Department of Justice: Vol. 80 Tuesday, No. 178 September 15, 2015

Vol.
80 Tuesday,
No. 178 September 15, 2015
Part II
Department of Justice
Drug Enforcement Administration
Masters Pharmaceuticals, Inc.; Decision and Order; Notice
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55418 Federal Register / Vol. 80, No. 178 / Tuesday, September 15, 2015 / Notices
DEPARTMENT OF JUSTICE in other States.1 Id. at 2. The Order 8. ‘‘From January 1, 2009 through
further alleged that during 2010, December 2009, [it] distributed
Drug Enforcement Administration Respondent distributed 37.86 million approximately 351,600 dosage units . . . to
dosage units of oxycodone nationally, of Temple Terrace Pharmacy.’’
[Docket No. 13–39] which nearly 24.4 million dosage units Id.
‘‘were distributed to its Florida The Show Cause Order then alleged
Masters Pharmaceuticals, Inc.; customers.’’ 2 Id. Finally, the Order that Respondent ‘‘consistently ignored
Decision and Order alleged that between January 1 and and/or failed to implement its own due
March 31, 2011, Respondent distributed diligence and suspicious order
On August 9, 2013, the Deputy 6.1 million dosage units of oxycodone monitoring policies, compromising the
Assistant Administrator, Office of nationally, of which approximately 2.76 effectiveness of those policies.’’ Id.
Diversion Control, Drug Enforcement million dosage units ‘‘were distributed Continuing, the Order alleged that
Administration, issued an Order to to its Florida customers.’’ 3 Id. ‘‘notwithstanding the large quantities of
Show Cause to Masters Next, the Show Cause Order alleged controlled substances ordered by [its]
Pharmaceuticals, Inc. (hereinafter, that ‘‘[s]ince at least 2009, the majority retail pharmacy customers,
Respondent). ALJ Ex. 1. The Show of [Respondent’s] largest purchasers of [Respondent] failed to conduct
Cause Order proposed the revocation of oxycodone . . . have been retail meaningful due diligence to ensure that
Respondent’s DEA Certificate of pharmacies in the State of Florida who the controlled substances were not
Registration Number RD0277409, [it] knew or should have known were diverted’’ and ‘‘ignor[ed] and/or fail[ed]
pursuant to which it is authorized to distributing controlled substances based
to document red flags of diversion
distribute controlled substances in on . . . prescriptions that were issued
present at many of its retail pharmacy
schedules II through V, at the registered for other than a legitimate medical
customers.’’ Id. Finally, the Order
location of 11930 Kemper Springs, purpose and outside [of] the usual
alleged that Respondent ‘‘failed to
Cincinnati, Ohio, and the denial of any course of professional practice.’’ Id. at 3.
detect and report suspicious orders of
pending application to renew or modify The Order then made allegations
oxycodone products by its pharmacy
its registration, on the ground that its regarding Respondent’s distributions of
customers, as required by 21 CFR
‘‘continued registration is inconsistent oxycodone 30 mg to eight pharmacies.
1301.74(b).’’ Id.
with the public interest.’’ Id. (citing 21 More specifically, the Order alleged
Following service of the Show Cause
U.S.C. 824(a)(4)). that:
Order, Respondent requested a hearing
The Show Cause Order specifically 1. ‘‘From April 1, 2009 through November on the allegations. ALJ Ex. 3. The matter
alleged that on April 21, 2009, 30, 2010, [it] distributed approximately was placed on the docket of the Office
Respondent entered into a 591,800 dosage units . . . to Tru-Valu
Drugs’’; of Administrative Law Judges, and
Memorandum of Agreement (MOA) assigned to ALJ Gail Randall
with DEA, pursuant to which it agreed 2. ‘‘From April 1, 2009 through January 31,
2011, [it] distributed approximately 993,100 (hereinafter, ALJ). ALJ’s Recommended
‘‘to ‘maintain a compliance program to dosage units . . . to The Drug Shoppe’’; Decision (R.D.), at 1. Following pre-
detect and prevent [the] diversion of 3. ‘‘From April 1, 2009 through March 31, hearing procedures, see generally ALJ
controlled substances as required under 2011, [it] distributed approximately 333,000 Exs. 5–11, the ALJ conducted an
the [Controlled Substances Act] and dosage units . . . to the Medical Plaza evidentiary hearing on February 24
applicable DEA regulations.’ ’’ Id. Pharmacy’’;
4. ‘‘From April 1, 2009 through September
through 28 and March 3 through 4,
(quoting MOA at ¶ II.1.a). The Order 2014, in Arlington, Virginia. Following
also alleged that in the MOA, 30, 2010, [it] distributed approximately 1.275
million dosage units . . . to Englewood the hearing, both parties filed briefs
Respondent ‘‘ ‘acknowledg[ed] and Specialty Pharmacy’’; containing their proposed findings of
agree[d] that the obligations undertaken 5. ‘‘From April 1, 2009 through December fact and conclusions of law.
. . . do not fulfill the totality of its 31, 2010, [it] distributed approximately On June 19, 2014, the ALJ issued her
obligations to maintain effective 570,700 dosage units . . . to City View Recommended Decision. Applying the
controls against the diversion of Pharmacy’’;
public interest standard of 21 U.S.C.
controlled substances or to detect and 6. ‘‘From January 1, 2009 through
November 30, 2010, [it] distributed 823(b), the ALJ noted that the relevant
report to DEA suspicious orders for factors were factors one—the
approximately 1.7 million dosage units . . .
controlled substances.’ ’’ Id. to Lam’s Pharmacy’’; maintenance of effective controls
The Order then alleged that 7. ‘‘From April 1, 2009 through August 31, against diversion—and four—
notwithstanding ‘‘the MOA, the specific 2009, [it] distributed approximately 637,400 Respondent’s experience in the
guidance provided to [Respondent] by dosage units . . . to Morrison’s RX’’; and distribution of controlled substances.
DEA, and the public information readily The ALJ rejected the Government’s
available regarding the oxycodone 1 By contrast, the Order alleged that during this
contention that Respondent had failed
epidemic in Florida, and in the United period, Respondent distributed approximately 1.47
million dosage units of oxycodone to its Nevada to report numerous suspicious orders,
States, [Respondent] failed to maintain customers, 1.27 million to its Tennessee customers, which it filled and shipped, upon
effective controls against the diversion 1.14 million to its Pennsylvania customers, and subsequently determining that the
of controlled substances . . . in 1.09 million to its New Jersey customers. ALJ Ex.
1, at 2.
customer was likely engaged in
violation of 21 U.S.C. 823(b)(1) and 2 By contrast, the Order alleged that during 2010, diverting controlled substances. R.D. at
(e)(1).’’ Id. at 1–2. The Order then Respondent distributed approximately 2.8 million 154–61. Noting that the relevant
alleged that from April 1, 2009 through dosage units of oxycodone to its Nevada customers, regulation requires the reporting of a
December 31, 2009, Respondent 2.14 million to its Tennessee customers, 1.7 million
to its New Jersey customers, and 1.37 million to its
suspicious order ‘‘when discovered,’’ 21
distributed more than 37 million dosage Pennsylvania customers. ALJ Ex. 1, at 2. CFR 1301.74(b), the ALJ opined that
units of oxycodone nationally and that 3 By contrast, the Order alleged that during this neither the regulation’s language nor its
nearly 25 million dosage units ‘‘were period, Respondent distributed approximately purpose ‘‘supports the conclusion that a
distributed to its Florida customers,’’ 600,000 dosage units of oxycodone to its Tennessee
customers, 415,000 to its New Jersey customers,
registrant is required to review past
and that the latter distributions ‘‘well 304,000 to its Pennsylvania customers, and 192,000 orders from pharmacies the registrant
exceeded’’ its distributions to customers to its Nevada customers. ALJ Ex. 1, at 2. later learns may be diverting controlled
Federal Register / Vol. 80, No. 178 / Tuesday, September 15, 2015 / Notices 55419
substances.’’ Id. at 157. The ALJ did, without documenting having performed oversight does not render the entire
however, conclude that the regulation the above steps, the ALJ rejected its system ineffective.’’ Id. at 201. The ALJ
‘‘impose[s] a duty to report past orders contention, reasoning that Respondent’s thus concluded that Respondent had
[that] the registrant actually discovers Policies and Procedures did ‘‘not ‘‘substantially complied with 21 CFR
were suspicious.’’ Id. at 158. However, require documentation of the reasons for 1301.74(b),’’ and that its failure to report
based on her review of the record, the the release of a held order.’’ Id. at 171. the suspicious order did not justify the
ALJ concluded that Respondent had And while noting ‘‘that Respondent revocation of its registration. Id.
