SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2080-19

IN THE MATTER OF 

THE APPLICATION OF

ONCOLOGY AND 

HEMATOLOGY 

SPECIALISTS, P.A., 

d/b/a OHS PHARMACY

TO OPERATE A PHARMACY

IN THE STATE OF NEW 

JERSEY.

___________________________

Argued October 20, 2021 – Decided December 22, 2021

Before Judges Hoffman, Geiger, and Susswein.

On appeal from the New Jersey Board of Pharmacy, 

Division of Community Affairs, Department of Law 

and Public Safety.

Richard B. Robins argued the cause for appellant 

Oncology and Hematology Specialists, P.A. 

(Mandelbaum Salsburg, PC, attorneys; Richard B. 

Robins, of counsel and on the briefs; Mohamed H. 

Nabulsi, on the briefs).

Jodi C. Krugman, Deputy Attorney General, argued the 

cause for respondent New Jersey Board of Pharmacy 

(Andrew J. Bruck, Acting Attorney General, attorney;

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the 

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
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A-2080-19

Sookie Bae-Park, Assistant Attorney General, of 

counsel; Jodi C. Krugman, on the brief).

PER CURIAM

Petitioner Oncology and Hematology Specialists, P.A. appeals from the 

final agency decision of the New Jersey State Board of Pharmacy (the Board), 

entered on December 11, 2019, denying petitioner's application to register, open, 

and operate a pharmacy within its medical practice.

Petitioner, a medical practice wholly owned by four medical doctors, 

sought to open a "closed door clinic pharmacy" within its practice location,

exclusively for the patients of its physicians. The Board denied petitioner's 

pharmacy application, concluding that such a pharmacy would violate the Codey 

Law, N.J.S.A. 45:9-22.5(a), which prohibits physicians from referring patients 

to health care services owned by them. The Board further concluded the 

proposed pharmacy did not fit within an exception to the Codey Law that states:

"The restrictions on referral of patients . . . shall not apply to . . . medical 

treatment or a procedure that is provided at the practitioner’s medical office[,]" 

N.J.S.A. 45:9-22.5(b), because pharmacies do not provide medical treatment. 

On appeal, petitioner argues the Board erred by failing to recognize that 

pharmacies provide medical treatment and by acting beyond the scope of its 

authority in considering the Codey Law, which falls under the authority of the 
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A-2080-19

Board of Medical Examiners. Petitioner further contends the Board's denial of 

the application amounted to impermissible anti-competitive conduct, and the 

doctrine of equitable estoppel required the Board to approve petitioner's 

application. We reject these arguments and affirm.

I. 

In May 2018, petitioner, an oncology and hematology medical practice in 

Mountain Lakes wholly owned by four physicians, submitted a pharmacy permit 

application to the Board, seeking to open a new "closed door clinic pharmacy" 

that would only be accessed by – and fill prescriptions for – petitioner's patients. 

The proposed pharmacy would be located at petitioner's practice in Mountain 

Lakes. An affidavit attached to its application specified that the pharmacy 

would be operated "in compliance with the 'Same Practice' Exception to New 

Jersey Codey Law . . . ." Thereafter, petitioner's counsel submitted a letter and 

certification, dated February 11, 2019, setting forth legal arguments and 

attaching documents in support of the subject application. 

On April 24, 2019, the Board considered petitioner's application and voted 

to deny the application, concluding "the practice structure would create a 

violation of the Codey Law." On December 11, 2019, the Board issued an order 
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memorializing the denial of petitioner's application, which included a sevenpage written explanation of its decision. 

The Board explained the Codey Law bars medical practitioners from 

referring patients to health care services where the practitioners hold "a 

significant beneficial interest." N.J.S.A. 45:9-22.5(a). Because "[t]he definition 

of '[h]ealth care service' set forth in N.J.S.A. 45:9-22.4 expressly includes a 

pharmacy," the Board stated, "any referral by a physician to a pharmacy, in 

which the physician has a beneficial interest, would violate the Codey Law, 

unless an exception to the law applies." Ibid. (second alteration in original). 

