[Federal Register Volume 68, Number 142 (Thursday, July 24, 2003)]
[Notices]
[Pages 43752-43753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-18870]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


G & O Pharmacy of Paducah, Incorporated; Denial of Application

    On April 19, 2002, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration (DEA), issued an 
Order to Show Cause to G & O Pharmacy \1\ (G & O) notifying the 
applicant of an opportunity to show cause as to why DEA should not deny 
its pending application for DEA Certificate of Registration as a 
retail-pharmacy practitioner pursuant to 21 U.S.C. 823(f). As a basis 
for the denial, the Order to Show Cause alleged that G & O's 
registration would be inconsistent with the public interest. The Order 
to Show Cause also notified G & O that should no request for a hearing 
be filed within 30 days, its hearing right would be deemed waived.
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    \1\ On the July 18, 2001 application for DEA registration, Mr. 
Lockhart listed the business address of the pharmacy as ``G & O 
Pharmacy of Paducah Inc.''
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    The Order to Show Cause was sent by certified mail to G & O at its 
proposed registered location in Paducah, Kentucky, and was received on 
April 26, 2002. DEA has not received a request for hearing or any other 
reply from G & O or anyone purporting to represent the pharmacy in this 
matter.
    Therefore, the Acting Administrator of DEA, finding that (1) thirty 
days having passed since the attempted delivery of the Order to Show 
Cause at the applicant's last known address, and (2) no request for 
hearing having been received, concludes that G & O is deemed to have 
waived its hearing right. See David W. Linder, 67 FR 12579 (2002). 
After considering material from the investigative file in this matter, 
the Acting Administrator now enters his final order without a hearing 
pursuant to 21 CFR 1301.43(d) and (e) and 1301.46.
    The Acting Administrator finds that G & O previously possessed DEA 
Certificate of Registration AG2999691. On July 23, 1992, an Order to 
Show Cause was issued proposing to revoke that Certificate of 
Registration. The Order to Show Cause alleged in substance that (1) in 
July 1990, an individual had overdosed on Demerol received from the 
owner-manager pharmacist of G & O Pharmacy, Randall Lockhart, without 
the benefit of a prescription; (2) accountability audits conducted of G 
& O Pharmacy by DEA investigators in 1990 revealed shortages of 
Schedules II and III controlled substances; (3) G & O Pharmacy had 
filled at least 217 call-in prescriptions not authorized by the 
physicians whose names appeared on the pharmacy's records; and (4) at 
least one individual, on multiple occasions, had received controlled 
substances from Mr. Lockhart without seeing the physician listed on the 
call-in prescription.
    Following prehearing procedures, a hearing was held in Louisville, 
Kentucky, on March 10 and 11, 1993. After the hearing, both parties 
submitted proposed findings of fact, conclusions of law and argument. 
Subsequently, on December 16, 1993, counsel for the Government filed a 
motion to reopen the proceedings, alleging that Mr. Lockhart 
transferred ownership of G & O to AML Corporation (AML). The motion 
also alleged that AML had applied for and received DEA Certificate of 
Registration BA3838553 to operate G & O and that DEA had not been 
notified pursuant to 21 CFR 1301.62 and 1307.14(b) (both sections 
presently designated as section 1301.52). The motion further alleged 
that G & O Pharmacy had ceased doing business under it previous 
ownership or that Mr. Lockhart had transferred ownership to another 
entity. When G & O failed to respond to the Government's motion, 
Administrative Law Judge Mary Ellen Bittner (Judge Bittner) issued an 
order reopening the proceedings in Docket No. 92-78.
    On March 11, 1994, an Order to Show Cause was issued to AML d/b/a G 
& O Pharmacy (containing the same allegations as those raised in the 
July 23, 1992, Order to Show Cause) alleging that its continued 
registration was inconsistent with the public interest. The Order to 
Show Cause further alleged that Mr. Lockhart had improperly transferred 
ownership of G & O without notifying DEA as required. Following the 
consolidation of the two cases, a hearing was conducted on November 17, 
1994.
    After finding that the continuance of a registration would be 
inconsistent with the public interest, the then-Deputy Administrator of 
DEA revoked DEA Certificate of Registration BA3838553 previously issued 
to AML Corporation d/b/a G & O Pharmacy. See, AML Corporation d/b/a G & 
O Pharmacy, and G & O Pharmacy, 61 FR 8973 (March 6, 1996). The Acting 
Administrator finds that the findings of fact and conclusions of law, 
which led to the revocation of AML/G & O's DEA Certificate of 
Registration, are set forth in great detail in the referenced final 
order. They will not be repeated in this final order, but are 
incorporated herein and will be referred to as necessary in rendering a 
decision in this matter.
    G & O has a documented history of non-compliance with DEA laws and 
regulations. From 1989 to 1991 while registered under DEA registration 
number AG2999691, the pharmacy dispensed 24 vials of Demerol, a 
Schedule II controlled substance, to a dentist without a valid 
prescription. It was later determined that these drugs were dispensed 
for the dentist's personal use. Accountability audits conducted by DEA 
investigators of G & O's controlled substances revealed significant 
shortages of various Schedules II, III, and IV controlled substances 
and the pharmacy filled numerous prescriptions for controlled 
substances that were not authorized by physicians whose names appeared 
on the prescriptions. In addition, Mr. Lockhart improperly transferred 
ownership of G & O to AML without

