[Federal Register Volume 72, Number 183 (Friday, September 21, 2007)]
[Notices]
[Pages 54070-54072]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18512]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 04-58]


RX Direct Pharmacy, Inc.; Dismissal of Proceeding

    On May 17, 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, 
BR8263876, issued to RX Direct Pharmacy, Inc. (Respondent) of Deerfield 
Beach, Florida. The Order of Immediate Suspension was based on my 
preliminary finding that Respondent, ``through its Internet service[,] 
has been responsible for the diversion of large quantities of 
controlled substances,'' Id. at 9, and that its continued registration 
during the pendency of the proceeding, ``would constitute an imminent 
danger to the public health and safety because of the substantial 
likelihood that [it would] continue to divert controlled substances.'' 
Id. at 10.
    The Show Cause Order proposed the revocation of Respondent's 
registration as a retail pharmacy and to deny any pending applications 
for renewal or modification of the registration on the ground that 
Respondent's continued registration would be inconsistent with the 
public interest. Show Cause Order at 1 (citing 21 U.S.C. 823(f) & 
824(a)). More specifically, the Show Cause Order alleged that 
Respondent's customers would access an affiliated Web site, at which 
they would complete an on-line questionnaire and list what drugs they 
were seeking. Id. at 5. According to the Show Cause Order, the 
questionnaires were then submitted to ``affiliated physicians,'' who 
would review the

[[Page 54071]]

questionnaires; if the physician approved the patient's request, the 
prescription was then forwarded to Respondent to be filled. Id.
    The Show Cause Order further alleged that on four separate 
occasions between November 24, 2003, and April 8, 2004, DEA 
investigators purchased various Schedule IV controlled substances 
including phentermine, Ambien, and Meridia, all of which were ordered 
through an Internet site and were filled by Respondent. Id. at 6-8. The 
Show Cause Order generally alleged that prescriptions were based solely 
on an Internet questionnaire, that the investigator never had any 
contact with the prescribing physician, and that a pharmacist never 
contacted the investigators to discuss their prescriptions. See id. 
Relatedly, the Show Cause Order also alleged that between March 22, 
2004, and April 13, 2004, Respondent dispensed to a Pennsylvania 
resident 600 hydrocodone tablets, which were prescribed by a Puerto 
Rico-based physician. Id. at 8.
    On June 11, 2004, Respondent timely requested a hearing. The matter 
was assigned to Administrative Law Judge (ALJ) Mary Ellen Bittner. At 
the request of both parties, various stays were entered in the matter.
    On October 10, 2006, the Government moved for summary disposition. 
The basis of the Government's motion was that Respondent's state 
pharmacy license had expired on February 28, 2005, and that Respondent 
was now closed. Gov. Mot. For Summary Judgment at 1. The Government 
thus maintained that because Respondent no longer had authority to 
handle controlled substances under Florida law, it was not entitled to 
maintain its DEA registration. Id. at 3. Alternatively, the Government 
argued that Respondent's DEA registration automatically terminated when 
it closed. Id. at 4 (citing 21 CFR 1301.52(a)).
    Respondent opposed the Government's motion. Respondent admitted 
that its state license had expired, that it did not renew the license, 
and that it had surrendered the license. Resp. Opp. at 3. Respondent 
also ``acknowledge[d] that under relevant law and precedent, DEA may 
not register an applicant to handle controlled substances if the 
applicant lacks authority to handle controlled substances in the state 
in which it practices.'' Id. Respondent asserted, however, that this 
rule should not be applied to it because of ``the unique 
circumstances'' wherein it ``surrendered its state pharmacy license 
after, and based solely on, DEA's Order to Show Cause and Immediate 
Suspension of [its] DEA registration and where there has been no 
opportunity for a hearing.'' \1\ Id. Respondent further contended that 
it ``surrendered its state license and did not request a hearing * * * 
based on the fact that DEA's action prevented [it] from operating as a 
pharmacy in Florida.'' \2\ Id. at 4. Respondent thus argued that ``[i]n 
light of the peculiar circumstances involved in this matter, it would 
be fundamentally unfair to revoke or terminate Respondent's DEA 
registration with[out] the opportunity for an administrative hearing.'' 
Id. at 5.
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    \1\ Respondent further maintained that it was ``financially 
impossible'' for it ``to maintain its state pharmacy license'' 
because ``under Florida law,'' it was required to keep its 
prescription department `` `open for a minimum of forty (40) hours 
per week and a minimum of five (5) days per week.' '' Id. at 4-5 
(quoting Fla. Adm. Code 64B16-28.1018). According to Respondent, it 
would have maintained its state license ``but for this practical 
impossibility.'' Id. at 5. Respondent also contended that because 
the Government seized all of its records and equipment, it ``made it 
difficult, if not impossible, for Respondent to conduct its pharmacy 
business.'' Id. at 2.
    \2\ In support of its position, Respondent cited my Order in 
Oakland Medical Pharmacy, 71 FR 50,100 (2006). Specifically, 
Respondent relied on the ALJ's reasoning in that case which I 
expressly declined to follow.
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    The ALJ did not find Respondent's arguments persuasive. 
Accordingly, as there were no material facts in dispute, the ALJ 
granted the Government's motion and forwarded the record to me for 
final agency action and recommended that I revoke Respondent's 
registration. ALJ Dec. at 6.
    While reviewing this matter, it was determined that Respondent's 
DEA registration expired on April 30, 2006, nearly six months before 
the Government moved for summary disposition. Moreover, Respondent did 
not file a renewal application. Accordingly, I ordered the parties to 
brief the issue of whether the case had become moot or whether there 
were collateral consequences that rendered the case a live controversy. 
See Ronald J. Riegel, 63 FR 67132, 67133 (1998) (``If a registrant has 
not submitted a timely renewal application prior to the expiration 
date, then the registration expires and there is nothing to revoke.''); 
see also William R. Lockridge, 71 FR 77791, 77797 (2006) (holding case 
not moot because of collateral consequences). Subsequently, both 
parties briefed the issue.
    The Government argues that while there are collateral consequences 
pertaining to the forfeiture of controlled substances that were seized 
at the time the immediate suspension was served, ``a section 824(f) 
asset forfeiture is predicated `[u]pon a revocation order becoming 
final.' '' Gov. Resp. to Briefing Order at 3 (quoting 21 U.S.C. 
824(f)). The Government notes that this leads to ``disparate 
dispositions'' because the controlled substances of an entity whose 
registration does not expire before the issuance of a final order are 
subject to forfeiture while a registrant can prevent the Government 
from obtaining forfeiture under section 824(f) by allowing its 
registration to expire. Id. The Government nonetheless argues that 
``affirming an immediate suspension will not trigger the section 824(f) 
asset forfeiture,'' and that ``[i]f the registrant's registration 
expires while OTSC proceedings are in progress and the registrant does 
not submit a renewal application, such a registrant can avoid the 
consequences of section 824(f).'' Id. at 3-4.
    Notably, the Government does not argue that the statute is silent 
on the question of whether forfeiture is triggered when a registrant 
requests a hearing and then allows its registration to expire before 
the final order is issued. Cf. Chevron U.S.A., Inc., v. NRDC, 467 U.S. 
837, 843 (1984) (``[I]f the statute is silent or ambiguous with respect 
to the specific issue, the question for the court is whether the 
agency's answer is based on a permissible construction of the 
statute.''). Instead, the Government argues that ``these disparate 
results can be obviated through other asset forfeiture proceedings or 
through settlements in related civil or criminal proceedings.'' Gov. 
Resp. at 4. The Government thus concedes that this case is now moot.
    Agreeing with the Government's reasoning, Respondent argues that 
``Sec.  824(f) forfeiture proceedings do not apply in a situation where 
the Respondent's registration expires while the OTSC proceedings are in 
progress and the registrant does not submit a renewal application.'' 
Respondent Resp. at 5. According to Respondent, ``[w]ithout a final 
order by DEA to `revoke or suspend' the registration, DEA may not use 
Sec.  824(f) to place such drugs under `seal' and require the 
registrant to forfeit the drugs.'' Id. Respondent further contends that 
to ``allow[] the government to permanently forfeit Respondent's 
property without an opportunity for a full hearing on the merits is 
unreasonable and contrary to law.'' Id. Respondent thus requests that I 
hold that the matter is moot.
    Having considered the record and the parties' positions, I conclude 
that this case is now moot. Respondent allowed its registration to 
expire and has not filed a renewal application. Indeed, Respondent has 
surrendered its state

