[Federal Register Volume 81, Number 218 (Thursday, November 10, 2016)]
[Notices]
[Pages 79188-79222]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-27120]



[[Page 79187]]

Vol. 81

Thursday,

No. 218

November 10, 2016

Part III





Department of Justice





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Drug Enforcement Administration





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 Jones Total Health Care Pharmacy, L.L.C., and SND Health Care, L.L.C.; 
Decision and Order; Notice

  Federal Register / Vol. 81 , No. 218 / Thursday, November 10, 2016 / 
Notices  

[[Page 79188]]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 15-2]


Jones Total Health Care Pharmacy, L.L.C., and SND Health Care, 
L.L.C.; Decision and Order

    On April 29, 2015, Administrative Law Judge Gail A. Randall 
(hereinafter, ALJ) issued the attached Recommended Decision.\1\ 
Therein, the ALJ found that ``Respondents violated recordkeeping 
requirements by failing to record whether Jones Pharmacy's biennial 
inventory was taken at the opening or close of business, and by failing 
to indicate the number of tablets per opened commercial container, the 
number of tablets shipped in each commercial container, and the number 
of commercial containers that [were] on hand.'' R.D. at 59 (citing 21 
CFR 1304.11(e)(3)).
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    \1\ All citations to the Recommended Decision are to the slip 
opinion as issued by the ALJ.
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    Most significantly, the ALJ further found that Respondent's (Jones 
Pharmacy) pharmacists dispensed controlled substance prescriptions in 
violation of their corresponding responsibility, see id. at 60-64, 
pursuant to which it is a violation of federal law for a pharmacist to 
knowingly dispense a controlled substance prescription which was not 
``issued for a legitimate medical purpose by a practitioner acting in 
the usual course of professional practice.'' 21 CFR 1306.04(a). The ALJ 
credited the testimony of the Government's Expert that the 
prescriptions presented various red flags, i.e., indicia that the 
prescriptions were not issued for a legitimate medical purpose. These 
included that: (1) The patients were traveling long distances (and many 
came from out-of-state) to obtain the prescriptions; (2) that the 
patients were prescribed cocktails which included narcotics such as 
oxycodone, benzodiazepines such as Xanax (alprazolam), and muscle 
relaxants such as Soma (carisoprodol) which were known to be highly 
abused; (3) that on some occasions, two patients came from the same 
out-of-state location and presented identical or nearly identical 
prescriptions; (4) that purported pain patients presented only 
prescriptions for short-acting but not long-acting narcotics; and (5) 
that the patients paid for their prescriptions with cash. Id. at 61-62. 
The ALJ further credited the testimony of the Government's Expert in 
pharmacy practice that the red flags presented by many of the 
prescriptions could not be resolved by the pharmacists. Id. at 64.
    The ALJ specifically rejected Respondent's contention that its 
owner (Ms. Cherese Jones) was simply na[iuml]ve or unaware of various 
indicia (otherwise known as red flags) that the prescriptions her 
pharmacy filled lacked a legitimate medical purpose as well as its 
contention that during the relevant time period, Florida pharmacists 
were generally ``unaware of the . . . concept of `red flags.' '' R.D. 
at 66-69. The ALJ was unpersuaded by the testimony of Respondent's 
Expert that pharmacists were generally unaware of the concept of red 
flags during the relevant time period, noting that while Respondent's 
Expert claimed to have based her opinion on a review of the Agency's 
administrative decisions, those decisions contradicted her testimony. 
Id. at 68-69.
    Finding that the Government met its burden of proof, the ALJ then 
addressed whether Respondent had put forward sufficient evidence to 
show why it could be entrusted with a registration. The ALJ 
specifically found that Ms. Jones had ``carefully avoided any admission 
that she failed to exercise her corresponding responsibility'' and that 
her ``wavering responses on cross-examination undoubtedly show her lack 
of understanding of a pharmacist's corresponding responsibility.'' R.D. 
71-72 & n.27. Based on her conclusion that Ms. Jones ``had not accepted 
responsibility for the unlawful dispensing that occurred at'' 
Respondent, the ALJ declined to consider Respondent's testimony 
regarding its remedial efforts. Id. at 73. And while finding that Jones 
Pharmacy and SND Healthcare ``are separate entities,'' id., the ALJ 
found that Ms. Jones was the owner and operator of both entities and 
that ``there is no dispute that SND Healthcare and Jones Pharmacy are 
one integrated enterprise.'' Id. at 74. The ALJ thus ``conclude[d] that 
the unlawful dispensing practices at Jones . . . Pharmacy, L.L.C., are 
an appropriate basis to deny the pending application'' of SND 
Healthcare for a registration. Id. The ALJ thus recommended that I 
revoke Jones Pharmacy's registration and deny any pending application 
by Jones to renew or modify its registration. Id. at 75. With respect 
to SND Healthcare, the ALJ recommended that I deny its pending 
application.
    Respondent filed Exceptions to the ALJ's Recommended Decision and 
the Government filed a Response to Respondent's Exceptions. Thereafter, 
the record was forwarded to me for Final Agency Action.
    Having considered the record in its entirety including Respondent's 
Exceptions, I find that while several of its contentions with respect 
to the ALJ's factual findings are not without merit, I adopt the ALJ's 
credibility findings and conclude that most of the ALJ's factual 
findings are supported by a preponderance of the evidence. I further 
conclude that the ALJ's factual findings support her legal conclusions 
that: (1) Respondent's pharmacists dispensed numerous controlled 
substance prescriptions in violation of the Agency's corresponding 
responsibility rule, see 21 CFR 1306.04(a); (2) Respondent has not 
accepted responsibility for its misconduct; and (3) that there is 
sufficient overlap in the ownership and control of Jones Pharmacy and 
SND Healthcare such that Jones' misconduct supports the denial of SND's 
application.\2\
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    \2\ I also adopt the ALJ's conclusion that Respondent Jones 
Pharmacy's inventories were non-compliant with DEA regulations. R.D. 
59-60.
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    Accordingly, I adopt the ALJ's legal conclusions, as well as her 
implicit conclusions that granting Jones' renewal application and SND's 
application ``would be inconsistent with the public interest.'' \3\ 21 
U.S.C. Sec.  823(f). I will therefore also adopt the ALJ's 
recommendations that I deny Jones Total Health's renewal application 
and SND's pending application. A discussion of Respondent's Exceptions 
follows.
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    \3\ While the ALJ also recommended that I revoke Jones Total 
Health Pharmacy's registration, R.D. at 75, I take official notice 
of the Agency's registration records which show that Jones did not 
submit a renewal application until December 30, 2015, the day before 
its registration was due to expire. Because Jones had previously 
been issued the Show Cause Order, to continue its registration past 
the expiration date, it was required to file its renewal application 
``at least 45 days before the date on which [its] existing 
registration [was] due to expire.'' 21 CFR 1301.36(i). Respondent 
did not seek to continue its registration past the expiration date, 
and based on the evidence in this record, I find that extension of 
its registration was not ``consistent with the public health and 
safety.'' Id. I therefore find that Jones Total Health Pharmacy's 
registration expired on December 31, 2015. See, e.g., Ralph J. 
Chambers, 79 FR 4962, 4962 (2014); Paul H. Volkman, 73 FR 30630, 
30641 (2008). However, Jones Total Health Pharmacy's application 
does remain pending before the Agency. Respondent may dispute this 
finding (as well as any other finding which is the subject of 
official notice) by filing a properly supported motion within ten 
days of the date of this Order. 5 U.S.C. Sec.  556(e).
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Exceptions to the ALJ's Findings of Fact

Exceptions to Findings Related to the DOH Inspection

    Respondent first takes exception to several of the factual findings 
made by the ALJ with respect to the June 2012 inspection which was 
conducted by the Florida Department of Health (DOH).

[[Page 79189]]

Exceptions, at 3-7. Specifically, Respondent excepts to the ALJ's 
finding (FoF #69) that during the inspection, the DOH Inspector (who 
testified at the hearing) ``found that the majority of [its] business 
was the sale of controlled substances, which the pharmacy was filling 
for cash and that very little business was for non-controlled 
substances.'' Id. Respondent argues that ``[t]his finding is erroneous 
and contradicted by the record.'' Id.
    While Respondent argues ``that objective evidence contradicts [the 
inspector's] testimony,'' the ALJ found the Inspector's testimony 
credible and the Government produced a second page of the Inspection 
report on which the Inspector listed ``Additional Remarks'' and stated 
in part:

    Inspection reveals that the pharmacy fills mostly CII narcotics. 
They are charging $9.00 per tablet for Oxycodone 30 mg or $1620/180. 
CII dispensing is cash though they take insurance for other 
medications. Profits on the CII run between $2,000 and $6600 per 
day. The non-controls are mostly filler RXs and some HIV meds filled 
with insurance. Profit on the non-controls are [sic] usually less 
than $200/day, often less than $50/day. The primary business of the 
pharmacy is the cash sale of narcotics. The total number of 
prescriptions filled daily is extremely low.

GX 12, at 2.

    Respondent asserts that the Inspector's testimony that this page of 
the report ``was created at the time of such inspection is not 
credible'' because it ``was never shown to Ms. Jones, [and] was . . . 
[n]ever signed by Ms. Jones'' during the inspection. Exceptions, at 4. 
Respondent further argues that ``[t]he fact that [the DOH Inspector] 
never shared page 2 . . . with Ms. Jones contradicts her testimony that 
if she saw things that a pharmacist was doing wrong, she would tell'' 
the pharmacist. Id. Respondent ignores, however, that the Inspector 
testified that the notes on page two were created so that the inspector 
on any subsequent inspection ``would know what to look for.'' Tr. 166. 
The Inspector also explained that her comments about Respondent's 
dispensing of narcotics were not placed on the first page of the 
inspection form because ``[w]e had had complaints about us putting 
things about narcotics on the front of an inspection, because people 
hang them, so we were told to put them on another page.'' Id. at 165-
66.\4\
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    \4\ Respondent also argues that the Inspector's failure to 
provide page 2 to Ms. Jones violated Florida DOH's ``Licensee Bill 
of Rights, which . . . requires that a pharmacy be presented for 
review . . . all inspection reports at the time of the inspection.'' 
Exceptions, at 4. Even if the Inspector's failure to provide this 
page to Ms. Jones violated the State's Licensee Bill of Rights, 
Respondent cites no authority pursuant to which the document would 
be rendered inadmissible in either administrative or judicial 
proceedings, and even if there is such authority, it would not be 
controlling in this proceeding.
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    However, even if page 2 of the report was not shown to Ms. Jones, I 
find no reason to reject the Inspector's testimony that she made the 
notes based on her observations during the inspection she conducted on 
June 7, 2012. Id. at 165-67.
    Respondent further attempts to question the validity of page two of 
the report. It asserts that the DOH Inspector ``testified that the date 
field on the top of the document could not be altered on reports after 
they are finalized.'' Exceptions, at 5. Respondent then notes that the 
``[t]he report marked as Respondents' Exhibit 8 [at p. 5] contains a 
typewritten data field, while the'' first page of the report submitted 
by the Government ``contains a blank in the date field next to Ms. 
Jones' signature.'' Id. Respondent then maintains that ``[t]his appears 
to contradict testimony than any date field on the report cannot be 
changed or manipulated and creates further doubt that page 2 . . . was 
created contemporaneous to the June 7, 2012 inspection.'' Id.
    Respondent, however, failed to cite to the portion of the 
transcript which purportedly contains this testimony. See id. While 
this is reason alone to reject its contention, see 21 CFR 
1316.66(a),\5\ Respondent ignores that the blank date field next to Ms. 
Jones' signature is located at the bottom of the page and not ``on the 
top of the document.'' Thus, I find no reason to reject the testimony 
of the Inspector regarding when she created the document.
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    \5\ This regulation provides that ``[t]he party shall include a 
statement of supporting reasons for such exceptions, together with 
evidence of record (including specific and complete citations of the 
pages of the transcript and exhibits) . . .''
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    Respondent also argues that the Inspector's testimony and the 
report's statement that ``the majority of Jones' Pharmacy's business 
was the sale of schedule II controlled substances . . . is inconsistent 
with the objective evidence.'' Exceptions, at 5. Putting aside that the 
report actually used the word ``primary'' rather than ``majority'' to 
describe the nature of Respondent's business, I find the contention 
unavailing. While Respondent points to data showing that during 2012, 
Respondent ``made a gross profit of $58,123 on sales of non-controlled 
substances'' and notes that it filled ``over 2,956 prescriptions'' for 
non-controlled drugs and filled ``only 769 prescriptions'' for 
controlled substances, id. at 5-6, Respondent ignores that its own 
prescription log report for the year shows that its gross profit on its 
sales of controlled substances was $316,942.\6\ RX 17, at 19. Thus, the 
objective evidence shows that in terms of Respondent's gross profit, 
its primary business during 2012 was the sale of controlled substances.
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    \6\ So too, the data for Respondent's previous years in business 
(2010 and 2011) supports the view that its primary business was the 
sale of controlled substances. Specifically, in 2010, it dispensed 
1847 controlled substance prescriptions and had a gross profit on 
these of $530,483. RX 13, at 40. By contrast, during 2010, it 
dispensed a total of 1072 prescriptions (including refills) for non-
controlled drugs and had a gross profit of only $10,189 on these 
dispensings. RX 14, at 25. And while during 2011, the number of non-
controlled prescriptions (including refills) it filled (3053) 
clearly overtook the number of controlled prescriptions it filled 
(1093), its gross profit on controlled substances was $439,990, more 
than 11 times its gross profit of $38,242 on the non-controlled 
drugs it sold. Compare RX 15, at 25, with RX 16, at 66.
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    Respondent also takes issue with the ALJ's crediting of the DOH 
Inspector's ``annotation in her report that [Respondent] sold a 180 
pill prescription for $1620, when [in the Inspector's] opinion the more 
reasonable price to pay was $200 to $250.'' Exceptions, at 6 (citing 
ALJ FoF #70). While it is unclear whether Respondent is challenging the 
Inspector's annotation as to the price Respondent was charging at the 
time of the inspection or what the Inspector testified as being the 
``more reasonable price,'' or both, the ``objective evidence'' shows 
that in this time period, Respondent was, in fact, charging $1620 for 
180 dosage units of oxycodone 30. See GX 23, at 5 (RX for 180 
Roxicodone 30 issued on July 2, 2102 and dispensed the same day as 
oxycodone 30 \7\ for $1620 cash); see also GX 24, at 11-14 (Rxs for 180 
oxycodone 30 dispensed on May 29, 2012 and June 26, 2012, each for 
$1620 cash).
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    \7\ Of note, the prescription label lists the National Drug Code 
number of 0406-8530-01. GX 23, at 5. I take official notice that, 
according to the FDA's National Drug Code Directory website, this is 
the drug code for generic oxycodone 30 mg tablets marketed by 
Mallinckrodt, Inc. Respondent may refute this finding by filing a 
properly supported motion within ten (10) days of the date of this 
Decision and Order.
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    Respondent further argues that the DOH Inspector ``conceded on 
cross-examination that she had no basis to know what an appropriate 
mark-up would be'' and her ``testimony in this regard should have been 
rejected.'' Exceptions, at 6 (citing Tr. 136). However, Respondent 
wrongly attributes this testimony to the DOH Inspector rather than the 
Supervisory Diversion Investigator who provided it. See Tr. 136.
    As for the DOH's Inspector's testimony that a ``more reasonable

[[Page 79190]]

price'' to pay for a 180 oxycodone 30 prescription was $200 to $250, it 
is true that she testified that did not know what price Respondent was 
paying for oxycodone in June 2012. Id. at 183. She also testified that 
she did not prepare a written analysis of the prevailing prices being 
charged for controlled substances during the period of February 2010 
through July 2012. Id. at 181. However, the Inspector also testified 
that, based on her ``experience as an inspector of pharmacies \8\ in 
the same area as [Respondent] on or around that time,'' ``less than 
$200'' and ``at most $250'' was a more typical price for 180 dosage 
units of oxycodone 30. Id. at 168. Notwithstanding that the Inspector 
did not know what price Respondent was paying for oxycodone and did not 
prepare a written report, based on her experience as a pharmacy 
inspector, she was clearly competent to testify as to the prices being 
charged by other pharmacies for 180 dosage units of oxycodone 30. See 
also Tr. 161-62 (Inspector's testimony that in determining whether 
pharmacies are filling legitimate controlled substances she looks at 
the prices being charged). I thus reject Respondent's contention on 
this issue as well.
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    \8\ The DOH Inspector had previously worked as a pharmacist for 
33 years. Tr. 161. She also testified that in the three and a half 
years that she has been a DOH Inspector, she had inspected ``[c]lose 
to 1,500'' pharmacies in the Dade and Broward County areas. Id. at 
160.
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    Next, Respondent argues that ``[t]he ALJ incorrectly found based on 
[GX] 14 that sales of controlled substances were in the top ten 
products that [Respondent] sold from January 1, 2010 through August 29, 
2014.'' Exceptions, at 6 (citing FOF # 72). Respondent contends that 
``[t]he finding was erroneous and misleading because [the Exhibit] was 
an aggregate report of [its dispensing] for multiple years.'' Id.
    The ALJ's finding was neither erroneous nor misleading as it 
specifically stated that this ``report indicated that controlled 
substances were in the top 10 products that [Respondent] sold from 
January 1, 2010 to August 29, 2014.'' R.D. at 15 (emphasis added). And 
even crediting Respondent's evidence that shows that after 2010, the 
number of non-controlled prescriptions it dispensed ``far exceeded the 
number of controlled'' prescriptions that were dispensed, the evidence 
is what it is--a report of the dispensings during that time period. I 
thus reject Respondent's challenge to this finding.
    Respondent also challenges the ALJ's finding that ``[d]uring the 
four inspections conducted by the [DOH], [Respondent's] dispensing and 
corresponding responsibilities were discussed.'' Exceptions, at 7 
(citing FOF #76). Respondent maintains that ``only two of the reports 
shown to Ms. Jones could be argued to relate to [the] corresponding 
responsibility--the reports of May 14, 2014 and August 29, 2014.'' Id. 
Respondent discounts the inspection of April 14, 2011, during which the 
Inspector noted on the report (a copy of which was provided to 
Respondent's representative) that:

    [t]his pharmacy is filling and dispensing what appears to be a 
large amount of Schedule II Controlled Substance[[hairsp]] written 
prescriptions, especially for OXYCODONE Tablets, from patients whose 
home addresses are in Ohio, Kentucky, Tennessee, Connecticut, 
Indiana, Georgia, Massachusetts, South Carolina, New Jersey, West 
Virginia, New Hampshire, as well as from out of area locations in 
Florida such as Panama City, Fernandina Beach, Kissimmee, Sanford, 
Orange Park, Gainesville, Crestview, Port Orange, Daytona Beach, St. 
Cloud, Wesley Chapel, and Tavares.

GX 13, at 1.

    In Respondent's view, this report apparently does not establish 
that the corresponding responsibility was discussed at the inspection 
because Respondent ``ceased filling prescriptions for out-of-state 
residents on April 1, 2011.'' Exceptions, at 7 n.8. Respondent ignores, 
however, that the Inspector's concerns were not limited to the 
oxycodone prescriptions dispensed to persons who came from other States 
and included the prescriptions it dispensed to Florida residents who 
came from out-of-area. Thus, even if the Inspector's remarks did not 
specifically use the words ``corresponding responsibility,'' the 
remarks nonetheless put Respondent on notice that the Inspector was 
concerned about whether it was dispensing legitimate prescriptions.
    In any event, the Agency's corresponding responsibility rule has 
been in force for decades and numerous decisions of both the courts and 
the Agency have provided ample guidance as to the scope of a 
pharmacist's duty under the rule. See, e.g., Medicine Shoppe-
Jonesborough v. DEA, 300 Fed. Appx. 409, 412 (6th Cir. 2008); United 
States v. Henry, 727 F.2d 1373, 1378-79 (5th Cir. 1984); United States 
v. Seelig, 622 F.2d 207 (6th Cir. 1980); United States v. Hayes, 595 
F.2d 258 (5th Cir. 1979); see also Frank's Corner Pharmacy, 60 FR 17574 
(1995); Medic-Aid Pharmacy, 55 FR 30043 (1990); Ralph J. Bertolino, 55 
FR 4729 (1990). Having obtained a DEA registration and commenced 
dispensing controlled substance prescriptions, Respondent's pharmacists 
were obligated to not fill prescriptions when they either knew or were 
willfully blind to the fact that the prescriptions lacked a legitimate 
medical purpose. 21 CFR 1306.04(a). Thus, it is irrelevant whether the 
DOH Inspectors discussed with Respondent's pharmacists their 
obligations under the Agency's corresponding responsibility rule.

Exceptions to Findings Regarding the 2013 DEA Inspection

    Respondent asserts that ``[t]he ALJ's finding of fact that 
[Respondent's] inventory only indicated the name of the controlled 
substances, the strength of the controlled substances, the quantity, 
and `one' of the NDC number was also erroneous.'' Exceptions, at 8 
(citing FOF #84). The ALJ's Finding of Fact No. 84 stated:

    DI Gonzales also noted that Ms. Jones' biennial inventory was 
missing some of the required information. The inventory was supposed 
to indicate amounts of finished form in each container and the 
amount of commercial bottles that she had on hand during her 
inventory. Ms. Jones' inventory only indicated the name of the 
controlled substances, the strength of the controlled substances, 
the quantity, and one of the NDC numbers.

R.D. at 17-18 (citing Tr. 35). According to Respondent, this finding 
was erroneous because the evidence ``reflect[s] [that] the entire NDC 
number for the particular strength was listed on the biennial 
inventories not just `one' of the NDC numbers.'' Exceptions, at 8 
(citing Tr. 472-73; 687; GX 5).
    To be sure, the DI actually testified that Ms. Jones ``only listed 
the name of the controlled substances, the strength of it, the 
quantity, and I believe on one of them the NDC number,'' Tr. 35, thus 
suggesting that the ALJ misread the testimony. Nonetheless, the 
Agency's regulation which sets forth the information which must be 
included on a pharmacy's inventory does not require that the pharmacy 
list the NDC number for any drug. See 21 CFR 1304.11(e)(3) (requiring 
that a dispenser's inventory include ``the same information required of 
manufacturers pursuant to paragraphs (e)(1)(iii) and (iv) of this 
section,'' which does not include the NDC number). As Respondent was 
not required to list any NDC number, to the extent the finding 
erroneously states that the inventory ``only indicated . . . one of the 
NDC numbers,'' it is immaterial.
    What is material is that the inventories were missing required 
information. Specifically, the inventory was required to include 
``[t]he number of units or volume of each finished form in each 
commercial container (e.g., 100-tablet bottle or 3-milliliter vial); 
and

[[Page 79191]]

[t]he number of commercial containers of each such finished form (e.g., 
four 100-tablet bottles or six 3-milliliter vials).'' Id. Sec.  
1304.11(e)(1)(iii)(C) & (D). Neither Respondent's November 3, 2011 
inventory nor its April 13, 2013 inventory listed this information. See 
GX 5, at 1-14; Tr. 34-36, 38. Moreover, neither inventory indicated 
whether it was ``taken either as of the opening of business or as of 
the close of business on the inventory date'' as required by 21 CFR 
1304.11(a). Tr. 36, 38.
    Respondent nonetheless argues that Ms. Jones provided ``unrebutted 
testimony . . . that the last two digits of the NDC number represent 
the bottle size of the medication (i.e., the number of tablets per 
bottle).'' Exceptions, at 8. Respondent further asserts that when it 
fills prescriptions, it uses ``the contents of open containers first, 
before opening another closed container of the same controlled 
substance,'' and thus, ``while the biennial inventory did not contain a 
column for the number of containers, that number was easily derived 
from the information on . . . the biennial inventory.'' Id. Respondent 
then contends that ``any factual finding that the DEA was unaware of 
the number of containers of controlled substances on hand is simply an 
argument of form over substance.'' Id. at 8-9.
    This argument does not, however, establish that the ALJ's factual 
findings as to what information was missing from the inventory were not 
supported by substantial evidence. Rather, it is an argument which goes 
to the weight to be given to the violations. With the exception of the 
discussion in Finding of Fact No. 84 that the inventories contained 
just ``one NDC'' number, I find that the rest of the ALJ's findings as 
to what required information was missing from the inventories are 
supported by substantial evidence.
    Respondent also takes exception to the ALJ's Finding of Fact No. 
91, which was based on the testimony of a Diversion Investigator, that 
upon reviewing Respondent's electronic schedule II orders forms (DEA 
E222 forms), he found ``480 line items that were done incorrectly.'' 
\9\ Exceptions, at 9 (quoting R.D. 19, FOF #91). Respondent submits 
that this finding is erroneous, because while the DI ``testified to 
this, . . . DEA . . . bears the burden of proof [and] provided no 
independent evidence of the 480 line items that were allegedly 
inappropriate.'' Id.
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    \9\ Prior to testifying as to the number of line items that were 
done incorrectly, the DI testified regarding several E222 order 
forms that were submitted for the record, noting that the forms 
``did not indicate how many packages Ms. Jones received or the date 
that she received the ordered packages.'' Tr. 39-43; see also GX 6.
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    According to the DI, these E222 forms were not properly completed 
because while the distributor shipped the orders, Respondent's owner 
did not go back online and ``input[[hairsp]] how many packages she 
received or the date she received them.'' Tr. 43. The Government also 
introduced various records showing several instances in which this 
occurred. GX 6, at 1-2; 3-5.
    As evidenced by her factual finding, the ALJ clearly found credible 
the DI's testimony as to the number of line items that were not 
properly completed. Contrary to Respondent's contention, the DI's 
testimony alone provides substantial evidence to support these 
violations. I therefore reject this contention.

Exceptions to the Testimony of the Government's Expert

    Respondent challenges several of the ALJ's factual findings that 
are based on the Government's Expert's testimony regarding a 
pharmacist's obligations in dispensing controlled substance 
prescriptions, and that in 2010, Florida pharmacists were generally 
aware of various red flags of abuse and diversion. R.D. 22-31; Tr. 240. 
First, Respondent challenges the ALJ's finding that ``[i]n her role as 
a retail pharmacist, [the Expert] interacted frequently with other 
pharmacists in the area.'' R.D. 23, FOF #108 (citing Tr. 216) (cited in 
Exceptions, at 9-10). Respondent contends that the ALJ should not have 
credited this testimony because ``[o]n cross-examination it became 
clear that [the Expert] could not identify any specific pharmacist she 
had talked to regarding the particular issues.'' Exceptions, at 10. 
However, the ALJ specifically addressed this portion of the Expert's 
testimony and while she noted that the Expert became hostile, the ALJ 
nonetheless found the Expert's testimony credible based on her years of 
experience. R.D. 24 n.13. Because the ALJ was in the best position to 
observe the Expert's testimony, and her testimony is not inherently 
implausible or inconsistent, I find no reason to reject the ALJ's 
credibility finding.
    Next, Respondent challenges the ALJ's factual finding No. 113, 
which was based on the Expert's testimony that in determining whether a 
controlled substance prescription is issued for a legitimate medical 
purpose, one of ``the biggest [signs] is when a patient asks you not to 
bill their insurance company and to pay cash for the prescription.'' 
Tr. 226; see also R.D. at 24; Exceptions, at 10. According to 
Respondent, ``[t]his finding is erroneous as the record is devoid of 
any evidence that anyone associated with the prescriptions at issue or 
otherwise, paid cash and simultaneously requested that [Respondent] not 
bill their insurance.'' Exceptions, at 10.
    While it is true that there is no evidence in the record that any 
particular patients asked Respondent's pharmacists not to bill their 
insurance for the prescriptions, that does not render the finding 
erroneous. Indeed, other testimony, which stands unrefuted, is that 
drug seekers are willing to pay high prices in cash to obtain 
controlled substances and that ``[o]ften the addicts will sell part of 
their prescription in order to pay this exorbitant amount of money \10\ 
for the prescription. So they take some and they sell some.'' Tr. 170. 
Moreover, a Supervisory Diversion Investigator, with 35 years of 
experience as a Diversion Investigator, testified that ``paying cash'' 
is a ``red flag[[hairsp]] of diversion.'' Tr. 124. This witness further 
testified that:

    \10\ This testimony was provided by the DOH Inspector in 
reference to the $1,620 price for 180 oxycodone 30 which Respondent 
was charging at the time of the June 2012 inspection. See generally 
Tr. 165-67.

    Normally people pay with insurance. And these type of narcotics 
don't cost that much money, so that is usually an indication that 
the patient and the pharmacist know that these drugs are going to be 
diverted, that they'd be willing to pay more than $1,000 for one 
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prescription, for instance.

Id. at 125. See also id. at 33 (testimony of DI that upon review of 
Respondent's schedule II prescriptions, ``we started discussing what we 
call as red flags, which a majority of [the prescriptions] were for 
Oxycodone 30 milligram . . . . And then we also noticed that they were 
all being paid for in cash.''); id. at 51 (DI's testimony that upon 
reviewing the dispensing records, one of the concerns was that ``a 
majority of the prescriptions were being paid [for] by cash.'').

