[Federal Register Volume 80, Number 97 (Wednesday, May 20, 2015)]
[Notices]
[Pages 29037-29053]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12131]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 11-71]


Cove Inc., D/B/A Allwell Pharmacy; Decision and Order

    On April 23, 2013, Administrative Law Judge Christopher B. McNeil 
(hereinafter, ALJ) issued the attached Recommended Decision.\1\ Neither 
party filed exceptions to the ALJ's Recommended Decision.
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    \1\ The ALJ's Recommended Decision is cited as R.D.; all 
citations to the Recommended Decision are to the slip opinion issued 
by the ALJ.
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    Having reviewed the record in its entirety and the Recommended 
Decision, I have decided to adopt the ALJ's findings of fact and 
conclusions of law, except as discussed below. I further adopt the 
ALJ's recommended order that Respondent's application be denied.
    As explained in the ALJ's Recommended Decision, in making the 
public interest determination, Congress directed the Agency to consider 
``the applicant's experience in dispensing . . . controlled 
substances.'' 21 U.S.C. 823(f)(2). The evidence showed that 
Respondent's President and majority owner is Mrs. Ogechi Abalihi, and 
that while Mrs. Abalihi is a registered nurse, she is not a pharmacist 
and has no experience working in a retail pharmacy. Moreover, when 
questioned both during the pre-registration investigation and at the 
hearing as to whether she was familiar with the federal controlled-
substance recordkeeping and security requirements for retail 
pharmacies, Mrs. Abalihi responded by stating, in essence, that those 
matters would be addressed by the pharmacist she would retain. Tr. 143-
46. In her testimony, Mrs. Abalihi also made clear that she lacks 
knowledge of these requirements as they pertain to retail pharmacies, 
stating that ``if there's a requirement for me to do anything, know 
these things, study them, I will do them. But when I applied I was not 
made to understand that I need to know all this.'' Id. at 144.
    This is truly a remarkable answer, which fully demonstrates why 
granting Respondent's application ``would be inconsistent with the 
public interest.'' 21 U.S.C. 823(f). Notwithstanding that the Order to 
Show Cause specifically alleged that the Agency's investigation found 
Mrs. Abalihi ``had no knowledge of DEA regulations pertaining to the 
handling of controlled substances and related security requirements,'' 
ALJ Ex. 1, at 1; she still lacked knowledge of these requirements when 
she testified

[[Page 29038]]

some two years later.\2\ While neither the Controlled Substances Act 
(CSA), nor the Agency's regulations, prohibits a pharmacy, which is 
owned by a non-pharmacist, from holding a DEA registration, the holder 
of the registration is ultimately accountable for ensuring compliance 
by its pharmacists with the requirements of the CSA and the Agency's 
regulations. See United States v. Southern Union Co., 630 F.3d 17, 31 
(1st Cir. 2010), rev'd on other grounds, 132 S.Ct. 2344 (2012) (quoted 
in Holiday CVS, L.L.C., d/b/a CVS/Pharmacy Nos. 219 and 5195, 77 FR 
62315, 62317 (2012) (``[T]hose who manage companies in highly regulated 
industries are not unsophisticated. . . . It is part of [a company's] 
business to keep abreast of government regulation.'')).
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    \2\ While Ms. Abalihi testified that she was not told prior to 
her interview with the DIs that ``she needed to study anything,'' 
Tr. 136, the Show Cause Order clearly provided notice that her lack 
of knowledge of DEA regulations was at issue.
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    It is indisputable that absent knowledge of the CSA and the 
Agency's regulations, a registrant cannot properly supervise its 
pharmacists to protect against the diversion of controlled 
substances.\3\ Thus, Mrs. Abalihi's admitted lack of knowledge of these 
requirements provides reason alone to conclude that granting 
Respondent's application ``would be inconsistent with the public 
interest.'' 21 U.S.C. 823(f).
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    \3\ Pharmacies which handle controlled substances are subject to 
extensive recordkeeping and security requirements. See 21 CFR 
1301.75-1301.76 (security requirements); id. Sec. Sec.  1304.03-
1304.06; 1304.21-1304.22 (recordkeeping and reporting requirements). 
In addition, as the ALJ explained, their pharmacists are charged 
with the responsibility of dispensing only those prescriptions which 
are ``issued for a legitimate medical purpose by an individual 
practitioner acting in the usual course of his professional 
practice.'' 21 CFR 1306.04(a). See also generally 21 CFR part 1306 
(setting forth various other requirements pertaining to 
prescriptions and the dispensing of controlled substances by 
pharmacies).
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    I further adopt the ALJ's conclusion that the evidence with respect 
to factor five--such other conduct which may threaten public health and 
safety--supports the denial of Respondent's application. More 
specifically, the ALJ found that both Mrs. Abalihi and Ms. Taylor, who 
purportedly was to be Respondent's pharmacist-in-charge, made 
materially false statements to the Investigators when they were 
questioned regarding who would act as Respondent's pharmacist. However, 
upon review of the record, including the pleadings, I adopt the ALJ's 
conclusion only with respect to Ms. Taylor.
    The evidence showed that when DEA Diversion Investigators (DI or 
DIs) asked Mrs. Abalihi who would manage the pharmacy, she stated that 
Ms. Jacinta Taylor would do so. Tr. 34. Subsequently, the DIs 
interviewed Ms. Taylor, who is a licensed pharmacist (and the owner of 
ten percent of Respondent) and who stated that she would be the 
pharmacist-in-charge at Respondent. Id. at 38. Ms. Taylor also told the 
DIs that she would order the controlled substances and that the 
pharmacy would be open from nine to six on weekdays and nine to one on 
Saturday. Id. at 38-39.
    However, during the interview, Ms. Taylor told the DIs that she had 
a full time position at a Sweetbay Pharmacy in Tampa, and worked 
between the hours of ten to eight. Id. at 39. A DI further testified 
that according to the State Pharmacy Board, Ms. Taylor was not listed 
as Respondent's supervising pharmacist. Id. When the DI asked Ms. 
Taylor ``about that,'' she replied that ``she would leave Sweetbay if 
and when [Respondent] started to make money.'' Id. at 40.
    The DIs then asked Ms. Taylor who would be Respondent's pharmacist-
in-charge given her full time position at Sweetbay and intent to 
continue working there until Respondent became profitable; Ms. Taylor 
identified a Ms. Mustafa, a co-worker at Sweetbay. Id. However, when 
the DIs told Ms. Taylor that they wanted to talk to Ms. Mustafa, Ms. 
Taylor stated that she did not think that Ms. Mustafa would want to be 
interviewed and added, ``[w]ell, perhaps she won't work there.'' Id. at 
41. Subsequently, one of the DIs called Mrs. Abalihi and ``asked her to 
put [him] in touch with Ms. Mustafa.'' Id. at 42. While Mrs. Abalihi 
stated that she would contact Ms. Mustafa and either get her phone 
number for the DI ``or have her call'' him, he never received a call 
from Ms. Mustafa. Id.
    Ms. Taylor did not testify at the hearing. However, in an 
affidavit, Ms. Taylor stated that she ``was caught `flat footed' '' by 
the question and ``thought'' that Ms. Mustafa, ``another pharmacist who 
worked at Sweetbay, . . . might be willing to serve such role.'' RX 7, 
at 2. Ms. Taylor further acknowledged that at the time of the 
interview, she ``had not made formal arrangements for [a] replacement 
and had not yet asked Ms. Mustafa whether she would be willing to 
fulfill such role, but thought that Ms. Mustafa would be so willing.'' 
Id. Moreover, in her testimony, Ms. Abalihi stated that she did not 
know Ms. Mustafa, that she had never spoken with her, and that there 
was ``no plan'' to have her work at Respondent. Tr. 138-39. And when 
asked by the ALJ whether in March 2011, Ms. Taylor had told her ``that 
she would be relying on Ms. Mustafa,'' Mrs. Abalihi answered that 
Taylor ``did not say she would be relying on Ms. Mustafa, no. She said 
the name came to her when this question was thrown to her. She wasn't 
expecting it, but the name came to her.'' Id. at 161.
    Notwithstanding her assertion that she was caught flatfooted, Ms. 
Taylor's affidavit, as well as Ms. Abalihi's testimony, establishes 
that Taylor had no basis in fact for her statement to the Investigators 
that Ms. Mustafa would be Respondent's pharmacist-in-charge until Ms. 
Taylor decided to start working there. Accordingly, Ms. Taylor's 
statement was false. Moreover, her statement was materially false in 
that it had the capacity to influence the Agency's decision to grant 
Respondent's application, because of the obvious need to determine 
whether those who will actually engage in dispensing activities on 
behalf of a proposed pharmacy registrant, hold the necessary state 
license and have not previously violated federal or state laws related 
to controlled substances. See 21 U.S.C. 823(f)(2) & (4) (directing 
Agency to consider the applicant's experience in dispensing controlled 
substances and compliance with applicable laws related to controlled 
substances); see also 21 CFR 1301.76(a) (``The registrant shall not 
employ, as an agent or employee who has access to controlled 
substances, any person who has been convicted of a felony offense 
relating to controlled substances or who, at any time, had an 
application for registration with the DEA denied, had a DEA 
registration revoked or has surrendered a DEA registration for 
cause.'').
    I do not, however, adopt the ALJ's legal conclusion that Mrs. 
Abalihi made a material misrepresentation when she subsequently agreed 
to provide Ms. Mustafa's contact information rather than disclose that 
she knew nothing about Ms. Mustafa's role with the pharmacy. R.D. at 
32. In support of his reasoning, the ALJ explained that ``[i]f Ms. 
Abalihi intended on using contract pharmacists at the start of 
Allwell's operation, she had an affirmative duty to say so when DEA 
investigators asked her about the role Ms. Mustafa was to play. By her 
silence, and by promising to provide contact information for Ms. 
Mustafa, Ms. Abalihi misled the investigators.'' Id.
    It may be that Ms. Abalihi misled the investigators, but the record 
is far from clear on this point. More specifically, while the record 
establishes that the DI called Ms. Abalihi and asked her about getting 
contact information for Ms. Mustafa, the record does not establish that 
the Investigator ever specifically ``asked her about the role Ms. 
Mustafa

[[Page 29039]]

was to play.'' Most significantly, the Government never alleged in 
either the Show Cause Order or its pre-hearing statements that Ms. 
Abalihi made a materially false statement or materially misled the DIs 
when she promised to get Ms. Mustafa's contact information. Nor did the 
Government make any such argument in its post-hearing brief.\4\ 
Accordingly, because the Government never provided notice in the 
charging documents that it intended to litigate the issue and makes no 
claim that the issue was litigated by consent, I reject the ALJ's 
conclusion that Mrs. Abalihi materially misled the Investigators.\5\ 
See Kenneth Harold Bull, 78 FR 62666, 62674 (2013); CBS Wholesale 
Distributors, 74 FR 36746, 36749-50 (2009). That being said, the 
material misrepresentation of Ms. Taylor, who owned ten percent of 
Respondent and who was designated by Respondent's majority owner as its 
pharmacist-in-charge, is properly charged to Respondent and supports 
the denial of its application under factor five.
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    \4\ For the same reason, I need not decide whether, even 
assuming that Ms. Abalihi lacked the intent to deceive when she told 
the Investigators that she would obtain Ms. Mustafa's contact 
information, she had a duty to correct any erroneous information she 
provided the Investigators upon being told by Ms. Taylor that there 
was no plan for Ms. Mustafa to work at Respondent.
    \5\ I reject ALJ Finding of Fact number 5 and Conclusion of Law 
number 5 only to the extent they are based on the statements of Ms. 
Abalihi.
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    Moreover, even as of the date of the hearing, the Agency still does 
not know who will be Respondent's pharmacist-in-charge. Beyond Ms. 
Taylor's statement that she did not intend to leave her job at Sweetbay 
Pharmacy until Respondent is profitable, the evidence further showed 
that at the time of the hearing, Ms. Taylor had left the Tampa area and 
was working at a pharmacy in Orlando. RX E; Tr. 156-57. Moreover, Ms. 
Taylor did not testify at the hearing. Because Respondent has failed to 
provide material information as to who will be its pharmacist-in-charge 
and oversee the dispensing of the controlled substances and compliance 
with the Agency's various regulations, I hold that the Agency had 
demonstrated that granting its application ``would be inconsistent with 
the public interest.'' 21 U.S.C. 823(f).
* * * * *
    In the Show Cause Order, the Government also alleged as a basis for 
denial of the application that ``Mrs. Abalihi's husband participated in 
[the] unlawful dispensing of controlled substances that were prescribed 
over the Internet by physicians who did not personally examine the 
patients'' and that ``[t]his dispensing occurred while he was a 
pharmacist at a pharmacy that surrendered its DEA registration in 
December 2007 because of these illicit dispensing practices.'' ALJ Ex. 
1, at 1. The Show Cause Order further alleged that Mrs. Abalihi's 
husband told the Agency's Investigators ``that these dispensing 
practices were lawful and that he intended to apply for a DEA 
registration to open his own retail pharmacy.'' Id. at 1-2.
    The parties stipulated that Mrs. Abilihi's husband, Alfred Abilihi 
``is a registered pharmacist, [and] was a pharmacist at Moon Lake 
pharmacy who dispensed controlled substances based on unlawful internet 
prescriptions prior to Moon Lake Pharmacy surrendering its DEA 
registration on December 17th, 2007.'' Tr. 11-12. The evidence shows 
that on November 29, 2007, a DEA Investigator received an anonymous 
phone call from a pharmacist who had worked at Moon Lake for one day, 
GX 6C, at 1; the pharmacist alleged that ``the pharmacy was engaging in 
internet drug trafficking of [h]ydrocodone.'' Tr. 74. Accordingly, on 
December 7, two DIs went to the pharmacy, which was located in New Port 
Richey, and ``after several minutes of examination . . . found that the 
pharmacy was solely engaged in internet drug trafficking of 
[h]ydrocodone and some [s]chedule IV drugs such as Xanax and Valium,'' 
in violation of 21 CFR 1306.04(a). Id. at 75.
    The DI further testified that after ``a few minutes of 
investigation,'' he and another DI ``discovered that there were two 
physicians,'' one located in Virginia and one located in New York City, 
``who had sent . . . hundreds of prescriptions for [h]ydrocodone to 
Moon Lake Pharmacy for filling'' and that the purported patients were 
located ``throughout the 50 states of the United States.'' Id. at 77-
78. The DI further explained that ``there was no contact between the 
patients and the so-called physicians'' and ``[e]verything was based on 
the submission of a credit card number,'' with the ``payment of several 
hundred dollars to a company that used [Moon Lake] to fill the 
prescriptions'' and that ``Moon Lake . . . was getting $75 per filled 
[h]ydrocodone prescription.'' Id. at 78.
    According to the DI, the pharmacy was not open to the public and it 
``was extremely small, it looked like 600 square feet'' with ``no 
seating area for walk-ins.'' Id. at 79. Also, ``[t]here was no over-
the-counter merchandise'' and ``no merchandise . . . other than the 
controlled substances.'' Id. Continuing, the DI explained that 
``[t]here was essentially nothing except the compounding equipment, a 
fax machine, a scale, the counter, [and] little else.'' Id.
    The DI identified one Vivian Alberto as the owner of the pharmacy. 
Id. at 78. However, Ms. Alberto was not a licensed pharmacist. Id. 
Indeed, the only pharmacist the Investigators encountered at Moon Lake 
was Mr. Alfred Abalihi. Id. at 80. According to the DI, he and his 
partner approached Mr. Abalihi and stated that they had found 
``hundreds of prescriptions being filled for people that have no 
contact with two physicians, one in Virginia [and] one in New York.'' 
Id. at 84. After telling Mr. Abalihi that he was ``creating these 
labels, [and] you know what's going on,'' the DI asked him if he 
thought ``it's legal that the patients are far removed from the doctors 
with no contact and they're getting [h]ydrocodone.'' Id. at 85. Mr. 
Abalihi replied that he did not see a problem with filling the 
prescriptions and that ``it was legal and . . . ethical to do so.'' Id. 
at 80. The DI further testified that while interviewing Mr. Abalihi, 
the latter stated that ``he would like to open up his own pharmacy.'' 
Id. at 81.\6\
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    \6\ Six days later, Ms. Alberto voluntarily surrendered Moon 
Lake's DEA registration. Tr. 82. As the DI explained, he requested 
that Ms. Alberto surrender Moon Lakes' registration ``because 
everything [Ms. Alberto] was doing was criminal.'' Tr. 83.
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    Mr. Abalihi testified that he worked for Moon Lake for only ``a few 
days,'' before the Investigators showed up and that he had obtained the 
job through a temporary staffing agency. Tr. 98-99. He further 
maintained that he did not know that Ms. Alberto was the owner because 
``she speaks only Spanish'' and he does not. Id. at 102. He then 
claimed that prior to the Investigators' inspection of Moon Lake, no 
one at the pharmacy had explained how the prescriptions arrived there 
and that he had ``no'' idea how the patients obtained the prescriptions 
and that a Web site was used as part of the prescribing process. Id. at 
102-03. And when asked whether he had any recollection that there was 
anything wrong with the prescriptions he filled for Moon Lake, Mr. 
Abalihi answered: ``No, I can't recollect.'' Id. at 103-04.
    In his testimony, Mr. Abalihi denied telling the Investigators that 
what he was doing was legal, as well as that he intended to open his 
own pharmacy. Id. at 104. He also claimed that the DIs ``didn't even 
tell me why they were there,'' although he also asserted that they told 
him that ``we didn't come here for you. If the pharmacy manager did 
what we told him to do the last time we came we wouldn't have been 
here.'' Id.