Such an unlawful arrangement would exist if the Board approved petitioner's 

application because petitioner's physicians would have a beneficial interest in 

the pharmacy, which would only fill prescriptions for patients referred 

exclusively by the petitioner's physicians. 

Moreover, the Board determined the "so-called 'in-office' exception" did 

not apply because "the proposed pharmacy would have to provide a 'medical 

treatment or a procedure'" in petitioner's office, but "a pharmacy provides 

neither 'medical treatments' nor 'medical procedures' to patients." The Board 

also noted that its decision was consistent with the several advisory opinions 

rendered by the Board of Medical Examiners, providing "that although 
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physicians may own pharmacies, the Codey Law would prohibit a physician 

from referring the physician's own patients to the pharmacy in which he or she 

held an ownership interest." 

Before the Board issued its order and accompanying explanation, the 

Deputy Director of Consumer Affairs, assisted by the Supervising Management 

Improvement Specialist and the Executive Officer and Chief Investigator of the 

Legalized Games of Chance Commission, reviewed the Board's then-proposed 

order and the relevant documentation "to determine whether the denial of a 

pharmacy permit to a physician-owned medical practice constitutes anticompetitive conduct by the Board . . . ." In a memorandum dated December 10, 

2019, the Deputy Director stated, "[w]e unanimously determined the Board's 

proposed action would not displace competition" because the denial 

in no way suggests that licensed physicians cannot 

become owners of a pharmacy. The Board's action does 

not limit ownership of a pharmacy to only licensed 

pharmacists. Non-licensees, including physicians, may 

own a pharmacy. The Board's determination to deny 

the application for a permit was based on the fact that 

the proposed pharmacy would only have filled 

prescriptions written by the same physicians who were 

owners of the pharmacy.

Petitioner now appeals from the December 11, 2019 order that denied its

application to register, open, and operate a pharmacy within its medical practice. 
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Petitioner presents the following points of argument: 

POINT I

THE BOARD ERRONEOUSLY ACTED BEYOND 

ITS LAWFUL SCOPE OF AUTHORITY BY 

SEEKING TO INTERPRET AND APPLY THE 

CODEY LAW, WHICH DOES NOT GOVERN 

PHARMACIES, AND WHICH THE BOARD LACKS 

POWER TO ENFORCE.

POINT II

THE BOARD ERRONEOUSLY FOUND THAT THE 

IN-OFFICE EXCEPTION TO THE CODEY LAW IS 

INAPPLICABLE TO THE PRACTICE OF 

PHARMACY.

POINT III

THE BOARD'S DENIAL OF APPELLANT'S PERMIT 

APPLICATION WAS PRECLUDED BASED ON THE 

DOCTRINE OF EQUITABLE ESTOPPEL AND 

OTHER EQUITABLE GROUNDS.

POINT IV

THE BOARD ERRED BY ENGAGING IN ANTICOMPETITIVE CONDUCT.

II.

Appellate review of a final agency decision is limited, Russo v. Bd. of 

Trs., 206 N.J. 14, 27 (2011), in recognition "that agencies have 'expertise and 
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superior knowledge . . . in their specialized fields.'" Hemsey v. Bd. of Trs., 198 

N.J. 215, 223 (2009) (alteration in original) (quoting In re License Issued to 

Zahl, 186 N.J. 341, 353 (2006)). Thus, an agency's decision should be upheld 

"unless there is a clear showing that it is arbitrary, capricious, or unreasonable, 

or that it lacks fair support in the record." Russo, 206 N.J. at 27 (quoting In re 

Herrmann, 192 N.J. 19, 27-28 (2007)). 

