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Daily Rules, Proposed Rules, and Notices of the Federal Government

DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket Nos. 12-37 and 12-38]

Holiday CVS, L.L.C., d/b/a CVS/Pharmacy Nos. 219 and 5195; Decision and Order

On June 8, 2012, Chief Administrative Law Judge (ALJ) John J. Mulrooney II, issued the attached Recommended Decision. Both parties filed Exceptions to the ALJ's decision.

Having considered the record in its entirety, including the parties' Exceptions, I have decided to adopt the ALJ's recommended rulings, findings of fact (except as discussed below), conclusions of law, and proposed sanction. A discussion of Respondents' Exceptions follows.1

Respondents' Exceptions

Respondents raise numerous exceptions to the ALJ's Recommended Decision. Of their contentions, the most substantial, but ultimately still unpersuasive, are the following:

(1) That their conduct in dispensing controlled substance prescriptions issued by two physicians, whose DEA Registrations were "expired" and therefore invalid, "cannot serve as a basis for revocation," Resp. Exceptions at 2-9;

(2) that the ALJ's findings that Respondents dispensed controlled substances pursuant to prescriptions, which raised red flags that a pharmacist could not resolve, and thus violated their corresponding responsibility under federal law, are not supported by substantial evidence,id.at 9-22; and

(3) that the ALJ failed to consider evidence of their acceptance of responsibility,id.at 22-25.

Exception One--Respondents' Dispensings of Controlled Substance Prescriptions Issued by Physicians Whose Registrations Were "Expired" Does Not Support the Revocation of Their Registrations

The evidence showed that both Respondents dispensed numerous prescriptions which were issued by two physicians, Dr. Anthony Wicks and Dr. Ronald Lynch, who no longer held their DEA registrations and thus could not lawfully prescribe controlled substances under federal law.See21 CFR 1306.03(a) ("A prescription for a controlled substance may be issued only by an individual practitioner who is * * * [e]ither registered or exempted from registration pursuant to SSSS 1301.22(c) and 1301.23 of this chapter."). More specifically, with respect to Dr. Wicks, the evidence showed that his registration expired on May 31, 2011. Yet, between June 6 and July 15, 2011, Respondent CVS #219 dispensed thirty-eight prescriptions issued by Dr. Wicks for oxycodone 30 mg. Likewise, between June 7 and July 14, 2011, Respondent CVS #5195 dispensed seventeen prescriptions issued by Wicks for oxycodone 30 mg.

While Respondent also characterizes Dr. Lynch's registration as "expired," the record shows that Lynch's registration had, in fact, been revoked following a hearing under 21 U.S.C. 824(a). More specifically, on December 3, 2010, the Agency issued a Decision and Final Order, which revoked Dr. Lynch's registration with an effective date of January 18, 2011, based,inter alia,on findings that he violated 21 CFR 1306.04(a) by issuing controlled substance prescriptions outside of the usual course of professional practice and which lacked a legitimate medical purpose; this decision was published in theFederal Registeron December 16, 2010. GX 31;see also Ronald Lynch, M. D.; Revocation of Registration,75 FR 78,745, 78,752-54 (2010). Pursuant to Agency practice, the decision was also published on the DEA Office of Diversion Control's public Web site.

Nonetheless, Respondent CVS #219 dispensed forty controlled substance prescriptions and Respondent CVS #5195 dispensed five controlled substance prescriptions, which Lynch issued after his registration had been revoked.2 GX 32. The evidence further shows that CVS #219 dispensed fifteen controlled substance prescriptions issued by Lynch during or later than June 2011, and that it did so as late as September 2011.Id.

Respondents argue that their dispensings of the prescriptions issued by Drs. Wick and Lynch cannot support the revocation of their registration because there is "no evidence that the allegedly expired status of any prescriber's DEA registration wasknown or should have been knownto Respondents or their pharmacists prior to dispensing." Resp. Exceptions, at 2. In support of their contention, Respondents maintain that the evidence shows "that every CVS pharmacist relies on the company-wide pharmacy information management system to notify the pharmacist of the status of a physician's DEA registration."Id.Respondents also argue that the database they used may have contained inaccuracies, because at the time of the dispensings, the stores were allowed to input prescriber information into the dispensing software and this information may have been inaccurate; alternatively, they argue that there was a time lag between the date on which a practitioner's registration expired and the date this information, which is collected by a third-party data aggregator, was downloaded into the company-wide pharmacy information management system.

As the ALJ noted, the argument only takes Respondents so far because the evidence shows that the third-party vendor from whom CVS receives registration data obtains its data from the Government on a weekly basis and then transmits the data to CVS on a weekly basis.3 ALJ at 60-61. Thus, while this delay might justify Respondents' having filled some of Dr. Wicks' prescriptions, it does not justify Respondents' having filled a substantial portion of them.4

Even if I accepted Respondents' contention that the time lag in their obtaining of updated information regarding the expiration of Dr. Wicks' registration explains why they continued to dispense his prescriptions,the argument is totally unpersuasive when applied to the prescriptions of Dr. Lynch.5 As explained above, the Agency published its Decision and Order revoking Dr. Lynch's registration on December 3, 2010, and the Order was effective on January 18, 2011. Yet, Respondents dispensed Dr. Lynch's controlled substance prescriptions after the effective date of the Order and did so for months thereafter. Indeed, Respondents were still dispensing his prescriptions more than six months after the date of the Order's publication.