[[Page 29040]]

at 100-01.\7\ Yet, the evidence establishes that the DIs encountered 
Mr. Abalihi on their first visit to Moon Lake Pharmacy. GX 6C, at 2 (] 
4).
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    \7\ It is undisputed that Mr. Abalihi was never subjected to 
discipline by the Florida Board of Pharmacy.
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    On cross-examination, Mr. Abalihi repeatedly maintained that he 
could not remember if he had dispensed prescriptions for hydrocodone or 
if hydrocodone was the main drug that was being dispensed at Moon Lake. 
Id. at 110-11. Indeed, Abalihi maintained that he could not recall 
having looked at any of the prescriptions he filled, did not know the 
size of the pharmacy, and could not recall whether Moon Lake was ``set 
up as a typical retail pharmacy'' and was ``selling other 
merchandise.'' Id. at 112. He also maintained that he did not discuss 
with anybody ``how they operate[d]'' and that ``[t]he only thing is 
that prescriptions were filled and brought to me to check, and I 
checked.'' Id.\8\ Moreover, when asked if he ``knew [that] what was 
going on at Moon Lake Pharmacy; that the operation was illegal with 
what they were doing with hydrocodone,'' Mr. Abalihi answered: ``I 
didn't say, sir.'' Id. at 120.
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    \8\ When asked on cross-examination, whether as a Florida-based 
pharmacist, he would not fill a prescription issued by a New York 
doctor for a patient who lives in Georgia, Mr. Abalihi answered:
    It depends. If I see a prescription--and I call the doctor and 
verify that that prescription came there. I don't know if the doctor 
has met the patient. The onus lies on the doctor to make sure that 
he sees his patient, and my own is to make sure that the 
prescription is authentic.
    Tr. 114. However, Mr. Abalihi then testified that he did not 
recall that he ever called and asked a physician if he/she had 
contact with the patient when he worked at Moon Lake. Id. at 114-15.
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    Mr. Abalihi also testified that he had tried to subsequently open 
his own pharmacy, but had withdrawn his application for a DEA 
registration after his then-attorney advised him that DEA intended to 
deny his application. Id. at 106. Moreover, Mr. Abalihi testified that 
he does not intend to work or otherwise operate Respondent and that he 
``just wanted . . . to advise my wife how to do things,'' and he 
``would have loved to work there, but the DEA wouldn't allow me to.'' 
Id. at 108. He further maintained that during the week, he works full 
time as a pharmacist at a Miami area pharmacy, and comes home to Tampa 
on the weekends. Id. at 109.
    Mr. Abalihi acknowledged that his wife had filed her application 
after he had withdrawn his application. Id. at 122. When asked if he 
had advised his wife regarding her application, he answered: ``I'm her 
husband. I knew she was going to apply to open a pharmacy.'' Id. After 
testifying that he did not have an ownership interest in Respondent and 
was neither a director nor officer of it, Mr. Abalihi further asserted 
he does not ``have any hand in running'' the pharmacy. Id. at 123.
    Likewise, Mrs. Abalihi asserted that she did not make her husband a 
co-owner of Respondent because he ``had tried in the past'' to ``open a 
pharmacy'' and was told by his counsel to withdraw his DEA application. 
Tr. 133. She further asserted that DEA has ``blacklisted'' her husband. 
Id. Mrs. Abalihi offered no testimony that her husband would not work 
at the pharmacy.
    According to Respondent's Exhibit C, which is a License 
Verification printout from the Florida Department of Health, Mr. 
Abalihi has a clear and active pharmacist license in the State of 
Florida, and has not been subject to discipline or a public complaint. 
RX C, at 1. Yet the License Verification printout also lists Mr. 
Abalihi's address of record as 1947 W. Dr. Martin Luther King Jr. Blvd. 
in Tampa, Florida. Id. This is the same address as Respondent. See RX 
B. Moreover, the License Verification printout does not list any 
secondary locations for Mr. Abalihi. Id. at 2.
    The ALJ rejected the Government's contention that Respondent's 
application should be denied because Mr. Abalihi's ``past negative 
history'' in dispensing controlled substances ``has a clear nexus'' to 
his wife's application. R.D. at 28-30 (citing Govt's Proposed Findings 
of Fact, Conclusions of Law, and Argument in Respondent to Respondent's 
Brief, at 10 (citing Matthew D. Graham, 67 FR 10229 (2002)). The ALJ 
rejected the Government's argument, noting that in Graham, the Agency 
had denied the application based on the misconduct of the applicant's 
business partner, who had previously surrendered a DEA registration for 
distributing large quantities of list I chemicals while having 
reasonable cause to believe they would be used to manufacture a 
controlled substance. See id. at 29.
    The ALJ thus reasoned that Graham was distinguishable because 
``unlike the business plan presented by Ms. Abalihi, the registrant in 
Graham was economically tied to the third party'' but ``Ms. Abalihi 
presented a business plan that expressly removed Mr. Abalihi from all 
phases of the proposed pharmacy's operation'' and he ``would not 
directly participate as an officer or owner of'' Respondent. Id. While 
noting that Ms. Abalihi offered no testimony that ``she would prohibit 
her husband from working in the pharmacy,'' the ALJ credited her 
statement ``that she would keep her husband `apart from ownership and 
management' of the pharmacy.'' Id. The ALJ further reasoned that 
``having considered the affidavit of Mr. Abalihi,\9\ and having 
considered the testimony from both Mr. and Mr. [sic] Abilihi, I find 
sufficient credible and unrebutted evidence to conclude Mr. Abalihi 
does not intend to perform a significant role in the operation of'' 
Respondent. Id.
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    \9\ Having reviewed Mr. Abalihi's affidavit, I am at a loss as 
to what statement it contained that the ALJ found so persuasive on 
this issue.
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    As for Mr. Abalihi's involvement at Moon Lake Pharmacy, the ALJ 
noted that he shared the same sense as the DIs ``that anyone in Mr. 
Abalihi's position would have had reason to question the legitimacy of 
the operation'' as well as the DIs' ``sense of incredulity that Mr. 
Abalihi would have failed to recognize the illegal nature of what was 
going on at Moon Lake, even though his stay there was brief.'' Id. at 
29-30. After noting that Mr. Abalihi ``was not charged with any 
misconduct arising out of his service at Moon Lake,'' the ALJ explained 
that while ``Mr. Abalihi may have unwisely told the DEA investigators 
that Moon Lake's operations were legal . . . I cannot conclude from 
that piece of evidence that [he] was knowingly advancing Moon Lake's 
criminal enterprise when the DEA arrived.'' Id. at 30. Notwithstanding 
``that the parties . . . stipulated that Mr. Abalihi dispensed 
controlled substances based on unlawful Internet prescriptions during 
his short tenure at Moon Lake,'' the ALJ explained that ``the most we 
can say for certain is that Mr. Abalihi was the pharmacist who was 
present when the DEA agents arrived at Moon Lake and brought its 
operation to an end.'' Id. And noting that Mr. Abalihi's record ``since 
then is unblemished,'' the ALJ reasoned that ``his plan to avoid direct 
involvement with [Respondent] adequately attenuates the link between 
him and the proposed pharmacy.'' Id.
    I reject the ALJ's conclusion that Mr. Abalihi was not knowingly 
advancing Moon Lake's criminal enterprise when DEA arrived. Indeed, 
this conclusion is irreconcilable with the ALJ's finding that there is 
``sufficient credible evidence to conclude Mr. Abalihi was aware that 
the practices \10\ in this pharmacy were illegal.'' R.D. at 28. 
Moreover, as the ALJ found, the evidence shows that Mr. Abalihi 
committed criminal conduct by knowingly dispensing controlled substance 
prescriptions which were issued outside of the usual course of

[[Page 29041]]

professional practice and lacked a legitimate medical purpose. See 21 
U.S.C. 841(a)(1); 21 CFR 1306.04(a).
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    \10\ While I agree with the ALJ's finding, I do not rely on the 
DI's assertion that the pharmacy's compounding activities were 
illegal.
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    Here, in addition to the stipulation that Mr. Abalihi dispensed 
controlled substances based on unlawful internet prescriptions, a DI 
testified that upon arriving at the pharmacy and reviewing the 
prescriptions, he found that the prescriptions were solely for 
hydrocodone, a schedule III controlled substance, and drugs such as 
Xanax and Valium, which are schedule IV benzodiazepines. Tr. 75. Most 
significantly, the evidence showed that the Investigators found that 
hundreds of prescriptions were being filled that had been written for 
controlled substances by two physicians, one of whom was located in 
Virginia and the other New York, and that the patients were located 
throughout the fifty States of the U.S. Id. at 77-78; 84. Moreover, the 
pharmacy did not have an area for walk-in patients, had no over-the-
counter merchandise, and indeed, sold no merchandise other than 
controlled substances. Id. at 79.
    Under 21 CFR 1306.04(a), ``[a] prescription for a controlled 
substance . . . must be issued for a legitimate medical purpose by an 
individual practitioner acting in the usual course of . . . 
professional practice.'' Moreover, while ``[t]he responsibility for the 
proper prescribing and dispensing of controlled substances is upon the 
prescribing practitioner . . . a corresponding responsibility rests 
with the pharmacist who fills the prescription.'' Id. Accordingly, 
``[a]n order purporting to be a prescription issued not in the usual 
course of professional treatment . . . is not a prescription within the 
meaning and intent of [21 U.S.C. 829] and the person knowingly filling 
such a purported prescription . . . shall be subject to the penalties 
provided for violations of the provisions of law relating to controlled 
substances.'' Id.\11\
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    \11\ Well before Mr. Abalihi filled prescriptions for Moon Lake, 
several federal appeals courts had upheld the convictions of 
pharmacists under 21 U.S.C. 841(a)(1) for filling prescriptions 
which were issued over the internet by physicians, who did not 
practice in the same State where the patients resided, and who did 
not physically examine the patients, because the physician did not 
establish a legitimate doctor-patient relationship with the patient. 
See United States v. Nelson, 383 F.3d 1227, 1231-32 (10th Cir. 
2004); United States v. Fuchs, 467 F.3d 889, 899-900 (5th Cir. 
2006). So too, DEA had issued numerous decisions holding that both 
the act of prescribing over the internet, as well as the act of 
dispensing a prescription issued over the internet, by a physician 
who has either engaged in the unlicensed practice of medicine or 
failed to establish a legitimate doctor-patient relationship, 
violates 21 CFR 1306.04(a) and constitutes an unlawful distribution 
under 21 U.S.C. 841(a)(1). See United Prescription Services, Inc., 
72 FR 50397, 50407-09 (2007); Trinity Health Care Corp., d/b/a 
Oviedo Discount Pharmacy, 72 FR 30849, 30855 (2007); EZRX, LLC, 69 
FR 63178, 63181 (2004); see also William R. Lockridge, M.D., 71 FR 
77791 (2006); Marvin L. Gibbs, Jr., M.D., 69 FR 11658 (2004); Rick 
Joe Nelson, M.D., 66 FR 30752 (2001).
     Moreover, in 2001, DEA issued a Guidance Document warning of 
the potential illegality of dispensing controlled substances based 
on prescriptions which were obtained through the internet and 
telephone consultations. DEA, Dispensing and Purchasing Controlled 
Substances over the Internet, 66 FR 21181, 21182-83 (2001).
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    As held in numerous Agency decisions, under the Controlled 
Substances Act, ``it is fundamental that a practitioner must establish 
a bonafide doctor-patient relationship in order to act `in the usual 
course of . . . professional practice' and to issue a prescription for 
a `legitimate medical purpose.' '' See, e.g., David A. Ruben, M.D., 78 
FR 38363, 38380 (2013) (citing United States v. Moore, 423 U.S. 122, 
142-43 (1975); other citations omitted). So too, DEA has held that a 
physician who engages in the unauthorized practice of medicine, such as 
by prescribing controlled substances to patients who reside in a State 
where he/she is not licensed to practice, acts outside of the usual 
course of professional practice and therefore violates the CSA for this 
reason as well. United Prescription Services, 72 FR 50397, 50407 (2007) 
(``A controlled-substance prescription issued by a physician who lacks 
the license necessary to practice medicine within a State is therefore 
unlawful under the CSA.''). As the Supreme Court has explained: ``In 
the case of a physician, [the CSA] contemplates that he is authorized 
by the State to practice medicine and to dispense drugs in connection 
with his professional practice.'' Moore, 423 U.S. at 140-41 (emphasis 
added).
    Thus, I reject the ALJ's portrayal of Mr. Abalihi as a hapless 
bystander who was in the wrong place at the wrong time when the DIs 
arrived at Moon Lake. To the contrary, as the ALJ found, there was 
``sufficient credible evidence to conclude [that he] was aware that the 
practices in this pharmacy were illegal.'' R.D. at 28. Indeed, the 
respective locations of the two prescribing physicians and the 
patients, who were located through the country, made it clear to Mr. 
Abilihi that the prescriptions lacked a legitimate medical purpose and 
were issued outside of the usual course of professional practice. 21 
CFR 1306.04(a). Moreover, even if it was not immediately apparent to 
Mr. Abalihi that he was aiding and abetting a criminal enterprise, 
surely at some point during his first day at Moon Lake a reasonable 
pharmacist would have reached this conclusion, and in any event, Mr. 
Abalihi went back to the pharmacy a second day.\12\
---------------------------------------------------------------------------

    \12\ The ALJ ``note[d] that Mr. Abalihi was not charged with any 
misconduct arising out of his service at Moon Lake.'' R.D. at 30. As 
has been repeatedly explained, this is totally irrelevant because 
there are any number of reasons why neither a prosecutor nor a state 
licensing body may bring charges. See Robert L. Dougherty, M.D., 76 
FR 16823, 16833n.13 (2013). Rather, what matters is his underlying 
misconduct.
---------------------------------------------------------------------------

    In short, the evidence shows that Mr. Abalihi violated his 
corresponding responsibility and the CSA by filling prescriptions which 
lacked a legitimate medical purpose and were issued outside of the 
usual course of professional practice. Id.; see also 21 U.S.C. 
841(a)(1). Moreover, Mr. Abalihi's testimony makes clear that he still 
does not understand the scope of his obligations in dispensing 
controlled substances. As found above, when asked if he would not fill 
a prescription written by a New York physician for a patient who lives 
in Georgia, he testified, in essence, that if he called the doctor and 
the doctor verified the prescription, he wouldn't ``know if the doctor 
ha[d] met the patient'' and that ``[t]he onus lies on the doctor to 
make sure that he sees his patient.'' Tr. 114.
    Not only did Mr. Abalihi offer no testimony that he had called 
either of the doctors whose prescriptions he filled while at Moon Lake, 
his understanding of the scope of his obligations under federal law has 
been repeatedly rejected by both this Agency and multiple United States 
Courts of Appeal. As the Fifth Circuit has explained, ``[v]erification 
by the issuing practitioner on request of the pharmacist is evidence 
that the pharmacist lacks knowledge that the prescription was issued 
outside the scope of professional practice. But it is not an insurance 
policy against a fact-finder's concluding that the pharmacist had the 
requisite knowledge despite a purported but false verification.'' 
United States v. Hayes, 595 F.2d 258, 261 (5th Cir. 1979). Thus, simply 
calling a physician to verify a prescription is not enough because a 
pharmacist has ``the responsibility not to fill an order that purports 
to be a prescription but is not a prescription within the meaning of 
the statute because he knows [or has reason to know] that the issuing 
practitioner issued it outside the scope of medical practice.'' Id. 
(quoted in East Main Street Pharmacy, 75 FR 66149, 66164 (2010)); see 
also United States v. Henry, 727 F.2d 1373, 1379 (5th Cir. 1984); 
Medic-Aid Pharmacy, 55 FR 30043,

