Source: https://www.deadiversion.usdoj.gov/fed_regs/actions/2015/fr0520_3.htm
Timestamp: 2019-04-21 04:41:32+00:00

Document:
On April 23, 2013, Administrative Law Judge Christopher B. McNeil (hereinafter, ALJ) issued the attached Recommended Decision.\1\ Neither party filed exceptions to the ALJ's Recommended Decision.
\1\ The ALJ's Recommended Decision is cited as R.D.; all citations to the Recommended Decision are to the slip opinion issued by the ALJ.
Having reviewed the record in its entirety and the Recommended Decision, I have decided to adopt the ALJ's findings of fact and conclusions of law, except as discussed below. I further adopt the ALJ's recommended order that Respondent's application be denied.
As explained in the ALJ's Recommended Decision, in making the public interest determination, Congress directed the Agency to consider "the applicant's experience in dispensing . . . controlled substances." 21 U.S.C. 823(f)(2). The evidence showed that Respondent's President and majority owner is Mrs. Ogechi Abalihi, and that while Mrs. Abalihi is a registered nurse, she is not a pharmacist and has no experience working in a retail pharmacy. Moreover, when questioned both during the pre-registration investigation and at the hearing as to whether she was familiar with the federal controlled-substance recordkeeping and security requirements for retail pharmacies, Mrs. Abalihi responded by stating, in essence, that those matters would be addressed by the pharmacist she would retain. Tr. 143-46. In her testimony, Mrs. Abalihi also made clear that she lacks knowledge of these requirements as they pertain to retail pharmacies, stating that "if there's a requirement for me to do anything, know these things, study them, I will do them. But when I applied I was not made to understand that I need to know all this." Id. at 144.
some two years later.\2\ While neither the Controlled Substances Act (CSA), nor the Agency's regulations, prohibits a pharmacy, which is owned by a non-pharmacist, from holding a DEA registration, the holder of the registration is ultimately accountable for ensuring compliance by its pharmacists with the requirements of the CSA and the Agency's regulations. See United States v. Southern Union Co., 630 F.3d 17, 31 (1st Cir. 2010), rev'd on other grounds, 132 S.Ct. 2344 (2012) (quoted in Holiday CVS, L.L.C., d/b/a CVS/Pharmacy Nos. 219 and 5195, 77 FR 62315, 62317 (2012) ("[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 regulation.")).
\2\ While Ms. Abalihi testified that she was not told prior to her interview with the DIs that "she needed to study anything," Tr. 136, the Show Cause Order clearly provided notice that her lack of knowledge of DEA regulations was at issue.
It is indisputable that absent knowledge of the CSA and the Agency's regulations, a registrant cannot properly supervise its pharmacists to protect against the diversion of controlled substances.\3\ Thus, Mrs. Abalihi's admitted lack of knowledge of these requirements provides reason alone to conclude that granting Respondent's application "would be inconsistent with the public interest." 21 U.S.C. 823(f).
\3\ Pharmacies which handle controlled substances are subject to extensive recordkeeping and security requirements. See 21 CFR 1301.75-1301.76 (security requirements); id. Sec. Sec. 1304.03-1304.06; 1304.21-1304.22 (recordkeeping and reporting requirements). In addition, as the ALJ explained, their pharmacists are charged with the responsibility of dispensing only those prescriptions which are "issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice." 21 CFR 1306.04(a). See also generally 21 CFR part 1306 (setting forth various other requirements pertaining to prescriptions and the dispensing of controlled substances by pharmacies).
I further adopt the ALJ's conclusion that the evidence with respect to factor five--such other conduct which may threaten public health and safety--supports the denial of Respondent's application. More specifically, the ALJ found that both Mrs. Abalihi and Ms. Taylor, who purportedly was to be Respondent's pharmacist-in-charge, made materially false statements to the Investigators when they were questioned regarding who would act as Respondent's pharmacist. However, upon review of the record, including the pleadings, I adopt the ALJ's conclusion only with respect to Ms. Taylor.
The evidence showed that when DEA Diversion Investigators (DI or DIs) asked Mrs. Abalihi who would manage the pharmacy, she stated that Ms. Jacinta Taylor would do so. Tr. 34. Subsequently, the DIs interviewed Ms. Taylor, who is a licensed pharmacist (and the owner of ten percent of Respondent) and who stated that she would be the pharmacist-in-charge at Respondent. Id. at 38. Ms. Taylor also told the DIs that she would order the controlled substances and that the pharmacy would be open from nine to six on weekdays and nine to one on Saturday. Id. at 38-39.
However, during the interview, Ms. Taylor told the DIs that she had a full time position at a Sweetbay Pharmacy in Tampa, and worked between the hours of ten to eight. Id. at 39. A DI further testified that according to the State Pharmacy Board, Ms. Taylor was not listed as Respondent's supervising pharmacist. Id. When the DI asked Ms. Taylor "about that," she replied that "she would leave Sweetbay if and when [Respondent] started to make money." Id. at 40.
The DIs then asked Ms. Taylor who would be Respondent's pharmacist-in-charge given her full time position at Sweetbay and intent to continue working there until Respondent became profitable; Ms. Taylor identified a Ms. Mustafa, a co-worker at Sweetbay. Id. However, when the DIs told Ms. Taylor that they wanted to talk to Ms. Mustafa, Ms. Taylor stated that she did not think that Ms. Mustafa would want to be interviewed and added, "[w]ell, perhaps she won't work there." Id. at 41. Subsequently, one of the DIs called Mrs. Abalihi and "asked her to put [him] in touch with Ms. Mustafa." Id. at 42. While Mrs. Abalihi stated that she would contact Ms. Mustafa and either get her phone number for the DI "or have her call" him, he never received a call from Ms. Mustafa. Id.
Ms. Taylor did not testify at the hearing. However, in an affidavit, Ms. Taylor stated that she "was caught 'flat footed' " by the question and "thought" that Ms. Mustafa, "another pharmacist who worked at Sweetbay, . . . might be willing to serve such role." RX 7, at 2. Ms. Taylor further acknowledged that at the time of the interview, she "had not made formal arrangements for [a] replacement and had not yet asked Ms. Mustafa whether she would be willing to fulfill such role, but thought that Ms. Mustafa would be so willing." Id. Moreover, in her testimony, Ms. Abalihi stated that she did not know Ms. Mustafa, that she had never spoken with her, and that there was "no plan" to have her work at Respondent. Tr. 138-39. And when asked by the ALJ whether in March 2011, Ms. Taylor had told her "that she would be relying on Ms. Mustafa," Mrs. Abalihi answered that Taylor "did not say she would be relying on Ms. Mustafa, no. She said the name came to her when this question was thrown to her. She wasn't expecting it, but the name came to her." Id. at 161.
Notwithstanding her assertion that she was caught flatfooted, Ms. Taylor's affidavit, as well as Ms. Abalihi's testimony, establishes that Taylor had no basis in fact for her statement to the Investigators that Ms. Mustafa would be Respondent's pharmacist-in-charge until Ms. Taylor decided to start working there. Accordingly, Ms. Taylor's statement was false. Moreover, her statement was materially false in that it had the capacity to influence the Agency's decision to grant Respondent's application, because of the obvious need to determine whether those who will actually engage in dispensing activities on behalf of a proposed pharmacy registrant, hold the necessary state license and have not previously violated federal or state laws related to controlled substances. See 21 U.S.C. 823(f)(2) & (4) (directing Agency to consider the applicant's experience in dispensing controlled substances and compliance with applicable laws related to controlled substances); see also 21 CFR 1301.76(a) ("The registrant shall not employ, as an agent or employee who has access to controlled substances, any person who has been convicted of a felony offense relating to controlled substances or who, at any time, had an application for registration with the DEA denied, had a DEA registration revoked or has surrendered a DEA registration for cause.").