[[Page 54072]]

pharmacy license and closed its business. Moreover, Respondent has not 
asserted that it plans to re-enter the business of pharmacy at some 
future date. See CRJ Pharmacy, Inc., and YPM Total Care Pharmacy, Inc., 
72 FR 30846 (2007).
    Finally, as the Government points out, the United States Attorney 
has sought forfeiture of ``any property which the defendant used or 
intended to be used in any manner * * * to commit'' the offenses 
charged in the indictment which includes the controlled substances 
previously seized. See Indictment, United States of America v. Frank 
Hernandez, et al., at 11 (Case  07-60027-CR, S.D. Fla.). 
Because title to the controlled substances will be determined in the 
pending criminal proceeding, this case does not present any collateral 
consequence that the issuance of a final order would resolve.\3\ 
Accordingly, this case is now moot.\4\
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    \3\ Respondent also requests that ``DEA authorize [it] to 
determine whether the controlled substances still in the 
government's possession may be distributed to an authorized 
registrant for credit.'' Respondent's Resp. at 5. Respondent's 
request should be directed to the Federal District Court. See 21 
U.S.C. 824(f).
    \4\ In holding this matter moot, I rely solely on the factual 
circumstances and do not adopt the parties' construction of the 
statute. Indeed, under that interpretation, even where a hearing has 
been held on the allegations that supported the immediate suspension 
order and the seizure of controlled substances, a respondent could 
see how it had fared in the proceeding and if it determined that it 
was not likely to prevail, it could then defeat the effect of the 
proceeding simply by failing to submit a renewal application and 
allowing its registration to expire. Under the parties' 
construction, the hearing would have been for naught and the 
Government would likely be required to relitigate the issues in 
another proceeding. It is implausible that Congress intended such a 
result.
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Order

    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 the 
Order to Show Cause be, and it hereby is, dismissed.

    Dated: September 13, 2007.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E7-18512 Filed 9-20-07; 8:45 am]
BILLING CODE 4410-09-P