[Federal Register Volume 71, Number 164 (Thursday, August 24, 2006)]
[Notices]
[Pages 50100-50102]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-14045]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 05-15]


Oakland Medical Pharmacy; Revocation of Registration

    On October 27, 2004, I, the Deputy Administrator of the Drug 
Enforcement Administration, issued an Order to Show Cause and further 
ordered the immediate suspension of DEA Certificate of Registration, 
AO6837477, issued to Oakland Medical Pharmacy (Respondent) of Madison 
Heights, Michigan. The Show Cause Order proposed to revoke Respondent's 
pharmacy registration and to deny any pending applications for renewal 
or modification of its registration on the ground that Respondent's 
continued registration would be inconsistent with the public interest. 
See 21 U.S.C. 823(f) and 824(a). The Order of Immediate Suspension was 
based on my preliminary finding that Respondent's continued 
registration ``would constitute an imminent danger to the public health 
and safety because of the substantial likelihood'' that Howard 
Applebaum, Respondent's owner and chief pharmacist would ``continue to 
divert controlled substances to persons who will abuse them.'' Show 
Cause Order at 3. The Show Cause Order also notified Respondent of its 
right to a hearing. Id.
    The Show Cause Order specifically alleged that between February 
2002 and October 2004, Mr. Applebaum had ``[o]n many occasions * * * 
provided [two undercover] agents with refills of controlled substance 
prescriptions when refills had not been authorized by a physician.'' 
Id. at 2. The Show Cause Order further alleged that Mr. Applebaum had 
``also provided the agents with excessive amounts of controlled 
substances that had not been authorized by a physician'' by providing 
the agents with refills when he dispensed the initial prescriptions. 
Id. The Order also alleged that Mr. Applebaum had provided refills to 
the agents long before their original prescriptions would have been 
used up. Id.
    The Show Cause Order alleged that on July 26, 2004, Mr. Applebaum 
filled a controlled substance prescription for an agent ``with no 
authorization from her physician.'' Id. The Order also alleged that on 
the same day, the agent observed Mr. Applebaum provide another customer 
with two refills for a controlled substance. Id.
    The Show Cause Order further alleged that a review Respondent's 
records for

[[Page 50101]]