I do not, however, adopt the ALJ's legal conclusion that Mrs. Abalihi made a material misrepresentation when she subsequently agreed to provide Ms. Mustafa's contact information rather than disclose that she knew nothing about Ms. Mustafa's role with the pharmacy. R.D. at 32. In support of his reasoning, the ALJ explained that "[i]f Ms. Abalihi intended on using contract pharmacists at the start of Allwell's operation, she had an affirmative duty to say so when DEA investigators asked her about the role Ms. Mustafa was to play. By her silence, and by promising to provide contact information for Ms. Mustafa, Ms. Abalihi misled the investigators." Id.
was to play." Most significantly, the Government never alleged in either the Show Cause Order or its pre-hearing statements that Ms. Abalihi made a materially false statement or materially misled the DIs when she promised to get Ms. Mustafa's contact information. Nor did the Government make any such argument in its post-hearing brief.\4\ Accordingly, because the Government never provided notice in the charging documents that it intended to litigate the issue and makes no claim that the issue was litigated by consent, I reject the ALJ's conclusion that Mrs. Abalihi materially misled the Investigators.\5\ See Kenneth Harold Bull, 78 FR 62666, 62674 (2013); CBS Wholesale Distributors, 74 FR 36746, 36749-50 (2009). That being said, the material misrepresentation of Ms. Taylor, who owned ten percent of Respondent and who was designated by Respondent's majority owner as its pharmacist-in-charge, is properly charged to Respondent and supports the denial of its application under factor five.
\4\ For the same reason, I need not decide whether, even assuming that Ms. Abalihi lacked the intent to deceive when she told the Investigators that she would obtain Ms. Mustafa's contact information, she had a duty to correct any erroneous information she provided the Investigators upon being told by Ms. Taylor that there was no plan for Ms. Mustafa to work at Respondent.
\5\ I reject ALJ Finding of Fact number 5 and Conclusion of Law number 5 only to the extent they are based on the statements of Ms. Abalihi.
Moreover, even as of the date of the hearing, the Agency still does not know who will be Respondent's pharmacist-in-charge. Beyond Ms. Taylor's statement that she did not intend to leave her job at Sweetbay Pharmacy until Respondent is profitable, the evidence further showed that at the time of the hearing, Ms. Taylor had left the Tampa area and was working at a pharmacy in Orlando. RX E; Tr. 156-57. Moreover, Ms. Taylor did not testify at the hearing. Because Respondent has failed to provide material information as to who will be its pharmacist-in-charge and oversee the dispensing of the controlled substances and compliance with the Agency's various regulations, I hold that the Agency had demonstrated that granting its application "would be inconsistent with the public interest." 21 U.S.C. 823(f).
In the Show Cause Order, the Government also alleged as a basis for denial of the application that "Mrs. Abalihi's husband participated in [the] unlawful dispensing of controlled substances that were prescribed over the Internet by physicians who did not personally examine the patients" and that "[t]his dispensing occurred while he was a pharmacist at a pharmacy that surrendered its DEA registration in December 2007 because of these illicit dispensing practices." ALJ Ex. 1, at 1. The Show Cause Order further alleged that Mrs. Abalihi's husband told the Agency's Investigators "that these dispensing practices were lawful and that he intended to apply for a DEA registration to open his own retail pharmacy." Id. at 1-2.
The parties stipulated that Mrs. Abilihi's husband, Alfred Abilihi "is a registered pharmacist, [and] was a pharmacist at Moon Lake pharmacy who dispensed controlled substances based on unlawful internet prescriptions prior to Moon Lake Pharmacy surrendering its DEA registration on December 17th, 2007." Tr. 11-12. The evidence shows that on November 29, 2007, a DEA Investigator received an anonymous phone call from a pharmacist who had worked at Moon Lake for one day, GX 6C, at 1; the pharmacist alleged that "the pharmacy was engaging in internet drug trafficking of [h]ydrocodone." Tr. 74. Accordingly, on December 7, two DIs went to the pharmacy, which was located in New Port Richey, and "after several minutes of examination . . . found that the pharmacy was solely engaged in internet drug trafficking of [h]ydrocodone and some [s]chedule IV drugs such as Xanax and Valium," in violation of 21 CFR 1306.04(a). Id. at 75.
The DI further testified that after "a few minutes of investigation," he and another DI "discovered that there were two physicians," one located in Virginia and one located in New York City, "who had sent . . . hundreds of prescriptions for [h]ydrocodone to Moon Lake Pharmacy for filling" and that the purported patients were located "throughout the 50 states of the United States." Id. at 77-78. The DI further explained that "there was no contact between the patients and the so-called physicians" and "[e]verything was based on the submission of a credit card number," with the "payment of several hundred dollars to a company that used [Moon Lake] to fill the prescriptions" and that "Moon Lake . . . was getting $75 per filled [h]ydrocodone prescription." Id. at 78.
According to the DI, the pharmacy was not open to the public and it "was extremely small, it looked like 600 square feet" with "no seating area for walk-ins." Id. at 79. Also, "[t]here was no over-the-counter merchandise" and "no merchandise . . . other than the controlled substances." Id. Continuing, the DI explained that "[t]here was essentially nothing except the compounding equipment, a fax machine, a scale, the counter, [and] little else." Id.
\6\ Six days later, Ms. Alberto voluntarily surrendered Moon Lake's DEA registration. Tr. 82. As the DI explained, he requested that Ms. Alberto surrender Moon Lakes' registration "because everything [Ms. Alberto] was doing was criminal." Tr. 83.
Mr. Abalihi testified that he worked for Moon Lake for only "a few days," before the Investigators showed up and that he had obtained the job through a temporary staffing agency. Tr. 98-99. He further maintained that he did not know that Ms. Alberto was the owner because "she speaks only Spanish" and he does not. Id. at 102. He then claimed that prior to the Investigators' inspection of Moon Lake, no one at the pharmacy had explained how the prescriptions arrived there and that he had "no" idea how the patients obtained the prescriptions and that a Web site was used as part of the prescribing process. Id. at 102-03. And when asked whether he had any recollection that there was anything wrong with the prescriptions he filled for Moon Lake, Mr. Abalihi answered: "No, I can't recollect." Id. at 103-04.
In his testimony, Mr. Abalihi denied telling the Investigators that what he was doing was legal, as well as that he intended to open his own pharmacy. Id. at 104. He also claimed that the DIs "didn't even tell me why they were there," although he also asserted that they told him that "we didn't come here for you. If the pharmacy manager did what we told him to do the last time we came we wouldn't have been here." Id.
at 100-01.\7\ Yet, the evidence establishes that the DIs encountered Mr. Abalihi on their first visit to Moon Lake Pharmacy. GX 6C, at 2 (] 4).
\7\ It is undisputed that Mr. Abalihi was never subjected to discipline by the Florida Board of Pharmacy.
On cross-examination, Mr. Abalihi repeatedly maintained that he could not remember if he had dispensed prescriptions for hydrocodone or if hydrocodone was the main drug that was being dispensed at Moon Lake. Id. at 110-11. Indeed, Abalihi maintained that he could not recall having looked at any of the prescriptions he filled, did not know the size of the pharmacy, and could not recall whether Moon Lake was "set up as a typical retail pharmacy" and was "selling other merchandise." Id. at 112. He also maintained that he did not discuss with anybody "how they operate[d]" and that "[t]he only thing is that prescriptions were filled and brought to me to check, and I checked." Id.\8\ Moreover, when asked if he "knew [that] what was going on at Moon Lake Pharmacy; that the operation was illegal with what they were doing with hydrocodone," Mr. Abalihi answered: "I didn't say, sir." Id. at 120.
It depends. If I see a prescription--and I call the doctor and verify that that prescription came there. I don't know if the doctor has met the patient. The onus lies on the doctor to make sure that he sees his patient, and my own is to make sure that the prescription is authentic.
Tr. 114. However, Mr. Abalihi then testified that he did not recall that he ever called and asked a physician if he/she had contact with the patient when he worked at Moon Lake. Id. at 114-15.
Mr. Abalihi also testified that he had tried to subsequently open his own pharmacy, but had withdrawn his application for a DEA registration after his then-attorney advised him that DEA intended to deny his application. Id. at 106. Moreover, Mr. Abalihi testified that he does not intend to work or otherwise operate Respondent and that he "just wanted . . . to advise my wife how to do things," and he "would have loved to work there, but the DEA wouldn't allow me to." Id. at 108. He further maintained that during the week, he works full time as a pharmacist at a Miami area pharmacy, and comes home to Tampa on the weekends. Id. at 109.
Mr. Abalihi acknowledged that his wife had filed her application after he had withdrawn his application. Id. at 122. When asked if he had advised his wife regarding her application, he answered: "I'm her husband. I knew she was going to apply to open a pharmacy." Id. After testifying that he did not have an ownership interest in Respondent and was neither a director nor officer of it, Mr. Abalihi further asserted he does not "have any hand in running" the pharmacy. Id. at 123.
