[Federal Register Volume 64, Number 176 (Monday, September 13, 1999)]
[Notices]
[Pages 49507-49510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-23667]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


KK Pharmacy; Revocation of Registration

    On April 2, 1999, the Deputy Assistant Administrator, Office of 
Division Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to KK Pharmacy, of Osage Each, Missouri, notifying 
it of an opportunity to show cause as to why DEA should not revoke its 
DEA Certificate of Registration BK1488104 pursuant to 21 U.S.C. 
824(a)(1), 824(a)(4) and 824(a)(5), and deny any pending applications 
for renewal of such registration pursuant to 21 U.S.C. 823(f), for 
reason that the pharmacy materially falsified an application for DEA 
registration, is continued registration would be inconsistent with the 
public interest, and it has been mandatorily excluded from 
participation in a program pursuant to 41 U.S.C. 1320a-7(a). The order 
also notified KK Pharmacy that should no request for a hearing be field 
within 30 days of receipt of the Order to Show Cause, its hearing right 
would be deemed waived.
    DEA received a signed receipt indicating that the Order to Show 
Cause was received on April 10, 1999. No request for a hearing or any 
other reply was received by DEA from KK Pharmacy or anyone purporting 
to represent it in this matter. Therefore, the Deputy Administrator, 
finding that (1) 30 days have passed since the receipt of the Order to 
Show Cause, and (2) no request for a hearing have been received, 
concludes that KK Pharmacy is deemed to have waived its hearing right. 
After considering material from the investigative file in this matter, 
the Deputy Administrator now enters his final order without a hearing 
pursuant to 21 CFR 1301.43(d) and (e) and 1301.46.
    The Deputy Administrator finds that Daniel J. Vossman is the owner 
of KK Pharmacy and is also its pharmacist-in-charge. KK Pharmacy is 
located in Missouri and currently possesses DEA Certificate of 
Registration BK1488104.
    In 1980, Mr. Vossman was the vice president of a corporation which 
owned several pharmacies and a wholesale distributor in Kansas. In June 
of 1980, Mr. Vossman admitted to the Kansas Pharmacy Board (Kansas 
Board) that on paper, he had been transferring the controlled substance 
Eskatrol from the distributor to one of the pharmacies, but in fact, he 
had been giving the drug to his wife for her personal use without a 
physician's authorization. According to Mr. Vossman, he diverted 
approximately 1,300 dosage units of the drug this way. A subsequent 
audit revealed a shortage of 1,300 dosage units of the drug this way. A 
subsequent audit revealed a shortage of 1,897 dosage units of Eskatrol 
from the pharmacy and 150 dosage units from the distributor. A later 
investigation revealed that prescriptions could not be found for many 
Schedule II prescription numbers and many Schedule II prescriptions 
that were on hand were unsigned. In addition, an audit covering the 
period January 1, 1977 to August 25, 1980, revealed discrepancies for a 
number of Schedule II controlled substances, including a shortage of 
2,207 dosage units of Eskatrol or 53.2% for which it was accountable.
    As a result, on December 3, 1980, the Kansas Board issued an Order 
effective October 1, 1980, which suspended Mr. Vossman's pharmacist 
registration for 90 days, 60 days of which were suspended, and then 
placed his registration on probation for one year. In addition, the 
wholesale distributor's registration was limited to non-

[[Page 49508]]