only failed to report a single suspicious documented some reasons for abnormal As for her finding that Respondent
order. Id. orders,’’ she further reasoned that ‘‘[t]he had violated its own policies and
Turning to the Government’s mere absence of documentation— procedures by failing to obtain a UR
contention that Respondent had failed documentation that is not required by every time an order was held by the
to maintain effective controls against Respondent’s Policies and Procedures, SOMS, the ALJ reasoned that ‘‘the
diversion, the ALJ concluded that the DEA regulations, or any established relevant question . . . is not simply
Government’s evidence as to the volume industry standard—does not constitute whether Respondent failed to follow its
of Respondent’s sales to Florida and the substantial evidence that the policies, but whether such failure
eight pharmacies in particular did not undocumented act did not occur.’’ Id. at rendered [its] system [for maintaining
support a finding that it was in violation 172; see also id. at 173–74, 176. effective controls] ineffective . . . and/
of this duty. Id. at 164–67. As the ALJ Next, the ALJ addressed the or constituted negative experience
explained, ‘‘the sheer volume of a Government’s contention that distributing controlled substances so as
respondent’s controlled substances sales Respondent failed to properly use the to justify revocation.’’ Id. The ALJ then
or purchases, without some kind of Utilization Reports (URs) which it explained that Respondent’s failure to
contextual background to link the sales obtained from its pharmacy customers. follow its policies and procedures did
to the respondent’s duty under the CSA, Id. at 179–95. While the ALJ found that not render them ineffective per se and
cannot be used to indicate that the Respondent was required under its that the Government was required to
distributor’s registration would be policies and procedures to obtain a UR show that diversion was the ‘‘direct and
against the public interest.’’ Id. at 164. from a pharmacy customer whenever it forseeable consequence’’ of its failure to
The ALJ further noted that the placed an order on compliance hold and follow its policy in order to establish
Government did not present a yet repeatedly failed to do so, id. at 181, that its due diligence program was
‘‘statistical expert or any other evidence she otherwise rejected the Government’s ineffective. Id. at 202. Because ‘‘the
to explain why the volume of contention that Respondent did not Government made no showing that the
Respondent’s sales was necessarily properly utilize the URs in its review of shipments Respondent made without
indicative of diversion.’’ Id. at 166. She the held orders. Id. at 181–92. requiring URs were likely to be
also credited the testimony of In rejecting the Government’s diverted,’’ or ‘‘that updated URs, had
Respondent’s statistical expert that the contention, the ALJ explained that they been requested, would have
‘‘shipments to the DEA-identified because DEA was obligated under a indicated that the drugs were likely to
pharmacies rarely stand out from the Memorandum of Agreement (MOA) to be diverted,’’ the ALJ concluded that
rest of the monthly shipments’’; that conduct a compliance review and notify Respondent’s failure to obtain the URs
because Respondent does not have Respondent of any deficiencies in its did not ‘‘justify revocation.’’ Id. The ALJ
access to the Agency’s ARCOS database, policies and procedures and failed to do thus recommended that Respondent be
‘‘it cannot compare its shipments to so with respect to its use of the URs, the allowed to retain its registration and
[those] made by other distributors’’; that MOA bars the Agency ‘‘from that the Administrator approve any
‘‘Respondent’s business model as a sanctioning Respondent for not pending renewal application. Id. at 203.
secondary supplier made comparisons implementing additional UR analyses Both parties filed Exceptions to the
across pharmacies practically useless’’; into its Policies and Procedures.’’ R.D. at ALJ’s Recommended Decision.
and that comparing its distributions to 186. While noting the parties’ agreement Thereafter, the record was forwarded to
Florida customers with those in other ‘‘that controlled substance ratios are an me for final agency action. Having
States was not ‘‘very meaningful important aspect that should be reviewed the record in its entirety, and
because there [are] so many factors that investigated prior to shipping controlled having carefully considered the ALJ’s
are relevant.’’ Id. at 167 (citations substances,’’ the ALJ then reasoned that Recommended Decision as well as the
omitted). ‘‘[t]he Government offered no evidence parties’ Exceptions,4 I respectfully reject
Next, the ALJ rejected the that accurate information regarding the ALJ’s decision for reasons explained
Government’s contention that controlled substance ratios can only be throughout this decision.
Respondent failed to follow its own acquired through URs.’’ Id. at 188–89. To summarize my reasons, I do agree
policies and procedures. Id. at 170–79. She also rejected the Government’s with the ALJ that the Government’s
The ALJ first found that Respondent’s contention that Respondent’s actions in evidence as to the volume of
Policies and Procedures required that an editing or deleting orders that were Respondent’s sales to the Florida
order placed on compliance hold by its placed on hold by the SOMS established pharmacies and the State in general
Suspicious Order Monitoring System that it did not maintain effective does not constitute substantial evidence
(SOMS) be subject to additional due controls against diversion or failed to that the pharmacies were likely
diligence which included: (1) report suspicious orders, noting that diverting controlled substances. I also
Contacting the customer to discern the Respondent edited and deleted orders agree with the ALJ’s rejection of the
reason for the deviation in size, pattern, ‘‘for business reasons.’’ Id. at 196. Government’s contention that
or frequency; (2) independently While acknowledging that the Respondent, upon terminating a
verifying the reason stated by the Government had proved that customer because it was likely diverting
customer; and (3) conducting a Respondent had failed to report a single controlled substances, was obligated to
complete file review. Id. at 73–74, 76– suspicious order, the ALJ reasoned that review the customer’s past orders and
77. While the Government cited ‘‘Respondent fills many orders each year
numerous instances in which and has reported hundreds of 4 I address the various exceptions raised by the
Respondent’s employees released orders suspicious orders, so one minor Parties throughout this decision.
determine whether any of them were that it would document the reason why estimates, I conclude that a distributor
suspicious and, if so, report them. it filled those orders that were held by must use the URs in evaluating whether
However, I do so because, even the SOMS. Thus, where there is no such a customer’s dispensing ratio is
assuming that the Government’s documentation that Respondent suspicious.
interpretation is a reasonable reading of contacted the pharmacy, I find that Next, I respectfully disagree with the
the suspicious order regulation, the Respondent did not contact the ALJ’s conclusion that Respondent’s
Government has not provided pre- pharmacy. Moreover, while in many failure to obtain a new UR every time
enforcement notice to the regulated instances there is no documentation that an order was held by the SOMS did not
community of this obligation. Respondent contacted the pharmacy, render its policies and procedures
Moreover, while I agree with the ALJ Respondent’s records document a ineffective. R.D. 202. Contrary to the
that ‘‘a pharmacy’s business model, reason for filling the order that is ALJ’s understanding, the Government
dispensing patterns, or other extraneous to the reason one would was not required to show that the
characteristics might make an order expect to be provided by a pharmacy. shipments Respondent made without
suspicious, despite the particular order Accordingly, I find that in numerous requiring a new UR ‘‘were likely to be
not being of unusual size, pattern or for instances, the record supports a finding diverted,’’ id., but rather, only that its
frequency,’’ I respectfully disagree with that Respondent failed to contact the failure to obtain a new UR rendered its
her conclusion that these characteristics pharmacy and obtain an explanation for system for detecting suspicious orders
must ‘‘make it likely that controlled those orders. ineffective. For reasons explained in
substances will be diverted’’ to trigger I also respectfully disagree with the this decision, I conclude that
the reporting requirement. R.D. at 155. ALJ’s conclusion that Respondent’s Respondent’s repeated failure to obtain
In short, the ALJ’s interpretation actions in editing or deleting orders that new URs, both when orders were held,
imposes a higher standard than that of had been held by the SOMS (typically as well as when its own inspector
the plain language of the regulation, because they were of unusual size) does recommended that it do so, rendered its
which requires only that the order be not establish that the orders were suspicious order monitoring system
suspicious, a standard which is less suspicious. While the ALJ reasoned that defective.
than that of probable cause. ‘‘orders were edited and deleted for Finally, I respectfully disagree with
Although I agree with the ALJ that business reasons,’’ I find that the weight the ALJ’s conclusion that the
upon investigating an order, a of evidence is to the contrary and that Government has proven only that
distributor may determine that an order most of the edited and deleted orders Respondent failed to report a single
is not suspicious, I respectfully disagree were suspicious and should have been suspicious order. To the contrary, I find
with her conclusion that ‘‘Respondent reported. that each of the seven pharmacies
provided ample evidence that the Further, I respectfully disagree with submitted numerous suspicious orders
pharmacies had legitimate reasons for the ALJ’s rejection of the Government’s which should have been reported but
the high percentage of controlled contention that Respondent failed to were not. Accordingly, I respectfully
substances dispensed by the pharmacies properly use the URs because it did not disagree with the ALJ’s ultimate
in dispute.’’ R.D. at 189. Indeed, I find use them to analyze the pharmacies’ conclusion that Respondent has
the evidence offered by Respondent on ratio of controlled to non-controlled substantially complied with the
this point to be seriously lacking in dispensings. As for the ALJ’s reasoning Agency’s suspicious order rule and her
probative force.5 that the 2009 Memorandum of recommendation that revocation of its
I also respectfully disagree with the Agreement (MOA) bars the Government registration is not warranted.
ALJ’s conclusion that the Government from sanctioning Respondent for failing Having reviewed the entire record
did not prove that Respondent to use the URs in this manner, nothing including the ALJ’s Recommended
repeatedly failed to contact the in the MOA provided Respondent with Decision and the Parties’ Exceptions, as
pharmacies and obtain an explanation immunity for violations of DEA ultimate factfinder, see 5 U.S.C. 557(b),
for those orders which were held by the regulations occurring after March 31, I make the following factual findings.
