[Federal Register Volume 87, Number 69 (Monday, April 11, 2022)]
[Notices]
[Pages 21212-21215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07687]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Crosby Pharmacy and Wellness; Decision and Order

I. Introduction

    On October 23, 2021, the Assistant Administrator, Diversion Control 
Division, Drug Enforcement Administration (hereinafter, DEA or 
Government), issued an Order to Show Cause (hereinafter, OSC) to Crosby 
Pharmacy and Wellness (hereinafter, Applicant) of Montgomery, Texas. 
OSC, at 1. The OSC proposes the denial of Applicant's registration 
application, Control No. W20008908A (hereinafter, registration 
application). It alleges that Applicant materially falsified its 
registration application and that Applicant's registration would be 
``inconsistent with the public interest, as that term is defined in 21 
U.S.C. 823(f).'' Id.
    Specifically, the OSC alleges that, during an onsite visit when 
Applicant was a registrant, the Government discovered ``serious 
recordkeeping violations,'' including not maintaining an initial 
inventory, not maintaining a biennial inventory, and not maintaining 
accurate records of all controlled substances received and sold. Id. at 
1-2 (citing 21 CFR 1304.11(b), 1304.11(c), 1304.21(a)). The OSC also 
alleges that Applicant materially falsified its registration 
application by answering ``no'' to the question of whether it had 
``ever surrendered (for cause) or had a federal controlled substance 
registration revoked, suspended, restricted, or denied, or is any such 
action pending.'' Id. at 2.
    The OSC notifies Applicant of the right to request a hearing on the 
allegations or to submit a written statement, while waiving the right 
to a hearing; the procedures for electing each option; and the 
consequences for failing to elect either option. Id. at 3 (citing 21 
CFR 1301.43). The OSC also notifies

[[Page 21213]]

Applicant of the opportunity to submit a corrective action plan. Id. at 
3-4 (citing 21 U.S.C. 824(c)(2)(C)).

II. Adequacy of Service

    In a sworn Declaration dated August 20, 2021 (hereinafter, 
Declaration), a Diversion Investigator (hereinafter, DI) assigned to 
the Houston Division Office in Houston, Texas, stated that she ``caused 
a copy of the . . . [OSC] to be sent to . . . [Applicant] at . . . 
[its] proposed registered address via First Class Mail and Certified 
Mail.'' DI Declaration, at 3. She stated that ``[b]oth of these 
mailings were returned to DEA.'' Id. The DI also stated that, on 
November 12, 2020, she ``caused a copy of the . . . [OSC] to be 
emailed'' to Applicant at the ``email address . . . given to DEA by . . 
. [Applicant] in . . . [its registration a]pplication.'' Id. According 
to the DI's sworn Declaration, she ``did not receive any notification 
that the message was not delivered.'' Id.
    The Government forwarded its Request for Final Agency Action 
(hereinafter, RFAA), along with the evidentiary record, to this office 
on August 24, 2021. In its RFAA, the Government represented that 
``Applicant did not request a hearing'' and requested that I ``enter an 
order denying Applicant's application.'' RFAA, at 1.
    Based on the DI's Declaration, the Government's written 
representations, and my review of the record, I find that the 
Government accomplished service of the OSC on Applicant on or about 
November 12, 2020. I also find that more than thirty days have now 
passed since the Government accomplished service of the OSC. Further, 
based on the Government's written representations, I find that neither 
Applicant, nor anyone purporting to represent Applicant, requested a 
hearing, submitted a written statement while waiving Applicant's right 
to a hearing, or submitted a corrective action plan. Accordingly, I 
find that Applicant has waived the right to a hearing and the right to 
submit a written statement and corrective action plan. 21 CFR 
1301.43(d); 21 U.S.C. 824(c)(2)(C). I, therefore, issue this Decision 
and Order based on the record submitted by the Government, which 
constitutes the entire record before me. 21 CFR 1301.43(e).