[[Page 29042]]

30044 (1990); Frank J. Bertolino, 55 FR 4729, 4730 (1990).
    Nor--notwithstanding that it is couched as being based on 
credibility findings--do I find persuasive the ALJ's conclusion that 
the link between Mr. Abalihi and Respondent is adequately attenuated 
because Mrs. Abalihi has kept her husband ``apart from [the] ownership 
and management of'' Respondent and Mr. Abalihi ``plan[s] to avoid 
direct involvement with'' the pharmacy. R.D. at 29-30. While Graham is 
undoubtedly distinguishable from this case, it does not reflect the 
limits of the Agency's authority to deny an application or revoke an 
existing registration based on the misconduct of a third party, 
particularly where that third party is a family relation of the 
applicant's principal. Indeed, in numerous cases--none of which are 
discussed in the Recommended Decision--the Agency has either revoked 
existing registrations or denied applications of pharmacies based on 
the closeness of the relationship between a person who diverted 
controlled substances or committed other serious CSA violations and 
another party who is either the applicant or new owner of a pharmacy.
    Accordingly, the Agency has held that it ``may look to who exerts 
influence over the registrant'' in determining whether to deny an 
application or revoke a registration. See, e.g., City Drug Co., 64 FR 
59212, 59214 (1999). As the Agency explained in City Drug: ``sometimes 
the bonds linking the former owner to the new owner are too close to 
ensure that the former owner will have no influence over the operation 
of the pharmacy.'' Id. (citing Monk's Pharmacy, 52 FR 8988, 8989 (1987) 
and Carriage Apothecary, Inc., 52 FR 27599, 27599 (1987)).
    In Monk's Pharmacy, the Agency denied an application of a pharmacy, 
noting that the former owner, who had been convicted of a felony 
relating to controlled substances, had transferred ownership to his 
children and to a third-party, who was a registered pharmacist. 52 FR 
at 8988. The Agency denied the application, noting ``that the bonds 
linking the convicted [former pharmacy owner] with his children and the 
subject pharmacy are too close to permit a reasonable certainty that he 
will have no authoritative voice in its operation.'' Id. at 8989.
    So too, in Carriage Apothecary, the pharmacy's owner, who had 
committed recordkeeping violations, had transferred the stock of the 
corporation which owned the pharmacy to his children. 52 FR at 27599. 
Noting that ``[t]he Administrator has long held that he can look behind 
a corporate fa[ccedil]ade to determine who makes the decisions 
concerning the controlled substance business of a pharmacy,'' the 
Agency revoked the pharmacy's registration, holding that while the 
pharmacy was now owned by the children of the former owner, neither 
child was a pharmacist, and the former owner ``continues to exert 
influence or control over [the pharmacy] through the family-held 
corporation.'' Id.
    Moreover, in Unarex of Plymouth Road, d/b/a Motor City Prescription 
and Unarex of Dearborn, d/b/a/Motor City Prescription Center, 50 FR 
6077 (1985), two pharmacists, who had been convicted of CSA violations 
(conspiracy and unlawful distribution), had transferred both their 
ownership interests and their respective office or directorship to 
their spouses. Noting that both pharmacists ``share[d] indirectly in 
the profits of'' the two pharmacies, the Agency revoked the 
registration of both pharmacies, holding that ``[i]t is appropriate 
that both registrations be revoked in light of this continued benefit'' 
received by the pharmacists.\13\ Id. at 6079.
---------------------------------------------------------------------------

    \13\ While the Administrator noted that one of the pharmacists 
continued to work in one of the stores, and thus declined to believe 
that this pharmacist ``no longer exerts influence over the 
operation'' of the pharmacy, no such evidence was presented as to 
the second store. 50 FR at 6079.
---------------------------------------------------------------------------

    Lawsons & Sons Pharmacy and Fenwick Pharmacy, 48 FR 16140 (1983), 
involved two pharmacies whose pharmacist was convicted of unlawfully 
distributing controlled substances. At the time of the proceeding, the 
pharmacist's wife owned 100 percent of one of the pharmacies and fifty 
percent of the other.\14\ Therein, the registrants provided an 
affidavit from the pharmacist's wife ``stat[ing] that she is an active 
and knowledgeable officer of each of the corporations and has come to 
understand the operation of the pharmacies,'' and that ``she ha[d] 
great trust in the two pharmacists she ha[d] hired to run these 
pharmacies and that her husband has withdrawn from [his] involvement in 
the pharmacies''; the registrants also provided an affidavit from one 
of the registrant's managing pharmacists stating that he understood 
that the convicted pharmacist's wife would ``discourage'' her husband 
``from entering the store'' upon his release from incarceration. Id. at 
16141. The Agency nonetheless rejected the registrants' evidence and 
revoked both registrations, holding that while the convicted 
pharmacist's wife ``has always had some administrative duties in the 
store, she is not a trained pharmacist and relies on the advice of the 
managing pharmacists at both stores. In light of [the convicted 
pharmacist's] past activities, the Acting Administrator cannot conclude 
that he will not attempt to exert some form of control over one or both 
of the pharmacies.'' Id.
---------------------------------------------------------------------------

    \14\ The Agency's decision does not state who owned the other 
fifty percent of this pharmacy.
---------------------------------------------------------------------------

    Here, the totality of the circumstances leads me to reject the 
ALJ's conclusion that the link between Mr. Abalihi and Respondent is 
too attenuated to support (in addition to the other bases set forth 
above) the denial of the latter's application.\15\ Notably, Mrs. 
Abalihi submitted the application only after Mr. Abalihi was informed 
(by his attorney) that the local DEA field office intended to deny his 
application and he withdrew it.\16\
---------------------------------------------------------------------------

    \15\ The ALJ ``question[ed] whether there is a sufficient link 
established between Mr. Abalihi's past work at Moon Lake Pharmacy 
and Cove, Inc.'s proposal to operate'' Respondent. R.D. at 28; see 
also id. at 31 (``[T]he facts shown here do not establish the kind 
of ties that link Mr. Abalihi's past brief involvement with Moon 
Lake's illegal operation to the operation proposed by the Respondent 
here.'').
    To the extent the ALJ was suggesting that to the deny the 
application on this basis, the Government must show that Mrs. 
Abalihi intended to operate Respondent as a pharmacy which filled 
prescriptions obtained by soliciting customers over the internet and 
which were issued by physicians who did not establish a valid 
doctor-patient relationship with the customers, the Government was 
not required to make such a showing. Rather, it was only required to 
show that Mr. Abalihi had committed violations of the CSA and that 
there was reason to believe that he would exert influence or control 
over Respondent's operation.
    \16\ While the Abalihis maintain that they have been 
``blacklisted'' by DEA, Tr. 98 & 133; instead of withdrawing his 
application, Mr. Abalihi could have challenged the proposed denial 
of his application and would have been entitled to a hearing. See 21 
U.S.C. 824(c). At that hearing, he could have challenged the 
Government's evidence as well as put forward evidence relevant to 
the issue of whether his registration would be consistent with the 
public interest. See id. Sec.  823(f).
---------------------------------------------------------------------------

    Indeed, Mrs. Abalihi admitted that the reason she did not make her 
husband a co-owner was because of his prior failed attempt to obtain a 
DEA registration. Tr. 133. So too, while Mr. Alabihi was not made a 
shareholder of Respondent, he is married to Respondent's principal 
owner and would thus share, at least indirectly, in any of Respondent's 
profits. See Unarex, 50 FR at 6079. Mr. Abalihi would thus have a 
strong economic incentive to exercise influence over Respondent's 
operation.\17\ See id.
---------------------------------------------------------------------------

    \17\ While in Graham, there clearly was a business arrangement 
between the applicant and his partner (who had diverted list I 
chemicals), consistent with the cases discussed above, I reject the 
ALJ's reasoning that Graham is distinguishable on ground that 
``unlike the business plan presented by Ms. Abalihi, the registrant 
in Graham was economically tied to the third party.'' R.D. at 29. 
Contrary to the ALJ's understanding, the Abalihi's marriage 
establishes that Mr. and Mrs. Abalihi are economically tied. Cf. 
Califano v. Jobst, 434 U.S. 47, 54 (1977) (``Both tradition and 
common experience support the conclusion that marriage is an event 
which normally marks an important change in economic status.''); 
Women Involved in Farm Economics v. USDA, 876 F.2d 994, 1005 (D.C. 
Cir. 1989) (noting with approval the assumption that ``whatever 
their roles, married men and women constitute one economic unit'').
     While I conclude that Mrs. Abalihi submitted the pending 
application as part of a ruse by the Abalihis to obtain a 
registration after Mr. Abalihi withdrew his application, and that 
the Abalihis planned all along for Mr. Abalihi to be Respondent's 
pharmacist-in-charge, contrary to the ALJ's understanding, the 
Agency's case law does not require that the Government prove that 
Mr. Abalihi ``intend[ed] to perform a significant role in the 
operation of'' Respondent. R.D. at 29.

---------------------------------------------------------------------------

[[Page 29043]]

    Moreover, notwithstanding that Mr. Abalihi was not made a 
shareholder or officer, Mrs. Abalihi offered no testimony that he would 
not work at the pharmacy. R.D. at 29. Indeed, Respondent's own evidence 
shows that Mr. Abalihi listed Respondent as his address of record for 
his pharmacist license with the Florida Department of Health.\18\ RX C. 
Thus, while Mr. Abalihi claimed that he had no intention of working at 
Respondent, he offered no explanation for the inconsistency between his 
testimony and his action in listing Respondent as his address of 
record. Moreover, given Mr. Abalihi's claim, it is strange that he 
signed the return receipt card, manifesting service of the Show Cause 
Order, which was mailed to Respondent at its physical location of 1947 
W. Dr. Martin Luther King Blvd. See GX 1, at 2. Thus, while the ALJ 
found credible Mr. Abalihi's testimony that he did not intend to work 
at Respondent, the ALJ never reconciled his finding with this evidence.
---------------------------------------------------------------------------

    \18\ Mr. Abalihi also testified that he was working full time at 
a pharmacy in Miami. Tr. 109. Yet he did not list this pharmacy as 
either his address of record or as a secondary location with the 
Florida Department of Health, see RX C, and I find it implausible 
that he would continue working full time in Miami if Respondent 
obtained a registration given the expense of hiring a pharmacist.
---------------------------------------------------------------------------

    Finally, Ms. Taylor, who Mrs. Abalihi represented as being 
Respondent's pharmacist-in-charge, told the DIs that she did not intend 
to leave her then-position at Sweetbay Pharmacy until Respondent was 
profitable. Moreover, when questioned as to who would be the pharmacist 
during the interim period, Ms. Taylor gave the name of a person she had 
never asked. Ms. Taylor, who has since taken a position in Orlando, did 
not testify in the proceeding, and while she did submit an affidavit, 
the affidavit contains no statement that she still intends to become 
Respondent's pharmacist-in-charge. Indeed, Mrs. Abalihi still has not 
disclosed who will be Respondent's pharmacist-in-charge.\19\ The 
evidence thus suggests that the plan all along was for Mr. Abalihi to 
be Respondent's pharmacist-in-charge.
---------------------------------------------------------------------------

    \19\ Notwithstanding that many of the Agency cases have involved 
pharmacies whose prior owners were convicted of criminal offenses, a 
criminal conviction of either the pharmacy or its pharmacist/owner 
is not required to sustain the denial of an application or the 
revocation of a registration. For example, in Carriage Apothecary, 
the pharmacy and pharmacist were not convicted of any offense but 
agreed to pay a civil penalty. 52 FR at 27599.
---------------------------------------------------------------------------

    Accordingly, based on the record as a whole, I reject the ALJ's 
conclusion that the links between the applicant and Mr. Abalihi are 
sufficiently attenuated to conclude that he will exercise no influence 
or control over Respondent.\20\ I further conclude that the record 
supports a finding that Mrs. Abalihi submitted the application as part 
of a ruse to obtain a registration after her husband withdrew his 
application. This finding provides additional reason to reject the 
application.\21\
---------------------------------------------------------------------------

    \20\ I therefore reject the ALJ's finding of fact number seven. 
See R.D. at 34. I also reject the ALJ's conclusion of law number 
four. See id. at 35-36.
    \21\ In one of Respondent's filings, it asserts that its case is 
``most analogous'' to the Agency's decision in Terese, Inc., D/B/A 
Peach Orchard Drugs, 76 FR 46843 (2011). It's not. In Terese, the 
Government sought the revocation of the registration of a pharmacy, 
which was owned by the wife of a pharmacist, who along with his 
pharmacy, had been convicted of health care fraud and required to 
surrender his DEA registration as part of his sentence. While the 
Government argued that the pharmacy was simply the alter ego of a 
previous pharmacy, which had been subject to mandatory exclusion 
from federal health care programs by virtue of its conviction, see 
21 U.S.C. 824(a)(5) and 42 U.S.C. 1320a-7(a), I noted that the 
respondent was not subject to mandatory exclusion but rather only 
permissive exclusion, and that Congress had not granted the Agency 
authority to revoke a registration on the latter basis. 76 FR at 
46846-48.
    While the Government also alleged that the former pharmacy and 
its pharmacist had diverted controlled substances, I rejected the 
allegation for lack of substantial evidence. Id. at 46846 & n.9. 
However, I also explained that ``had the evidence established that 
[the owner's husband or the former pharmacy had] violated the CSA or 
state controlled substance laws, the Agency case law on piercing the 
corporate veil would authorize the revocation of [the] 
[r]espondent's registration.'' Id.
---------------------------------------------------------------------------

ORDER

    Pursuant to the authority vested in me by 21 U.S.C. 823(f), as well 
as 28 CFR 0.100(b), I order that the application of Cove, Incorporated, 
doing business as Allwell Pharmacy, for a DEA Certificate of 
Registration as a retail pharmacy, be, and it hereby is, denied. This 
order is effective immediately.

    Dated: May 11, 2015.
Michele M. Leonhart,
Administrator.
Brian Bayly, Esq., for the Government
Daniel G. Musca, Esq., and Brian C. Chase, Esq., for the Respondent

RECOMMENDED RULINGS, FINDINGS OF FACT, CONCLUSIONS OF LAW, AND DECISION 
OF THE ADMINISTRATIVE LAW JUDGE

Nature of the Proceeding

    Christopher B. McNeil, Administrative Law Judge. On March 3, 
2011, Ogechi E. Abalihi submitted a request on behalf of Cove, Inc., 
seeking a new retail pharmacy DEA Certificate of Registration, 
allowing it to dispense controlled substances through a business 
that would be known as Allwell Pharmacy in Tampa, Florida. On July 
26, 2011, finding cause to believe this registration would be 
inconsistent with the public interest, the Drug Enforcement 
Administrator, through the Deputy Assistant Administrator, issued an 
order to show cause why the Administrator should not deny the 
application. In response, on August 22, 2011, the Respondent 
requested an extension of the time permitted to file a response, 
which was granted by DEA Administrative Law Judge Timothy J. Wing. 
Judge Wing thereafter received what he found to be a waiver of Cove, 
Inc.'s right to a hearing on the matter and terminated the 
administrative review Cove had requested.
    In her review of the record, the Administrator concluded there 
were factual disputes that warranted further development and 
remanded the matter to the Office of Administrative Law Judges, with 
instructions to permit the parties to present evidence at a hearing 
to be conducted in Tampa, Florida. At this point, Judge Wing was no 
longer with the DEA Office of Administrative Law Judges, so 
Administrative Law Judge Gail Randall issued an order for prehearing 
statements. On December 3, 2012, prior to the submission of 
prehearing statements, Chief Administrative Law Judge John J. 
Mulrooney II reassigned the case from ALJ Randall to the 
undersigned, and I presided over an evidentiary hearing conducted in 
Tampa, Florida, on February 13, 2013.