SOMS because they were of unusual 2009. Moreover, I conclude that the ALJ
Findings
size, deviated substantially from a did not apply the correct legal standard
normal pattern, or were of unusual in evaluating Respondent’s contention Respondent is a secondary or
frequency. Rather, I find that the record that it reasonably relied on the ‘‘tertiary’’ wholesaler of various
contains substantial evidence that Government’s failure to identify the pharmaceutical products including
Respondent represented to the Agency manner in which it used the URs as a controlled substances; ‘‘[t]he vast
deficiency in the compliance review majority of [its] customers are
5 Respondent’s evidence on this point was largely
and that therefore, the Government independent, retail pharmacies located
comprised of the declaration of the head of its should be barred from sanctioning it throughout the United States,’’ which
Compliance Department, Ms. Jennifer Seiple,
regarding its due diligence efforts. I acknowledge based on this conduct. Instead, I are ‘‘[o]ften . . . small, family owned
that the ALJ found Ms. Seiple’s testimony credible conclude that Respondent’s defense and operated stores.’’ RX 104, at 6–7; Tr.
and clearly gave it substantial weight. However, for should have been evaluated under the 994. According to its CEO and owner, it
reasons explained throughout this decision, I find doctrine of equitable estoppel and I ‘‘is not a primary or full line
that much of Ms. Seiple’s testimony as to the
reasons why Respondent did not report the various reject its contention. wholesaler’’ and ‘‘carries far fewer
pharmacies’ orders as suspicious is unpersuasive. I also respectfully disagree with the products than primary wholesalers.’’ Id.
In other instances, her testimony is refuted by other ALJ’s conclusion that use of the URs Moreover, ‘‘none of [its] customers use
evidence. Accordingly, I decline to give Ms. was not necessary to obtain accurate [it] as the sole source for all the
Seiple’s testimony substantial weight. See Universal
Camera Corp. v. NLRB, 340 U.S. 474, 496 (1951)
information regarding the pharmacies’ pharmaceutical products they
(‘‘The substantial evidence standard is not modified dispensing ratios. Rather, I conclude dispense.’’ RX 104, at 7. And according
in any way when the [Agency] and its [ALJ] that a distributor is required to use the to its owner, its ‘‘business model tends
disagree. . . . The findings of the [ALJ] are to be most accurate information available to to make its customers’ purchasing
considered along with the consistency and inherent
probability of testimony. The significance of [her]
it. Because the URs show the actual patterns more difficult to predict and
report, of course, depends largely on the importance dispensing level of each drug, and more variable than they would be if
of credibility in the particular case.’’). questionnaires and surveys provide only Masters were a full-line wholesaler.’’ Id.
at 8; see also Tr. 997 (testimony of The letter also set forth various If an order deviates substantially from a
Respondent’s former Vice-President that characteristics found by the Agency to normal pattern, the size of the order does not
because it was a tertiary supplier, be present in pharmacies engaged in matter and the order should be reported as
suspicious. Likewise, a registrant need not
demand ‘‘is very elastic’’ and that ‘‘it diverting controlled substances. These wait for a ‘‘normal pattern’’ to develop over
was very hard to pinpoint a demand included, inter alia, ‘‘[o]rdering time before determining where a particular
from a customer who bought from you excessive quantities of a limited variety order is suspicious. The size of an order
very infrequently’’). of controlled substances . . . while alone, whether or not it deviates from a
Respondent is the holder of DEA ordering few, if any, other drugs,’’ and normal pattern, is enough to trigger the
Certificate of Registration Number ordering the controlled drugs ‘‘in registrant’s responsibility to report the order
RD0277409, pursuant to which it is quantities disproportionate to the as suspicious. The determination of whether
authorized to distribute controlled an order is suspicious depends not only on
quantity of non-controlled medications
the ordering patterns of a particular
substances in schedules II through V, at ordered.’’ Id. at 3. customer, but also on the patterns of the
the registered location of 11930 Kemper The letter also provided a list of registrant’s customer base and the patterns
Springs, Cincinnati, Ohio. GX 1. While suggested questions for distributors to throughout the relevant segment of the
this registration was due to expire on ask in ‘‘determin[ing] whether a regulated industry.
January 31, 2014, on December 10, 2013, suspicious order is indicative of Id.
Respondent filed a timely renewal diversion of controlled substances.’’ Id. The letter further explained that a
application. 21 CFR 1301.36(i). While most of these questions focused registrant’s ‘‘responsibility does not end
Accordingly, Respondent’s registration on whether a pharmacy was engaged in merely with the filing of a suspicious
has remained in effect pending this the unlawful distribution of controlled order report’’ and that a ‘‘[r]egistrant[]
Decision and Final Order. 5 U.S.C. substances through internet schemes in must conduct an independent analysis
558(c); 21 CFR 1301.36(i). which physicians prescribed drugs to of suspicious orders prior to completing
DEA Guidance to Distributors on patients with whom they had not a sale to determine whether the
Reporting Suspicious Orders and established a legitimate doctor-patient controlled substances are likely to be
Maintaining Effective Controls Against relationship, some of the questions were diverted from legitimate channels.’’ Id.
Diversion applicable to all pharmacies. These Continuing, the letter warned that
included: (1) ‘‘[w]hat percentage of the ‘‘[r]eporting an order as suspicious will
Prior to the events at issue here, the
pharmacy’s business does dispensing not absolve the registrant of
Deputy Assistant Administrator, Office
controlled substances constitute?’’ (2) responsibility if the registrant knew, or
of Diversion Control, wrote two letters
‘‘[a]re one or more practitioners writing should have known, that the controlled
which were sent to all registered
a disproportionate share of the substances were being diverted.’’ Id.
distributors including Respondent. GXs
prescriptions for controlled substances The letter thus advised that a registrant
3 & 4. The letters discussed the
being filled by the pharmacy?’’ and (3) which ‘‘routinely report[s] suspicious
requirements imposed by 21 CFR
‘‘[d]oes the pharmacy charge reasonable orders, yet fill[s] these orders without
1301.74 for reporting suspicious orders
prices for controlled substances?’’ Id. first determining that [the] order[s] [are]
and the scope of a registrant’s obligation
‘‘to maintain effective controls against The letter then explained that not being diverted . . . may be failing
the diversion of controlled substances ‘‘[t]these questions [were] not all- to maintain effective controls against
into other than legitimate medical, inclusive’’ and that ‘‘the answer to any diversion’’ and engaging in acts which
scientific, and industrial channels.’’ GX of the[ ] questions’’ would not are ‘‘inconsistent with the public
3, at 2. The first letter, which was dated ‘‘necessarily determine whether a interest.’’ Id. at 2.
September 27, 2006, set forth the text of suspicious order is indicative of The Previous Agency Proceeding
21 CFR 1301.74(b): diversion.’’ Id. Finally, the letter Against Respondent
concluded by advising that
The registrant shall design and operate a On October 17, 2008, the Deputy
system to disclose to the registrant suspicious
‘‘[d]istributors should consider the
totality of the circumstances when Assistant Administrator, Office of
orders of controlled substances. The Diversion Control, issued an Order to
registrant shall inform the Field Division evaluating an order for controlled
Office of the Administration in his area of substances.’’ Show Cause to Respondent alleging that
suspicious orders when discovered by the it had ‘‘failed to maintain effective
registrant. Suspicious orders include orders
Id. controls against diversion of particular
of unusual size, orders deviating On December 27, 2007, the Deputy controlled substances’’ in that it
substantially from a normal pattern, and Assistant Administrator sent a second ‘‘distributed large amounts of
orders of unusual frequency. letter to all registered distributors hydrocodone,’’ then a schedule III
Id. (quoting 21 CFR 1301.74(b)). including Respondent, the purpose of narcotic,6 ‘‘to customers it knew, or
Continuing, the letter noted that ‘‘in which was ‘‘to reiterate the should have known, were diverting the
addition to reporting all suspicious responsibilities of controlled substance [drug] into other than legitimate
orders, a distributor has a statutory manufacturers and distributors to medical, scientific and industrial
responsibility to exercise due diligence inform DEA of suspicious orders in channels.’’ GX 5, at 1. The Order further
to avoid filling suspicious orders that accordance with 21 CFR 1301.74(b).’’ alleged that Respondent ‘‘distributed
might be diverted into other than GX 4, at 1. extraordinarily large amounts of
legitimate . . . channels.’’ Id. The letter After reciting the regulatory text that hydrocodone to’’ two pharmacies,
then explained that ‘‘a distributor may ‘‘suspicious orders include orders of an which were ‘‘rogue Internet pharmacies
not simply rely on the fact that the unusual size, orders deviating that filled prescriptions that were not
person placing the suspicious order is a substantially from a normal pattern, and issued for a legitimate medical purpose
DEA registrant and turn a blind eye to orders of an unusual frequency,’’ the
6 Combination hydrocodone products have since
the suspicious circumstances’’ and that letter explained that ‘‘[t]hese criteria are
been placed into schedule II of the CSA. See
a ‘‘distributor should exercise due care disjunctive and are not all inclusive.’’ Rescheduling of Combination Hydrocodone
in confirming the legitimacy of all Id. (quoting 21 CFR 1301.74(b)). Products From Schedule III to Schedule II, 79 FR
orders prior to filling.’’ Id. Continuing, the letter explained that: 11037 (2014).
in the usual course of professional employee trained to detect suspicious agreed that it would not ‘‘find the
practice.’’ Id. The Government alleged orders for the purposes of determining’’ Compliance Review ‘not satisfactory’
that Respondent’s sales to the two either that the ‘‘order[] should not be unless the failure(s) [we]re sufficient to
pharmacies ‘‘were consistently high filled and reported to . . . DEA’’ or that provide . . . a factual and legal basis for
compared to [its] sales of hydrocodone order was ‘‘not likely to be diverted into issuing an Order to Show Cause under
to other customers,’’ with one of the other than legitimate medical, scientific 21 U.S.C. § 824(a) against the inspected
pharmacy’s purchases ‘‘increase[ing] or industrial channels.’’ Id. Respondent facility.’’ Id. Moreover, the MOA
dramatically’’ to a peak of more than 1.1 further agreed that these obligations ‘‘do provided that ‘‘[a] finding of
million dosage units in a single month, not fulfill the totality of its obligations ‘satisfactory’ does not otherwise express
and the other pharmacy’s purchases to maintain effective controls against the DEA’s approval of Master’s compliance
increasing from 30,000 to more than diversion of controlled substances or to program.’’ Id.