III. Findings of Fact

A. Applicant's Registration History

    I find there is substantial uncontroverted record evidence that 
Applicant previously held registration No. FC7640623. RFAA Exhibit 
(hereinafter, RFAAX) 3, at 1. I find there is substantial 
uncontroverted record evidence that Applicant surrendered that 
registration for cause by signing a DEA-104, ``Surrender for Cause of 
DEA Certificate of Registration'' on January 8, 2020. RFAAX 4, at 1. 
Further, I find there is substantial uncontroverted record evidence 
that, on or around January 29, 2020, Applicant submitted the 
registration application. DI Declaration, at 2; RFAAX 2, at 1-3. I find 
clear, unequivocal, convincing, and unrebutted record evidence that, on 
the registration application, Applicant certified that it had never 
``surrendered (for cause) . . . a federal controlled substance 
registration.'' RFAAX 2, at 1. I find there is substantial 
uncontroverted record evidence that DEA issued this OSC about the 
registration application. OSC, at 1; RFAAX 4, at 2.

B. Investigation of Applicant

    I find there is substantial uncontroverted record evidence that DI 
and other DEA employees ``conducted an onsite visit'' of Applicant on 
January 8, 2020. DI Declaration, at 1. I find there is substantial 
uncontroverted record evidence that, during this visit, the DEA team 
``discovered a number of problems with . . . [Applicant's controlled-
substance-related] recordkeeping.'' Id. I further find there is 
substantial uncontroverted record evidence that DI ``confronted'' a 
representative of Applicant about ``some'' of the recordkeeping 
problems. Id. at 2. I find there is substantial uncontroverted record 
evidence that, ``[i]n response,'' a representative of Applicant 
``agreed to surrender'' Applicant's registration and signed a DEA-104 
stating that Applicant was ``surrender[ing its registration] for 
cause.'' Id.; RFAAX 4, at 1. I find there is substantial uncontroverted 
record evidence that DEA sent Applicant a letter, dated January 24, 
2020, ``confirming the surrender of . . . [its] registration privileges 
in Schedules II through V on January 8, 2020,'' and stating that, 
``[c]oncurrent with the surrender,'' Applicant is ``no longer 
authorized to order, distribute, possess, dispense, administer, 
prescribe, or engage in any activities with controlled substances under 
DEA Registration Number FC7640623.'' RFAAX 7, at 1. I find there is 
substantial uncontroverted record evidence that DEA directed the 
January 24, 2020 letter to Applicant at the physical address Applicant 
submitted in the registration application. RFAAX 7, at 1; RFAAX 2, at 
1.
    I find there is substantial uncontroverted record evidence that DI 
continued the investigation of Applicant after its voluntary 
registration surrender for cause by issuing an administrative subpoena 
to Applicant's distributor. RFAAX 5, at 1; DI Declaration, at 2. I find 
there is substantial uncontroverted record evidence that, pursuant to 
the administrative subpoena, Applicant's distributor provided DI with 
DEA Form 222s and invoices. DI Declaration, at 2. I find there is 
substantial uncontroverted record evidence that these distributor 
documents show that the distributor provided Applicant with more than 
18,000 tablets of oxycodone 30 mg, more than 16,000 tablets of 
hydrocodone/acetaminophen 10/325 mg, more than 13,000 tablets of 
alprazolam 2 mg, more than 20,000 tablets of carisoprodol 350 mg, and 
120 bottles of 473 ml promethazine with codeine. Id.; see also RFAAX 6. 
I find there is substantial uncontroverted record evidence that the 
distributor shipped controlled substances to Applicant. DI Declaration, 
at 2; RFAAX 6. I find there is substantial uncontroverted record 
evidence that Applicant did not produce for the DEA team an initial 
inventory of the controlled substances, ``any records of dispensing any 
controlled substances,'' and ``any controlled substances.'' DI 
Declaration, at 1.

