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RX Direct Pharmacy, Inc.; Dismissal of Proceeding
FR Doc E7-18512 [Federal Register: September 21, 2007 (Volume 72,
Number 183)] [Notices] [Page 54070-54072] From the Federal Register
Online via GPO Access [wais.access.gpo.gov] [DOCID:fr21se07-125]
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 04-58]
RX Direct Pharmacy, Inc.; Dismissal of Proceeding
On May 17, 2004, I, the Deputy Administrator of the Drug Enforcement
Administration, issued an Order to Show Cause and further ordered the
immediate suspension of DEA Certificate of Registration, BR8263876,
issued to RX Direct Pharmacy, Inc. (Respondent) of Deerfield Beach,
Florida. The Order of Immediate Suspension was based on my preliminary
finding that Respondent, "through its Internet service[,] has been
responsible for the diversion of large quantities of controlled
substances,'' Id. at 9, and that its continued registration during the
pendency of the proceeding, "would constitute an imminent danger to the
public health and safety because of the substantial likelihood that [it
would] continue to divert controlled substances.'' Id. at 10.
The Show Cause Order proposed the revocation of Respondent's
registration as a retail pharmacy and to deny any pending applications
for renewal or modification of the registration on the ground that
Respondent's continued registration would be inconsistent with the
public interest. Show Cause Order at 1 (citing 21
U.S.C. 823(f) & 824(a)).
More specifically, the Show Cause Order alleged that Respondent's
customers would access an affiliated Web site, at which they would
complete an on-line questionnaire and list what drugs they were seeking.
Id. at 5. According to the Show Cause Order, the questionnaires were
then submitted to "affiliated physicians,'' who would review the
[[Page 54071]]
questionnaires; if the physician approved the patient's request, the
prescription was then forwarded to Respondent to be filled. Id.
The Show Cause Order further alleged that on four separate occasions
between November 24, 2003, and April 8, 2004, DEA investigators
purchased various Schedule IV controlled substances including
phentermine, Ambien, and Meridia, all of which were ordered through an
Internet site and were filled by Respondent. Id. at 6-8. The Show Cause
Order generally alleged that prescriptions were based solely on an
Internet questionnaire, that the investigator never had any contact with
the prescribing physician, and that a pharmacist never contacted the
investigators to discuss their prescriptions. See id. Relatedly, the
Show Cause Order also alleged that between March 22, 2004, and April 13,
2004, Respondent dispensed to a Pennsylvania resident 600 hydrocodone
tablets, which were prescribed by a Puerto Rico-based physician. Id. at
8.
On June 11, 2004, Respondent timely requested a hearing. The matter
was assigned to Administrative Law Judge (ALJ) Mary Ellen Bittner. At
the request of both parties, various stays were entered in the matter.
On October 10, 2006, the Government moved for summary disposition.
The basis of the Government's motion was that Respondent's state
pharmacy license had expired on February 28, 2005, and that Respondent
was now closed. Gov. Mot. For Summary Judgment at 1. The Government thus
maintained that because Respondent no longer had authority to handle
controlled substances under Florida law, it was not entitled to maintain
its DEA registration. Id. at 3. Alternatively, the Government argued
that Respondent's DEA registration automatically terminated when it
closed. Id. at 4 (citing 21
CFR 1301.52(a)).
Respondent opposed the Government's motion. Respondent admitted that
its state license had expired, that it did not renew the license, and
that it had surrendered the license. Resp. Opp. at 3. Respondent also "acknowledge[d]
that under relevant law and precedent, DEA may not register an applicant
to handle controlled substances if the applicant lacks authority to
handle controlled substances in the state in which it practices.'' Id.
Respondent asserted, however, that this rule should not be applied to it
because of "the unique circumstances'' wherein it "surrendered its state
pharmacy license after, and based solely on, DEA's Order to Show Cause
and Immediate Suspension of [its] DEA registration and where there has
been no opportunity for a hearing.'' \1\ Id. Respondent further
contended that it "surrendered its state license and did not request a
hearing * * * based on the fact that DEA's action prevented [it] from
operating as a pharmacy in Florida.'' \2\ Id. at 4. Respondent thus
argued that "[i]n light of the peculiar circumstances involved in this
matter, it would be fundamentally unfair to revoke or terminate
Respondent's DEA registration with[out] the opportunity for an
administrative hearing.'' Id. at 5.
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\1\ Respondent further maintained that it was "financially
impossible'' for it "to maintain its state pharmacy license'' because "under
Florida law,'' it was required to keep its prescription department " 'open
for a minimum of forty (40) hours per week and a minimum of five (5)
days per week.' '' Id. at 4-5 (quoting Fla. Adm. Code 64B16-28.1018).
According to Respondent, it would have maintained its state license "but
for this practical impossibility.'' Id. at 5. Respondent also
contended that because the Government seized all of its records and
equipment, it "made it difficult, if not impossible, for Respondent to
conduct its pharmacy business.'' Id. at 2.
\2\ In support of its position, Respondent cited my
Order in Oakland Medical Pharmacy, 71 FR 50,100 (2006). Specifically,
Respondent relied on the ALJ's reasoning in that case which I
expressly declined to follow.