156,000 dosage units in one month. Id. detect and report to DEA suspicious Finally, DEA agreed to release
at 2. The Government also alleged that orders for controlled substances.’’ Id.7 Respondent from administrative claims
‘‘based upon the amounts and patterns Pursuant to the MOA, DEA agreed to ‘‘within [its] enforcement authority
of the hydrocodone orders and because ‘‘conduct a review of the functionality under 21 U.S.C. 823, 824 and 842, based
DEA made [Respondent] aware of illegal of [Respondent’s] diversion compliance on the Covered Conduct,’’ as well as
Internet activity just prior to the program at [its] distribution center,’’ ‘‘the conduct alleged in [the first] Order
unusual increases in distributions of including a ‘‘review [of] the to Show Cause.’’ Id. at 6. However, the
hydrocodone to these customers,’’ investigatory files maintained by [it] of MOA further provided that
Respondent ‘‘knew or should have the customers serviced by the ‘‘[n]otwithstanding the releases by DEA
known’’ that the pharmacies ‘‘were distribution center.’’ Id. at 4–5. DEA contained in this Paragraph, DEA
engaged in illegal activity’’ and yet it also agreed to ‘‘conduct an exit reserved the right to seek to admit
‘‘failed to report [their] orders . . . as interview with [Respondent’s] evidence of the Covered Conduct for
‘suspicious,’ as required by’’ 21 CFR representatives to provide DEA’s proper evidentiary purposes in any
1301.74(b). Id. preliminary conclusions regarding the other administrative proceeding against
The Government further alleged that Compliance Review.’’ Id. the Released Parties (i.e., Respondent)
Respondent distributed hydrocodone to The MOA further provided that that for non-covered conduct.’’ Id.
two other pharmacies, with common review would be ‘‘deemed satisfactory On August 17, 2009, two DEA
ownership, notwithstanding that it had unless DEA determine[d] that the Diversion Investigators (DIs) went to
obtained information ‘‘that clearly facility’’ did not ‘‘maintain effective Respondent’s Kemper Springs location
indicated that these pharmacies were controls against diversion,’’ ‘‘failed to to conduct the compliance review and
operating as . . . rogue Internet detect and report . . . suspicious orders provide training to Respondent
pharmacies . . . and failed to report . . . after April 1, 2009,’’ or ‘‘failed to regarding its obligations under the
such orders as suspicious.’’ Id. Finally, meaningfully investigate new or existing Controlled Substances Act. Tr. 90, 92–
the Government alleged that customers regarding the customer’s 93. Respondent’s attendees included
‘‘[t]hroughout 2007 and 2008, legitimate need to order or purchase Dennis Smith, CEO; Wayne Corona,
[Respondent] . . . continued to fill controlled substances.’’ Id. Moreover, then Vice-President; Matt Harmon, then
orders for controlled substances from the MOA provided that ‘‘[t]he Compliance Manager; Jennifer Seiple,
rogue Internet pharmacies and . . . Compliance Review shall be deemed Vice-President of Compliance; and Eric
failed to file suspicious order reports on ‘not satisfactory’ if DEA provides Schulze, Compliance Clerk.
such orders, in circumstances in which written notice with specificity to As part of the review, one of the DIs
[it] knew or should have known that the [Respondent] on or before 220 days from reviewed the CSA’s requirements for
pharmacies were operating illegally.’’ the Effective Date of [the MOA], stating inventories; records, including the use
Id. that [Respondent had] failed to meet any of schedule II order forms; and reports,
On April 1, 2009, the Government and of the requirements,’’ apparently including the regulation governing the
Respondent resolved the allegations by pertaining to maintaining effective reporting of suspicious orders. GX 11.
entering a settlement and release controls against diversion, failing to The other DI, who had queried DEA’s
agreement, as well as an Administrative detect and report suspicious orders, and Automation of Reports and
Memorandum of Agreement (MOA). GX failing to meaningfully investigate its Consolidated Orders System
6. While Respondent was not required customers.8 Id. However, DEA also (hereinafter, ARCOS), a database used to
to admit to any of the allegations, it track the acquisition and distribution of
agreed to pay the Government the 7 Respondent also agreed that it would review its various controlled substances including,
amount of $500,000 to settle ‘‘claims or distributions of oxycodone, hydrocodone, inter alia, all schedule II drugs and
alprazolam, and phentermine to its retail pharmacy
potential claims for civil penalties . . . and physician customers for the 18-month period
schedule III narcotics, obtained data of
for failing to report suspicious orders of prior to the signing of the MOA and identify those Respondent’s distributions between
controlled substances’’ in violation of 21 current customers which ‘‘exceeded the thresholds January 2007 and June 2009 and created
U.S.C. § 842(c). Id. at 2, 4. or met other criteria established in its compliance several charts, which he presented to
Respondent also ‘‘agree[d] to maintain program on the date of such review.’’ GX 6, at 3. Respondent’s representatives. GX 48A.
Respondent agreed that ‘‘[t]o the extent it has not
a compliance program designed to otherwise done so, [it] shall conduct an According to the DI, he intended to
detect and prevent diversion of investigation for each customer where such review show Respondent that oxycodone (a
controlled substances as required under reveals purchasing patterns substantially deviating schedule II narcotic drug) and
the CSA and applicable regulations.’’ Id. from the normal purchasing patterns observed . . . hydrocodone (then a schedule III
for that customer, and take appropriate action as
at 2. The program was to ‘‘include required by this Agreement, DEA regulations and narcotic drug when combined typically
procedures to review orders for other procedures established under Masters’ with acetaminophen but now a schedule
controlled substances,’’ and further compliance program.’’ Id. II narcotic drug) comprised the majority
8 The MOA specifically referred to ‘‘the
provided that orders ‘‘exceed[ing] of the controlled substances it
requirements in either subsections II(2)(d)(i),(ii), or
established thresholds and meet[ing] (iii) of this Agreement.’’ GX 6, at 5. The provisions
distributed during this period; that the
other criteria as determined by this sentence references are simply clauses within majority of the oxycodone and
[Respondent would] be reviewed by [an] a single sentence and are not separate subsections. hydrocodone it distributed was in ‘‘the
most commonly abused dosage highly abused substance’’ and that it high percentage of controlled substances as
strengths’’; and that the majority of the was ‘‘being obtained surreptitiously and compared to non-controlled substances.
oxycodone it sold was distributed to its unlawfully down in Florida.’’ Id. at GX 51B, at 4 ¶ 12.
customers in Florida, which he 1071–72. Mr. Corona acknowledged that During the review, Respondent also
characterized as ‘‘the epicenter of the Respondent and its CEO were ‘‘aware of made a presentation to the DIs regarding
oxycodone epidemic.’’ 9 GX 48A, at 3. the ‘oxycodone epidemic’ stemming its controlled drug handling policies
The DI also testified that he presented from Florida’’ and that ‘‘[t]his was and procedures. RX 12. As part of the
Respondent with data and a chart common knowledge at [Respondent] as presentation, Respondent stated that all
showing its distributions of oxycodone well as in the pharmaceutical industry new controlled substance customers
to several of the pharmacies during the in general.’’ GX 51B, at 9 ¶ 31. He were required to provide ‘‘a valid DEA
period of January through June 2009, further testified that Florida was ‘‘the registration number,’’ which it verified
including Morrison’s RX (672,600 ‘wild west’ and . . . a ‘free for all’ when using the National Technical
dosage units), Lam’s Pharmacy it came to sales and dispensing of Information Service database. Id. at 11–
(522,500), Englewood Specialty oxycodone.’’ Id. 12. Also, new customers were required
Pharmacy (262,700), and The Drug The DI also testified that a document to ‘‘[c]omplete a survey designed to
Shoppe (242,700). Id. at 5; GX 12, at 23. entitled ‘‘Suggested Questions a screen customers for inappropriate
The DI testified that his intent in doing Distributor should ask prior to shipping business activity,’’ which included
so ‘‘was to alert [Respondent] to controlled substances’’ was presented to questions as to how many prescriptions
potentially problematic trends that [he] Respondent at the review. Tr. 223–24; the customer filled per day and how
perceived based upon [its] ARCOS see also RX 13. One of the suggested many were for controlled substances,
reporting.’’ GX 48A, at 5–6.10 questions was: ‘‘What is the pharmacy’s whether the pharmacy did mail order or
Consistent with the DI’s testimony, a ratio of controlled v. non-controlled internet business, and whether the
former employee of Respondent who orders?’’ RX 13, at 1. Next to it is the pharmacy filled prescriptions for out-of-
attended the briefing testified that the DI handwritten notation: ‘‘RATIO C20—NC area or out-of-state doctors or patients.
very clearly expressed his concerns 80.’’ Id. However, on cross-examination, Id. at 15. Respondent further
about Respondent’s continued sales of the DI testified that nothing in the represented that it reviewed the survey
oxycodone 30 mg, which he explained ‘‘training materials,’’ i.e., the responses to determine if the customer
was the most abused form of oxycodone, PowerPoint presentation, see GX 11, was engaged in ‘‘inappropriate business
to Morrison’s, Englewood, The Drug addressed how Respondent should practices’’ ‘‘[]prior to shipping even one
Shoppe, and Lam’s. Tr. 1155. The evaluate the ratios of controlled to non- controlled drug,’’ and that if the
former employee further testified that as controlled drugs ordered by a pharmacy, responses were ‘‘not indicative of
the DI reviewed Respondent’s files for Tr.114, and he did not recall what inappropriate practice,’’ it would
these pharmacies and looked at their specific discussions he had with approve the customer to purchase
sales volume, he would turn and look at Respondent’s representatives regarding controlled substances. Id. at 16.