III. Discussion

A. The Controlled Substances Act and the Public Interest Factors

    Pursuant to the Controlled Substances Act (hereinafter, CSA), 
``[t]he Attorney General shall register practitioners . . . to dispense 
. . . controlled substances . . . if the applicant is authorized to 
dispense . . . controlled substances under the laws of the State in 
which he practices.'' 21 U.S.C. 823(f). The CSA further provides that 
an application for a practitioner's registration may be denied upon a 
determination that ``the issuance of such registration . . . would be 
inconsistent with the public interest.'' Id. In making the public 
interest determination, the CSA requires consideration of the following 
factors:

    (1) The recommendation of the appropriate State licensing board 
or professional disciplinary authority.
    (2) The applicant's experience in dispensing . . . controlled 
substances.
    (3) The applicant's conviction record under Federal or State 
laws relating to the manufacture, distribution, or dispensing of 
controlled substances.
    (4) Compliance with applicable State, Federal, or local laws 
relating to controlled substances.
    (5) Such other conduct which may threaten the public health and 
safety.

Id.


[[Page 21214]]


    These factors are considered in the disjunctive. Robert A. Leslie, 
M.D., 68 FR 15227, 15230 (2003). I ``may rely on any one or a 
combination of factors and may give each factor the weight [I] deem[ ] 
appropriate in determining whether . . . an application for 
registration [should be] denied.'' Id. Moreover, while I am required to 
consider each factor, I ``need not make explicit findings as to each 
one,'' and I ``can give each factor the weight . . . [I] determine[ ] 
is appropriate.'' Jones Total Health Care Pharmacy, LLC v. Drug Enf't 
Admin., 881 F.3d 823, 830 (11th Cir. 2018) (quoting Akhtar-Zaidi v. 
Drug Enf't Admin., 841 F.3d 707, 711 (6th Cir. 2016)); see also MacKay 
v. Drug Enf't Admin., 664 F.3d 808, 816 (10th Cir. 2011) (quoting 
Volkman v. Drug Enf't Admin., 567 F.3d 215, 222 (6th Cir. 2009) 
(quoting Hoxie v. Drug Enf't Admin., 419 F.3d 477, 482 (6th Cir. 
2005))). In other words, the public interest determination ``is not a 
contest in which score is kept; the Agency is not required to 
mechanically count up the factors and determine how many favor the 
Government and how many favor the registrant. Rather, it is an inquiry 
which focuses on protecting the public interest; what matters is the 
seriousness of the registrant's misconduct.'' Peter A. Ahles, M.D., 71 
FR 50097, 50098-99 (2006).
    The OSC in this matter, as already discussed, alleges that 
Applicant's registration application should be denied because it would 
be inconsistent with the public interest for Applicant to have a 
registration and because Applicant's registration application contains 
a materially false response to a liability question. OSC, at 1-3; 21 
U.S.C. 823(f), 824(a)(1); supra section II. A determination that the 
issuance of a registration ``would be inconsistent with the public 
interest'' is a basis for the denial of a registration application. 21 
U.S.C. 823(f). The CSA, however, places the provision addressing the 
ramification of a material falsification with the bases for revocation 
or suspension of a registration. 21 U.S.C. 824(a).
    Prior Agency decisions have addressed whether it is appropriate to 
consider a material falsification and other bases for revocation or 
suspension described in 21 U.S.C. 824(a) when determining whether or 
not to grant a practitioner registration application.\1\ For over 
forty-five years, and as recently as late last year, Agency decisions 
have concluded that it is. See, e.g., Lisa M. Jones, N.P., 86 FR 52196 
(2021); Robert Wayne Locklear, 86 FR 33738 (2021) (collecting Agency 
decisions). These decisions offer multiple bases and analyses for that 
conclusion. 86 FR at 33744-45. For example, a prior decision noted that 
``[t]o hold otherwise would mean that applications would have to be 
granted [under 21 U.S.C. 823(f)] only to be revoked the next day'' 
under 21 U.S.C. 824(a). Id. at 33744 (quoting John R. Amato, M.D., 40 
FR 22852 (1975)). I reaffirm my decision in Lisa M. Jones, N.P. that a 
basis for revocation or suspension described in a provision of 21 
U.S.C. 824(a) may be the basis for the denial of a practitioner 
registration application.
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    \1\ A pharmacy is a ``practitioner.'' 21 U.S.C. 802(21).
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B. Allegation That Applicant Submitted a Materially False Registration 
Application