the period January 2003 through May 2004 indicated that ``Mr. Applebaum 
routinely dispenses unauthorized controlled substances by providing 
early refills * * * and multiple refills of prescriptions for the same 
controlled substances on the same date.'' Id. The Order also alleged 
that Respondent's records show that ``Mr. Applebaum dispenses narcotic 
to drug addicts and to individuals obtaining treatment for narcotic 
addiction.'' Id.
    The Show Cause Order alleged that ``Mr. Applebaum was ``routinely 
dispens[ing] contraindicated controlled substances at the same time to 
the same patient,'' and that he was also ``routinely dispens[ing] 
controlled substances'' to doctor shoppers. Id. Finally, the Show Cause 
Order alleged that from October 2003 through April 2004, Respondent had 
purchased 350,000 units of hydrocodone products and that 46 percent of 
the hydrocodone prescriptions it dispensed were issued by the same 
physician. Id. at 3. The Order thus alleged that there was a 
``substantial likelihood that Mr. Applebaum will continue to divert 
controlled substances to'' drug abusers and that Respondent's continued 
registration ``would constitute an imminent danger to public health and 
safety.'' Id.
    On December 13, 2004, the Office of the Administrative Law Judges 
received Respondent's request for a hearing. The case was assigned to 
Administrative Law Judge (ALJ) Gail A. Randall.
    On December 22, 2004, the Government moved for summary disposition. 
The basis for the motion was that on November 16, 2004, the Michigan 
Board of Pharmacy had filed an Administrative Complaint against 
Respondent and had also summarily suspended Respondent's state pharmacy 
license. The State's Order of Summary Suspension was effective 
immediately. The Government thus contended that because Respondent no 
longer had authority under state law to distribute or dispense 
controlled substances, see 21 U.S.C. 824(a)(3), it was not entitled to 
hold its Federal registration. The Government further contended that 
there was no factual matter in dispute.\1\
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    \1\ Upon receipt of the Government's motion, the ALJ ordered 
that the proceedings be stayed pending a decision on the motion and 
further order Respondent to file a reply.
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    On January 21, 2005, Respondent filed an opposition to the 
Government's motion. While Respondent acknowledged that the State had 
summarily suspended its registration, it contended that the State's 
action ``was predicated in large part on the immediate ex-parte 
suspension of respondent's DEA registration * * * and the facts 
developed by the DEA.'' Resp. Answer to Motion for Summary Disp. at 1. 
Respondent further contended that the hearing before the State ALJ was 
ongoing and that the state order was not final. See id. Respondent 
argued that for DEA to rely on the State's summary suspension when the 
State's action was based on the original DEA proceeding ``is a case of 
boot-strapping extraordinaire.'' Id. at 2.
    Respondent thus contended that it would be ``fundamentally unfair'' 
to grant the Government's motion. Id. Respondent further contended that 
revocation was not required by the statutory language of 21 U.S.C. 
824(a)(3). See id. (quoting 21 U.S.C. 824(a)(3) (``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''). According to 
Respondent, ``[t]he action is not mandatory nor is it warranted in this 
situation where the respondent has specifically requested a hearing on 
the merits and is currently in the midst of'' a State hearing ``on the 
issue of whether * * * Respondent's conduct merits [an] order of 
summary suspension of the licenses by the State.'' Id. at 2-3. 
Respondent thus requested that the ALJ deny the Government's motion for 
summary disposition and that the Federal proceeding be stayed until the 
State issued a decision on the merits.
    On February 4, 2005, the ALJ issued an Order for Status Report. In 
the order, the ALJ notified the parties that she had taken the matter 
under advisement and that the proceedings would remain stayed. The ALJ 
also ordered Respondent to file a status report with respect to its 
State license on or before April 18, 2005. The ALJ further notified 
Respondent that if it failed to file the report, the ALJ would rule on 
the government's motion based on the information then before her. See 
Order for Status Report at 1.
    As of May 27, 2005, Respondent had not filed a status report. The 
ALJ therefore issued her order, opinion and recommended decision. In 
her order, the ALJ granted the Government's motion for summary 
disposition, denied the Respondent's request for a continued stay of 
the proceedings and recommended the revocation of Respondent's 
registration on the ground that Respondent lacked State authority to 
handle controlled substances. See ALJ Dec. at 5-7.
    The ALJ specifically found that ``Respondent did not deny that it 
is currently without state authorization to handle controlled 
substances.'' ALJ Dec. at 5. The ALJ further noted that Respondent had 
failed to file a report advising her of the status of the state 
proceeding. See id. Because state authorization is an essential 
prerequisite to a DEA registration, see id. at 4, and it was undisputed 
that ``that the Respondent does not have authority to handle controlled 
substances in the jurisdiction where it seeks to maintain its DEA 
registration,'' the ALJ granted the Government's motion for summary 
disposition. Id. at 5.
    The ALJ acknowledged Respondent's argument that it was ``unfair'' 
for DEA to revoke its registration based on the Michigan suspension, 
because it had been based on the DEA Order to Show Cause and Immediate 
Suspension of Registration. Id. at 5-6. The ALJ further noted that 
``such an action is circular and may result in the Respondent being 
denied an opportunity to adjudicate the facts.'' Id. at 6.
    The ALJ also denied Respondent's request for a stay until the 
conclusion of the state proceeding. According to the ALJ, ``[t]he fact 
remains that the Respondent currently lacks state authorization to 
handle controlled substances, and therefore cannot remain registered 
with the DEA.'' Id. The ALJ thus concluded that she had ``no choice but 
to grant summary disposition at the present time, and to deny'' 
Respondent's motion for a stay. Id.
    Thereafter, Respondent sought reconsideration of the ALJ's 
recommended decision. The basis for Respondent's motion was that he had 
not intentionally failed to file a Status Report but had erroneously 
believed, based on a phone conversation with Government counsel that 
occurred on April 11, 2005, that Government counsel ``was going to 
investigate the matter and confirm with Respondent's counsel whether it 
was still necessary for him to file anything additional in writing 
given the status of the'' state hearing. Resp. Req. for Recon. at 2. 
Respondent's counsel stated that when he did not hear back from 
Government counsel, he ``wrongly assumed that the issue had been 
resolved.'' Id. Respondent further informed the ALJ that the state 
proceedings were continuing and that the proceeding had been ``an 
elongated and vigorously contested hearing,'' which had been held on 
five different dates with one additional date to follow, at which the 
State's ``expert pharmacy witness'' was to testify. Id. at 3.
    The Government responded that while it did not object to the late 
filing of the status report, it did object to

[[Page 50102]]