Likewise, on appeal, appellate courts accord deference to the "agency's 

interpretation of a statute" it is charged with enforcing. Thompson v. Bd. of 

Trs., 449 N.J. Super. 478, 483 (App. Div. 2017) (quoting Richardson v. Bd. of 

Trs., 192 N.J. 189, 196 (2007)). "Deference to agency interpretation of a statute 

is appropriate as long as that interpretation is reasonable, and does not conflict 

with the express or implied intent of the legislature . . . ." Gilliland v. Bd. of 

Rev., 298 N.J. Super. 349, 354 (App. Div. 1997) (citations omitted). However, 

an agency's "interpretation of the law outside of its charge is entitled to 'no 

special deference."' Comm. Workers of Am., Local 1034 v. N.J. State 

Policemen's Benevolent Ass'n, Local 203, 413 N.J. Super. 286, 291 (App. Div. 

2010) (quoting In re Camden Cnty. Prosecutor, 394 N.J. Super. 15, 23 (App. 

Div. 2007)). See also Teeters v. Div. of Youth and Fam. Servs., 387 N.J. Super. 

423, 428 (App. Div. 2006) (citations omitted) ("Although we are enjoined to 
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accord respect to an agency's interpretation of the statute it is assigned to 

administer, we are not bound by an agency's interpretation of law, any more than 

we are bound by the legal rulings of lower courts"). 

Under this limited standard of review, "[a] reviewing court 'may not 

substitute its own judgment for the agency's, even though the court may have 

reached a different result.'" In re Stallworth, 208 N.J. 182, 192 (2011) (quoting 

In re Carter, 191 N.J. 474, 483 (2007)). Rather, an appellate court focuses on

three major inquiries: (l) whether the agency's decision conforms with relevant 

law; (2) whether the decision is supported by substantial credible evidence in 

the record; and (3) whether, in applying the law to the facts, the administrative 

agency clearly erred in reaching its conclusion. Id. at 192.

Petitioner's principal claim of agency error asserts that the Board 

erroneously interpreted the Codey Law. We disagree. The Codey Law provides, 

"[a] practitioner shall not refer a patient or direct an employee of the practitioner 

to refer a patient to a health care service in which the practitioner, or the 

practitioner's immediate family, or the practitioner in combination with the 

practitioner's immediate family has a significant beneficial interest . . . ." 

N.J.S.A. 45:9-22.5(a). "'Practitioner' means a physician, chiropractor or 
9

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podiatrist licensed pursuant to Title 45 of the Revised Statutes." N.J.S.A. 45:9-

22.4; see also N.J.S.A. 45:9-18. 

"Health care service" means a business entity which 

provides on an inpatient or outpatient basis: testing for 

or diagnosis or treatment of human disease or 

dysfunction; or dispensing of drugs or medical devices 

for the treatment of human disease or dysfunction. 

Health care service includes, but is not limited to, a 

bioanalytical laboratory, pharmacy, home health care 

agency, rehabilitation facility, nursing home, hospital, 

or a facility which provides radiological or other 

diagnostic imagery services, physical therapy, 

ambulatory surgery, or ophthalmic services.

. . . .

"Significant beneficial interest" means any financial 

interest; but does not include ownership of a building 

wherein the space is leased to a person at the prevailing 

rate under a straight lease agreement, payments made 

by a hospital to a physician pursuant to a hospital and 

physician incentive plan, or any interest held in 

publicly traded securities.

[N.J.S.A. 45:9-22.4 (emphasis added).]

The Codey Law includes the following relevant exception to the above 

rule: 

"The restrictions on referral of patients established in this section shall not apply 

to . . . medical treatment or a procedure that is provided at the practitioner's 

medical office and for which a bill is issued directly in the name of the 
10 A-2080-19

practitioner or the practitioner’s medical office . . . ." N.J.S.A. 45:9-22.5(c).

Neither the statutes governing physicians, nor the Board of Medical Examiners' 

regulations, define "medical treatment" or "medical procedure." 