In enacting the Controlled Substances Act, Congress created a comprehensive and closed system for regulating the distribution of those controlled substances, which have legitimate medical uses, to prevent the diversion of these substances to those who would either abuse them or sell them to those who do.See Gonzalesv.Oregon,546 U.S. 243, 250 (2006). One of the fundamental features of this scheme is the requirement that all persons who seek to engage in the legitimate manufacture, distribution, or dispensing of a controlled substance must first obtain a registration from the Attorney General authorizing them to do so.See21 U.S.C. 822(a). And to protect the public from those practitioners who engage in the diversion of controlled substances, Congress authorized the Attorney General to revoke the registration of a practitioner upon finding,inter alia,that the practitioner "has committed such acts as would render his registration * * * inconsistent with the public interest."Id.sec. 824(a)(4).

It is manifest that Respondents' conduct in filling prescriptions issued by a practitioner whose registration had been revoked undermines the Congressional scheme. Nor, given that the Order revoking Dr. Lynch's registration was published in theFederal Register(as well as on the Agency's Web site), can Respondents reasonably claim ignorance of it.Cf. Fed. Crop Ins. Corp.v.Merrill,332 U.S. 380, 384-85 (1947) ("Just as everyone is charged with knowledge of the United States Statutes at Large, Congress has provided that the appearance of rules and regulations in theFederal Registergives legal notice of their contents.") (citations omitted);see also Californiav.FERC,329 F.3d 700, 707 (9th Cir. 2003) ("Publication in theFederal Registeris legally sufficient notice to all interested or affected persons regardless of actual knowledge or hardship resulting from ignorance, except those who are legally entitled to personal notice.").6

So too, those who engage in a highly regulated industry are expected to keep informed of regulatory developments which affect their industry.See United Statesv.Southern Union Co.,630 F.3d 17, 31 (1st Cir. 2010) ("[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."). Here, the Agency's publication of the revocation order in Lynch's case thus provided Respondents with reason to know that, effective January 18, 2011, Lynch would no longer be authorized to issue controlled substance prescriptions.See Ralph J. Bertolino, d/b/a Ralph J. Bertolino Pharmacy,55 FR 4729, 4730 (1990).

Accordingly, Respondents' contention that the evidence does not establish that they (or their pharmacists) had actual knowledge of the revocation of Dr. Lynch's registration is wholly unavailing. Given that Respondents continued filling Lynch's unlawful prescriptions for more than six months after the Order became effective, and in the case of CVS #219 did so repeatedly, this conduct is sufficiently egregious to support the conclusion that Respondents committed acts which render their continued registrations "inconsistent with the public interest." 21 U.S.C. 824(a)(4);cf. United Prescription Services, Inc.,72 FR 50397, 50408-09 (2007) ("While filling a prescription issued by a practitioner whose registration had recently expired might be excusable, [pharmacy's] repeated filling of numerous prescriptions long after the expiration of [physician's] registration clearly was not appropriate and was unlawful.").7 By itself, this conduct is sufficient to conclude that the Government has made out aprima faciecase for revocation. I therefore reject this exception.

Exception Two--The ALJ's Findings That Respondents Dispensed Controlled Substances Pursuant to Prescriptions Which Raised Red Flags That Could Not Be Resolved and Thus Violated Their Corresponding Responsibility Under Federal Law Are Not Supported by Substantial Evidence

Respondents also contend that the record does not support the ALJ's findings that they violated their corresponding responsibility under federal law to dispense only those prescriptions, which have been "issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice." 21 CFR 1306.04(a). Respondents take exception to the ALJ findings because they "are based solely on the testimony of the Government's Expert * * * who stated that he found certain red flags on approximately fifty of the more than 25,000 prescriptions filled by Respondents to be 'unresolvable.' " Resp. Exceptions, at 9. Respondents contend that "[n]o other witness, no case law, no Administrator decision, and no published DEA guidance supports [the Government Expert's] claims that certain red flags are `unresolvable' on their face."Id.at 9-10. Respondents further argue that the testimony of the Government's Expert"is unreliable and biased and cannot by itself provide sufficient evidence to satisfy the Government's burden of proof."Id.at 10.Finally, Respondents contend that "the Government's `unresolvable' red flag argument--adopted in full in the ALJ recommendation--improperly shifts the burden of proof to Respondents."Id.

At the hearing, the Government presented extensive evidence showing that numerous persons, including persons who were not Florida residents, obtained prescriptions for both oxycodone 30 mg and alprazolam 2 mg from various South Florida physicians, whose offices were typically located 200 miles or more from Respondents (seeGX 62), which they then presented to Respondents' pharmacists and which Respondents filled, notwithstanding that there are numerous pharmacies between South Florida and Sanford (where Respondents are located). The evidence included multiple spreadsheets showing each Respondent's dispensings of the oxycodone (and in some cases alprazolam) prescriptions issued by various physicians.

A principal component of the Government's evidence was the testimony of its expert witness, Professor Paul Doering, who reviewed various dispensings made by the Respondents and opined as to whether the Respondents had complied with their corresponding responsibility to dispense only lawful prescriptions. Professor Doering, who has been a registered pharmacist in the State of Florida since 1973, currently holds the title of Distinguished Service Professor of Pharmacy Practice, Emeritus, of the College of Pharmacy at the University of Florida, and has been on its faculty since 1976. GX 6, at 1-2. He has also published extensively and presented numerous papers at professional meetings.See id.at 4-29.