    The evidence further shows that 93 percent of the controlled 
substance prescriptions dispensed by Respondent from February 15, 2010 
through July 3, 2012 were paid for with cash or cash equivalents. Tr. 
57; see also GX 2 (spreadsheet of the controlled substance 
prescriptions showing, inter alia, the method of payment). The 
Government's Expert testified that in her experience, ``only . . . 
maybe five percent of the patients pay cash,'' Tr. 285, a figure which 
is consistent with other evidence provided by the Government, 
specifically, an April 2012 report prepared by the IMS Institute for 
Healthcare Informatics, which, based on

[[Page 79192]]

its National Prescription Audit, found that out of 4.024 billion 
prescriptions dispensed during 2011, cash was the method of payment for 
only 258 million prescriptions or 6.4 percent. GX 29, at 42.
    Respondent takes issue with the ALJ's having allowed the 
Government's Expert ``to testify about the . . . report.'' Exceptions, 
at 11. It argues that the Government's Expert ``had no personal 
knowledge to how the report was compiled and the report was not 
reflective of the South Florida community [sic] which [Respondent] was 
located.'' Id. Respondent also argues that the report ``did not address 
the record evidence that Florida had one of the highest uninsured rates 
for individuals.'' Id.
    While Respondent is correct that the Government's Expert did not 
have personal knowledge as to how the report was compiled and the 
report does reflect nationwide data, Respondent ignores that the Expert 
testified that in her experience, which includes 17 years as a retail 
pharmacist and a substantial period working at pharmacies in Broward 
and Dade County, only five percent of patients pay cash for their 
prescriptions. Respondent also ignores that its Expert agreed that six 
percent was an accurate figure for the nationwide average.
    Moreover, while Respondent produced a Census Bureau Report which 
shows that in 2012, 20.1 percent of Floridians did not have what the 
Census Bureau defines as ``comprehensive health insurance'' coverage, 
the Report clearly stated that ``[t]his definition excluded single 
service plans, such as accident, disability, dental, vision or 
prescription medicine.'' RX 33, at 7, 24. Thus, the actual percentage 
of persons lacking insurance covering their prescriptions is likely 
less than the 20.1 percent figure.\11\ Moreover, even ignoring that 49 
percent of the prescriptions in GX 2 were filled for out-of-state 
customers, there is still a wide disparity between the percentage of 
prescriptions that were paid for with cash and what one would expect 
based on the Census Bureau's figure regarding the percentage of 
uninsured Floridians.
---------------------------------------------------------------------------

    \11\ Respondent also produced a reprint of an article from the 
Kaiser Health News which was attributed to the Miami Herald; the 
article states that Broward County's uninsured rate was 26 percent 
and was purportedly based on census data. RX 33, at 1. However, this 
document is hearsay and actually contains hearsay within hearsay. In 
contrast to the figure provided in the IMS Report, which has been 
corroborated by both the Government's and Respondent's experts, 
Respondent has made no showing to establish the reliability of the 
statements in the Miami Herald article. See J.A.M. Builders v OSHA, 
233 F.3d 1350 (2000). Nor is there any tradition of courts accepting 
newspaper articles as reliable evidence of the statements contained 
in them.
---------------------------------------------------------------------------

    Finally, Respondent takes exception to the ALJ's crediting the 
Government Expert's ``testimony that `a pharmacist could also go to the 
[DOH's] website and lookup the prescriber's specialty.' '' Exceptions, 
at 10 (citing FOF #115). According to Respondent, the Government's 
Expert ``was impeached'' on cross-examination ``and conceded that with 
regard to the cited example the DOH website only lists the training 
that a particular physician had and not necessarily their area of 
expertise.'' Id. at 10-11 (citing Tr. 339).
    To be sure, in this portion of the transcript, Respondent's counsel 
questioned the Government's Expert about a physician whose profile 
showed that he had done a residency in pediatrics but did not list any 
specialty certification. See GX 35, at 3. However, the DOH profiles for 
other physicians do include their ``certifications from specialty 
boards recognized by the Florida board which regulates the profession 
for which he/she is licensed.'' GX 36, at 2-3 (profile of Dr. S.K. 
showing that he was board certified in ``Family Practice'' by the 
``American Board of Family Medicine.''); see also, e.g., GX 37, at 2-3 
(profile of Dr. J.F. showing that he was board certified in ``Family 
Practice'' by the ``American Osteopathic Board of Family 
Phy[sicians]''); GX 38, at 2-3 (profile of Dr. R.T. showing that he was 
board certified in ``Obstetrics and Gynecology'' by the ``American 
Board of Obstetrics & Gynecolog[y]''); GX 42, at 2-3 (profile of Dr. 
R.W. showing that he was board certified in ``Emergency Medicine'' and 
``Internal Medicine'' by the American Boards of Emergency Medicine and 
Internal Medicine).
    Moreover, many of the prescriptions in the record also listed the 
prescriber's NPI (National Provider Identifier) number and the 
Government's Expert provided unrefuted testimony that a pharmacist can 
use an NPI number and look up a physician's specialty. Tr. 228. 
Notably, Respondent did not take exception to this portion of the ALJ's 
factual finding number 115. See Exceptions, at 10.
    Respondent also argues that the Government's Expert acknowledged on 
cross-examination that the prescriptions contained, in the words of 
Respondent's counsel, ``no indication that a doctor is practicing 
within any particular scope,'' Tr. 337, and that ``there is no 
prohibition in the medical field [against] a physician writing a 
prescription for a particular drug regardless of the area in which they 
may specialize.'' Exceptions, at 11 (citing Tr. 337, 339). As for the 
first concession, while it is true that the prescriptions typically did 
not list the doctor's specialty, the Government's Expert provided 
testimony which the ALJ found credible that it is important for a 
pharmacist to know the scope of the physician's practice because a 
doctor's deviation from his specialty ``could indicate a possible red 
flag.'' R.D. 25 (FOF# 115). So too, even assuming that in Florida, a 
physician is not prohibited from prescribing a particular drug 
regardless of the area in which he/she specializes, certainly when 
physicians issue prescriptions for large quantities of highly abused 
controlled substances such as oxycodone 30, alprazolam 2, and in many 
cases carisoprodol, and these drugs are not usually prescribed by 
physicians with a particular specialty, there is a compelling reason to 
question the legitimacy of the prescription. I thus reject Respondent's 
challenges to the testimony of the Government's Expert.\12\
---------------------------------------------------------------------------

    \12\ For the same reason, I reject Respondent's Exceptions to 
the ALJ Factual Findings Nos. 128 and 130. As for Finding No. 128, 
it discussed prescriptions written by one Dr. K., who was affiliated 
with ``The Pain Center of Broward,'' for D.T., a male patient whose 
address was in West Virginia. Exceptions, at 13. Specifically, Dr. 
K. prescribed 107 du of oxycodone 30, 41 du of oxycodone 15, and 30 
alprazolam 2mg, which D.T. filled at Respondent paying $791 in cash 
for the drugs. GX 48.
    While Respondent argues that the Government presented no 
evidence concerning Dr. K.'s ``then current practice area,'' the DOH 
website shows that he was board certified in Obstetrics and 
Gynecology. See GX 40, at 4. And even though the prescription did 
not indicate that Dr. K. was practicing in an area different than 
his specialty, the Government's Expert provided credible testimony 
that a pharmacist needs to know a prescriber's practice area when 
evaluating whether a controlled substance prescription has been 
issued for a legitimate medical purpose. Indeed, the circumstances 
attendant with D.T.'s prescriptions provided compelling evidence 
that the prescriptions lacked a legitimate medical purpose and 
should have prompted additional investigation into Dr. K.'s 
background.
---------------------------------------------------------------------------

Exceptions to ``Alleged Red Flags Within Jones Pharmacy's 
Prescriptions''

    Next, Respondent argues that the ALJ erred in finding that 
Respondent ``filled prescriptions for patients that `traveled from 
North Carolina to see doctors in Deerfield Beach.' '' Exceptions, at 12 
(quoting R.D. 28, FOF # 123 and citing GXs 16 and 44). Respondent 
argues that ``there was no evidence in the record that any particular 
patients travelled from North Carolina'' and that the Government 
provided ``no evidence that such individuals had traveled to Florida 
for the purposes of obtaining the prescription as opposed to already 
staying in Florida for an extended period of time.'' Id. Continuing, 
Respondent maintains that ``[t]he only

[[Page 79193]]

evidence in the record concerning these individuals [sic] residence was 
the fact that the individuals presented licenses from the State of 
North Carolina.'' Id.
    With respect to these two patients (L.S. and J.S.), whose driver's 
licenses showed that they had the same last name and resided at the 
same residence in Charlotte, North Carolina, the prescriptions they 
presented raised numerous other red flags. Specifically, each of these 
individuals went to the same pain clinic in Deerfield Beach and 
obtained prescriptions for large quantities of oxycodone and alprazolam 
that were frequently identical and paid approximately $500 to $600 in 
cash (or cash equivalents) for their drugs when they filled the 
prescriptions. See GX 16; GX 44; Tr. at 230 (discussing red flags). 
Moreover, at each visit, the patients obtained prescriptions for two 
short-acting formulations of oxycodone. According to the Government's 
Expert, this is a red flag because with legitimate chronic pain 
management, ``the patient should present a prescription for a long 
acting plus a short acting,'' with the latter being used for 
breakthrough dosing. Tr. 229. The Government's Expert further explained 
that ``drug seekers tend to want the short acting medications because 
those are the ones that will give them those immediate highs'' and you 
``don't get the high you do from the long acting that you do from the 
short.'' Id.
    As the evidence shows, on March 11, 2010, L.S. and J.S. received 
the exact same three prescriptions from the same doctor, Rene 
Casanova,\13\ which Respondent filled the next day: 210 oxycodone 30, 
90 oxycodone 15 and 75 alprazolam 2. See GX 16, at 1-11. At their April 
8, 2010 visit to the clinic, L.S. and J.S. saw Dr. Randall Wolff.\14\ 
While Dr. Wolff did not prescribe alprazolam to them, he nonetheless 
issued both of them prescriptions for 210 oxycodone 30 and 90 oxycodone 
15. Id. at 13-19. While at their next visit (May 6, 2010) to the pain 
clinic, a different doctor, Charles Neuringer,\15\ issued them slightly 
different prescriptions for oxycodone 30 (210 du to L.S. and 180 to 
J.S.), he provided them with identical prescriptions for 90 oxycodone 
15 and 60 alprazolam 2, at their June 2, 2010 visit, Dr. Neuringer 
provided them with identical prescriptions for 180 du of oxycodone 30, 
90 oxycodone 15, and 60 alprazolam 2.\16\ Id at 21-44. Thus, even if 
the Government did not produce evidence that these two persons were 
travelling from North Carolina each time they obtained the 
prescriptions, there were ample other red flags that provided 
compelling evidence that the prescriptions they presented and 
Respondent filled lacked a legitimate medical purpose.
---------------------------------------------------------------------------

    \13\ I take official notice that following a hearing, on 
September 19, 2012, the former Administrator revoked Dr. Casanova's 
registration based on her findings that he issued controlled 
substance prescriptions which lacked a legitimate medical purpose in 
violation of 21 CFR 1306.04(a). See Rene Casanova, 77 FR 58150, 
58151-52 (2012).
    \14\ Following a hearing, on January 19, 2012, the former 
Administrator revoked Dr. Wolff's registration based on her findings 
that he issued controlled substance prescriptions which lacked a 
legitimate medical purpose in violation of 21 CFR 1306.04(a). See GX 
42, at 1; see also Randall L. Wolff, 77 FR 5106, 5121-22 (2012).
    \15\ On or about December 17, 2010, Dr. Neuringer surrendered 
his registration for cause. GX 41, at 1.
    \16\ Respondent filled the May 6 and June 2 prescriptions the 
same day they were issued.
---------------------------------------------------------------------------

    Moreover, even if the Government did not show that L.S. and J.S. 
were travelling from North Carolina each time they obtained 
prescriptions and filled them at Respondent, the evidence shows that 
between February 15, 2010 and April 1, 2011, Respondent dispensed more 
than 1,500 controlled substance prescriptions to more than 500 patients 
whose addresses indicated that they did not live in Florida. GX 2. The 
patients came from such States as North Carolina, Ohio, West Virginia, 
Kentucky, Tennessee, Mississippi, Georgia, and others. Id. Given the 
number of these patients, I find it likely that many of them were 
traveling to Florida in search of controlled substances.
    Respondent also takes exception to the ALJ's crediting of the 
testimony of Government's Expert regarding prescriptions issued by Dr. 
M. to R.H. for 180 oxycodone 30, 112 Endocet (oxycodone/acetaminophen) 
10/325, and 90 carisoprodol 350. Respondent dispensed the 
prescriptions, and charged R.H. $945 for the oxycodone 30, $196 for the 
Endocet, and $41.08 for the carisoprodol, for a total of $1182 in cash. 
GX 19; GX 47. According to the prescriptions, R.H. resided in Panama 
City, Florida, which is in the Florida panhandle and on the other side 
of the State from Fort Lauderdale. Id.
    Respondent objects to the ALJ's finding that these medications were 
``prescribed to a 56 year old man \17\ by a pediatrician,'' arguing 
that the prescriptions ``on their face solely indicated that the 
physician . . . was associated with the Intercoastal [sic] Medical 
Group'' and did not reflect that the doctor was a pediatrician. 
Exceptions, at 12. Respondent further contends that Dr. M.'s DOH 
Physician Profile indicated only that he had done a residency in 
pediatrics and there was no testimony as to his current practice. Id.
---------------------------------------------------------------------------

    \17\ The prescription label lists R.H.'s birthdate as April 2, 
1954. GX 19, at 2.
---------------------------------------------------------------------------

    However, even ignoring that Dr. M.'s DOH profile did not list Dr. 
M. as having any specialty certification, see GX 35, at 3; let alone 
certification in a specialty such as pain management, oncology, or 
hospice and palliative medicine, see Tr. 229, these prescriptions 
raised numerous other red flags which provided compelling evidence that 
the prescriptions likely lacked a legitimate medical purpose. These 
included the drugs, strength of the dosage units and quantities 
prescribed; the distance R.H. likely travelled to obtain the 
prescriptions; and R.H.'s willingness to pay nearly $1200 in cash for 
the drugs. Indeed, were R.H. a legitimate chronic pain patient, these 
prescriptions would have cost him more than $14,000 a year. Thus, I 
reject Respondent's exception to the ALJ's Finding of Fact No.128.
    Next, Respondent takes exception to the ALJ's crediting of the 
Government's Expert's testimony regarding Respondent's dispensing of 
prescriptions for 180 oxycodone 30 and 30 Xanax 2 which were written by 
a doctor in Sunrise, Florida for three persons from West Palm Beach. 
Exceptions, at 13 (citing R.D. 30-31, FOF# 130). Respondent states that 
``[t]he ALJ accepted [the Expert's] statement that the doctor was 
`rubberstamping the prescriptions and there was no individualized 
treatment.' '' Id. (quoting FOF #130). Respondent argues that the 
Expert's testimony was ``wholesale speculation'' because she did not 
review patient files, or interview the patients or the doctors. Id.
    Putting aside that ALJ's actual finding was that ``this appeared to 
be an instance where the doctor was `rubber stamping' the 
prescriptions,'' R.D. at 30 (emphasis added), Respondent does not 
address other portions of the ALJ's findings, including that the 
prescriptions were for cocktail medications and that Xanax 2 mg is a 
high dose of Xanax. Id; see also Tr. 270-71. Moreover, the prescription 
numbers assigned by Respondent show that the prescriptions were 
presented sequentially, and the evidence shows that each of the 
patients paid $900 in cash for the oxycodone 30 prescriptions. GX 50, 
at 2; GX 2 (line items 2541-2546). Respondent also fails to explain why 
legitimate patients would be willing to travel from West Palm Beach

[[Page 79194]]

down to Sunrise \18\ to obtain prescriptions and pay $900 cash for just 
the narcotic, which was highly sought after by drug abusers and 
diverters. Thus, even accepting that three persons presenting the same 
prescriptions on a single day from the same doctor does not 
conclusively establish that the latter was engaged in ``rubber 
stamping'' or ``pattern prescribing,'' there were ample other indicia 
which created a strong suspicion that the prescriptions lacked a 
legitimate medical purpose.
---------------------------------------------------------------------------

    \18\ According to a query conducted on Mapquest, of which I take 
official notice, Pt. W.F. resided approximately 47 miles from Dr. 
A.M.'s office.
---------------------------------------------------------------------------

Exceptions to the ALJ's Findings Regarding the Testimony of 
Respondent's Expert

    Respondent also argues that in her Finding of Fact #190, ``[t]he 
ALJ erroneously made findings . . . concerning [its Expert's] testimony 
as it relates to corresponding responsibility.'' Exceptions, at 14. 
According to Respondent, ``the ALJ made findings . . . that [its 
Expert] indicated that she has not done any research about the 
corresponding responsibility of a pharmacist; had not given any 
presentations about the corresponding responsibility of a pharmacist 
since 2007; and has not published any research on corresponding 
responsibility issues.'' Id. (citing R.D. 46). Respondent contends that 
these findings are contrary to its Expert's unrebutted testimony that 
``she sat on the National Association for Board of Pharmacy and sat on 
a task force for the DEA'' on ``the implementation of prescription 
monitoring programs.'' Id. (citing Tr. 795). According to Respondent, 
its Expert testified that ``it was very conceivable that [the] 
corresponding responsibility did come up in this context.'' Id. 
Respondent further notes that its Expert ``testified that she has done 
research on the area of corresponding responsibility'' because she 
teaches students in simulated pharmacy dispensing exercises and 
``needed to know that knowledge as well for regulatory compliance in 
the stores I supervise.'' Id. (quoting Tr. 799).
    As an initial matter, Respondent's Expert actually testified that 
she ``needed to know that knowledge as well for regulatory compliance 
in the stores I supervised.'' Tr. 799 (emphasis added). Notably, the 
evidence shows that the Expert last supervised retail pharmacy stores 
in 2006, when she went to work for the Institute for Safe Medication 
Practices. Tr. 717; RX 24 (Expert's Resume). Thus, as of the hearing, 
Respondent's Expert had not worked in regulatory compliance in nearly a 
decade.
    As for her participation on the task force on prescription 
monitoring programs, her actually testimony was: ``I don't know if we 
ever discussed that . . . that term [i.e., the corresponding 
responsibility], but we had a task force with DEA, so to the extent 
that the DEA wanted to bring that up, we would talk about it.'' Tr. 
794. When pressed by the Government if the term came up, Respondent's 
Expert answered: ``But I can't remember it. I don't remember,'' after 
which she testified that she did not remember one way or the other but 
stated that it was ``very conceivable that the term would have come 
up.'' Id. at 794-95.
    Respondent also cites to other portions of its Expert's testimony 
regarding her knowledge of a pharmacist's corresponding responsibility, 
including her testimony that she has reviewed administrative decisions 
published by the Agency, the DEA Pharmacist's Manual, and ``pharmacy 
journals to the extent that they've published anything about that.'' 
Tr. 800; see also Exceptions, at 14. Respondent also notes that its 
Expert ``is a member of the American Society of Pharmacy Law.'' 
Exceptions, at 14-15. However, when asked whether the corresponding 
responsibility had been discussed at any of the Society's meetings, 
Respondent's Expert answered: ``I don't remember.'' Tr. 801.
    The ALJ specifically found that ``the testimony of Respondent's 
Expert . . . is not credible as it relates to the general knowledge of 
Florida pharmacists from 2010 to 2012.'' R.D. 68. Having reviewed the 
record and ALJ's findings, I agree with the ALJ and her reasons for 
declining to credit the testimony of Respondent's Expert.
    As explained above, Respondent's Expert has not supervised retail 
pharmacies in nearly a decade and, in her own testimony, she 
acknowledged that she has not filled a prescription in 15 years. Tr. 
794. Moreover, Respondent's Expert is licensed only in Massachusetts 
and while she ``did a consulting job in Florida,'' she has not worked 
as a dispensing pharmacist in the State.\19\ RX 24, at 1; Tr. 737.
---------------------------------------------------------------------------

    \19\ Respondent's Expert did not further explain what the 
``consulting job'' involved. Tr. 737.
---------------------------------------------------------------------------

    Also, much of her testimony as to how she has become knowledgeable 
on a pharmacist's corresponding responsibility was vague. While 
Respondent's Expert claimed to have reviewed various Agency decisions 
including East Main Street Pharmacy, 75 FR 66149 (2010), in determining 
what red flags of abuse and diversion were generally known to 
pharmacists during the period of 2010 through 2012, she then opined 
that she did not believe that many of the red flags identified in that 
decision \20\ were widely known to be indicators of diversion and 
abuse.
---------------------------------------------------------------------------

    \20\ Of note, the East Main Street findings were based on the 
testimony of an expert witness for the Government. 75 FR at 66156.
---------------------------------------------------------------------------

    For example, Respondent testified that in her opinion, the 
combination of prescriptions for a narcotic, a benzodiazepine, and 
carisoprodol ``would [not] signify a pattern of drug abuse to 
pharmacists in 2010.'' Tr. 865. Yet, based on the expert testimony in 
East Main Street Pharmacy, the Agency found that ``the combination of a 
benzodiazepine, a narcotic and carisoprodol is `well known in the 
pharmacy profession' as being used `by patients abusing prescription 
drugs.' '' \21\ 75 FR at 66163.
---------------------------------------------------------------------------

    \21\ In East Main Street, the Agency also noted the Government 
Expert's testimony that ``these cocktails would have a synergistic 
effect on a person's central nervous system and could cause 
respiratory depression.'' 75 FR at 66163.
---------------------------------------------------------------------------

    Respondent also testified that she did not believe that it was 
widely known in 2010 that a patient paying cash was an indicator of 
abuse or diversion. Tr. 864. However, in East Main Street, the Agency 
found, based on expert testimony, that ```any reasonable pharmacist 
knows that a patient that wants to pay cash for a large quantity of 
controlled substances is immediately suspect.' '' 75 FR at 66158.
    Respondent's Expert also opined that she did not believe that 
patients travelling long distances to obtain prescriptions was widely 
known in 2010 to be an indicator of abuse or diversion of prescription 
drugs. Tr. 864. However, in East Main Street, \22\ the Agency found 
that ``the fact that the patients were driving so far to get their 
prescriptions filled `would be a major red flag to any pharmacist.' '' 
75 FR at 66164; see also id. at 66158 (discussing testimony of expert 
witness that the fact that patients were ``driving 2 + hours'' to fill 
prescriptions ``would be a major red flag to any pharmacist and that a 
reasonable pharmacist would seriously question why these patients were 
driving such a long distance to have their prescriptions filled'' and 
that ``the number one reason'' consumers shop at certain pharmacies 
``is proximity to where they live'').
---------------------------------------------------------------------------

    \22\ In East Main Street, the patients were generally travelling 
from the Portsmouth, Ohio and northern Kentucky to Columbus, Ohio, a 
considerably shorter distance than that travelled by many of the 
patients in this matter. See 75 FR at 66158.

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

[[Page 79195]]

    As for whether, in 2010, pattern prescribing was also an indicator 
that prescriptions were not issued for a legitimate medical purpose, 
Respondent's Expert opined that she did not believe that this ``was 
widely known by pharmacists'' to be ``happening.'' Tr. 865. Yet, in 
East Main Street, the Agency found that ``in the prescriptions he 
reviewed, the Government['s] Expert observed that there was `no 
individualization of dosing based on pain in these patients' with 
respect to the hydrocodone and alprazolam prescriptions and that `any 
pharmacist would have known that this was a problem and a strong 
indicator of a doctor operating a controlled substance prescribing 
mill.' '' 75 FR at 66163.
    Finally, when asked whether in her view, it was widely known in 
2010 that Xanax in the two milligram dosage was to be used in ``only 
very rare circumstances,'' Respondent asserted that ``it was not widely 
known that Xanax should be reserved for certain circumstances.'' Tr. 
865-66. However, in East Main Street, the Agency found that ``with 
respect to the alprazolam, the Government's Expert explained . . . that 
the two-milligram strength . . . is generally only prescribed for a 
patient with post-traumatic stress disorder.'' 75 FR at 66163.
    Respondent's Expert further maintained that the first time DEA 
publicly addressed the issue of out-of-state patients coming to 
pharmacies was in the 2012 Holiday CVS decision. Tr. 752-53; see also 
Holiday CVS, L.L.C., d/b/a CVS Pharmacy Nos. 219 and 5195, 77 FR 62316, 
62321 (2012). However, in East Main Street, the Agency had noted that 
``approximately half'' of the pharmacy's patients ``were coming from 
Kentucky,'' which ``was more than two hours away,'' and that this 
``would be a major red flag to any pharmacist.'' 75 FR 66164. Beyond 
this, it is obvious that patients travelling great distances to obtain 
large quantities of potent narcotics such as oxycodone 30 are likely 
seeking the drugs to either abuse them or divert them to others.\23\
---------------------------------------------------------------------------

    \23\ Respondent's Expert also testified that the first reference 
to the term ``red flag'' that she could find in DEA's public 
pronouncements was in the Holiday CVS decision. Tr. 753. However, 
the term appears in DEA administrative decisions involving 
practitioners including pharmacies even earlier than in East Main 
Street. See Paul J. Caragine, 63 FR 51592, 51600 (1998); see also 
Medicine Shoppe-Jonesborough, 73 FR 364 (2008); United Prescription 
Services, Inc., 72 FR 50397 (2007). It also has appeared in federal 
court decisions that predate 2010. See United States v. Johnston, 
322 Fed. Appx. 660, 666-68 (11th Cir. 2009); Medicine Shoppe-
Jonesborough v. DEA, 300 Fed. Appx. 409, 413 (6th Cir. 2008); United 
States v. Alerre, 430 F.3d 681,686 (4th Cir. 2005); United States v. 
Chin, 795 F.2d 496, 502 (5th Cir.1986).
    In any event, the term ``red flag'' has been part of the lexicon 
for more than 200 years, and whether the Agency has used this term, 
or such terms as ``warning signs'' or ``suspicious circumstances,'' 
is of no consequence. See III The Compact Edition of the Oxford 
English Dictionary 1132 (1987) (noting term's use ``[a]s a sign of 
danger, a warning, or a signal to stop''); Jayam Krishna-Iyer, 74 FR 
459, 460-61 n.3 (2009). What matters is whether Respondent's 
pharmacists either knew or were willfully blind to the fact that the 
controlled substance prescriptions they dispensed lacked a 
legitimate medical purpose. 21 CFR 1306.04(a).
---------------------------------------------------------------------------

    Respondent also argues that the ALJ ``erroneously made findings 
that suggested [that its Expert's] opinions in this case that [it] 
should maintain its . . . registration was based solely on her 
`conversations with Ms. Jones.' '' Exceptions, at 15 (quoting R.D. 47, 
FOF#194). The ALJ did not, however, find that the Expert's Opinion was 
based ``solely'' on her conversations with Ms. Jones. See R.D. 47, 
FOF#194. Indeed, the ALJ specifically noted the Expert's testimony that 
Respondent ``has displayed a `positive trend downwards as to the amount 
of controlleds that are dispensed per non-controlleds.' '' Id. (quoting 
Tr. 785). And the ALJ also acknowledged that Respondent's Expert had 
reviewed Respondent's policies and ``opined that Ms. Jones has changes 
`policies and procedures as she [has] learned about things.' '' R.D. 
48, FOF#197 (citing Tr. 832-33 and quoting Tr. 850).
    However, the ALJ also noted that Respondent's Expert ``did not 
offer any opinions as to whether or not [Respondent's] dispensing of 
controlled substances was abnormal in 2010 [through] 2012.'' R.D. 47, 
FOF #195. Indeed, when asked if she was offering any opinion as to 
whether Respondent's dispensing in this period ``was atypical or 
abnormal,'' Respondent's Expert answered: ``No, but I do think she did 
exercise her corresponding responsibility in 2014.'' Tr. 809. 
Respondent's Expert further admitted that she was not ``offering any 
opinions . . . on whether . . . any specific prescriptions was or was 
not filled by [Respondent] in compliance with [its] corresponding 
responsibility.'' Id. Respondent's Expert also testified that she was 
not offering any opinions as to whether the extent to which Respondent 
filled prescriptions for cash or for out of state patients was atypical 
or abnormal. Id. at 810-812.
    In short, having reviewed Respondent's exceptions to the ALJ's 
findings as to the testimony of its Expert, I find no reason to reject 
the ALJ's credibility finding.\24\
---------------------------------------------------------------------------

    \24\ In this section of its Exceptions, Respondent also takes 
issue with the ALJ's finding that ``[t]he Florida E-FORSCE website 
indicated that the system was created in 2009 by the Florida 
legislature.'' Exceptions, at 15 (citing R.D. 41 n. 21). Respondent 
argues that ``[i]t appears the ALJ may have performed independent 
research concerning the E-FORSCE system because it does not appear 
that either party introduced the website'' into evidence. Id. 
Respondent notes that neither party requested that the ALJ to take 
judicial notice of the website. Id. Respondent further argues that 
the E-FORSCE system did not become operational until September 1, 
2011. Exceptions, at 15-16 (citing a fact sheet at the website).
     The ALJ did not, however, base her finding that Respondent's 
pharmacists violated their corresponding responsibility on their 
failure to use the E-FORSCE system in determining whether to 
dispense the prescriptions. Nor do I. Thus, the ALJ's noting that 
the Florida legislature enacted the legislation creating the system 
in 2009 is not a material fact and no error was committed. See 5 
U.S.C. Sec.  556(e) (``When an agency decision rests on official 
notice of a material fact not appearing in the evidence in the 
record, a party is entitled, on timely request, to an opportunity to 
show the contrary.'').
---------------------------------------------------------------------------

Exceptions to the ALJ's Conclusions of Law

Exceptions to the ALJ's Legal Conclusion as to Factor One

    In discussing Factor One--the recommendation of the state licensing 
board--the ALJ found that the record did not contain a recommendation 
from the Florida Board or any evidence of disciplinary action taken 
against Respondent or Ms. Jones. R.D. at 57-58. Noting that under DEA 
precedent, ``[t]he ultimate responsibility to determine whether a 
registration is consistent with the public interest has been delegated 
exclusively to the DEA [and] not to entities within state government,'' 
the ALJ held that the absence of a recommendation or disciplinary 
action against Respondent (or Ms. Jones) is not dispositive and neither 
weighs in favor of, or against, a determination as to whether 
Respondent's continued registration is consistent with the public 
interest. R.D. at 58 (citing Top Rx, 78 FR 26069, 26081 (2013); Edmund 
Chein, 72 FR 6,580, 6590 (2007), pet. for rev. denied Chein v. DEA, 533 
F.3d 828 (D.C. Cir. 2008)).
    Respondent argues that the actions of the DOH in conducting six 
inspections, which found that ``in virtually all of those exams, and 
certainly all exams subsequent to 2012,'' Respondent ``was in 
compliance with all rules and regulations including those relating to 
the maintenance of ordering forms and inventory,'' ``should be deemed 
as persuasive for continued registration.'' Exceptions, at 16. However, 
this statement is contradicted by the record evidence related to the 
DOH inspections.\25\
---------------------------------------------------------------------------

    \25\ For example during the June 10, 2013 Inspection, the 
Inspector found that Respondent was non-compliant with the 
requirement that it report controlled substance dispensings to the 
PDMP within 7 days. RX 8, at 3. Also, during the August 29, 2014 
inspection, the DOH Inspector found that Respondent was non-
compliant with Florida law requiring that it maintain controlled 
substances records ``for 4 years.'' Id. at 1. Also at the latter 
inspection, the Inspector noted that ``controlled substance invoices 
are mixed in with non-controlled'' and that ``CII should be separate 
and CIII-V should be marked if filed with noncontrols [sic] [and] 
must be readily retrievable from all other records.'' Id. Of note, 
under 21 CFR 1304.04(h)(1), ``[i]nventories and records of all 
controlled substances listed in schedule I and II shall be 
maintained separately from all other records of the pharmacy.''

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

[[Page 79196]]

    Respondent also argues that because ``the State has taken no action 
adverse to [it], the ALJ should have found that this factor weighed in 
favor of continued registration.'' Id. (citing Physicians Pharmacy, 
L.L.C., 77 FR 47096 (2012)). However, while Respondent retains its 
state authority, the Agency has long held that possession of state 
authority is a prerequisite for obtaining and maintaining a 
registration.\26\ Whether a registrant retains its state license is not 
a factor in determining whether it has committed acts which render its 
registration inconsistent with the public interest.\27\ Thus, in the 
absence of a recommendation regarding Respondent's registration, 
Respondent's continued possession of its State authority is not 
dispositive and neither supports nor refutes the Government's 
contention that its registration is ``inconsistent with the public 
interest.'' 21 U.S.C. Sec.  823(f). Accordingly, I agree with ALJ's 
ruling that factor one ``does not weigh for or against a determination 
as to whether the Respondents' continued registration is consistent 
with the public interest,'' R.D. 58, and reject the exception.
---------------------------------------------------------------------------

    \26\ Thus, consistent with the structure of section 823(f), 
determining whether an applicant possesses state authority is an 
inquiry which is required before the Agency considers the public 
interest factors. See 21 U.S.C. Sec.  823(f). And in revocation 
proceedings, a registrant's loss of state authority is a basis for 
revoking a registration which is independent from the determination 
of whether a registrant has committed such acts as to render its 
registration inconsistent with the public interest. Compare id. 
Sec.  824(a)(3) with id. Sec.  824(a)(4).
     To be sure, there are cases in which the Agency has adopted a 
recommended decision which endorsed the view that the possession of 
a valid state license ``weighs against a finding that Respondent's 
registration would be inconsistent with the public interest.'' 
However, whether an applicant possesses the requisite state 
authority is properly viewed as a threshold matter which is to be 
considered before the public interest determination is made.
    \27\ Certainly conduct which causes a State Board to suspend or 
revoke a practitioner's controlled substances authority may involve 
controlled substances and provide a basis to revoke under the public 
interest standard. But a State Board may also suspend or revoke a 
practitioner's state authority for reasons having nothing to do with 
a registrant's controlled substance activities; while such cases do 
not implicate the public interest standard, they are nonetheless 
grounds to revoke based solely on the registrant's loss of state 
authority. 21 U.S.C. Sec.  824(a)(3).
---------------------------------------------------------------------------

Exceptions to the ALJ's Legal Conclusions as to Factors Two and Four

    In her decision, the ALJ found that Respondent ``violated 
recordkeeping requirements by failing to record whether [its] biennial 
inventory was taken at the opening or close of business, and by failing 
to indicate the number of tablets per opened commercial container, the 
number of tablets shipped in each commercial container, and the number 
of commercial containers that Ms. Jones had on hand.'' R.D. at 59 
(citing 21 CFR 1304.11(e)(3)). Reasoning that without ``a complete 
inventory, the DEA is unable to conduct an accurate accountability 
audit,'' the ALJ, while acknowledging that ``the inventory was complete 
in other aspects,'' then explained that ``Ms. Jones' partial compliance 
does not obviate her failure to record the required the information on 
the biennial inventory.'' Id. at 60. The ALJ further explained that 
``Respondent's lack of attention to detail with its accountability of 
the controlled substances received and dispensed is adequate grounds 
for recommending [the] revocation of [its] registration.'' Id. (citing 
Alexander Drug Co., 66 FR 18299, 18303 (2001) (citing Singers-Andreini 
Pharmacy, Inc., 63 FR 4668 (1998))).
    Respondent argues that the ALJ's conclusion ``was one of form over 
substance'' and that ``the unrebutted testimony of Ms. Jones, the 
biennial inventories presented, [its] expert['s] testimony . . . , and 
the DOH inspections, all establish that Jones Pharmacy was in 
substantial compliance with the applicable regulation,'' and that this 
standard ``is recognized in DEA regulations.'' Exceptions, at 17, 19 
(citing 21 CFR 1301.71(b)). Respondent further argues that revocation 
is not warranted based on ``these minor deficiencies.'' Id. at 19.
    Contrary to Respondent's understanding, the ``substantial 
compliance'' standard applies only with respect to the Agency's 
assessment of an applicant's/registrant's ``overall security system.'' 
21 CFR 1301.71(b). Moreover, in the Controlled Substances Act, Congress 
set the standard for assessing the adequacy of a registrant's 
inventories by requiring that ``every registrant . . . make a complete 
and accurate record of all stocks thereof on hand.'' 21 U.S.C. Sec.  
827(a)(1) (emphasis added). See also id. Sec.  827(a)(3) (requiring 
that ``every registrant . . . shall maintain . . . a complete and 
accurate record of each such substance . . . received, sold, delivered, 
or otherwise disposed of'').
    Under DEA's regulations, Respondent's inventories were neither 
complete nor accurate. They were not complete because they did not list 
the number of commercial containers on hand and the number of units in 
each such container. See 21 CFR 1304.11(e)(3); id. Sec.  
1304.11(e)(1)(iii)-(iv). Nor were they accurate because they did not 
indicate whether the inventory was taken ``as of [the] opening of 
business or as of the close of business.'' Id. Sec.  1304.11(a). In the 
absence of the inventories indicating whether they were taken at the 
opening or close of business, DEA personnel conducting an audit would 
not know whether to count the prescriptions dispensed and any shipments 
received (as well as any returns or other dispositions) on the dates 
that the inventories were taken.
    Respondent nonetheless argues that because the inventories listed 
the NDC number of the controlled substances, and ``the last two digits 
of the NDC number represent the bottle size,'' the inventories 
contained the required information. Exceptions, at 18. While it may be 
that the last two digits of an NDC number indicate the bottle size, 
there are a multitude of different manufacturer's controlled drug 
products on the market and DEA personnel had no obligation to 
investigate what bottle size corresponded with the various NDC numbers 
listed on Respondent's inventories.\28\
---------------------------------------------------------------------------

    \28\ Respondent also asserts that its Expert ``found it 
compelling that the DOH remarked in the October 12, 2011 DOH report 
that [it] had a zero (0%) percent error rate on its physical 
inventory.'' Exceptions, at 18. Putting aside that the Inspector's 
comment pertained to an audit he conducted and not an inventory, see 
RX 8, at 7; the Inspector's Report noted that Ms. Jones had not 
provided a controlled drug report and that the software company had 
to be contacted ``in order to figure out how to print the report.'' 
Id. Thus, the DOH Inspector's audit likely did not include 
controlled substances.
---------------------------------------------------------------------------

    Moreover, despite her factual finding that 480 line items on 
Respondent's schedule II order forms were not completed correctly, the 
ALJ did not draw a legal conclusion as to whether Respondent was in 
compliance with DEA's regulations. Compare R.D. at 18-19 (FOF Nos. 89-
91), with id. at 58-60 (discussing legal conclusions with respect to 
recordkeeping). I find that Respondent violated DEA regulations by 
failing to properly record ``the number of commercial or bulk 
containers furnished on each item and the dates on which the containers 
are received by the purchaser.'' 21 CFR 1305.13(e).