Ms. Seiple (the Compliance Director) the ratio of controlled to non-controlled As for its existing customers,
and ask: ‘‘You’re not selling to this guy, substances. Id. at 182. He also Respondent stated that beginning in
are you, Jennifer?’’ Id. at 1156.11 acknowledged that he did not provide October 2008, it had conducted more
Also, at the hearing, Mr. Corona training ‘‘concerning the proper use of than 5,800 surveys and that ‘‘[a]ll
admitted that oxycodone 30 mg ‘‘was a drug utilization reports,’’ id. at 114, and customers eligible to purchase
that he was not asserting that controlled drugs . . . ha[d] undergone
9 Other testimony described the extent of the
Respondent was using the utilization [its] due diligence process and been
oxycodone epidemic in Florida during this period,
including that between 2005 and 2010, the State reports in a manner inconsistent with its approved by [the] Compliance
experienced a 345 percent increase in narcotic- written policies and procedures. Id. at Department.’’ Id. at 19. Respondent
related overdose deaths, with 11 people dying per 132. Nor did he tell Respondent that it further represented that since January 1,
day in 2010, as well as an increase from 250 to 2008, it had conducted 346 site visits of
1,400 in the number of newborns who were was analyzing the information
addicted to oxycodone per year. Tr. 28. contained in the customer files customers located in California, Florida,
The State eventually enacted legislation requiring incorrectly, id. at 115, including the Kentucky, Nevada, Ohio, Tennessee,
that a physician and clinic ‘‘primarily engaged in URs which were in the due diligence and West Virginia. Id. at 20.
the treatment of pain by prescribing or dispensing
files Respondent kept for Morrison’s, Respondent also briefed the DIs
controlled substance[s]’’ register as a pain regarding its Suspicious Order
management clinic with the Florida Department of Englewood, The Drug Shoppe, and
Health and limited the authority of dispensing Lam’s. Id. at 141. Monitoring System (hereinafter, SOMS).
physicians in such clinics to dispensing a 72-hour However, recalling the briefing More specifically, Respondent
supply of narcotics to those patients who paid for
provided by DEA, Mr. Corona testified explained that every order containing at
the drugs ‘‘by cash, check, or credit card.’’ Fla. Stat. least one controlled substance was
§§ 458.3265(1)(a) (2010), 465.0276(1)(b) (2010). The that:
following year, the State enacted legislation which tracked by calendar month and that any
barred physicians from dispensing schedule II and
DEA provided information regarding time a customer placed a new order that
III controlled substances except in even more specific questions to ask Masters’ customers would result in the customer receiving
limited circumstances. Fla. Stat. § 465.0276 (2011); on due diligence questionnaires and during
site visits. These questions were designed to
more controlled drugs (by drug family)
see also Tr. 31. Based on the extensive abuse of
oxycodone in Florida, in July 2011 the State’s gather information to allow Masters to in the past 30 days than its highest
Surgeon General declared a public health identify ‘‘red flags’’ that may indicate that a monthly total in any of the previous six
emergency. Tr. 30–31; GX 47. particular customer was involved in calendar months, the order was held for
10 The DI further testified that he specifically
illegitimate dispensing of controlled review and could not be shipped until
identified Lam’s as a customer they ‘‘[s]hould be substances. In particular, DEA advised us to
‘looking at.’’’ GX 48A, at 6.
it was released by the Compliance
11 I have considered Respondent’s contention that
focus on whether a customer had a high Department.12 Id. at 25–29. Respondent
the ALJ ‘‘incorrectly found that DEA very clearly
percentage of cash for controlled substance
expressed concerns about’’ these four pharmacies prescriptions (as compared to third-party 12 Under the SOMS, Respondent assigned a
during the Compliance Review. Resp. Exceptions, at insurance payment), refused to accept Controlled Substance Limit (CSL) for each drug
19. Having reviewed the record, I reject the insurance for the payment of controlled family ordered by a customer. According to a
contention. substance prescriptions, and/or dispensed a Continued
also stated that the SOMS was designed ordering privileges would be diversion of controlled drugs.’’ Id. This
to place holds based on a change in a ‘‘suspended indefinitely.’’ Id. included a survey; the authentication of
customer’s order patterns. Id. at 27. Finally, Respondent represented that the licenses of the facility, pharmacist-
Respondent represented that every ‘‘[d]ocumentation on all orders held for in-charge, and practitioners; a check of
controlled substance order ‘‘go[es] review and their dispositions are publicly available disciplinary records
through SOMS even before our system permanently retained.’’ Id. (emphasis in for recent disciplinary actions; and
checks to see if we have the ordered original). See also GX 51B, at 6 ¶ 19 review by a compliance manager. Id.
items in stock,’’ and that ‘‘[i]f the order (testimony of Wayne Corona) (‘‘The The Policy further provided that
and the account history meets [sic] or compliance department would contact ‘‘[a]dditional due diligence shall be
exceeds [sic] the criteria set in [the] the customer, advise that the order was required of any customer when any of
SOMS, the order is held for review,’’ held and request a reason why the order the following issues are indicated’’ to
which involved the Compliance Staff exceeded SOMS parameters. The reason include that: (1) There were
conducting ‘‘additional due diligence’’ would be documented in the due ‘‘[s]ignificant, recent, and/or relevant
and determining whether the order diligence files, specifically in the disciplinary actions relating to the
could be shipped. Id. at 30. Respondent ‘Memos for Record’ (MFRs). It may also handling of controlled drugs’’; (2) a
further represented that if its have been electronically documented in customer was distributing controlled
Compliance Staff ‘‘reject[ed] the order,’’ the ‘Ship to Memos’ which were also substances over the internet or by mail
it was ‘‘considered ‘suspicious’ ’’ and part of the due diligence file.’’) order; (3) a customer was ‘‘diverting
would be ‘‘reported to . . . DEA’’ and (emphasis added)). controlled drugs through any other
the customer’s controlled substance Of further note, during the briefing, means’’; (4) a ‘‘customer place[d] a
Respondent provided the DIs with a six- potentially suspicious order’’; and (5)
document describing the SOMS, upon the
page Appendix which explained the the compliance manager conducting the
completion of the initial due diligence, the operations of the SOMS. RX 78, at 59– review required more information. Id. at
Compliance Department would assign a default 64. On the issue of the documentation 30–31. The Policy then stated that the
monthly limit for each control [sic] drug group of those orders that were held for
based on the ‘‘information derived from the initial additional due diligence could ‘‘include
due diligence.’’ GX 35, at 15. This limit would set
review, the Appendix stated: any or all of the following steps, as
the number of doses that a customer could receive All orders have a full audit trail as related determined by the compliance
at a particular registered location ‘‘in any given 30 to SOMS. Each order that is processed manager’’: (1) Obtaining ‘‘[d]rug
day period,’’ but could ‘‘be edited for a period of through the system will show the status of
six months after the first purchase of each control [u]tilization [r]ecords’’; (2) conducting a
[sic] [drug] group.’’ Id.
the three parts of the SOMS system along site visit; (3) inquiring of law
However, according to its policies and
with the customer’s current limits and the enforcement agencies; (4) checking with
procedures, Respondent did not require that new results of the limits as related to this order.
