-Trial Intervention Agreement, Ms. Abad was not
prosecuted. The Dinorah Pharmacy was dissolved as a business entity,
and its DEA registration was retired. Effective March of 1993, the
Department
[[Page 15973]]
of Health and Human Services excluded Dinorah Pharmacy from
participation in the Medicaid program pursuant to 42 U.S.C. 1320a-7(a)
for a period of five years. Such exclusion was mandatory under Section
1128(a)(1) of the Social Security Act.
On October 20, 1992, Dinorah Drug Store was incorporated, and Ms.
Abad was listed as the registered agent of the corporation. Ms. Abad
applied for and received a pharmacy permit for Dinorah Drug Store from
the Board of Pharmacy for the State of Florida. Per the record, Ms.
Abad had not applied for a Medicaid provider number for the Respondent
pharmacy. On February 8, 1993, Ms. Abad submitted, on behalf of the
Respondent, an application for a DEA registration as a retail pharmacy.
That application was the basis of the DEA's Order to Show Cause dated
December 12, 1994.
Since its incorporation, the Respondent pharmacy has been routinely
inspected by the Department of Business and Professional Regulation for
the State of Florida and has always been found to be in compliance with
the laws and regulations of the State of Florida regarding pharmacies.
The record contains an opinion from a pharmacy investigator for the
State of Florida (Florida Investigator), a stating that he does not
believe any grounds exist to deny Dinorah Drug Store a DEA
registration. The Respondent also submitted evidence from members of
the community, attesting to the honesty and trustworthiness of Ms.
Abad.
Initially, the parties dispute whether 21 U.S.C. 824(a)(5) may be
used as a basis to deny DEA registration to the Respondent pharmacy on
the grounds that Ms. Abad, the predominant owner of the Respondent
pharmacy, was also the predominant owner of Dinorah Pharmacy at the
time it was excluded under the Medicaid program pursuant to 42 U.S.C.
1320as-7(a). Under Section 824(a)(5), the Deputy Administrator may
suspend or revoke a registration issued pursuant to Section 823 upon a
finding that the registration--``has been excluded (or directed to be
excluded) from participation in a program pursuant to Section 1320a-
7(a) of Title 42.'' It is the Government's position that this section
is to be construed as not only grounds for the suspension or revocation
of a DEA registration, but also as a basis for the denial of an
application for a DEA registration. However, counsel for the Respondent
argued that this provision is inapplicable, because this section is
limited to the revocation or suspension of already existing
registrations. Here the Respondent is applying for a new DEA
Certificate of Registration.
The Deputy Administrator agrees with Judge Tenney's resolution of
this issue. Judge Tenney noted that the Government's argument was more
convincing.
To reject 21 U.S.C. 824(a)(5) as a basis for the denial of DEA
registration makes little sense. The result would be to grant the
application for registration, only to possibly turn around and
propose to revoke or suspend that registration based on the
registrant's exclusion from a Medicare program. A statutory
construction which would impute a useless act to Congress will be
viewed as unsound and rejected. South Corp. v. United States, 690
F.2d [1369], 1374 (Fed. Cir. 1982).
Therefore, 21 U.S.C. 824(a)(5) may serve as a basis for the denial
of a DEA registration.
As Judge Tenney noted, the DEA Deputy Administrator ``has
consistently revoked, suspended, or denied the registrations of
pharmacies based upon the unlawful practices of the pharmacy's owner,
majority shareholder, officer, managing pharmacist, or other key
employee.'' See, e.g., AML Corporation, d/b/a/ G & O Pharmacy, Docket
No. 94-34 and 92-78, 61 FR 8973 (1996); Unarex of Plymouth, d/b/a/
Motor City Prescription and Unarex of Dearborn, d/b/a/ Motor City
Prescription Center, 50 FR 6077 (1985). Therefore, it is appropriate to
look to the conduct of Ms. Abad, the person who is both the predominant
owner and practicing pharmacist for the Respondent.
Although Ms. Abad was not prosecuted for her actions in dispensing
sample medications and submitting claims to Medicaid for those samples,
it is significant that such conduct resulted in the conviction and the
mandatory exclusion of Dinorah Pharmacy from the Medicaid program
pursuant to 42 U.S.C. 1320a-7(a), while Ms. Abad was its predominant
owner and sole pharmacist. Therefore, the Deputy Administrator agrees
with Judge Tenney in concluding that ``[c]ounsel for the DEA has
presented a primafacie case for the denial of [the] Respondent's
application for registration under 21 U.S.C. 824(a)(5).''
However, also as Judge Tenney correctly wrote, ``[s]ince denial of
registration under Section 824(a)(5) is discretionary, the factors
listed in Section 823(f) may be considered in determining whether the
granting of [the] Respondent's application is inconsistent with the
public interest.'' Pursuant to 21 U.S.C. 823(f), the Deputy
Administrator may deny an application for registration as a retail
pharmacy, if he determines that granting the registration would be
inconsistent with the public interest. Section 823(f) requires that the
following factors be considered:
(1) The recommendation of the appropriate State licensing board or
professional disciplinary authority.