[[Page 79197]]

    While Respondent argues that the violations found by the ALJ do not 
support revocation, I need not decide whether these violations, 
including those based on its failure to properly complete the order 
forms, would support the revocation of Respondent's registration as 
opposed to some lesser sanction. This is so because the evidence shows 
that Respondent has committed egregious dispensing violations which 
fully support the denial of both its and SND's applications.

Exceptions to the ALJ's Findings That Respondent Violated Its 
Corresponding Responsibility

    Respondent raises five arguments as to why I should reject the 
ALJ's legal conclusion that it violated 21 CFR 1306.04(a). The first 
three of these are based primarily on the ALJ's reliance on the 
testimony of the Government's Expert that many of the prescriptions 
presented red flags which were unresolvable. They include that: (1) 
Government's Expert was not qualified to testify as an Expert; (2) the 
Expert was biased; and (3) its right to due process was violated when 
the ALJ denied its request for a copy of the Expert's report. 
Exceptions, at 20-24. As for its other contentions, Respondent argues 
that: (4) Substantial evidence does not support a finding that 
Respondent knew or should have known of the various red flags, id. at 
24-29; and (5) this proceeding ``may have been brought for punitive 
reasons'' because Respondent's owner complained to her congressional 
representatives when DEA failed to approve her request to change her 
registered location. Id. at 30. I find that none of these contentions 
have merit.

Respondent's Challenges to the Government's Expert

    Respondent first challenges the ALJ's ruling accepting the 
Government's Expert as an Expert in retail pharmacy. Tr. 224. According 
to Respondent, the Government's Expert was not qualified to testify as 
such because she has ``no expertise of ever serving on pharmacy 
boards,'' has ``never taught pharmacy,'' has ``never worked at an 
independent pharmacy . . . or testified about any expertise with 
independent pharmacies,'' and ``is not currently working in a capacity 
where she [is] dispensing.'' Exceptions, at 21. Respondent also argues 
that the Government's Expert's ``retail pharmacy experience was limited 
to that of an assistant manager at Publix [a supermarket chain]--and 
before that [as] a pharmacist at Walgreens,'' these being ``large 
retail institutions that had significant resources.'' Id. And 
Respondent argues that the Expert ``had never before been qualified as 
an expert,'' that she ``has not published any articles relating to red 
flags of diversion,'' nor written ``any policies or procedures relating 
to diversion'' or ``controlled substances.'' Id. at 21-22.
    The evidence shows, however, that Government's Expert holds both a 
Bachelor of Science in Pharmacy and a Doctor of Pharmacy degree. GX 25, 
at 1. She testified that she had 17 years of experience working in 
retail pharmacies, Tr. 214, and her CV shows and she has 10 years of 
experience working a pharmacist, an assistant manager and a pharmacy 
manager at retail pharmacies. GX 25, at 2, 4. She testified to having 
dispensed an estimated five million prescriptions. Tr. 216.
    She also testified that based on her education and professional 
experience she was familiar with a pharmacist's responsibilities in 
dispensing controlled substances and issues involving the diversion and 
abuse of controlled substances. Id. at 218-19. Thus, the Government's 
Expert's experience and education provided an ample basis for the ALJ 
to deem her qualified to testify as an expert witness. See, e.g., 
United States v. Roach, 644 F.3d 763, 764 (8th Cir. 2011) (physician 
qualified to testify as expert on issues based on knowledge acquired 
``solely from on-the-job observations and attendance at conferences and 
seminars''); American General Life Ins. Co. v. Schoenthal Family, LLC, 
555 F.3d 1331, 1338-39 (11th Cir. 2009) (rejected argument that 
``[e]xperience alone . . . can never form the basis for expert 
testimony,'' and noting that expert's education and experience rendered 
him qualified to testify as expert on insurance industry standards). I 
therefore reject Respondent's argument to the contrary.\29\
---------------------------------------------------------------------------

    \29\ While Respondent invokes Rule 702 of the Federal Rules of 
Evidence (which provide only guidance in this proceeding, see 
Rosalind A. Cropper, 66 FR 41040, 41041 (2000)), even under Rule 
702, the Government's Expert would have been deemed qualified to 
testify as such based on her experience and knowledge. There is no 
requirement that an expert has served on a Board of Pharmacy, has 
written articles on or taught the subject matter, or has previously 
testified as an expert. See Fed. R. Evid.702 (Advisory Committee 
Notes 2000 Amendments) (``Nothing in this amendment is intended to 
suggest that experience alone-or experience in conjunction with 
other knowledge, skill, training or education-may not provide a 
sufficient foundation for expert testimony.''); Beins v. United 
States, 695 F.2d 951, 609 (D.C. Cir. 1982) (expert's lack of 
publications in field not disqualifying). As for Respondent's 
argument that the Expert's experience was limited to working ``in 
large retail institutions'' and not independent pharmacies, the 
Agency's corresponding responsibility rule applies in the same 
manner to all pharmacies.
---------------------------------------------------------------------------

    Respondent further maintains that the Expert was biased because she 
``testified that she helped write the Order to Show Cause.'' 
Exceptions, at 22. Respondent also notes that the Expert testified that 
she had provided a report to DEA, which was in existence when it sought 
discovery from the Government, but that the ALJ denied its request for 
discovery. Respondent further argues that the ALJ's ruling denying its 
request for the Expert's report was a denial of its right to due 
process. Id. at 23 (citing McClelland v. Andrus, 606 F.2d 1278, 1286 
(D.C. Cir. 1979)). Respondent then asserts that the Expert's report 
``likely contained the identity of other witnesses and may have lead 
[sic] to the discovery of additional evidence.'' Id. at 24.
    As for Respondent's claims that the Government's Expert was biased 
because she ``testified that she helped write the Order to Show 
Cause,'' the Expert's testimony was: ``Yes, I provided a report of my 
findings and my opinion only.'' Tr. 303. And when then asked by 
Respondent if she had ``seen that report in any documents that have 
been shown to you in this proceeding,'' the Expert ``I think they 
showed it to me after the fact. This is what we submitted to you. They 
showed me the Order after, yes. After they gave it to you, they 
forwarded it to me too, but I'm going to be honest, I don't read all 
that stuff.'' Id.
    Of note, the record contains no indication that the Show Cause 
Order (which was in the record as ALJ Ex. 1) was presented by 
Respondent to the Expert when this colloquy occurred. See id. And when 
the Government objected to this line of questioning on the ground that 
``we're using terms here . . . in a confusing manner'' and asked that 
Respondent's counsel ``show her the document,'' the ALJ instructed 
Respondent's Counsel that ``if you would be precise in what you're 
referring to, that would be very helpful,'' before adding that ``[i]t 
is confusing.'' Tr. 304. Respondent's Counsel then proceeded to ask the 
Government's Expert about the report she submitted. Id. at 305. As I 
also find the record confusing, I do not find it established that the 
Government's Expert helped to write the Order to Show Cause other than 
in the sense that she reviewed the prescriptions and provided a report 
to the Government.
    I also reject Respondent's contention that it was entitled to 
discovery of the Expert's report. As several courts of appeals have 
recognized, ``[t]he

[[Page 79198]]

Administrative Procedure Act contains no provision for pretrial 
discovery in the administrative process . . . and the Federal Rules of 
Civil Procedure for discovery do not apply to administrative 
proceedings.'' Silverman v. CFTC, 549 F.2d 28, 33 (7th Cir. 1977); see 
also Mister Discount Stockbrokers, Inc., v. SEC, 768 F.2d 875 (7th Cir. 
1985). Rather, `` `[t]he extent of discovery that a party is entitled 
to is primarily determined by the particular agency.' '' Mister 
Discount Stockbrokers, 768 F.2d at 878 (quoting McClelland, 606 F.2d at 
1285).
    DEA's regulations do not, however, provide for broad-based 
discovery. Rather, consistent with the Due Process Clause, they provide 
only the right to receive in advance of the hearing a summary of the 
anticipated testimony of the Government's witnesses and copies of the 
Government's proposed exhibits.
    To be sure, the Agency has recognized that ``discovery must be 
granted if in the particular situation a refusal to do so would so 
prejudice a party as to deny [it] due process.'' Margy Temponeras, 77 
FR 45675, 45676 n.4 (2012) (quoting McClelland, 606 F.2d at 1285)). See 
also Goldberg v. Kelly, 397 U.S. 254, 270 (1970) (``where governmental 
action seriously injures an individual, and the reasonableness of the 
action depends on fact findings, the evidence used to prove the 
Government's case must be disclosed to the individual so that he has an 
opportunity to show that it is untrue'') (int. quotations and other 
citation omitted). However, ``the party seeking discovery must rely on 
more than speculation and must show that the evidence is relevant [and] 
material, and that the denial of access to the documents is 
prejudicial.'' Beau Boshers, 76 FR 19401, 19403 (2011) (citing Echostar 
Comm. Corp. v. FCC, 292 F.3d 749, 756 (D.C. Cir. 2002); Silverman, 549 
F.2d at 34). The prejudice must be of such ``a significant degree so as 
to result in a denial of due process.'' Mister Discount Stockbrokers, 
768 F.2d at 878.
    While Respondent contends that the denial of its right to the 
report of the Government's Expert violated its right to due process, I 
conclude that Respondent has failed to identify any prejudice, let 
alone prejudice resulting in the denial of due process. Notably, in 
advance of the hearing, the Government provided Respondent with a 
thorough disclosure of the testimony it expected to elicit from its 
Expert regarding the various red flags of diversion present in the 
prescriptions she reviewed and it also identified those sets of 
prescriptions which its Expert would testify were ``filled in the face 
of numerous unresolvable red flags for diversion.'' ALJ Ex. 11, at 16-
19 (Govt. Prehearing Statement). Moreover, Respondent makes no claim 
that the Government failed to provide copies of its proposed exhibits 
in advance of the hearing as required by the ALJ's Prehearing Ruling. 
ALJ Ex.16, at 3. Thus, Respondent was fully apprised of the 
Government's theory of the case and the evidence it intended to rely on 
and Respondent had ample opportunity to prepare a defense.
    While Respondent asserts that by denying it ``access to [the 
Expert's] report, [it] was denied access to part of the evidence on 
which the DEA relies [on] to revoke its license,'' Exceptions, at 24; 
the Government did not introduce the report into evidence and thus did 
not rely on it to prove its case. Moreover, Respondent was able to 
thoroughly cross-examine the Government's Expert as to the basis of her 
opinions that the prescriptions presented unresolvable red flags. See 
Tr. 289-359; 375-79.
    Respondent further asserts that it has been prejudiced because the 
Expert's report ``likely contains the identity of other witnesses and 
may have lead [sic] to the discovery of additional evidence.'' 
Exceptions, at 24. However, earlier in its Exceptions, Respondent 
argued that I should reject the ALJ's findings as to the prescriptions 
in GX 22 because the Government's Expert acknowledged that ``she had 
not . . . spoken with the doctors, or the patients or any physicians 
that had issued the prescriptions at issue in this action.'' 
Exceptions, at 13 (citing Tr. 317). As Respondent has not even 
suggested what other type of witnesses it believes the Expert's report 
refers to, its claim of prejudice rests on pure speculation. I 
therefore reject its exception.\30\
---------------------------------------------------------------------------

    \30\ In light of my conclusion that Respondent has not shown 
that the denial of the Expert's report is so prejudicial as to deny 
it due process, I do not address the Government's argument that the 
report was a draft report which even under the Federal Rules of 
Civil Procedure need not be disclosed to the opposing party. Govt. 
Resp. to Respondents' Exceptions, at 20-21 (citing Fed. R. Civ. P. 
26(b)(4)(B)). Nor do I address the Government's contention that the 
parties agreed that the only documents subject to disclosure were 
the prehearing summaries of the expected testimony, the experts' 
CVs, and any documents that their experts would be expected to refer 
to on direct examination and that Respondents ``are complaining 
about a document they abandoned months before the hearing.'' Id. at 
19.
---------------------------------------------------------------------------

Respondent's Contention That Substantial Evidence Does Not Support a 
Finding That It Knew or Should Have Known of the Red Flags
    Respondent argues that ``[t]he ALJ improperly concluded that 
[Respondent] knew or should have recognized a red flag prior to the 
time the controlled substances were dispensed.'' Exceptions, at 24. 
Noting the ALJ's reliance on Holiday CVS, Respondent argues that 
``unlike the Holiday CVS case, there was no evidence in the record of 
this case that any controlled substance was diverted, or any 
prescription [was] issued by a prescribing physician who lacked 
authority to prescribe controlled substances.'' Id. at 24-25. 
Respondent further argues that in Holiday CVS, the pharmacies ``were 
specifically advised by DEA staff on more than one occasion of 
prescribing patterns to look out for as potential indicators of 
diversion.'' Id. at 25 (citing 77 FR at 62326, 62331). Respondent thus 
contends that ``[n]one of these facts are [sic] present in this 
action.'' Id.
    While it is true that in Holiday CVS, the Agency found that 
pharmacies knowingly filled prescriptions issued by two physicians who 
were no longer registered and did so well after the pharmacies should 
have known that the physicians were no longer registered, that was only 
a small part of the case. See 77 FR at 62316-317. Rather, the heart of 
the Government's case was that the pharmacies' pharmacists had 
repeatedly violated their corresponding responsibility by dispensing 
prescriptions when they either knew or were willfully blind to the fact 
that the prescriptions lacked a legitimate medical purpose. See id. at 
62317-322; see also id. at 62332-334.
    Contrary to Respondent's contention, the Government's proof was 
similar to that put forward in this case in that it was based entirely 
on circumstantial evidence. More specifically, the evidence showed 
that: (1) The patients were travelling long distances (and frequently 
from out-of-state) to obtain their prescriptions; (2) the prescriptions 
were for large quantities of such highly abused drugs as oxycodone 30 
and alprazolam; (3) the doctors issued prescriptions for combinations 
of oxycodone (including two dosage strengths both oxycodone 30 and 15) 
and alprazolam; and (4) the patients were paying cash for the 
prescriptions. See id. at 62332-34.
    As in this matter, in Holiday CVS, the Government did not put 
forward any witness who testified that he/she had ``personal 
knowledge'' that the drugs were being diverted. While Respondent 
further argues that the Government did not put on any evidence ``that 
any diagnosis was not legitimate . . . or that any controlled substance 
was diverted after a prescription was filled,'' Exceptions, at 29; the 
Government did introduce evidence showing that several

[[Page 79199]]

of the physicians either surrendered their registrations or had their 
registrations revoked after a hearing in which they were found to have 
issued prescriptions in violation of 21 CFR 1306.04(a). See Rene 
Casanova, 77 FR at 58151-52; GX 42, at 1 (registration printout for 
Randall L. Wolff); Wolff, 77 FR at 5121-22; GX 41, at 1 (registration 
printout showing Dr. Neuringer surrendered his registration for 
cause).\31\
---------------------------------------------------------------------------

    \31\ The evidence also shows that Respondent filled controlled 
substance prescriptions issued by Drs. Jacobo Dreszer (4 Rxs), 
Michael Aruta (7 Rxs), Beau Boshers (12 Rxs), and Cynthia Cadet (2 
Rxs). See GX 2 (line entries nos. 25, 41, 53-60, 70-83, 87). I take 
official notice that on February 25, 2010, the former Administrator 
ordered the immediate suspension of each of these doctor's 
registrations, and following a consolidated hearing before an ALJ, 
the former Administrator found that each of these doctors had issued 
controlled substance prescriptions outside of the usual course of 
professional practice and which lacked a legitimate medical purpose 
and revoked their respective registrations. See Cynthia M. Cadet, 76 
FR 19450, 19451, 19465 (2011); Michael J. Aruta, 76 FR 19420, 19420, 
19434 (2011); Beau Boshers, 76 FR 19401, 19404, 19419 (2011); Jacobo 
Dreszer, 76 FR 19386, 19389-90, 19401 (2011).
---------------------------------------------------------------------------

    Nor do I find persuasive Respondent's attempt to distinguish 
Holiday CVS because in that matter, agency Investigators met with CVS 
employees and discussed both a pharmacist's corresponding 
responsibility and various red flags attendant with illegitimate 
prescriptions. To the extent Respondent suggests that its owner and 
pharmacists were entitled to a similar briefing, and should be excused 
from liability because they did not receive such a briefing, it is 
mistaken. DEA does not have the resources to personally brief every 
registrant following its discovery of new patterns of diversion.\32\ 
Rather, as a participant in a highly regulated profession, Respondent's 
owner had an obligation to keep herself informed regarding regulatory 
developments which affected her profession. Cf. Holiday CVS, 77 FR at 
62317 (citing United States v. Southern Union Co., 630 F.3d 17, 31 (1st 
Cir. 2010) (``[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 regulations.'')).
---------------------------------------------------------------------------

    \32\ In Holiday CVS, one of the Government's Investigators (who 
also testified in this proceeding) testified that the DEA Weston 
Office had decided in 2005 ``to interview all new pharmacy 
applicants and also treat all new pharmacy applications the same and 
alert the chains. So when there was a new pharmacy opening up, I 
would contact them and they would come in for a discussion of the 
situation.'' 77 FR at 62331. Respondent cites to this testimony and 
argues that ``[t]here was no testimony from DEA staff that the DEA 
ever provided similar information to [it] during the . . . time 
period covering the prescriptions at issue in this action.'' 
Exceptions, at 29 n.32. Respondent thus suggests that ``there was a 
disparity of treatment between types of pharmacies despite the DEA 
seeking to impose the same knowledge on [it] that was given to 
Holiday CVS.'' Id.
     To the extent Respondent raises the lack of such a briefing as 
an affirmative defense, the burden of production was on Respondent 
to show that it did not occur and Respondent produced no evidence as 
to whether DEA Investigators visited it prior to granting its 
initial application, let alone that they failed to conduct a 
briefing on red flags associated with unlawful prescriptions. 
Second, even if Respondent had established that it was treated 
differently than chain pharmacies because it was an independent 
pharmacy, the Government's basis for treating it differently would 
only be subject to rational basis review. Cf. FCC v. Beach Comm., 
Inc., 508 U.S. 307, 316-17 (1993). Finally, because the regulation 
provides constitutionally adequate notice of a pharmacist's legal 
obligation to not knowingly dispense prescriptions which lack a 
legitimate medical purpose, see United States v. Hayes, 595 F.2d 
258, 260-61 (5th Cir. 1979), and the red flags themselves are simply 
factual circumstances which provide evidence to suspect that a 
prescription was not issued for a legitimate medical purpose, 
Respondent cannot claim that it has been denied fair notice that its 
filling of the prescriptions at issue was unlawful.
---------------------------------------------------------------------------

    Moreover, even prior to Respondent's first engaging in the 
dispensing of controlled substances, this Agency had identified several 
of the same red flags that are present here, such as the prescribing of 
drug cocktails of narcotics (oxycodone), benzodiazepines (alprazolam), 
and carisoprodol and patients obtaining large doses and multiple 
prescriptions for narcotics. See Paul H. Volkman, 73 FR 30630, 30637 
(2008) (discussing testimony of expert in pain management that 
physician's practice of prescribing drug cocktails of opioids, which 
often included multiple opioids, a benzodiazepine and carisoprodol, 
``greatly increased the chance for drug abuse, diversion, [and]/or 
addiction''); \33\ see also Your Druggist Pharmacy, 73 FR 75774, 75775 
n.1 (2008) (discussing carisoprodol's use by drug abusers as a part of 
a drug cocktail which also includes an opiate and benzodiazepine).
---------------------------------------------------------------------------

    \33\ Indeed, the Government's Expert in Volkman discussed at 
length six patients who received multiple controlled substance 
prescriptions from the doctor and died of overdoses only a few days 
later. See 73 FR at 30637 n.23.
---------------------------------------------------------------------------

    Also, as discussed above, on October 27, 2010, the Agency 
identified additional red flags in the East Main Street Pharmacy case 
such as patients paying cash, patients travelling long distances to 
obtain prescriptions, and patients obtaining prescriptions for 
alprazolam in the two milligram dosage. To the extent Respondent 
believes that it should be excused for its dispensing violations which 
occurred prior to this date because no Agency decision had explicitly 
found that these circumstances were red flags, the circumstances of 
patients, who had traveled long distances and frequently from out-of- 
state, presenting prescriptions for multiple controlled substances 
including large quantities of oxycodone (and frequently prescriptions 
for both 30 and 15 milligrams dosages), alprazolam 2mg, and at times 
also carisoprodol, for which they paid large sums of cash (or cash 
equivalents), created an obvious and compelling level of suspicion that 
the prescriptions lacked a legitimate medical purpose. See Holiday CVS, 
77 FR at 62322 (``[T]he red flags presented by the circumstances of 
patients travelling from Kentucky or Tennessee to South Florida to 
obtain prescriptions, including for a schedule II narcotic, which by 
definition has the highest potential for abuse of any drug that may be 
lawfully prescribed, and then travelling to Respondents to fill them, 
are so obvious that only those who are deliberately ignorant would fill 
these prescriptions.'') (citation omitted).\34\ Because I conclude that 
these red flags rendered it obvious that the prescriptions likely 
lacked a legitimate medical purpose, I reject Respondent's further 
contention that ``the ALJ . . . improperly concluded that there was a 
general knowledge of `red flags' among . . . independent pharmacies.'' 
Exceptions, at 29.
---------------------------------------------------------------------------

    \34\ In this exception, Respondent also repeats its argument 
that the Government's Expert ``provided no credible evidence that 
the term [red flags] was known by pharmacists [sic] the State of 
Florida other than her unsubstantiated testimony.'' Id. at 27. 
Respondent also relies on the discredited testimony of its Expert to 
the effect that the first reference she found on the Agency's 
website to the term red flag was in the Holiday CVS decision and 
that she did not believe that in 2010, such circumstances as 
patients paying cash or traveling to obtain prescriptions was widely 
known by pharmacists to be an indicator of abuse or diversion. Id. 
at 28. I reject these arguments for the reasons explained in my 
discussion of Respondent's exceptions to the ALJ's factual findings 
and credibility determinations regarding the parties' experts.
---------------------------------------------------------------------------

    Respondent further argues that the ALJ erred in ``credit[ing] the 
DEA's argument that cash and high prices charged are evidence of 
knowledge [on Ms. Jones's part] that her `acts were illegal.' '' Id. 
According to Respondent, this ``argument turns the principles of due 
process and burden of proof on their head,'' apparently because both 
parties' Experts testified that there are no ``prohibitions of 
pharmacies charging any particular price on controlled substances.'' 
Id. (citing Tr. 758).
    Respondent, however, cites no authority for its contention. 
Moreover, even granting that there are no prohibitions on the prices a 
pharmacy can charge for controlled substances, when those prices far 
exceed what other pharmacies would charge, the Agency may properly draw 
the inference that

[[Page 79200]]

the pharmacy is charging those prices because it knows it is supplying 
persons who are seeking the drugs to either abuse them or divert them 
to others. See United States v. Leal, 75 F.3d 219, 223 (6th Cir. 1996) 
(holding that evidence that pharmacist ``marked up controlled substance 
prices 788% as compared to a national average of 86%'' supported 
finding that pharmacist knew prescriptions were unlawful''); United 
States v. Cooper, 868 F.2d 1505, 1512 (6th Cir. 1989) (evidence that 
pharmacy charged prices well in excess of average prices supports an 
inference that the pharmacist knew drugs were prescribed illegally); 
Hayes, 595 F.2d at 261 (holding that evidence that ``the prices charged 
by [pharmacist] for drugs were unusually high'' supported conclusion 
that pharmacist ``knew that the prescriptions were not issued for a 
legitimate medical purpose'').
    Here, the evidence shows that Respondent was charging prices as 
high as $1620 for 180 dosage units of oxycodone 30 mg when it paid 
$58.66 for the drugs. See, e.g., GX 2 (line entries Nos. 3172, 3192, 
3249). Moreover, the DOH Inspector, who had inspected approximately 
1,500 pharmacies in Broward and Dade counties and who had 33 years of 
experience as a practicing pharmacist, testified that the typical price 
for 180 oxycodone 30 was ``less than $200'' and ``at most $250.'' Tr. 
168. The Inspector further testified that the $1620 price Respondent 
was charging at the time of the 2012 DOH Inspection was 
``extraordinary'' and that ``in charging that amount of money,'' 
Respondent's owner knew the prescriptions were not issued for a 
legitimate medical purpose. Id. at 167. I agree and I reject 
Respondent's contention to the contrary.

Respondent's Contention That This Proceeding May Have Been Brought For 
Punitive Reasons

    Respondent further argues that ``the objective evidence indicates 
that the instant action may have been brought for punitive reasons.'' 
Exceptions, at 30. As support for its contention, Respondent cites to 
the evidence showing that in March 2012, Ms. Jones leased a new 
location; that on June 2, 2012, she applied to change her registered 
address to her new location; and that in both July and October 2012 she 
had sent DEA Investigators the dispensing report (GX 2), but that DEA 
did not approve the modification until April 2, 2013, several weeks 
after Respondent's owner had written her congressional representatives 
to complain about the delay. Id. at 30-33.
    In its Exceptions, Respondent further quotes from Ms. Jones' letter 
to her congressional representatives in which she asserted that ``I can 
only think of negative reason of why someone would sit on our file so 
long,'' that ``[i]t feels like an abuse of power for someone in this 
position,'' and ``I feel this is an adult version of being bullied. I 
am emailing and calling and I can't get any response on the status of 
our application and why it is taking so long.'' RX 7 (quoted in 
Exceptions, at 32-33). Noting that one of the Government's 
Investigators testified that when he conducted the April 2, 2013 
inspection, he was aware that Ms. Jones had sent this letter to her 
congressional representatives, Respondent thus suggests that the 
proceeding was brought to retaliate against Ms. Jones for complaining 
to her representatives. Exceptions, at 32-33 & n.33.
    I reject the contention that the proceedings were brought to 
retaliate against Respondent's owner. Here, notwithstanding that Ms. 
Jones engaged in constitutionally protected speech when she complained 
to her congressional representatives, the Government's case for seeking 
the revocation of Respondent's registration is amply supported by the 
evidence showing that Respondent's pharmacists filled numerous 
controlled substance prescriptions in violation of 21 CFR 1306.04(a) 
thus rendering its registration inconsistent with the public interest. 
In the related context of a Bivens action for a retaliatory criminal 
prosecution, the Supreme Court has held that a plaintiff must show that 
the prosecutor lacked probable cause. See Hartman v. Moore, 547 U.S. 
250, 265-66 (2006); see United States v. Armstrong, 517 U.S. 456, 464 
(1996) (holding that ``a presumption of regularity'' supports 
prosecutorial decisionmaking, and where probable cause exists the 
decision to bring a charge ``generally rests entirely'' in the 
prosecutor's ``discretion'') (int. quotations and citations omitted). 
Because there is no evidence in the record, other than Ms. Jones' 
assertion, that the proceeding was brought to punish her for having 
complained to her congressional representative, and because the case 
against Ms. Jones is amply supported by the evidence in the record, I 
reject her contention.

Respondent's Exception That the ALJ Failed To Consider Respondent's 
Evidence as to Ms. Jones' Acceptance of Responsibility and Remedial 
Actions

    The ALJ further found ``that Ms. Jones has not unequivocally 
accepted responsibility for'' the ``unlawful dispensing that occurred 
at [Respondent] from 2010 [through] 2012.'' R.D. at 73. Based on this 
finding, the ALJ applied Agency precedent which holds that a 
registrant's acceptance of responsibility and showing that it has 
undertaken adequate remedial measures are independent and ``essential 
requirements for rebutting the Government's prima facie showing that 
continuing an existing registration would be `consistent with the 
public interest,''' and declined to consider Respondent's evidence of 
remedial measures. Id. (citing Holiday CVS, 77 FR at 62346 (quoting 21 
U.S.C. Sec.  823(f))).
    Respondent takes exception to the ALJ's finding that Ms. Jones 
failed to unequivocally accept responsibility for its misconduct. It 
argues that the ALJ erred in concluding that Ms. Jones' testimony that 
she believed ``that she was dispensing in accordance with appropriate 
methods, demonstrates a lack of acceptance of responsibility.'' Id. at 
33-34. Respondent argues that ``there is no specific language that is 
required to `unequivocally accept responsibility'' because ``not all 
individuals are the same and different individuals express themselves 
in different ways.'' Id. at 34. Respondent then argues that ``Ms. Jones 
repeatedly indicated that she accepted responsibility for her actions 
that she felt bad in that she would not want to have done something to 
hurt anyone.'' Id. Respondent further points to Ms. Jones' testimony 
``that knowing what she knows now, she could have done more to 
determine if prescriptions were written for legitimate purposes'' but 
that ``she did not believe any of the prescriptions in 2010 that were 
issued were not for legitimate medical purpose at that time . . . 
[a]lthough knowing what she knows now, she concedes it is possible they 
may not have been.'' Id. After discussing two older agency cases which 
Respondent asserts stand for the proposition ``that there is no 
specific way in which a party may accept responsibility,'' Respondent 
all but acknowledges the insufficiency of its showing on this issue 
when it argues that ``[i]n the instant action, there was substantial 
evidence on the record that Ms. Jones equivocally took responsibility 
for her actions.'' Exceptions, at 34-36 (emphasis added and citing 
Barry H. Brooks, 66 FR 18305 (2001) and Mary Thomson, 65 FR 75969 
(2000)).
    While it is true that in these two cases the Agency granted 
registrations to persons whose acceptance of responsibility was less 
than unequivocal, in subsequent cases the Agency has made clear that 
where the Government has proved that a registrant

[[Page 79201]]

has engaged in intentional or knowing misconduct, revocation is 
warranted in the absence of the registrant's unequivocal acceptance of 
responsibility for its misconduct. See Jayam Krishna-Iyer, 74 FR 459, 
464 (2009). As the former Administrator explained:

    While some isolated decisions of this Agency may suggest that a 
practitioner who committed only a few acts of diversion was entitled 
to regain his registration even without having to accept 
responsibility for his misconduct, the great weight of the Agency's 
decisions are to the contrary. . . . Because of the grave and 
increasing harm to public health and safety caused by the diversion 
of prescription controlled substances, even where the Agency's proof 
establishes that a practitioner has committed only a few acts of 
diversion, this Agency will not grant or continue the practitioner's 
registration unless he accepts responsibility for his 
misconduct.\35\
---------------------------------------------------------------------------

    \35\ In Krishna-Iyer, the Agency further overruled any case to 
the contrary. 74 FR at 464 n.9.