The ALJ found credible Professor Doering's testimony that controlled substances are "high alert drugs" and that among controlled substances, drugs such as "opioids, benzodiazepines, [and] other central nervous system depressant drugs" require "the highest level scrutiny" on the part of a pharmacist who is presented with prescriptions for these drugs. Tr. 692; ALJ at 28. Professor Doering testified that in pharmacy practice, there are various red flags, which create "a level of concern that might cause a pharmacist to either choose not to fill a prescription or take some other kind of actions," and that "the more red flags there are, the stronger that suspicion is." Tr. 694. Professor Doering testified that while some red flags might be resolvable by checking a patient's identification or calling the prescriber, there are also circumstances in which calling the prescriber will not resolve the red flags because the red flags indicate that the prescriber is collaborating with the patient to divert drugs.Id.at 697-700.

Professor Doering specifically identified such red flags as including that the patient is paying for controlled substance prescriptions with cash,id.at 703;the respective locations of the patient and the prescriber,id.at 701-02;that a prescriber writes for certain combinations or patterns of drugs,id.at 708;and multiple patients presenting "prescriptions for the same drugs, the same quantities * * * from the same doctor without any kind of variability or change considering the different patients that come into the pharmacy," thus suggesting that the physician prescribes in a "factory like manner."Id.

Professor Doering reviewed the various spreadsheets of the prescriptions dispensed by Respondents and testified regarding whether Respondents could have lawfully dispensed various prescriptions given the red flags they presented. For example, when questioned about Respondent CVS #219's dispensing of oxycodone 30 mg prescriptions,8 which were issued by a Fort Lauderdale-based physician (P.G.) for persons whose addresses were in Kentucky and Tennessee and who paid cash, Professor Doering opined that the multiple red flags these prescriptions presented could not be resolved so that a reasonable pharmacist could dispense them consistent with his corresponding responsibility under federal law.9 Tr. 722-23.

As the ALJ found, the Government elicited additional testimony from its Expert regarding the prescriptions issued by other doctors which was to similar effect. For example, the Government noted that on August 29 and 30, 2010, Respondent CVS #219 filled prescriptions for either 210 or 240 tablets of oxycodone 30 mg for four Kentucky residents, all of whom paid cash, which were issued by a physician (L.A.) whose office address was listed as either in Miami or Fort Lauderdale. GX 57, at 15. Two of these individuals were from Clay City; the other two were from Stanton.Id.

Regarding these prescriptions, Professor Doering testified that he could not "foresee any explanation for this set of red flags that would satisfy my professional obligation not to fill the scripts." Tr. 754. When further questioned as to whether anything "could have been done to resolve the[] red flags" presented by these prescriptions, Professor Doering explained that "it's a conflagration or a combination of things that suggests to me that these prescriptions were not issued in the usual course of medical practice" and that nothing on the hard copy of the prescriptions "would change [his] opinion."Id.at 757-58. And when asked by the ALJ if he was imposing a more stringent standard than the standard of a Florida pharmacist, Professor Doering testified that the standard he applied was "what they're taught in school," and that in his "many conversations with similar pharmacies operating under similar circumstances * * * the feedback I get is universally consistent with my point of view."Id.at 758.

The Government also noted that on August 19, 2010, Respondent CVS #219 filled four prescriptions for 180 tablets of oxycodone 30 mg for four Kentucky residents, which were issued by a physician (C.N.) whose address was listed as either being in Delray Beach or Deerfield Beach, two cities located in Palm Beach County. Tr. 759-64; GX 57, at 38. Here again, Professor Doering testified that the red flags could not be resolved and that no information on the hard copy of the prescriptions would lead him to change his opinion. Tr. 764.

Professor Doering likewise testified regarding dispensings that occurred at Respondent CVS #5195. More specifically, he addressed Respondent's dispensings on August 26, 2010, of several prescriptions for 180 tablets of oxycodone 30 mg written by a Dr. JackDanton10 of Pompano Beach for three residents of Tennessee, two of whom shared the same last name and address in Knoxville, with the other being from the town of Mascot. GX 57, at 29. Professor Doering testified that the red flags associated with these prescriptions included that they were paid for with cash, the prescriptions were for "a high alert drug," that the patients were "from out-of-state who apparently traveled a great distance to be seen in Pompano Beach," and that the assigned prescription numbers were very close sequentially, suggesting that it was "most likely they were presented to the pharmacy within a very short time span." Tr. 751.11 While Professor Doering was not specifically asked whether the combination of red flags presented by the Danton prescriptions was resolvable, based on his earlier testimony that other prescriptions, which were issued for the same drug and in similar quantities to persons who had travelled from out-of-state to South Florida to obtain the prescriptions and then on to Sanford to fill them presented red flags which were not resolvable, I conclude that the red flags presented by these prescriptions were also not resolvable.

Professor Doering further testified regarding Respondent CVS #5195's dispensings on August 11, 2010 of six oxycodone 30 mg prescriptions (all but one of which were for 180 tablets12 ), issued by a Dr. Carlos Gonzales of West Palm Beach to six Kentucky residents, all of whom paid cash.13 GX 57, at 35. The evidence further showed that three of these persons lived in the same town (Stanton) and that two of them had the same last name and street address; another two were also from the same town (Danville).Id.When asked whether a reasonable and prudent pharmacist in Sanford would want to resolve the red flags presented by these prescriptions before dispensing them, Professor Doering answered: "If it's resolvable. I think I've testified already that there's no explanation that's going to resolve that in my mind." Tr. 916.14

The Government also introduced an eighty-one page spreadsheet of the controlled substance prescriptions which were written by a Longwood, Florida physician and filled by both Respondents.15 The spreadsheet documents numerous instances in which both Respondents filled two or more controlled substance prescriptions that the physician typically wrote for 168 tablets of oxycodone 30 mg and 56 tablets of alprazolam 2 mg; moreover, in many instances, the patients received a third prescription for 56 tablets of oxycodone 15 mg.SeeGX 55.