[[Page 43753]]

notifying DEA as required by the agency's regulations.
    The Acting Administrator also finds that effective March 17, 1999, 
Mr. Lockhart and the Kentucky Board of Pharmacy (Board) entered into an 
Agreed Order with respect to Mr. Lockhart's license to practice 
pharmacy in that state. Among the factual findings agreed upon by the 
parties was that in September 1997, Mr. Lockhart made a false or 
fraudulent statement or misrepresentation of a material fact to the 
Board in securing renewal of his pharmacist license. As a result, Mr. 
Lockhart was ordered to pay a fine of $1,000 and obtain ten hours of 
continuing education.
    The parties entered into a second Agree Order on September 13, 
2000, when it was determined that Mr. Lockhart failed to submit 
evidence of continuing education hours as required by the order of 
March 17, 1999. as a result, Mr. Lockhart was fined $500, and ordered 
to obtain an additional 6.5 hours of continuing education within six 
months of the entry of the Agreed Order.
    Pursuant to 21 U.S.C. 823(f), the Acting Administrator may deny an 
application for a DEA Certificate of Registration if he determines that 
such registration would be inconsistent with the public interest. In 
determining the public interest, the following factors are 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 Acting 
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. Schwartz, Jr., M.D., 54 FR 16,422 (1989).
    Regarding factor one, recommendation of appropriate state licensing 
board or professional disciplinary authority, in 1997 and again in 
2000, Mr. Lockhart's license to practice pharmacy was subject to review 
and sanction by the Kentucky Board of Pharmacy. These actions were 
based upon Mr. Lockhart's misrepresentations on a renewal application 
regarding his continuing education, and his failure to obtain 
continuing education as required by the Board.
    Factors two and four, experience in dispensing controlled 
substances and compliance with applicable controlled substance laws are 
relevant in determining whether G & O's registration would be 
inconsistent with the public interest. The then-Deputy Administrator 
previously found that Mr. Lockhart's improperly dispensed Schedule II 
controlled resulting in the transfer of 24 dosage units of Demerol to a 
dentist for his personal use. 61 FR at 8976. Further, accountability 
audits conducted by DEA investigators revealed shortages of over 40,000 
dosage units of various Schedules II through IV controlled substances 
with no evidence adduced by G & O to explain the shortages. In 
addition, DEA's previous investigation of G & O revealed that the 
pharmacy unlawfully dispensed controlled substances in which 
approximately 198 prescriptions retrieved from the pharmacy were not 
authorized by the physicians whose names appeared on the pharmacy 
records. Such conduct is grounds for denying G & O's pending 
application for DEA registration.
    In addition, Mr. Lockhart and G & O demonstrated non-compliance 
with DEA regulations when Mr. Lockhart transferred ownership of G & O 
to AML. Pursuant to 21 CFR 1307.14(b) (since redesignated as 21 CFR 
1301.52), Mr. Lockhart was required to provide the Special Agent in 
Charge in his area specific information at least 14 days in advance of 
the date of the proposed transfer of his ownership in G & O. The record 
before the Acting Administrator reveals that Mr. Lockhart failed to 
inform DEA of the transfer.
    As to factor five, the Acting Administrator finds relevant a 
finding in the previous proceeding that the transfer of ownership from 
G & O to AML was not a bona fide transaction, but as Judge Bittner 
described, ``a stratagem to obtain a new DEA registration.'' 61 FR at 
8976. The apparent ruse designed to secure a DEA Certificate of 
Registration demonstrates a disturbing willingness on the part of Mr. 
Lockhart to engage in dishonest conduct, and further weighs in favor of 
denying G & O's pending application. Similarly, factor five is relevant 
to Mr. Lockhart's use of false information on the application for 
renewal of his pharmacist license. It is well settled that a 
registration of pharmacy may be revoked or application denied based on 
the wrongdoing of its owner or officers, Crosstown Drugs, 54 FR 28521 
(1989). See also, Alexander Drug Company, Inc., 66 FR 18299 (2001).
    It is clear that G & O's past experience in handling controlled 
substances is dismal at best. The pharmacy, through its owner Randall 
Lockhart improperly dispensed controlled substances, including 
instances where the pharmacy failed to obtain physician authorization 
and G & O also failed to account for shortages of large quantities of 
controlled substances. Mr. Lockhart further engaged in the deceptive 
transfer of his ownership interest in G & O to another entity for the 
purpose of securing a DEA registration.
    The Acting Administrator acknowledges that most of these events 
took place more than ten years ago. However, in light of G & O's 
failure to request a hearing in this matter, and the absence of 
evidence to rebut the above allegations, the Acting Administrator is 
left with the conclusion that the applicant has not corrected the 
deficiencies which led to the revocation of its previous Certificate of 
Registration. This conclusion is further supported by evidence that Mr. 
Lockhart has continued to engage in dishonest conduct by providing 
false information on a state professional application, resulting in 
fines and further conditions being placed on his pharmacist license. In 
view of the foregoing, the Acting Administrator concludes that G & O 
cannot be entrusted to handle controlled substances, and the granting 
of its application would not be in the public interest.
    Accordingly, the Acting 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 the 
application for DEA Certificate of Registration submitted by G & O 
Pharmacy of Paducah, Incorporated be, and it hereby is, denied. This 
order is effective August 25, 2003.

    Dated: July 3, 2003.
William B. Simpkins,
Acting Administrator.
[FR Doc. 03-18870 Filed 7-23-03; 8:45 am]
BILLING CODE 4410-09-M