Petitioner argues the Board's determination that "the 'practice of 

pharmacy' does not involve 'medical treatment or procedure' . . . was totally 

erroneous." Petitioner contends a pharmacy's activities fit within "the generally 

accepted meaning of the language 'medical treatment or procedure,"' which, 

citing medical and legal dictionaries, OSHA regulations, and New Jersey case 

law, petitioner asserts "is defined as 'a broad term covering all the steps taken to 

effect a cure of an injury or disease; including examination and diagnosis as well 

as application of remedies[.]'" Petitioner argues a pharmacy's activities of 

dispensing medication, . . . "interpreting and evaluating 

prescriptions"; "administering and distributing drugs"; 

"advising and consulting on the therapeutic values, 

contents, hazards and uses of drugs"; "collecting, 

analyzing and monitoring patient data"; "providing 

pharmaceutical care and education"; "collaborative 

drug therapy management including modifying, 

continuing or discontinuing drug or device therapy"; 

"ordering or performing of laboratory tests under 

collaborative drug therapy management"; and "ordering 

clinical tests"

[N.J.S.A. 45:14-41.]
11 A-2080-19

constitute medical treatment as steps taken to combat illness and the application 

of remedies. Petitioner also emphasizes the significant training and 

qualifications of pharmacists to show they administer medical treatment. 

The Board's interpretation that pharmacies do not provide medical 

treatment is also supported by the professional and statutory distinction between 

medical doctors and pharmacists. Physicians and pharmacists undergo different 

education and training, and pharmacists are not medical doctors. Moreover, the 

statutes governing medical practice and those governing pharmaceutical practice 

occupy two different chapters of New Jersey's Revised Statutes – Chapter 9 

governs medical practice, and Chapter 14 governs pharmacy practice. 

Physicians are persons "licensed or permitted to practice medicine or 

surgery in this State[,]" N.J.S.A. 45:9-27.5(a), whereas pharmacists are persons 

"licensed by this State to engage in the practice of pharmacy[,]" N.J.S.A. 45:14-

41. These distinctions suggest that only physicians (or those under their 

supervision) provide medical care while pharmacists provide pharmaceutical 

care. 

Whereas Chapter 9 states that, "'the practice of medicine or surgery' . . . 

include[s] the practice of any branch of medicine and/or surgery, and any 

method of treatment of human ailment, disease, pain, injury, deformity, mental 
12 A-2080-19

or physical condition," N.J.S.A. 45:9-5.1, Chapter 14 describes the "practice 

of pharmacy" in terms of the provision of services, not treatment.

"Practice of pharmacy" means a health care service by 

a pharmacist that includes: compounding, dispensing 

and labeling of drugs, biologicals, radio 

pharmaceuticals or devices; overseeing automated 

medication systems; interpreting and evaluating 

prescriptions; administering and distributing drugs, 

biologicals and devices; maintaining prescription drug 

records; advising and consulting on the therapeutic 

values, content, hazards and uses of drugs, biologicals 

and devices; managing and monitoring drug therapy; 

collecting, analyzing and monitoring patient data; 

performing drug utilization reviews; storing 

prescription drugs and devices; supervising 

technicians, interns and externs; and such other acts, 

services, operations or transactions necessary, or 

incidental to, providing pharmaceutical care and 

education. In accordance with written guidelines or 

protocols established with a licensed physician, the 

"practice of pharmacy" also includes collaborative drug 

therapy management including modifying, continuing 

or discontinuing drug or device therapy; ordering or 

performing of laboratory tests under collaborative drug 

therapy management; and ordering clinical tests, 

excluding laboratory tests, unless those tests are part of 

collaborative drug therapy management.

[N.J.S.A. 45:14-41.]

Chapter 14 further provides:

"Pharmaceutical care" means the provision by a 

pharmacist of drug therapy review and other related 

patient care services intended to achieve positive 

outcomes related to the treatment, cure or prevention of 
13 A-2080-19

a disease; control, elimination or reduction of a 

patient’s symptoms; or arresting or slowing of a disease 

process as defined by the rules and regulations of the 

board.

[N.J.S.A. 45:14-41 (emphasis added).]