Issue

    The general issue to be adjudicated by the Administrator, with 
the assistance of this recommended decision, is whether the record 
as a whole establishes, by substantial evidence, that Cove, Inc.'s 
application for a Certificate of Registration with the DEA should be 
denied as inconsistent with the public interest, as that term is 
used in 21 U.S.C. Sec.  823(f).
    The issue arose after DEA investigators completed an evaluation 
of the evidence supporting Cove, Inc.'s application. In this 
evaluation, investigators learned that the 90 percent owner of Cove, 
Inc., Ogechi Abalihi, R.N., had no experience as a pharmacist and 
limited knowledge about DEA regulations pertaining to the retail 
distribution of controlled substances. Investigators also found that 
the ten percent owner of Cove, Inc., pharmacist Jacinta Taylor, was 
not planning on being present at the pharmacy until after it became 
profitable. The investigators noted that Ms. Taylor gave them 
conflicting information regarding who would serve as Allwell's 
pharmacist up to the time when Ms. Taylor would participate in the 
operation of the pharmacy. Investigators also

[[Page 29044]]

were concerned that Ms. Abalihi's husband, Alfred Abalihi, R. Ph., 
although not a Cove, Inc. shareholder or manager of Allwell, had 
been associated with a different pharmacy that had been compelled to 
surrender its DEA Certificate in 2007 due to illegal dispensing 
operations.
    Based on the information presented to them in the course of 
Cove, Inc.'s application, the Diversion Investigators concluded that 
granting Cove, Inc. a Certificate of Registration would be 
inconsistent with the public interest, prompting the show cause 
order that would deny this application. The specific issue thus is 
whether by at least a preponderance of the evidence the Government 
has established that granting a DEA Certificate of Registration to 
Cove, Inc. would be inconsistent with the public interest, as that 
term is used in 21 U.S.C. 823(f)
    After carefully considering the testimony elicited at the 
hearing, examining the admitted exhibits, evaluating the arguments 
of counsel, and weighing the record as a whole, I have set forth my 
recommended findings of fact, conclusions of law, and analysis 
below, recommending that the DEA deny Cove, Inc.'s Application for a 
Certificate of Registration.

Evidence

    Allwell Pharmacy's proposed DEA-registered location is 1947 W. 
Dr. Martin Luther King, Jr. Blvd., Tampa, Florida 33609. The 
proposed DEA-registered location is not open for business or 
operating at this time as a pharmacy or other commercial business, 
but the pharmacy is licensed as a retail pharmacy in the State of 
Florida and retains a Florida community pharmacy license. Allwell 
Pharmacy's owner is Cove, Inc., and the corporation has two 
shareholders: Ogechi E. Abalihi, who owns 90 percent of the company, 
and Jacinta Taylor, who owns ten percent.\1\
---------------------------------------------------------------------------

    \1\ Tr. at 10-11.
---------------------------------------------------------------------------

    Ms. Abalihi has no experience either as a pharmacist or owning a 
retail pharmacy, but she does have extensive experience as a 
Registered Nurse licensed as such since 2001, and throughout such 
period has worked with controlled substances. Jacinta Taylor has 
extensive experience working as a Florida-licensed pharmacist, 
working as a pharmacist and dispensing controlled substances.\2\
---------------------------------------------------------------------------

    \2\ Id.
---------------------------------------------------------------------------

Testimony from the DEA Diversion Investigators

    Kenneth Boggess has been a Diversion Investigator for the DEA 
for 26 years.\3\ He graduated from the Federal Law Enforcement 
Training Center in 1980 and from the FBI Academy in 1986.\4\ In this 
course of study, he has become familiar with sections of the Code of 
Federal Regulations, with the identification of controlled 
substances, and with the means and processes of illegally diverting 
controlled substances.\5\ Throughout his tenure as a DEA Diversion 
Investigator, Mr. Boggess has participated in continuing education 
courses and has participated in numerous investigations, including 
those pertaining to pharmacies.\6\
---------------------------------------------------------------------------

    \3\ Tr. at 30.
    \4\ Id.
    \5\ Id. at 32.
    \6\ Id. at 31.
---------------------------------------------------------------------------

    Investigator Boggess explained that he was involved in 
evaluating the application submitted by Cove, Inc., the Respondent 
in this matter.\7\ Part of that evaluation included meeting with one 
of Cove, Inc.'s two owners, Ogechi Abalihi.\8\ He said his first 
meeting with Ms. Abalihi took place on March 22, 2011, at the DEA's 
Tampa office, and that DEA Diversion Investigator Ira Wald also 
attended this meeting.\9\
---------------------------------------------------------------------------

    \7\ Id. at 32.
    \8\ Id.
    \9\ Id. at -32-33.
---------------------------------------------------------------------------

    According to Investigator Boggess, Ms. Abalihi obtained her 
nursing degree in Lagos, Nigeria, and moved to New York in 1992.\10\ 
He said that upon arriving in New York, Ms. Abalihi worked for a 
health care corporation, moving to Tampa in the early 2000s, where 
she began working with the Veterans Administration as a part-time 
nurse.\11\
---------------------------------------------------------------------------

    \10\ Id. at 33.
    \11\ Id. at 33-34.
---------------------------------------------------------------------------

    As part of the application investigation, Investigator Boggess 
said he questioned Ms. Abalihi about her plan to manage the proposed 
pharmacy. He said when he asked Ms. Abalihi who would actually 
manage Allwell Pharmacy, she told him it would be managed by the 
other co-owner, Jacinta Taylor.\12\ According to Investigator 
Boggess, Ms. Abalihi is the 90 percent owner of Cove, Inc., and Ms. 
Taylor is the ten percent owner.\13\ Investigator Boggess said he 
questioned Ms. Abalihi about the business relationship between her 
and Ms. Taylor, and was told she met Ms. Taylor in 2010, in the 
course of treatment in a therapist's office.\14\
---------------------------------------------------------------------------

    \12\ Id. at 34.
    \13\ Id. at 36.
    \14\ Id. at 34.
---------------------------------------------------------------------------

    During the interview conducted on March 22, 2011, Investigator 
Boggess questioned Ms. Abalihi about how the proposed pharmacy would 
maintain its records and maintain compliance with DEA regulations 
concerning the dispensing of controlled substances.\15\ When asked, 
on cross examination, whether this kind of questioning was part of 
his ``standard operating procedure,'' Investigator Boggess said yes, 
adding that Tampa ``has significant problems with applicants here, 
and the Internet problems and this oxycodone problem.'' \16\ He 
explained that the questions he uses when evaluating an applicant 
have been generated through suggestions from DEA headquarters and 
from the experiences of DEA officers in Tampa, but that these 
questions are not published for public consumption.\17\ There was, 
however, some indication, according to Investigator Boggess, that 
word of the kind of questions being asked in these applications is 
getting around, such that the applicants ``have a good idea what 
we're going to ask.'' \18\
---------------------------------------------------------------------------

    \15\ Id. at 35.
    \16\ Id. at 60.
    \17\ Id.
    \18\ Id. at 61.
---------------------------------------------------------------------------

    Investigator Boggess explained that when he questions an 
applicant about the applicant's knowledge of DEA regulations, he 
ends the inquiry if it is clear the person knows nothing about those 
regulations, because ``there's no point in badgering someone.'' \19\ 
That appears to have been the case here, during his interview with 
Ms. Abalihi. He described his questions as being ``simple,'' and 
gave as an example: ``How do you plan on maintaining your 
invoices?'' \20\ Investigator Boggess said in response to the 
questions he posed regarding DEA regulations, Ms. Abalihi deferred 
all questions about controlled substances and about the security of 
those substances to Ms. Taylor, electing not to answer them 
herself.\21\ When asked who would be responsible for ordering 
controlled substances being dispensed in the pharmacy, Ms. Abalihi 
told Investigator Boggess that she intended to give Ms. Taylor power 
of attorney, and they would use either Harvard Drug or Cardinal as 
their wholesale supplier.\22\
---------------------------------------------------------------------------

    \19\ Id. at 64.
    \20\ Id.
    \21\ Id. at 36.
    \22\ Id.
---------------------------------------------------------------------------

    The following week, Investigator Boggess contacted Jacinta 
Taylor and met with her on March 30, 2011 at the DEA office in 
Tampa, along with Investigator Wald.\23\ Investigator Boggess said 
after confirming her identity and her credentials as a pharmacist, 
he inquired about the proposed business operation.\24\ He said Ms. 
Taylor confirmed that she met Ms. Abalihi ``socially at some type of 
therapy session'' in 2010.\25\ He testified that Ms. Taylor 
initially told him she would be the pharmacist in charge of the 
pharmacy when it opened, and that she expected to be the person who 
would order controlled substances, most likely using Great Lakes 
Harvard Drug as the pharmacy's supplier.\26\ She told him the 
pharmacy would be operating from 9:00 a.m. until 6:00 p.m., Mondays 
through Fridays, and from 9:00 a.m. until 1 p.m. on Saturdays, and 
would be closed on Sundays.\27\
---------------------------------------------------------------------------

    \23\ Id. at 37.
    \24\ Id. at 37-38.
    \25\ Id. at 38.
    \26\ Id.
    \27\ Id. at 38-39.
---------------------------------------------------------------------------

    When Investigator Boggess considered these operating hours, he 
asked Ms. Taylor about her current employment and the hours she was 
on duty with that job, as a pharmacist at Sweetbay. According to 
Investigator Boggess, Ms. Taylor then acknowledged working at 
Sweetbay on a full-time basis, with hours from 10:00 a.m. until 8:00 
p.m.\28\ When this scheduling conflict was brought to Ms. Taylor's 
attention, Investigator Boggess said Ms. Taylor amended her previous 
answer: rather than stating she would be the pharmacist in charge of 
the pharmacy when it opened, she told him that she would leave her 
job at Sweetbay ``if and when Allwell started to make money.''\29\ 
Investigator Boggess pursued this inquiry, asking Ms. Taylor who 
would be Allwell's pharmacist in charge in the meantime. In 
response, Ms. Taylor told

[[Page 29045]]

him the interim pharmacist in charge would be a coworker of hers, 
Dalya Mustafa.\30\
---------------------------------------------------------------------------

    \28\ Id. at 39.
    \29\ Id. at 40.
    \30\ Id.
---------------------------------------------------------------------------

    When he learned that Ms. Taylor intended to use Ms. Mustafa as 
the interim pharmacist in charge of the applicant pharmacy, 
Investigator Boggess told Ms. Taylor he would need to interview Ms. 
Mustafa, given the significant role Ms. Mustafa would be playing 
with the new pharmacy.\31\ According to Investigator Boggess, at 
this point in the interview Ms. Taylor ``stuttered and said, `Well, 
perhaps [Ms. Mustafa] won't work there.''' \32\ At the conclusion of 
this interview, Investigator Boggess called Ms. Abalihi and asked if 
she would provide contact information so that he could call Ms. 
Mustafa and confirm the role she would be playing in the proposed 
pharmacy.\33\ According to Investigator Boggess, Ms. Abalihi talked 
with Investigator Boggess on either the 30th or 31st of March 2011, 
and told him she would contact Ms. Mustafa and either have her call 
him or provide him with her phone number. Investigator Boggess said 
that despite this, Ms. Mustafa never contacted him and he heard 
nothing further from Ms. Abalihi regarding Ms. Mustafa.\34\
---------------------------------------------------------------------------

    \31\ Id. at 41.
    \32\ Id.
    \33\ Id. at 41.
    \34\ Id. at 42.
---------------------------------------------------------------------------

    In addition to inquiring of Ms. Abalihi how Cove, Inc. would 
ensure compliance with DEA controlled substance regulations, 
Investigator Boggess said he and Investigator Wald were also 
concerned about the role Alfred Abalihi--Ms. Abalihi's husband--
would play in the new pharmacy. Here, both Investigator Wald and 
Investigator Boggess described an investigation their office 
conducted four years earlier, involving Moon Lake Pharmacy. 
According to Investigator Boggess, during the initial interview on 
March 22, 2011 Investigator Wald told Ms. Abalihi that he had 
conducted an inspection of Moon Lake Pharmacy back in 2007, and that 
during this inspection Mr. Abalihi was the pharmacist on duty.\35\ 
Investigator Boggess said that the inspection of Moon Lake had been 
prompted by information indicating it was illegally distributing 
controlled substances over the Internet.\36\ Investigator Boggess 
said that during the inspection of Moon Lake, Mr. Abalihi told 
Investigator Wald that, while he knew nothing about the owner or 
operator of the pharmacy and was only working on a short-term 
contractual basis through his employer, HealthCare Consultants, he 
believed there was nothing illegal about what Moon Lake was doing 
and added that ``he himself . . . wouldn't mind opening a pharmacy'' 
of his own.\37\
---------------------------------------------------------------------------

    \35\ Id. at 35.
    \36\ Id. at 35.
    \37\ Id.
---------------------------------------------------------------------------

    The record reflects that Moon Lake surrendered its DEA 
Certificate of Registration shortly after this inspection, based on 
the investigators' charge that the operation was illegal. The record 
also shows that Mr. Abalihi was then dispatched to serve as a 
temporary pharmacist at numerous other locations, as an employee of 
HealthCare Consultants, all without incident or disciplinary action.
    Investigator Boggess testified that at the conclusion of the 
investigation into Cove, Inc.'s application for DEA registration, 
DEA's Diversion Group Supervisor, Roberta Goralczyk determined that 
the application should be denied.\38\ He said he then spoke to both 
Ms. Abalihi and Ms. Taylor, and learned that Ms. Taylor wished to 
withdraw the application but that Ms. Abalihi would not drop the 
request for the DEA Certificate.\39\ Investigator Boggess told Ms. 
Taylor, however, that as she was not the actual applicant, she could 
not withdraw the application.\40\ He said that after this 
discussion, both Ms. Taylor and Ms. Abalihi spoke with him at the 
end of March, 2011 and asked for a list of the DEA's objections, 
indicating that they both wished to have the application go 
forward.\41\
---------------------------------------------------------------------------

    \38\ Id. at 43.
    \39\ Id.
    \40\ Id. at 44.
    \41\ Id.
---------------------------------------------------------------------------

    Investigator Boggess testified that as of January 2013, when he 
last drove past Allwell's proposed location, the pharmacy had not 
opened.\42\ He added that five other pharmacies were operating 
within a few hundred yards of the proposed location, all in close 
proximity to St. Joseph's Hospital.\43\ He said he recently visited 
these pharmacies, and confirmed they all held DEA Certificates 
allowing them to dispense controlled substances.\44\ Through this 
testimony, Investigator Boggess established there is an ongoing 
concern by pharmacists regarding the proliferation of pain 
medication prescriptions, particularly regarding OxyContin 15 and 30 
mg. tablets.\45\ On cross examination, Investigator Boggess 
confirmed that it is common for health care professionals and 
pharmacies to cluster around a hospital.\46\ He also confirmed that 
there is no evidence to suggest St. Joseph's Hospital is a ``pill 
mill hospital,'' nor did he believe there was evidence to suggest 
any of the pharmacies constituted problems for the DEA with respect 
to their dispensation practices.\47\
---------------------------------------------------------------------------

    \42\ Id. at 45.
    \43\ Id.
    \44\ Id. at 45-46.
    \45\ Id. at 47-59.
    \46\ Id. at 65.
    \47\ Id. at 66-67.
---------------------------------------------------------------------------

    During his visit to David's Pharmacy on January 18, 2013, 
Investigator Boggess observed a sign on the divider between the 
pharmacy and the patients indicating that the pharmacy would not 
dispense oxycodone 15 or 30 mg. tablets.\48\ He said he spoke with 
the owner, pharmacist David Cataya, and to Mr. Cataya's wife, 
Carmen, about concerns the pharmacist had regarding the dispensing 
of controlled substances in this neighborhood.\49\ He learned the 
pharmacist saw the trend for oxycodone had gone down, but that 
demand for hydromorphone (Dilaudid) had gone up such that it was now 
the drug of choice of drug seekers in their neighborhood.\50\ As a 
result, the pharmacist preferred to fill controlled substance 
prescriptions only for those individuals who could prove they lived 
in the neighborhood and who were his established customers.\51\
---------------------------------------------------------------------------

    \48\ Id. at 47.
    \49\ Id. at 48.
    \50\ Id.
    \51\ Id. at 50.
---------------------------------------------------------------------------

    Investigator Boggess described making similar trips to and 
receiving similar input from four other nearby pharmacies, including 
Hillsborough River Compounding Pharmacy, run by Mr. Uba, Care Plus 
Pharmacy run by Mr. Bakari, CVS Pharmacy, run by Mr. Alicea, and 
Walgreens Pharmacy, run by Mr. Luu. In these interviews, 
Investigator Boggess learned that the nearby hospital did not 
generate many prescriptions for controlled substances.\52\ He also 
learned that while some of those he interviewed felt there was a 
high demand for oxycodone, not all found there to be a shortage.\53\ 
Mr. Alicea reported attempts by drug seeking customers to seek out 
oxycodone and to attempt to learn the price charged for the drug, 
prompting Mr. Alicea to refuse to fill prescriptions for more than 
100 dosage units of the drug, and to post a sign in the pharmacy 
stating ``No Oxycodone,'' in large print on an 8 by 11 sheet of 
paper at the pharmacy counter.\54\ At the Walgreens Pharmacy, Mr. 
Luu reported there was a high demand for oxycodone, and that he 
would not fill prescriptions for Schedule II medications.\55\
---------------------------------------------------------------------------