Likewise, Mrs. Abalihi asserted that she did not make her husband a co-owner of Respondent because he "had tried in the past" to "open a pharmacy" and was told by his counsel to withdraw his DEA application. Tr. 133. She further asserted that DEA has "blacklisted" her husband. Id. Mrs. Abalihi offered no testimony that her husband would not work at the pharmacy.
According to Respondent's Exhibit C, which is a License Verification printout from the Florida Department of Health, Mr. Abalihi has a clear and active pharmacist license in the State of Florida, and has not been subject to discipline or a public complaint. RX C, at 1. Yet the License Verification printout also lists Mr. Abalihi's address of record as 1947 W. Dr. Martin Luther King Jr. Blvd. in Tampa, Florida. Id. This is the same address as Respondent. See RX B. Moreover, the License Verification printout does not list any secondary locations for Mr. Abalihi. Id. at 2.
The ALJ rejected the Government's contention that Respondent's application should be denied because Mr. Abalihi's "past negative history" in dispensing controlled substances "has a clear nexus" to his wife's application. R.D. at 28-30 (citing Govt's Proposed Findings of Fact, Conclusions of Law, and Argument in Respondent to Respondent's Brief, at 10 (citing Matthew D. Graham, 67 FR 10229 (2002)). The ALJ rejected the Government's argument, noting that in Graham, the Agency had denied the application based on the misconduct of the applicant's business partner, who had previously surrendered a DEA registration for distributing large quantities of list I chemicals while having reasonable cause to believe they would be used to manufacture a controlled substance. See id. at 29.
The ALJ thus reasoned that Graham was distinguishable because "unlike the business plan presented by Ms. Abalihi, the registrant in Graham was economically tied to the third party" but "Ms. Abalihi presented a business plan that expressly removed Mr. Abalihi from all phases of the proposed pharmacy's operation" and he "would not directly participate as an officer or owner of" Respondent. Id. While noting that Ms. Abalihi offered no testimony that "she would prohibit her husband from working in the pharmacy," the ALJ credited her statement "that she would keep her husband 'apart from ownership and management' of the pharmacy." Id. The ALJ further reasoned that "having considered the affidavit of Mr. Abalihi,\9\ and having considered the testimony from both Mr. and Mr. [sic] Abilihi, I find sufficient credible and unrebutted evidence to conclude Mr. Abalihi does not intend to perform a significant role in the operation of" Respondent. Id.
\9\ Having reviewed Mr. Abalihi's affidavit, I am at a loss as to what statement it contained that the ALJ found so persuasive on this issue.
As for Mr. Abalihi's involvement at Moon Lake Pharmacy, the ALJ noted that he shared the same sense as the DIs "that anyone in Mr. Abalihi's position would have had reason to question the legitimacy of the operation" as well as the DIs' "sense of incredulity that Mr. Abalihi would have failed to recognize the illegal nature of what was going on at Moon Lake, even though his stay there was brief." Id. at 29-30. After noting that Mr. Abalihi "was not charged with any misconduct arising out of his service at Moon Lake," the ALJ explained that while "Mr. Abalihi may have unwisely told the DEA investigators that Moon Lake's operations were legal . . . I cannot conclude from that piece of evidence that [he] was knowingly advancing Moon Lake's criminal enterprise when the DEA arrived." Id. at 30. Notwithstanding "that the parties . . . stipulated that Mr. Abalihi dispensed controlled substances based on unlawful Internet prescriptions during his short tenure at Moon Lake," the ALJ explained that "the most we can say for certain is that Mr. Abalihi was the pharmacist who was present when the DEA agents arrived at Moon Lake and brought its operation to an end." Id. And noting that Mr. Abalihi's record "since then is unblemished," the ALJ reasoned that "his plan to avoid direct involvement with [Respondent] adequately attenuates the link between him and the proposed pharmacy." Id.
professional practice and lacked a legitimate medical purpose. See 21 U.S.C. 841(a)(1); 21 CFR 1306.04(a).
\10\ While I agree with the ALJ's finding, I do not rely on the DI's assertion that the pharmacy's compounding activities were illegal.
Here, in addition to the stipulation that Mr. Abalihi dispensed controlled substances based on unlawful internet prescriptions, a DI testified that upon arriving at the pharmacy and reviewing the prescriptions, he found that the prescriptions were solely for hydrocodone, a schedule III controlled substance, and drugs such as Xanax and Valium, which are schedule IV benzodiazepines. Tr. 75. Most significantly, the evidence showed that the Investigators found that hundreds of prescriptions were being filled that had been written for controlled substances by two physicians, one of whom was located in Virginia and the other New York, and that the patients were located throughout the fifty States of the U.S. Id. at 77-78; 84. Moreover, the pharmacy did not have an area for walk-in patients, had no over-the-counter merchandise, and indeed, sold no merchandise other than controlled substances. Id. at 79.
\11\ Well before Mr. Abalihi filled prescriptions for Moon Lake, several federal appeals courts had upheld the convictions of pharmacists under 21 U.S.C. 841(a)(1) for filling prescriptions which were issued over the internet by physicians, who did not practice in the same State where the patients resided, and who did not physically examine the patients, because the physician did not establish a legitimate doctor-patient relationship with the patient. See United States v. Nelson, 383 F.3d 1227, 1231-32 (10th Cir. 2004); United States v. Fuchs, 467 F.3d 889, 899-900 (5th Cir. 2006). So too, DEA had issued numerous decisions holding that both the act of prescribing over the internet, as well as the act of dispensing a prescription issued over the internet, by a physician who has either engaged in the unlicensed practice of medicine or failed to establish a legitimate doctor-patient relationship, violates 21 CFR 1306.04(a) and constitutes an unlawful distribution under 21 U.S.C. 841(a)(1). See United Prescription Services, Inc., 72 FR 50397, 50407-09 (2007); Trinity Health Care Corp., d/b/a Oviedo Discount Pharmacy, 72 FR 30849, 30855 (2007); EZRX, LLC, 69 FR 63178, 63181 (2004); see also William R. Lockridge, M.D., 71 FR 77791 (2006); Marvin L. Gibbs, Jr., M.D., 69 FR 11658 (2004); Rick Joe Nelson, M.D., 66 FR 30752 (2001).
Moreover, in 2001, DEA issued a Guidance Document warning of the potential illegality of dispensing controlled substances based on prescriptions which were obtained through the internet and telephone consultations. DEA, Dispensing and Purchasing Controlled Substances over the Internet, 66 FR 21181, 21182-83 (2001).
As held in numerous Agency decisions, under the Controlled Substances Act, "it is fundamental that a practitioner must establish a bonafide doctor-patient relationship in order to act 'in the usual course of . . . professional practice' and to issue a prescription for a 'legitimate medical purpose.' " See, e.g., David A. Ruben, M.D., 78 FR 38363, 38380 (2013) (citing United States v. Moore, 423 U.S. 122, 142-43 (1975); other citations omitted). So too, DEA has held that a physician who engages in the unauthorized practice of medicine, such as by prescribing controlled substances to patients who reside in a State where he/she is not licensed to practice, acts outside of the usual course of professional practice and therefore violates the CSA for this reason as well. United Prescription Services, 72 FR 50397, 50407 (2007) ("A controlled-substance prescription issued by a physician who lacks the license necessary to practice medicine within a State is therefore unlawful under the CSA."). As the Supreme Court has explained: "In the case of a physician, [the CSA] contemplates that he is authorized by the State to practice medicine and to dispense drugs in connection with his professional practice." Moore, 423 U.S. at 140-41 (emphasis added).
\12\ The ALJ "note[d] that Mr. Abalihi was not charged with any misconduct arising out of his service at Moon Lake." R.D. at 30. As has been repeatedly explained, this is totally irrelevant because there are any number of reasons why neither a prosecutor nor a state licensing body may bring charges. See Robert L. Dougherty, M.D., 76 FR 16823, 16833n.13 (2013). Rather, what matters is his underlying misconduct.
In short, the evidence shows that Mr. Abalihi violated his corresponding responsibility and the CSA by filling prescriptions which lacked a legitimate medical purpose and were issued outside of the usual course of professional practice. Id.; see also 21 U.S.C. 841(a)(1). Moreover, Mr. Abalihi's testimony makes clear that he still does not understand the scope of his obligations in dispensing controlled substances. As found above, when asked if he would not fill a prescription written by a New York physician for a patient who lives in Georgia, he testified, in essence, that if he called the doctor and the doctor verified the prescription, he wouldn't "know if the doctor ha[d] met the patient" and that "[t]he onus lies on the doctor to make sure that he sees his patient." Tr. 114.