controlled substances only. Since the wholesale distributor was not 
longer authorized to handle controlled substances by the state, Mr. 
Vossman surrendered the wholesale distributor's DEA Certificate of 
Registration on January 12, 1981.
    On December 5, 1990, Mr. Vossman filed an application to review KK 
Pharmacy's DEA Certificate of Registration BK1488104. Mr. Vossman 
answered ``No'' to the question on the application (hereinafter 
referred to as the liability question) which asks, ``If the applicant 
is a * * * pharmacy, has any officer, partner, stockholder or 
proprietor * * * ever surrendered or had a Federal controlled substance 
registration revoked, suspended, restricted or denied, or ever had a 
State professional license or controlled substance registration 
revoked, suspended, denied, restricted or placed on probation?''
    Between July 22, 1988 and December 16, 1997, the Missouri Board of 
Pharmacy (Missouri Board) conducted ten inspections of KK Pharmacy. 
Throughout these inspections, various repeated violations of state and 
federal controlled substance laws were noted, such as controlled 
substances were dispensed on a number of occasions without a 
physician's authorization, required information was missing from 
prescriptions, prescriptions were missing from the pharmacy's files, 
and a photocopied prescription for a Schedule II controlled substance 
was filled by the pharmacy. As a result of these inspections, the 
Missouri regulatory authorities took action on several occasions 
against KK Pharmacy's state permits.
    On August 17, 1993, the Missouri Board issued a Stipulation and 
Agreement which placed the pharmacy permit of KK Pharmacy on probation 
from August 27, 1993 through August 26, 1998. This agreement was 
declared null and void in November 1996.
    Mr. Vossman submitted another renewal application for his DEA 
Certificate of Registration on November 28, 1993. Again, Mr. Vossman 
Answered ``No'' to the liability question, and also answered ``No'' to 
another liability question which asks whether, ``the applicant [has] 
ever * * * had a State professional license or controlled substance 
registration revoked, suspended, restricted or denied or ever had a 
State professional license or controlled substance registration 
revoked, suspended, denied, restricted or place on probation?''
    On February 2, 1994, KK Pharmacy entered into a Memorandum of 
Understanding with the Missouri Bureau of Narcotics and Dangerous Drugs 
(Missouri BNDD). Mr. Vossman agreed that for five years he would 
provide the Missouri BNDD with prescription and refill information on a 
quarterly basis; permit access to pharmacy records by the Missouri 
Board and the Missouri BNDD; and meet all conditions set forth in the 
Stipulation and Agreement with the Missouri Board.
    KK Pharmacy failed to provide the Missouri BNDD with prescription 
information as required by the Memorandum of Understanding, and failed 
to renew its Missouri controlled substance registration. As a result, 
on February 16, 1995, KK Pharmacy entered into a second Memorandum of 
Understanding with the Missouri BNDD, in which Mr. Vossman agreed to 
take a completed and accurate inventory by hand of all controlled 
substances upon the signing of the Memorandum. In addition, Mr. Vossman 
agreed that for seven years he would, among other things, take an exact 
count of all controlled substances on hand every six months; maintain a 
perpetual inventory of all controlled substances; provide the Missouri 
BNDD with prescription and refill information on a quarterly basis; 
maintain all records in accordance with state and federal laws; 
maintain Schedule II order forms in accordance with federal law; not 
dispense Schedule II controlled substances without a signed 
prescription; not partially fill Schedule II prescriptions; and meet 
annually with the Missouri BNDD.
    On November 15, 1996, a 29-count felony information was filed 
against Mr. Vossman in the Circuit Court of Camden County, Missouri 
alleging that Mr. Vossman, d/b/a KK Pharmacy made false statements to 
receive health care payments. Two of these counts involved controlled 
substances. On October 1, 1997, Mr. Vossman pled guilty to one count of 
the information, and was sentenced to probation for five years.
    On November 22, 1996, Mr. Vossman submitted an application to renew 
KK Pharmacy's DEA Certificate of Registration. On this application, Mr. 
Vossman answered ``Yes'' to the liability questions. In his explanation 
accompanying the application, Mr. Vossman indicated that he had been 
charged with making a false statement to receive a health care benefit, 
and that he had signed a Memorandum of Understanding with the Missouri 
BNDD on February 16, 1995, but that this Memorandum was being contested 
in the Circuit Court of Cole County, Missouri. However, Mr. Vossman 
failed to mention the 1980 suspension and probation of his license to 
practice pharmacy in Kansas, his surrender in 1981 of the wholesale 
distributor's DEA registration, or the 1994 Memorandum of Understanding 
with the Missouri BNDD.
    By letter dated August 16, 1996, the Missouri Department of Health 
proposed the denial of KK Pharmacy's application for renewal of its 
controlled substance registration. The letter stated that Mr. Vossman 
has failed to provide satisfactory proof that the managing officers of 
KK Pharmacy are of good moral character. The letter further stated that 
registration of KK Pharmacy is inconsistent with the public interest 
because the pharmacy has not maintained effective controls against the 
diversion of controlled substances, has not operated in compliance with 
applicable state and federal law and has provided false or fraudulent 
material information on its application for registration.
    Ultimately, by letter dated December 3, 1996, Mr. Vossman was 
advised that KK Pharmacy's application for a state controlled substance 
registration was denied and that he had 30 days to request a hearing. 
The letter listed as reasons for the denial that Mr. Vossman made a 
false statement on an application for a Missouri controlled substance 
registration; between June 1994 and August 1995, KK Pharmacy filled or 
refilled 81 controlled substance prescriptions without a physician's 
authorization; the pharmacy did not maintain 25 controlled substance 
prescriptions on file for a period of two years; it filled two Schedule 
II prescriptions in excess of a 30-day supply without a physician's 
written justification; it filled four Schedule II prescriptions for 
which there was no signed prescription order; and it filled two 
Schedule II prescriptions without the dispenser's signature. Mr. 
Vossman requested a hearing on the denial.
    On July 16, 1997, Mr. Vossman and the Missouri BNDD filed a `Joint 
Stipulation of Facts, With Proposed AHC [Administrative Hearing 
Committee] Conclusions of Law and Proposed AHC Order and with Joint 
Agreement and Terms of Discipline,'' hereinafter referred to as the 
Joint Agreement. In this filing the parties stipulated that KK 
Pharmacy's Missouri controlled substance registration expired on July 
31, 1994 and was not renewed until February 16, 1995, yet the pharmacy 
continued to dispense controlled substances. The parties also 
stipulated that KK Pharmacy furnished false information to the Missouri 
BNDD on three applications and dispensed 27 refills of generic Darvocet 
N-100 to a