    \52\ Id. at 49, 51.
    \53\ Id. at 51-55.
    \54\ Id. at 56.
    \55\ Id. at 59.
---------------------------------------------------------------------------

    When asked on cross examination why he waited until 2013 to 
conduct these interviews with the nearby pharmacies, Investigator 
Boggess agreed that ``the two-year delay is a good question, period, 
for this whole process,'' but that he was working with 30 other 
applications at the time and the interviews were done when he 
``finally got around to [them]''.\56\ He added, however, that there 
is no regulation that requires his office to avoid saturation of a 
market when evaluating an application for a pharmacy.\57\ He 
specifically denied any practice of denying an application based on 
over-saturation in the Tampa Bay area.\58\
---------------------------------------------------------------------------

    \56\ Id. at 68.
    \57\ Id. at 69.
    \58\ Id. at 70.
---------------------------------------------------------------------------

    DEA Diversion Investigator Ira Wald also testified. He stated he 
has been a Division Investigator for 38 years, having been hired in 
1975 and having completed several months of initial training in DEA 
auditing techniques, legal procedure, and investigative techniques, 
with periodic refresher courses.\59\ Mr. Wald stated that from this 
course of study, and based on his experience in investigating the 
application of pharmacies seeking DEA certification, he is familiar 
with the Code of Federal Regulations pertaining to the distribution 
and dispensing of controlled substances.\60\
---------------------------------------------------------------------------

    \59\ Id. at 72-3.
    \60\ Id. at 73-4.
---------------------------------------------------------------------------

    With respect to his concerns about the role Mr. Abalihi might 
play in the operation of Allwell Pharmacy, Investigator Wald 
testified that in 2007, after receiving an anonymous call about Moon 
Lake Pharmacy, he visited

[[Page 29046]]

the pharmacy at its location in New Port Richey, Florida.\61\ 
Investigator Wald said that after determining that the pharmacy was 
engaged in Internet trafficking of hydrocodone, Xanax, and Valium, 
and after determining there were violations of compounding 
regulations, Investigator Wald questioned the pharmacist present at 
the time of this visit--Alfred C. Abalihi, who is Ms. Abalihi's 
husband.\62\
---------------------------------------------------------------------------

    \61\ Id. at 75.
    \62\ Id. at 79.
---------------------------------------------------------------------------

    According to Investigator Wald, the pharmacy was small--about 
600 square feet in size--and it did not appear it was open to the 
public, but was instead a compounding site.\63\ Investigator Wald 
said the compounding room had thousands of hydrocodone capsules in a 
transparent two-gallon jug, along with 100 grams of pure hydrocodone 
powder.\64\ According to Investigator Wald, this type of storage was 
a violation because ``compounding by definition requires that the 
compounder, the pharmacist, make up the prescription[s] one at a 
time pursuant to need, not thousands beforehand pursuant to 
projected sales possibilities.'' \65\ According to Investigator 
Wald, when questioned about this operation, Mr. Abalihi stated he 
``saw no problem with it,'' and stated ``it was legal and proper, 
ethical to do so''.\66\ Mr. Abalihi added that ``he would like to 
open up his own pharmacy.'' \67\
---------------------------------------------------------------------------

    \63\ Id.
    \64\ Id. at 76.
    \65\ Id.
    \66\ Id. at 80.
    \67\ Id. at 81.
---------------------------------------------------------------------------

    When asked during cross examination about Moon Lake's 
compounding methods, Investigator Wald stated he did not know if 
compounding in advance based on anticipated need was permitted under 
Florida law, but knew that federal law forbids advanced compounding 
absent registration as a manufacturer.\68\ Investigator Wald also 
acknowledged that upon his initial visit to Moon Lake Pharmacy, he 
did not see Mr. Abalihi actually compounding drugs, and from his 
review of the pharmacy records he did not see Mr. Abalihi listed as 
either the prescription department manager or as an officer or 
director of the pharmacy.\69\
---------------------------------------------------------------------------

    \68\ Id. at 86.
    \69\ Id. at 88.
---------------------------------------------------------------------------

    Investigator Wald explained that after meeting with Mr. Abalihi 
at Moon Lake Pharmacy he arranged to meet with the pharmacy's owner, 
Vivian Alberto.\70\ During this meeting and a meeting that followed 
shortly thereafter, Investigator Wald requested and received the 
surrender of the pharmacy's DEA registration, putting the pharmacy 
out of business ``because everything [Ms. Alberto] was doing was 
criminal.'' \71\
---------------------------------------------------------------------------

    \70\ Id. at 82.
    \71\ Id. at 83.
---------------------------------------------------------------------------

    Moon Lake Pharmacy surrendered its former DEA registration 
number, FM0523870, on or about December 17, 2007, because the 
pharmacy dispensed controlled substances based on illegal Internet 
prescriptions. The parties have stipulated that Mr. Abalihi was a 
pharmacist at Moon Lake who dispensed controlled substances based on 
unlawful Internet prescriptions.\72\ The parties also have 
stipulated that Mr. Abalihi was never an owner, officer, pharmacist-
in-charge, or prescription department manager of Moon Lake 
Pharmacy.\73\
---------------------------------------------------------------------------

    \72\ Id. at 11-12.
    \73\ Id.
---------------------------------------------------------------------------

    Regarding the initial investigation into Cove, Inc.'s 
application for a DEA Certificate of Registration for Allwell 
Pharmacy, Investigator Wald confirmed the testimony of Investigator 
Boggess regarding standard procedures in these investigations. He 
said it is normal for his office to quiz new DEA applications on 
their familiarity with DEA regulations.\74\ Further, he said his 
office requires the applicants to meet with the investigators, to 
describe their operations, their backgrounds, and their professional 
expertise in operating a pharmacy--this because of the ``many 
criminal violations coming from retail pharmacies.'' \75\
---------------------------------------------------------------------------

    \74\ Id. at 89.
    \75\ Id. at 89.
---------------------------------------------------------------------------

    Investigator Wald confirmed the salient points addressed by 
Investigator Boggess. He recalled that during the initial interviews 
with Ms. Abalihi and Ms. Taylor, he and Investigator Boggess asked 
about the ownership of Cove, Inc., and about Ms. Abalihi's training, 
education, and experience with pharmacies in the past, and about how 
much of her attention she was going to devote to the pharmacy.\76\ 
The record reflects that under her proposed business plan, Ms. 
Abalihi would operate the retail pharmacy herself, along with a co-
owner who is a registered pharmacist and who would be responsible 
for dispensing controlled substances. He also confirmed Investigator 
Boggess's observation that St. Joseph's Hospital, which is near the 
location of the proposed Allwell Pharmacy, is not currently regarded 
as a ``pill mill,'' and that while it does generate prescriptions 
for controlled substances, it does not dispense them--patients who 
are treated at the hospital but who are not actually admitted to the 
hospital will, for the most part, fill their prescriptions off-
site.\77\
---------------------------------------------------------------------------

    \76\ Id. at 91.
    \77\ Id. at 92, 95.
---------------------------------------------------------------------------

Testimony in Support of the Application

    Testifying in support of Cove, Inc.'s application, Ogechi E. 
Abalihi stated that she has a diploma of Nursing from Lagos 
University Teaching Hospital as well as a diploma in Midwifery from 
University College Hospital. Ms. Abalihi obtained both degrees in 
Nigeria, where she worked between 1988 and 1992 as a Registered 
Nurse.\78\ In addition, Ms. Abalihi has a Bachelor's Degree from 
City College New York, and in 2012 earned a Master's Degree in 
Nursing from the University of South Florida.\79\ She explained that 
courses in the Master's program included pharmacology and advanced 
pharmacology, which covered the legalities of prescribing controlled 
substances in Florida.\80\
---------------------------------------------------------------------------

    \78\ Id. at 125-6.
    \79\ Id. at 125.
    \80\ Id. at 128.
---------------------------------------------------------------------------

    After moving from Nigeria to New York in 1992, Ms. Abalihi 
worked with the Health and Hospitals Corporation in Harlem Hospital 
for about ten years: \81\ ``As a Registered Nurse, I worked in 
orthopedics, massage, I did a little bit of psychiatric nursing, I 
worked in [the] intensive care unit.'' \82\ Ms. Abalihi said she had 
the knowledge and education associated with the professional 
standards of service as a Registered Nurse, including knowledge of 
medication inventorying, dispensing, and safekeeping.\83\
---------------------------------------------------------------------------

    \81\ Id. at 126-7.
    \82\ Id. at 127.
    \83\ Id.
---------------------------------------------------------------------------

    Ms. Abalihi said she moved to Tampa in 2001, working both at the 
Veterans Administration Hospital there and operating a group home, 
between 2007 and 2010, as the home's Director of Nursing.\84\ She 
said in this capacity she was involved with patients who had 
prescriptions for controlled substances, so she was responsible for 
inventory, dispensing, and safe handling of the drugs.\85\ She 
currently works as a Registered Nurse at the Veterans Administration 
Hospital, in the hospital's critical care unit.\86\ She described 
this as full-time work in the intensive care unit, the cardiac unit, 
and the surgical unit, where she is required to make sure 
prescription doses are correct, and has to understand medication 
side effects, ``how it's going to impact my patient, and how much 
this patient can get at a particular time. Basically, standard 
nursing procedures for dispensing [and] safety [ ] of controlled 
substances.'' \87\
---------------------------------------------------------------------------

    \84\ Id.
    \85\ Id. at 127-28.
    \86\ Id. at 125, 128.
    \87\ Id. at 133.
---------------------------------------------------------------------------

    Ms. Abalihi testified that through her work as a nurse and 
through her formal education, she has been trained in dispensing 
controlled substances: ``I inventory controlled substances as a 
Registered Nurse, and I have knowledge of safekeeping processes with 
relationship to [the] nursing profession.'' \88\ This experience, 
she said, includes ``knowledge of inventory, safety of controlled 
drugs [,] and dispensing.'' \89\ She said she has held a nursing 
license from New York for over ten years, and has held her Florida 
license since 2001, and has never been disciplined by any 
governmental entity nor convicted of any crime.\90\
---------------------------------------------------------------------------

    \88\ Id. at 125.
    \89\ Id. at 126.
    \90\ Id. at 140.
---------------------------------------------------------------------------

    Ms. Abalihi said she applied for a DEA Certificate of 
Registration in early 2011 so that Cove, Inc. could operate Allwell 
Pharmacy.\91\ She acknowledged she never has owned a retail 
pharmacy, has never worked in a pharmacy, and is not a licensed 
pharmacist, and as such she would not be dispensing controlled 
substances.\92\ She said the plan was to operate a standard retail 
community pharmacy with a co-owner who

[[Page 29047]]

was a pharmacist, and to serve as a supplier of drugs to assisted 
living facilities.\93\ She explained that she had recently operated 
a group home, which she stated is ``kind of assisted living,'' and 
believed she could serve this kind of population.\94\ She said she 
had no trouble obtaining a Florida state license to operate the 
pharmacy, and applied for a DEA Certificate of Registration shortly 
after obtaining a state license.\95\
---------------------------------------------------------------------------

    \91\ Id. at 129.
    \92\ Id. at 141, 143.
    \93\ Id. at 129.
    \94\ Id. at 130.
    \95\ Id. at 130-31.
---------------------------------------------------------------------------

    According to Ms. Abalihi, she and Jacinta Taylor own Cove, Inc., 
with Ms. Taylor owning ten percent and Ms. Abalihi owning 90 
percent. Ms. Abalihi is the sole officer and director.\96\ Ms. 
Taylor is a pharmacist licensed in Florida. Ms. Abalihi met Ms. 
Taylor socially, as both have children in the autism spectrum and 
met each other while taking their children to autism therapy.\97\
---------------------------------------------------------------------------

    \96\ Id. at 131.
    \97\ Id. at 131, 133.
---------------------------------------------------------------------------

    Ms. Abalihi testified that when she was invited to the DEA to 
discuss her application, Investigator Wald referred to her husband, 
and told her ``there were issues'' with a pharmacy he had worked 
at.\98\ Ms. Abalihi said she told Investigator Wald ``[w]ell, I 
don't know about that. I'm just doing this on my own.'' \99\ She 
testified that she told the investigators that Mr. Abalihi would not 
have anything to do with Allwell Pharmacy, and that she was 
``engaging the services of Jacinta Taylor, who is a licensed 
pharmacist, to be the one--the pharmacy manager or the prescriptions 
department manager, whichever one is being referred to.'' \100\ She 
told the investigators that Mr. Abalihi had been ``blacklisted'' 
from owning or operating a pharmacy.\101\
---------------------------------------------------------------------------

    \98\ Id. at 134.
    \99\ Id.
    \100\ Id. at 135.
    \101\ Id.
---------------------------------------------------------------------------

    Ms. Abalihi said that at the conclusion of the interview, 
Investigator Boggess asked when she planned to open the pharmacy, 
and offered to provide whatever help she needed, leaving her assured 
that she ``had a good interview.'' \102\ She added, however, that 
she was never told that she needed to study anything about 
regulations pertaining to the DEA, so ``whatever questions they 
asked me, I answer[ed] to the best of my knowledge. The ones I could 
not answer I refer[red] them to my prescription manager, you know 
those things that I knew I didn't know anything about, for her to 
answer [.]'' \103\
---------------------------------------------------------------------------

    \102\ Id.
    \103\ Id. at 136.
---------------------------------------------------------------------------

    By her own account, Ms. Abalihi recognized that she lacked the 
experience needed to operate a pharmacy if the pharmacy dispensed 
controlled substances. Recognizing this limitation, Ms. Abalihi 
testified that she would address this by engaging the services of a 
registered pharmacist to assist in the daily operation of the store. 
Ms. Abalihi said her familiarity and experience with controlled 
substances is based wholly on ``nursing professional standards''. 
When asked on cross-examination whether she was ``familiar with the 
record-keeping requirements for controlled substances for a retail 
pharmacy,'' she did not answer the question directly, but stated 
only ``[a]gain, like I said, in terms of controlled substances my 
experience is with nursing.'' \104\ When asked about controlled 
substance regulations concerning biannual inventories, or concerning 
the different physical security requirements applicable to Schedule 
II controlled substances (in contrast with those applicable to 
Schedules III through V), Ms. Abalihi again would not answer the 
questions, but said questions and issues like these would have to be 
addressed by a pharmacist working at Allwell.\105\ When asked what 
percentage of prescriptions she anticipated would be for controlled 
substances, Ms. Abalihi responded by saying that if anyone could 
answer that question, it would be the pharmacy manager, not 
herself.\106\
---------------------------------------------------------------------------

    \104\ Id. at 144.
    \105\ Id. at 144, 146.
    \106\ Id. at 146.
---------------------------------------------------------------------------

    Ms. Abalihi described the arrangement she entered into with the 
prospective pharmacist, Ms. Taylor. She agreed, during cross 
examination, that Allwell would have to completely rely on the 
pharmacist working there in order to ensure compliance with DEA 
controlled substances regulations.\107\
---------------------------------------------------------------------------

    \107\ Id.
---------------------------------------------------------------------------

    Ms. Abalihi testified that the business plan for Allwell was to 
have it open and operational from 9:00 a.m. until 6:00 p.m. Monday 
through Friday, and from 9:00 a.m. to 1 p.m. on Saturdays, with the 
pharmacy closed on Sundays.\108\ She acknowledged that when they 
were interviewed by the DEA investigators, Ms. Taylor was working at 
Sweetbay as a pharmacist, but stated that Ms. Taylor would come to 
work at Allwell as soon as Ms. Abalihi got the required 
license.\109\
---------------------------------------------------------------------------

    \108\ Id. at 156.
    \109\ Id. at 137.
---------------------------------------------------------------------------