30044 (1990); Frank J. Bertolino, 55 FR 4729, 4730 (1990).
Nor--notwithstanding that it is couched as being based on credibility findings--do I find persuasive the ALJ's conclusion that the link between Mr. Abalihi and Respondent is adequately attenuated because Mrs. Abalihi has kept her husband "apart from [the] ownership and management of" Respondent and Mr. Abalihi "plan[s] to avoid direct involvement with" the pharmacy. R.D. at 29-30. While Graham is undoubtedly distinguishable from this case, it does not reflect the limits of the Agency's authority to deny an application or revoke an existing registration based on the misconduct of a third party, particularly where that third party is a family relation of the applicant's principal. Indeed, in numerous cases--none of which are discussed in the Recommended Decision--the Agency has either revoked existing registrations or denied applications of pharmacies based on the closeness of the relationship between a person who diverted controlled substances or committed other serious CSA violations and another party who is either the applicant or new owner of a pharmacy.
Accordingly, the Agency has held that it "may look to who exerts influence over the registrant" in determining whether to deny an application or revoke a registration. See, e.g., City Drug Co., 64 FR 59212, 59214 (1999). As the Agency explained in City Drug: "sometimes the bonds linking the former owner to the new owner are too close to ensure that the former owner will have no influence over the operation of the pharmacy." Id. (citing Monk's Pharmacy, 52 FR 8988, 8989 (1987) and Carriage Apothecary, Inc., 52 FR 27599, 27599 (1987)).
In Monk's Pharmacy, the Agency denied an application of a pharmacy, noting that the former owner, who had been convicted of a felony relating to controlled substances, had transferred ownership to his children and to a third-party, who was a registered pharmacist. 52 FR at 8988. The Agency denied the application, noting "that the bonds linking the convicted [former pharmacy owner] with his children and the subject pharmacy are too close to permit a reasonable certainty that he will have no authoritative voice in its operation." Id. at 8989.
So too, in Carriage Apothecary, the pharmacy's owner, who had committed recordkeeping violations, had transferred the stock of the corporation which owned the pharmacy to his children. 52 FR at 27599. Noting that "[t]he Administrator has long held that he can look behind a corporate fa[ccedil]ade to determine who makes the decisions concerning the controlled substance business of a pharmacy," the Agency revoked the pharmacy's registration, holding that while the pharmacy was now owned by the children of the former owner, neither child was a pharmacist, and the former owner "continues to exert influence or control over [the pharmacy] through the family-held corporation." Id.
Moreover, in Unarex of Plymouth Road, d/b/a Motor City Prescription and Unarex of Dearborn, d/b/a/Motor City Prescription Center, 50 FR 6077 (1985), two pharmacists, who had been convicted of CSA violations (conspiracy and unlawful distribution), had transferred both their ownership interests and their respective office or directorship to their spouses. Noting that both pharmacists "share[d] indirectly in the profits of" the two pharmacies, the Agency revoked the registration of both pharmacies, holding that "[i]t is appropriate that both registrations be revoked in light of this continued benefit" received by the pharmacists.\13\ Id. at 6079.
\13\ While the Administrator noted that one of the pharmacists continued to work in one of the stores, and thus declined to believe that this pharmacist "no longer exerts influence over the operation" of the pharmacy, no such evidence was presented as to the second store. 50 FR at 6079.
Lawsons & Sons Pharmacy and Fenwick Pharmacy, 48 FR 16140 (1983), involved two pharmacies whose pharmacist was convicted of unlawfully distributing controlled substances. At the time of the proceeding, the pharmacist's wife owned 100 percent of one of the pharmacies and fifty percent of the other.\14\ Therein, the registrants provided an affidavit from the pharmacist's wife "stat[ing] that she is an active and knowledgeable officer of each of the corporations and has come to understand the operation of the pharmacies," and that "she ha[d] great trust in the two pharmacists she ha[d] hired to run these pharmacies and that her husband has withdrawn from [his] involvement in the pharmacies"; the registrants also provided an affidavit from one of the registrant's managing pharmacists stating that he understood that the convicted pharmacist's wife would "discourage" her husband "from entering the store" upon his release from incarceration. Id. at 16141. The Agency nonetheless rejected the registrants' evidence and revoked both registrations, holding that while the convicted pharmacist's wife "has always had some administrative duties in the store, she is not a trained pharmacist and relies on the advice of the managing pharmacists at both stores. In light of [the convicted pharmacist's] past activities, the Acting Administrator cannot conclude that he will not attempt to exert some form of control over one or both of the pharmacies." Id.
\14\ The Agency's decision does not state who owned the other fifty percent of this pharmacy.
\15\ The ALJ "question[ed] whether there is a sufficient link established between Mr. Abalihi's past work at Moon Lake Pharmacy and Cove, Inc.'s proposal to operate" Respondent. R.D. at 28; see also id. at 31 ("[T]he facts shown here do not establish the kind of ties that link Mr. Abalihi's past brief involvement with Moon Lake's illegal operation to the operation proposed by the Respondent here.").
To the extent the ALJ was suggesting that to the deny the application on this basis, the Government must show that Mrs. Abalihi intended to operate Respondent as a pharmacy which filled prescriptions obtained by soliciting customers over the internet and which were issued by physicians who did not establish a valid doctor-patient relationship with the customers, the Government was not required to make such a showing. Rather, it was only required to show that Mr. Abalihi had committed violations of the CSA and that there was reason to believe that he would exert influence or control over Respondent's operation.
\16\ While the Abalihis maintain that they have been "blacklisted" by DEA, Tr. 98 & 133; instead of withdrawing his application, Mr. Abalihi could have challenged the proposed denial of his application and would have been entitled to a hearing. See 21 U.S.C. 824(c). At that hearing, he could have challenged the Government's evidence as well as put forward evidence relevant to the issue of whether his registration would be consistent with the public interest. See id. Sec. 823(f).
Indeed, Mrs. Abalihi admitted that the reason she did not make her husband a co-owner was because of his prior failed attempt to obtain a DEA registration. Tr. 133. So too, while Mr. Alabihi was not made a shareholder of Respondent, he is married to Respondent's principal owner and would thus share, at least indirectly, in any of Respondent's profits. See Unarex, 50 FR at 6079. Mr. Abalihi would thus have a strong economic incentive to exercise influence over Respondent's operation.\17\ See id.
\17\ While in Graham, there clearly was a business arrangement between the applicant and his partner (who had diverted list I chemicals), consistent with the cases discussed above, I reject the ALJ's reasoning that Graham is distinguishable on ground that "unlike the business plan presented by Ms. Abalihi, the registrant in Graham was economically tied to the third party." R.D. at 29. Contrary to the ALJ's understanding, the Abalihi's marriage establishes that Mr. and Mrs. Abalihi are economically tied. Cf. Califano v. Jobst, 434 U.S. 47, 54 (1977) ("Both tradition and common experience support the conclusion that marriage is an event which normally marks an important change in economic status."); Women Involved in Farm Economics v. USDA, 876 F.2d 994, 1005 (D.C. Cir. 1989) (noting with approval the assumption that "whatever their roles, married men and women constitute one economic unit").
While I conclude that Mrs. Abalihi submitted the pending application as part of a ruse by the Abalihis to obtain a registration after Mr. Abalihi withdrew his application, and that the Abalihis planned all along for Mr. Abalihi to be Respondent's pharmacist-in-charge, contrary to the ALJ's understanding, the Agency's case law does not require that the Government prove that Mr. Abalihi "intend[ed] to perform a significant role in the operation of" Respondent. R.D. at 29.
Moreover, notwithstanding that Mr. Abalihi was not made a shareholder or officer, Mrs. Abalihi offered no testimony that he would not work at the pharmacy. R.D. at 29. Indeed, Respondent's own evidence shows that Mr. Abalihi listed Respondent as his address of record for his pharmacist license with the Florida Department of Health.\18\ RX C. Thus, while Mr. Abalihi claimed that he had no intention of working at Respondent, he offered no explanation for the inconsistency between his testimony and his action in listing Respondent as his address of record. Moreover, given Mr. Abalihi's claim, it is strange that he signed the return receipt card, manifesting service of the Show Cause Order, which was mailed to Respondent at its physical location of 1947 W. Dr. Martin Luther King Blvd. See GX 1, at 2. Thus, while the ALJ found credible Mr. Abalihi's testimony that he did not intend to work at Respondent, the ALJ never reconciled his finding with this evidence.