    Having read and analyzed all of the record evidence, I find from 
clear, unequivocal, convincing, and unrebutted record evidence that 
Applicant surrendered (for cause) its DEA registration on January 8, 
2020. Supra section II.A, section II.B; RFAAX 4. Having read and 
analyzed all of the record evidence, I find from clear, unequivocal, 
convincing, and unrebutted record evidence that Applicant answered 
``no'' to the second liability question in the registration 
application--whether Applicant ``ever surrendered (for cause) . . . a 
federal controlled substance registration.'' Supra section II.A. 
Applicant's false answer to the second liability question in the 
registration application implicates two of the public interest factors 
that the CSA requires me to consider: Applicant's experience in 
dispensing controlled substances, and Applicant's compliance with 
applicable federal laws relating to controlled substances. 21 U.S.C. 
823(f)(2), (4); Frank Joseph Stirlacci, M.D., 85 FR 45229, 45234 
(2020). As such, Applicant's false response to the second liability 
question in the registration application was ``predictably capable of 
affecting, i.e., had a natural tendency to affect'' my official 
decision on its registration application. Frank Joseph Stirlacci, M.D., 
85 FR at 45238. Accordingly, I find from clear, unequivocal, 
convincing, and unrebutted record evidence that the registration 
application contains a material falsification, an independent basis for 
the denial of the registration application.

C. Allegation That Issuing a Registration to Applicant Would Be 
Inconsistent With the Public Interest

    As already discussed, the OSC includes three allegations that 
Applicant failed to maintain required ``controlled substances 
records.'' OSC, at 2. First, the OSC alleges that Applicant ``failed to 
maintain an initial inventory, in violation of 21 CFR 1304.11(b).'' Id. 
As already discussed, based on substantial uncontroverted record 
evidence that the distributor shipped controlled substances to 
Applicant, I find there is substantial uncontroverted record evidence 
that Applicant did not produce for the DEA team an initial inventory of 
the controlled substances, ``any records of dispensing any controlled 
substances,'' and ``any controlled substances.'' Supra section II.B. 
Accordingly, I find that Applicant violated the CSA by failing to 
maintain an initial inventory, implicating 21 U.S.C. 823(f)(2) and (4). 
21 CFR 1304.11(b).
    Second, the OSC alleges that Applicant ``failed to maintain a 
biennial inventory, in violation of 21 CFR 1304.11(c).'' OSC, at 2. 
There is no evidence in the record that supports this allegation. 
Accordingly, I find that this OSC allegation is not founded.
    Third, the OSC alleges that Applicant ``failed to maintain accurate 
records of all controlled substances received and sold, in violation of 
21 CFR 1304.21(a).'' Id. As already discussed, based on substantial 
uncontroverted record evidence that the distributor shipped controlled 
substances to Applicant, I find there is substantial uncontroverted 
record evidence that Applicant did not produce for the DEA team ``any 
records of dispensing any controlled substances'' and ``any controlled 
substances.'' Supra section II.B. Accordingly, I find that Applicant 
violated the CSA by failing to maintain accurate records of all 
controlled substances received and sold, implicating 21 U.S.C. 
823(f)(2) and (4). 21 CFR 1304.21(a).
    The Government has the burden of proof in this proceeding. 21 CFR 
1301.44(d). I carefully considered all of the record evidence relevant 
to the material falsification allegation, the recordkeeping 
allegations, and the public interest factors of 21 U.S.C. 823(f)(2) and 
(4). For the above-stated reasons, I find that the Government met its 
burden on the OSC's material falsification allegation and on two of the 
OSC's three recordkeeping violation allegations. I further find that 
Applicant did not submit any evidence, let alone evidence that rebuts 
the Government's prima facie case, on these founded OSC allegations. 
Accordingly, I conclude that it would be ``inconsistent with the public 
interest'' for me to grant the registration application. 21 U.S.C. 
823(f).