Notably, under Chapter 9, the practice of medicine involves "any method of 

treatment of human ailment[,]" N.J.S.A. 45:9-5.1, whereas under Chapter 14, 

pharmaceutical care involves "patient care services intended to achieve positive 

outcomes related to the treatment[,]" N.J.S.A. 45:14-41 (emphasis added). 

Pharmaceutical care being related to treatment, but not treatment itself, reflects 

that pharmacists and pharmacies do not render medical treatment to patients; 

rather, they are the means by which patients receive access to their treatment 

needs. 

Even where the practice of pharmacy involves working "in conjunction 

with . . . physicians" to provide "collaborative drug therapy management[,]"

N.J.A.C. 13:39-13.2(a), a pharmacist may perform "[o]nly those activities that 

have been approved by the collaborating physician," N.J.A.C. 13:39-13.1, which 

shall only include the collecting, analyzing and 

monitoring of patient data; ordering or performing of 

laboratory tests based on the standing orders of a 

physician as set forth in the written protocol; ordering 

of clinical tests based on the standing orders of a 

physician as set forth in the written protocol, . . . 

modifying, continuing or discontinuing drug or device 
14 A-2080-19

therapy; and therapeutic drug monitoring with 

appropriate modification to dose, dosage regimen, 

dosage forms or route of administration. 

[N.J.S.A. 45:14-41.]

These activities do not obviously constitute medical treatment and are akin to 

the others "related to" treatment. Furthermore, to engage in collaborative 

practice with a physician, a pharmacist must "be pre-approved by the Board." 

N.J.A.C. 13:39-13.3. Petitioner does not indicate that it planned to engage in 

collaborative practice or would seek permission from the Board to do so.

We acknowledge that in Kemp, our Supreme Court interpreted the word 

"treatment"1and held, "[t]he plain meaning of "treatment" encompasses the 

administration of a vaccine." 147 N.J. at 300-01 (citing various legal and 

medical dictionaries for the proposition that "treatment" encompasses 

prevention of diseases). Later in its opinion, the Court explicitly stated, "[t]he 

introduction of the vaccine into [one]'s body, . . . to cause the body to react in a 

certain way, falls within the definition of medical treatment." Id. at 303-04 

1 Kemp involved the issue of whether a State entity enjoyed immunity from 

liability under the Tort Claims Act, N.J.S.A. 59:6-4. 147 N.J. at 297, 299. The 

statute provided public entities with "absolute immunity for the failure to 

perform an adequate examination 'for the purpose of determining whether [a] 

person has a disease or physical or mental condition that would constitute a 

hazard to the health or safety of himself or others'" unless "the examination is 

'for the purpose of treatment."' Id. at 300. 
15 A-2080-19

(emphasis added). Chapter 14 provides, the "[p]ractice of pharmacy . . .

includes . . . administering a distributing drugs . . . ." N.J.S.A. 45:14-41. It 

further provides:

"Administer" means the direct application of a drug to 

the body of a patient or research subject by 

subcutaneous, intramuscular or intradermal injection, 

inhalation or ingestion by a pharmacist engaged in 

collaborative practice or in accordance with regulations 

jointly promulgated by the board and the State Board of 

Medical Examiners.

[Ibid.]

While pharmacists provide medical treatment when they administer

vaccines, most referrals from physicians to a pharmacy are not for vaccination, 

but rather for the dispensing of drugs and the other services encompassing the 

"practice of pharmacy" under N.J.S.A. 45:14-41, which do not constitute 

medical treatment or procedures. Petitioner does not claim its pharmacy would 

only be administering vaccines. Since the primary functions of a pharmacy do 

not include medical treatment, the Board did not err by finding the "in-office" 

exception to the Codey Law inapplicable. 