\18\ Mr. Abalihi also testified that he was working full time at a pharmacy in Miami. Tr. 109. Yet he did not list this pharmacy as either his address of record or as a secondary location with the Florida Department of Health, see RX C, and I find it implausible that he would continue working full time in Miami if Respondent obtained a registration given the expense of hiring a pharmacist.
Finally, Ms. Taylor, who Mrs. Abalihi represented as being Respondent's pharmacist-in-charge, told the DIs that she did not intend to leave her then-position at Sweetbay Pharmacy until Respondent was profitable. Moreover, when questioned as to who would be the pharmacist during the interim period, Ms. Taylor gave the name of a person she had never asked. Ms. Taylor, who has since taken a position in Orlando, did not testify in the proceeding, and while she did submit an affidavit, the affidavit contains no statement that she still intends to become Respondent's pharmacist-in-charge. Indeed, Mrs. Abalihi still has not disclosed who will be Respondent's pharmacist-in-charge.\19\ The evidence thus suggests that the plan all along was for Mr. Abalihi to be Respondent's pharmacist-in-charge.
\19\ Notwithstanding that many of the Agency cases have involved pharmacies whose prior owners were convicted of criminal offenses, a criminal conviction of either the pharmacy or its pharmacist/owner is not required to sustain the denial of an application or the revocation of a registration. For example, in Carriage Apothecary, the pharmacy and pharmacist were not convicted of any offense but agreed to pay a civil penalty. 52 FR at 27599.
\20\ I therefore reject the ALJ's finding of fact number seven. See R.D. at 34. I also reject the ALJ's conclusion of law number four. See id. at 35-36.
\21\ In one of Respondent's filings, it asserts that its case is "most analogous" to the Agency's decision in Terese, Inc., D/B/A Peach Orchard Drugs, 76 FR 46843 (2011). It's not. In Terese, the Government sought the revocation of the registration of a pharmacy, which was owned by the wife of a pharmacist, who along with his pharmacy, had been convicted of health care fraud and required to surrender his DEA registration as part of his sentence. While the Government argued that the pharmacy was simply the alter ego of a previous pharmacy, which had been subject to mandatory exclusion from federal health care programs by virtue of its conviction, see 21 U.S.C. 824(a)(5) and 42 U.S.C. 1320a-7(a), I noted that the respondent was not subject to mandatory exclusion but rather only permissive exclusion, and that Congress had not granted the Agency authority to revoke a registration on the latter basis. 76 FR at 46846-48.
While the Government also alleged that the former pharmacy and its pharmacist had diverted controlled substances, I rejected the allegation for lack of substantial evidence. Id. at 46846 & n.9. However, I also explained that "had the evidence established that [the owner's husband or the former pharmacy had] violated the CSA or state controlled substance laws, the Agency case law on piercing the corporate veil would authorize the revocation of [the] [r]espondent's registration." Id.
Pursuant to the authority vested in me by 21 U.S.C. 823(f), as well as 28 CFR 0.100(b), I order that the application of Cove, Incorporated, doing business as Allwell Pharmacy, for a DEA Certificate of Registration as a retail pharmacy, be, and it hereby is, denied. This order is effective immediately.
Daniel G. Musca, Esq., and Brian C. Chase, Esq., for the Respondent.
Christopher B. McNeil, Administrative Law Judge. On March 3, 2011, Ogechi E. Abalihi submitted a request on behalf of Cove, Inc., seeking a new retail pharmacy DEA Certificate of Registration, allowing it to dispense controlled substances through a business that would be known as Allwell Pharmacy in Tampa, Florida. On July 26, 2011, finding cause to believe this registration would be inconsistent with the public interest, the Drug Enforcement Administrator, through the Deputy Assistant Administrator, issued an order to show cause why the Administrator should not deny the application. In response, on August 22, 2011, the Respondent requested an extension of the time permitted to file a response, which was granted by DEA Administrative Law Judge Timothy J. Wing. Judge Wing thereafter received what he found to be a waiver of Cove, Inc.'s right to a hearing on the matter and terminated the administrative review Cove had requested.
In her review of the record, the Administrator concluded there were factual disputes that warranted further development and remanded the matter to the Office of Administrative Law Judges, with instructions to permit the parties to present evidence at a hearing to be conducted in Tampa, Florida. At this point, Judge Wing was no longer with the DEA Office of Administrative Law Judges, so Administrative Law Judge Gail Randall issued an order for prehearing statements. On December 3, 2012, prior to the submission of prehearing statements, Chief Administrative Law Judge John J. Mulrooney II reassigned the case from ALJ Randall to the undersigned, and I presided over an evidentiary hearing conducted in Tampa, Florida, on February 13, 2013.
The general issue to be adjudicated by the Administrator, with the assistance of this recommended decision, is whether the record as a whole establishes, by substantial evidence, that Cove, Inc.'s application for a Certificate of Registration with the DEA should be denied as inconsistent with the public interest, as that term is used in 21 U.S.C. Sec. 823(f).
were concerned that Ms. Abalihi's husband, Alfred Abalihi, R. Ph., although not a Cove, Inc. shareholder or manager of Allwell, had been associated with a different pharmacy that had been compelled to surrender its DEA Certificate in 2007 due to illegal dispensing operations.
After carefully considering the testimony elicited at the hearing, examining the admitted exhibits, evaluating the arguments of counsel, and weighing the record as a whole, I have set forth my recommended findings of fact, conclusions of law, and analysis below, recommending that the DEA deny Cove, Inc.'s Application for a Certificate of Registration.
The record reflects that Moon Lake surrendered its DEA Certificate of Registration shortly after this inspection, based on the investigators' charge that the operation was illegal. The record also shows that Mr. Abalihi was then dispatched to serve as a temporary pharmacist at numerous other locations, as an employee of HealthCare Consultants, all without incident or disciplinary action.
\52\ Id. at 49, 51.
\77\ Id. at 92, 95.
\86\ Id. at 125, 128.
\92\ Id. at 141, 143.
\97\ Id. at 131, 133.
\105\ Id. at 144, 146.
Ms. Abalihi acknowledged that presently, Ms. Taylor works full time as a pharmacist in Orlando, having moved from Tampa sometime after this application was filed.\110\ When asked whether she knew if Ms. Taylor was planning on moving back to Tampa if Cove, Inc. gets the Certificate it seeks for Allwell, Ms. Abalihi stated "We can't say for sure until this whole thing is over. I mean I don't expect her to, you know, just not do something with her life with this whole thing--I mean this whole thing has to be over for her to--that is my perception, for her to make a decision what she wants to do." \111\ She added that despite what Ms. Taylor told Investigator Boggess about the plan to use Ms. Mustafa as a second pharmacist, Ms. Abalihi did not know Ms. Mustafa, had never met her, and had never spoken with her.\112\ She offered no explanation for telling the DEA investigators that she would either provide them with Ms. Mustafa's contact information or have Ms. Mustafa contact them--actions which indicate that she was complicit in Ms. Taylor's prevarication regarding the purported plan to use Ms. Mustafa when Allwell began its operation.
\113\ Id. at 138, 161.
I am thus presented with two significantly different versions of what was said when Diversion Investigators Boggess and Wald questioned Ms. Abalihi and Ms. Taylor. The Diversion Investigators testified that Ms. Taylor indicated she would leave her job at Sweetwater and join the operation of Allwell only when it started to become profitable--not at its inception. Both investigators testified that Ms. Taylor initially told them she would have a coworker, Ms. Mustafa, serve as the pharmacy's pharmacist between the time it began its operation and the time when Ms. Taylor joined the store as its pharmacist. Investigator Boggess testified that in furtherance of this representation, Ms. Abalihi committed to providing him with Ms. Mustafa's contact information--a commitment Ms. Abalihi now denies ever making.
Because the two Diversion Investigators' testimony is internally consistent, is consistent with the evidence as a whole, is consistent with a common sense understanding of the events being described, and does not appear to be tainted with bias or a motivation to prevaricate, and because I do not find other indicia of unreliability, I give substantial weight to the statements of Investigators Boggess and Wald regarding this exchange.
investigators that Ms. Mustafa would play a role in the pharmacy when it began its operations.