Id. See also Michael A. White, 79 FR 62957, 62958, 62967-68 (2014) 
(adopting ALJ's finding that physician did not accept responsibility 
when his ``acceptance of responsibility was tenuous at best,'' ``not 
once during the hearing did [he] unequivocally admit fault for his 
improper . . . prescriptions,'' and he ``minimized the severity of his 
misconduct''); The Medicine Shoppe, 79 FR 59504, 59508-10 (2014) 
(adopting ALJ's finding that pharmacy had not accepted responsibility 
for its misconduct when its owner/pharmacist initially testified that 
he accepted responsibility but on cross-examination denied ever having 
filled an unlawful prescription notwithstanding proof to the contrary); 
Holiday CVS, 77 FR at 62323 (rejecting challenge to ALJ finding that 
pharmacy registrants had failed to acknowledge their misconduct when 
corporate official testified only that company ``takes its 
responsibility seriously, and given . . . the elevated level of drug 
abuse that's being observed broadly in Florida, we don't want to 
contribute to that'').\36\
---------------------------------------------------------------------------

    \36\ The Agency's rule has been upheld on review. See MacKay v. 
DEA, 664 F.3d 808, 820 (10th Cir. 2011) (``The DEA may properly 
consider whether a physician admits fault in determining if the 
physician's registration should be revoked. When faced with evidence 
that a doctor has a history of distributing controlled substances 
unlawfully, it is reasonable for the . . . Administrator to consider 
whether that doctor will change his . . . behavior in the future. 
And that consideration is vital to whether continued registration is 
in the public interest.''); Chein v. DEA, 533 F.3d 828, 837 (D.C. 
Cir. 2008) (upholding revocation of physician's registration based 
on physician's failure to accept responsibility where physician 
``continued [to] insist[] that his dispensing of anabolic steroids 
to the undercover agents was proper''); Hoxie v. DEA, 419 F.3d 477, 
483 (6th Cir. 2005).
---------------------------------------------------------------------------

    Here, Respondent's evidence falls well short of the mark and even 
putting aside the egregious nature and scope of Respondent's 
misconduct, Ms. Jones' testimony establishes that she still does not 
understand what her obligations are under the CSA. Notably, when asked 
on cross-examination about specific sets of prescriptions, Ms. Jones 
maintained that at the time she dispensed the prescriptions she thought 
she was properly exercising her corresponding responsibility. Tr. 578-
79. She further denied that she had reason to believe the prescriptions 
were not issued for a legitimate medical purpose, explaining that ``I 
did what I had done at other pharmacies and I thought that was 
enough.'' Id. Ms. Jones further testified that her process for checking 
the legitimacy of the prescriptions was limited to ``calling the doctor 
and verifying that the prescription was written by the office.'' \37\ 
Id. at 581.
---------------------------------------------------------------------------

    \37\ Contrary to Ms. Jones' understanding, it has been settled 
law for years that a pharmacist's obligations under the 
corresponding responsibility rule requires more than just calling 
the prescriber. As the Fifth Circuit has explained:
     Verification 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 factfinder's concluding 
that the pharmacist has the requisite knowledge despite a purported 
but false verification. . . . What is required by [a pharmacist] is 
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 that the issuing practitioner issued it 
outside the scope of medical practice.
    United States v. Hayes, 595 F.2d 258, 261 (5th Cir. 1979). See 
also United States v. Seelig, 622 F.2d 207, 213 (6th Cir. 1980) 
(violation of 21 CFR 1306.04(a) ``may be inferred from proof that 
[pharmacists] deliberately closed their eyes to what would otherwise 
be obvious to them''); Medicine Shoppe-Jonesborough v. DEA, 300 Fed. 
Appx. 409 (2008). And not only is ignorance of the law no excuse, 
those who choose to participate in a highly regulated profession 
cannot reasonably claim ignorance of the legal obligations imposed 
on them as a practitioner in that profession. See David A. Ruben; 78 
FR 38363, 38387 n.54 (2013); cf. Hageseth v. Superior Court, 59 Cal. 
Rptr.3d 385, 403 (Ct. App. 2007).
---------------------------------------------------------------------------

    While Ms. Jones further testified that ``[k]nowing what I know 
today, I think I could have done more digging to test the legitimacy of 
the prescriptions,'' id. at 583, she then explained that ``there are 
doctors who will still write prescriptions like this and who are still 
practicing. So, I feel like we have to be the police of the legitimacy 
of the prescriptions, even though that should be their responsibility 
to make sure legitimate prescriptions are written based on the 
diagnosis of the patient.'' Id. at 585 (emphasis added).
    Throughout the cross-examination, Ms. Jones continued to maintain 
her belief that she had complied with her obligations under 21 CFR 
1306.04(a) when she filled the prescriptions while denying that she had 
any obligation to do anything other than call the doctor's office. For 
example, when asked if her ``due diligence include[d] assessing 
whether'' the prescriptions in Government Exhibit 17 and 45 \38\ (which 
were presented by two persons who provided the same address in 
Tennessee and were for three controlled substances) were issued ``for 
legitimate medical purposes,'' Ms. Jones answered: ``Well we call the 
office to verify the prescription and to make sure it was valid. I 
disagree with what you're saying that we didn't make sure that the 
prescription was legitimate. I don't agree to that. I'm sorry, I 
don't.'' Tr. 593-94. When then asked whether there was ``reason to 
believe that'' the prescriptions were not issued for a legitimate 
medical purpose, Ms. Jones answered:
---------------------------------------------------------------------------

    \38\ These prescriptions were obtained by two patients (D.H. and 
K.S.) who provided the same residence address in Harriman, Tennessee 
and obtained prescriptions on same day (on two occasions) from a 
clinic in Opa Locka which Respondent filled for oxycodone 30 (three 
of the prescriptions being for 180 du, one being for 150 du), 
oxycodone 15 (all four prescriptions being for 90 du), and 
alprazolam 2 (all four prescriptions being for 60 du). GXs 17, 45. 
D.H. and K.S. paid for each prescription with cash. GX 45, at 2.

    At face value of the prescription, no, because they're actual 
medications. They're written by a doctor. I've done a lot of 
training. Pain is what the patient says it is. Someone can, I have a 
patient who has sickle cell and has told me he's went to the 
hospital and sat there and waited and they asked him what his pain 
level was and he told them ten and it wasn't until they took his 
vitals that they actually believed him. So, I don't think you could 
look at someone to say you're not in pain and that's not a 
---------------------------------------------------------------------------
legitimate prescription.

Id. at 595. However, even if a pharmacist cannot look someone in the 
eye and determine whether she is actually in pain, a pharmacist can 
certainly evaluate the likelihood that prescriptions are legitimate 
when two patients, who provided the same address in Tennessee, 
presented essentially identical prescriptions for large quantities of 
oxycodone 30 and 15, as well as alprazolam 2, which they obtained from 
the same doctors, paid cash for the prescriptions and just happened to 
drop by her pharmacy to fill the prescriptions.
    Next, the Government pursued the same line of questioning regarding 
the 49 prescriptions which were presented by 22 patients and filled by 
Respondent on April 19 and 20, 2010. Tr. 596; GXs 46 and 18. Of note, 
none of the 22

[[Page 79202]]

patients who filled these controlled substance prescriptions was from 
Florida. Rather, the patients were from Ohio, West Virginia, Georgia, 
Tennessee, Kentucky, and Mississippi. Moreover, 40 of the prescriptions 
were written by Dr. Wolff of Deerfield Beach, who registration was 
revoked by this Agency following a hearing at which he was found to 
have violated 21 CFR 1306.04(a).\39\ Each of the patients filled a 
prescription for oxycodone 30, with sixteen of the patients obtaining 
180 dosage units or more, fourteen of the patients also obtained 
prescriptions for alprazolam 2mg, and thirteen of the patients also 
obtained a third prescription for oxycodone 15. See GX 46. Moreover, 
each of the patients paid cash for their prescriptions. Id. at 3-4. 
Here, as well, these out-of-state patients just happened to know to go 
to Respondent, out of all the pharmacies in South Florida, and which 
had been opened for just over two months, to fill their 
prescriptions.\40\
---------------------------------------------------------------------------

    \39\ The other nine prescriptions were written by a doctor in 
Miami. GX 46, at 12.
    \40\ A review of the spreadsheet of Respondent's controlled 
substance dispensings shows that even in the initial months of its 
dispensing activity, filling prescriptions for persons who provided 
non-Florida addresses predominated over filling prescriptions for 
Florida residents. For example, from February 15, 2010 through the 
end of May 2010, Respondent filled 706 controlled substance 
prescriptions for persons who provided a non-Florida address and 
only 152 prescriptions for Florida residents. See GX 2 (line entries 
2-706). Indeed, between February 15 and March 12, 2010 (its first 
month of dispensing as no dispensings occurred on March 13-14), it 
filled controlled substance prescriptions for 42 persons who 
provided addresses in Kentucky, Ohio, West Virginia, Tennessee, and 
North Carolina but only eight Florida residents. Id. (line entries 
2-102). With the exception of three carisoprodol prescriptions, the 
prescriptions were comprised entirely of oxycodone in both 30 and 15 
milligram dosage forms and alprazolam in either the 2 or 1 milligram 
dosage form. Of the patients who filled controlled substance 
prescriptions at Respondent during its first month of dispensing, 43 
of them obtained prescriptions for oxycodone 30 and each paid cash.
---------------------------------------------------------------------------

    Asked whether she thought she was exercising her corresponding 
responsibility to ensure that these prescriptions were issued for a 
legitimate medical purpose, Ms. Jones testified: ``I think I was at the 
time, yes.'' Tr. 599. When subsequently asked if she ``understand[s]s 
those responsibilities differently today,'' Ms. Jones answered:

    Differently today--differently in the sense of I can do more; 
differently, no, in the sense if the prescription is written by the 
prescriber, I don't think it makes it an illegitimate, not a 
legitimate prescription for medical purposes. I think I can do more 
digging to make sure that the patient is going to use it 
appropriately and not make it so that somebody else has access to 
it. I do that by looking at their history that the inspector made me 
aware of in August of 2014, but I still do rely on the prescriber to 
write prescriptions for legitimate medical purposes.

Id. at 599-600. Here again, notwithstanding the obvious and compelling 
evidence that the prescriptions lacked a legitimate medical purpose, 
Respondent continued to deny that the prescriptions were unlawfully 
dispensed.\41\
---------------------------------------------------------------------------

    \41\ Asked about additional sets of prescriptions, Ms. Jones 
adhered to the same theme that she believed that when she filled the 
prescriptions she properly exercised her corresponding 
responsibility, but today, she ``would do more digging.'' Tr. 606. 
She did so no matter how strong the indicia of suspicion were with 
respect to the prescriptions, such as when she was asked about an 
oxycodone prescription that cost her $58.56 and for which she 
charged the patient $1620. Id. at 611-12.
---------------------------------------------------------------------------

    Moreover, at other points in her testimony, Ms. Jones left no doubt 
that she still does not understand her obligations under 21 CFR 
1306.04(a). To be sure, Ms. Jones testified that she ``would shy away'' 
from filling a prescription for a patient who is paying cash. Id. at 
623. However, when then asked if she ``believe[s] there are 
circumstances where a pharmacist should refuse to fill a prescription 
after making the judgment that it is not issued for [a] legitimate 
medical purpose,'' she testified:

    That still leaves us diagnosing whether the patient has pain or 
not. I wouldn't say for legitimate medical purpose. I would say by 
looking at the totality of what the situation is and as much 
information as you can collect and then deciding if you're okay, if 
you feel comfortable filling it or not.

    Id. at 624. While on further questioning Ms. Jones testified that 
``[t]here are circumstances that would cause me to reject a 
prescription,'' she then added that ``I don't think I can make the 
determination whether it's for legitimate medical purposes because I 
would have to say that I'm in that person's body and I know how they 
feel if we're just speaking about pain medications.'' Id. at 625. And 
subsequently, Ms. Jones testified that with respect to pain 
medications, ``I might question the quantity, maybe the duration, but 
for legitimate medical purpose, that would lead me into me having to 
diagnose because I'm someone who will give recommendations and tell you 
what I think, but I can't, I don't think it's a fair statement that you 
could say someone is not in pain.'' Id. at 628.\42\
---------------------------------------------------------------------------

    \42\ The federal courts have also rejected this view. As the 
Fifth Circuit has further explained: `` `a pharmacist can fulfill 
[her] responsibility under [21 CFR] 1306.04 without practicing 
medicine. . . . [A] pharmacist can know that prescriptions are 
issued for no legitimate medical purpose without [her] needing to 
know anything about medical science.' '' United States v. Henry, 727 
F.2d 1373, 1378 (5th Cir. 1984) (quoting Hayes, 595 F.2d at 261 
n.6).
---------------------------------------------------------------------------

    Subsequently, Ms. Jones was asked after if she understood her 
corresponding responsibility under the Controlled Substances Act. Id. 
at 639. Ms. Jones answered:

    Well, I understand that I have a responsibility to make sure 
that patients are safe with the medication they receive. But, you, 
you're saying medical legitimacy. The law is saying that we had a--
to make sure it says medical, it's--the law says medical legitimacy? 
That's what I'm not understanding.

Id.

    When then asked whether she knew ``one way or another'' if she had 
a corresponding responsibility, Ms. Jones answered: ``I did not know 
that the law said that I had to make sure that prescriptions said it 
was legitimate, medically legitimate.'' Id. at 639-40. Ms. Jones then 
admitted that she did not know this even while ``sitting here today.'' 
Id. at 640. When then asked for her ``understanding of what the law 
requires of . . . a pharmacist [who] dispens[es] controlled 
substances,'' Ms. Jones testified ``that I need to make sure that the 
patients are safe and that I need to make sure that the prescription is 
a, a true and correct prescription. That's my understanding of my 
responsibilities.'' Id. at 640-41. And when asked if she has ``any 
responsibility to ensure that the prescription is issued for a 
legitimate medical purpose,'' Ms. Jones testified: ``I thought that was 
the prescriber's responsibility. The person actually writing the 
prescription.'' Id. at 641.
    Thereafter, Ms. Jones was asked whether she ``acknowledge[s]'' that 
she did not exercise her responsibility to ensure that that 
prescriptions at issue ``were issued for a legitimate medical 
purpose?'' Id. at 642. Ms. Jones answered: ``[i]n my scope of what I 
did I, that was not a part of what I was doing anyway if that makes 
sense. That was not something that I thought was my responsibility to 
make sure they were medically legitimate.'' Id. Indeed, when asked 
whether there was any category of the prescriptions discussed in the 
hearing that she thought were medically legitimate, Ms. Jones replied: 
``I can't say that they weren't medically legitimate because I didn't 
have conversations with the patients. So, I can't say that they were or 
were not.'' Id. at 646.
    The ALJ was not impressed by Ms. Jones' testimony. As the ALJ 
explained:

    Ms. Jones purported to accept responsibility for [Respondent's] 
dispensing practices by repeatedly asserting that she did

[[Page 79203]]

what she knew at the time, but now she knows she could have done 
more. But then Ms. Jones demonstrated by her statements that she 
does not fully understand her corresponding responsibility even yet 
today. Thus, there remains no excuse for the Respondent's past 
dispensing conduct and continued lack of knowledge of [her and her 
pharmacists'] corresponding responsibility. . . .

R.D. 72-73 (citing 21 CFR 1306.04(a)).

    I agree. And because Respondent has not credibly accepted 
responsibility for its misconduct, the ALJ did not err when she 
declined to consider Respondent's evidence of its remedial measures. 
See R.D. at 73 (citing cases).
    As found above, the evidence shows that Respondent filled nearly 
3,300 controlled substance prescriptions, the vast majority of which 
presented such compelling evidence that the prescriptions lacked a 
legitimate medical purpose as to support a finding that Respondent's 
pharmacists either knew or were willfully blind to the fact that the 
prescriptions were issued in violation of 21 CFR 1306.04(a). Given the 
scope and duration of Respondent's misconduct, Ms. Jones' failure to 
acknowledge its misconduct, as well as Ms. Jones' testimony which 
demonstrates that notwithstanding this proceeding, she still does not 
understand the scope of a pharmacist's obligations under the CSA, I 
have no confidence that either of Ms. Jones' entities (Total Health 
Pharmacy, L.L.C., and SND Healthcare, L.L.C.) will faithfully comply 
with the CSA if it was granted a registration.\43\ Accordingly, I 
reject Respondent's exceptions and will adopt the ALJ's recommendation 
that I deny the application of Jones Total Health Pharmacy, L.L.C., to 
renew its registration and the application of SND Healthcare, L.L.C., 
for a registration. See R.D. at 75.
---------------------------------------------------------------------------

    \43\ Indeed, this is a case where the proven misconduct is so 
extensive and egregious that even if the ALJ had found that Ms. 
Jones had credibly accepted responsibility (and given weight to the 
evidence of remedial measures), I still would have concluded that 
allowing Respondents to be registered ``would be inconsistent with 
the public interest.'' 21 U.S.C. Sec. Sec.  823(f) and 824(a)(4). 
See also Hatem M. Ataya, 81 FR 8221, 8244 (2016) (``[W]hile 
proceedings under 21 U.S.C. Sec. Sec.  823 and 824 are remedial in 
nature, there are cases in which, notwithstanding a finding that a 
registrant has credibly accepted responsibility, the misconduct is 
so egregious and extensive that the protection of the public 
interest nonetheless warrants the revocation of a registration or 
the denial of an application.'') (citing Fred Samimi, 79 FR18698, 
18714 (2014)).
---------------------------------------------------------------------------

Order

    Pursuant to the authority vested in me by 21 U.S.C. Sec.  823(f) 
and 28 CFR 0.100(b), I order that the application of Jones Total Health 
Pharmacy, L.L.C., for a DEA Certificate of Registration as a retail 
pharmacy be, and it hereby is, denied. I further order that the 
application of SND Healthcare, L.L.C., for a DEA Certificate of 
Registration as a retail pharmacy be, and it hereby is, denied. This 
Order is effective immediately.

    Date: October 31, 2016.
Chuck Rosenberg,
Acting Administrator.
Dana Hill, Esq., for the Government.

Daniel S. Newman, Esq., for the Respondent.

Findings of Fact, Conclusions of Law, and Recommended Decision

I. Introduction

    Administrative Law Judge Gail A. Randall. This proceeding is an 
adjudication governed by the Administrative Procedure Act, 5 U.S.C. 
Sec. Sec.  551 et. seq., to determine whether the Drug Enforcement 
Administration (``DEA'') should deny a pharmacy's application, and 
revoke an associated pharmacy's registration with pending applications 
for renewal of such registration denied under the Controlled Substances 
Act, 21 U.S.C. Sec. Sec.  824(a)(4) and 823(f).

II. Procedural Background

    The Deputy Assistant Administrator, Drug Enforcement Administration 
(``DEA'' or ``Government''), issued an Order to Show Cause (``Order'') 
dated October 6, 2014, proposing to deny the application, number 
W13031979A, for SND Healthcare, LLC, (``SND''), pursuant to 21 U.S.C. 
Sec.  823(f), and to revoke the DEA Certificate of Registration, number 
FJ1733725 for Jones Total Health Pharmacy, LLC, (``Jones 
Pharmacy''),\44\ pursuant to 21 U.S.C. Sec.  824(a)(4), because the 
registration of each entity is inconsistent with the public interest, 
as that term is defined in 21 U.S.C. Sec.  823(f).\45\ [Administrative 
Law Judge Exhibit (``ALJ Exh.'') 1].
---------------------------------------------------------------------------

    \44\ The Order to Show Cause in this matter refers to a Jones 
Total Health Care Pharmacy, but the DEA certificate of registration 
history documents indicate the pharmacy's name as Jones Total Health 
Pharmacy. [cf. ALJ Exh 1 with Gov't Exh. 8]. DI Gonzales testified 
at the hearing that the Order to Show Cause misstated Jones 
Pharmacy's name. [Tr. 111-112]. Therefore, the correct full name of 
the entity involved in this matter is Jones Total Health Pharmacy, 
LLC. [Tr. 112; Gov't Exh. 8].
    \45\ SND Healthcare, LLC, and Jones Total Health Pharmacy, LLC, 
together will be referred to as ``Respondents.''
---------------------------------------------------------------------------

    On November 5, 2014, the Respondents, through counsel, timely filed 
a request for a hearing in the above-captioned matter. [ALJ Exh. 2].
    I, Gail A. Randall, Administrative Law Judge, have been designated 
as the presiding officer in the above-captioned case.
    On January 14, 2015, a Protective Order was issued in this matter. 
[ALJ Exh. 17]. Upon joint request, I issued my Order Modifying The 
Protective Order on January 30, 2015. [ALJ Exh. 18].
    On January 12, 2015, I issued a Prehearing Ruling, which includes 
the parties' stipulations. [ALJ Exh. 16]. On February 4, 2015, I issued 
the Notice of Hearing, informing both parties of the time and place for 
the hearing. [ALJ Exh. 20].
    The hearing was conducted in this matter on March 3, 2015 through 
March 6, 2015, at the Miami Dade Courthouse, Miami, Florida. [Id].
    On April 20, 2015, the Government filed its Proposed Findings of 
Fact and Conclusions of Law (``Govt. Brief''). Also on April 20, 2015, 
the Respondents filed their Proposed Findings of Fact and Conclusions 
of Law (``Resp. Brief'').

III. Issues

    The issues in this proceeding are:
    (1) Whether the record as a whole establishes by a preponderance of 
the evidence that the Drug Enforcement Administration (``DEA'' or 
``Government'') should revoke the DEA Certificate of Registration, 
number FJ1733725, of Jones Total Health Care Pharmacy as a retail 
pharmacy, pursuant to 21 U.S.C. Sec.  824(a) (2006), and deny any 
pending applications for renewal or modification of such registration, 
pursuant to 21 U.S.C. Sec.  823(f) (2006), because its continued 
registration would be inconsistent with the public interest, as that 
term is defined in 21 U.S.C. Sec.  823(f).
    (2) Whether or not the record as a whole establishes by a 
preponderance of the evidence that the DEA should deny the application, 
number W13031979A for a DEA Certificate of Registration for SND 
Healthcare, LLC, as a retail pharmacy pursuant to 21 U.S.C. Sec.  
823(f), because to grant its application would be inconsistent with the 
public interest, as that term is defined in 21 U.S.C. Sec.  823(f). 
[ALJ Exh. 16; Tr. 6].

IV. Findings of Fact

    I find by a preponderance of the evidence the following facts:

A. Stipulated Facts

1. Stipulations About Controlled Substances Dispensed to B.F. and K.W.
    1. On February 17, 2010, Jones Pharmacy dispensed 240 tablets of 
Oxycodone HCL 30 mg, 30 tablets of

[[Page 79204]]

Xanax 2 mg, and 120 tablets of Carisoprodol 350 mg to B.F.
    2. On February 17, 2010, Jones Pharmacy dispensed 240 tablets of 
Oxycodone HCL 30 mg, 30 tablets of Xanax 2 mg, and 180 tablets of 
Oxycodone HCL 15 mg to K.W.
    3. On March 17, 2010, Jones Pharmacy dispensed 240 tablets of 
Oxycodone HCL 30 mg, 180 tablets of Oxycodone HCL 15 mg, 60 tablets of 
Carisoprodol 350 mg, and 30 tablets of Xanax 2 mg to B.F.
    4. On March 17, 2010, Jones Pharmacy dispensed 240 tablets of 
Oxycodone HCL 30 mg, 180 tablets of Oxycodone HCL 15 mg, and 30 tablets 
of Xanax 2 mg to K.W.
    5. On April 14, 2010, Jones Pharmacy dispensed 240 tablets of 
Oxycodone HCL 30 mg, 180 tablets of Oxycodone HCL 15 mg, 60 tablets of 
Carisoprodol 350 mg, and 30 tablets of Xanax 2 mg to B.F.
    6. On April 14, 2010, Jones Pharmacy dispensed 240 tablets of 
Oxycodone HCL 30 mg, 180 tablets of Oxycodone HCL 15 mg, and 30 tablets 
of Xanax 2 mg to K.W.
2. Stipulations About Controlled Substances Dispensed to L.S. and J.S.
    7. On March 12, 2010, Jones Pharmacy dispensed 210 tablets of 
Roxicodone (Oxycodone HCL) 30 mg, 90 tablets of Roxicodone 15 mg, and 
75 tablets of Xanax 2 mg to L.S.
    8. On March 12, 2010, Jones Pharmacy dispensed 210 tablets of 
Roxicodone 30 mg, 90 tablets of Roxicodone 15 mg, and 75 tablets of 
Xanax 2 mg to J.S.
    9. On April 9, 2010, Jones Pharmacy dispensed 210 tablets of 
Roxicodone 30 mg and 90 tablets of Roxicodone 15 mg to L.S.
    10. On April 9, 2010, Jones Pharmacy dispensed 210 tablets of 
Roxicodone 30 mg and 90 tablets of Roxicodone 15 mg to J.S.
    11. On May 6, 2010, Jones Pharmacy dispensed 210 tablets of 
Roxicodone 30 mg, 90 tablets of Roxicodone 15 mg, and 60 tablets of 
Xanax 2 mg to L.S.
    12. On May 6, 2010, Jones Pharmacy dispensed 180 tablets of 
Roxicodone 30 mg, 90 tablets of Roxicodone 15 mg, and 60 tablets of 
Xanax 2 mg to J.S.
    13. On June 2, 2010, Jones Pharmacy dispensed 180 tablets of 
Roxicodone 30 mg, 90 tablets of Roxicodone 15 mg, and 60 tablets of 
Xanax 2 mg to L.S.
    14. On June 2, 2010, Jones Pharmacy dispensed 180 tablets of 
Roxicodone 30 mg, 90 tablets of Roxicodone 15 mg, and 60 tablets of 
Xanax 2 mg to J.S.
3. Stipulations About Controlled Substances Dispensed to D.H. and K.S
    15. On April 13, 2010, Jones Pharmacy dispensed 150 tablets of 
Oxycodone HCL 30 mg, 90 tablets of Oxycodone HCL 15 mg, and 60 tablets 
of Alprazolam 2 mg to D.H.
    16. On April 13, 2010 Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg, 90 tablets of Oxycodone HCL 15 mg, and 60 tablets 
Alprazolam 2 mg to K.S.
    17. On May 17, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg, 90 tablets of Oxycodone HCL 15 mg, and 60 tablets 
of Alprazolam 2 mg to D.H.
    18. On May 17, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg, 90 tablets of Oxycodone HCL 15 mg, and 60 tablets 
of Alprazolam 2 mg to K.S.
4. Stipulations About Controlled Substances Dispensed on April 19 and 
20
    19. On April 19, 2010, Jones Pharmacy dispensed 210 tablets of 
Oxycodone HCL 30 mg to J.C.
    20. On April 19, 2010, Jones Pharmacy dispensed 210 tablets of 
Oxycodone HCL 30 mg to S.H.
    21. On April 19, 2010, Jones Pharmacy dispensed 210 tablets of 
Oxycodone HCL 30 mg to C.L.
    22. On April 19, 2010, Jones Pharmacy dispensed 210 tablets of 
Oxycodone HCL 30 mg to J.B.
    23. On April 19, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg to J.S.
    24. On April 19, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg to C.H.
    25. On April 19, 2010, Jones Pharmacy dispensed 210 tablets of 
Oxycodone HCL 30 mg, 90 tablets of Oxycodone HCL 15 mg, and 60 tablets 
of Alprazolam 2 mg to J.A.
    26. On April 19, 2010, Jones Pharmacy dispensed 210 tablets of 
Oxycodone HCL 30 mg, 90 tablets of Oxycodone HCL 15 mg, and 60 tablets 
of Alprazolam 2 mg to M.T.
    27. On April 20, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg, 30 tablets of Oxycodone HCL 15 mg, 30 tablets of 
Endocet 10/650 mg, and 30 tablets of Alprazolam 2 mg to R.F.
    28. On April 20, 2010, Jones Pharmacy dispensed 60 tablets of 
Oxycodone HCL 15 mg and 30 tablets of Alprazolam 2 mg to S.F.
    29. On April 20, 2010, Jones Pharmacy dispensed 150 tablets of 
Oxycodone HCL 30 mg, 60 tablets of Oxycodone HCL 15 mg, and 30 tablets 
of Alprazolam 2 mg to S.T.
    30. On April 20, 2010, Jones Pharmacy dispensed 150 tablets of 
Oxycodone HCL 30 mg and 30 tablets of Alprazolam 2 mg to J.K.
    31. On April 20, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg, 60 tablets of Oxycodone HCL 15 mg, and 30 tablets 
of Alprazolam 2 mg to G.O.
    32. On April 20, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg to J.T.
    33. On April 20, 2010, Jones Pharmacy dispensed 150 tablets of 
Oxycodone HCL 30 mg, 60 tablets of Oxycodone HCL 15 mg, and 60 tablets 
of Alprazolam 2 mg to B.C.
    34. On April 20, 2010, Jones Pharmacy dispensed 20 tablets of 
Oxycodone HCL 30 mg to E.C.
    35. On April 20, 2010, Jones pharmacy dispensed 150 tablets of 
Oxycodone HCL 30 mg, 60 tablets of Oxycodone HCL 15 mg, and 60 tablets 
of Alprazolam 2 mg to J.H.
    36. On April 20, 2010, Jones Pharmacy dispensed 120 tablets of 
Oxycodone HCL 30 mg, 60 tablets of Oxycodone HCL 15 mg, and 30 tablets 
of Alprazolam 2 mg to M.R.
    37. On April 20, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg, 120 tablets of Oxycodone HCL 15 mg, and 60 Tablets 
Alprazolam 2 mg to R.J.
    38. On April 20, 2010, Jones Pharmacy dispensed 200 tablets of 
Oxycodone HCL 30 mg, 100 tablets of Oxycodone HCL 15 mg, and 75 tablets 
of Alprazolam 2 mg to J.D.
    39. On April 20, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg, 90 tablets of Oxycodone HCL 15 mg, and 30 tablets 
of Alprazolam 2 mg to L.N.
    40. On April 20, 2010, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg, 90 tablets of Oxycodone HCL 15 mg, and 60 tablets 
of Alprazolam 2 mg to A.T.
5. Stipulations About Controlled Substances Dispensed to R.H.
    41. On October 26, 2010, Jones Pharmacy dispensed 90 tablets of 
Carisoprodol 350 mg, 180 tablets of Oxycodone HCL 30 mg, and 112 
tablets of Oxycodone-APAP 10/325 mg to R.H.
6. Stipulations About Controlled Substances Dispensed to D.T.
    42. On February 28, 2011, Jones Pharmacy dispensed 107 tablets of 
Oxycodone HCL 30 mg, 41 tablets of Oxycodone HCL 15 mg, and 30 tablets 
of Xanax 2 mg to D.T.

[[Page 79205]]

7. Stipulations About Controlled Substances Dispensed to R.C., J.C., 
and T.M.
    43. On July 27, 2011, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg and 30 tablets of Xanax 2 mg to R.C.
    44. On July 27, 2011, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg and 30 tablets of Xanax 2 mg to J.C.
    45. On July 27, 2011, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg and 30 tablets of Xanax 2 mg to T.M.
8. Stipulations About Controlled Substances Dispensed to M.H., J.R., 
and W.F.
    46. On August 1, 2011, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg and 30 tablets of Xanax 2mg to M.H.
    47. On August 1, 2011, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg and 30 tablets of Xanax 2 mg to J.R.
    48. On August 2, 2011, Jones Pharmacy dispensed 180 tablets of 
Oxycodone HCL 30 mg and 30 tablets of Xanax 2 mg to W.F.
9. Stipulations About Controlled Substances Dispensed to D.O.
    49. On May 4, 2012, Jones Pharmacy dispensed 30 tablets of 
Clonazepam 1 mg and 180 tablets of Dilaudid (Hydromorphone) 8 mg to 
D.O.
    50. On July 2, 2012, Jones Pharmacy dispensed 30 tablets of 
Clonazepam 1 mg and 180 tablets of Roxicodone HCL 30 mg to D.O.
10. Stipulations About Controlled Substances Dispensed to M.S./S.M \46\
---------------------------------------------------------------------------

    \46\ The parties agree on the stipulations related to the 
patient in question. There is some conflicting documentary evidence 
as to the ordering of this patient's first and last names.
---------------------------------------------------------------------------

    51. On January 11, 2012, Jones Pharmacy dispensed 180 tablets of 
Oxycodone 30 mg to M.S./S.M.
    52. On February 8, 2012, Jones Pharmacy dispensed 180 tablets of 
Oxycodone 30 mg to M.S./S.M.
    53. On March 7, 2012, Jones Pharmacy dispensed 180 tablets of 
Oxycodone 30 mg to M.S./S.M.
    54. On April 4, 2012, Jones Pharmacy dispensed 180 tablets of 
Oxycodone 30 mg to M.S./S.M.
    55. On May 1, 2012, Jones Pharmacy dispensed 180 tablets of 
Oxycodone 30 mg to M.S./S.M.
    56. On May 29, 2012, Jones Pharmacy dispensed 180 tablets of 
Oxycodone 30 mg to M.S./S.M.
    57. On June 26, 2012, Jones Pharmacy dispensed 180 tablets of 
Oxycodone 30 mg to M.S./S.M.
11. Stipulations About Jones Pharmacy's Dispensing of Controlled 
Substances as Enumerated in the Order to Show Cause.
    58. The prescriptions enumerated in the Order to Show Cause were 
issued and filled in the time period of February 15, 2010 through July 
3, 2012.
    59. There are no prescriptions enumerated in the Order to Show 
Cause that were issued or filled after July 3, 2012.
    60. The controlled substances dispensed by Jones enumerated in the 
order to Show Cause were prescribed by physicians who were licensed to 
practice medicine in Florida at the time the prescriptions were written
    61. The controlled substances referenced in Stipulations 1-57 were 
prescribed by physicians who were licensed to practice medicine in 
Florida at the time the prescriptions were written. [ALJ Exh. 21].

B. DEA Investigation

    62. Domingo Gonzales is a Diversion Investigator (``DI'') who has 
worked for the DEA for two and a half years. [Transcript (``Tr.'') 25]. 
DI Gonzales works at the Miami Field Division in Miami, Florida. [Id.]. 
DI Gonzales has completed between 15-20 pharmacy inspections during his 
tenure with the DEA. [Tr. 26-27]. DI Gonzales was tasked with 
conducting an onsite inspection of Jones Total Health Pharmacy in April 
of 2013. [Tr. 27].
    63. Group Supervisor Gayle Lane is a Miami Diversion Group 
Supervisor who has worked for the DEA for 38 years. [Tr. 115-117]. 
Group Supervisor Lane supervises six Diversion Investigators conducting 
investigations of pharmaceutical drug diversion. [Tr. 115]. Group 
Supervisor Lane's supervisory territory includes Monroe, Miami Dade, 
and Broward counties. [Tr. 116]. Recently Group Supervisor Lane has 
also done investigations in the Fort Meyers and Naples area. [Tr. 116]. 
In the last five years, Group Supervisor Lane has conducted close to 
200 investigations. [Tr. 117]. Group Supervisor Lane testified that the 
DEA DI's look for red flags such as people coming in to the pharmacy at 
the same time with identical prescriptions from the same doctor, or 
exorbitant prices for controlled substances. [Tr. 124-125].\47\ 
Exorbitant prices would indicate abuse or diversion because normally 
``people pay with insurance. And these type of narcotics don't cost 
that much money, so that is usually an indication that the patient and 
the pharmacist know that these drugs are going to be diverted, that 
they'd be willing to pay more than $1,000 for one prescription, for 
instance.'' [Tr. 125]. Group Supervisor Lane assigned the Jones 
Pharmacy case to DI Gonzales. [Tr. 122].
---------------------------------------------------------------------------

    \47\ As a caveat, Group Supervisor Lane also testified that she 
did not have any personal knowledge of the controlled substances 
listed in the Order to Show Cause being diverted by the individuals 
to whom they were dispensed to. [Tr. 140].
---------------------------------------------------------------------------

    64. Brian Curtis is a Diversion Investigator who works for the DEA 
in the Miami Field Division. [Tr. 148]. DI Curtis filled in for 
Investigator Gonzales when DI Gonzales was on military leave. [Tr. 148-
149]. DI Curtis was asked to assist with pulling prescriptions, and 
providing them to the pharmacist expert, Dr. Gordon, for review. [Tr. 
149].
    65. DI Curtis pulled all of the prescriptions for the respective 
customers indicated in Government Exhibits 15-24. [Gov't Exh. 15-24].