The Government then asked Professor Doering for his opinion regarding the red flags that were presented by this doctor's prescriptions and directed his attention to several prescriptions that each Respondent filled on December 23, 2010. More specifically, the Government noted the prescriptions that Respondent CVS #219 filled for patients T.F. and A.T., each of whom received 168 tablets of oxycodone 30 mg, 56 tablets of oxycodone 15 mg, and 56 tablets of alprazolam 2 mg; seeGX 55, at 15, 47; as well as the prescriptions that Respondent CVS #5195 filled for patients C.H. and J.R., each of whom also received 168 tablets of oxycodone 30 mg, 56 tablets of oxycodone 15 mg, and 56 tablets of alprazolam 2 mg.See id.at 62, 74.16

Regarding these prescriptions, Professor Doering Expert testified that from the perspective of "a clinical pharmacist * * * that combination of drugs is * * * a red flag because [a]lprazolam and oxycodone are commonly diverted to nonmedical use." Tr. 784. As for the two oxycodone prescriptions each person obtained, Professor Doering explained that while "one might speculate that the reason for that is that pain can vary throughout the day and it may be that the individual is suggested to take the 15 [mg tablets] when the pain is not so great and 30 [mg tablets] when it is so great," the "30 milligram tablets are scored right down the middle, and it's quite easy to break them in half."Id.Professor Doering thus explained that prescribing both fifteen and thirty milligram strengths of the drug "just doesn't make any sense."Id.He also testified that pill cutters are widely available in pharmacies and that it is common for doctors to prescribe a stronger strength of a drug to save money and instruct their patients to cut the drug in half.Id.at 786.

Professor Doering further testified that the prescribing patterns of this physician "would suggest that the one size fits all concept was in the" physician's mind, and that this was "highly suspicious" because "you see the same drugs, the same quantities, the same patterns over and over again."Id.at 784-85. Indeed, while the Government questioned Professor Doering about only a few of the prescriptions, the eighty-plus page spreadsheet manifests that this physician repeatedly engaged in the pattern prescribing of oxycodone with alprazolam and frequently provided these persons with prescriptions for both oxycodone 30 mg and 15 mg.17 Moreover, this was not the only physician who engaged in the pattern prescribing of oxycodone and alprazolam and whose prescriptionswere filled by Respondents.See, e.g.,GX 35.

Respondents take exception to the ALJ's reliance on Professor Doering's testimony. Resp. Exceptions, at 18-22. More specifically, they assert that Professor Doering's testimony is unreliable because he did not use a reliable methodology in formulating his opinions.Id.at 18-21. They also assert that Professor Doering's testimony is biased because he acknowledged having testified for the Government in "virtually all" of the cases in which he has testified as an expert.Id.at 21-22.

As for the claim of bias, Respondents' argument provides no reason to reject the ALJ's credibility determination. The mere fact that Professor Doering has consistently testified for the Government is not sufficient to prove bias.

As for the claim that Professor Doering's testimony was unreliable, Respondents contend this is so because he "spent insufficient time reviewing the dispensing data," "failed to review (or to request) any hard-copy prescriptions," "relied on data pre-selected by the Government instead of conducting an independent evaluation of all of the data available," and that he "fundamentally misunderstood the data he reviewed." Resp. Exceptions, at 20. Respondents' contentions are not persuasive.

As for the first assertion, Respondents note that "Professor Doering spent fewer than ten hours reviewing" the dispensing data.Id.at n.9. However, Respondents offer no explanation as to why this was insufficient to review the data.

With respect to the second assertion, given that much of Professor Doering's testimony centered on certain prescriptions that presented a collection of red flags that no reasonable and prudent pharmacist could resolve so as to lawfully fill the prescriptions, his failure to review the hard-copy prescriptions is of no consequence. As Professor Doering testified with respect to several of the prescriptions, the fact that he was not provided with the hard copy prescriptions did not affect his opinion because "[t]here's nothing that I could gain from that review that would change my opinion." Tr. 758.

As for Respondents' claim that Professor Doering relied on data which was pre-selected by the Government rather than conduct an independent evaluation of all of the available data, Respondents cite to his testimony that the Government provided him with a spreadsheet that listed the cash-only transactions. Resp. Exceptions, at 20 n.11 (citing Tr. 849:8-852:18). Respondents' counsel then asked Professor Doering whether "when the Government provided that information to [him] they also consider[ed] cash discount to be the same thing as cash?" Tr. 851. Professor Doering answered that he could not "remember" and added that he did not do anything to look at the individual prescriptions and determine which ones were actually paid for with cash.18 Id.

Respondents' argument gains no traction because Professor Doering subsequently explained that even if a patient presented a card entitling him to a cash discount, this would not address the other red flags which may have been present. Tr. 924. As Professor Doering further testified, "you have to look at it in totality of the issues that give you reason for concern."Id.at 924-25. And with respect to the prescriptions that he discussed during his direct examination, Professor Doering explained that even after eliminating the red flag of cash payments, there were still other red flags present which could not have been resolved so as to lawfully dispense the prescriptions.19 Id.at 925.