The ultimate status, accept or reject, will be
‘‘common carriers to determine if the
controlled substance customers provide a
utilization report showing their actual dispensings shown along with the date/time and user [customer] is using their services; and
of prescription products prior to setting the initial associated with the action. A reason code and (5) ‘‘[a]cquiring a commercial credit
monthly limit. Rather, under its policies and notes will also be provided as additional report . . . to verify the survey
procedures, obtaining a UR was a discretionary act detail supporting the decision. information provided by the customer.’’
even when Respondent deemed it necessary to
conduct additional due diligence on a new Id. at 64. Id. at 31.
customer. RX 78, at 30–31. In addition to the SOMS Appendix, Respondent’s Policy 6.2 sets forth its
According to the testimony of a former Respondent provided the DIs with a requirements and procedures for
compliance department employee, based on the monitoring and reporting suspicious
number of prescriptions a customer reported that it
copy of its compliance manual, which
filled on a daily basis (which was typically only an included its policies and procedures for orders. Id. at 32. According to
estimate), Respondent would place the customer in evaluating its controlled substance Respondent, the SOMS did four things:
one of three tiers and assign the initial monthly customers and their controlled (1) It ‘‘[t]racks each customer’s purchase
limit of dosage units for each controlled substance history for controlled drugs’’; (2) it
family (e.g., oxycodone). Tr. 1380–82. While there
substance orders; its policy on site visits
is testimony to the effect that the tiers were set at (including its site visit and due ‘‘[r]eviews every order for controlled
either ‘‘5, 10, or 15’’ thousand dosage units, it is diligence survey forms); and the drugs . . . prior to shipment’’; (3) it
unclear whether this applied to each controlled operation of the SOMS. GX 48A, at 8; ‘‘[h]olds all orders for controlled drugs
substance family. Tr. 627 (testimony of DI). Of that meet or exceed the criteria set forth
further note, there is no evidence as to how
see also RX 78. Because the written
Respondent determined the number of dosage units policy and procedures provide in 21 CFR 1301.74(b)’’ (the suspicious
for each controlled substance family and tier. additional detail beyond that which was order reporting regulation); and (4) it
According to the materials Respondent provided discussed in the slides used in ‘‘[r]equires each order to be individually
(i.e., the SOMS Appendix), ‘‘[a]fter six months of Respondent’s PowerPoint briefing, reviewed prior to shipment.’’ Id. The
full history for a control [sic] [drug] group, the Policy then set forth Respondent’s
customer invoice history will be used to determine relevant provisions are discussed below.
the monthly limit for each control [sic] [drug] Respondent’s Policy 6.1 set forth the procedures for those orders that were
group,’’ with an ‘‘update . . . occur[ing] on the first requirements to purchase controlled placed on hold by the SOMS. Id. These
of every month.’’ RX 78, at 59–60. However, ‘‘[t]he drugs. RX 78, at 30. These requirements procedures required that ‘‘[a]
highest monthly total [including product that was compliance staff member call[] the
returned] from the preceding six months will be
included that any customer ‘‘possess a
used as the new Monthly Limit for [a] control [sic] valid, unexpired DEA registration’’ in customer and request[]’’ both: (1) ‘‘[a]n
[drug] group.’’ Id. at 60. the appropriate drug schedules; that it explanation for the order,’’ which was to
As for the determination of whether an order ‘‘is provide its ‘‘registration number and/or be ‘‘independently verified’’; and (2)
invalid’’ because of its ‘‘size,’’ Respondent a copy of the registration’’; and that ‘‘[a] current utilization report, listing all
represented that this is made by adding ‘‘the total
number of doses invoiced in the past 30 days [on Respondent would validate the of the pharmaceuticals’’ (including both
a rolling basis] plus the total doses on open orders customer’s registration though the NTIS controlled and non-controlled)
plus the number of doses on the received order[s] (National Technical Information dispensed by the pharmacy ‘‘in the most
and compar[ing] it to the monthly limit.’’ Id. Service) database. Id. recent calendar month.’’ Id. The
According to Respondent’s former Vice President,
even if an order placed a customer one pill over its
The Policy also required Respondent procedures also required that ‘‘[t]he
CSL for a controlled drug group, the order would to ‘‘perform sufficient due diligence on customer’s entire file’’ be reviewed,
be placed on hold and trigger a review. Tr. 1001. all customers in order to prevent the including its ‘‘initial survey,’’ its ‘‘order
history with’’ Respondent, and ‘‘[t]he also instructed that photographs should to [Respondent] that a review of all the
site visits report(s),’’ if available.’’ Id. be taken of the pharmacy’s exterior, as information and material provided
According to the Policy, orders held well as ‘‘any other feature in or around indicated that Masters ha[d]
for review would be released and filled the pharmacy’’ that would ‘‘be helpful progressively engaged in actions to
when the order was found to be in making compliance decisions about implement policies and procedures to
‘‘consistent with the customer’s the customer.’’ Id. Finally, the Policy promote an effective system to detect
utilization report,’’ and the review of directed that if the inspector and prevent diversion of controlled
‘‘the customer’s file, including [its] ‘‘identifie[d] anything about the substances.’’ GX 48A, at 8. The DI
survey responses and site visits’’ was pharmacy or its staff that indicated . . . further explained that he ‘‘based this
found to be ‘‘consistent with legitimate that the pharmacy is currently engaged conclusion on the written policies and
business practices.’’ Id. The Policy in inappropriate business activity,’’ this procedures provided . . . by
further directed that a held order would was to be reported to the Compliance [Respondent], and [his] assessment that,
not be filled upon a finding that the Department ‘‘as soon as possible after if properly implemented, these policies
order was inconsistent with the the visit.’’ Id. (emphasis in original). and procedures could promote an
utilization report, the file review As found above, the MOA required effective system to detect and prevent
‘‘indicate[d] that the customer may be that DEA ‘‘conduct an exit interview diversion of controlled substances.’’ Id.
engaged in inappropriate business . . . to provide [its] preliminary Also, although the MOA stated that if
practices,’’ or ‘‘[t]he customer refuses to conclusions regarding the Compliance DEA found the Compliance Review to
provide . . . the information necessary Review.’’ GX 6, at 5. The DI did not, be ‘‘not satisfactory,’’ it was to
to complete its evaluation.’’ Id. at 32–33. however, do a formal exit interview. GX ‘‘provide[ ] written notice with
Moreover, the Policy directed that ‘‘[a]ll 48A, at 8. Indeed, the DI testified that specificity to [Respondent] on or before
orders . . . held for review that because the new policies had been 220 days from [the MOA’s] [e]ffective
[Respondent did] not fill for [these] implemented on August 14, 2009, only [d]ate,’’ GX 6, at 5; DEA did not provide
reasons . . . shall be considered four days before the Compliance any such notice. Tr. 120–25.
‘Suspicious Orders’ according to 21 CFR Review, there was not enough time to On August 18, 2009, the same day
1301.74(b) and reported to’’ DEA. Id. at determine if the policies were being that the review concluded, Matt
33. Finally, upon the determination that properly implemented. Tr. 230. Harmon, Respondent’s Compliance
an order was suspicious, Respondent’s However, the DI testified that at the Manager, prepared a memorandum
policy required that ‘‘the customer’s conclusion of the review, he ‘‘explained which he provided to both Wayne
ordering privileges for controlled drugs Corona (Vice-President) and Dennis
. . . be suspended indefinitely.’’ Id. 13 57. The Pharmacy Evaluation Form is six pages Smith (owner and CEO). GX 38; see also
long, with questions regarding ownership Tr. 1161–62. Therein, Harmon proposed
Respondent’s Policy and Procedures information, years in business, the licenses of the
included its Policy 6.5, which applied pharmacy, its pharmacist-in-charge, its pharmacy
various steps which Respondent should
to site visits. Id. at 37. The Policy stated staff, and the nature of its practice. As for the latter take in response to the DEA review.
that it was Respondent’s policy to
section, the pharmacy was required to list all of the Harmon proposed that Respondent use
pharmaceutical distributors it had purchased from the pharmacies’ utilization reports to
conduct site visits for ‘‘all’’ customers in the last 24 months; answer questions regarding
purchasing large quantities of controlled ‘‘the average number of prescriptions filled per ‘‘[i]dentify pharmacies’’ whose
substances, as well as when its day,’’ ‘‘[w]hat percentage are ANY CONTROLLED dispensings of controlled drugs and
Compliance Department determined
DRUG (CII–V),’’ ‘‘[w]hat percentage are ANY other drugs of concern (tramadol and
SCHEDULE II DRUG (CII)’’; and list the percentage carisoprodol) comprised ‘‘50% or more
that ‘‘additional due diligence [was] of prescription revenue from private insurance,
of their’’ dispensings and if so, then
necessary prior to’’ filling a controlled Medicare/Medicaid, cash, and other sources. Id. at
51–55. The pharmacy was also required to disclose determine if ‘‘over half of their
substance order. Id. The purpose of the
if it had a Web site or was affiliated with any Web purchases in each drug family [were of]
site visits was to verify the customer’s sites and, if either question was answered in the either the highest strength or otherwise
location; its ‘‘trade class’’ (whether it affirmative, list the URL(s). Id. at 55. The pharmacy
frequently diverted drug products.’’ Id.
was a closed door, wholesale, or was further required to disclose if it ‘‘fill[ed]
prescriptions for practitioners in the primary Harmon then listed five products:
community pharmacy); the
business of pain management,’’ and if so, ‘‘list all ‘‘oxycodone 30 mg,’’ ‘‘methadone 10
representations it made during ‘‘the due such practitioners and their DEA numbers.’’ Id. mg,’’ ‘‘hydrocodone 10 mg,’’
diligence process,’’ such as its proximity Finally, the form included a section titled as
‘‘alprazolam 2 mg,’’ and ‘‘codeine
to health care providers; and finally, to ‘‘Inspector’s Notes.’’ Id. at 55–56.
syrup,’’ both ‘‘with or without
‘‘look[] for indications of inappropriate As for the Due Diligence Survey, it asked similar
questions, including whether the pharmacy had a promethazine.’’ Id. at 1. Harmon then
business activity.’’ Id. Web site; whether it did mail order; if it had a proposed that if both conditions were
The Policy required that those primary wholesaler and, if so, the wholesaler’s present with respect to a pharmacy,
conducting the site visits ‘‘take name; the daily script average and daily script
Respondent ‘‘need[ed] to suspend
comprehensive notes’’ and complete a average of schedule II drugs; the percentage of
scripts that were for controlled drugs; the controlled sales to’’ the pharmacy until
‘‘Pharmacy Evaluation Form.’’ 14 Id. It percentage of scripts that were for schedule IIs; and it concluded an investigation. Harmon
whether the pharmacy accepted insurance and also explained that ‘‘[w]e should assume
13 See also GX 51B, at 6 ¶ 19 (declaration of
Medicare/Medicaid, and, if so, the percentage paid
Wayne Corona) (‘‘The compliance department by insurance. Id. at 57. The form also asked
that every pharmacy meeting the above
would contact the customer, advise that the order questions regarding what the pharmacy did to criteria is engaged in inappropriate
was held and request a reason why the order prevent doctor shopping; how the pharmacy business activity until proven
exceeded SOMS parameters. The reason would be ensured that doctors were ‘‘exercising proper otherwise.’’ Id.
