[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