Thus, contrary to Respondents' contention, Professor Doering's testimony, coupled with the evidence he reviewed, is more than enough to satisfy the Government's burden of proof. Moreover, the Government elicited additional testimony that, while it did not address any specific prescriptions, provides further support for the conclusion that Respondents' pharmacists repeatedly dispensed prescriptions when they had reason to know that the prescriptions lacked a legitimate medical purpose and were issued outside of the usual course of professional practice. 21 CFR 1306.04(a).

More specifically, on October 18, 2011, DEA Investigators served Administrative Inspection Warrants at both Respondents and interviewed various employees of each store's pharmacy departments including their pharmacists-in-charge. At CVS #5195, a DEA Investigator (DI) interviewed Ms. Jessica Merrill, its pharmacist-in-charge. Tr. 227. Ms. Merrill stated that "she could fill oxycodone * * * prescriptions all day long, but rather than doing that, she had decided to set a limit * * * each morning" on the number of prescriptions the store would fill for oxycodone (as well as alprazolam), which was based on the available inventory of oxycodone and the amount of staff on hand.Id.at 229-30. Ms. Merrill stated that "once the limit [wa]s reached," customers who then presented oxycodone prescriptions were told the store was out-of-stock even when it still had stock on hand.20 Id.at 230. Ms. Merrill further stated that "the limit [was] basically based upon a first-come, first-served system" and that as a result, "customers would start staggering in at 8:02 a.m. to present their prescriptions."Id.at 230-31.

When asked by the DI why she was limiting the number of prescriptions the store would fill as the store still had oxycodone in inventory, Ms. Merrill replied that "she had to keep a certain amount of oxycodone on hand to fill prescriptions * * * for her real pain patients."Id.at 231-32. According to the DI, she then asked Ms. Merrill why she would fill prescriptions "from these not-real pain patients."Id.at 233-34. Ms. Merrill replied that "as a pharmacist she was stuck between a rock and a hard place, and that basically * * * she had not been trained to diagnose," and that if she or her staff were "able to confirm that a prescription had been issued by a physician who was licensed by the state, and had a DEA license, then . . . [the pharmacy] should be able to trust that that prescription--or that physician is legitimate, and that the doctor * * * ha[d] given the correct diagnosis."Id.at 234.

Ms. Merrill further acknowledged that patients were presenting patterns of prescriptions that included oxycodone, an anti-anxiety medication, and a muscle relaxant; she also admitted that "a lot of these customers were paying for their prescriptions in cash."Id.at 238. When questioned by the DI as to why the patients were using cashinstead of insurance, Ms. Merrill stated "most of them are unemployed."Id.When the DI then asked how the patients could afford to pay for hundreds of dollars-worth of prescriptions if they were unemployed, Ms. Merrill stated that she did not know.Id.However, when the DI suggested that the patients might be selling their pills, Ms. Merrill said: "I know."Id.

The DI further testified that she had obtained the prescriptions that the pharmacy had accepted for filling that day,id.at 226, and that upon reviewing them, observed that "[t]he prescriptions from one particular physician's office basically appeared to be all for the same quantity and the same combination of drugs."Id.at 239. However, when she discussed this with Ms. Merrill, the latter "basically stated that * * * as a pharmacist, she is not trained to diagnose, and it's up to the doctor to determine whether or not they need a prescription."Id.

The DI also observed that some of the prescriptions were issued by a physician located near or in Orlando for a patient from Daytona Beach.Id.at 240. The DI then asked Ms. Merrill whether she found it "a little odd" that the patients had presented their prescriptions in Sanford,21 given that there are CVSs all over central Florida and that the patients "obviously passed multiple CVSs coming from the doctor."Id.Ms. Merrill, however, did not "know why they did that."Id.

On October 28, 2011, the DI also participated in an interview of other employees of the Respondents at the local DEA field office, including Mr. Paras Priyadarshi, the pharmacist-in-charge at Respondent CVS #219.Id.at 244-45.According to the DI, the prescription records for CVS #219 showed that it was "basically filling prescriptions for the same type of cocktail prescribing pattern that CVS #5195 had been dispensing," namely combinations of oxycodone, alprazolam, and carisoprodol.22 Id.at 247. When asked whether he found it "odd that all of these practitioners in the area" that the pharmacy was "filling for," were writing prescriptions for the same combination of drugs "to all these different patients," Mr. Priyadarshi answered that he did not find it odd and that this was the combination of drugs these doctors prescribed.Id.at 248.Nor did Mr. Priyadarshi find it odd that when "prescriptions came from a specific doctor, every single patient had the same ailment."23 Id.at 250. And when asked whether the patients asked for a certain brand of drugs, Mr. Priyadarshi stated that the patients "would come in and ask for the `Ms' or the `blues'," which are street slang references to the thirty milligram oxycodone tablets manufactured by Mallinckrodt.Id.; see also id.at 254 (testimony regarding statements of Susan Masso, another pharmacist who worked at Store #219). However, Mr. Priyadarshi did not find it suspicious that patients would use street slang to ask for thirty milligram oxycodone.24 Id.at 256, 264.

The statements of Respondents' employees thus manifest a complete abdication of their responsibility "to exercise professional judgment" before dispensing prescriptions for highly abused controlled substances.Ralph J. Bertolino, d/b/a/Ralph J. Bertolino Pharmacy,55 FR 4,729, 4,730 (1990). This evidence provides further support for the conclusions that each Respondent dispensed numerous prescriptions when their pharmacists either knew or had reason to know that the prescriptions lacked a legitimate medical purpose and were issued outside of the usual course of professional practice and thus violated the CSA.See21 CFR 1306.04(a).