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The ALJ did not find Respondent's arguments persuasive. Accordingly,
as there were no material facts in dispute, the ALJ granted the
Government's motion and forwarded the record to me for final agency
action and recommended that I revoke Respondent's registration. ALJ Dec.
at 6.
While reviewing this matter, it was determined that Respondent's DEA
registration expired on April 30, 2006, nearly six months before the
Government moved for summary disposition. Moreover, Respondent did not
file a renewal application. Accordingly, I ordered the parties to brief
the issue of whether the case had become moot or whether there were
collateral consequences that rendered the case a live controversy. See
Ronald J. Riegel, 63 FR 67132, 67133 (1998) ("If a registrant has not
submitted a timely renewal application prior to the expiration date,
then the registration expires and there is nothing to revoke.''); see
also William R. Lockridge, 71 FR 77791, 77797 (2006) (holding case not
moot because of collateral consequences). Subsequently, both parties
briefed the issue.
The Government argues that while there are collateral consequences
pertaining to the forfeiture of controlled substances that were seized
at the time the immediate suspension was served, "a section 824(f) asset
forfeiture is predicated '[u]pon a revocation order becoming final.' ''
Gov. Resp. to Briefing Order at 3 (quoting 21
U.S.C. 824(f)). The Government notes that this leads to "disparate
dispositions'' because the controlled substances of an entity whose
registration does not expire before the issuance of a final order are
subject to forfeiture while a registrant can prevent the Government from
obtaining forfeiture under section 824(f) by allowing its registration
to expire. Id. The Government nonetheless argues that "affirming an
immediate suspension will not trigger the section 824(f) asset
forfeiture,'' and that "[i]f the registrant's registration expires while
OTSC proceedings are in progress and the registrant does not submit a
renewal application, such a registrant can avoid the consequences of
section 824(f).'' Id. at 3-4.
Notably, the Government does not argue that the statute is silent on
the question of whether forfeiture is triggered when a registrant
requests a hearing and then allows its registration to expire before the
final order is issued. Cf. Chevron U.S.A., Inc., v. NRDC, 467 U.S. 837,
843 (1984) ("[I]f the statute is silent or ambiguous with respect to the
specific issue, the question for the court is whether the agency's
answer is based on a permissible construction of the statute.'').
Instead, the Government argues that "these disparate results can be
obviated through other asset forfeiture proceedings or through
settlements in related civil or criminal proceedings.'' Gov. Resp. at 4.
The Government thus concedes that this case is now moot. Agreeing with
the Government's reasoning, Respondent argues that "Sec. 824(f)
forfeiture proceedings do not apply in a situation where the
Respondent's registration expires while the OTSC proceedings are in
progress and the registrant does not submit a renewal application.''
Respondent Resp. at 5. According to Respondent, "[w]ithout a final order
by DEA to 'revoke or suspend' the registration, DEA may not use Sec.
824(f) to place such drugs under 'seal' and require the registrant to
forfeit the drugs.'' Id. Respondent further contends that to "allow[]
the government to permanently forfeit Respondent's property without an
opportunity for a full hearing on the merits is unreasonable and
contrary to law.'' Id. Respondent thus requests that I hold that the
matter is moot.
Having considered the record and the parties' positions, I conclude
that this case is now moot. Respondent allowed its registration to
expire and has not filed a renewal application. Indeed, Respondent has
surrendered its state
[[Page 54072]]
pharmacy license and closed its business. Moreover, Respondent has
not asserted that it plans to re-enter the business of pharmacy at some
future date. See CRJ Pharmacy, Inc., and YPM Total Care Pharmacy, Inc.,
72 FR 30846 (2007).
Finally, as the Government points out, the United States Attorney has
sought forfeiture of "any property which the defendant used or intended
to be used in any manner * * * to commit'' the offenses charged in the
indictment which includes the controlled substances previously seized.
See Indictment, United States of America v. Frank Hernandez, et al., at
11 (Case 07-60027-CR, S.D. Fla.). Because title to the controlled
substances will be determined in the pending criminal proceeding, this
case does not present any collateral consequence that the issuance of a
final order would resolve.\3\ Accordingly, this case is now moot.\4\
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\3\ Respondent also requests that "DEA authorize
[it] to determine whether the controlled substances still in the
government's possession may be distributed to an authorized registrant
for credit.'' Respondent's Resp. at 5. Respondent's request should be
directed to the Federal District Court. See 21 U.S.C. 824(f).
\4\ In holding this matter moot, I rely solely on
the factual circumstances and do not adopt the parties' construction
of the statute. Indeed, under that interpretation, even where a
hearing has been held on the allegations that supported the immediate
suspension order and the seizure of controlled substances, a
respondent could see how it had fared in the proceeding and if it
determined that it was not likely to prevail, it could then defeat the
effect of the proceeding simply by failing to submit a renewal
application and allowing its registration to expire. Under the
parties' construction, the hearing would have been for naught and the
Government would likely be required to relitigate the issues in
another proceeding. It is implausible that Congress intended such a
result.
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Order
Pursuant to the authority vested in me by 21
U.S.C. 823(f) and 824(a),
as well as 28 CFR 0.100(b) and 0.104, I hereby order that the Order to
Show Cause be, and it hereby is, dismissed.
Dated: September 13, 2007.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E7-18512 Filed 9-20-07; 8:45 am]
BILLING CODE 4410-09-P
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