[[Page 49509]]

customer in 1992 and 1993 without a physician's knowledge or 
authorization.
    As a result of this Joint Agreement, KK Pharmacy was issued a 
Missouri controlled substance registration which was placed on 
probation for five years subject to various terms and conditions, 
including that KK Pharmacy will maintain a perpetual inventory for all 
controlled substances using the Pharmacy's computer, conduct background 
checks on all current and future pharmacist employees; maintain records 
showing the dates and times each pharmacy employee works; employ a 
consulting pharmacist to review the pharmacy's controlled substance 
handling; provide the Missouri BNDD with prescription and refill 
information on a quarterly basis; not accept any Schedule II telephone 
prescription; verify that all information on controlled substance 
prescriptions is complete and accurate; and verify on a daily basis a 
printout of prescription data for that day.
    On November 20, 1997, the consulting pharmacist filed her first 
report with the Missouri BNDD noting that KK Pharmacy seemed to be 
making efforts to comply with the Joint Agreement, however she was 
still finding problems with the Schedule III through V perpetual 
inventory resulting in an ability to reconcile the drugs. The 
consulting pharmacist submitted her second report on March 10, 1998, in 
which she noted a decline in KK Pharmacy's compliance with the Joint 
Agreement and many violations of pharmacy law. The consulting 
pharmacist stated in her report that ``I must also say that over the 
last three months I have felt that there have been attempts to hide or 
cover missing information needed by me to make an accurate assessment 
of the pharmacy's compliance with the agreement.'' The consulting 
pharmacist further ``found it to be virtually impossible to reconcile 
the inventory in this pharmacy because there have been so many errors 
and corrections that there is no way to trace [the drugs.]'' The 
consulting pharmacist concluded that ``[o]ver the last three months I 
have felt that Mr. Vossman has not taken the initiative to be 
responsible for the pharmacy, but has expected that I or the 
technicians would come in and do the job for him[,]'' and that ``I am 
not sure that Mr. Vossman has the incentive or the skills needed to 
comply with the terms of this agreement.''
    By letter dated February 27, 1998, Mr. Vossman was notified by the 
Department of Health and Human Services that he was being excluded from 
participation in the Medicare, Medicaid, Maternal and Child Health 
Services Block Grant and Block Grants to States for Social Services 
programs for a period of five years pursuant to 42 U.S.C. 1320a-7(a).
    On March 11, 1998, a Felony Conviction Complaint was filed with the 
Missouri Board stating that Mr. Vossman's conviction is an offense 
reasonably related to the qualifications, functions, or duties of a 
pharmacist or involves moral turpitude, and asking the Missouri Board 
to conduct a hearing and to impose appropriate discipline. Following a 
hearing, not attended by Mr. Vossman or a representative, the Missouri 
Board issued its Findings of Fact, Conclusions of Law, and Order of 
Discipline (Order) on April 23, 1998, revoking Mr. Vossman's pharmacist 
license. Thereafter, on April 30, 1998, Mr. Vossman filed a Petition 
for Review of the Missouri Board's Order stating that he did not attend 
the disciplinary hearing because he was not aware of it, and even had 
he been aware of the hearing, he would not have had sufficient time to 
prepare for it. In addition, Mr. Vossman filed a motion on April 30, 
1998, in the Circuit Court of Cole County, Missouri seeking a stay of 
the Missouri Board's Order pending resolution of the appeal. The Court 
granted Mr. Vossman's motion for a stay on April 30, 1998.