\122\ Id. at 100, 102.
\123\ Id. at 101, 102.
\144\ 21 U.S.C.A. Sec. 823 (West), current through Public Law 112-283, approved 1-15-13.
\145\ 21 U.S.C.A. Sec. 823, eff. 4/15/2009, current through Public Law 112-283, approved 1-15-13.
\146\ Government's Proposed Findings of Fact, Conclusions of Law, and Argument in Response to "Respondent's Brief" at 3 (citing Richard J. Lanham, M.D., 57 FR 40475-01 (August 27, 1992), Henry J. Schwartz, Jr., M.D., 54 FR 16442-01 (April 24, 1989). Also cited is Neveille H. Williams, D.D.S., 51 FR 17556 (1986), but the entry at that citation corresponds to the matter of Paul Stepak, M.D., 51 FR 17556 (May 13, 1986), and is inapposite here.
\147\ Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005); JLB, Inc., d/b/a Boyd Drugs, 53 FR 43945-02, 43947 (October 31, 1988); see also David E. Trawick, D.D.S., 53 FR 5326-01, 5327 (February 23, 1988).
\148\ Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); see also Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005).
\149\ Trawick v. DEA, 861 F.2d 72, 76 (4th Cir. 1988).
\150\ Jayam Krishna-Iyer, M.D., 74 FR 459-01, 462 (January 6, 2009).
In this case, the Government does not contend there is a history of professional discipline by a licensing board, nor did it offer evidence of a criminal conviction pertaining to any party, nor did it allege Cove, Inc., or any material party failed to comply with applicable laws relating to controlled substances. Accordingly, Factors One, Three, and Four in 21 U.S.C. 823(f) are not presented as bases for revoking this Certificate.
\151\ See Physicians Pharmacy, L.L.C., 77 FR 47096, 47104 (August 7, 2012).
\152\ Id. (citing Robert A. Leslie, M.D., 68 FR 15,227, 15,230 (March 28, 2003) (state license is a necessary but not a sufficient condition for registration, and therefore, this factor is not dispositive)).
\154\ Order to Show Cause, found in ALJ Exhibit 1, at 1.
In hearings regarding the denial of a proposed DEA Certificate of Registration, "the Administration shall have the burden of proving that the requirements for such registration pursuant to section 303 or section 1008(c) and (d) of the Act (21 U.S.C. 823 or 958(c) and (d)) are not satisfied." \157\ Accordingly, in order to establish cause to deny Cove, Inc.'s application, the Government must establish by at least a preponderance of the evidence that it would be inconsistent with the public interest to grant this application, given the applicant's experience in dispensing controlled substances (Factor Two), given Mr. Abalihi's past history and present association with the new pharmacy (Factor Two), and given evidence of other conduct which may threaten the public health and safety (Factor Five).
\157\ 21 CFR 1301.44, current through April 4, 2013.
The evidence establishes that the applicant did not have personnel with the requisite experience in dispensing controlled substances to support its application. Considering first the experience attributed to Ms. Abalihi, I find the scope of nursing practice does, to some degree, include exposure to regulations pertaining to the distribution of controlled substances. Ms. Abalihi competently testified that in the course of her nursing practice, she has had occasion to deliver controlled substances to persons in her care. Further, there is evidence that as a nurse, Ms. Abalihi has been required to account for controlled substance inventories, and to guard against improper diversion of such inventories.
\158\ See Sun & Lake Pharmacy, 76 FR 24523-02, 24525 (May 2, 2011) (citing 21 CFR 1306.04(a)).
\159\ 21 CFR 1306.04(a) (2005), current through February 21, 2013.
Driving this corresponding responsibility is the standard, also found in DEA regulations, that a prescription for a controlled substance "must be issued for a legitimate medical purpose," and that it be prescribed by "an individual practitioner acting in the usual course of his professional practice." \160\ Although the record shows Ms. Abalihi has formal education in the fields of basic and advanced pharmacology, and has experience in administering medications including controlled substances, the record also shows that she has no experience in understanding and applying the corresponding responsibilities imposed on pharmacists who dispense controlled substances under DEA regulations. To the contrary--from her testimony and from her business plan, it is clear Ms. Abalihi disavows having such knowledge, electing to defer all questions on these regulations to her business partner, Ms. Taylor.
prescriptions. Nothing in Ms. Abalihi's training suggests she is familiar with the practices of persons who present questionable prescriptions to pharmacists in the hope of securing controlled substances illegally.
Further, as a corporate entity, Cove, Inc. itself has no history of experience in the distribution of controlled substances. Allwell Pharmacy would be this corporation's first and only venture into such activity, and neither of its shareholders has ever operated a pharmacy before. The evidence calls into question whether Ms. Taylor would actually participate in the operation of Allwell Pharmacy, at least at the beginning of operations. When this application was presented to the DEA, Ms. Taylor was employed at another pharmacy on a full-time basis, during hours that would have made it impossible for her to be present when Allwell was open for business. When asked to describe her intentions in this regard, Ms. Taylor told the DEA investigators that she planned on working at Allwell only once it became profitable--not at the very beginning. Since then, Ms. Taylor has moved to Orlando, and there is no evidence indicating she has any plans to return to Tampa any time soon.
I am mindful that Ms. Abalihi now disputes the DEA investigators' reports regarding when Ms. Taylor would actually begin work. I am persuaded, however, to attribute greater weight to the testimony on this point provided by Investigator Boggess and Investigator Wald, than I attribute to Ms. Abalihi's version of what was said. It is clear from the record that Ms. Taylor had no clear investment in Cove, Inc. nor in Allwell Pharmacy. As a minority shareholder with no proven financial investment in the company, Ms. Taylor was in no way obligated to quit her job at Sweetbay in order to work at Allwell. The record offers no evidence that Ms. Taylor contributed capital or cash in exchange for receiving her ten percent shares in the corporation.
\161\ See Tr. at 157.
This conclusion is buttressed by the evidence regarding the role of Dayla Mustafa. The need for someone to play the role attributed to Ms. Mustafa would arise only upon Ms. Taylor's absence from Allwell during the initial operation of the new pharmacy. The evidence establishes that based on Ms. Taylor's admission that she would not be present initially, and upon the investigators' query, Ms. Taylor offered Ms. Mustafa as the person who would provide the requisite experience initially. The evidence establishes that this was a falsehood--that in fact Ms. Mustafa never agreed to play such a role, and Ms. Taylor came up with the name only because she felt the need to address concerns being raised by the DEA investigators. Ms. Abalihi tacitly confirmed this false representation and compounded the problem when she offered to provide the investigators with Ms. Mustafa's contact information. Thus, the evidence establishes that no one having the requisite knowledge and experience to operate a pharmacy and to conform to DEA diversion control requirements would be present initially.
I do note the Respondent's complaint regarding the practice, attributed to Investigators Boggess and Wald, of asking applicant's questions regarding their familiarity with DEA diversion control regulations.\162\ After stating that "there is no law or regulation supporting this practice," the Respondent avers that "everyone knows that the DEA does not go around interviewing Walgreens or Wal-Mart shareholders or management whenever those pharmacy chains decide to open up a new location in the area." \163\ I cannot endorse this conclusion, as it is not supported by any evidence in the record before me. Further, I am obliged to focus on the application before me. Here, the 90 percent shareholder and sole officer of the corporation that proposes to dispense controlled substances has only limited experience handling controlled substances, and has never operated a pharmacy. Ms. Abalihi recognized the importance of this shortfall, and proposed to fill the gap by taking on a ten percent shareholder, expecting this person to bring with her the experience needed to ensure compliance with DEA diversion control regulations. That shareholder, however, was already committed to a full-time job that prevented her from working at the new pharmacy. When this gap was raised, the ten percent shareholder lied to the DEA investigators, falsely stating a co-worker, Ms. Mustafa, would be filling the gap until the new pharmacy was operational.
\162\ Respondent's Post-Hearing Brief, at 12.