Petitioner also highlights the Board of Medical Examiners' regulations 

that "permit[] physicians to refer their own patients for bioanalytical tests to 

laboratories in which the physicians have a financial interest, and which are 
16 A-2080-19

located at the physicians' offices" and "permit[] physicians to dispense 

prescription drugs to their own patients in their offices." N.J.A.C. 13:35-

6.16(i)(1); N.J.A.C. 13:35-7.5(a). Petitioner argues that if physicians are 

allowed to provide these services without violating the Codey Law, then they 

also can lawfully operate a pharmacy within their practice. We disagree.

First, bioanalytical testing may constitute medical treatment and fit within 

the above-discussed exception to the Codey Law. More importantly, N.J.S.A. 

45:14-41 provides: "'Pharmacy practice site' means any place in this State where 

drugs are dispensed or pharmaceutical care is provided by a licensed pharmacist, 

but shall not include a medical office under the control of a licensed physician." 

N.J.S.A. 45:14-41 (emphasis added). Accordingly, when physicians dispense 

medication directly to patients per N.J.A.C. 13:35-7.5, they do not act as 

pharmacists or a separate pharmaceutical entity. There is thus no "refer[ral]" . . . 

to a health care service" that would violate the Codey Law; instead, the 

dispensing falls within the scope of the doctor's medical practice.

Petitioner maintains the Board exceeded the scope of its authority by 

interpreting, applying, and enforcing the Codey Law. Petitioner also contends

the Pharmacy Practice Act (PPA), N.J.S.A. 45:14-40 to -82, only empowers the 

Board to regulate the practice of pharmacy, and thus the Board was not 
17 A-2080-19

authorized to enforce the Codey Law, which regulates the profession of 

physicians; instead, the New Jersey State Board of Medical Examiners has sole 

and exclusive authority to regulate the conduct of physicians in New Jersey.

Citing Newcomb Sales v. Bd. of Pharmacy, 218 N.J. Super. 69, 71 (App. Div. 

1987), petitioner further argues the Board deviated from the PPA's directives, 

which "mandates issuance of a pharmacy permit," upon an applicant's 

satisfaction of the applicable statutory requirements to receive a permit, none of 

which prohibit physician ownership of pharmacies. Petitioner contends that "the 

Board may deny an application only for one or more of the eleven grounds 

specifically enumerated in the PPA." Thus, because it "satisfied each of the 

enumerated statutory and regulatory permit requirements," petitioner asserts 

"the Board lacked lawful power to deny the permit application based on a reason 

that was not enumerated in the controlling statute." We disagree.

N.J.S.A. 45:14-42 provides:

The [B]oard shall enforce the provisions of this act. 

The [B]oard shall have all of the duties, powers and 

authority specifically granted by or necessary for the 

enforcement of this act, as well as such other duties, 

powers and authority as it may be granted from time to 

time by applicable law.

The statute delineating the Board's responsibilities and powers authorizes 

the Board to "deny . . . the permit of any pharmacy practice site" if the Board 
18 A-2080-19

finds "that any conduct of the . . . applicant is violative of any federal, State or 

local laws or regulations relating to the practice of pharmacy . . . ." N.J.S.A. 

45:14-75(b)(1) (emphasis added). The Codey Law reasonably relates to the 

practice of pharmacy, as it explicitly defines pharmacies as a health care service, 

N.J.S.A. 45:9-22.4, to which physicians are barred from referring their patients 

if they hold a beneficial interest in said pharmacy, N.J.S.A. 45:9-22.5(a). Thus, 

we conclude the Board acted within the scope of its authority under N.J.S.A. 

45:14-75(b) in denying petitioner's application because petitioner, a group of 

physicians, would violate a state law relating to the practice of pharmacy if 

permitted to operate the pharmacy.

Petitioner next argues "the doctrine of equitable estoppel precludes the 

Board from lawfully denying [petitioner]'s application" because petitioner relied 

on the Board's previous grant and multiple renewals of a pharmacy permit to a 

similarly-structured in-house physician-owned pharmacy. The Board granted 

this application to Regional Cancer Care Associates LLC (RCCA) in 2014 and 

renewed it as recently as May 2019. Petitioner argues it "reasonably expected" 

its pharmacy permit would be granted, relying on the Board allowing RCCA to 

operate a physician-owned pharmacy. Based on this assumption, petitioner 
19 A-2080-19

asserts it has incurred costs in excess of $512,000 relating to its pharmacy 

application. 