documented in the due diligence files. . . . The standards of care for their patients’’; if the
compliance department was supposed to
Harmon further proposed that
pharmacy had ‘‘ever refused to fill a prescription,’’
independently verify the reason given by the and if so, what were ‘‘the most common reasons’’;
Respondent’s investigation of such
customer. If the reason was valid, the order would whether it had ‘‘ever decided to permanently stop pharmacies focus on four questions: (1)
be released. If the reason could not be validated, it filling’’ prescriptions written by a physician, and if Was there ‘‘a strong independently
was supposed to be reported as suspicious.’’). so, ‘‘the reason for doing so’’; whether it filled verifiable, legitimate reason for this
14 A copy of the Pharmacy Evaluation Form prescriptions written by out-of-area or out-of-state
(which was revised on May 27, 2009) and the Due doctors; whether it filled prescriptions for out-of-
pattern?’’; (2) was the pharmacy ‘‘selling
Diligence Survey—For Pharmacies (which was area or out-of-state patients; and whether it filled a full range of non-controlled
revised on May 14, 2009) are found at RX 78, at 51– prescriptions ‘‘via the internet.’’ Id. pharmaceuticals?’’; (3) were ‘‘the
majority of the[] controlled drug In December 2010, a DI with the also stated that he was aware of the fact
prescriptions paid for with insurance?’’; Detroit Field Division was directed to that DEA had suspended the registration
and (4) did the pharmacy ‘‘sell front- conduct an investigation as to whether of Harvard Drug Group, L.L.C., based on
store items?’’ Harmon added that those Respondent was complying with the its distributions of oxycodone to Florida
customers who met ‘‘only some of these 2009 MOA. GX 49B, at 7, ¶ 10. After and that Respondent had been ‘‘flooded
criteria should be subjected to reviewing data showing Respondent’s with contacts from Harvard[’s]
additional due diligence prior to any distributions of various controlled customers inquiring about oxycodone
sale.’’ Id. substances (which showed that products after’’ the suspension of
The Government’s Evidence of oxycodone comprised more than 60 Harvard’s registration. Id.
Respondent’s Sales of Oxycodone percent of its distributions during 2009 As part of the investigation, the DI
During the Period of April 1, 2009 and 2010, and that 44 of its top 50 served several administrative subpoenas
Through March 31, 2011 to the Seven oxycodone customers were located in on Respondent and obtained the record
Florida Pharmacies Florida), on Feb 8, 2011, the DI for 21 pharmacies including Tru-Valu
(accompanied by two other DIs) went to Drugs, Inc.; The Drug Shoppe, Inc.;
The main focus of the Government’s Respondent’s Kemper Springs facility to Morrison’s RX, Inc.; City View
case was Respondent’s sales of determine whether Respondent had Pharmacy; CIFII Corp, d/b/a Lam’s
oxycodone to seven Florida-based ‘‘created and implemented a system Pharmacy; Englewood Specialty
pharmacies during the height of the designed to maintain effective controls Pharmacy, Inc.; Medical Plaza Pharmacy
State’s oxycodone crisis. Based on data against diversion.’’ Id. at 8. The DIs met
submitted by Respondent through of Plantation, L.L.C.; and Temple
with Wayne Corona (Respondent’s Terrace Pharmacy, d/b/a Superior
ARCOS, the Government prepared a President and Chief Operating Officer),
spreadsheet of the purchases of Pharmacy. GX 49B, at 14; 59 n.15; 87
Jennifer Seiple, and Matthew Harmon, n.18. The DI reviewed these files, which
oxycodone 15 and 30 mg by the seven and reviewed various records. Id. at 8–
pharmacies (as well as Lam’s Pharmacy, were maintained by Respondent’s
9. compliance department and contained
which was located in Las Vegas, According to a DI, Corona stated that
Nevada) identified in the Show Cause customer questionnaires, pharmacy
Respondent’s ‘‘employees were aware of evaluations, site visit forms, Memos for
Order during the following periods: (1) the diversion problems with oxycodone
April 1, 2009 through December 31, Record (MFRs), Ship to Memos, SOMS
in Florida’’ but did not ‘‘consider the
2009; (2) calendar year 2010; and (3) geographic locations of its Florida
January through March 2011. It also kids sitting around a pool in bathing suits with big
pharmacy customers.’’ Id. at 9.16 Corona smiles on their face [sic], and he said this was an
prepared spreadsheets listing the issue and we’re not going to participate in this
pharmacies’ monthly purchases of both of dosage units distributed to the pharmacies alone anymore. So he effectively that day cut everybody
drugs from Respondent.15 establishes that Respondent ‘‘knew or should have off.
known’’ that the ‘‘prescriptions were issued for Tr. 1074. In his testimony, Smith confirmed
15 The Government also submitted two tables other than a legitimate medical purpose and outside Corona’s recollection of the impetus for the
purporting to show the total number of oxycodone the usual course of professional practice.’’ ALJ Ex. decision to cut off the pain clinics. He testified that:
dosage units Respondent sold to its customers in 1, at 3 (Order to Show Cause, at ¶ 5). I was down there a couple of days, two or three
each State during the years 2009 through 2012, as I also agree with the ALJ’s conclusion that the days. We looked at the pain clinics. We looked at
well as its average monthly sale per customer Government’s calculations of the average monthly certain areas of town that some of the pain clinics
during each year. See GXs 10B & 10L. The ALJ purchase of oxycodone by Respondent’s customers were located in. We also got a copy of City Beat,
found the data unreliable because the first of these (as reflected in both exhibits) are flawed. R.D. 27 which was a monthly or a weekly—one of those free
tables shows that Respondent distributed nearly 25 n.22. As for the calculations in GX 10B, the catalogs you often see outside of restaurants—and
million dosages in 2009 to its Florida customers, Government conceded that these were erroneous started going through it and identified that towards
which was approximately 67 percent of its total because each transaction was treated as if it was the back there were a lot of advertisements for pain
oxycodone distributions, while the second of these made by a separate pharmacy, Tr. 1736, and thus clinics that I thought were very unethical. It would
tables, which was submitted as a rebuttal exhibit— the number of pharmacies used to calculate the show young people sitting around a pool and it
after Respondent discredited the Government’s average was off by a factor of 14 for the 2009 named the pain clinic and say [sic] we dispense on
calculation of its average monthly sale per customer calculation and 24 for the 2010 calculation. site, and that really hit home hard.
in each State—shows that Respondent had sold an Compare GX 10B with GX 10L. Tr. 1665–66; see also RX 104, at 19 (Smith Decl.
additional 7.6 million dosage units to its Florida Similarly, while the calculations in GX 10L may at ¶ 73).
customers and that this comprised approximately have been based on an accurate number of Smith did not, however, cut off the pharmacies.
66 percent of its total distributions. However, there pharmacies, I agree with the ALJ that the According to Corona, this was because Smith
was little change between the data in the two calculations are flawed because they did not take believed that Respondent could rely on the
exhibits for calendar years 2010 and 2011. The 2010 into account that Respondent’s customers did not pharmacies to vet the physicians who were writing
data show that Respondent distributed 24,389,400 necessarily purchase oxycodone each month and the prescriptions. Corona then asserted that ‘‘[w]e
dosage units to its Florida customers (according to thus suffer from aggregation bias. R.D. 27 n.22; see all knew that a licensed professional in the health
GX 10B) and 24,387,800 to its Florida customers also Tr. 1625–26, 1755–57. Indeed, I note that while care field would for the most part behave ethically
(according to table 10L); the tables show that GX 10L was submitted after Respondent’s expert and legally,’’ id. at 1075, even though Smith
Respondent’s total distributions were 37,866,700 pointed out this flaw in the Government’s initial testified that he had concerns about the ethics and
(according to GX 10B) and 37,859,300 (according to calculations, the Government still submitted legality of the conduct engaged in by pain-clinic
GX 10L). The ALJ did not address why this portion calculations that did not correct for aggregation physicians. Id. at 1665–66.
of the data is unreliable. Moreover, Respondent did bias. So too, while Smith admitted that he knew that
not dispute that it ‘‘distribute[d] a lot of oxycodone 16 Indeed, at the hearing, both Messrs. Corona and
oxycodone was the primary drug being sought for
to the state, lots of it.’’ Tr. 1837 (closing argument Smith testified that in early 2009, Smith, illicit use in Florida, id. at 1668, he asserted that
of Respondent’s counsel). accompanied by another employee, travelled to he ‘‘put a lot of thought into it, and I just felt that
However, I agree with the ALJ that the data as to Florida to check out the situation. Tr. 1033, 1665. there should be segregation of duties, that the
its total sales in Florida do not establish that At the time, Respondent was supplying pain clinics physician should write and the pharmacy should
Respondent failed to maintain effective controls which engaged in the direct dispensing of dispense, and that was an added line of due
against diversion. R.D. at 27 n.22, 164–67. I also controlled substances to patients. On his return, diligence on the part of the pharmacy.’’ Id. at 1666.
find unpersuasive the Government’s proffered Smith decided to cut off the pain clinics. As Corona Apparently, the possibility that pharmacists might
comparison of Respondent’s Florida sales with its explained: also act unethically or illegally never occurred to
sales to its customers in other States including He [Smith] said he couldn’t believe what was him, even though Smith was obviously aware of
Texas, California, and New York, which the going on in Florida with respect to the pain clinics this possibility from his experience in addressing
Government argues were ‘‘similarly situated’’ in because he had seen park benches and bus stop the allegations of the previous Show Cause Order
terms of demographics and the number of medical benches advertising pain clinics, and he brought that Respondent supplied pharmacies that were
establishments. Gov. Post-Hrng. Br. 104–06. back a copy of City Beat with I forget how many unlawfully distributing controlled substances via
Accordingly, I reject the allegation that the volume pages of nothing but ads for pain clinics with young the internet.