[[Page 21215]]

IV. Sanction

    Where, as here, the Government presented a prima facie case that it 
would be ``inconsistent with the public interest'' to grant the 
registration application, and Applicant did not rebut the Government's 
prima facie case, the ``burden of proof shifts'' to Applicant ``to show 
why it can be trusted with a registration.'' Jones Total Health Care 
Pharmacy, LLC v. Drug Enf't Admin., 881 F.3d at 830; see also Samuel 
Mintlow, M.D., 80 FR 3630, 3652 (2015) (``[S]ufficient mitigating 
evidence'' must be presented ``to assure the Administrator that [he] 
can be entrusted with the responsibility carried by such a 
registration.''); Cleveland J. Enmon Jr., M.D., 77 FR 57116, 57126 
(2012) (same); Robert M. Golden, M.D., 61 FR 24808, 24812 (1996) 
(same). Further, past performance is the best predictor of future 
performance and, when an applicant has ``failed to comply with its 
responsibilities in the past, it makes sense for the agency to consider 
whether the pharmacy will change its behavior in the future.'' Pharmacy 
Doctors Enterprises, Inc. v. Drug Enf't Admin., 789 F. App'x at 733 
(citing Jones Total Health Care Pharmacy, LLC v. Drug Enf't Admin., 881 
F.3d at 831 (citing MacKay v. Drug Enf't Admin., 664 F.3d at 820 
(``[T]hat consideration is vital to whether continued registration is 
in the public interest.'') and Alra Labs., Inc. v. Drug Enf't Admin., 
54 F.3d 450, 452 (7th Cir. 1995) (``An agency rationally may conclude 
that past performance is the best predictor of future 
performance.''))).
    Additionally, in evaluating whether a practitioner should be 
entrusted with a registration, the Agency considers whether the 
practitioner has accepted responsibility for any misconduct; circuit 
courts have approved the Agency's acceptance of responsibility 
requirement. Pharmacy Doctors Enterprises, Inc. v. Drug Enf't Admin., 
789 F. App'x at 732; Jones Total Health Care Pharmacy, LLC v. Drug 
Enf't Admin., 881 F.3d at 830 (citing MacKay v. Drug Enf't Admin., 664 
F.3d at 820 (``The DEA may properly consider whether a physician admits 
fault in determining if the physician's registration should be 
revoked.'')); see also Jeffrey Stein, M.D., 84 FR 46968, 46972-73 
(2019) (unequivocal acceptance of responsibility); Jayam Krishna-Iyer, 
M.D., 74 FR 459, 463 (2009) (collecting cases).
    The Agency also has decided that the egregiousness and extent of 
the misconduct are significant factors in determining the appropriate 
sanction. Garrett Howard Smith, M.D., 83 FR 18882, 18910 (2018) 
(collecting cases); Samuel Mintlow, M.D., 80 FR at 3652 (``Obviously, 
the egregiousness and extent of a registrant's misconduct are 
significant factors in determining the appropriate sanction.''). The 
Agency has also considered the need to deter similar acts by Applicant 
and by the community of registrants and potential registrants. Id.
    In terms of egregiousness, the violations that the record evidence 
shows Applicant committed go to the heart of the CSA--not complying 
with required controlled substance recordkeeping and submitting a 
registration application that includes a material falsification.
    Applicant did not take responsibility for the founded violations. 
Accordingly, it is not reasonable to believe that Applicant's future 
controlled substance dispensing will comply with legal requirements.\2\
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    \2\ I do not consider remedial measures when an applicant does 
not unequivocally accept responsibility. In this matter, Applicant 
did not accept responsibility or propose remedial measures.
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    For all of these reasons, I find that it would be inconsistent with 
the public interest for me to entrust Applicant with a registration. 
Accordingly, I shall order the denial of Applicant's registration 
application, Control No. W20008908A.

Order

    Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 
U.S.C. 823(f), I hereby deny the registration application submitted by 
Crosby Pharmacy and Wellness, Control No. W20008908A, seeking 
registration in Texas as a practitioner, and I hereby deny any other 
pending application submitted by Crosby Pharmacy and Wellness for a DEA 
registration in the State of Texas. This Order is effective May 11, 
2022.

Anne Milgram,
Administrator.
[FR Doc. 2022-07687 Filed 4-8-22; 8:45 am]
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