Respondents nonetheless contend that the ALJ improperly shifted the burden of proof from the Government to them. Resp. Exceptions, 15-18. More specifically, Respondents note that in a pre-hearing order, the ALJ held that to prove a violation of 21 CFR 1306.04(a), the Government was required to prove the following elements: (1) That "the Respondent dispensed a controlled substance"; (2) that "a red flag was or should have been recognized at or before the time the controlled substances was dispensed"; and (3) that "the red flag was not resolved conclusively prior to the dispensing of the controlled substance." ALJ Ex. 28, at 11-12;see alsoResp. Exceptions, at 15-16.

Respondents argue that the ALJ improperly required them "to present evidence that the red flags discussed by the Governmentwere,in fact, resolved, in lieu of holding the Government to its obligation to prove that these red flagswere notresolved." Resp. Exceptions, at 16 (emphasis in original). According to Respondents, the Government "did not identify any of these prescriptions, which it selected for Professor Doering from a pool of 25,000, until Professor Doering testified at the hearing."Id.Respondents note that the Government did not introduce the hard-copy prescriptions and that its case "relied on an analysis of spreadsheets of Respondents' dispensing data and its expert's conclusory assertion that all the red flags on the prescriptions [which] he identified from the spreadsheets were simply `unresolvable.'"Id.at 17. Respondents thus contend that the Government "failed to meet the burden of proof to demonstrate that the identified red flags were or were not resolved" and that the ALJ improperly shifted the burden of production to them.Id.

As discussed above, with respect to multiple prescriptions, particularly those which were presented by non-Florida residents, who had obtained the prescriptions from doctors in South Florida located more than 200 miles from Respondents, and yet filled them at Respondents, the ALJ found credible Professor Doering's testimony that the red flags were not resolvable and that nothing on the particular prescription (such as a notation by the pharmacist of having verified the prescription or thediagnosis) would lead him to change his conclusion. While the ALJ's pre-hearing order did not explicitly contemplate the scenario that certain red flags could not be resolved conclusively so as to permit a lawful dispensing, it is clear that if the red flags presented by a prescription could not be revolved, then the Government satisfied the third element of itsprima facieburden. The ALJ thus did not improperly shift the burden of proof to Respondents.25 Accordingly, I reject the contention.26

While not discussed in their brief under this exception, Respondents raise several other arguments, which are closely related to their main contention that the Government has not shown that they violated 21 CFR 1306.04(a). First, with respect to the dispensings that occurred in 2010, they argue that "the Government failed to establish that the red flag would have been known to a reasonable pharmacistat the time the prescription was presented."Resp. Exceptions, at 27. Respondents further argue that "pharmacists and pharmacies in Florida were just beginning to see significant increases in prescriptions for oxycodone and to experience the effects of Florida's pill mill legislation."Id.Respondents thus contend that there is no evidence "that any of the alleged red flags of diversion about which Professor Doering testified would or should have been recognized as red flags during the early stage of the oxycodone epidemic."Id.

As discussed by an Agency Investigator, the Florida pill mill crisis was "no secret," Tr. 43, and was the subject of "a lot of publicity in the press."Id.at 52. Thus, in response to the societal harms27 caused by the diversion and abuse of prescription drugs including oxycodone and alprazolam, in 2010, the Florida legislature enacted legislation which,inter alia,restricted the amount of schedule II narcotics, such as oxycodone, which a prescriber could dispense directly to a patient who paid for the medication with cash, check, or credit card, to no more than a 72-hour supply. Tr. 44-45;seeFla. Stat. Ann. SS 465.0276(1)(b)(2011). As a consequence of the law, for those patients who lacked a third-party payer, prescribers were required to write paper prescriptions, which a patient was required to fill at a pharmacy.Id.

Respondents and their supervisory management cannot reasonably claim ignorance of the Florida pill mill problem or the legislation enacted by the State. Likewise, Respondents' protestation of ignorance begs the question of what they expected would occur upon the enactment of the State's pill mill legislation.

In any event, even before many of the dispensings which are at issue here, this Agency had published several decisions which discussed the diversion and abuse of oxycodone, as well as drug cocktails which included oxycodone, alprazolam, and carisoprodol.See Paul J. Volkman,73 FR 30,630 (2008) (discussing drug cocktails issued by physician for oxycodone, benzodiazepines and carisoprodol, expert testimony of abuse potential of these drugs, and red flag of patient travelling long distance to fill prescriptions);see also East Main Street Pharmacy,75 FR 66,149 (Oct. 27, 2010) (discussing abuse of oxycodone, alprazolam, and carisoprodol and red flag of patients traveling long distances to fill prescriptions);Your Druggist Pharmacy,73 FR 75,774, 75,775 n.1. (2008) (noting that "[w]hile carisoprodol [was] not controlled under Federal law, it is controlled under various state laws and is highly popular with drug abusers, especially when taken as part of a drug cocktail that includes an opiate and a benzodiazepine"). Beyond this, the red flags presented by the circumstances of patients travelling from Kentucky or Tennessee to South Florida to obtain prescriptions, including for a schedule II narcotic, which by definition has the highest potential for abuse of any drug that may be prescribed lawfully,see21 U.S.C. 812(b)(2), and then travelling to Respondents to fill them, are so obvious that only those who are deliberately ignorant would fill these prescriptions. I thus reject this contention as well.