    On June 18, 1998, Mr. Vossman filed a request for rehearing while 
his petition for review of the Missouri Board's revocation of his 
pharmacist license was pending. The Missouri Board withdrew its April 
23, 1998 Order, and a hearing was held on July 9, 1998. On July 16, 
1998, the Missouri Board issued its Findings of Fact, Conclusions of 
Law, and Order of Discipline (Order) revoking Mr. Vossman's pharmacist 
license and prohibiting him from applying for reinstatement of his 
license for three years. Mr. Vossman again filed a petition for review 
of the Missouri Board's Order on July 24, 1998, in the Circuit Court of 
Cole County, Missouri. Mr. Vossman also filed a motion in the Circuit 
Court of Cole County, Missouri, requesting a stay of the Missouri 
Board's Order pending appeal, which was granted on July 27, 1998. There 
is no further evidence in the file regarding the disposition of this 
matter.
    The Deputy Administrator may revoke or suspend a DEA Certificate of 
Registration under 21 U.S.C. 824(a), upon a find that the registrant:
    (1) Has materially falsified any application filed pursuant to or 
required by this subchapter or subchapter II of this chapter;
    (2) Has been convicted of a felony under this subchapter or 
subchapter II of this chapter or any other law of the United States, or 
of any State, relating to any substance defined in this subchapter as a 
controlled substance;
    (3) Has had his State license or registration suspended, revoked, 
or denied by competent State authority and is no longer authorized by 
State law to engage in the manufacturing, distribution, or dispensing 
of controlled substances or has had the suspension, revocation or 
denial of his registration recommended by competent State authority;
    (4) Has committed such acts as would render his registration under 
section 823 of this title inconsistent with the public interest as 
determined under such section; or
    (5) Has been excluded (or directed to be excluded) from 
participation in a program pursuant to section 1320a-7(a) or Title 42.
    The Deputy Administrator finds that it is well-settled that a 
pharmacy operates under the control of owners, stockholders, 
pharmacists or other employees, and therefore the acts of these 
individuals are relevant in determining whether grounds exist to revoke 
a pharmacy's DEA Certificate of Registration. See Rick's Pharmacy, 
Inc., 62 FR 42595 (1997), Maxicare Pharmacy, 61 FR 27368 (1996); Big-T 
Pharmacy, Inc. 47 FR 51830 (1982).
    Pursuant to 21 U.S.C. 824(a)(1), a registration may be revoked if 
the registrant has materially falsified an application for 
registration. DEA has previously held that in finding that there has 
been a material falsification of an application, it must be determined 
that the applicant knew or should have known that the response given to 
the liability question was false. See, Martha Hernandez, M.D., 62 FR 
61145 (1997); Herbert J. Robinson, M.D. 59 FR 6304 (1994).
    On KK Pharmacy's renewal application dated December 5, 1990, Mr. 
Vossman answered ``No'' to the liability question, even though his 
Kansas pharmacist license had been suspended and then placed on 
probation in 1980, and he surrendered his wholesale distributor's DEA 
registration in 1981.
    Mr. Vossman also falsified KK Pharmacy's renewal application dated 
November 28, 1993, by again answering ``No'' to the liability question. 
Like the 1900 renewal application, Mr. Vossman should have disclosed 
the action against his Kansas pharmacist license in 1980 and the 
surrender of his wholesale distributor DEA registration in 1981. In 
addition, Mr. Vossman should have answered the liability question in 
the affirmative based upon the Missouri Board's action in August 1993 
placing