Given the evidence before me, I cannot endorse the Respondent's claim that "short of being licensed as a practicing pharmacist, Mrs. Abalihi has about as much experience properly handling controlled substances as anyone is likely to have." \164\ From her own testimony, it is clear Ms. Abalihi was unfamiliar with DEA diversion control requirements and was unwilling to answer any questions regarding the regulatory environment in which pharmacies must operate. This was true during the investigation into this application, and it was also true during the evidentiary hearing. Thus, even though Ms. Abalihi has continued her professional development by attending courses that included pharmacology, she continues to lack the knowledge and experience required to operate a pharmacy that dispenses controlled substances. She has no experience as a pharmacist, professed no knowledge of the standards of care that must be met by registered pharmacists, and proposed no concrete plan to have a pharmacist actually working at the pharmacy, at least until the enterprise was established and operational. Upon this evidence, the Government has established by at least preponderance that issuing a Certificate of Registration to the Respondent would be inconsistent with the public interest, under Factor Two.
\164\ Respondent's Post-Hearing Brief, at 11.
\165\ Order to Show Cause, at 1.
\166\ Government's Proposed Findings of Fact, Conclusions of Law, and Argument in Response to "Respondent's Brief," at 8.
practices in this pharmacy were illegal. Having said that, however, I cannot conclude that this evidence supports the Government's contention that the circumstances arising from Mr. Abalihi's work at Moon Lake Pharmacy establish cause to find Cove, Inc.'s application is inconsistent with the public interest. The evidence establishes that Mr. Abalihi would not directly participate as an officer or owner of Cove, Inc. Thus, I must question whether there is a sufficient link established between Mr. Abalihi's past work at Moon Lake Pharmacy and Cove, Inc.'s proposal to operate Allwell Pharmacy.
In support of its claim that such a nexus exists and must be recognized, the Government offers as guidance the decision in In Re Matthew D. Graham.\168\ As noted in the Government's brief, Graham involved the application for a List 1 Chemical Registration under 21 U.S.C. 823(h) (and not registration under 21 U.S.C. 823(f)). The DEA challenged the application because the applicant's business partner had in the past surrendered a DEA registration after the partner illegally sold pseudoephedrine. In the Final Order, Graham's application was denied, in part by applying language similar to language found in Section 832(f)'s Factor Two, which calls for the "public interest" inquiry to consider "[a]ny past experience of the applicant in the manufacture and distribution of chemicals[.]" \169\ While thus not precisely on point, the discussion in Graham does highlight those factors that should be considered when determining whether to deny a registration based on the past misconduct of a third party.
\168\ Government's Proposed Findings of Fact, Conclusions of Law, and Argument in Response to "Respondent's Brief," at 10, citing In re Matthew D. Graham, 67 FR 10229-01 (March 6, 2002).
\169\ Id. at 10230, quoting 21 U.S.C. 823(h)(4).
The agency thus may attribute to a registrant the prior misconduct of third party. The conditions in Graham, however, are not well aligned to those present in Cove, Inc.'s application. In Graham, the registrant told the DEA he intended to enter into a wholesale business arrangement with Snodell, with whom he was co-owner of a wholesale business outlet. Thus, unlike the business plan presented by Ms. Abalihi, the registrant in Graham was economically tied to the third party. When it surfaced that Snodell had illegally sold pseudoephedrine a year earlier, and when it became clear that under Graham's business plan Snodell would be responsible for referring List I chemical orders to Graham, this nexus served as a basis for denying Graham's application.
In the case presently before the Administrator, on the other hand, Ms. Abalihi presented a business plan that expressly removed Mr. Abalihi from all phases of the proposed pharmacy's operation. The evidence establishes that Mr. Abalihi would not directly participate as an officer or owner of Cove, Inc. While it might be reasonable to be skeptical about the efficacy (or even the existence) of such a line between spouses, the evidence now in the record does not permit me to recognize the kind of nexus that existed in Graham.
The Government correctly notes in its brief that Ms. Abalihi has not indicated she would prohibit her husband from working in the pharmacy.\171\ Ms. Abalihi's statement that she would keep her husband "apart from ownership and management" of the pharmacy, however, effectively distinguishes this case from Graham.\172\ Equally important, having considered the affidavit of Mr. Abalihi, and having considered the testimony from both Mr. and Mr. Abalihi, I find sufficient credible and unrebutted evidence to conclude Mr. Abalihi does not intend to perform a significant role in the operation of Allwell Pharmacy.
\171\ Government's Proposed Findings of Fact, Conclusions of Law, and Argument in Response to "Respondent's Brief," at 10.
\172\ Id. quoting Affidavit of Ms. Abalihi, attached as Exhibit E to Respondent's Brief, ALJ Exhibit 6.
I fully appreciate the Government's concern regarding the events involving Mr. Abalihi during his very short tenure at Moon Lake Pharmacy. I note the skepticism expressed by the investigators, as they recalled the nature of Moon Lake's Internet-based operation. I share their sense that anyone in Mr. Abalihi's position would have had reason to question the legitimacy of the operation, and I share their sense of incredulity that Mr. Abalihi would have failed to recognize the illegal nature of what was going on at Moon Lake, even though his stay there was brief.
The Respondent, however, correctly notes that Mr. Abalihi was not charged with any misconduct arising out of his service at Moon Lake. Mr. Abalihi may have unwisely told the DEA investigators that Moon Lake's operations were legal, but I cannot conclude from that piece of evidence that Mr. Abalihi was knowingly advancing Moon Lake's criminal enterprise when the DEA arrived. Unlike the acknowledged misconduct by Graham's business partner (leading to the partner surrendering his DEA Certificate), here the most we can say for certain is that Mr. Abalihi was the pharmacist who was present when the DEA agents arrived at Moon Lake and brought its operations to an end. While it is true that the parties have stipulated that Mr. Abalihi dispensed controlled substances based on unlawful Internet prescriptions during his short tenure at Moon Lake, Mr. Abalihi's record since then is unblemished and his plan to avoid direct involvement with Allwell and Cove, Inc. adequately attenuates the link between him and the proposed pharmacy.
Having said that, I must note that a core theme presented in support of the Respondent's application has not been established as fact. In its post-hearing brief, the Respondent states that "[o]nce the decision had been made by the DEA that Mr. Abalihi was banned for the rest of his life from ever having an ownership stake in a pharmacy with a DEA registration, the DEA then set a course of blocking anyone relating to Mr. Abalihi from obtaining a DEA registration." \173\ This record does not support the premise that Mr. Abalihi has been "banned for the rest of his life" from anything.
\173\ Respondent's Post-Hearing Brief, at 11.
The record fails to establish why Mr. Abalihi withdrew his request for a DEA Certificate, other than to indicate the action was based on the advice of his attorney. The factual claims on this point appearing in the Order to Show Cause have been supported by substantial evidence, and include the parties' stipulation that Mr. Abalihi improperly dispensed controlled substances while working at Moon Lake Pharmacy. The DEA has in the past recognized the need to evaluate the circumstances that may arise when a husband and wife are involved in a new application for a retail-pharmacy DEA Certificate and when there has been a prior adverse DEA action involving one of the spouses involving another pharmacy.\174\ The facts alleged in the Order to Show Cause warranted this measure of scrutiny, but the facts shown here do not establish the kind of ties that link Mr. Abalihi's past brief involvement with Moon Lake's illegal operation to the operation proposed by the Respondent here.
\174\ See, e.g., DePietro's Pharmacy, 56 FR 31675-02 (July 11, 1991).
I reject in its entirety, however, the Respondent's assertion that the DEA's "real motivation" in challenging Cove, Inc.'s application, was "Mr. Abalihi's brief employment at Moon Lake Pharmacy." \175\ The assertion is based on an unproved premise that Mr. Abalihi has been unfairly "blacklisted" by the DEA, based on what he said and did on the day DEA agents visited Moon Lake Pharmacy.\176\ The evidence before me does not establish that Mr. Abalihi is the subject of any bar to obtaining a DEA Certificate of Registration. Instead, the record indicates that Mr. Abalihi's former lawyer met with the DEA while he sought to start his own pharmacy, and was persuaded during that meeting to advise Mr. Abalihi to withdraw his application.
I find insufficient evidence to conclude that Mr. Abalihi's relationship with Cove, Inc., through his marriage to Ms. Abalihi, gives rise to a public threat under Factor Two, although Factor Two does serve as a basis for denying this application, given the absence of sufficient relevant experience by Ms. Abalihi, for the reasons set forth above.