reconsideration of the ALJ's decision. See Govt. Resp. at 2. While the 
Government counsel did not remember the aforementioned telephone 
conversation, he did not dispute that Respondent's counsel may have 
asked him whether he had to file anything. Id. The Government further 
pointed out that Respondent's counsel did not contend that he had not 
received the ALJ's Order for Status Report, and that the Order, which 
the Government had not received, presumably clearly stated the deadline 
for filing the Status Report. See id. at 2-3.
    The Government contended that whether Respondent should be 
permitted to file a status report was irrelevant because Respondent's 
state license had been suspended in November 2004 and had remained so 
since then. The Government further argued that ``Respondent still does 
not know when the state proceedings will end, and there is no assurance 
that Respondent will regain its state authority.'' Id. at 3. According 
to the Government, ``[t]he ALJ based her Decision on the fact that 
Respondent had no state authority to handle controlled substances at 
the time of the Decision. That fact was true at the time of the 
deadline for the status report, at the time of the Decision and is true 
at the present.'' Id. Therefore, the Government argued that there was 
no basis for the ALJ to reconsider her decision.
    The ALJ denied Respondent's motion for reconsideration. Again, the 
ALJ noted that ``under the Controlled Substances Act it is clear that 
the DEA does not have statutory authority to maintain a registration if 
the registrant is without state authority to handle controlled 
substances in the state in which the registrant conducts business.'' 
Order Denying Resp. Req. for Recon. at 2. The ALJ then transmitted the 
record to me.\2\
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    \2\ I emphasize that there is no provision in DEA's regulations 
for either party to request reconsideration of an ALJ's recommended 
decision. See generally 21 CFR Subpart D. The appropriate means of 
challenging the ALJ's decision is to file exceptions. See 21 CFR 
1316.66.
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    Having considered the record as a whole, I hereby issue this 
decision and final order. I adopt the ALJ's findings of fact and 
conclusions of law. I further adopt the ALJ's recommended decision to 
revoke Respondent's registration. I do not, however, adopt the opinion 
to the extent it suggests that it was ``unfair'' for this agency to 
revoke Respondent's Federal registration based on the State proceeding 
and that ``such an action is circular and may result in the Respondent 
being denied an opportunity to adjudicate the facts.'' ALJ Dec. at 6.
    I acknowledge that the State's Administrative Complaint relied in 
part on my Order to Show Cause and Immediate Suspension of 
Registration. See Admin. Complaint at 3. But the state complaint did 
not rely solely on my action. The state complaint cited a variety of 
grounds under Michigan law for imposing sanctions including ``failing 
to comply with applicable Federal laws,'' id. at 2 (citing Mich. Comp. 
Laws Sec.  333.7311(1)(f)); dispensing of ``controlled substances for 
other than legitimate medical purposes,'' id. (citing Mich. Comp. Laws 
Sec.  333.7311(1)(g)); and ``if an officer or stockholder of the 
pharmacy lacks good moral character.'' Id. at 2-3 (citing Mich. Comp. 
Laws Sec.  333.17768(2)(a)). The complaint further alleged that 
Respondent had violated these provisions of state law. Id. at 3-4. 
Furthermore, the State's Order of Summary Suspension was based on the 
``careful consideration of the documentation filed'' in the State's 
administrative proceeding including the complaint. Order of Summary 
Suspension 1. The State's Order also provided a procedure for 
Respondent to petition for dissolution of the state suspension. See id.
    I take the State on its word and conclude that its decision to 
summarily suspend Respondent's state license was not based solely on my 
order but was also based on its own evaluation of the evidence. 
Furthermore, as Respondent itself pointed out, the State proceeding has 
been ``an elongated and vigorously contested hearing,'' which included 
at least six days of hearings with the State putting on an expert 
witness. It is hard to imagine why a proceeding would take so long to 
litigate and require expert testimony if it did not involve an 
adjudication of the underlying facts. Thus, I do not accept the ALJ's 
conclusion that it is ``circular'' for this agency to revoke 
Respondent's registration based on the State's summary suspension order 
and that doing so ``may result in * * * Respondent being denied an 
opportunity to adjudicate the facts.'' ALJ Dec. at 6. Quite the 
opposite, it appears that the State entered its suspension order based 
on its own examination of the evidence; it further appears that 
Respondent has had a full and fair opportunity to litigate the facts in 
the State proceeding.
    DEA's regulations make clear that the ALJ's decision is only a 
recommendation; it is not the final agency action. The revocation of 
Respondent's Federal registration becomes final only with this order. 
Yet in the interval between the ALJ's decision and the publication of 
this order, Respondent has submitted no evidence to show that the State 
has lifted its suspension.
    As the ALJ correctly recognized, DEA has consistently held that a 
registrant may not hold a DEA registration if it is without appropriate 
authority under the laws of the state in which it does business. See, 
e.g., Rx Network of South Florida, LLC, 69 FR 62,093 (2004); Wingfield 
Drugs, Inc., 52 FR 27,070 (1987). Respondent does not have authority 
under Michigan law to handle controlled substances. Therefore, it is 
not entitled to maintain its DEA registration. See Rx Network of South 
Florida, 69 FR at 62095.

Order

    Accordingly, 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) and 0.104, I hereby order 
that DEA Certificate of Registration, No. AO6837477, issued to Oakland 
Medical Pharmacy be, and it hereby is, revoked. I further order that 
any pending applications for renewal or modification of its 
registration be, and they hereby are, denied. This order is effective 
September 25, 2006.

    Dated: August 15, 2006.
Michele M. Leonhart,
Deputy Administrator.
 [FR Doc. E6-14045 Filed 8-23-06; 8:45 am]
BILLING CODE 4410-09-P