C. Florida Department of Health Inspector Mary Crane

    66. Mary Crane is a Pharmacy Inspector for the Florida Department 
of Health who works in Broward County and Dade County, Florida. [Tr. 
159]. Ms. Crane inspects pharmacies for compliance with the laws and 
rules of the State of Florida and for a pharmacy's adherence to federal 
laws as well. [Tr. 159]. Ms. Crane also checks to ensure that 
pharmacies are operating in a clean and safe manner, and that they 
comply with the standards of practice in Florida. [Tr. 160]. In the 
past three and a half years, Ms. Crane has completed close to 1,500 
pharmacy inspections in Broward County and Dade County. [Tr. 160]. 
Before she was a pharmacy inspector, Ms. Crane practiced retail 
pharmacy for 33 years. [Tr. 161].
    67. When Ms. Crane inspects prescriptions in the course of her 
duties, she looks for red flags. [Tr. 162]. In determining whether a 
red flag is present on a prescription, Ms. Crane looks at the pattern 
of prescribing, the profile of the patient to see if there is a 
progression from a low to high dose, other medications the individual 
is taking, type of physician that wrote the prescription, and other 
factors such as the patient's age, type of medication, and whether or 
not the prescription was purchased with cash. [Tr. 162]. Ms. Crane 
further testified that there is not a definitive list of things a 
pharmacist is supposed to check. [Tr. 163]. Ms. Crane stated that the 
concept of ``red

[[Page 79206]]

flags,'' not the term, has been present for her entire tenure as a 
pharmacist, 36 years. [Tr. 206, 210].
    68. In 2012, Ms. Crane inspected Jones Pharmacy. [Tr. 164]. Ms. 
Jones told Ms. Crane that she was moving her pharmacy because she was 
going to be compounding creams for the Miami Heat basketball team, and 
needed a store that looked better in a better area. [Tr. 167, 451, 
671].
    69. During the inspection, Ms. Crane found that the majority of 
Jones' business was for Schedule II controlled substances which the 
pharmacy was filling for cash. There was little of the business that 
was for non-controlled substances. [Tr. 164]. Ms. Crane noted that when 
she drove up to Jones pharmacy ``people were loitering in the parking 
lot. It was not in a really nice area, and I was a little bit, when I 
got out of my car, kind of looked around.'' [Tr. 164]. During her 
discussion with Ms. Jones about the pharmacy's proposed move, Ms. Crane 
told Ms. Jones ``you need to leave these pill seekers at the old store 
because that clientele will not come if you have a lot of people 
hanging around that want narcotics.'' [Tr. 167].
    70. Pursuant to her inspection, Ms. Crane filled out an inspection 
form. [Tr. 165-166; Gov't Exh 12]. Ms. Jones signed the first page of 
the report, but the second page including Ms. Cranes' remarks was not 
provided to Ms. Jones. [Tr. 165, 181-182; Gov't Exh 12]. Ms. Crane 
wrote that the ``primary business of the pharmacy is the cash sale of 
narcotics.'' [Tr. 166-167]. Ms. Crane also annotated in her report that 
Jones Pharmacy sold a 180 pill prescription for $1,620. [Tr. 167]. Ms. 
Crane said that a more reasonable price to pay for this type of 
prescription would be $200-$250. [Tr. 168]. Ms. Crane stated that the 
``extraordinary price that people were paying cash for that 
prescription stood out to [her], that not only were the prescriptions . 
. . not [written] for [a] legitimate means but that [Ms. Jones] knew it 
in charging that amount of money.'' [Tr. 167]. Ms. Crane did not note 
any deficiencies with Ms. Jones' biennial inventory. [Tr. 185-186].
    71. Ms. Crane testified that high prices were an indicator of abuse 
and/or diversion because addicts will often sell part of their 
prescription in order to pay the exorbitant amount of money the addicts 
paid to purchase the prescription. [Tr. 169-170]. Ms. Crane also 
testified that she never prepared a written analysis regarding the 
prevailing prices of controlled substances that were sold during the 
period February 2010 through July 2012. [Tr. 181]. Nor was Ms. Crane 
aware of the prices Ms. Jones paid per pill for Oxycodone 30 mg in June 
of 2012. [Tr. 183].
    72. During Ms. Crane's inspection of Jones Pharmacy in August 2014, 
she asked Ms. Jones to produce a drug utilization report. [Tr. 174; 
Gov't Exh 14]. The drug utilization report Ms. Jones produced listed 
the drugs Jones Pharmacy had dispensed by NDC number, and it also had 
the total number of units the pharmacy has dispensed. [Tr. 174; Gov't 
Exh 14]. The report indicated that controlled substances were in the 
top 10 products that Jones Pharmacy sold from January 1, 2010 to August 
29, 2014. [Tr. 175; Gov't Exh. 14]. The amount of profit Ms. Jones made 
from schedule II narcotics during the three and a half year period was 
in excess of $1.2 million. [Tr. 176].
    73. Ms. Crane noted that there was an inspection conducted on April 
14, 2011, where inspector Allen Miller noted that Jones Pharmacy was 
filling controlled substance prescriptions for patients whose home 
addresses were out of state. [Tr. 170-172; Gov't Exh. 13]. Ms. Crane 
said that filling prescriptions for people traveling from out of state 
was a problem indicating diversion. [Tr. 173].
    74. Ms. Crane noted during her inspection that Ms. Jones had 
reported a suspected forgery, and notified the police. [Tr. 186-187]. 
Ms. Crane advised Ms. Jones to keep her file and narrative of the 
event. [Tr. 186; Gov't Exh. 12].
    75. In August of 2014, Ms. Crane inspected Jones Pharmacy again and 
noted that there were no remarks relating to DEA 222 forms, the 
biennial inventory, filling prescriptions for out of state clients, or 
that the pharmacy was dispensing mostly controlled substances. [Tr. 
190-191; Resp. Exh. 8].
    76. During the four inspections conducted by the Florida Department 
of Health, Jones Pharmacy's dispensing and corresponding 
responsibilities were discussed. [Tr. 204; Resp. Exh. 8].

D. 2013 DEA Inspection

    77. The April 2013 inspection of Jones Pharmacy was prompted by Ms. 
Jones' submittal of a request for a change of address. [Tr. 28].
    78. When a registrant wishes to move location, the registrant is 
required to request a change of address with the DEA. [Tr. 28]. When a 
registrant sends a request for change of address to the Miami DEA 
office, the DEA will review data from the automated consolidation 
ordering system (``ARCOS'') \48\ to see if there is any issue with the 
respective pharmacy's Schedule 2 and 3 narcotic ordering practices. 
[Tr. 29, 118]. Looking at the ARCOS data, the DEA reviews the quantity 
and type of controlled substances the pharmacy is ordering. [Tr. 120]. 
After the review of ARCOS data, DEA reviews the prescriptions at the 
pharmacy. [Tr. 118].
---------------------------------------------------------------------------

    \48\ DI Gonzales testified that the ARCOS system is a system in 
which manufacturers and distributors are required to input ``their 
transactions of Schedule 2 controlled substances and Schedule 1 in 
small cases and at the time any Schedule 3 narcotic drugs. [The 
manufacturers and distributors] are required to indicate all their 
sales and purchases of controlled substances in those fields.'' [Tr. 
at 30].
---------------------------------------------------------------------------

    79. In April of 2013, the DEA approved the address change and Ms. 
Lane assigned the pharmacy to Domingo Gonzales. [Tr. 121].
    80. In the summer of 2014, Domingo Gonzales was not able to take 
the lead role on the investigation due to military leave, so Ms. Lane 
assigned DI Brian Curtis to fill in for DI Gonzales. [Tr. 122].
    81. During the April 2013 inspection, DI Gonzales presented Ms. 
Jones with a DEA 82, Notice of Inspection form. [Tr. 32]. Ms. Jones 
reviewed the document and declined to ask questions. [Id.]. DI Gonzales 
and Ms. Richards then asked Ms. Jones for her biennial inventories, 
invoices for schedule 2 or DEA 222 forms for purchases of Schedule 2 
controlled substances, and her schedule 2 controlled substance 
prescriptions. [Id.].
    82. DI Gonzales proceeded to review Ms. Jones' biennial 
inventories, order forms, and invoices. [Tr. 32]. DI Gonzales was not 
able to review all of the orders, because Ms. Jones could not produce 
all of the orders. [Id.].
    83. During his inspection, DI Gonzales reviewed the prescriptions 
for possible red flags. [Tr. 33]. DI Gonzales noticed that on the back 
of some of the prescriptions there was a copy of the purchaser's 
driver's license. In some instances, the license was an out of state 
license. [Tr. 33]. Also with some prescriptions, DI Gonzales noticed 
that they were paid for with cash. [Tr. 33-34]. These were an 
indication of red flags. [Tr. 34].
    84. DI Gonzales also noted that Ms. Jones' biennial inventory was 
missing some of the required information. [Tr. 35]. The inventory was 
supposed to indicate amounts of finished form in each container and the 
amount of commercial bottles that she had on hand during her inventory. 
[Id.]. Ms. Jones' inventory only indicated the name of the controlled 
substances, the strength of the controlled substances, the quantity, 
and one of the NDC numbers. [Id.].
    85. Specifically, Ms. Jones produced two inventories that she 
conducted on November 3, 2011, and April 13, 2013,

[[Page 79207]]

respectively. [Tr. 36; Gov't Exh. 5]. In the November 3, 2011 
inventory, Ms. Jones did not indicate whether the inventory was 
conducted at the beginning, or close of business, as required by the 
Federal Code of Regulations. [Id.]. The time the inventory is taken is 
important for auditing purposes. [Tr. 37]. Ms. Jones also did not 
``indicate the number of tablets per commercial container, that come in 
each commercial container, or the number of commercial containers in 
each that she had on hand.'' [Tr. 36; Gov't Exh. 5]. The number of 
tablets is important for auditing reasons and the prevention of 
diversion. [Tr. 36].
    86. With regard to the April 13, 2013 inventory, the same 
deficiencies as noted in the November 3, 2011 inventory were present. 
[Tr. 38; Gov't Exh. 5].
    87. Ms. Jones was not able to produce all of her orders for 
invoices, because a great deal of the invoices were saved in coded 
electronic format on her computer's desktop.\49\ [Tr. 421; 687-690].
---------------------------------------------------------------------------

    \49\ DI Gonzales testified that the electronic copy of orders 
for invoices appeared as a string of numbers followed by a little 
bit of information, followed again by a string of numbers. This 
sequence would then repeat itself. [Tr. 35].
---------------------------------------------------------------------------

    88. At the conclusion of the inspection, DI Gonzales took all of 
Ms. Jones' controlled substances prescriptions, her invoices for 
schedule 2 controlled substances, and all of Ms. Jones' DEA 222 forms 
for purchases of schedule 2 controlled substances. [Tr. 33].
    89. DI Gonzales testified to orders that were indicated on DEA E222 
forms. [Tr. 39]. These orders were three different orders placed on May 
22, 2012, May 18, 2012, and November 15, 2011. [Tr. 39; Gov't Exh. 6]. 
DI Gonzales prepared the exhibit indicating the individual orders. [Tr. 
39]. DI Gonzales indicated that the May 22, 2012 order, reflected on 
pages 7-10, was done correctly. [Tr. 40].
    90. The order placed on November 15, 2011, was done incorrectly. 
There was no record of how much Ms. Jones received or the date on which 
the order was received. [Tr. 42-43; Gov't Exh. 6 at 1-2]. Likewise, the 
order placed on May 18, 2012, was also deficient. [Gov't Exh. 6 at 3-
6]. It did not indicate how many packages Ms. Jones received or the 
date that she received the ordered packages. [Tr. 43; Gov't Exh. 6 at 
3-6].
    91. In total, there were 480 line items that were done incorrectly 
on Ms. Jones' orders. [Tr. 44].
    92. DI Gonzales testified to reviewing Jones pharmacy's dispensing 
report from February 15, 2010, until July 3, 2012. [Tr. 46; Gov't Exh 
2]. The report was provided in an electronic excel spreadsheet format. 
[Gov't Exh. 2]. Ms. Rodriguez, attorney for Ms. Jones at the time, 
provided DI Gonzales with the dispensing report, which included Jones 
Pharmacy's dispensing history as far back as the day the pharmacy 
opened. [Tr. 46; Gov't Exh. 3].
    93. The dispensing report indicated line item numbers 1 through 
3,300, and ranged from February 15, 2010 until July 3, 2012. [Tr. 47]. 
The report provides prescription information such as the date it was 
filled, the date it was written, the drug and patient information, to 
include the patient's name and date of birth, information regarding how 
much the prescription cost to the pharmacy, and how much the customer 
paid. [Tr. 47]. There were 834 instances where the patient paid above 
$5.00 per pill. [Tr. 61; Govt. Exh. 4]. There were 415 instances where 
the markup was over 1,000 percent. [Tr. 61-62].
    94. When reviewing information of this nature, DI Gonzales looks 
for red flags that stick out. [Tr. 49]. For example, DI Gonzales looks 
for the most popular drug dispensed from the pharmacy, the information 
regarding the customer, the price the pharmacy is actually charging, 
and what the DEA considers ``cocktail drugs.'' \50\ [Tr. 49-50].
---------------------------------------------------------------------------

    \50\ DI Gonzales defined the term ``cocktail drug'' as pain 
medications such as Oxycodone or Hydromorphone combined with an 
Alprazolam 2 milligram or Soma 350 milligram or Carisoprodol. [Tr. 
56]. When DI Gonzales did his calculation, he only used these drugs 
to calculate the total aggregate number of cocktail drugs dispensed. 
[Tr. 56-57].
---------------------------------------------------------------------------

    95. DI Gonzales and the DEA hired Dr. Tracey Gordon to review the 
dispensing records.\51\ [Tr. 50]. To enable Dr. Gordon's analysis of 
the records, DI Gonzales created charts and pivot tables \52\ to 
succinctly display the information. [Tr. 55; Gov't Exh 4].
---------------------------------------------------------------------------

    \51\ Dr. Tracey Gordon holds a Bachelor's of Science degree in 
pharmacy from Florida A&M University, and a Doctorate in pharmacy 
from the University of Florida. [Tr. 216-217; Gov't Exh. 25]. Dr. 
Gordon currently works as a Clinical Hospice Pharmacist. [Tr. 214]. 
Prior to her Hospice experience, Dr. Gordon worked in retail 
pharmacy for 17 years as a pharmacist for Eckerd, Walgreens, and 
Publix in certain Florida Counties. [Tr. 214-215]. Dr. Gordon was 
recognized at the hearing as an expert in retail pharmacy. [Tr. 224; 
see Infra FOF 106-111].
    \52\ DI Gonzales explained that a pivot table is a tool 
available in Microsoft Excel software that allows the user to sort 
through information by topic heading and establish a chart from the 
desired information. [Tr. 54-55].
---------------------------------------------------------------------------

    96. Before Dr. Gordon reviewed the dispensing records, DI Gonzales 
discovered through his analysis of the information that 99% of the 
controlled substances Jones Pharmacy filled were for immediate release 
controlled substances, and 89% of the drugs were for pain medications 
that the DEA considers ``cocktail drugs.'' [Tr. 48, 50; Gov't Exh. 4]. 
DI Gonzales further determined that 49% of the ``cocktail drug'' 
controlled substances were dispensed to out of state customers. [Tr. 
57].
    97. DI Gonzales also determined in his analysis of the dispensing 
records that 93% of the prescriptions for controlled substances were 
paid for with cash. [Tr. 57]. DI Gonzales calculated the markup on the 
controlled substances, and created a spreadsheet to display this 
information. [Tr. 58-59; Gov't Exh. 4]. DI Gonzales determined that 
there were 415 instances where Ms. Jones charged a 1,000% markup on 
these controlled substances. [Tr. 61-62; Gov't Exh. 4].
    98. DI Gonzales also reviewed the top 10 doctors Jones Pharmacy 
dispensed for during the time frame covered in the dispensing report. 
[[Tr. 62; Gov't Exh. 32]. The information revealed that Dr. Randall 
Wolff prescribed 261 prescriptions that Jones Pharmacy subsequently 
filled. [Tr. 63]. DI Gonzales then looked up Dr. Wolff's profile on the 
Florida Department of Health License Certification website, and he 
printed the profile. [Tr. 66; Gov't Exh. 42 at 2-5]. DI Gonzales then 
created a packet for Doctor Wolff that consisted of a printout from 
DEA's internal CSA2 database, and the report from the Florida 
Department of Health License Verification website. [Tr. 66; Gov't Exh. 
42]. In total, the packet was five pages. [Gov't Exh. 42].
    99. DI Gonzales created documents similar to Government Exhibit 42 
for all of Jones Pharmacy's top ten prescribing physicians, including 
Randall Wolff. [Tr. 66-67; Gov't Exh. 33-42]. The purpose for compiling 
this data was to aide Dr. Gordon's analysis of the prescriptions. [Tr. 
63]
    100. DI Gonzales prepared individual dispensing histories for 
customers B.F. and K.F. from Ohio for the purpose of aiding Dr. 
Gordon's analysis of Jones Pharmacy's prescribing practices. [Tr. 69-
70; Gov't Exh. 43].
    101. DI Gonzales prepared similar documents in the same manner for 
the patients listed in Government Exhibits 44-52. [Tr. 72; Gov't Exh. 
44-52]. These documents are printouts of the dispensing report for the 
individuals identified in the Government's Order to Show Cause. [Tr. 
72; Gov't Exh. 44-52; ALJ Exh. 1]. The documents include records of all 
the prescriptions the respective patients obtained from Jones Pharmacy. 
[Tr. 72; Gov't Exh. 44-52].

[[Page 79208]]

    102. Ms. Jones applied for a DEA license in 2013 for another 
pharmacy, SND Healthcare. [Tr. 73]. DI Gonzales was alerted to SND 
Healthcare's application by DEA Group Supervisor Gayle Lane. [Tr. 73]. 
DI Gonzales confirmed that Ms. Jones was the owner of both Jones 
Pharmacy and SND Healthcare by searching the Florida Division of 
Corporations' website, Sunbiz. [Tr. 74-75]. Sunbiz's records are 
publicly available. [Tr. 75].
    103. DI Gonzales also reviewed the Certification of Authenticity 
from the Florida Department of State Division of Corporations for Jones 
Pharmacy, and SND Healthcare, LLC. [Tr. 76; Gov't Exh. 9]. These 
documents showed that Cherese Jones is the only corporate officer for 
both corporations. [Tr. 77; Gov't Exh. 9]. These corporations also 
share a mailing address. [Tr. 77].
    104. DI Gonzales then searched the Florida Department of Health 
database which specifies the pharmacists in charge or pharmacists 
affiliated to the pharmacy. [Tr. 78; Gov't Exh. 10, at 34]. DI Gonzales 
procured these documents to verify the licenses and the owners of 
anyone affiliated with the pharmacy. [Tr. 79] The documents indicate 
that Cherise Jones was the individual applying for the license. [Tr. 
79; Gov't Exh 10, at 6].
    105. In July of 2013, DI Gonzales had a meeting with Ms. Jones and 
her then attorney, Ms. Monica Rodriguez. [Tr. 79-80]. The purpose of 
the meeting was to discuss the red flags and issues that were found 
during DI Gonzales's inspection. [Tr. 80]. At the meeting, DI Gonzales 
offered Ms. Jones an opportunity to surrender her DEA number and 
withdraw the application that she had pending. [Tr. 80]. Ms. Jones 
declined. [Tr. 80].

E. Dr. Tracy Gordon (Government Expert)

    106. Dr. Tracey Gordon is a Clinical Hospice Pharmacist, with a 
little over two years of practice. [Tr. 213-214]. Dr. Gordon works on 
an interdisciplinary team consisting of doctors and nurses. [Tr. 214]. 
The team works to help manage pain and symptoms in hospice patients. 
[Id.].
    107. Dr. Gordon works alongside physicians and makes 
recommendations of controlled substances based on patient symptoms. 
[Id.]. Prior to becoming a clinical hospice pharmacist, Dr. Gordon 
worked in retail pharmacy for 17 years as a pharmacist. Before that, 
Dr. Gordon was a pharmacy tech, clerk, and an intern. [Id.]. As a 
retail pharmacist, Dr. Gordon worked for Eckerd, Walgreens, and Publix. 
[Id.]. Dr. Gordon worked in Leon, Broward, Palm Beach, and Dade 
counties, respectively. [Tr. 215]. Dr. Gordon worked as a pharmacy 
manager and assistant pharmacy manager in some stores. [Id.]. For some 
employers, Dr. Gordon floated from one store to the next.\53\ [Id.]. 
Dr. Gordon testified that she has probably worked in 200 pharmacies. 
[Id.]. Dr. Gordon estimated that she worked alongside at least 100 
pharmacists during her career. [Tr. 215-216].
---------------------------------------------------------------------------

    \53\ Dr. Gordon explained that in retail pharmacy, you can 
either have your own home store, or you can ``float'' to different 
stores. [Tr. 215]. In her retail experience, Dr. Gordon did both. 
[Tr. 215].
---------------------------------------------------------------------------

    108. In her role as a retail pharmacist, Dr. Gordon interacted 
frequently with other pharmacists in the area. [Tr. 216]. Dr. Gordon 
currently holds a consultant license, and regular pharmacy license in 
Florida.\54\ [Tr. 216]. Dr. Gordon obtained her Bachelors of Science 
degree in pharmacy at Florida A&M University, and a Doctorate in 
pharmacy from the University of Florida. [Tr. 216-217; Gov't Exh. 25].
---------------------------------------------------------------------------

    \54\ At the hearing, Dr. Gordon testified that she was licensed 
as a pharmacist in Florida and Georgia. [Tr. 216; Gov't Exh. 25]. 
Dr. Gordon's Georgia license lapsed on December 31, 2014, however. 
[Tr. 290] When confronted on cross examination about this fact, Dr. 
Gordon became hostile and stated that ``her Georgia license has 
nothing to do with this case.'' [Tr. 291]. At one point, Dr. Gordon 
interrupted a dialogue between counsel and the Judge attempting to 
show how her lack of a Georgia pharmacy license was irrelevant to 
this case. [Tr. 292]. As counsel for Respondents rightly pointed 
out, the Government highlighted certain credentials of Dr. Gordon on 
direct examination; one of those being that Dr. Gordon is licensed 
as a pharmacist in Georgia. While I recognize that this case deals 
with Dr. Gordon's expertise as a retail pharmacist in Florida, I 
find paramount to Dr. Gordon's credibility that her credentials 
accurately reflect the licenses she currently holds. If Doctor 
Gordon's Georgia Pharmacy license was so idle and irrelevant that 
she let it lapse, then surely it should be left off of her 
curriculum vitae. Despite this fact, I find Dr. Gordon's opinions 
credible to the limited extent that they deal with the practice of 
retail pharmacy in Florida.
---------------------------------------------------------------------------

    109. In her professional experience, Dr. Gordon has become familiar 
with issues surrounding the abuse or diversion of controlled 
substances. [Tr. 218]. Dr. Gordon acknowledged that there is no 
comprehensive written list of issues a pharmacist may encounter during 
his practice. [Tr. 218]. Dr. Gordon stated ``it's just what you do. You 
just see, you have to determine whether a prescription is for a 
legitimate medical purpose to protect your patient because that's what 
we're here to do.'' [Tr. 218].\55\
---------------------------------------------------------------------------

    \55\ In a related part of her testimony, Dr. Gordon stated 
``[p]harmacists have known from the beginning of time that a 
prescription should be for a legitimate medical purpose. That's our 
purpose. That's one of our jobs.'' [Tr. 234]. Dr. Gordon also 
testified that Florida pharmacists were aware of red flags of abuse 
and diversion in 2010. [Tr. 240].
---------------------------------------------------------------------------

    110. Dr. Gordon has not sat on any boards of pharmacy, a board or 
organization that sets educational policy for pharmacists, and is not 
currently dispensing pharmaceuticals. [Tr. 220-222].
    111. Dr. Gordon was recognized as an expert in retail pharmacy.\56\ 
[Tr. 224].
---------------------------------------------------------------------------

    \56\ During her cross examination, Dr. Gordon was asked about 
Florida pharmacists' general knowledge of red flags. [Tr. 323]. Dr. 
Gordon stated that she knew of Florida pharmacists' general 
knowledge of red flags because she spoke to pharmacists in her 
network, and watched a reality show broadcast on national television 
that depicted diversion in Broward and Dade Counties. [Id.]. When 
asked about the identities of the independent pharmacists Dr. Gordon 
spoke to in 2010, Dr. Gordon became hostile stating ``Well let's 
see, do you remember everyone you speak to back in 2010? I do 
remember there's this one pharmacist who used to come into Publix 
all the time and we talked about it all the time'' and ``[h]ow about 
my father? . . . My father is an independent. He worked for 
independent for years.'' [Tr. 324]. Notwithstanding the above listed 
statements, Dr. Gordon's experience infers that she had a great deal 
of interaction with Florida Pharmacists during her career, including 
the years 2010 through 2012. And despite her inability to articulate 
specific examples, it follows that Dr. Gordon was generally aware of 
Florida pharmacists' knowledge of red flags because she had 
extensive interaction with many pharmacists during the applicable 
time period. For this reason, I find Dr. Gordon's testimony 
regarding what Florida pharmacists knew from 2010-2012 credible and 
persuasive.
---------------------------------------------------------------------------

    112. Dr. Gordon testified that in order to ensure that a 
prescription was issued for a legitimate medical purpose, a pharmacist 
must check the dose, check the quantity, see what type of doctor wrote 
the prescription, and look at the patient's address. [Tr. 226]. Dr. 
Gordon stated that in order to properly check the prescription, the 
pharmacist must be a ``judge of the person too, to see the person, to 
make sure that's what they need.'' \57\ [Id.].
---------------------------------------------------------------------------

    \57\ Dr. Gordon testified that it was possible some of Jones' 
patients were drug dealers or drug addicts. [Tr. 340]. When asked 
about her experience with drug addicts or drug users, Dr. Gordon 
stated ``[a]ctually I was in a group with a bunch of drug addicts in 
my church. Yes, I was with them for two years and I helped them.'' 
[Tr. 342]. Dr. Gordon admitted that she did not have any formal 
social work degrees or drug counseling training. [Id.]. In this 
vein, I afford Dr. Gordon's testimony no weight as it relates to 
whether or not Jones' patients were drug dealers or addicts because 
Dr. Gordon has no personal knowledge of Jones' patients. Dr. 
Gordon's testimony is only credible in that it shows the 
prescriptions Jones Pharmacy filled presented red flags for a 
variety of reasons. [Tr. 342].
---------------------------------------------------------------------------

    113. Another concern to Dr. Gordon is when patients ask you not to 
bill their insurance company and to pay cash for the prescription 
instead. [Id.]. That to Dr. Gordon is one of the biggest signs of 
possible abuse or diversion. [Id.].
    114. Dr. Gordon explained the tools that are available to the 
pharmacist in preventing diversion. [Tr. 227]. One such tool is E-
FORCSE. [Id.]. E-FORCSE is a program that was created

[[Page 79209]]

by the state of Florida so that a pharmacist could see if a patient was 
either doctor shopping or pharmacy shopping. [Id.]. The program shows 
other pharmacies where the patient went to fill prescriptions, and the 
medication and controlled substances he received. [Tr. 228]. Dr. 
Gordon's normal procedure when she receives a prescription is to check 
if the patient has visited her pharmacy before. If the patient has not, 
then Dr. Gordon will look for the patient's profile in the E-FORCSE 
program. [Tr. 227-228].
    115. Dr. Gordon also stated that it was important to know the scope 
of a physician's practice, because deviation from the practice area 
could indicate a possible red flag.\58\ [Tr. 228-229]. Dr. Gordon 
stated that if a pharmacist does not know the prescriber, there are 
other tools the pharmacist can use to view a prescriber's specialty. 
[Tr. 228]. Dr. Gordon explained that Publix had a National Provider 
Identifier (``NPI'') system which allowed the pharmacist to look up a 
doctor and their specialty. [Id.]. For pharmacies without an NPI, Dr. 
Gordon stated that a pharmacist could also go to the Department of 
Health website and look up the prescriber's specialty as well. [Tr. 
228].
---------------------------------------------------------------------------

    \58\ During her cross-examination Dr. Gordon stated that it is 
``frowned upon'' and ``unethical'' for a doctor to write a 
prescription for a reason outside of his particular scope of 
practice. [Tr. 334-335]. When questioned along these lines, Dr. 
Gordon could not produce a rule or authority for these contentions. 
[Id.]. Here, I afford no weight to Dr. Gordon's conclusions that it 
is ``unethical'' or ``frowned upon'' for a physician to write a 
prescription outside his normal scope of practice, for Dr. Gordon 
presented no authority, rule, or basis for her knowledge that would 
corroborate these assertions. I do, however, recognize and find 
credible Dr. Gordon's testimony that a physician prescribing outside 
their normal scope of practice presents a ``red flag'' when there is 
a high volume of controlled substances prescribed by a doctor 
repeatedly operating outside his scope of practice. [Tr. 228-229; 
379]. In this instance, Dr. Gordon noted such a pattern by utilizing 
and sorting through DI Gonzales' Microsoft excel pivot tables. [Tr. 
379-380].
---------------------------------------------------------------------------

    116. Dr. Gordon explained that with proper pain management, ``the 
patient should present a prescription for a long acting plus a short 
acting [medication]. And the rule of thumb is, you know, usually no 
more than two to three breakthrough doses per day. So really a short 
acting prescription if the patient is being managed chronically should 
not exceed maybe three tablets a day or 90 pills a month.'' [Tr. 229].
    117. Dr. Gordon further testified that some drugs, like Oxycodone 
and Hydromorphone can be a red flag themselves. [Tr. 230]. Dr. Gordon 
testified to an IMS Institute of Healthcare Informatics report that was 
admitted at the hearing. [Tr. 287-288; Gov't Exh. 29]. Dr. Gordon 
stated that the IMS report indicates that the national average for cash 
sales of prescriptions dispensed between the years 2007 to 2011 is six 
percent. [Tr. 288; Gov't Exh at 42].
    118. Dr. Gordon testified that there are circumstances where a 
pharmacist can fill prescriptions despite the presence of one or more 
of these red flags. [Tr. 231]. This can be accomplished by speaking to 
the patient, speaking to the caregiver, speaking to the physician's 
office. [Tr. 231].
    119. Dr. Gordon stated that as a retail pharmacist, she never set 
prices for any medications. [Tr. 297].
    120. In 2010, Dr. Gordon was asked by Group Supervisor Gayle Lane 
and DI Domingo Gonzales to look at Jones Pharmacy's prescriptions to 
determine if Cherise Jones did anything wrong in filling them. [Tr. 
240]. Dr. Gordon was asked to look at Jones Pharmacy's prescriptions 
and dispensing report, and determine whether or not she would have 
filled the prescriptions at issue. [Tr. 240-241, 301]. Dr. Gordon 
prepared a report that described certain red flags that she saw with 
Jones Pharmacy's prescriptions. [Tr. 305]. Dr. Gordon testified that 
some of the prescriptions presented red flags that could not be 
conclusively resolved. [Tr. 241].