Independent of concerns addressed under Factor Two, the evidence also forces the conclusion that conduct attributed to both Ms. Taylor and Ms. Abalihi would threaten the public health and safety, warranting a denial of the application under Factor Five. Here the evidence establishes that Ms. Taylor misled the DEA investigators when she was asked about arrangements to have a pharmacist present when Allwell began its operations. I find there is competent and credible evidence that when asked who would be working at Allwell initially, Ms. Taylor told the investigators the initial pharmacist would be her coworker, Ms. Mustafa. This was not true, and constitutes a material misrepresentation in the application process. Ms. Taylor elected not to testify (indeed there is no evidence suggesting the Respondent requested her to do so), and nothing in her affidavit \178\ compels a more benign interpretation of her conduct.
\178\ Respondent's Exhibit G, Affidavit of Jacinta Taylor.
Further, when the investigators requested contact information from Ms. Abalihi so they could confirm Ms. Mustafa's role, Ms. Abalihi compounded the misrepresentation and offered to get the requested information, rather than disclose that she knew nothing about Ms. Mustafa's role with the pharmacy. If Ms. Abalihi intended on using contract pharmacists at the start of Allwell's operation, she had an affirmative duty to say so when DEA investigators asked her about the role Ms. Mustafa was to play. By her silence, and by promising to provide contact information for Ms. Mustafa, Ms. Abalihi misled the investigators.
Making a material misrepresentation in the course of an investigation into the operation of the proposed pharmacy creates a risk of harm to the public health and safety. The operation of a pharmacy is a highly regulated enterprise, requiring advanced skill and technical expertise unique to the profession. Lying about who would be present with that skill and expertise casts doubt on the ability of both Ms. Abalihi and Ms. Taylor to protect the public, and suggests they will instead act only in their own self-interest. Upon such evidence, the Government has established by at least preponderance that issuing a Certificate of Registration to the Respondent would be inconsistent with the public interest, under Factor Five.
Where the Government has made out its prima facie case, the burden shifts to the Respondent to show why its continued registration would be consistent with the public interest.\179\ Having considered the record as a whole and in particular the claims appearing in the Respondent's post-hearing brief, I find no substantial evidence in rebuttal of the Government's case. Ms. Abalihi continues to take the position that she is fully qualified to operate a pharmacy, based on her experience as a Registered Nurse; and continues to seek a Certificate of Registration to dispense controlled substances out of a retail pharmacy that has no pharmacist on staff.
\179\ See Theodore Neujahr, D.V.M. 65 FR 5680-01, 5682 (February 4, 2000) and Service Pharmacy, Inc., 61 FR 10791-01, 10795 (March 15, 1996).
1. On March 3, 2011 and acting on behalf of Cove, Inc., Ogechi E. Abalihi submitted a new application for a DEA retail-pharmacy Certificate of Registration, to operate a pharmacy under the name of Allwell Pharmacy, to be located at 1947 West Dr. Martin Luther King, Jr. Boulevard, Tampa, Florida 33609. This pharmacy is not open for business and has never operated as a business, although it has been issued a community pharmacy license by the state of Florida.
2. Cove, Inc. is owned by its 90 percent shareholder and sole officer, Ogechi E. Abalihi, and its ten percent shareholder, Jacinta Taylor.
3. Ms. Abalihi has no experience working in, managing, or owning a pharmacy; has no direct knowledge of DEA controlled substance regulations; has extensive experience as a Registered Nurse; has worked with controlled substances but only in the context of her service as a Registered Nurse; and has proposed a business plan for Allwell Pharmacy that requires the presence of a pharmacist throughout the pharmacy's operating hours, which were 9:00 a.m. to 6:00 p.m. Mondays through Fridays, and from 9:00 a.m. to 1:00 p.m. on Saturdays.
4. Although the Applicant's business plan called for DEA controlled substance regulations to be implemented by a registered pharmacist on duty throughout the pharmacy's operational hours, there was no provision for having a registered pharmacist present during the initial phase of the pharmacy's operation. Instead, the plan called for Ms. Abalihi to operate the pharmacy until it became profitable, at which time Ms. Taylor planned on quitting her full-time job at another pharmacy and becoming an employee at Allwell Pharmacy. Under this plan, until Ms. Taylor actually began working at Allwell Pharmacy, there would be no one with the experience, knowledge, and training needed to ensure compliance with DEA regulations.
5. During the application process and during interviews with DEA Diversion Investigators, both Ms. Abalihi and Ms. Taylor acknowledged the need to have a registered pharmacist present whenever the pharmacy was open. Both Ms. Abalihi and Ms. Taylor misled the Investigators by falsely representing that when it opened, Allwell Pharmacy's staff would include Dalya Mustafa, who is a registered pharmacist and was Ms. Taylor's co-worker. The evidence establishes that there would be no pharmacist present when Allwell Pharmacy began its operations, under the business plan created by Ms. Abalihi.
6. Without the active participation of Ms. Taylor or another person experienced in applying DEA regulations, Cove, Inc. lacked the experience required for its application to be consistent with the public interest.
7. The 90 percent owner of Cove, Inc., Ogechi E. Abalihi is married to a registered pharmacist, Alfred Abalihi. Mr. Abalihi is not an officer, shareholder, or employee of either Cove, Inc., or Allwell Pharmacy. There is insufficient evidence establishing that he would have any direct involvement with either Cove, Inc., or Allwell Pharmacy, just as there is insufficient evidence establishing that he would abstain from such involvement, should the pharmacy become operational.
8. Mr. Abalihi was a pharmacist employed in 2007 by HealthCare Consultants. In the course of his employment at HealthCare Consultants, Mr. Abalihi was directed to provide services as a registered pharmacist at Moon Lake Pharmacy. While providing services as a temporary worker through HealthCare Consultants at Moon Lake Pharmacy, Mr. Abalihi dispensed controlled substances based on unlawful Internet prescriptions prior to Moon Lake Pharmacy surrendering its DEA registration on December 17, 2007.
1. When it proposes to deny a new application for a retail-pharmacy DEA Certificate of Registration, the Government is required to establish by at least a preponderance of the evidence that the pharmacy's initial registration is inconsistent with the public interest. 21 U.S.C. 823(f); 21 CFR 1301.44(d).
the experience of the applicant in dispensing controlled substances is of such character and quality that registration is not in the public interest. This requires evidence of both the qualitative manner and quantitative volume of the applicant's experience. Where evidence of the applicant's experience, as expressed through its employees and officers, establishes that the business plan provides for the active daily involvement of no one having experience applying DEA controlled substance diversion regulations in a retail pharmacy setting, and provides only for the involvement of an employee familiar with the regulations applicable to Registered Nurses whose duties include dispensing medication, in such an application there is sufficient evidence proving, by at least a preponderance, that granting such an application would be inconsistent with the public interest.
4. When proposing to deny a retail-pharmacy application under Factor Two based on the prior association and dispensing history of a third party, the Government must demonstrate that the third party's past negative experience in dispensing controlled substances warrants a finding that his or her association with the applicant would be inconsistent with the public interest. Where, as here, the third party is the husband of the applicant's majority shareholder but has no clearly demonstrated role in either the corporation (as a shareholder or an officer), or in the retail pharmacy (as an employee or manager), and where there is insufficient evidence demonstrating the third party's past negative experience will have any impact on the operation of the retail pharmacy, the Government has not met its burden of proving a basis to deny the application under Factor Two.
5. In order to establish a basis for denying a new application for a retail-pharmacy Certificate of Registration based on the provisions of 21 U.S.C. 823 (f)(5) (Factor Five), the Government must present evidence establishing, by at least a preponderance, other conduct (i.e., conduct not covered within the scope of Factors One through Four) which may threaten the public health and safety. Where, as here, the evidence establishes that when called upon by DEA investigators to identify the person or persons who would be familiar with DEA diversion control regulations and would be present at the retail pharmacy to ensure compliance with those regulations, the applicant's sole officer and both of its two shareholders made material misrepresentations about having such person or persons present, there is substantial evidence of conduct that may threaten the public health and safety. In such an application there is sufficient evidence proving, by at least a preponderance, that granting such an application would be inconsistent with the public interest.
6. Upon such evidence, the Government has met its burden and has made a prima facie case in support of the proposed order denying the Respondent's application for a retail-pharmacy Certificate of Registration.
7. Upon a review of the record as a whole, including all claims made in the Respondent's post-hearing brief, there is insufficient evidence of remediation. Accordingly, the Government has established cause to deny this application.
As the Government has established its prima facie case by at least a preponderance of the evidence, the Respondent's application for a retail-pharmacy DEA Certificate of Registration should be DENIED.

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