(2) The applicant's experience in dispensing, or conducting
research with respect to controlled substances.
(3) The applicant's conviction record under Federal or State laws
relating to the manufacture, distribution, or dispensing of controlled
substances.
(4) Compliance with applicable State, Federal, or local laws
relating to controlled substances.
(5) Such other conduct which may threaten the public health or
safety.
These factors are to be considered in the disjunctive; the Deputy
Administrator may rely on any one or a combination of factors and may
give each factor the weight he deems appropriate in determining whether
a registration should be revoked or an application for registration
denied. See Henry J. Schwarz, Jr., M.D., Docket No. 88-42, 54 FR 16422
(1989).
In this case, all five factors are relevant in determining whether
the Respondent's registration would be inconsistent with the public
interest. As to factor one, ``recommendation of the appropriate State
licensing board, . . .'' it is significant that the Respondent and Ms.
Abad have the requisite permits and licenses to operate within the
State of Florida, and that no evidence has been submitted of adverse
actions taken by the Florida Board of Pharmacy against either the
Respondent or Ms. Abad. Further, the Florida Investigator has inspected
the Respondent and found it to be in compliance with Florida law. He
also opined that no reason existed to deny the Respondent's
registration application. In light of the above, the Deputy
Administrator agrees with Judge Tenney's conclusion, that ``as to
Factor 1, I find that Ms. Abad and the Respondent have some form of
approval attributable to the appropriate State licensing body.''
As to factor two, the Respondent's ``experience in dispensing . . .
controlled substances,'' the Deputy Administrator agrees with Judge
Tenney's finding, that it is relevant that Ms. Abad, as owner and sole
pharmacist of Dinorah Pharmacy, had a DEA registration. Further, for
eleven years she had operated under that registration as the sole
pharmacist responsible for handling and dispensing controlled
substances without any allegations of improprieties. Finally, neither
party presented any evidence with regards to
[[Page 15974]]
Dinorah Pharmacy or the Respondent pharmacy, alleging any improprieties
involving controlled substances.
As to factors three and four, neither the Respondent, Dinorah
Pharmacy, nor Ms. Abad has ever been charged with or convicted of any
offense relating to the distribution or dispensing of controlled
substances. Dinorah Pharmacy was convicted of one count of Selling
Samples or Complimentary Packages of Drug Products in violation of
Florida law, but the drug products involved were not controlled
substances.
Finally, as to factor five, ``[s]uch other conduct which may
threaten the public health or safety,'' Judge Tenney found it
significant that the small amount involved in the unlawful billing to
the Medicaid program of Dinorah Pharmacy ``suggests that the billing
was not a widespread practice. . . .'' He further noted that in the
notification letter sent to Dinorah Pharmacy, giving notice of its
mandatory exclusion from the Medicaid Program, the Department of Health
and Human Services had written that there were no aggravating
circumstances in this instance to justify imposing more than the
mandatory minimum period of exclusion.
Further, the Respondent also submitted relevant character evidence
as to the trustworthiness and honesty of Ms. Abad. Various individuals
in the medical profession, and one accountant, noted that Ms. Abad was
an honest, hard-working individual who provided quality service to the
community served by the Dinorah Drug Store.
The Deputy Administrator agrees with Judge Tenney's conclusion that
the denial of registration under Section 824(a)(5) is discretionary.
Here, the Government's basis for denial is Dinorah Pharmacy's five-year
mandatory exclusion from the Medicaid Program as a result of the
conduct of Ms. Abad, the current owner and pharmacist for the
Respondent. However, balanced against this basis for denial is (1) the
lack of any adverse action or allegations pertaining to Ms. Abad's
conduct related to controlled substances, (2) the observations and
recommendation of the Florida Investigator concerning Ms. Abad's
conduct as a pharmacist for the Respondent and his recommendation that
DEA grant the registration application, and (3) the positive character
evidence provided by the Respondent, attesting to Ms. Abad's
trustworthiness and positive contributions of her professional services
to the community served by the Dinorah Drug Store.
In reaching his conclusion, the Deputy Administrator notes that Ms.
Abad's conduct of selling drug samples and billing Medicaid for such
sales is fraudulent behavior, and he certainly does not condone such
activity. However, in reviewing the entire record, the Deputy
Administrator concludes that the public interest is best served by
granting the Respondent a DEA Certificate of Registration. Further, the
Deputy Administrator is aware of the Respondent's immediate need for
such a registration. Therefore, given this need, the Deputy
Administrator has determined that the public interest will be better
served in making this final order effective upon publication, rather
than thirty days from the date of publication.
Accordingly, the Deputy Administrator of the Drug Enforcement
Administration, pursuant to the authority vested in him by 21 U.S.C.
823, and 28 CFR 0.100(b) and 0.104, hereby orders that the pending
application of Dinorah Drug Store, Inc., for a DEA Certificate of
Registration, be, and it hereby is, approved. This order is effective
upon the date of publication in the Federal Register.
Dated: April 4, 1996.
Stephen H. Greene,
Deputy Administrator.
[FR Doc. 96-8927 Filed 4-9-96; 8:45 am]
BILLING CODE 4410-09-M