Equitable estoppel "is designed to prevent injustice by not permitting a 

party to repudiate a course of action on which another party has relied to his 

detriment." Knorr v. Smeal, 178 N.J. 169, 178 (2003). This equitable doctrine 

is "founded in the fundamental duty of fair dealing imposed by law" and "is 

invoked in 'the interests of justice, morality and common fairness.'" Ibid. (first 

quoting Casamasino v. City of Jersey City, 158 N.J. 333, 354 (1999); and then 

quoting Palatine I v. Plan. Bd., 133 N.J. 546, 560 (1993)). "[T]o establish 

equitable estoppel, plaintiffs must show that defendant engaged in conduct, 

either intentionally or under circumstances that induced reliance, and that 

plaintiffs acted or changed their position to their detriment." Ibid. (citing Miller 

v. Miller, 97 N.J. 154, 163 (1984)). However, "[s]ubstantial detrimental reliance 

is not enough, 'only justified and reasonable reliance warrant the application of 

equitable estoppel[.]'" Gen. Accident Ins. Co. v. N.Y. Marine and Gen. Ins. Co., 

320 N.J. Super. 546, 557 (App. Div. 1999) (quoting Palatine I v. Plan. Bd., 133 

N.J. 546, 563 (1993)). 

"Equitable estoppel is rarely invoked against a governmental entity. 

However, equitable estoppel will be applied in the appropriate circumstances 
20 A-2080-19

unless the application would prejudice essential governmental functions." 

Middletown Twp. Policemen's Benevolent Ass'n Local No. 124 v. Twp. of 

Middletown, 162 N.J. 361, 367 (2000) (internal citations and quotation marks 

omitted) (quoting Wood v. Borough of Wildwood Crest, 319 N.J. Super. 650, 

656 (App. Div. 1999)). We recently stated that "equitable considerations are 

relevant to assessing governmental conduct, and may be invoked to prevent 

manifest injustice." Tasa v. Bd. of Trs., 458 N.J. Super. 47, 60 (App. Div. 2019) 

(quoting In re Johnson, 215 N.J. 366, 378-79 (2013)). 

We reject petitioner's equitable estoppel argument. The Board has 

conceded that it made a mistake when it granted the permit to RCCA and has 

filed an action for the rescission of RCCA's permit. We agree with the Board

that "if approval of RCCA's application was in error, it was not required to repeat 

that error as to [petitioner]."

Additionally, within four months of submitting its application to the 

Board, petitioner received notice the Board would likely reject its pharmacy 

application to avoid violating the Codey Law. In May 2018, petitioner 

submitted the application under review, and in September 2018, the Board 
21 A-2080-19

denied the application for a physician-owned-pharmacy permit submitted by 

Summit Medical Group (SMG).

2

 

Finally, petitioner has not shown the Board reversing its position on 

physician-owned pharmacies to be unjust. See Johnson, 215 N.J. at 379-80 

("Equitable estoppel is designed to prevent disavowal of prior conduct if a 

change of course would be unjust."). "[A]dministrative agencies generally have 

the inherent power to reopen or to modify and rehear prior decisions[,]"

including "decision[s] involving the same parties and the identical subject 

matter . . . ." In re Trantino, 89 N.J. 347, 364 (1982). 

Additionally, an agency may revise its interpretation of a statute after 

testing the "wisdom of its policy" and to meet "the demands of changed

circumstances . . . ." Glukowsky v. Equity One, Inc., 180 N.J. 49, 65-66 (2004) 

(citations omitted). Thus, the Board changing course to accord its policy with 

the Codey Law and the Board of Medical Examiners' position on physicianowned pharmacies did not amount to a "manifest injustice." 