I therefore conclude that the ALJ's finding that both Respondents repeatedly dispensed controlled substances in violation of 21 CFR 1306.04(a) is supported by substantial evidence.28 ALJ at 69-70. I further adopt the ALJ's finding that "the Government has established that the Respondents have committed acts that are inconsistent with the public interest" and that "the record evidence under the Fourth and Second Factors weighs in favor of revocation."Id.

Exception Three--The ALJ Failed To Consider Evidence of Respondents' Acceptance of Responsibility

Respondents also argue that the ALJ erred in holding that "they `have not accepted responsibility for the actionsthat form the basis of the Government'sprima faciecase.'" Resp. Exceptions, at 22 (quoting ALJ at 72). According to Respondents, the ALJ failed to "credit the unequivocal statements of CVS's Vice President of Pharmacy Operations explaining that CVS accepted responsibility on behalf of Respondents and fails entirely to consider the significant evidence of the swift and targeted actions taken by CVS in the wake of the [Administrative Inspection] Warrants to address and resolve the precise concerns identified by DEA at Stores 219 and 5195."Id.at 23. They further contend that "CVS's actions speak volumes to its acceptance of responsibility for Respondents' dispensing practices and for assuring that its pharmacies and employees meet their legal obligations."Id.However, having reviewed the record, I agree with the ALJ's conclusion that "Respondents have not accepted responsibility for the actions that form the basis of the Government'sprima faciecase." ALJ at 72.

This Agency has repeatedly held that where the Government has proved that a registrant has committed acts inconsistent with the public interest, a registrant must "`"present[] sufficient mitigating evidence to assure the Administrator that [it] can be entrusted with the responsibility carried by such a registration."'"Medicine Shoppe-Jonesborough,73 FR 364, 387 (2008) (quotingSamuel S. Jackson,72 FR 23,848, 23,853 (2007) (quotingLeo R. Miller,53 FR 21,931, 21,932 (1988))). Moreover, because "past performance is the best predictor of future performance,"ALRA Labs., Inc.,v.DEA,54 F.3d 450, 452 (7th Cir. 1995), this Agency has repeatedly held that where a registrant has committed acts inconsistent with the public interest, the registrant must both accept responsibility for its actions and demonstrate that it will not engage in future misconduct.Medicine Shoppe-Jonesborough,73 FR at 387;see also Jackson,72 FR at 23,853;John H. Kennedy,71 FR 35,705, 35,709 (2006);Prince George Daniels,60 FR 62,884, 62,887 (1995).

DEA cases make clear that admitting fault for past misconduct is an important factor in determining whether a registrant has rebutted the Government'sprima facieshowing that its continued registration would be "inconsistent with the public interest." 21 U.S.C. 824(a)(4). As the Tenth Circuit recently held in rejecting a physician's contention that the Agency exceeded its statutory authority in considering whether he had admitted fault for his prescribing violations:

MacKayv.DEA,664 F.3d 808, 820 (2011) (citingHoxiev.DEA,419 F.3d 477, 483 (6th Cir. 2005)).See also Cheinv.DEA,533 F.3d 828, 837 (D.C. Cir. 2007) (upholding revocation order, noting in part that physician had not "accepted responsibility for his misconduct");Hoxie,419 F.3d at 483 (DEA properly considers admission of fault in determining whether a registration should be revoked).

As noted above, Respondents contend that the ALJ failed to give proper weight to what they characterize as "the unequivocal statements of CVS's Vice President of Pharmacy Operations explaining that CVS accepted responsibility on behalf of Respondents." Resp. Exceptions, at 23. However, at the hearing, the evidence offered to rebut the Government'sprima faciecase focused entirely on various measures CVS implemented following the execution of the Administrative Inspection Warrants in October 2011. Contrary to Respondents' assertion, the only testimony of the company's official that even mentioned the word "responsibility," occurred in response to the question posed by their counsel as to why CVS had taken various actions since October 2011. Tr. 1296. In response, the official testified:

Id.at 1296-97.

As the ALJ found, at no point did this official acknowledge that Respondents had engaged in any misconduct. Indeed, in their post-hearing brief, Respondents all but concede as much, arguing that the Agency "cannot point to another instance where a revocation of a chain pharmacy's license has occurred in similar circumstances." Resp. Proposed Findings of Fact and Conclusions of Law (Post-Hearing Br.), at 123. Respondents further contend that "other DEA revocation cases bear a crucial distinction from this case: in virtually all of those cases, the individual doctor or independent pharmacy owner/pharmacist was both the one accused of wrongdoing and the registrant. As such, these individuals were in a position to apologize for their own misconduct or that of the retail pharmacy they owned or operated."Id.

Be that as it may, the Agency's rule is clear and the fact that CVS is a large corporation provides no reason to excuse it from explicitly acknowledging the misconduct of Respondents and their pharmacists. Therefore, I decline to create one rule for chain pharmacies and another rule for closely held or sole-proprietor owned pharmacies. Because Respondents have failed to satisfy this requirement, the ALJ properly held that they have not accepted responsibility for their misconduct.

Nor, even with respect to whether CVS has successfully demonstrated that it will not engage in future misconduct, is its evidence convincing. It is acknowledged that CVS made changes to its pharmacy software, issued new dispensing guidelines, and is requiring its pharmacy personnel to undergo additional training. However, other evidence still raises serious questions as to how seriously CVS takes its responsibility to comply with federal law.