[[Page 49510]]

the pharmacy permit of KK pharmacy on probation for five years. While 
the Missouri Board's action was ultimately declared null and void in 
November 1996, it was in effect in November 1993 when Mr. Vossman 
submitted the renewal application.
    Finally, while Mr. Vossman did answer ``Yes'' to the liability 
question on KK Pharmacy's renewal application dated November 22, 1996, 
he failed to note in his explanation for his response that he had 
entered into a Memorandum of Understanding with the Missouri BNDD in 
1994; that his Kansas pharmacist license was suspended and then placed 
on probation in 1980; and that he surrendered the DEA registration of 
his wholesale distributor in 1981.
    The Deputy Administrator concludes that Mr. Vossman materially 
falsified KK Pharmacy's 1990, 1993 and 1996 renewal applications for 
its DEA Certificate of Registration, and therefore grounds exists to 
revoke the pharmacy's DEA registration.
    Next, pursuant to 21 U.S.C. 823(f) and 824(a)(4), the Deputy 
Administrator may revoke a DEA Certificate of Registration and deny any 
pending applications, if he determines that the continued 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 and 
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 be 
denied. See Henry J. Schwarz, Jr., M.D., 54 FR 16422 (1989).
    As to factor one, the file is replete with actions against KK 
Pharmacy and Mr. Vossman by various state licensing agencies. Mr. 
Vossman's Kansas pharmacist license was suspended in 1980 and then 
placed on probation. KK Pharmacy entered into a Memorandum of 
Understanding with the Missouri BNDD in 1994, and again in 1995. Action 
was taken by the Missouri BNDD to deny KK Pharmacy's state controlled 
substance registration in December 1996. The pharmacy was ultimately 
issued a new state controlled substance registration in July 1997 that 
was subject to various terms and conditions for five years. Then in 
1998, Mr. Vossman's pharmacist permit was revoked by the Missouri 
Board, but that revocation was stayed pending appeal of the Missouri 
Board's Order.
    Factors two and four, KK Pharmacy's experience in dispensing 
controlled substances and its compliance with applicable laws, are 
clearly relevant in determining the public interest. In 1980, Mr. 
Vossman diverted controlled substances from his then pharmacy and 
wholesale distributor for his wife's personal use without a physician's 
authorization. Between 1988 and 1997, the Missouri Board conducted ten 
inspections of the pharmacy which revealed numerous repeated 
violations. Particularly noteworthy is that Mr. Vossman continued to 
dispense controlled substances on a number of occasions without a 
physican's authorization.
    In 1997, Mr. Vossman was given another chance by the Missouri Board 
to come into compliance. However, the consulting pharmacist hired to 
review KK Pharmacy's handling of controlled substances reported in 
March 1998 that, ``there have been attempts to hide or cover missing 
information needed * * * to make an accurate assessment of the 
pharmacy's compliance with the agreement.'' The consulting pharmacist 
concluded that, ``Mr. Vossman has not taken the initiative to be 
responsible for the pharmacy, but has expected that I or the 
technicians would come in and do the job for him,'' and that ``I am not 
sure that Mr. Vossman has the incentive or the skills needed to comply 
with the terms of this agreement.''
    While there is no evidence under factor three that Mr. Vossman or 
KK Pharmacy has been convicted of a controlled substance related 
offense, the Deputy Administrator does find Mr. Vossman's conviction 
for making a false statement to receive a health care benefit relevant 
under factor five. A registrant's truthfulness and trustworthiness are 
appropriately considered in determining the public interest.
    The Deputy Administrator concludes that there are serious questions 
as to whether Mr. Vossman and KK Pharmacy can be trusted to responsibly 
handle controlled substances. Accordingly, the Deputy Administrator 
concludes that KK Pharmacy's continued registration would be 
inconsistent with the public interest and therefore grounds exist to 
revoke the pharmacy's DEA Certificate of Registration pursuant to 21 
U.S.C. 824(a)(4).
    Finally, there is a basis to revoke KK Pharmacy's DEA Certificate 
of Registration pursuant to 21 U.S.C. 824(a)(5). Mr. Vossman was 
advised by letter from the Department of Health and Human Services 
dated February 27, 1998, that pursuant to 42 U.S.C. 1320a-7(a) he was 
excluded from participation in the Medicare, Medicaid, Maternal and 
Child Health Services Block Grant and Block Grants to States for Social 
Services programs for a period of five years. The Deputy Administrator 
finds that while this exclusion was based upon Mr. Vossman's conviction 
for a non-controlled substance related offense, DEA has previously held 
that misconduct which does not involve controlled substances may 
constitute grounds, under 21 U.S.C. 824(a)(5), for the revocation of a 
DEA Certificate of Registration. See Stanley Dubin, D.D.S., 61 FR 60727 
(1996), George D. Osafo, M.D., 58 FR 37508 (1993); Gilbert L. Franklin, 
D.D.S., 57 FR 3441 (1992).
    Therefore, the Deputy Administrator concludes that grounds exist to 
revoke KK Pharmacy's DEA Certificate of Registration pursuant to 21 
U.S.C. 824(a)(1), (4), and (5). No evidence of explanation or 
mitigating circumstances was offered by KK Pharmacy, Mr. Vossman, or 
anyone purporting to represent the pharmacy.
    Accordingly, the Deputy Administrator of the Drug Enforcement 
Administration, pursuant to the authority vested in him by 21 U.S.C. 
823 and 824, and 28 CFR 0.100(b) and 0.104, hereby orders that DEA 
Certificate of Registration BK1488104, previously issued to KK 
Pharmacy, be, and it hereby is, revoked. The Deputy Administrator 
further orders that any pending applications for renewal of such 
registration, be, and they hereby are, denied. This order is effective 
October 13, 1999.

    Dated: August 24, 1999.
Donnie R. Marshall,
Deputy Administration.
[FR Doc. 99-23667 Filed 9-10-99; 8:45 am]
BILLING CODE 4410-09-M