F. Red Flags Within Jones Pharmacy's Prescriptions

    121. There is no one place where a registrant can go to view a 
published list of ``red flags.'' [Tr. 140]. This includes the DEA 
Pharmacy Manual, or the DEA's instructions on operating a pharmacy. 
[Tr. 140-141]. Supervisor Lane testified that there is no place where 
pharmacists can find a comprehensive list of ``red flags'' because the 
red flags are changing in various parts of the country. [Tr. 142]. 
Supervisor Lane said that recognizing these flags was ``common sense on 
a pharmacist's part,'' and that DEA cannot publish a definitive list of 
red flags because ``[p]harmacy practice isn't a checkoff list, and the 
red flags change.'' [Tr. 142-143].
    122. Jones Pharmacy filled prescriptions for patients B.F. and K.W. 
These two individuals presented identification from Ohio on the same 
street. [Tr. 243; Gov't Exh. 15, 43].\59\ The patients were seeing the 
same doctor in Fort Lauderdale, the prescriptions were written on the 
same date, and the prescriptions were filled at the same time for 
common cocktail medications: Oxycodone 30, Oxycodone 15, Xanax 2, and 
Carisoprodol. Dr. Gordon stated that the dosing in these prescriptions 
were red flags because with proper pain management, a person normally 
has a long acting medication plus a short acting pain medication. [Tr. 
244; Gov't Exh. 15, 43] In this case, both Oxycodone 30 and Oxycodone 
15 were dispensed. [Tr. 244]. There is no need, however, to issue these 
two different strengths of this prescription because Oxycodone 30 could 
be split in half to achieve the proper dose. [Tr. 244-245; Gov't Exh. 
15, 43]. Further, Dr. Gordon testified that a combination of Oxycodone 
and Xanax was a red flag because the two medications accentuate each 
other making euphoric effects. Dr. Gordon testified that there was 
nothing Jones Pharmacy could have done to resolve all of these red 
flags when presented together.\60\ [Tr. 243; Gov't Exh. 15, 43].
---------------------------------------------------------------------------

    \59\ Government Exhibits 43 through 54 are printouts of the 
dispensing report that indicate the dispensing history for the 
customers whose prescriptions are identified in the order to show 
cause. [Tr. 72]. When counsel for the Government introduced a set of 
prescriptions in Government Exhibits 15 through 24, he also 
introduced the correlating customer's dispensing history in 
Government Exhibits 43-54. [Tr. 72] The exhibits were prepared this 
way to avoid the use of an electronic spreadsheet. [Tr.70].
    \60\ In Government Exhibit 15 at 1, there was a handwritten 
notation stating that the prescription was verified by Angie. [Tr. 
243-244]. Dr. Gordon testified that this only indicated that someone 
at Jones pharmacy called to make sure the doctor wrote the 
prescription, not that Jones Pharmacy tested whether this 
prescription was for a legitimate medical purpose. [Tr. 244].
---------------------------------------------------------------------------

    123. Jones Pharmacy filled prescriptions for patients that traveled 
from North Carolina to see doctors in Deerfield Beach. [Tr. 247-248; 
Gov't Exh. 16, 44]. Dr. Wolff, a pulmonologist, and Dr. Nuanger, a 
urologist, issued multiple prescriptions for Oxycodone 15 mg, 30 mg, 
and Xanax 2 mg. [Tr. 248 Gov't Exh. 16, 44]. Each time, Jones Pharmacy 
was paid cash for these prescriptions. [Tr. 248]. Dr. Gordon testified 
that it was not normal to see prescriptions from a urologist for 
combinations of Oxycodone and Xanax month after month. [Tr. 249; Gov't 
Exh. 16, 44]. Likewise, Dr. Gordon testified that it was not typical to 
see a pulmonologist issue prescriptions for Oxycodone and Xanax, 
especially since these patients were receiving these prescriptions 
repeatedly, month after month. [Tr. 249; Gov't Exh. 16, 44]. Dr. Gordon 
testified that there was nothing Jones Pharmacy could have done to 
resolve the red flags present in these prescriptions. [Tr. 248; Gov't 
Exh. 16, 44].
    124. Jones Pharmacy filled prescriptions for D.H. and K.S. [Tr. 
250; Gov't Exh. 17, 45]. These patients

[[Page 79210]]

presented identification which indicated they lived at the same address 
in Tennessee. [Tr. 250; Gov't Exh. 17, 45]. Jones dispensed common 
cocktail drugs, Oxycodone 30 mg, Oxycodone 15 mg, and Xanax 2 mg to 
D.H. and K.S. [Tr. 250; Gov't Exh. 17, 45]. Both patients were seeing 
doctors in Opa Locka, Florida. [Tr. 250; Gov't Exh. 17, 45]. The 
patients paid for these prescriptions with cash. [Tr. 250]. Dr. Gordon 
testified that there was nothing Jones Pharmacy could have done to 
resolve the red flags present in these prescriptions. [Tr. 250; Gov't 
Exh. 17, 45].
    125. Ms. Jones testified to prescriptions for patient D.H. and 
patient K.S. which indicated the patients' diagnosis. [Tr. 515-517; 
Gov't Exh. 17, at 1, 9]. Both prescriptions listed ``chronic back 
pain'' on their front side in handwriting. [Gov't Exh. 17, at 1, 9]. 
The back of these prescriptions indicated that the patients had the 
same address. [Gov't Exh. 17, at 2, 10]. With regard to the similar 
addresses, Ms. Jones admitted that at the time these prescriptions were 
filled it was ``not something that [she] actually probably noticed.'' 
[Tr. 518]. Ms. Jones stated that looking at the addresses is something 
now that she looks at more closely. [Tr. 518-519]. Ms. Jones testified 
that she is not aware of this or any prescription dispensed at the 
pharmacy being diverted. [Tr. 517].
    126. Jones Pharmacy filled prescriptions for patients on two dates 
in April of 2010 where red flags were present. [Tr. 251; Gov't Exh. 
18,46]. All of the prescriptions filled on April 19, 2010 and April 20, 
2010, were from patrons who lived out of state. [Tr. 251; Gov't Exh. 
18,46]. Specifically, the patrons lived in Ohio, West Virginia, 
Georgia, Tennessee, Kentucky, and Mississippi. They were prescribed the 
typical cocktail medications Oxycodone 15, Oxycodone 30, and Xanax 2. 
[Tr. 251; Gov't Exh. 18, 46]. There was also some Percocet sporadically 
prescribed therein. [Tr. 251- 252; Gov't Exh. 18,46]. All of the 
patients were driving to either Miami or Deerfield Beach and seeing a 
couple of doctors, including Dr. Wolff, the pulmonologist. [Tr. 252; 
Gov't Exh. 18,46]. Dr. Gordon testified that there was nothing Jones 
Pharmacy could have done to resolve the red flags present in these 
prescriptions. [Tr. 251-252; Gov't Exh. 18, 46].
    127. Jones Pharmacy filled prescriptions where red flags were 
present on October 26, 2010. [Tr. 252-253; Gov't Exh. 19, 47]. The 
patient these prescriptions were dispensed to lived in Panama City, 
approximately 10 hours away from Jones Pharmacy. [Tr. 253; Gov't Exh. 
19, 47]. The medications were prescribed to a 56-year-old man, by a 
pediatrician, and consisted of Oxycodone 30 mg, Oxycodone-APAP 10/325 
mg, and Carisoprodol 350 mg. [Tr. 253; ALJ Exh. 21 at 4]. Dr. Gordon 
testified that there was nothing Jones Pharmacy could have done to 
resolve these flags. [Tr. 257-258; Gov't Exh. 19, 47].
    128. Jones Pharmacy filled prescriptions for patient D.T. on 
February 28, 2011. [Tr. 265; Gov't Exh. 20, 48]. The prescriptions were 
for Oxycodone 30 mg, Oxycodone 15 mg, and Alprazolam 2 mg. [Tr. 266]. 
The prescription indicated that the patient is from West Virginia. [Tr. 
265-266; Gov't Exh. 20, 48]. The prescribing doctor, Dr. Karten, is a 
Gynecologist, or OB/GYN. [Tr. 268; Gov't Exh. 20, 40, 48]. Patient 
D.T., however, is a male. [Tr. 268]. This indicates that Dr. Karten is 
prescribing outside the scope of his practice. [Tr. 268]. Dr. Gordon 
testified that there was nothing Jones Pharmacy could have done to 
resolve the red flags present in these prescriptions. [Tr. 268; Gov't 
Exh. 20, 48].
    129. Jones Pharmacy filled prescriptions for three different 
individuals on July 27, 2011. [Tr. 269; Gov't Exh. 21, 49]. The 
prescriptions were filled for three different patients from West Palm 
Beach who traveled to Wilton Manors, Florida, to obtain similar 
prescriptions. [Tr. 269; Gov't Exh. 21, 49]. The prescriptions were 
prescribed on the same date for Oxycodone 30, Xanax 2, and Oxycodone 
15. [Tr. 269; Gov't Exh. 21, 49]. The patients all paid for the 
prescriptions in cash. [Tr. 269; Gov't Exh. 21, 49]. Dr. Gordon 
testified that there was nothing Jones Pharmacy could have done to 
resolve the red flags present in these prescriptions. [Tr. 270; Gov't 
Exh. 21, 49].
    130. Jones Pharmacy filled prescriptions for three patients on 
August 1, 2011. [Tr. 270; Gov't Exh. 22, 50]. These prescriptions were 
filled for patients from West Palm Beach, Florida, who drove to 
Sunrise, Florida, to obtain these prescriptions for cocktail 
medications. [Tr. 270; Gov't Exh. 22, 50]. After obtaining identical 
prescriptions on the same day from the same doctor, these patients 
drove to Jones Pharmacy to have them filled. [Tr. 270; Gov't Exh. 22, 
50]. The patients presented prescriptions for Oxycodone 30 mg and Xanax 
2 mg. [Tr. 271; Gov't Exh. 22, 50]. Dr. Gordon stated that this 
appeared to be an instance where the doctor was ``rubber stamping'' the 
prescriptions, there was no individualized treatment. [Tr. 271; Gov't 
Exh. 22, 50]. Dr. Gordon further testified that Xanax 2 mg is a very 
high dose of Xanax.\61\ Dr. Gordon testified that there was nothing 
Jones Pharmacy could have done to resolve the red flags present in 
these prescriptions. [Tr. 272; Gov't Exh. 22, 50].
---------------------------------------------------------------------------

    \61\ Dr. Gordon testified that in her experience as a Clinical 
Hospice Pharmacist catering to terminal patients, she rarely sees 
prescriptions for Xanax 2 mg because it is such a high dose of 
Xanax. [Tr. 272].
---------------------------------------------------------------------------

    131. Ms. Jones testified that at the time the above described 
prescriptions were presented, she had no concerns with the 
prescriptions, including the distances the patients traveled to the 
pharmacy. [Tr. 528-529]. In fact, Ms. Jones testified that these 
prescriptions indicated that she and a pharmacy technician wrote on the 
prescriptions verifying the diagnosis. [Tr. 526-527]. Ms. Jones stated 
that with her current knowledge, if she was presented with the same 
prescription today, she would look at the patient's address, look at 
the type of doctor, the monitoring system E-FORCSE, and have the 
patient explain the reason for filling the prescription at Jones 
Pharmacy if he traveled a long distance. [Tr. 529-530].
    132. Jones Pharmacy filled prescriptions for repeat customer D.O. 
on multiple occasions. [Tr. 273; Gov't Exh. 23, 51]. D.O. presented 
identification that indicated his address is in Pompano Beach, Florida. 
[Tr. 273; Gov't Exh. 23, 51]. D.O. drove to Miami to see a doctor, and 
then back up to Fort Lauderdale to Jones Pharmacy to have the 
prescription filled. [Tr. 273; Gov't Exh. 23, 51]. D.O. obtained 
Hydromorphone 8 mg and Clonazepam 1 mg. [Tr. 273; Gov't Exh. 23, 51]. 
Hydromorphone 8 mg and Clonazepam 1 mg are common cocktail medications. 
[Tr. 273]. The doctor who provided D.O. these medications, Ronald H. 
Thompson, M.D., specializes as an obstetrics and gynecologist, an OB/
GYN. [Tr. 274; Gov't Exh. 38]. D.O. is a male patient. [Tr. at 274]. 
During his first visit to Jones Pharmacy, D.O. paid $900 for 180 
tablets of Hydromorphone. [Tr. 274]. On his second visit, he paid $1620 
for 180 tablets of Hydromorphone 8 mg. [Tr. 275]. Dr. Gordon stated 
that these factors indicated Jones Pharmacy knew that ``these 
medications were diverted and [that] the patron was taken advantage 
of'' by Jones Pharmacy by charging such high prices. [Id.]. Dr. Gordon 
testified that there was nothing Jones Pharmacy could have done to 
resolve the red flags present in these prescriptions, and these 
prescriptions could not have been filled in compliance with Jones 
Pharmacy's duties. [Tr. 275; Gov't Exh. 23, 51].

[[Page 79211]]

    133. Jones Pharmacy filled prescriptions for patient M.S./S.M. who 
lives in Deerfield Beach, Florida. M.S./S.M. traveled north to Boca 
Raton, Florida, to see a doctor, then traveled south to Jones Pharmacy 
to have the prescriptions filled. [Tr. 276; Gov't Exh. 24, 52]. The 
prescriptions filled were Oxycodone 30 mg, and the doctor's signature 
appeared to be stamped, not signed. [Tr. 276; Gov't Exh. 24]. Dr. 
Gordon testified that this indicates that Oxycodone 30 mg is a 
medication that this Doctor regularly prescribes. [Tr. 277]. M.S./S.M. 
paid between $1080--$1980 for a 180 pill prescription. [Tr. 277]. Dr. 
Gordon stated that this indicated that ``the pharmacist was aware of 
what she was charging and [that she was] taking advantage of patrons, 
of drug addicts or drug dealers.'' [Tr. 277]. Dr. Gordon further stated 
that there was nothing Jones Pharmacy could have done to resolve the 
apparent red flags in these prescriptions. [Tr. 279].
    134. Ms. Jones testified about the verifications that were 
conducted for these prescriptions. [Tr. 533; Gov't Exh. 24]. Ms. Jones 
confirmed that the prescriptions were verified with the prescriber for 
the diagnosis. [Tr. 534]. Ms. Jones confirmed that the prescriptions 
appear to have been stamped with the prescribing Doctor's signature. 
[Tr. 534-536].
    135. With regard to the above listed prescriptions at issue in this 
matter, Ms. Jones testified that ``we may have made mistakes that 
people may call dumb, naive, stupid, but it was not our intent to put 
stuff in the hand of other people.'' [Tr. 531]. Ms. Jones further 
stated ``I would have done stuff different if it was, if it's now, I 
would do it different.'' [Tr. 532]. Ms. Jones also expressed confusion 
about her corresponding responsibility when questioned on the topic. 
She stated ``I did not know that the law said that I had to make sure 
that prescriptions said it was legitimate, medically legitimate.'' [Tr. 
640]. When asked if there were circumstances that would cause Ms. Jones 
to reject a prescription, Ms. Jones stated ``[t]here are circumstances 
that would cause me to reject a prescription. I don't think I can make 
the determination whether it's for a legitimate medical purposes 
because I would have to say that I'm in that person's body and I know 
how they feel if we're speaking just about pain medications.'' [Tr. 
625].
    136. Ms. Jones admitted that ``she could have done things a lot 
different.'' [Tr. 579]. Ms. Jones stated that she was aware of her 
responsibility for public safety, but that she didn't think at the time 
that the prescriptions were issued for a non-legitimate medical 
purpose. Ms. Jones stated that she thought what she did was enough in 
reconciling the prescriptions. [Tr. 579] Now, however, Ms. Jones knows 
that she could have, and should have, done more.\62\ [Tr. 580].
---------------------------------------------------------------------------

    \62\ On cross examination, Ms. Jones repeatedly stated that 
there was more she could have done to ensure the legitimacy of the 
prescriptions at issue. [Tr. 579-580, 582-583, 585-586, 588, 590-
591, 593-596, 599-601, 608-609, 620-621, 623-624]. Ms. Jones 
admitted that her ``process wasn't great for looking at if [a 
prescription] was issued for [a] legitimate medical purpose.'' [Tr. 
580]. The process Ms. Jones used in 2010 only involved her calling 
the prescribing doctor's office for verification that the doctor 
wrote the prescription. [Tr. 581].
---------------------------------------------------------------------------

    137. In 2010, Jones Pharmacy made a total gross margin of 
$530,483.06 on the sales of controlled substances. [Tr. 651; Resp. Exh. 
13, at 40]. In 2010, Jones pharmacy made a total gross margin of 
$10,188.89 on the sales of non-controlled substances. [Tr. 652; Resp. 
Exh. 14, at 25]. Ms. Jones testified that in 2010, controlled substance 
sales made up the primary sources of her income. [Tr. 653]. Ms. Jones 
stated that this amount of controlled substance sales for an 
independent pharmacy was normal in 2010. [Tr. 653]. In 2010, Ms. Jones 
conversed with a Walmart pharmacist in Jacksonville, an independent 
pharmacist in Fort Lauderdale, and an independent pharmacist in Miami 
on this topic. [Tr. 655-656]. These pharmacists told Ms. Jones that 
this level of controlled substance sales was normal. [Tr. 654-655].
    138. In 2011, Jones Pharmacy filled slightly less than 1,100 
prescriptions for controlled substances. [Tr. 666]. Jones Pharmacy made 
a total gross margin of $439,990 on the sales of these controlled 
substances. [Tr. 666-667; Resp. Exh. 15, at 25]. In 2011, Jones 
Pharmacy made a total gross margin of $38,241 on the sales of non-
controlled substances. [Tr. 667; Resp. Exh. 16, at 66].
    139. In 2012, Jones Pharmacy filled 720 controlled substance 
prescriptions for a profit of $316,942. [Tr. 669-670; Resp. Exh. 17, at 
19]. In 2012, Jones Pharmacy made a total gross margin of $58,123 on 
the sales of non-controlled substances. [Resp. Exh. 18, at 64].
    140. From April 2013 to December 2013, Jones pharmacy dispensed 213 
prescriptions for controlled substances for a profit of $25,556.69. 
[Tr. 670-671; Resp. Exh 19, at 8].
    141. In 2010, Jones pharmacy did not have any written policies 
related to the filling of prescriptions for controlled substances as it 
had to do with the legitimacy of prescriptions. [Tr. 656].
    142. In 2011 and 2012, Jones Pharmacy filled more prescriptions for 
non-controlled substances than controlled substances. [Tr. 708; Resp. 
Exh. 4, 15, 16,17, 18].
    143. In 2013, Jones Pharmacy filled more prescriptions in non-
controlled substances than controlled substances. [Tr. 709; Resp. Exh. 
4, 19, 20].

G. Ms. Cherese Jones

    144. Ms. Jones is the sole owner of Jones Pharmacy and SND 
Healthcare. [Tr. 570; Gov't Exh 9, 10]. Jones Pharmacy has always been 
under the management of Ms. Jones. [Tr. 571]. Ms. Jones is the 
Registered Agent, the Florida Community Pharmacy Permit applicant, 
managing member, and authorized representative who submitted the 
Applications By Foreign Limited Liability Company For Authorization To 
Transact Business in Florida for both Jones Pharmacy and SND 
Healthcare. [Gov't Exh. 9, 10].
    145. Ms. Jones works at Jones Total Health Pharmacy. [Tr. 385]. 
Jones Pharmacy is a community pharmacy in Fort Lauderdale. [Id.]. Ms. 
Jones holds current pharmacist licenses in Florida, Pennsylvania, 
Nebraska, Arkansas, Tennessee and Kentucky. [Tr. 385-386; Resp. Exh 1]. 
Jones Pharmacy has a current license with the Florida Department of 
Health, Division of Medical Quality Assurance. [Tr. 387; Resp. Exh. 2-
3].
    146. Ms. Jones sent a letter to her congresswoman and two senators 
in Florida based on the delay she was experiencing with the DEA 
approving her move from one location to the other. [Tr. 87]. DI 
Gonzales was aware of Ms. Jones' congressional inquiries at the time he 
conducted the pharmacy inspection. [Tr. 87]. In the letters to her 
congressional representatives urging action on behalf of the DEA to 
change her pharmacy's address, Ms. Jones stated that she was `` `lucky' 
to move her business to a `better environment' where she could `go in 
the parking lot and not worry about smelling urine or seeing people 
hanging out on the sidewalk.' '' [Resp. Exh. 5 at 2, 6 at 2, 7 at 2].
    147. Ms. Jones graduated from Florida A&M University with a doctor 
of pharmacy degree in 2000. [Tr. 392; Resp. Exh. 1].
    148. After graduation, Ms. Jones completed two American Society of 
Health Systems (ASHP) Pharmacists residencies. [Tr. 392-393]. The ASHP 
residencies are post-graduate volunteer training that a candidate is 
matched for. [Tr. 392]. Ms. Jones did her ASHP residency at Jackson 
Memorial Hospital, Miami, Florida. [Tr. 393-394; Resp. Exh 1].
    149. Ms. Jones' first residency was in pharmacy practice, and it 
focused mainly on adults. [Tr. 394]. The second

[[Page 79212]]

residency Ms. Jones completed was for pediatrics. [Tr. 395]. Following 
her residency at Jackson, Ms. Jones moved to Pennsylvania where she 
worked at a children's hospital and did some part-time rotations at a 
Walgreens. [Tr. 396].
    150. After ten months in Pennsylvania, Ms. Jones moved back to 
Florida and began working at Miami Children's Hospital. [Tr. 400]. Ms. 
Jones worked at Miami Children's hospital for two years. [Tr. 407]. 
Following Miami Children's Hospital, Ms. Jones worked as a pharmacist 
for various employers, including Target, until she was hired by 
Community Health of South Florida (``CHI''). [Tr. 408]. CHI is a 
federally qualified health center. [Id.]. At CHI, Ms. Jones supervised 
three pharmacy managers, and numerous staff pharmacists and 
technicians. [Tr. 408-409].
    151. Ms. Jones has completed poster presentations, and presented 
her work at the mid-year ASHP meetings. [Tr. 412]. Ms. Jones has also 
conducted in-service lectures. [Tr. 412-413; Resp. Exh. 1].
    152. Ms. Jones started Jones Total Health Pharmacy in February of 
2010. [Tr. 410]. Ms. Jones has always had a strong interest in 
pediatrics, and she desired to bring that interest to her own pharmacy. 
[Tr. 411]. Ms. Jones had never operated a pharmacy on her own before 
starting Jones Total Health Pharmacy. [Tr. 414]. Jones Pharmacy's 
original location was on 300 West Sunrise Boulevard in Fort Lauderdale. 
[Id.].
    153. When Jones Pharmacy opened in 2010, it opened using a 
wholesaler, H.D. Smith. [Tr. 416]. H.D. Smith provided the pharmacy 
with everything that Jones Pharmacy sold, including controlled 
substances. [Tr. 416]. After about three months with H.D. Smith, the 
company informed Jones Pharmacy that its purchase volume was not enough 
to keep it with H.D. Smith. [Tr. 417]. Jones Pharmacy was then referred 
to SmartSource, but SmartSource only sold non-controlled substances. 
[Id.]. At that point, Jones Pharmacy started using multiple companies 
to get everything that it needed for the pharmacy. [Tr. 417-418]. Jones 
Pharmacy has been using McKesson for its pharmaceutical needs since the 
end of 2011. [Tr. 417-418].
    154. Ms. Jones initiated policies and procedures she had utilized 
at CHI when she started Jones Pharmacy. [Tr. 420]. These policies 
included recording a patient's information in the computer system, 
checking whether a patient had allergies, and recording patient 
demographics. [Tr. 419]. Then the prescription was scanned into the 
computer and typed. [Tr. 419]. If a patient presented a prescription 
for a controlled substance, Ms. Jones would call the doctor's office to 
ensure the doctor authored and issued the prescription. [Tr. 420] At 
its inception, Ms. Jones ensured that most of the pharmacy's policies 
and procedures were in writing. [Tr. 421]. Ms. Jones stated that the 
policies and procedures change when changes are necessary. [Id.]. 
Later, Ms. Jones started asking the prescribing doctor for a patient's 
diagnosis. [Tr. 513]. This was not until after the pharmacy had 
operated for a while, because it was not something that Ms. Jones had 
done at the other pharmacies she had previously worked at. [Id.].
    155. Ms. Jones was not present for the State of Florida Department 
of Health Investigative Services inspection on April 14, 2011. [Tr. 
423; Gov't Exh. 13]. In the remarks section of the report, Investigator 
Alan Miller concluded that Jones pharmacy was ``filling and dispensing 
what appears to be a large amount of Schedule II Controlled Substances 
written prescriptions'' from out of state patients. [Tr. 425-426; Gov't 
Exh. 13].
    156. Jones Pharmacy stopped filling out of state prescriptions on 
April 1, 2011. [Tr. 426]. At that time, Jones Pharmacy's policies and 
procedures were not modified in writing to reflect this new policy 
change. [Tr. 428].
    157. Jones Pharmacy had a fraud policy in place, for the 
identification and process of fraudulent prescriptions, in October of 
2011. [Tr. 430; Resp. Exh. 25].
    158. Pursuant to deficiencies uncovered during inspections from the 
State of Florida Department of Health Investigative Service, Ms. Jones 
promptly corrected all noted deficiencies. [Tr. 431-436].
    159. The State of Florida Department of Health Investigative 
Service conducted an inspection on October 12, 2011, at Jones Pharmacy. 
During this inspection, Ms. Jones was not told that any of Jones 
Pharmacy's DEA 222 forms were deficient. [Tr. 441; Resp. Exh. 8, at 7].
    160. The State of Florida Department of Health Investigative 
Service conducted an inspection on June 7, 2012, at Jones Pharmacy, for 
a change of pharmacy location. [Tr. 440; Resp. Exh. 8, at 5-6]. During 
this inspection, the Florida Department of Health investigator did not 
tell Ms. Jones that any of Jones Pharmacy's DEA 222 forms were 
deficient. [Tr. 440-441; Resp. Exh. 8 at 5-6]. Also during the June 7, 
2012 inspection, Ms. Jones notified the inspector that the pharmacy had 
encountered a prescription that had been forged. [Tr. 442; Resp. Exh. 
8, at 5]. In response, the pharmacy reported the forgery to the police. 
[Id.].
    161. After the State of Florida Department of Health Investigation 
inspected the new location for a change of pharmacy location, Ms. Jones 
submitted a request of registration update to the DEA. [Tr. 446]. Ms. 
Jones called the DEA and was told how to request the change of 
location. [Id.]. Ms. Jones completed her request on June 20, 2012. 
[Id.].
    162. Ms. Jones acquired the new location, 1150 West Sunrise 
Boulevard, Fort Lauderdale, FL, in March of 2012. [Tr. 446; Resp. Exh. 
12]. At that time, Ms. Jones was paying rent for two pharmacy 
locations: the new location awaiting approval from the DEA, and the 
location where she was operating. [Tr. 446-447].
    163. Ms. Jones submitted her application for address change online 
to the DEA on June 20, 2012. [Tr. 455]. She followed-up on her 
application on July 3, 2012, by calling the DEA call center. [Tr. 455] 
The call center transferred Ms. Jones to the DEA's Weston office, and 
Donna Richards responded to Ms. Jones inquiry. [Tr. 455]. Later that 
day, Susan Langston called Ms. Jones and asked for a dispensing report 
for controlled substances. [Tr. 455-456; Gov't Exh. 2]. After Ms. Jones 
submitted the requested information to Ms. Langston, she waited for a 
reply. [Tr. 457]. Jones Pharmacy was prohibited from moving its 
controlled substances to the new location until the DEA approved the 
registration at the new address. [Id.].
    164. Because Ms. Jones did not hear anything from Ms. Langston 
after she submitted her dispensing report, Ms. Jones sent emails to the 
DEA asking if there was any update on her registration. [Tr. 457]. 
Then, in October of 2012, Ms. Donna Richards asked Ms. Jones to send 
her Jones Pharmacy's dispensing report. [Tr. 457]. Ms. Jones sent Ms. 
Richards the file that same day, and Ms. Richards confirmed receipt. 
[Tr. 458]. Thereafter, Ms. Jones emailed for updates but did not 
receive any. [Id.].
    165. Due to the DEA's inaction on her registration request, on 
March 7, 2013, Ms. Jones wrote to her U.S. Congresswoman, and U.S. 
Senators explaining the delay and her frustration. [Tr. 460; Resp. Exh. 
No 5, 6,7]. Senator Nelson, Senator Rubio, and Congresswoman Wasserman 
Shultz wrote back to Ms. Jones. [Tr. 464-465; Resp. Exh. 5,6,7].
    166. Then, on April 2, 2013, Ms. Jones had a site visit from DI 
Gonzales and DI Richards. [Tr. 467-468]. During the visit, Ms. Jones 
was asked for controlled

[[Page 79213]]

substance prescriptions and ordering records. [Tr. 469]. Ms. Jones 
produced a computer file with the controlled substance ordering system 
(``CSOS'') \63\ records. [Id.]. The file was saved in a CSV format. 
[Tr. 470]. Ms. Jones sent a paper copy of the records to DI Gonzales on 
May 3, 2013, via FedEx. [Tr. 471]. DI Gonzales contended that he could 
not the read the records, so Ms. Jones wrote a key on the first page of 
the packet to help DI Gonzales understand the CSV format for the 
finalized CSOS orders. [Tr. 471, 473-474; Gov't Exh. 53].
---------------------------------------------------------------------------

    \63\ The Controlled Substance Ordering System (``CSOS'') is the 
system pharmacies use to electronically order a controlled substance 
from their wholesalers. [Tr. 470].
---------------------------------------------------------------------------

    167. Ms. Jones testified that during the April 2, 2012 inspection, 
the meeting ``wasn't a good overall tone. The meeting just, it didn't 
really--it deteriorated after it started.'' [Tr. 475]. Ms. Jones stated 
that DI Gonzales took with him Jones Pharmacy's controlled substances 
prescriptions, schedules II-V. [Tr. 475]. He also took the controlled 
substance ordering receipts and records. [Tr. 475].
    168. Later on April 2, 2012, Ms. Jones received a call from DI 
Gonzales, DI Langston, and DI Richards. [Tr. 476]. Ms. Langston talked 
with Ms. Jones about the inspection that had been conducted that day 
and the letters Ms. Jones wrote to her Senators and Congresswoman. [Tr. 
477]. Ms. Langston said the Registration was done, and DI Richards 
confirmed it. [Id.]. The change of address was approved. [Tr. 477; 
Resp. Exh. 8].
    169. The next time Jones Pharmacy was inspected was in June of 2013 
by the Florida Department of Health [Tr. 478].
    170. In July of 2013, Ms. Jones met with DI Gonzales. [Tr. 481]. At 
the meeting, DI Gonzales talked about pricing, specialties of 
prescribers, and drug cocktails. [Tr. 481].
    171. Ms. Jones explained that Jones Pharmacy's controlled 
substances are priced through Average Wholesale Pricing (``AWP''). [Tr. 
481-482]. Jones pharmacy has formulas in its software system that are 
based off of AWP. [Id.]. Specifically, Jones Pharmacy uses a Rx30 
pharmacy system that derives its pricing information from First 
Databank. [Tr. 482, 678]. First Databank is a service Rx30 uses to set 
AWP information. [Tr. 678-679]. First Databank publishes various 
pricing benchmarks and information, and the Rx30 software is driven 
from it. [Tr. 678]. Jones Pharmacy has always used First Databank 
pricing, but it was up to the Pharmacy to change the pricing to what 
they wanted it to be. [Tr. 483]. In 2014, After DI Gonzales brought to 
Ms. Jones' attention the high prices the pharmacy was charging for 
controlleds, Jones Pharmacy started using the First Databank pricing, 
AWP plus the dispensing fee. [Tr. 483]. Prices vary based on the AWP at 
the time. [Tr. 483-484]. Often times AWP prices can be high. [Tr. 483-
484].
    172. Jones Pharmacy started using E-FORCSE in 2011. [Tr. 615]. E-
FORCSE is the Electronic-Florida Online Reporting of Controlled 
Substance Evaluation Program monitoring system. The system shows which 
pharmacies a patient went to, and the medication and/or controlled 
substances the patient received. [Tr. 228].\64\ Before E-FORCSE, Jones 
Pharmacy used wholesalers that required it to enter the patients into a 
prescription monitoring program (``PMP'') report. Ms. Jones testified 
that she thought the only people that order from those same wholesalers 
fed into the system, and then you could look at the patient's fill 
history. [Tr. 615-616].
---------------------------------------------------------------------------

    \64\ The Florida E-FORCSE website indicates that the system was 
created in 2009 by the Florida Legislature to ``encourage safer 
prescribing of controlled substances and to reduce drug abuse and 
diversion within the state of Florida.'' Florida Health E-FORCSE 
Homepage, http://www.floridahealth.gov/statistics-and-data/e-forcse/ 
( last visited Apr. 10, 2015). Specifically, E-FORCSE ``collects, 
maintains, and stores controlled substance prescription dispensing 
information in its database and makes the information available to 
health care practitioners and law enforcement and regulatory 
agencies during active investigations.'' [Id.].
---------------------------------------------------------------------------

    173. Ms. Jones first heard about red flags for diversion when 
Florida Department of Health Inspector Robert Di Fiore inspected the 
Jones Pharmacy on May 14, 2014. [Tr. 484-485; Resp. Exh. 8, at 2].
    174. Jones Pharmacy dispensed controlled substances to patient H.L. 
up until July 2014. [Tr. 495-496; Resp. Exh 11, at 2]. Jones Pharmacy 
noted that patient H.L. was taking the same medication every month, and 
patient H.L. became verbally abusive if her prescription was ``not 
ready or done her way.''[Tr. 495]. Due to this Jones Pharmacy stopped 
filling prescriptions for patient H.L., but other pharmacies continued 
to fill prescriptions for her. [Tr. 496; Resp. Exh. 11, at 2].
    175. Ms. Jones stated that when Jones Pharmacy opened, it was not 
calling the prescriber to ascertain a patient's diagnosis. [Tr. 513]. 
This practice was consistent with Ms. Jones' experience in retail 
pharmacy. [Tr. 514-515]. Later, Ms. Jones instituted a policy of 
calling the prescriber and asking for a patient's diagnosis. [Tr. 513]. 
Ms. Jones presented examples of situations wherein the pharmacy called 
the doctor to ensure he authored the prescription, ascertained the 
patient's diagnosis, and recorded it on the prescription. [Tr. 512-517, 
524-527; 532-534; Gov't Exh 17, 22, 24].
    176. Ms. Jones testified that she did not believe in any way that 
any of the prescriptions at issue in these proceedings were going to be 
diverted after they were filled. [Tr. 517-518, 524].
    177. Ms. Jones stopped filling prescriptions for certain 
individuals after the May 2014 Florida Department of Health 
Investigation. [Tr. 538]. Inspector Crane brought to Ms. Jones' 
attention the fact that certain patients coming to Jones Pharmacy had 
drug related arrest records. [Tr. 537-538]. Ms. Jones used the Broward 
County court website to look up patient names and determine if a 
patient had an arrest record. [Tr. 538]. From this information, Ms. 
Jones determined that certain patients had drug charges in their 
criminal records, and she refused to fill prescriptions for these 
individuals. [Tr. 538, 540-541].
    178. Ms. Jones credibly testified that her practices today are 
different from those when she first opened Jones Pharmacy. [Tr. 519]. 
First, Ms. Jones dispenses much less controlled substances. [Tr. 565; 
Resp. Exh 4]. Her main business is from non-controlled substances that 
the pharmacy sells. [Tr. 564-565]. Second, in the event that Jones 
Pharmacy is presented with a prescription similar to the ones at issue 
in this proceeding, Ms. Jones stated that she would do things 
differently. [Tr. 520-523]. She would look at the prescribing doctor's 
credentials, the patients history in the monitoring system, speak with 
the doctor's office, questioning why a patient is coming from out of 
state to have a prescription filled, and require documentation 
substantiating an out of state patients reason for fill. [Tr. 520-523; 
Tr. 544-545]. Ms. Jones also stated that she will not fill for cash 
only patients unless the patient presents a ``really good reason.'' 
[Tr. 541]. Ms. Jones stated the number of patients paying with cash 
have diminished significantly. [Tr. 565, 568-569; Resp. Exh. 4].
    179. Ms. Jones now has a written policy for how employees are to 
evaluate controlled substance prescriptions. [Tr. 555-556; Resp. Exh. 
26]. Ms. Jones testified that Jones Pharmacy's new operational policies 
and procedures establish clear guidelines for how the pharmacy receives 
controlled substances, dispenses them to patients, evaluates the 
legitimacy of a prescription, verifies the prescription, what is done 
for pick-

[[Page 79214]]

ups, drop offs, and the protocol to follow if the pharmacy decides not 
to fill a prescription. [Tr. 555-556; Resp. Exh. 26]. The new policy 
and procedures guide is dated January 4, 2015. [Tr. 556; Resp. Exh. 
26].
    180. When testifying about pricing procedures, Ms. Jones admitted 
that she marked up controlled and non-controlled substances. [Tr. 680-
681]. In fact, Ms. Jones stated that she marked up ``most of the 
controlleds.'' [Tr. 682].