For example, Respondents point to the fact thatat the timeof the Administrative Inspection Warrants, they became aware of the Government's concerns that they were dispensing oxycodone prescriptions issued by certain "high-volume prescribers" and ceased dispensing schedule II narcotic prescriptions issued by these physicians.Id.at 23-24;see alsoGX 29 (November 15, 2011 email from Respondent's counsel to DI noting that CVS would be suspending various physicians). Yet, among these physicians was the same Longwood, Florida physician, who repeatedly prescribed combinations of oxycodone and alprazolam based on nearly uniform diagnoses, which both Respondents repeatedly filled (and had been doing so for at least six months), notwithstanding that it was clear that he was engaged in pattern prescribing.SeeGX 55 (eighty-one page spreadsheet of each Respondent's dispensings of physician's prescriptions); GXs 67 & 68. Respondents offer no explanation for why they could not figure out on theirown that this physician was issuing unlawful prescriptions.29

Respondents also argue that CVS has appointed new pharmacists-in-charge at each store. Resp. Post-Hearing Br. 126. According to Respondents, "[t]his employment decision was made `in the best interest of the stores' and was designed to provide new leadership for the pharmacies."Id.; see alsoTr. 1294 (testimony of CVS Vice President; decision "was based on the additional scrutiny within the stores related to these hearings, the company felt it was in the best interest of those pharmacies to bring in new leadership that would not be distracted by these events").30 However, CVS's Vice President did not know what further personnel actions were being taken with respect to these individuals. Tr. 1295. Given the egregiousness of their misconduct, it is stunning that CVS offered no assurance that these individuals had been discharged from employment.See21 CFR 1301.92. Accordingly, I agree with the ALJ that Respondents have not rebutted the Governments'prima faciecase.31

Respondents further argue that the ALJ's recommended sanction is overly broad and that any sanction should be limited to oxycodone or schedule II controlled substances. Resp. Exceptions, at 25-26. According to Respondents, this is so because "the Government's evidence focused almost exclusively on Respondents' dispensing of oxycodone" and "the only evidence regarding other controlled substances related to substances commonly dispensed in conjunction with oxycodone."Id.at 25.

I acknowledge that DEA possesses the discretion to limit an order of revocation to a particular controlled substance.See21 U.S.C. 824(b). However, I conclude that to exercise that discretion here would be particularly inappropriate and ill-serve the public interest.

The Agency has previously held that "[t]he Government is not required to prove that multiple categories of [controlled substances] were diverted in order to sustain the revocation of [a registrant's] entire registration."Southwood Pharmaceuticals, Inc.,72 FR 36,487, 36,503 (2007). Rather, proof that a registrant has diverted any category of a controlled substance is sufficiently egregious misconduct to warrant the revocation of a registrant's entire registration.See id.(rejecting ALJ's recommendation to limit revocation to a single drug and revoking distributor's registration based solely on evidence registrant diverted hydrocodone, a schedule III drug).

In any event, Respondents diverted not only schedule II drugs, which have been placed in this schedule because they have the highest potential for abuse and the abuse of them "may lead to severe psychological or physical dependence,"see21 U.S.C. 812(b)(2), but also schedule IV benzodiazepines.32 Moreover, Respondents' misconduct was both egregious and of extensive duration and undoubtedly caused extensive harm to the public interest, notwithstanding the assertion of CVS's Vice President that CVS does not want to contribute to the prescription drug abuse problem. This is more than enough to conclude that the revocation of the entirety of each Respondents' controlled substance dispensing authority is necessary to protect the public interest. I therefore reject Respondents' contention that the ALJ's recommendation is overly broad and adopt the ALJ's recommended sanction.33

Order

Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 824(a)(4), as well as 28 CFR 0.100(b), I order that DEA Certificate of Registration Number BC5289055, issued to Holiday C.V.S., L.L.C., d/b/a CVS Pharmacy #00219, and DEA Certificate of Registration Number BC6988298, issued to Holiday C.V.S., L.L.C., d/b/a CVS Pharmacy #5195, be, and they hereby are, revoked. I further order that any pending applications of Holiday C.V.S., L.L.C., d/b/a CVS Pharmacy #00219 or #5195, be, and they hereby are, denied. This Order is effective November 13, 2012.

Dated: June 8, 2012 JOHN J. MULROONEY, II Chief Administrative Law Judge
ACTION: The rejected exhibits are, however, simply a compilation of the purchases of the Respondents. The Government made no proffer that it had performed a statistically valid study of the oxycodone purchases by CVS pharmacies (as well as other pharmacies) in the State of Florida, or even within the central Florida area, and that even after controlling for the relevant variables which might legitimately affect purchasing patterns, the Respondents' increased purchases could not be explained by an increase in legitimate prescriptions. Nor is it clear what the evidence adds as the testimony establishes that following the enactment of the 2010 Florida pill mill bill, CVS's officials requested a meeting with DEA because "they had seen an increase in the numbers of prescriptions for oxycodone," and at the meeting, the purchases of both Respondents were specifically discussed. Tr. 52, 58, 80-81. Thus, there is ample evidence that CVS officials were on notice that something was amiss at both pharmacies.

Finally, as the ALJ properly held, Respondents' purchases do not establish a violation of 21 CFR 1306.04(a). Rather, such a violation must be established by reference to a specific prescription and evidence indicating that Respondents' pharmacists dispensed the prescription notwithstanding that they either knew or had reason to know that the prescription lacked a legitimate medical and was issued outside of the usual course of professional practice.SeeOrder on Hearing Scope, at 7-12 (ALJ Ex. 28). I thus reject the Government's contention.