    Ms. Abalihi acknowledged that presently, Ms. Taylor works full 
time as a pharmacist in Orlando, having moved from Tampa sometime 
after this application was filed.\110\ When asked whether she knew 
if Ms. Taylor was planning on moving back to Tampa if Cove, Inc. 
gets the Certificate it seeks for Allwell, Ms. Abalihi stated ``We 
can't say for sure until this whole thing is over. I mean I don't 
expect her to, you know, just not do something with her life with 
this whole thing--I mean this whole thing has to be over for her 
to--that is my perception, for her to make a decision what she wants 
to do.'' \111\ She added that despite what Ms. Taylor told 
Investigator Boggess about the plan to use Ms. Mustafa as a second 
pharmacist, Ms. Abalihi did not know Ms. Mustafa, had never met her, 
and had never spoken with her.\112\ She offered no explanation for 
telling the DEA investigators that she would either provide them 
with Ms. Mustafa's contact information or have Ms. Mustafa contact 
them--actions which indicate that she was complicit in Ms. Taylor's 
prevarication regarding the purported plan to use Ms. Mustafa when 
Allwell began its operation.
---------------------------------------------------------------------------

    \110\ Id. at 157.
    \111\ Id.
    \112\ Id. at 138.
---------------------------------------------------------------------------

    When pressed to explain this, Ms. Abalihi denied knowing Ms. 
Mustafa, denied ever speaking to Ms. Mustafa, and denied that Ms. 
Taylor said she would be relying on Ms. Mustafa. According to Ms. 
Abalihi, ``[Ms. Taylor] did not say she would be relying on Ms. 
Mustafa, no. She said the name came to her when this question was 
thrown to her. She wasn't expecting it, but the name came to her.'' 
\113\ When asked, however, whether there was a plan in effect to 
actually have Ms. Mustafa work at the pharmacy, Ms. Abalihi said 
``not exactly. Jacinta Taylor mentioned her after--you know, after 
her interview with the DEA she mentioned her to me as a possibility 
of coverage for her. And I know very well that you can actually get 
coverage. And I know very well that you can actually get coverage.'' 
\114\
---------------------------------------------------------------------------

    \113\ Id. at 138, 161.
    \114\ Id. at 139.
---------------------------------------------------------------------------

    I am thus presented with two significantly different versions of 
what was said when Diversion Investigators Boggess and Wald 
questioned Ms. Abalihi and Ms. Taylor. The Diversion Investigators 
testified that Ms. Taylor indicated she would leave her job at 
Sweetwater and join the operation of Allwell only when it started to 
become profitable--not at its inception. Both investigators 
testified that Ms. Taylor initially told them she would have a 
coworker, Ms. Mustafa, serve as the pharmacy's pharmacist between 
the time it began its operation and the time when Ms. Taylor joined 
the store as its pharmacist. Investigator Boggess testified that in 
furtherance of this representation, Ms. Abalihi committed to 
providing him with Ms. Mustafa's contact information--a commitment 
Ms. Abalihi now denies ever making.
    Because the two Diversion Investigators' testimony is internally 
consistent, is consistent with the evidence as a whole, is 
consistent with a common sense understanding of the events being 
described, and does not appear to be tainted with bias or a 
motivation to prevaricate, and because I do not find other indicia 
of unreliability, I give substantial weight to the statements of 
Investigators Boggess and Wald regarding this exchange.
    Further, because I find Ms. Abalihi's testimony to be internally 
contradictory, inconsistent with the evidence as a whole, and 
inconsistent with that of Ms. Taylor's statements to the 
investigators and her averments in the affidavit introduced as 
evidence, and because I find Ms. Abalihi and Ms. Taylor both had a 
financial interest in claiming that Allwell would have a registered 
pharmacist on duty in order to obtain a DEA Certificate (even if 
that was not going to be the case), I do not give substantial weight 
to Ms. Abalihi's claim that she never committed to giving the 
investigators contact information for Ms. Mustafa. From this 
contradictory account, I find Ms. Abalihi compounded the falsehood 
Ms. Taylor initiated, by failing to disclose the true lack of 
involvement of Ms. Mustafa in the planned operation of Allwell 
Pharmacy; and I find that Ms. Taylor falsely stated to the

[[Page 29048]]

investigators that Ms. Mustafa would play a role in the pharmacy 
when it began its operations.
    During her testimony, Ms. Abalihi attempted to minimize the 
significance of the role Ms. Taylor or Ms. Mustafa would play in the 
initial stage of Allwell's operation. Ms. Abalihi said that there 
are agencies (like the one employing her husband) that can cover 
pharmacies, ``so out of the issue of Mustafa as a coverage, a 
substitute, I don't think it was an issue for running that 
pharmacy.'' \115\ There is, however, no evidence that Ms. Abalihi 
told the DEA investigators that she intended to start Allwell's 
operation using temporary agency pharmacists, like the one employing 
her husband. She recognized, however, that DEA certification was 
essential to her business plan. She testified that without the DEA 
Certificate she could not find suppliers or insurers that would work 
with the pharmacy.\116\
---------------------------------------------------------------------------

    \115\ Id. at 139.
    \116\ Id. at 138.
---------------------------------------------------------------------------

    Ms. Abalihi's husband, Alfred Abalihi, also testified in support 
of Cove, Inc.'s application. Mr. Abalihi stated that while he would 
not be part of the business operation, he did have experience in the 
operation of a pharmacy.\117\ He holds a license to practice as a 
pharmacist in Florida, based on an accredited Bachelor of Pharmacy 
degree from the University of Ife [now Obafemi Awolowo University], 
in Nigeria.\118\ He has held the Florida license since 2003, and has 
never been subject to discipline by any governmental entity with 
respect to that license, nor has he ever been charged with or 
convicted of any crime by any governmental entity.\119\
---------------------------------------------------------------------------

    \117\ Id. at 108.
    \118\ Id. at 97.
    \119\ Id.
---------------------------------------------------------------------------

    Mr. Abalihi said he was aware that his wife was attempting to 
secure a DEA Certificate of Registration that would permit Cove, 
Inc. to operate the Allwell Pharmacy but said he was never made an 
owner of that corporation. According to Mr. Abalihi, ``[t]o my 
understanding I've been made to believe that [the] DEA have [sic] 
blacklisted me based on the temporary work I did at Moon Lake 
Pharmacy in 2007.'' \120\
---------------------------------------------------------------------------

    \120\ Id. at 98.
---------------------------------------------------------------------------

    Mr. Abalihi explained that he did not know much about Moon 
Lake's operation and was working there under contract as assigned by 
his employer, HealthCare Consultants.\121\ He said he worked at Moon 
Lake only a few days and that this was one of many assignments he 
had been dispatched to as an employee of HealthCare 
Consultants.\122\ He said he never interviewed for the job at Moon 
Lake, knew nothing about who owned the pharmacy, and never spoke 
with anyone at the pharmacy before starting his work there--adding 
that the owner worked there as a technician, but spoke only Spanish, 
which Mr. Abalihi said he neither speaks nor understands.\123\
---------------------------------------------------------------------------

    \121\ Id. at 99.
    \122\ Id. at 100, 102.
    \123\ Id. at 101, 102.
---------------------------------------------------------------------------

    Mr. Abalihi said that the DEA agents visited Moon Lake on the 
last day on this assignment.\124\ According to Mr. Abalihi, when he 
asked Investigator Wald whether he was in any kind of trouble, 
Investigator Wald told him ``No, we didn't come here for you. If the 
pharmacy manager did what we told him to do the last time we came, 
we wouldn't have been here. So it's not about you.'' \125\ Mr. 
Abalihi testified that before working at Moon Lake Pharmacy, he knew 
nothing about how that pharmacy received its prescriptions--and did 
not know there was an Internet Web site used as part of the 
prescribing process.\126\
---------------------------------------------------------------------------

    \124\ Id. at 100.
    \125\ Id.
    \126\ Id. at 103.
---------------------------------------------------------------------------

    Prior to the hearing, the parties stipulated that Mr. Abalihi 
``dispensed controlled substances based on unlawful Internet 
prescriptions'' while working at Moon Lake Pharmacy.\127\ During the 
hearing, however, Mr. Abalihi said he now could not recall any 
specific prescriptions he filled during the few days that he was 
working at Moon Lake, and had no recollection of there being 
anything wrong with any of the prescriptions he filled there.\128\ 
He said he knew Moon Lake was compounding hydrocodone into dosage 
units, but said the compounding was done when he was not 
present.\129\ He denied, however, ever telling Investigator Wald 
that what he was doing was legal, saying ``I never made any 
statement like that.'' \130\ Mr. Abalihi said he worked with two 
other people at Moon Lake--a husband and wife--both of whom ``ran 
away'' and escaped from the pharmacy when the DEA investigators 
arrived.\131\ Mr. Abalihi added that his assignment at Moon Lake was 
to end on the day the DEA investigators visited the pharmacy, so he 
did not return, and that he has never been disciplined by the 
Florida Board of Pharmacy for his work at Moon Lake.\132\
---------------------------------------------------------------------------

    \127\ Id. at 11-12.
    \128\ Id. at 103.
    \129\ Id. at 111.
    \130\ Id. at 104.
    \131\ Id. at 118-19.
    \132\ Id. at 104.
---------------------------------------------------------------------------

    Mr. Abalihi testified that after this experience, he attempted 
to open his own pharmacy through Masters Worldwide Ventures, doing 
business as My Master's Pharmacy.\133\ He said that his business 
plan was to operate a community pharmacy and to dispense drugs in 
some assisted living facilities, apparently pursuing a business plan 
similar to the one described by his wife with respect to the 
operation of Allwell Pharmacy.\134\ He said he would have no 
arrangements with any pain clinics, adding that he did not even know 
any such clinics.\135\
---------------------------------------------------------------------------

    \133\ Id. at 106.
    \134\ Id. at 107.
    \135\ Id.
---------------------------------------------------------------------------

    Mr. Abalihi said he ended this venture at the advice of an 
attorney, ``based on the fact that DEA has told [his lawyer] that 
they have made up their mind to deny me the license.'' \136\ He said 
he personally never spoke to or met with DEA representatives when 
attempting to secure a Certificate to operate My Master's Pharmacy, 
electing instead to have his attorney meet with those agents.\137\ 
He said he actually tried to operate My Master's Pharmacy without a 
DEA Certificate of Registration, but found that drug wholesalers 
would not supply drugs without that Certificate. Further, Mr. 
Abalihi realized that if he was unable to dispense controlled 
substances his customers would ``quickly go to the other pharmacies 
that have a controlled [substances] license, leaving me to lose in 
business.'' \138\
---------------------------------------------------------------------------

    \136\ Id. at 106.
    \137\ Id. at 121.
    \138\ Id. at 107.
---------------------------------------------------------------------------

    When asked whether he intends to work at or otherwise operate 
Allwell Pharmacy once it opens for business, Mr. Abalihi responded 
``No. I just wanted to stay as--to advise my wife how to do things. 
But I would have loved to work there, but the DEA wouldn't allow me 
to.'' \139\ When asked on cross-examination whether he gave advice 
to his wife about having her own application for a DEA pharmacy, Mr. 
Abalihi did not answer directly, but instead responded ``I'm her 
husband. I knew she was going to apply to open a pharmacy.'' \140\
---------------------------------------------------------------------------

    \139\ Id. at 108.
    \140\ Id. at 122.
---------------------------------------------------------------------------

    After hearing her husband's testimony, Ms. Abalihi was asked, on 
cross examination, ``what is your understanding why [the] DEA 
`blacklisted' Mr. Abalihi'', Ms. Abalihi said she cannot answer the 
question, nor could she answer the Government's question whether it 
is her belief that her husband violated any DEA laws.\141\ When she 
was asked, however, why her husband withdrew his application for a 
DEA Certificate on behalf of My Master's Pharmacy, she stated the 
only reason for doing that was the advice given by counsel.\142\ 
When asked whether either Investigator Wald or Investigator Boggess 
told her that her husband had been blacklisted, Ms. Abalihi stated 
``[t]hey didn't tell me that.'' \143\
---------------------------------------------------------------------------

    \141\ Id. at 153.
    \142\ Id. at 155.
    \143\ Id. at 163.
---------------------------------------------------------------------------

Analysis

    The Administrator is being asked to grant a Certificate of 
Registration that would permit Cove, Inc., to dispense controlled 
substances through a pharmacy to be known as Allwell Pharmacy. When 
presented with such an application, the Administrator is guided by 
provisions in the United States Code mandating that she determine 
whether granting such a Certificate ``would be inconsistent with the 
public interest.'' \144\ In determining the public interest, the 
following factors shall be considered:
---------------------------------------------------------------------------

    \144\ 21 U.S.C.A. Sec.  823 (West), current through Public Law 
112-283, approved 1-15-13.
---------------------------------------------------------------------------

    (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.

[[Page 29049]]

    (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.\145\
---------------------------------------------------------------------------

    \145\ 21 U.S.C.A. Sec.  823, eff. 4/15/2009, current through 
Public Law 112-283, approved 1-15-13.
---------------------------------------------------------------------------

    As correctly noted in the Government's post-hearing brief, an 
application denial may be based on any one, or any combination, of 
the five factors cited above.\146\ When exercising authority as an 
impartial adjudicator, the Administrator may properly give each 
factor whatever weight she deems appropriate in determining whether 
an application should be rejected.\147\ Moreover, the Administrator 
is ``not required to make findings as to all of the factors[.]'' 
\148\ The Administrator is not required to discuss each factor in 
equal detail, or even every factor in any given level of 
detail.\149\ The balancing of the public interest factors ``is not a 
contest in which score is kept; the Agency is not required to 
mechanically count up the factors and determine how many favor the 
Government and how many favor the registrant. Rather, it is an 
inquiry which focuses on protecting the public interest[.]'' \150\
---------------------------------------------------------------------------

    \146\ Government's Proposed Findings of Fact, Conclusions of 
Law, and Argument in Response to ``Respondent's Brief'' at 3 (citing 
Richard J. Lanham, M.D., 57 FR 40475-01 (August 27, 1992), Henry J. 
Schwartz, Jr., M.D., 54 FR 16442-01 (April 24, 1989). Also cited is 
Neveille H. Williams, D.D.S., 51 FR 17556 (1986), but the entry at 
that citation corresponds to the matter of Paul Stepak, M.D., 51 FR 
17556 (May 13, 1986), and is inapposite here.
    \147\ Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005); JLB, 
Inc., d/b/a Boyd Drugs, 53 FR 43945-02, 43947 (October 31, 1988); 
see also David E. Trawick, D.D.S., 53 FR 5326-01, 5327 (February 23, 
1988).
    \148\ Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); see also 
Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005).
    \149\ Trawick v. DEA, 861 F.2d 72, 76 (4th Cir. 1988).
    \150\ Jayam Krishna-Iyer, M.D., 74 FR 459-01, 462 (January 6, 
2009).
---------------------------------------------------------------------------

    In this case, the Government does not contend there is a history 
of professional discipline by a licensing board, nor did it offer 
evidence of a criminal conviction pertaining to any party, nor did 
it allege Cove, Inc., or any material party failed to comply with 
applicable laws relating to controlled substances. Accordingly, 
Factors One, Three, and Four in 21 U.S.C. 823(f) are not presented 
as bases for revoking this Certificate.
    I would note parenthetically that there is evidence supporting 
the Respondent's application that neither party directly addresses. 
There is undisputed evidence that the Respondent obtained the 
required license from Florida authorities, permitting it to operate 
a retail pharmacy in Tampa. In a recent DEA adjudication, obtaining 
such a license was considered by the Administrator as evidence in 
support of the application under Factor One (``recommendation of the 
appropriate State licensing board or professional disciplinary 
authority'').\151\ ``Although not dispositive, Respondent's 
possession of a valid retail pharmacy license . . . weighs against a 
finding that Respondent's registration would be inconsistent with 
the public interest.'' \152\ In this case, however, neither party 
cites to 21 U.S.C. 823(f)(1). Given the focus on Factors Two and 
Five, it should suffice to note, as the ALJ did in the earlier case, 
that `[a]lthough not dispositive, Respondent's possession of a valid 
retail pharmacy license . . . weighs against a finding that 
Respondent's registration would be inconsistent with the public 
interest.'' \153\
---------------------------------------------------------------------------

    \151\ See Physicians Pharmacy, L.L.C., 77 FR 47096, 47104 
(August 7, 2012).
    \152\ Id. (citing Robert A. Leslie, M.D., 68 FR 15,227, 15,230 
(March 28, 2003) (state license is a necessary but not a sufficient 
condition for registration, and therefore, this factor is not 
dispositive)).
    \153\ Id.
---------------------------------------------------------------------------

