[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]
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DEPARTMENT OF JUSTICE
Drug Enforcement Administration
[Docket No. 04-58]
RX Direct Pharmacy, Inc.; Dismissal of Proceeding
On May 17, 2004, I, the Deputy Administrator of the Drug
Enforcement Administration, issued an Order to Show Cause and further
ordered the immediate suspension of DEA Certificate of Registration,
BR8263876, issued to RX Direct Pharmacy, Inc. (Respondent) of Deerfield
Beach, Florida. The Order of Immediate Suspension was based on my
preliminary finding that Respondent, ``through its Internet service[,]
has been responsible for the diversion of large quantities of
controlled substances,'' Id. at 9, and that its continued registration
during the pendency of the proceeding, ``would constitute an imminent
danger to the public health and safety because of the substantial
likelihood that [it would] continue to divert controlled substances.''
Id. at 10.
The Show Cause Order proposed the revocation of Respondent's
registration as a retail pharmacy and to deny any pending applications
for renewal or modification of the registration on the ground that
Respondent's continued registration would be inconsistent with the
public interest. Show Cause Order at 1 (citing 21 U.S.C. 823(f) &
824(a)). More specifically, the Show Cause Order alleged that
Respondent's customers would access an affiliated Web site, at which
they would complete an on-line questionnaire and list what drugs they
were seeking. Id. at 5. According to the Show Cause Order, the
questionnaires were then submitted to ``affiliated physicians,'' who
would review the
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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