H. Ms. Donna Horn (Respondents' Expert)

    181. Donna Horn testified for the Respondent, and was recognized as 
an expert in pharmacy, pharmacy operations, and regulatory compliance 
for pharmacies. [Tr. 725, 737; Resp. Exh 24]. Ms. Horn lives in 
Norwood, Massachusetts. [Tr. 713]. Ms. Horn graduated from 
Massachusetts College of Pharmacy in Boston, Massachusetts in 1983. 
[Tr. 714]. She then worked for Osco, a national pharmacy chain, as a 
pharmacist and pharmacy manager for many years. [Id.]. Eventually Osco 
was sold to Brooks Pharmacy, and Ms. Horn worked for Brooks as a 
regional pharmacy manager. [Tr. 714-715]. It was her job to ready and 
transition 28 stores that she was supervising to the Brooks system of 
operations. [Id.]. When that was completed, Ms. Horn became the manager 
of regulatory affairs for Brooks. [Id.]. In that role, Ms. Horn ensured 
that the policies and procedures for the Brooks pharmacies were in 
compliance with the state regulations. [Tr. 716]. Then, in 2006, Ms. 
Horn went to work for the Institute for Safe Medication Practices. [Tr. 
717]. The institute conducts studies in medication errors that occur in 
hospitals and pharmacies. The institute also does continuing education 
(``CE''). [Tr. 717]. Ms. Horn also writes articles for journals, and 
has served on the Massachusetts Board of Pharmacy for 11 years. [Tr. 
717-718]. In 1995, Ms. Horn was elected to the executive committee of 
the National Association of Boards of Pharmacy (``NABP''). [Tr. 720] 
All boards of pharmacy in the United States are members of NABP. [Tr. 
720]. At NABP, Ms. Horn wrote model rules and regulations in 
conjunction with stakeholders and experts in the field. [Tr. 720-721]. 
When Ms. Horn was president of NABP, her platform was ``reducing 
medication errors in community pharmacies.'' [Tr. 735]. Ms. Horn 
currently holds a pharmacy license in Massachusetts. [Tr. 722]. Ms. 
Horn is also an adjunct faculty member of the Massachusetts College of 
Pharmacy. [Tr. 724]. She has been qualified as an expert in Federal and 
State courts. [Tr. 725; Resp. Exh 24]. Ms. Horn's experience reflects 
that she is very experienced in the prevention of Medication safety and 
errors. [Tr. 723, 728, 730-731; Resp. Exh. 24 at 5-9]. In fact, Ms. 
Horn indicated that patient safety and medication risk management is a 
passion of hers. [Tr. 723]. The last prescription Ms. Horn filled was 
in 2000 or 2001. [Tr. 794].
    182. Ms. Horn testified that she talked with Ms. Jones, reviewed 
the documents in this case, and noticed that Ms. Jones has adapted her 
pharmacy policies to make a much more comprehensive and complete 
approach to compliance with the applicable regulations. [Tr. 743-744].
    183. Ms. Horn testified that Ms. Jones' policies and procedures 
[are] ``a great example of what should be done in order to prevent the, 
prevent the fraudulent filling of controlled substances.'' [Tr. 744; 
Resp. Exh. 25].
    184. With regard to the dispensing of prescriptions in 2010, Ms. 
Horn stated that the dispensing pharmacist should have looked at the 
patient who is getting the prescription and recorded a complete patient 
history. [Tr. 748]. Ms. Horn also stated that, in 2010, a pharmacist 
needed to know a patient's drug allergies, what the patient was being 
treated for, and other medications the patient was on, and who the 
prescriber was. [Id.]. Ms. Horn further testified that the pharmacist 
would look at the actual prescription itself for the quantity and 
frequency of what's being dispensed to see if it makes sense. [Tr. 
749].
    185. Prior to 2014, Ms. Horn had not seen anything published by the 
DEA concerning the dispensing of controlled substances to out-of-state 
customers. [Tr. 752]. In May of 2014, Ms. Horn attended a presentation 
at the NABP annual meeting where the DEA displayed a video vignette on 
``red flags.'' [Tr. 751]. The intent of the video was to have every 
state board of pharmacy publish a link to the video on their respective 
websites. [Tr. 752]. Ms. Horn stated that she did not believe that the 
DEA had published anything relating to red flags on their website in 
2010 or 2011 because there is nothing on it today. [Tr. 752-753]. Ms. 
Horn stated that the May 2014 meeting was the first time she ``heard of 
the red flags and saw them played out in a movie.'' [Tr. 752]. Ms. Horn 
did acknowledge that in 2012, the DEA published a legal opinion on its 
website that referred to ``red flags.'' [Tr. 753]. Ms. Horn consulted 
some of the DEA administrative opinions in determining what was 
generally known among pharmacists in 2009-2011. [Tr. 872-873]. Ms. Horn 
claimed that the first time the concept of ``red flags'' was widely 
known among pharmacists was in relation to the video vignette released 
in May of 2014. [Tr. 751-752].
    186. Ms. Horn opined that, in 2010, it was not widely known among 
pharmacists that patients travelling long distances, seeking to pay 
cash, presenting combinations of narcotics, benzodiazepines, and 
carisoprodol, and presenting pattern prescriptions were indicators of 
abuse and/or diversion of controlled substances. [Tr. 864-866].
    187. Ms. Horn reviewed the State of Florida Department Of Health 
Investigative Services inspection reports in forming her opinions. [Tr. 
759, 761; Resp. Exh. 8].
    188. Ms. Horn stated that she looked at the DEA Form 222's in this 
matter, and she believed that the forms were in compliance with the 
applicable regulations. [Tr. 773; Resp. Exh. 27]. She stated that 
Respondent's method of recordkeeping is compliant with the regulations, 
both federal and state. [Id].
    189. Ms. Horn testified that some combinations of drugs that are 
labeled as ``cocktail drugs'' may be taken together for legitimate 
medical reasons, and often are taken together. [Tr. 777].
    190. Ms. Horn did not opine on any of the Government-presented 
prescriptions. [Tr. 780; Gov't Exh. 15-23]. Ms. Horn stated that she 
did not review any of the prescriptions at issue from 2010-2012. [Tr. 
806]. Ms. Horn indicated that she has not done any research about the 
corresponding responsibility of a pharmacist. [Tr. 799]. Ms. Horn also 
indicated that she has not given any presentations about the 
corresponding responsibility of a pharmacist since 2007. [Tr. 799]. 
Further, Ms. Horn indicated that she has not published any research on 
corresponding responsibility issues. [Tr. 797-798].
    191. Ms. Horn testified that she agreed with the procedures that 
Ms. Jones was using in 2010. [Tr. 781]. Ms. Horn stated that she 
believed Ms. Jones' procedures were in conformity with what the DEA 
expected a pharmacist to do to prevent diversion in 2010. [Id.].
    192. Ms. Horn testified that Jones Pharmacy has displayed a 
``positive trend downwards as to the amount of controlleds that are 
dispensed per non-controlleds.'' [Tr. 785]. Ms. Horn further testified 
that she believed Ms. Jones is ``aware now that people are not as 
honest as she thought that they were and that she's made steps to get 
those people out of her business.'' [Tr. 786].
    193. Ms. Horn testified that she did not review any of the Florida 
rules regarding the use or misuse of

[[Page 79215]]

prescriptions in preparation for her testimony. [Tr. 805-806].
    194. Ms. Horn stated that her opinion in this case, that Ms. Jones 
should maintain her DEA registration, is based on her conversations 
with Ms. Jones. [Tr. 806-808]. Ms. Horn stated that Ms. Jones has 
learned a lot from the time she opened Jones Pharmacy, and ``she 
understands what her responsibilities are. They are much more clear to 
her now. The conversations that I've had with her, I truly believe she 
would not go to filling those prescriptions and she would certainly 
take into [sic] affect any other DEA red flags that you come up with, 
she would use those in determining, as long as she knows about them, in 
determining whether or not to fill a prescription. I truly believe 
that.'' [Tr. 807]. Ms. Horn opined Ms. Jones' current dispensing 
practices are ``very much in line with what [Ms. Horn] would expect to 
see at a community pharmacy.'' [Tr. 785-786].
    195. Ms. Horn did not offer any opinions as to whether or not Jones 
Pharmacy's dispensing of controlled substances was abnormal in 2010, 
2011, and 2012. [Tr. 809]. Similarly, Ms. Horn did not opine about the 
practice of dispensing controlled substances to out of state persons 
and the prices charged for controlled substances for the timeframe 2010 
through 2012. [Tr. 810-812]. Ms. Horn stated that she thinks Ms. Jones 
``did exercise her corresponding responsibility in 2014.'' [Tr. 809].
    196. Ms. Horn testified that Jones Pharmacy's unwritten 2010 policy 
of calling the prescribing doctor--to certify that the doctor authored 
the prescription himself--indicated that the pharmacy was exercising 
its corresponding responsibility to ensure controlled substances were 
issued for a legitimate medical purpose under federal law. [Tr. 827; 
Resp. Exh. 25]. Ms. Horn further testified that merely calling the 
doctor was not enough, it ``is also imperative that you have a 
discussion to talk about what is the diagnosis and what is the 
treatment going to be.'' [Tr. 829]. Ms. Horn further stated that the 
above listed protocols are ``all [she] knows about what was expected of 
a corresponding responsibility up until the time [the DEA] came up with 
these other red flags that would also help a pharmacist determine 
whether or not a prescription should be filled or not.'' [Tr. 829].
    197. Ms. Horn liked the Respondent's more recent policies better 
than her earlier policies because the policies have been ``updated to 
reflect new knowledge of diversion tactics.'' [Tr. 832; Resp. Exh. 26]. 
This new policy was enacted in 2015. [Tr. 833]. Ms. Horn opined that 
Ms. Jones has changed ``policies and procedures as she [has] learned 
about things.'' [Tr. 850].
    198. Ms. Horn stated that in 2010 it was not widely known in the 
pharmacy community that certain drugs or combinations of cocktails were 
indicative of abuse or diversion. [Tr. 864]. Ms. Horn also stated that 
in 2010 it was not widely known in the pharmacy community that paying 
cash was an indicator of abuse or diversion rather than using 
insurance. [Tr. 864]. Ms. Horn stated that in 2010 it was not widely 
known in the pharmacy community that pattern prescribing--``patients 
going to the same doctor for the same ailments, receiving the same 
prescriptions in the same quantity without any difference in the 
treatment'' [Tr. 865]--was an indicator of abuse or diversion. [Tr. 
865]. Ms. Horn stated that in 2010 it was not widely known that Xanax 2 
mg was only used in rare circumstances. [Tr. 865-866].

V. Conclusions of Law and Discussion

A. Position of the Parties

1. The Government's Position
    On April 20, 2015, the Government timely filed its lengthy (eighty-
one page) Government's Proposed Findings Of Fact And Conclusions Of Law 
(``Gov't Brief''). In it, the Government urged me to accept the 
following conclusions of law: (1) the dispensing practices at Jones 
Total Health Pharmacy LLC are an appropriate basis to deny SND 
Healthcare LLC's application for a DEA registration; (2) Jones Pharmacy 
committed acts that render its continued registration inconsistent with 
the public interest; and (3) Respondents have not credibly accepted 
responsibility or undertaken meaningful remedial measures. [Gov't Br. 
42-79].
    First, as support for its argument that the dispensing practices at 
Jones Pharmacy are an appropriate basis to deny SND Healthcare LLC's 
application for a DEA registration, the Government avers that Jones 
Pharmacy and SND Healthcare are appropriately treated as one integrated 
enterprise for purposes of this proceeding. [Gov't Br. 42]. The 
Government states that ``[t]he DEA has denied an application by one 
business entity for a DEA COR as being inconsistent with the public 
interest, 21 U.S.C. 823(f), based on a separate, related business 
entity's dispensing conduct [sic] were it could find that the two were 
`nominally separate business entities.''' [Gov't Br. 42 (citing MB 
Wholesale, Inc., 72 Fed. Reg. 71,956, 71,958 (DEA 2007))]. The 
Government further states that SND Healthcare is essentially an 
expansion of Jones Pharmacy into Miami and the two entities can fairly 
be considered one `integrated enterprise' [because] . . . the 
ownership, management, and retail pharmacy operations of Jones Pharmacy 
and SND Healthcare are centralized with Cherese Jones.'' [Gov't Br. 
43]. Due to this, the Government argues that there is ``no basis in 
evidence or logic for imposing different sanctions for SND Healthcare 
and Jones Pharmacy or treating them as anything other than the 
integrated enterprise they are.'' [Gov't Br. 43-44].
    Second, the Government argues that Jones Pharmacy committed acts 
that render its continued registration inconsistent with the public 
interest. [Id.]. Here, the Government avers that Jones Pharmacy filled 
over a hundred prescriptions for controlled substances that presented 
indicia of diversion and abuse. [Gov't Br. 45]. As support, the 
Government cites prescriptions in Government Exhibits 15-24, and 
explains that these prescriptions displayed ``red flags'' that were 
indicators of diversion and abuse. [Gov't Br. 45-46]. These ``red 
flags'' consisted of customers traveling long distances (often from out 
of state), cash payments, pattern prescribing, prescriptions for 
immediate release pain medications in two different strengths or with 
no accompanying long-acting pain medications, and prescriptions for 
common cocktail medications. [Id.]. The Government also contends that 
Jones Pharmacy charged exorbitant cash prices for its ``highly diverted 
narcotics'' by citing an example wherein Jones Pharmacy charged ``one 
patient $9, $10, or $11 a pill--mark-ups of over 3,000% over Jones 
Pharmacy'[s] cost to obtain these drugs--when it was filling 
prescriptions from a doctor who literally used a rubber stamp to 
prescribe oxycodone.'' [Gov't Br. 48]. The Government states that these 
``red flags'' presented ``were not feasibly resolvable by a pharmacist 
operating within the accepted bounds of the profession exercising the 
responsibility to ensure that they were filling only legitimate 
controlled substance prescriptions.'' [Gov't Br. 49].
    Along these lines, the Government states that Jones Pharmacy's 
dispensing patterns, prices, and profits show that filling suspicious 
controlled substance prescriptions was its chosen business model, and 
the filling of these controlled substances was Jones' primary business. 
[Gov't Br. 49-52]. The Government further avers that Ms. Jones knew or 
had reason to know of the Pharmacy's unlawful dispensing, and her 
claimed ignorance of abuse and

[[Page 79216]]

diversion is neither a credible nor a legally viable defense. [Gov't 
Br. 53]. The Government then argues that Ms. Jones' purported 
naivet[eacute] ``simply cannot be squared with the objective 
evidence,'' [Id.] and requests that I find that ``Ms. Jones was not 
credible when she portrayed herself as `dumb, na[iuml]ve, [and] stupid' 
because this description cannot be squared with the profits she made 
and the prices she charged in 2010, 2011, and 2012.'' [Gov't Br. 58].
    Next, the Government explains that the testimony of Respondent's 
expert, Ms. Horn, is neither credible nor grounded in any professional 
experience with regard to pharmacists general ignorance of red flags. 
[Gov't Br. 59]. Here, the Government contests Ms. Horn's ``professional 
exposure to issues involving a pharmacist's corresponding 
responsibility have been spare, sporadic, and sparse.'' [Id.]. The 
Government cites facts such as Ms. Horn has never filled prescriptions 
in Florida, and Ms. Horn last practiced as a pharmacist filling 
prescriptions fifteen years ago. [Gov't Br. 60]. Finally, the 
Government states that accepting Ms. Horn's conclusion that ``red 
flags'' were a mystery in 2010 would upend this Agency's prior opinions 
and the expertise on which they were based. [Gov't Br. 65].
    As additional support for its assertion that Jones Pharmacy 
committed acts that render its continued registration inconsistent with 
the public interest the Government states that Jones Pharmacy's 
inventories and records were deficient. [Gov't Br. 65]. Specifically, 
the Government alleges that the Respondent's inventories did not 
include whether they were taken at the beginning or end of the day, the 
number of commercial containers or dosage units per container, and what 
was received at the pharmacy for 480 orders of controlled substances. 
[Gov't Br. 66]. Citing these violations, the Government states 
``[a]lthough revocation and denial of Respondents' registrations is 
justified based on Jones Pharmacy's dispensing practices alone, 
recordkeeping deficiencies provide yet more reason to support this 
determination.'' [Gov't Br. 68].
    Last, the Government argues that Respondents have not credibly 
accepted responsibility or undertaken meaningful remedial measures. 
[Gov't Br. 68]. The Government contends that Ms. Jones refused to admit 
responsibility for her past conduct, and revealed ignorance of her 
responsibilities that persists to this day. [Gov't Br. 69]. The 
Government avers that Ms. Jones' statements that she `` `could have 
done more' to prevent abuse and diversion'' place her as a third party 
bystander to wrongdoing. [Gov't Br. 72]. The Government states that Ms. 
Jones testimony ``that she viewed, and continues to view, this as a 
prescriber's responsibility is a blatant attempt to shift blame to 
others, not accept it for herself.'' [Id.]. Further, the Government 
states that Jones Pharmacy offered no credible evidence of remedial 
efforts because Respondent's attempt to show that it had a dramatic 
decline in controlled substances dispensing ``coincided with (1) the 
decision to stop servicing out-of-state customers in April 2011 and (2) 
after the DEA started investigating Jones Pharmacy in April 2013.'' 
[Gov't Br. 78]. Finally, the Government urges me to find that ``Jones 
Pharmacy's changes in dispensing practices reflect law enforcement's 
scrutiny of Jones Pharmacy rather than Jones Pharmacy's scrutiny of its 
customers.'' [Id.].
2. The Respondent's Position
    On April 20, 2015, the Respondents timely filed their Respondents' 
Post-Hearing Brief. (``Resp. Brief''). Therein, the Respondent averred 
that Jones Pharmacy's continued registration is not inconsistent with 
the public interest, and that the Respondents have presented evidence 
to mitigate any evidence that shows that their registrations threaten 
the public interest. [Resp. Br. 29-37].
    First, in addressing their contention that Jones Pharmacy's 
continued registration is not inconsistent with the public interest, 
the Respondents argue that public interest factors 1 and 3 clearly 
weigh in Respondent's favor. [Resp. Br. 29]. As support, the 
Respondents state that they currently hold a valid Florida license, and 
that the Florida Board of Pharmacy has not initiated any action against 
their license since its issuance in 2009. [Resp. Br. at 29-30]. 
Respondents also state that there is ``no evidence in the record that 
the Respondent or its owner/operator has ever been convicted (or 
charged with) a crime related to the manufacture, distribution, or 
dispensing of controlled substances. [Resp. Br. 30].
    Next, Respondents address public interest factor two by explaining 
that their experience in dispensing controlled substances has changed 
considerably from 2010 until now. [Resp. Br. 30]. The Respondents state 
that ``[i]n 2010, controlled substance dispensing constituted 63% of 
Jones' dispensing. This percentage steadily declined and as of the end 
of 2014, controlled substance dispensing was only at seventeen percent 
(17%).'' [Resp. Br. 30]. Respondents also state that their cash 
business has been significantly reduced from 2010 to 2014, and that 
Jones Pharmacy has ``completely changed the way that it conducts its 
business with regard to controlled substances.'' [Resp. Br. 31].
    The Respondents also argue that public interest factor four is in 
their favor because ``[a]t all times during the period at issue, 
Respondents sought to comply with state and federal laws relating to 
controlled substances.'' [Resp. Br. 31]. Here the Respondents argue 
that there was no specific legal standard that defined ``red flags'' 
that a pharmacist was expected to recognize and act upon. [Resp. Br. 
32]. As support, the Respondents cite the testimony of Ms. Donna Horn, 
Respondents' expert witness. [Id.]. Respondents state that Ms. Horn 
``testified that it was her opinion that Ms. Jones complied with her 
corresponding responsibility as she understood it at the time by taking 
the actions that she took to check the validity of the prescriptions.'' 
[Id.]. These procedures included verifying the individuals presenting 
the prescriptions, verifying the physician's office and identifying who 
spoke on behalf of the physician, verifying that the physicians' 
licenses were active, and obtaining the diagnosis. [Resp. Br. 32].
    Respondents further aver that public interest factor five also 
weights in their favor. [Resp. Br. 33]. Respondents argue that their 
continued registration and granting of pending registration will not 
threaten the public safety because there is evidence in the record that 
reflects Jones Pharmacy's compliance with the law, including the 
Florida Department of Health inspections. [Resp. Br. 33-34]. Further, 
Respondents argue that their expert, Ms. Donna Horn, testified that 
Respondents continued registration would not be inconsistent with the 
public interest. [Resp. Br. 33].
    Last, Respondents argue that even though they do not concede that 
the DEA has met its burden in this instance, Respondents have met their 
burden to show that their registrations do not threaten the public 
interest. [Resp. Br. 34]. First, Respondents aver that they have 
accepted responsibility for their actions through the testimony of Ms. 
Jones. [Resp. Br. 34-35]. Second, Respondents state that they have 
``demonstrated through [their] actions that [they have] taken remedial 
measures to insure future compliance'' with the law. [Resp. Br. 35]. 
The Respondents explain that their remedial measures include:

(1) ceasing to fill out of state prescriptions; (2) implementing a 
policy to ensure prevention of fraudulent dispensing; (3) 
supplementing the procedure for calling physician offices; (4) 
verifying physician

[[Page 79217]]

practice areas; (5) reviewing the distances traveled between a 
patient and the physician writing the prescription; (6) reviewing 
the distance traveled between the customer and the Pharmacy; (7) 
reviewing on E-FORSCE other locations at which customers are filling 
prescriptions; (8) implementing new written policies and procedures; 
(9) ceasing to accept cash payments for controlled substance 
prescriptions; (10) refusing to fill prescriptions for certain 
individuals with criminal backgrounds; and substantially reducing 
business relating to the filling of prescriptions for controlled 
substances.

[Resp. Br. 36]. Respondents contend that the majority of these actions 
were taken without prompting from regulators. [Id.]. Third, Respondents 
claim that their recordkeeping also affects public interest factor 
four. [Id.]. To this end, the Respondents state that they have remedied 
the initial glitches in the ordering system, and that the ``record 
evidence reflects that Jones Total Health now maintains inventories in 
accordance with [DEA] requirements.'' [Resp. Br. 37].

    In Conclusion, the Respondents request that I find that their 
continued registration is not inconsistent with the public interest, 
and that they have presented sufficient evidence to mitigate any 
evidence that shows that their registrations threaten the public 
interest. [Resp. Br. 29-37].

B. Statement of Law and Discussion

    Pursuant to 21 U.S.C. Sec.  824(a)(4), the Administrator \65\ may 
revoke a registration, and deny a pending application for renewal or 
modification, if she determines that the continuation or issuance of 
such registration would be ``inconsistent with the public interest'' as 
determined pursuant to 21 U.S.C. Sec.  823(f). Section 823(f) requires 
that the following factors be considered:
---------------------------------------------------------------------------

    \65\ The Administrator has the authority to make such 
determinations pursuant to 28 C.F.R. Sec. Sec.  0.100(b) and 0.104 
(2014).
---------------------------------------------------------------------------

    (1) The recommendation of the appropriate State licensing board or 
professional disciplinary authority.
    (2) The [registrant's] experience in dispensing, or conducting 
research with respect to controlled substances.
    (3) The [registrant'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. Sec.  823(f); see also Alexander Drug Co., 66 Fed. Reg. 
18, 299, 18,302 (DEA 2001); Nicholas A. Sychak, d/b/a Medicap Pharmacy, 
65 Fed. Reg. 75,959, 75,967 (DEA 2000)]. These factors may be 
considered in the disjunctive: the Administrator may properly rely on 
any one or a combination of these factors, and may give each factor the 
weight she deems appropriate, in determining whether a registration 
should be revoked or an application for registration denied. [See 
Direct Wholesale, 69 Fed. Reg. 11,654, 11,655 (DEA 2004); Henry J. 
Schwarz, Jr., M.D., 54 Fed. Reg. 16,422, 16,424 (DEA 1989)].
    The applicable regulations state that the test for the proper 
prescribing and dispensing of controlled substances is as follows:

A prescription for a controlled substance to be effective must be 
issued for a legitimate medical purpose by an individual 
practitioner acting in the usual course of his professional 
practice. 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.

[21 C.F.R. Sec.  1306.04(a)]. Thus, for a prescription to be lawful, it 
needs to be written for a legitimate medical purpose in the 
practitioner's usual course of professional practice. Id. The 
pharmacist has a corresponding responsibility to verify the validity of 
a prescription, and if a prescription seems suspect, the pharmacist 
should not fill it. [Id. See also United Prescription Services, Inc., 
72 Fed. Reg. at 50,397, 50,407 (DEA 2007)].

    DEA prohibits a pharmacist from filling a prescription for 
controlled substances when he either ``knows or has reason to know that 
the prescription was not written for a legitimate medical purpose.'' 
[United, 72 Fed. Reg. at 50,407; Medic-Aid Pharmacy, 55 Fed. Reg. 
30,043, 30,044 (DEA 1990); see also Frank's Corner Pharmacy, 60 Fed. 
Reg. 17,574, 17,576 (DEA 1995); Ralph J. Bertolino, 55 Fed. Reg. 4,729, 
4,730 (DEA 1990); United States v. Seelig, 622 F.2d 207, 213 (6th Cir. 
1980)]. This Agency has further held that ``[w]hen prescriptions are 
clearly not issued for legitimate medical purposes, a pharmacist may 
not intentionally close his eyes and thereby avoid [actual] knowledge 
of the real purpose of the prescription.'' [Bertolino, 55 Fed. Reg. at 
4,730 (citations omitted)].
    With regard to a Pharmacy's conduct, DEA has consistently held that 
a retail store operates under the control of its owners, stockholders, 
or other employees, and therefore the conduct of these individuals is 
relevant in evaluating the fitness of an applicant. [See e.g., Rick's 
Pharmacy, 62 Fed. Reg. 42,595 (DEA 1997); Big T Pharmacy, 47 Fed. Reg. 
51,830 (DEA 1982)].
    In a pharmacy case to revoke a pharmacy registrant's certificate, 
the DEA has the burden of proving that the requirements for revocation 
are satisfied. [21 C.F.R. Sec.  1301.44(e)]. Once the Government has 
proven its prima facie case, the burden of proof shifts to the 
Respondent. [Arthur Sklar, R.Ph., d/b/a King Pharmacy, 54 Fed. Reg. 
34623, 34627 (DEA 1989)]. To rebut such a case the Respondent ``is 
required not only to accept responsibility for [the established] 
misconduct, but also to demonstrate what corrective measures [have 
been] undertaken to prevent the reoccurrence of similar acts.'' 
[Holiday CVS, 77 Fed. Reg. at 62, 339 citing Jeri Hassman, M.D., 75 
Fed. Reg. at 8,194, 8,236 (DEA 2010)].
    Along these lines, in situations where a registrant has had a 
lengthy history of violations, the U.S. Courts of Appeal have upheld 
the Agency's conclusions that past performance is the best predictor of 
future performance. [Alra Labs. v. DEA, 54 F.3d 450, 452 (7th Cir. 
1995)].
1. Factor One: Recommendation of State Licensing Board
    The record contains no recommendations from the State licensing 
board regarding these Respondents. Further, the record contains no 
evidence that the Respondents had any adverse State Board action taken 
against them. Lastly, the record contains no evidence that Ms. Jones 
had any adverse action taken by the State Board against her.
    Recommendations of state licensing boards are relevant, but not 
dispositive, in determining whether a respondent should be permitted to 
maintain a registration. [See Gregory D. Owens, D.D.S., 74 Fed. Reg. 
36,751, 36,755 (DEA 2009); see also Martha Hernandez, M.D., 62 Fed. 
Reg. 61,145, 61,147 (DEA 1997)]. According to clear Agency precedent, a 
``state license is a necessary, but not a sufficient condition for 
registration.'' [Robert A. Leslie, M.D., 68 Fed. Reg. at 15,230; John 
H. Kennedy, M.D., 71 Fed. Reg. 35,705, 35,708 (DEA 2006)]. The ultimate 
responsibility to determine whether a registration is consistent with 
the public interest has been delegated exclusively to the DEA, not to 
entities within state government. [Edmund Chein, M.D., 72 Fed. Reg. 
6,580, 6,590 (DEA 2007), aff'd Chein v. DEA, 533 F.3d 828 (D.C. Cir. 
2008)].
    I therefore conclude that the fact that the record does not contain 
evidence of a recommendation by a state licensing board does not weigh 
for or against a determination as to whether the

[[Page 79218]]

Respondents' continued registration is consistent with the public 
interest. [See Top Rx, 78 Fed. Reg. 26,069, 26,081 (DEA 2013)].
2. Factors Two and Four: Registrant's Experience in Dispensing 
Controlled Substances, and Compliance With Applicable State, Federal, 
or Local Laws Relating to Controlled Substances
    Because the Respondents' experience in dispensing controlled 
substances is related to their compliance with state and federal law, 
factors two and four will be considered together. [See, e.g., KK 
Pharmacy, 64 Fed. Reg. 49,507, 49,510 (DEA 1999); Service Pharmacy, 61 
Fed. Reg. 10,791, 10,795 (DEA 1996)].
a. Recordkeeping Violations
    Recordkeeping is one of the CSA's essential tenets. For a 
``registrant's accurate and diligent adherence to this obligation is 
absolutely essential to protect against the diversion of controlled 
substances.'' [Paul H. Volkman, 73 Fed. Reg. 30,630, 30,644 (DEA 2008), 
aff'd 567 F.3d 215, 224 (6th Cir. 2009)]. Accomplishing this requires 
``every registrant manufacturing, distributing, or dispensing a 
controlled substance or substances [to] maintain, on a current basis, a 
complete and accurate record of each such substance manufactured, 
received, sold, delivered, or otherwise disposed of by him.'' [21 
U.S.C. Sec.  827(a)(3)].
    In this manner, the Agency has consistently ``held that the failure 
to comply with recordkeeping requirements is a basis for revoking a 
registration. [Alexander Drug Co., 66 FR at 18,299, 18,303 (DEA 2001) 
citing Singers-Andreini Pharmacy, Inc., 63 FR 4,668 (DEA 1998); Arthur 
Sklar, 54 FR at 34,623; Summer Grove Pharmacy, 54 FR 28,522 (DEA 1989); 
The Boro Pharmacy and Bell Apothecary, 53 FR 15,151 (DEA 1988)]. Such 
lack of accountability is clearly not acceptable for a DEA registrant. 
[Alexander Drug, 66 FR at 18,303-04; Volkman, 73 FR at 30,644 (holding 
that recordkeeping violations alone supported denial of practitioner's 
application)].
    Here, Jones Pharmacy was missing some of its required recordkeeping 
information. [FOF 84-85]. Specifically, the Respondents violated 
recordkeeping requirements by failing to record whether Jones 
Pharmacy's biennial inventory was taken at the opening or close of 
business, and by failing to indicate the number of tablets per opened 
commercial container, the number of tablets shipped in each commercial 
container, and the number of commercial containers that Ms. Jones had 
on hand. [FOF 84-85; 21 CFR Sec.  1304.11(e)(3)].\66\ Such lack of 
accountability violates the DEA's regulations and the requisite closed 
system of distribution of controlled substances, for without such a 
complete inventory, the DEA is unable to conduct an accurate 
accountability audit. Although the inventory was complete in other 
aspects, Ms. Jones' partial compliance does not obviate her failure to 
record the required information on the biennial inventory.
---------------------------------------------------------------------------

    \66\ 21 CFR Sec.  1304.11 lists the controlled substances 
inventory requirements. As part of the requirements, subsection (a) 
lists that ``[t]he inventory may be taken either as of opening of 
business or as of the close of business on the inventory date and it 
shall be indicated on the inventory.'' Further, Sec.  1304.11(e)(3) 
lists the applicable inventory requirements for controlled substance 
dispensers. Specifically, the regulation states:
    Each person registered or authorized to dispense . . . 
controlled substances shall include in the inventory the same 
information required of manufacturers pursuant to paragraphs 
(e)(1)(iii) and (iv) of this section. In determining the number of 
units of each finished form of a controlled substance in a 
commercial container that has been opened, the dispenser . . . shall 
do as follows:
    (i) If the substance is listed in Schedules I or II, make an 
exact count or measure of the contents; or
    (ii) If the substance is listed in Schedule III, IV, or V, make 
an estimated count or measure of the contents, unless the container 
holds more than 1,000 tablets or capsules in which case he/she must 
make an exact count of the contents.
    Sec.  1304.11(e)(3).
    The applicable portion of Sec.  1304.11(e)(1)(iii) and (iv) 
states:
    (iii) For each controlled substance in finished form the 
inventory shall include:
    (A) The name of the substance; (B) Each finished form of the 
substance (e.g., 10-milligram tablet or 10-milligram concentration 
per fluid ounce or milliliter); (C) The number of units or volume of 
each finished form in each commercial container (e.g., 100-tablet 
bottle or 3-milliliter vial); and
    (D) The number of commercial containers of each such finished 
form (e.g. four 100-tablet bottles or six 3-milliliter vials).
    (iv) For each controlled substance not included in paragraphs 
(e)(1) (i), (ii) or (iii) of this section (e.g., damaged, defective 
or impure substances awaiting disposal, substances held for quality 
control purposes, or substances maintained for extemporaneous 
compoundings) the inventories shall include:(A) The name of the 
substance; (B) The total quantity of the substance to the nearest 
metric unit weight or the total number of units of finished form; 
and (C) The reason for the substance being maintained by the 
registrant and whether such substance is capable of use in the 
manufacture of any controlled substance in finished form.
    Sec.  1304.11(e)(1)(iii-iv).
---------------------------------------------------------------------------

    Thus, the Respondent's lack of attention to detail with its 
accountability of the controlled substances received and dispensed is 
adequate grounds for recommending revocation of Jones Pharmacy's 
registration. [Alexander Drug Co., 66 FR at 18,299, 18,303 (DEA 2001) 
citing Singers-Andreini Pharmacy, Inc., 63 FR 4,668 (DEA 1998)].
b. Red Flags
    The term ``red flags'' does not appear in the Controlled Substances 
Act, DEA regulations, or the DEA's Pharmacist Manual. [FOF 121]. 
However, the Government's expert, Dr. Tracy Gordon, indicated that the 
term ``red flags'' was generally known to Florida Pharmacists between 
2010 and 2012. [FOF 109, 111 & n. 13]. The Respondent's expert, Ms. 
Donna Horn, indicated that the general pharmacist community was unaware 
of the ``red flags'' cited in this case between the 2010 and 2012. [FOF 
185-186]. Here, I find Dr. Tracy Gordon's opinion more credible on this 
point, for Dr. Gordon's experience as a licensed Florida pharmacist who 
practiced as an Assistant Pharmacy Manager in Florida during the period 
2010-2012 infers that she has knowledge of what pharmacists knew during 
this time. [FOF 106-111 & fn. 13].
    The DEA has established a test for determining whether the 
Respondent's corresponding responsibility has been met in circumstances 
where the prescriptions raise red flags of potential improper 
prescribing. This three-part test is articulated as follows:

    Because Agency precedent limits the corresponding responsibility 
to circumstances which are known or should have been known 
[citations omitted], it follows that, to show a violation of a 
corresponding responsibility, the Government must establish that: 
(1) the Respondent dispensed a controlled substance; (2) a red flag 
was or should have been recognized at or before the time the 
controlled substance was dispensed; and (3) the question created by 
the red flag was not resolved conclusively prior to the dispensing 
of the controlled substance.