    In his Order to Show Cause, the Deputy Assistant Administrator, 
Office of Diversion Control, identified two factors as the bases for 
denying Cove, Inc.'s application. First, he referred to Factor Two, 
noting that Ms. Abalihi ``had no prior experience with operating or 
working at a retail pharmacy and had no knowledge of DEA regulations 
pertaining to handling of controlled substances and related security 
requirements.'' \154\ Also under Factor Two, the Deputy Assistant 
Administrator charged that the role Mr. Abalihi played in the 
operation of Moon Lake Pharmacy and his stated intention to obtain 
his own Certificate of Registration to operate a pharmacy created a 
risk to the public interest.\155\ The Order also identified Factor 
Five as a basis for denying the application, stating that ``[t]he 
only pharmacist that Mrs. Abalihi stated would work at Allwell 
Pharmacy gave DEA investigators evasive and conflicting information 
about the pharmacy's operation.'' \156\
---------------------------------------------------------------------------

    \154\ Order to Show Cause, found in ALJ Exhibit 1, at 1.
    \155\ Id.
    \156\ Id. at 2.
---------------------------------------------------------------------------

    In hearings regarding the denial of a proposed DEA Certificate 
of Registration, ``the Administration shall have the burden of 
proving that the requirements for such registration pursuant to 
section 303 or section 1008(c) and (d) of the Act (21 U.S.C. 823 or 
958(c) and (d)) are not satisfied.'' \157\ Accordingly, in order to 
establish cause to deny Cove, Inc.'s application, the Government 
must establish by at least a preponderance of the evidence that it 
would be inconsistent with the public interest to grant this 
application, given the applicant's experience in dispensing 
controlled substances (Factor Two), given Mr. Abalihi's past history 
and present association with the new pharmacy (Factor Two), and 
given evidence of other conduct which may threaten the public health 
and safety (Factor Five).
---------------------------------------------------------------------------

    \157\ 21 CFR 1301.44, current through April 4, 2013.
---------------------------------------------------------------------------

Factor Two Regarding Experience of Cove, Inc., Ms. Abalihi, and Ms. 
Taylor

    The evidence establishes that the applicant did not have 
personnel with the requisite experience in dispensing controlled 
substances to support its application. Considering first the 
experience attributed to Ms. Abalihi, I find the scope of nursing 
practice does, to some degree, include exposure to regulations 
pertaining to the distribution of controlled substances. Ms. Abalihi 
competently testified that in the course of her nursing practice, 
she has had occasion to deliver controlled substances to persons in 
her care. Further, there is evidence that as a nurse, Ms. Abalihi 
has been required to account for controlled substance inventories, 
and to guard against improper diversion of such inventories.
    The scope of this experience, however, leaves material and 
significant areas of expertise unmet. Pharmacists must conform to 
the corresponding responsibilities imposed upon them under DEA 
regulations. These responsibilities are unique to pharmacists, and 
are not likely to be recognized or met by a person whose sole 
function is as a Registered Nurse. DEA regulations impose upon 
pharmacists affirmative obligations regarding the distribution of 
controlled substances once a prescribing source (such as a doctor or 
physician's assistant) issues a prescription. Those obligations 
collectively are referred to as ``corresponding responsibilities,'' 
as they impose duties on pharmacies and pharmacists that correspond 
with those of treating sources.\158\ There is no corollary set of 
obligations imposed on Registered Nurses in the course of their 
professional duties. ``The responsibility for the proper prescribing 
and dispensing of controlled substances is upon the prescribing 
practitioner, but a corresponding responsibility rests with the 
pharmacist who fills the prescription.'' \159\
---------------------------------------------------------------------------

    \158\ See Sun & Lake Pharmacy, 76 FR 24523-02, 24525 (May 2, 
2011) (citing 21 CFR 1306.04(a)).
    \159\ 21 CFR 1306.04(a) (2005), current through February 21, 
2013.
---------------------------------------------------------------------------

    Driving this corresponding responsibility is the standard, also 
found in DEA regulations, that a prescription for a controlled 
substance ``must be issued for a legitimate medical purpose,'' and 
that it be prescribed by ``an individual practitioner acting in the 
usual course of his professional practice.'' \160\ Although the 
record shows Ms. Abalihi has formal education in the fields of basic 
and advanced pharmacology, and has experience in administering 
medications including controlled substances, the record also shows 
that she has no experience in understanding and applying the 
corresponding responsibilities imposed on pharmacists who dispense 
controlled substances under DEA regulations. To the contrary--from 
her testimony and from her business plan, it is clear Ms. Abalihi 
disavows having such knowledge, electing to defer all questions on 
these regulations to her business partner, Ms. Taylor.
---------------------------------------------------------------------------

    \160\ Id.
---------------------------------------------------------------------------

    Such deference would create a risk of harm to the public in this 
case. Diversion Investigator Boggess's testimony regarding the 
experiences of local pharmacists, and their collective concern about 
drug-seeking activity involving addictive pain killers like 
Oxycodone, establishes that there is a clear and present danger 
posed by persons who present themselves to pharmacies in the area, 
hoping to obtain drugs by questionable

[[Page 29050]]

prescriptions. Nothing in Ms. Abalihi's training suggests she is 
familiar with the practices of persons who present questionable 
prescriptions to pharmacists in the hope of securing controlled 
substances illegally.
    Further, as a corporate entity, Cove, Inc. itself has no history 
of experience in the distribution of controlled substances. Allwell 
Pharmacy would be this corporation's first and only venture into 
such activity, and neither of its shareholders has ever operated a 
pharmacy before. The evidence calls into question whether Ms. Taylor 
would actually participate in the operation of Allwell Pharmacy, at 
least at the beginning of operations. When this application was 
presented to the DEA, Ms. Taylor was employed at another pharmacy on 
a full-time basis, during hours that would have made it impossible 
for her to be present when Allwell was open for business. When asked 
to describe her intentions in this regard, Ms. Taylor told the DEA 
investigators that she planned on working at Allwell only once it 
became profitable--not at the very beginning. Since then, Ms. Taylor 
has moved to Orlando, and there is no evidence indicating she has 
any plans to return to Tampa any time soon.
    I am mindful that Ms. Abalihi now disputes the DEA 
investigators' reports regarding when Ms. Taylor would actually 
begin work. I am persuaded, however, to attribute greater weight to 
the testimony on this point provided by Investigator Boggess and 
Investigator Wald, than I attribute to Ms. Abalihi's version of what 
was said. It is clear from the record that Ms. Taylor had no clear 
investment in Cove, Inc. nor in Allwell Pharmacy. As a minority 
shareholder with no proven financial investment in the company, Ms. 
Taylor was in no way obligated to quit her job at Sweetbay in order 
to work at Allwell. The record offers no evidence that Ms. Taylor 
contributed capital or cash in exchange for receiving her ten 
percent shares in the corporation.
    Further, there is no evidence establishing any kind of agreement 
between Cove, Inc. and Ms. Taylor requiring her to provide 
professional services. There is, for example, no evidence that Ms. 
Taylor faced any adverse consequence should she decide not to end 
her employment at Sweetbay and begin working at Allwell. Ms. 
Abalihi's claim that Ms. Taylor would quit her job at Sweetbay in 
order to accept a position at Allwell is not supported by any 
competent evidence, and is contradicted by what I find to be 
credible testimony from the two DEA investigators, to the effect 
that Ms. Taylor was going to take a ``wait and see'' approach before 
lending her expertise to this new enterprise--an approach Ms. 
Abalihi appears to have endorsed.\161\
---------------------------------------------------------------------------

    \161\ See Tr. at 157.
---------------------------------------------------------------------------

    This conclusion is buttressed by the evidence regarding the role 
of Dayla Mustafa. The need for someone to play the role attributed 
to Ms. Mustafa would arise only upon Ms. Taylor's absence from 
Allwell during the initial operation of the new pharmacy. The 
evidence establishes that based on Ms. Taylor's admission that she 
would not be present initially, and upon the investigators' query, 
Ms. Taylor offered Ms. Mustafa as the person who would provide the 
requisite experience initially. The evidence establishes that this 
was a falsehood--that in fact Ms. Mustafa never agreed to play such 
a role, and Ms. Taylor came up with the name only because she felt 
the need to address concerns being raised by the DEA investigators. 
Ms. Abalihi tacitly confirmed this false representation and 
compounded the problem when she offered to provide the investigators 
with Ms. Mustafa's contact information. Thus, the evidence 
establishes that no one having the requisite knowledge and 
experience to operate a pharmacy and to conform to DEA diversion 
control requirements would be present initially.
    I do note the Respondent's complaint regarding the practice, 
attributed to Investigators Boggess and Wald, of asking applicant's 
questions regarding their familiarity with DEA diversion control 
regulations.\162\ After stating that ``there is no law or regulation 
supporting this practice,'' the Respondent avers that ``everyone 
knows that the DEA does not go around interviewing Walgreens or Wal-
Mart shareholders or management whenever those pharmacy chains 
decide to open up a new location in the area.'' \163\ I cannot 
endorse this conclusion, as it is not supported by any evidence in 
the record before me. Further, I am obliged to focus on the 
application before me. Here, the 90 percent shareholder and sole 
officer of the corporation that proposes to dispense controlled 
substances has only limited experience handling controlled 
substances, and has never operated a pharmacy. Ms. Abalihi 
recognized the importance of this shortfall, and proposed to fill 
the gap by taking on a ten percent shareholder, expecting this 
person to bring with her the experience needed to ensure compliance 
with DEA diversion control regulations. That shareholder, however, 
was already committed to a full-time job that prevented her from 
working at the new pharmacy. When this gap was raised, the ten 
percent shareholder lied to the DEA investigators, falsely stating a 
co-worker, Ms. Mustafa, would be filling the gap until the new 
pharmacy was operational.
---------------------------------------------------------------------------

    \162\ Respondent's Post-Hearing Brief, at 12.
    \163\ Id.
---------------------------------------------------------------------------

    Given the evidence before me, I cannot endorse the Respondent's 
claim that ``short of being licensed as a practicing pharmacist, 
Mrs. Abalihi has about as much experience properly handling 
controlled substances as anyone is likely to have.'' \164\ From her 
own testimony, it is clear Ms. Abalihi was unfamiliar with DEA 
diversion control requirements and was unwilling to answer any 
questions regarding the regulatory environment in which pharmacies 
must operate. This was true during the investigation into this 
application, and it was also true during the evidentiary hearing. 
Thus, even though Ms. Abalihi has continued her professional 
development by attending courses that included pharmacology, she 
continues to lack the knowledge and experience required to operate a 
pharmacy that dispenses controlled substances. She has no experience 
as a pharmacist, professed no knowledge of the standards of care 
that must be met by registered pharmacists, and proposed no concrete 
plan to have a pharmacist actually working at the pharmacy, at least 
until the enterprise was established and operational. Upon this 
evidence, the Government has established by at least preponderance 
that issuing a Certificate of Registration to the Respondent would 
be inconsistent with the public interest, under Factor Two.
---------------------------------------------------------------------------

    \164\ Respondent's Post-Hearing Brief, at 11.
---------------------------------------------------------------------------

Factor Two and the Nexus Between Cove, Inc. and Alfred Abalihi

    The Government also offered evidence under Factor Two regarding 
Ms. Abalihi's husband, Alfred Abalihi. In the Order to Show Cause, 
the Deputy Assistant Administrator reports that Mr. Abalihi 
``participated in unlawful dispensing of controlled substances'' 
while employed at a pharmacy in 2007.\165\ The Government alleged 
that Moon Lake Pharmacy had been engaged in illegally dispensing 
controlled substances based on Internet prescription activity. The 
general premise in this part of the charge is that Mr. Abalihi told 
DEA investigators in 2007 that he believed the pharmacy's operations 
were legal, and that he hoped someday to open his own pharmacy. 
Further, in its post-hearing brief, the Government calls into 
question Mr. Abalihi's credibility in his claim that he did not know 
Moon Lake's operations were illegal. From this, the Government 
argues that Mr. Abalihi's ``negative controlled substance 
experience'' has a ``clear nexus with his wife's present 
experience'' warranting a denial of the claim under Factor Two.\166\
---------------------------------------------------------------------------

    \165\ Order to Show Cause, at 1.
    \166\ Government's Proposed Findings of Fact, Conclusions of 
Law, and Argument in Response to ``Respondent's Brief,'' at 8.
---------------------------------------------------------------------------

    At the outset, I agree with the Government's skepticism 
regarding Mr. Abalihi's representation that he did not know Moon 
Lake's operations were illegal. It may be that current business 
practices tend to increase reliance on temporary or contract 
employees, including pharmacists; and that such practices increase 
the likelihood that the pharmacist will be unaware of the true 
nature of the pharmacy's operation. It is worth noting that to the 
extent such a practice exposes the pharmacist to the risk of working 
in an illegal shop, the pharmacist is not excused from his or her 
responsibility to act within the law, and must face the consequences 
of maintaining a blind eye to such an obviously illegal operation. 
Here, however, I need not rely on any such inference, because I have 
before me the parties' express stipulation that while at Moon Lake 
Mr. Abalihi ``dispensed controlled substances based on unlawful 
Internet prescriptions [.]'' \167\
---------------------------------------------------------------------------

    \167\ Tr., at 11-12.
---------------------------------------------------------------------------

    Given the very small office in which this compounding and 
dispensing was occurring, I find sufficient credible evidence to 
conclude Mr. Abalihi was aware that the

[[Page 29051]]

practices in this pharmacy were illegal. Having said that, however, 
I cannot conclude that this evidence supports the Government's 
contention that the circumstances arising from Mr. Abalihi's work at 
Moon Lake Pharmacy establish cause to find Cove, Inc.'s application 
is inconsistent with the public interest. The evidence establishes 
that Mr. Abalihi would not directly participate as an officer or 
owner of Cove, Inc. Thus, I must question whether there is a 
sufficient link established between Mr. Abalihi's past work at Moon 
Lake Pharmacy and Cove, Inc.'s proposal to operate Allwell Pharmacy.
    In support of its claim that such a nexus exists and must be 
recognized, the Government offers as guidance the decision in In Re 
Matthew D. Graham.\168\ As noted in the Government's brief, Graham 
involved the application for a List 1 Chemical Registration under 21 
U.S.C. 823(h) (and not registration under 21 U.S.C. 823(f)). The DEA 
challenged the application because the applicant's business partner 
had in the past surrendered a DEA registration after the partner 
illegally sold pseudoephedrine. In the Final Order, Graham's 
application was denied, in part by applying language similar to 
language found in Section 832(f)'s Factor Two, which calls for the 
``public interest'' inquiry to consider ``[a]ny past experience of 
the applicant in the manufacture and distribution of chemicals[.]'' 
\169\ While thus not precisely on point, the discussion in Graham 
does highlight those factors that should be considered when 
determining whether to deny a registration based on the past 
misconduct of a third party.
---------------------------------------------------------------------------

    \168\ Government's Proposed Findings of Fact, Conclusions of 
Law, and Argument in Response to ``Respondent's Brief,'' at 10, 
citing In re Matthew D. Graham, 67 FR 10229-01 (March 6, 2002).
    \169\ Id. at 10230, quoting 21 U.S.C. 823(h)(4).
---------------------------------------------------------------------------

    The Graham opinion explained:

    Regarding factor four, the applicant's past experience in the 
distribution of chemicals, the DEA investigation revealed that 
Graham has no previous experience related to handling or 
distributing listed chemicals. As set forth previously, however, his 
business partner Snodell surrendered a DEA registration because a 
DEA and KBI investigation revealed he was distributing large 
quantities of List I chemical products having reasonable cause to 
believe the chemical would be used to manufacture a controlled 
substance. Graham admitted to DEA investigators that Snodell was his 
source of information concerning the business of distributing listed 
chemicals. . . . For the above-stated reasons, the Administrator 
concludes that it would be inconsistent with the public interest to 
grant the application of Graham.\170\
---------------------------------------------------------------------------

    \170\ Id. at 10230.