We further agree with the Board arguments regarding petitioner's desire 

to open a pharmacy rather operate a dispensary:

2 The Board voted to deny SMG's application for a specialty pharmacy license 

at the conclusion of its September 27, 2018 meeting and explained the denial in 

an October 24, 2018 order and decision. 
22 A-2080-19

Most telling, however, is [petitioner's] admission that 

there is a direct financial incentive for its desire to open 

a pharmacy rather operate a dispensary. [Petitioner] 

admits that operating a dispensary "would present a 

serious payment issue" because pharmacy benefit 

managers "deter payment by seeking to restrict patient 

access to physician dispensaries." [Petitioner] thus 

admits to a direct financial incentive for [its] physicians 

to prescribe medications to be filled at the proposed 

pharmacy, where they will obtain additional profit from 

owning that pharmacy. Nothing would prevent an 

[petitioner's] physician[s] from choosing to prescribe a 

drug that will provide a higher profit margin for the 

pharmacy than a lower cost drug, assuming both would 

provide a similar benefit for patient treatment, or worse, 

choosing to prescribe a drug that would be less 

efficacious but produce a higher profit for the pharmacy 

and its physician-owners. This potential financial gain 

should not[,] either actually or potentially[,] influence 

a treatment decision. This concern is the precise ill the 

Codey Law was intended to prevent.

Lastly, petitioner argues the Board engaged in anti-competitive conduct 

by changing its position on physician owned pharmacies and denying 

petitioner's pharmacy application. Petitioner claims the Board, which is 

"controlled by active market participants, i.e., practicing pharmacists[,]" denied 

petitioner (and SMG's) application "to protect its members' financial interests[] 

by prohibiting non-pharmacists from competing against them in the free 

market." 
23 A-2080-19

Petitioner relies on N.C. State Bd. of Dental Exam'rs v. Fed. Trade 

Comm'n, 574 U.S. 494 (2015). In that case, the United States Supreme Court 

allowed the Federal Trade Commission (FTC) to bring a complaint against a 

dentist-run state dentistry board which, "after dentists complained to the Board 

that non-dentists were charging lower prices for certain services than dentists, 

"issued cease-and-desist letters to non-dentist teeth whitening service providers 

and product manufacturers, often warning that the unlicensed practice of 

dentistry is a crime." Id. at 494. 

The Court considered whether the Board could claim state-action 

immunity, not the merits of the FTC's claims alleging "anticompetitive and 

unfair method of competition." Id. at 501. Ultimately, the Court held that "a 

state board on which a controlling number of decisionmakers are active market 

participants in the occupation the board regulates" cannot "invoke state-action 

antitrust immunity" unless the state actively supervises the board for anticompetitive conduct. Id. at 511-12. Because the State did not exercise active 

supervision over the dentistry board, the Court found the board was not immune 

from suit and affirmed the decision disciplining the board for violating antitrust 

law. See Id. at 515.
24 A-2080-19

Petitioner's reliance on this case is unpersuasive. Petitioner did not assert

an anti-trust claim against the Board. Moreover, petitioner presents no evidence 

the Board acted improperly, but instead asks this court to "infer" the Board acted 

with an anti-competitive motive based on the Board's change-of-position on 

physician owned pharmacies after a large medical practice, SMG, applied to 

open a pharmacy.

Furthermore, the State proactively screened the Board's denial of 

petitioner's pharmacy application for anti-competitive conduct and concluded 

the denial did not displace competition. Nothing suggests the State's review of 

the Board's decision was deficient. See N.C. State Bd. of Dental Exam'rs, 574

U.S. at 515 (discussing state supervision over regulatory boards, which requires 

the supervisor review "the substance of the anticompetitive decision, not merely 

the procedures followed to produce it"; "the supervisor must have the power to 

veto or modify particular decisions to ensure they accord with state policy"; and 

"the state supervisor may not itself be an active market participant"). 

In sum, petitioner fails to convincingly show the Board acted with an 

improper motive or arbitrarily, capriciously, or unreasonably. 

Affirmed.