[Holiday CVS, LLC d/b/a CVS Pharmacy Nos. 219 and 5195, 77 FR 62,321, 
62,316 (DEA 2012)]. The ``steps necessary to resolve the red flag 
conclusively will perforce be influenced by the nature of the 
circumstances giving rise to the red flag.'' [Id. at 62,341].
    It is undisputed that Jones Pharmacy dispensed the controlled 
substances at issue in this proceeding, for the Respondent stipulated 
to dispensing the aforementioned prescriptions. [FOF 1-61; ALJ Exh. 
21]. Further, during the presentation of its case, the Government 
presented credible evidence that ``red flags'' were present in the 
prescriptions at issue in this matter. [FOF 1-61, 122-130, 132-133]. 
These ``red flags'' include patients traveling long distances for 
filling prescriptions (often traveling from out-of-state), 
prescriptions filled for common cocktail medications, short acting pain 
medications prescribed without a long acting pain medication,

[[Page 79219]]

prescriptions issued by doctors prescribing outside their scope of 
practice, prescriptions dispensed to patients with the same out-of-
state address for the same controlled substances on the same day, and 
cash payments. [FOF 122-130; 132-133]. This evidence of the existence 
of ``red flags'' within Jones Pharmacy's prescriptions was not rebutted 
by the Respondent's expert witness. [FOF 189]. In fact, the 
Respondent's expert witness did not opine on any of the prescriptions 
at issue in this matter. [FOF 190].
    This analysis, therefore, centers on the third prong of the Holiday 
CVS test; whether the ``red flags'' presented in Jones Pharmacy's 
prescriptions were conclusively resolved prior to the Pharmacy's 
dispensing the controlled substances at issue. [See Holiday CVS, 77 FR 
at 62,316].
    In her testimony, Ms. Jones stated that Jones Pharmacy followed the 
policies and procedures that were in place during 2010-2012 with regard 
to reviewing prescriptions for issues of concern. [FOF 154]. Those 
policies and procedures included only two methods of evaluating the 
legitimacy of a prescription: (1) telephoning the prescribing doctor to 
ensure that the prescription was authored by the prescribing doctor; 
and (2) inquiring about the patient's diagnosis. [FOF 154]. Credible 
evidence of these procedures was produced at the hearing in the form of 
Jones Pharmacy's original prescriptions--the same prescriptions used as 
the basis for the Government's allegations herein. [FOF 154, 175]. This 
evidence, however, is not enough to overcome the Government's 
allegations because it falls short of fulfilling a pharmacist's 
corresponding responsibility.
    When reviewing prescriptions from 2010 to 2012, Jones Pharmacy 
engaged in a minimal amount of investigation or inspection into the red 
flags present on the face of the prescriptions. [FOF 154, 175]. Jones 
Pharmacy's only methods of evaluating the legitimacy of a prescription 
included talking with the prescribing doctor to ensure that the 
prescription was authored by the prescribing doctor, and inquiring 
about the patient's diagnosis. [FOF 154]. Jones Pharmacy may have 
sought to prevent diversion through its practices, but it only looked 
into these two indicators of possible ``red flags'' when a prescription 
was presented with multiple others. [FOF 154].
    The Government's expert, Dr. Tracy Gordon, credibly testified that 
with regard to the ``red flags'' presented in the prescriptions 
stipulated to in this proceeding, the ``red flags'' presented were 
unresolvable. [FOF 120]. Dr. Gordon testified that there are certain 
situations in which red flags can be resolved, but the prescriptions 
Jones Pharmacy dispensed contained a multitude of red flags that, when 
considered together, could not be conclusively resolved. [FOF 121-124, 
126-130, 132-133]. For example, patients B.F. and K.W. presented 
identification from Ohio with addresses on the same street. [FOF 122]. 
B.F. and K.W. saw the same doctor, and were prescribed common cocktail 
medications. [FOF 1-6, 122]. Dr. Gordon testified that there was 
nothing Jones Pharmacy could have done to resolve these red flags when 
presented together. [FOF 122]. Therefore, I conclude that Jones 
Pharmacy dispensed controlled substances prescriptions with unresolved 
red flags.
    Similar to this, in Holiday CVS, the Administrator rejected the 
Respondent's contention that ```no case law, no Administrator decision, 
and no published DEA guidance supports [the Government Expert's] claims 
that certain red flags are `unresolveable' on their face.''' [77 FR at 
62,317]. Instead, the Administrator held that ``if the red flags 
presented by a prescription could not be resolved conclusively so as to 
permit a lawful dispensing, then the Government satisfied the third 
element of its prima facie burden.'' [Id. at 62,322].
    Following Holiday CVS, I have a duty to view the evidence presented 
in this matter and determine whether or not Jones Pharmacy conclusively 
resolved the red flags presented by a prescription prior to dispensing 
it. [Holiday CVS, 77 FR at 62,322]. As stated above, Dr. Gordon 
testified the red flags presented in Jones Pharmacy's prescriptions 
were unresolvable. [FOF 120, 122-124, 126-130, 132-134]. The 
Respondents did not put on any evidence rebutting specific red flags 
present in the prescriptions at issue. [FOF 190]. Rather, the 
Respondents expert only offered opinions regarding what red flags were 
generally known during 2010-2012. [FOF 184-186].
    Thus, the testimony of Dr. Gordon was not contradicted to the 
extent that it demonstrated Jones Pharmacy filled prescriptions with 
unresolvable red flags presented from 2010-2012. Due to this, I 
conclude that Jones Pharmacy did not conclusively resolve the red flags 
inherent in its prescriptions prior to dispensing. I therefore find 
that factors two and four weigh in favor of revocation.
c. Additional Indicators of Diversion
    Besides the red flags discussed above, the record manifests 
additional indicators that Jones Pharmacy may have dispensed controlled 
substances unlawfully. Specifically, the record indicates that Jones 
Pharmacy's business, from 2010--2012, was largely comprised of 
controlled substances sales. [FOF 96, 97 (explaining that 89% of all 
the controlled substance prescriptions filled by Jones were for 
cocktail drugs, roughly half of which were dispensed to out of state 
customers, 99% of the controlled substances were for immediate release 
pain medications, and 93% of the prescriptions dispensed were for cash 
paying customers)]. These statistics are unusually high compared to 
national averages. [FOF 70-72, 117; see also East Main Street Pharmacy, 
75 FR 66,149, 66,153 (DEA 2010) (noting that the Administrator has 
considered percentages of a pharmacy's dispensing practices as compared 
to national averages as an indicator of unlawful conduct)].
    The record also indicates that the pricing of Jones' controlled 
substances was extremely high, and 93% of controlled substance 
prescriptions were paid for in cash. [FOF 93, 97]. It is true that a 
pharmacy's level of controlled substances sales is not in and of itself 
a red flag for diversion or abuse. And it is also true that a pharmacy 
can charge the prices it wishes with regard to its controlled 
substances. But high prices and copious dispensing of controlled 
substances can be an indicator of possible diversion because it 
elucidates a customer base willing to pay exorbitant prices for a drug 
the customer could otherwise purchase at a nearby pharmacy for much 
less. \67\ [FOF 132]. This is especially true when a prescription is 
sold at over 1,000 times

[[Page 79220]]

the wholesale cost of the product. [FOF 97].
---------------------------------------------------------------------------

    \67\ In its brief the Government cites federal court precedent 
that supports the proposition that high prices are an indicator of 
unlawful controlled substance dispensing. [Gov't Br. 51 (citing U.S. 
v. Fuchs, 467 F.3d 889, 905 (5th Cir 2006) (noting that evidence 
that the pharmacy ``charged much higher prices than other 
pharmacies'' supported the conclusion that the pharmacist was part 
of a criminal conspiracy); U.S. v. Tanner, 61 F.3d 231, 237 (4th 
Cir. 1995) (finding evidence that pharmacist ``charged extremely 
high prices . . . indicate that [he] was fully cognizant that his 
acts were illegal, and that these sales were not mere accidents''); 
U.S. v. Hayes, 595 F.2d 258, 261 (5th Cir. 1979) (finding evidence 
including ``the prices charged by Hayes support the jury's 
conclusion that Hayes also knew that the prescriptions were not 
issued for a legitimate medical purpose''); U.S. v. Lovin, 2009 WL 
3634194, *7 (S.D. Cal. 2009) (finding ``evidence from which the jury 
could infer the defendants knew the substances were distributed for 
an other than legitimate medical purpose'' included ``the nature of 
the drugs sold and the exorbitant prices charged'')].
---------------------------------------------------------------------------

    Finally, the record shows that Jones Pharmacy's profits from 2010-
2012 were almost entirely derived from controlled substances sales. 
[FOF 137-139]. Specifically, Jones Pharmacy's annual profits from 
dispensing controlled substances in 2010 was $530,483, as opposed to 
the profits for non-controlled substances of $10,189. [FOF 137]. Jones 
Pharmacy's annual profits from dispensing controlled substances in 2011 
was $439,990, as opposed to the profits for non-controlled substances 
of $38,241. [FOF 138]. Jones Pharmacy's annual profits from dispensing 
controlled substances in 2012 was $316,942, as opposed to the profits 
for non-controlled substances of $58,123. [FOF 139]. The total amount 
of gross profits Jones Pharmacy made from the sales of schedule II 
narcotics during this three year period, 2010-2012, was in excess of 
$1.2 million. [FOF 72]. While I note the downward trend in profits 
derived from controlled substances for the years 2010, 2011, and 2012, 
Jones Pharmacy's amount of profits from controlled substance sales as 
compared to non-controlled substances is exorbitantly high. [FOF 117]. 
These statistics, coupled with the fact that 93% of controlled 
substances sales were paid for in cash, [FOF 97], indicate that Jones 
Pharmacy was dispensing controlled substances in the face of red flags 
for the sake of reaping lucrative cash profits. [FOF 70, 72].
d. Jones Pharmacy's Knowledge of Red Flags
    As an attempt to defend its dispensing actions and profit margins, 
the Respondents put on evidence purporting to show that Ms. Jones, 
along with the general pharmacy community, was unaware of the term or 
concept of ``red flags'' from 2010-2012. [FOF 173, 186; see also 
Holiday CVS, 77 FR at 62,316 (holding that ``Agency precedent limits [a 
registrant's] corresponding responsibility to circumstances which are 
known or should have been known.'' (internal citations omitted))]. As 
support, the Respondents argue that Ms. Jones was simply na[iuml]ve; 
she did not know or have reason to know that the prescriptions at Jones 
Pharmacy were not written for a legitimate medical purpose because the 
term or concept ``red flags'' was not generally known in the Florida 
pharmacy community from 2010-2012.\68\ [FOF 185, 198]. For the reasons 
listed below, I find that this defense fails, and Ms. Horn's expert 
testimony as it relates to Florida pharmacists' knowledge of the term 
or concept of ``red flags'' from 2010-2012 is not persuasive.
---------------------------------------------------------------------------

    \68\ While Ms. Horn testified that the first time she heard of 
the term ``red flags'' was in 2014, the term or concept ``red 
flags'' has long been recognized as a reflection of the norms of the 
pharmacy profession. [Holiday CVS, 77 FR at 62,319 (noting that the 
``red flag'' standard is what pharmacists are ``taught in 
schools''); East Main Street, 75 FR 66,149, 66,157 (DEA 2010) (``a 
pharmacist is `absolutely' taught to question the legality of a 
prescription'' such as ``a combination of a narcotic, a 
benzodiazepine, a muscle relaxant, and a sleeping pill'' with 
similar doses for everybody, [with] no individualization of 
therapy''); Gov't Br. 61]. Thus Ms. Jones' personal knowledge of the 
term ``red flags'' is not the focus here. The focus here is Ms. 
Jones' professional judgement when dispensing prescriptions that 
presented suspicious indicators such as the ``red flags'' discussed 
herein. [FOF 67].
---------------------------------------------------------------------------

    First, the Respondents aver that ``Ms. Jones complied with her 
corresponding responsibility as she understood it at the time by taking 
the actions that she took to check the validity of the prescriptions.'' 
[Resp. Br. 32; FOF 135]. At the hearing, Ms. Jones testified that she 
was na[iuml]ve, and did not know about ``red flags'' for abuse or 
diversion until May 2014. Specifically, Ms. Jones stated that ``we may 
have made mistakes that people may call dumb, na[iuml]ve, stupid, but 
it was not our intent to put stuff in the hand[s] of other people.'' 
[FOF 135].
    In its brief, the Government challenges the sincerity of the anti-
diversion ethos Ms. Jones declared at the hearing by pointing out 
inconsistencies in Ms. Jones's testimony and the Respondents' 
documentary evidence. The Government first points to high prices Ms. 
Jones charged and the cash profits Ms. Jones made to show that she 
``was fully cognizant that [her] acts were illegal'' and ``not mere 
accidents.'' [Gov't Br. 53]. Next, the Government notes a gaping 
inconsistency in Ms. Jones testimony which I find particularly 
persuasive in assessing Ms. Jones credibility. [Gov't Br. 55-56].
    In defending an assertion made by Florida Department of Health 
Inspector Crane--that a person could notice from Jones Pharmacy's 
parking lot that the pharmacy catered to pill seekers because of its 
``loitering'' clientele--Ms. Jones stated:

    The people [Ms. Crane] considered loitering were people that 
lived in the area. They were usually older gentlemen that sat 
outside of some of the businesses. There was a barber shop . . . 
There was a Haitian restaurant. There was a Hatian market. There was 
also a tax office . . . I don't think loitering was an appropriate 
term. They were actually people, I considered the pharmacy to be a 
part of the community, because they were people who made sure if I 
was walking in by myself, they would say are you okay? Good Morning. 
How are you? I felt like they looked out for me, so I don't feel 
like they were loitering.

[Tr. 415]. But in her letters to her congressional representatives 
urging action on behalf of the DEA to change her pharmacy's address, 
Ms. Jones stated that she was ```lucky' to move her business to a 
`better environment' where she could `go in the parking lot and not 
worry about smelling urine or seeing people hanging out on the 
sidewalk.''' [FOF 146]. This inconsistency, while seemingly trivial, 
calls into question the credibility of Ms. Jones' assertion that it was 
never Jones Pharmacy's intent to divert controlled substances because 
this statement purports that Ms. Jones was cognizant of the loitering, 
(possibly pill seeking) clientele outside her store. [FOF 69, 146].
    Second, the testimony of Respondent's Expert, Ms. Donna Horn, is 
not credible as it relates to the general knowledge of Florida 
pharmacists from 2010-2012. Ms. Horn has a multitude of experience in 
the prevention of prescription filling errors. [FOF 181]. When Ms. Horn 
was the President of the National Association of Board of Pharmacies, 
she prioritized a ``platform'' of ``reducing medication errors.'' [FOF 
181]. In contrast to her vast prevention of filling error experience, 
however, Ms. Horn indicated that she has not conducted any research on 
a pharmacist's corresponding responsibility. [FOF 190]. Ms. Horn also 
indicated that she has not published any research on corresponding 
responsibility issues. [FOF 190]. Further, Ms. Horn stated that she 
last practiced pharmacy as a pharmacist filling prescriptions fifteen 
years ago, and has never practiced as a pharmacist filling 
prescriptions in Florida, for she is only licensed as a pharmacist in 
Massachusetts [FOF 181].
    When asked about the basis for her knowledge with regard to 
pharmacists' general knowledge of ``red flags,'' Ms. Horn indicated 
that she looked at some of the administrative opinions on the DEA's 
website in forming her opinions. [FOF 185]. But as counsel for the 
Government rightly pointed out, Ms. Horn's opinions about what was 
``generally known among pharmacists based on DEA publications--
contradicts the only source she claimed to consult.'' [Gov't Br. 63].
    For example, Ms. Horn testified that in 2010, a combination of a 
benzodiazepine, a narcotic, and a carisoprodol was not a sign of drug 
abuse. Yet in one of the 2010 decisions that Ms. Horn claimed to 
review, East Main Street Pharmacy, the Administrator held that ``the

[[Page 79221]]

combination of a benzodiazepine, a narcotic and carisoprodol is `well 
known in the pharmacy profession' as being used `by patients abusing 
prescription drugs.''' [75 FR at 66,149)]. Likewise, the Government 
lists five such examples in its brief where Ms. Horn's opinion--
concerning what was generally known in the pharmacy community about a 
pharmacist's corresponding responsibility--stands in stark contrast to 
the administrative decision she purportedly used to form the basis of 
that very opinion. [Gov't Br. 63]. As such, I am not persuaded by Ms. 
Horn's testimony regarding what was generally known of ``red flags'' in 
the Pharmacy community from 2010-2012.
    I therefore conclude that the concept of red flags has long been 
recognized as a reflection of the norms of the pharmacy profession, and 
Jones Pharmacy's purported ignorance is not a credible defense. 
[Holiday CVS, 77 FR at 62, 319 (noting that DEA has held that the ``red 
flag'' standard is what pharmacists are ``taught in schools'' (Holiday 
CVS, 77 FR at 62,319), and that ``a pharmacist is `absolutely' taught 
to question the legality of a prescription'' such as ``a combination of 
a narcotic, a benzodiazepine, a muscle relaxant, and a sleeping pill'' 
with similar doses for everybody, [with] no individualization of 
therapy.'' East Main Street, 75 FR at 66,149)]. The Government, 
therefore, has met its burden of proof in this matter.
e. Mitigating Evidence
    Thus, because the Government has established its prima facie case, 
the burden of production now shifts to the Respondents to demonstrate 
that they take full responsibility for their unlawful conduct and they 
have put in place remedial measures so that such violations will not 
happen in the future. [Medicine Shoppe-Jonesborough, 73 FR 364, 387 
(DEA 2008) (quoting Samuel S. Jackson, 72 FR 23,848, 23,853 (DEA 2007)) 
(holding that a registrant must ``present sufficient mitigating 
evidence to assure the Administrator that [it] can be entrusted with 
the responsibility carried by such a registration''); Leo R. Miller, 53 
FR 21,931, 21,932 (DEA 1988)]. And because ``past performance is the 
best predictor of future performance,'' [ALRA Labs., Inc., v. DEA, 54 
F.3d 450, 452 (7th Cir. 1995)], ``this Agency has repeatedly held that 
where a registrant has committed acts inconsistent with the public 
interest, the registrant must both accept responsibility for its 
actions and demonstrate that it will not engage in future misconduct.'' 
[Holiday CVS, 77 FR at 62,323 citing Medicine Shoppe-Jonesborough, 73 
FR at 387; see also Jackson, 72 FR at 23,853; John H. Kennedy, 71 FR 
35,705, 35,709 (DEA 2006); Prince George Daniels, 60 FR 62,884, 62,887 
(DEA 1995)]. Once a respondent has accepted responsibility for her 
actions, she may ``demonstrate what corrective measures she has 
undertaken to prevent the re-occurrence of similar acts.'' [Hassman, 75 
FR at 8194 citing Jayam Krishna-Iyer, 74 FR 459, 464 & n.8 (2009)].
    As stated above, a registrant's acceptance of responsibility must 
be unequivocal. In her testimony, Ms. Jones repeatedly stated that she 
``could have done more'' when ensuring a prescription was issued for a 
legitimate medical purpose. [FOF 136 & fn. 21]. But as the Government 
rightly states in its brief, ``[a] registrant cannot accept 
responsibility for past misconduct without first understanding those 
responsibilities.'' [Gov't Br 72].
    Ms. Jones testified that the procedures she followed in 2010 were 
procedures she learned from her experience at other pharmacies. [FOF 
152-154]. With regard to the prescriptions at issue in this proceeding, 
and Jones Pharmacy's prescribing practices in 2010-2012, Ms. Jones 
stated repeatedly that she should have done things differently; that 
she could have, and should have, done things much different.\69\ [FOF 
125, 131, 135, 136 and n.19]. Then when asked on cross-examination 
about her responsibilities to ensure prescriptions were issued for a 
legitimate medical purpose, Ms. Jones said she thought she was 
exercising her responsibility because she was dispensing in accordance 
with her prior experience. [FOF 136 & fn. 19].\70\
---------------------------------------------------------------------------

    \69\ In MacKay v. DEA, 664 F.3d 808, 820 (10th Cir. 2011) the 
U.S. Court of Appeals for the Tenth Circuit addressed the 
Administrator's consideration of a practitioner's purported 
acceptance of responsibility. The Court held:
     [t]he DEA may properly consider whether a physician admits 
fault in determining if the physician's registration should be 
revoked. When faced with evidence that a doctor has a history of 
distributing controlled substances unlawfully, it is reasonable for 
the . . . Administrator to consider whether that doctor will change 
his or her behavior in the future. And that consideration is vital 
to whether the continued registration is in the public interest. . . 
. [T]he . . . Administrator had no evidence that Dr. MacKay 
recognized the extent of his misconduct and was prepared to remedy 
his prescribing practices.
    Id. See also Chein v. DEA, 533 F.3d 828, 837 (D.C. Cir. 2007) 
(upholding revocation order, noting in part that the physician had 
not ``accepted responsibility for his misconduct''); Hoxie, 419 F.3d 
at 483 (DEA properly considers admission of fault in determining 
whether a registration should be revoked).
    \70\ Ms. Jones carefully avoided any admission that she failed 
to exercise her corresponding responsibility.
    Q: When you filled those prescriptions on April 19 and 20 of 
2010, were you exercising your responsibility to insure they were 
issued for legitimate medical purposes?
    A: I think I was at the time, yes.
    Q: It's fair to say you fulfilled the responsibilities as you 
understood them at the time, correct?
    A: Correct.
    Q: And you understand those responsibilities differently today, 
correct?
    A: Differently today--differently in the sense of I can do more; 
differently, no, in the sense if the prescription is written by the 
prescriber, I don't think it makes it an illegitimate, not a 
legitimate prescription for medical purposes. I think I can do more 
digging to make sure that the patient is going to use it 
appropriately and not make it so that somebody else has access to it 
. . . But I still do rely on the prescriber to write prescriptions 
for legitimate medical purposes. [Tr. 599-600].
---------------------------------------------------------------------------

    I agree with the Government that the issue with these statements is 
that they ``place [Ms. Jones] in the role of a third party bystander to 
wrongdoing.'' [Gov't Br. 72]. Ms. Jones asserts that the practices and 
procedures she employed were those she utilized at other pharmacies. 
[FOF 154]. These statements do not act to ``unequivocally'' accept 
responsibility for Ms. Jones' actions. To the contrary, these 
statements shift the blame to prior pharmacies that Ms. Jones worked 
for.
    Next, the Government rightly notes that Ms. Jones places 
culpability of her actions on the ``professed confusion about legal 
responsibilities.'' [Gov't Br. 72]. And Ms. Jones' wavering responses 
on cross examination undoubtedly show her lack of understanding of a 
pharmacist's corresponding responsibility. For example, when asked 
whether or not there are circumstances that would cause Ms. Jones to 
reject a prescription because she believed it was not issued for a 
legitimate medical purpose, Ms. Jones stated ``there are circumstances 
that would cause me to reject a prescription. I don't think I can make 
the determination whether it's for a legitimate medical purposes 
because I would have to say that I'm in that person's body and I know 
how they feel if we're speaking just about pain medications.'' [FOF 
135]. Then when asked whether she knew one way or another if she had a 
corresponding responsibility, Ms. Jones stated ``I did not know that 
the law said that I had to make sure that prescriptions said it was 
legitimate, medically legitimate.'' [FOF 135].
    In Sigrid Sanchez, M.D., the Administrator considered a similar 
situation where a practitioner averred--in the face of wrongful 
prescribing allegations--that it ```was the first time in [her] 
professional career that [she] had been a dispensing practitioner,' and 
that she `was completely unaware that [she] had run afoul of the laws

[[Page 79222]]

governing dispensing practitioners.''' 78 FR 39, 331, 39,333 (DEA 
2013). Assessing these claims, the Administrator stated ``[o]ne must 
wonder why [the practitioner] did not make a similar effort to 
familiarize herself with the various requirements applicable to the 
dispensing of controlled substances under both the CSA and state 
laws.'' [Id.]. Considering this, the Administrator held that the 
practitioner's purported ``ignorance of law is no excuse.'' [Id.].
    The matter at hand is very much the same. Ms. Jones claimed that 
she was following her corresponding responsibility as she understood it 
from 2010-2012 when over a hundred prescriptions that were presented 
with multiple unresolved red flags were dispensed at Jones Pharmacy. 
Ms. Jones purported to accept responsibility for Jones Pharmacy's 
dispensing practices by repeatedly asserting that she did what she knew 
at the time, but now she knows she could have done more. [FOF 136 & fn. 
19]. But then Ms. Jones demonstrated by her statements that she does 
not fully understand her corresponding responsibility even yet today. 
[FOF 135]. Thus, there remains no excuse for the Respondents' past 
dispensing conduct and continued lack of knowledge of Jones Pharmacy's 
corresponding responsibility to ensure that controlled substances 
dispensed reach only patients with legitimate medical needs. [See 21 
CFR Sec.  1306.04(a)].
    I agree with the Government that as such, the Respondents' 
``[c]laims of reliance on others [and] professed confusions about legal 
responsibilities demonstrate precisely the opposite of acceptance of 
responsibility.'' [Gov't Br. 72]. For these reasons, I conclude that 
Ms. Jones has not accepted responsibility for the unlawful dispensing 
that occurred at Jones Pharmacy from 2010-2012.
    Because I find that Ms. Jones has not unequivocally accepted 
responsibility for the dispensing of prescriptions with red flags 
present from 2010-2012, I will not consider the remedial efforts that 
the Respondents put forth in their case in chief. [See Holiday CVS, 
LLC, 77 FR at 62,346 (explaining that a registrant's acceptance of 
responsibility and showing of remedial measures are independent 
``essential requirements for rebutting the Government's prima facie 
showing that continuing an existing registration would be `consistent 
with the public interest.''' 21 U.S.C. 823(f); see also Hassman, 75 FR 
at 8194 citing Jayam Krishna-Iyer, 74 FR at 464 & n.8. and The Medicine 
Shoppe, 79 FR 59,504, 59,510 (DEA 2014) (holding that there is no need 
to address a Respondent's remedial measures when the respondent has not 
accepted responsibility for its misconduct).
3. Basis for Denial of SND Healthcare LLC's Application for a DEA 
Registration
    Even though Jones Pharmacy and SND Healthcare are separate 
entities, they are treated as one integrated enterprise for purposes of 
this proceeding. In MB Wholesale, Inc., 72 FR 71,956, 71,958 (DEA 
2007), the Deputy Administrator denied an application by one business 
entity for a DEA Certificate of Registration as being inconsistent with 
the public interest, 21 U.S.C. 823(f), based on a separate, related 
business entity's dispensing conduct where the two were ``nominally 
separate business entities.'' [Id.]. The Deputy Administrator clarified 
that the Agency will treat two separately organized business entities 
as one integrated enterprise under the Controlled Substances Act where 
it is appropriate to do so based on the overlap of ownership, 
management, and operations of the two entities.'' [72 FR at 71,958].
    In this instance, there is no dispute that SND Healthcare and Jones 
Pharmacy are one integrated enterprise. Ms. Jones is the owner and 
operator of both Jones Pharmacy, and SND Healthcare. Jones Total Health 
Pharmacy, LLC, and SND Healthcare LLC, are both incorporated in the 
state of Delaware. [FOF 144]. The corporate documents produced in this 
proceeding show that Ms. Jones is the owner for both business entities. 
[FOF 144]. The corporate documents also reveal that Ms. Jones is the 
Registered Agent, the Florida Community Pharmacy Permit applicant, 
managing member, and authorized representative who submitted the 
Applications By Foreign Limited Liability Company For Authorization To 
Transact Business in Florida for both business entities. [FOF 144]. In 
light of this, I find that it is proper to consider Jones Total 
Healthcare, LLC, and SND Healthcare, LLC, as one integrated enterprise 
under the Controlled Substances Act because the ownership, management, 
and operations of each entity are sufficiently similar.
    By virtue of this finding, and because Agency has held that past 
performance is the best predictor of future performance, [Alra Labs. v. 
DEA, 54 F.3d 450, 452 (7th Cir. 1995)], I conclude that the unlawful 
dispensing practices at Jones Total Health Pharmacy, LLC, are an 
appropriate basis to deny the pending application for SND Healthcare, 
LLC's DEA Certificate of Registration.

VI. Conclusions and Recommendation

    Given the egregious dispensing practices that took place at Jones 
Pharmacy from 2010-2012, I recommend that the Respondents' Certificate 
of Registration for Jones Pharmacy be revoked, and any applications for 
modification or renewal be denied. Further, for the same reasons 
described herein, I recommend that the pending Certificate of 
Registration application for SND Healthcare be denied.\71\
---------------------------------------------------------------------------

    \71\ There is no evidence in this record under Factors Three and 
Five that would mitigate the conduct that is inconsistent with the 
public interest under Factors Two and Four. I therefore conclude 
that the absence of such evidence ``militates neither for nor 
against the revocation sought by the Government.'' Top Rx Pharmacy, 
78 FR 26,069, 26,081 (2013).

    Dated: April 29, 2015
Gail A. Randall,
Administrative Law Judge.
[FR Doc. 2016-27120 Filed 11-9-16; 8:45 am]
 BILLING CODE 4410-09-P