    The agency thus may attribute to a registrant the prior 
misconduct of third party. The conditions in Graham, however, are 
not well aligned to those present in Cove, Inc.'s application. In 
Graham, the registrant told the DEA he intended to enter into a 
wholesale business arrangement with Snodell, with whom he was co-
owner of a wholesale business outlet. Thus, unlike the business plan 
presented by Ms. Abalihi, the registrant in Graham was economically 
tied to the third party. When it surfaced that Snodell had illegally 
sold pseudoephedrine a year earlier, and when it became clear that 
under Graham's business plan Snodell would be responsible for 
referring List I chemical orders to Graham, this nexus served as a 
basis for denying Graham's application.
    In the case presently before the Administrator, on the other 
hand, Ms. Abalihi presented a business plan that expressly removed 
Mr. Abalihi from all phases of the proposed pharmacy's operation. 
The evidence establishes that Mr. Abalihi would not directly 
participate as an officer or owner of Cove, Inc. While it might be 
reasonable to be skeptical about the efficacy (or even the 
existence) of such a line between spouses, the evidence now in the 
record does not permit me to recognize the kind of nexus that 
existed in Graham.
    The Government correctly notes in its brief that Ms. Abalihi has 
not indicated she would prohibit her husband from working in the 
pharmacy.\171\ Ms. Abalihi's statement that she would keep her 
husband ``apart from ownership and management'' of the pharmacy, 
however, effectively distinguishes this case from Graham.\172\ 
Equally important, having considered the affidavit of Mr. Abalihi, 
and having considered the testimony from both Mr. and Mr. Abalihi, I 
find sufficient credible and unrebutted evidence to conclude Mr. 
Abalihi does not intend to perform a significant role in the 
operation of Allwell Pharmacy.
---------------------------------------------------------------------------

    \171\ Government's Proposed Findings of Fact, Conclusions of 
Law, and Argument in Response to ``Respondent's Brief,'' at 10.
    \172\ Id. quoting Affidavit of Ms. Abalihi, attached as Exhibit 
E to Respondent's Brief, ALJ Exhibit 6.
---------------------------------------------------------------------------

    I fully appreciate the Government's concern regarding the events 
involving Mr. Abalihi during his very short tenure at Moon Lake 
Pharmacy. I note the skepticism expressed by the investigators, as 
they recalled the nature of Moon Lake's Internet-based operation. I 
share their sense that anyone in Mr. Abalihi's position would have 
had reason to question the legitimacy of the operation, and I share 
their sense of incredulity that Mr. Abalihi would have failed to 
recognize the illegal nature of what was going on at Moon Lake, even 
though his stay there was brief.
    The Respondent, however, correctly notes that Mr. Abalihi was 
not charged with any misconduct arising out of his service at Moon 
Lake. Mr. Abalihi may have unwisely told the DEA investigators that 
Moon Lake's operations were legal, but I cannot conclude from that 
piece of evidence that Mr. Abalihi was knowingly advancing Moon 
Lake's criminal enterprise when the DEA arrived. Unlike the 
acknowledged misconduct by Graham's business partner (leading to the 
partner surrendering his DEA Certificate), here the most we can say 
for certain is that Mr. Abalihi was the pharmacist who was present 
when the DEA agents arrived at Moon Lake and brought its operations 
to an end. While it is true that the parties have stipulated that 
Mr. Abalihi dispensed controlled substances based on unlawful 
Internet prescriptions during his short tenure at Moon Lake, Mr. 
Abalihi's record since then is unblemished and his plan to avoid 
direct involvement with Allwell and Cove, Inc. adequately attenuates 
the link between him and the proposed pharmacy.
    Having said that, I must note that a core theme presented in 
support of the Respondent's application has not been established as 
fact. In its post-hearing brief, the Respondent states that ``[o]nce 
the decision had been made by the DEA that Mr. Abalihi was banned 
for the rest of his life from ever having an ownership stake in a 
pharmacy with a DEA registration, the DEA then set a course of 
blocking anyone relating to Mr. Abalihi from obtaining a DEA 
registration.'' \173\ This record does not support the premise that 
Mr. Abalihi has been ``banned for the rest of his life'' from 
anything.
---------------------------------------------------------------------------

    \173\ Respondent's Post-Hearing Brief, at 11.
---------------------------------------------------------------------------

    The record fails to establish why Mr. Abalihi withdrew his 
request for a DEA Certificate, other than to indicate the action was 
based on the advice of his attorney. The factual claims on this 
point appearing in the Order to Show Cause have been supported by 
substantial evidence, and include the parties' stipulation that Mr. 
Abalihi improperly dispensed controlled substances while working at 
Moon Lake Pharmacy. The DEA has in the past recognized the need to 
evaluate the circumstances that may arise when a husband and wife 
are involved in a new application for a retail-pharmacy DEA 
Certificate and when there has been a prior adverse DEA action 
involving one of the spouses involving another pharmacy.\174\ The 
facts alleged in the Order to Show Cause warranted this measure of 
scrutiny, but the facts shown here do not establish the kind of ties 
that link Mr. Abalihi's past brief involvement with Moon Lake's 
illegal operation to the operation proposed by the Respondent here.
---------------------------------------------------------------------------

    \174\ See, e.g., DePietro's Pharmacy, 56 FR 31675-02 (July 11, 
1991).
---------------------------------------------------------------------------

    I reject in its entirety, however, the Respondent's assertion 
that the DEA's ``real motivation'' in challenging Cove, Inc.'s 
application, was ``Mr. Abalihi's brief employment at Moon Lake 
Pharmacy.'' \175\ The assertion is based on an unproved premise that 
Mr. Abalihi has been unfairly ``blacklisted'' by the DEA, based on 
what he said and did on the day DEA agents visited Moon Lake 
Pharmacy.\176\ The evidence before me does not establish that Mr. 
Abalihi is the subject of any bar to obtaining a DEA Certificate of 
Registration. Instead, the record indicates that Mr. Abalihi's 
former lawyer met with the DEA while he sought to start his own 
pharmacy, and was persuaded during that meeting to advise Mr. 
Abalihi to withdraw his application.
---------------------------------------------------------------------------

    \175\ Id. at 14.
    \176\ Id.
---------------------------------------------------------------------------

    We do not know what was presented to this lawyer during her 
visits with the DEA, nor do we have the benefit of any documentary 
evidence supporting her reputed claim that the DEA has deemed Mr. 
Abalihi ineligible for a Certificate of Registration. We do not, 
indeed, have documentary evidence that the lawyer said or

[[Page 29052]]

did anything that would justify Mr. Abalihi's decision to withdraw 
his 2007 application. In short, Mr. Abalihi's conclusion that he had 
been ``blacklisted'' has not been supported by competent evidence. 
Instead, I have been told that Mr. Abalihi deferred to his lawyer, 
electing not to speak with the DEA directly, and apparently withdrew 
his application solely at his lawyer's suggestion. This does not 
constitute evidence proving ``unfair blacklisting,'' as alleged by 
the Respondent.\177\
---------------------------------------------------------------------------

    \177\ Id.
---------------------------------------------------------------------------

    I find insufficient evidence to conclude that Mr. Abalihi's 
relationship with Cove, Inc., through his marriage to Ms. Abalihi, 
gives rise to a public threat under Factor Two, although Factor Two 
does serve as a basis for denying this application, given the 
absence of sufficient relevant experience by Ms. Abalihi, for the 
reasons set forth above.

Factor Five

    Independent of concerns addressed under Factor Two, the evidence 
also forces the conclusion that conduct attributed to both Ms. 
Taylor and Ms. Abalihi would threaten the public health and safety, 
warranting a denial of the application under Factor Five. Here the 
evidence establishes that Ms. Taylor misled the DEA investigators 
when she was asked about arrangements to have a pharmacist present 
when Allwell began its operations. I find there is competent and 
credible evidence that when asked who would be working at Allwell 
initially, Ms. Taylor told the investigators the initial pharmacist 
would be her coworker, Ms. Mustafa. This was not true, and 
constitutes a material misrepresentation in the application process. 
Ms. Taylor elected not to testify (indeed there is no evidence 
suggesting the Respondent requested her to do so), and nothing in 
her affidavit \178\ compels a more benign interpretation of her 
conduct.
---------------------------------------------------------------------------

    \178\ Respondent's Exhibit G, Affidavit of Jacinta Taylor.
---------------------------------------------------------------------------

    Further, when the investigators requested contact information 
from Ms. Abalihi so they could confirm Ms. Mustafa's role, Ms. 
Abalihi compounded the misrepresentation and offered to get the 
requested information, rather than disclose that she knew nothing 
about Ms. Mustafa's role with the pharmacy. If Ms. Abalihi intended 
on using contract pharmacists at the start of Allwell's operation, 
she had an affirmative duty to say so when DEA investigators asked 
her about the role Ms. Mustafa was to play. By her silence, and by 
promising to provide contact information for Ms. Mustafa, Ms. 
Abalihi misled the investigators.
    Making a material misrepresentation in the course of an 
investigation into the operation of the proposed pharmacy creates a 
risk of harm to the public health and safety. The operation of a 
pharmacy is a highly regulated enterprise, requiring advanced skill 
and technical expertise unique to the profession. Lying about who 
would be present with that skill and expertise casts doubt on the 
ability of both Ms. Abalihi and Ms. Taylor to protect the public, 
and suggests they will instead act only in their own self-interest. 
Upon such evidence, the Government has established by at least 
preponderance that issuing a Certificate of Registration to the 
Respondent would be inconsistent with the public interest, under 
Factor Five.
    Where the Government has made out its prima facie case, the 
burden shifts to the Respondent to show why its continued 
registration would be consistent with the public interest.\179\ 
Having considered the record as a whole and in particular the claims 
appearing in the Respondent's post-hearing brief, I find no 
substantial evidence in rebuttal of the Government's case. Ms. 
Abalihi continues to take the position that she is fully qualified 
to operate a pharmacy, based on her experience as a Registered 
Nurse; and continues to seek a Certificate of Registration to 
dispense controlled substances out of a retail pharmacy that has no 
pharmacist on staff.
---------------------------------------------------------------------------

    \179\ See Theodore Neujahr, D.V.M. 65 FR 5680-01, 5682 (February 
4, 2000) and Service Pharmacy, Inc., 61 FR 10791-01, 10795 (March 
15, 1996).
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Findings of Fact

    1. On March 3, 2011 and acting on behalf of Cove, Inc., Ogechi 
E. Abalihi submitted a new application for a DEA retail-pharmacy 
Certificate of Registration, to operate a pharmacy under the name of 
Allwell Pharmacy, to be located at 1947 West Dr. Martin Luther King, 
Jr. Boulevard, Tampa, Florida 33609. This pharmacy is not open for 
business and has never operated as a business, although it has been 
issued a community pharmacy license by the state of Florida.
    2. Cove, Inc. is owned by its 90 percent shareholder and sole 
officer, Ogechi E. Abalihi, and its ten percent shareholder, Jacinta 
Taylor.
    3. Ms. Abalihi has no experience working in, managing, or owning 
a pharmacy; has no direct knowledge of DEA controlled substance 
regulations; has extensive experience as a Registered Nurse; has 
worked with controlled substances but only in the context of her 
service as a Registered Nurse; and has proposed a business plan for 
Allwell Pharmacy that requires the presence of a pharmacist 
throughout the pharmacy's operating hours, which were 9:00 a.m. to 
6:00 p.m. Mondays through Fridays, and from 9:00 a.m. to 1:00 p.m. 
on Saturdays.
    4. Although the Applicant's business plan called for DEA 
controlled substance regulations to be implemented by a registered 
pharmacist on duty throughout the pharmacy's operational hours, 
there was no provision for having a registered pharmacist present 
during the initial phase of the pharmacy's operation. Instead, the 
plan called for Ms. Abalihi to operate the pharmacy until it became 
profitable, at which time Ms. Taylor planned on quitting her full-
time job at another pharmacy and becoming an employee at Allwell 
Pharmacy. Under this plan, until Ms. Taylor actually began working 
at Allwell Pharmacy, there would be no one with the experience, 
knowledge, and training needed to ensure compliance with DEA 
regulations.
    5. During the application process and during interviews with DEA 
Diversion Investigators, both Ms. Abalihi and Ms. Taylor 
acknowledged the need to have a registered pharmacist present 
whenever the pharmacy was open. Both Ms. Abalihi and Ms. Taylor 
misled the Investigators by falsely representing that when it 
opened, Allwell Pharmacy's staff would include Dalya Mustafa, who is 
a registered pharmacist and was Ms. Taylor's co-worker. The evidence 
establishes that there would be no pharmacist present when Allwell 
Pharmacy began its operations, under the business plan created by 
Ms. Abalihi.
    6. Without the active participation of Ms. Taylor or another 
person experienced in applying DEA regulations, Cove, Inc. lacked 
the experience required for its application to be consistent with 
the public interest.
    7. The 90 percent owner of Cove, Inc., Ogechi E. Abalihi is 
married to a registered pharmacist, Alfred Abalihi. Mr. Abalihi is 
not an officer, shareholder, or employee of either Cove, Inc., or 
Allwell Pharmacy. There is insufficient evidence establishing that 
he would have any direct involvement with either Cove, Inc., or 
Allwell Pharmacy, just as there is insufficient evidence 
establishing that he would abstain from such involvement, should the 
pharmacy become operational.
    8. Mr. Abalihi was a pharmacist employed in 2007 by HealthCare 
Consultants. In the course of his employment at HealthCare 
Consultants, Mr. Abalihi was directed to provide services as a 
registered pharmacist at Moon Lake Pharmacy. While providing 
services as a temporary worker through HealthCare Consultants at 
Moon Lake Pharmacy, Mr. Abalihi dispensed controlled substances 
based on unlawful Internet prescriptions prior to Moon Lake Pharmacy 
surrendering its DEA registration on December 17, 2007.

Conclusions of Law

    1. When it proposes to deny a new application for a retail-
pharmacy DEA Certificate of Registration, the Government is required 
to establish by at least a preponderance of the evidence that the 
pharmacy's initial registration is inconsistent with the public 
interest. 21 U.S.C. 823(f); 21 CFR 1301.44(d).
    2. Five factors must be considered when determining the public 
interest in this case:
    (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. 21 U.S.C. 823(f).
    3. In order to establish a basis for denying a new application 
for a retail-pharmacy Certificate of Registration based on the 
provisions of 21 U.S.C. 823(f)(2) (Factor Two), the Government must 
present evidence establishing, by at least a preponderance, that

[[Page 29053]]

the experience of the applicant in dispensing controlled substances 
is of such character and quality that registration is not in the 
public interest. This requires evidence of both the qualitative 
manner and quantitative volume of the applicant's experience. Where 
evidence of the applicant's experience, as expressed through its 
employees and officers, establishes that the business plan provides 
for the active daily involvement of no one having experience 
applying DEA controlled substance diversion regulations in a retail 
pharmacy setting, and provides only for the involvement of an 
employee familiar with the regulations applicable to Registered 
Nurses whose duties include dispensing medication, in such an 
application there is sufficient evidence proving, by at least a 
preponderance, that granting such an application would be 
inconsistent with the public interest.
    4. When proposing to deny a retail-pharmacy application under 
Factor Two based on the prior association and dispensing history of 
a third party, the Government must demonstrate that the third 
party's past negative experience in dispensing controlled substances 
warrants a finding that his or her association with the applicant 
would be inconsistent with the public interest. Where, as here, the 
third party is the husband of the applicant's majority shareholder 
but has no clearly demonstrated role in either the corporation (as a 
shareholder or an officer), or in the retail pharmacy (as an 
employee or manager), and where there is insufficient evidence 
demonstrating the third party's past negative experience will have 
any impact on the operation of the retail pharmacy, the Government 
has not met its burden of proving a basis to deny the application 
under Factor Two.
    5. In order to establish a basis for denying a new application 
for a retail-pharmacy Certificate of Registration based on the 
provisions of 21 U.S.C. 823 (f)(5) (Factor Five), the Government 
must present evidence establishing, by at least a preponderance, 
other conduct (i.e., conduct not covered within the scope of Factors 
One through Four) which may threaten the public health and safety. 
Where, as here, the evidence establishes that when called upon by 
DEA investigators to identify the person or persons who would be 
familiar with DEA diversion control regulations and would be present 
at the retail pharmacy to ensure compliance with those regulations, 
the applicant's sole officer and both of its two shareholders made 
material misrepresentations about having such person or persons 
present, there is substantial evidence of conduct that may threaten 
the public health and safety. In such an application there is 
sufficient evidence proving, by at least a preponderance, that 
granting such an application would be inconsistent with the public 
interest.
    6. Upon such evidence, the Government has met its burden and has 
made a prima facie case in support of the proposed order denying the 
Respondent's application for a retail-pharmacy Certificate of 
Registration.
    7. Upon a review of the record as a whole, including all claims 
made in the Respondent's post-hearing brief, there is insufficient 
evidence of remediation. Accordingly, the Government has established 
cause to deny this application.

Recommendation

    As the Government has established its prima facie case by at 
least a preponderance of the evidence, the Respondent's application 
for a retail-pharmacy DEA Certificate of Registration should be 
DENIED.

Dated: April 23, 2013.

Christopher B. McNeil,

Administrative Law Judge.

[FR Doc. 2015-12131 Filed 5-19-15; 8:45 am]
BILLING CODE 4410-09-P