Notes, Utilization Report (URs), and whether it was part of [its] policies and actually testified that ‘‘[t]he compliance
other forms and emails. Id. at 16. procedures.’’ Id. at 19. department would contact the customer,
According to the DI, his review advise that the order was held and
The Government’s Exception
showed that Respondent ‘‘regularly request a reason why the order exceeded
As noted above, Respondent’s Policies SOMS parameters. The reason would be
ignored inconsistencies in information
and Procedures required that an order documented in the due diligence files,
provided by controlled substance
placed on compliance hold by the specifically in the ‘Memo for Record’
customers, including extremely high
Suspicious Order Monitoring System (MFRs). It may also have been
percentages of controlled substances
(SOMS) be subject to additional due electronically documented in the ‘Ship
being distributed by the pharmacy, diligence which included: (1) contacting to Memos’ which were also part of the
significant percentages of cash sales, the customer to discern the reason for due diligence file.’’ GX 51B, at 6 ¶ 19
and other indicators of potential the deviation in size, pattern, or (emphasis added). While the ALJ also
diversion.’’ Id. at 16–17. The DI further frequency; (2) independently verifying cited Mr. Corona’s oral testimony as
asserted that the documents showed the reason stated by the customer; (3) support for her characterization of his
that Respondent ‘‘deleted or edited obtaining a new utilization report; and testimony that the reasons ‘‘would often
orders that would bring customers (4) conducting a complete file review to be documented,’’ I reject this because it
above their threshold limit’’ and that it determine if the pharmacy’s order was is based on a misreading of Mr. Corona’s
also ‘‘routinely utilized a ‘release with consistent with legitimate business testimony.19
reservation’ or ‘ship with reservation’ practices. As will be shown below, The ALJ also asserted that another
(‘RWR or SWR’) designation and thus while the SOMS held numerous orders witness (Mr. Schulze), who had worked
allowed orders that [it] should have placed by the Florida pharmacies, in in the Compliance Department,
viewed as potentially suspicious [to] be only rare instances do Respondent’s ‘‘testified that not all research the
shipped.’’ Id. at 17. Finally, the DI records document that it contacted the Compliance Department conducted was
alleged that Respondent ‘‘ignored or pharmacy to obtain an explanation for documented in the MFRs or Ship to
failed to act on information it reviewed the order, let alone that it independently Memos, and that he did not feel that
during on-site inspections that were verified that explanation.18 leaving some research out of the due
significant indicators of potential The Government points to the diligence files violated Respondent’s
diversion.’’ Id. frequent absence of documentation Police and Procedures.’’ R.D. at 172–73.
showing that Respondent contacted the However, the thrust of Mr. Schulze’s
The Pharmacy Specific Evidence testimony was that the Compliance
pharmacies, obtained an explanation for
these orders, and independently verified Department would not necessarily
Before proceeding to make findings
that explanation. The Government document in the MFRs or the SOMS
specific to each of the Florida
contends that the reason there is no notes having performed Google searches
pharmacies,17 a discussion of the or having obtained a fax from the
parties’ exceptions which bear directly such documentation is because
Respondent’s employees did not do it. customer; instead, it would simply
on the weight to be given to the place the information in the customer’s
pharmacy-specific evidence is The ALJ rejected the Government’s
contention, asserting that the due diligence file. Tr. 1337–39. Thus,
warranted. These include the this testimony simply does not address
Government’s exception to the ALJ’s Government acknowledged in its brief
that Respondent’s ‘‘Policies and the issue.
finding that it failed to prove that While Mr. Schulze also testified that
Respondent did not comply with the Procedures do not require
documentation of the reasons for the he would ‘‘not necessarily’’ document
provisions of its policies and procedures ‘‘every single time’’ he made a phone
which required it to contact the release of a held order.’’ R.D. at 171. I
call to a customer, this was in response
pharmacy whenever an order was held need not decide whether this is a fair
to Respondent’s counsel’s suggestion
by the SOMS and obtain an explanation reading of the Government’s brief
that it was ‘‘[o]ften very difficult to get
for the order, which it then because, as found above, the ALJ
in touch with pharmacists’’ because
independently verified, as well as to ignored the evidence that Respondent,
they are ‘‘very busy people’’ and ‘‘don’t
obtain a new UR. Gov. Exceptions, at in its presentation to the Agency
sit at the end of the phone and take calls
43–56. As for Respondent, it asserts that regarding ‘‘The Process’’ for monitoring
from [Respondent’s] compliance
‘‘the ALJ assumed that all orders controlled substance orders, represented
department all the time.’’ Id. at 1335–36.
that ‘‘[d]ocumentation on all orders held
identified on the SOMS notes were held
for review and their dispositions are
by SOMS,’’ and that ‘‘[a]s a result of this 19 The actual question (by Respondent’s counsel),
permanently retained.’’ RX 12, at 30 which was based on a hypothetical, as it is not
misinterpretation, the ALJ vastly
(emphasis in original). supported by any facts in evidence and is not even
overstated the number of orders held by probative on this point, and Corona’s answer
Moreover, while the ALJ
the SOMS.’’ Resp. Exceptions, at 13. follows:
acknowledged Mr. Corona’s testimony
Respondent also argues that ‘‘the ALJ Q. Now, if Jennifer Seiple made that phone call
that documentation was the ‘‘ ‘lynchpin and the pharmacist said I ordered a day early
incorrectly concluded that the . . .
[sic] of the whole system in terms of because I’m going on vacation next week and she
Order to Show Cause was not based on didn’t document that on an MFR, you would trust
explaining our behavior,’ ’’ the ALJ then
‘Covered Conduct’ ’’ and that she ‘‘failed her to know that that was an appropriate reason?
characterized his testimony as ‘‘not[ing]
to make factual findings required to I mean, if she didn’t document it, that doesn’t
that the reasons for exceeding SOMS indicate to you that she was attempting to do
protect [its] interests under the’’ MOA.
would often be documented in [the] anything nefarious, does it?

Id. at 16. Respondent further asserts that MFRs and Ship to Memos.’’ R.D. at 171 A. No, it does not. What I would do is ask her
the ‘‘ALJ should not have allowed (citing Tr. 1094; GX 51B at 6 ¶ 19) under the assumption that she was well within her
evidence regarding [its] failure to review (emphasis added). Yet Mr. Corona
guidelines to do that and then ask her to please
document it for future reference or go back and
[the utilization reports] regardless of document it because documentation was the
18 While Policy 6.2 required Respondent to obtain linchpin of this whole system in terms of
17 Having reviewed the entire record, I limit my a new UR whenever an order was held by the explaining our behavior, especially in our
discussion of the pharmacy specific evidence to the SOMS, it is beyond dispute that Respondent rarely environment.
Florida pharmacies. obtained a new UR. Tr. 1094.
Most significantly, Respondent’s point given that Respondent represented Respondent’s Exceptions
counsel then asked Mr. Schulze if ‘‘[i]t to the Agency that it would maintain As noted above, Respondent takes
was your understanding that when such documentation. Moreover, there is exception to the ALJ’s findings as to the
compliance had significant or important ample authority to support the number of orders placed by the various
information or contact with a customer, Government’s position that the absence pharmacies that were held by the SOMS
that type of information should be of such documentation proves that the for review. Resp. Exceptions, at 13–16.
documented in the compliance file in pharmacies were not contacted. While Respondent acknowledges that
either the MFRs, or the SOMS notes, or ‘‘there was no direct evidence presented
the ship to notes, or somewhere, As a leading authority explains: ‘‘The
absence of an entry, where an entry on this point,’’ it argues that ‘‘the ALJ
correct?’’ Id. at 1336–37. Mr. Schulze incorrectly assumed that all orders
answered: ‘‘Yes.’’ Id.20 would naturally have been made if a
transaction had occurred, should identified on the SOMS notes were
In addition to her failure to
ordinarily be equivalent to an assertion held’’ for review. Id. at 13. Respondent
acknowledge Respondent’s
that no such transaction occurred, and contends that ‘‘the only orders that were
representation to the Agency that
therefore should be admissible in held by SOMS were those that also have
‘‘[d]ocumentation on all orders held for
evidence for that purpose.’’ V Wigmore, the name of a Compliance Department
review and their disposition are
permanently retained,’’ RX 12, at 30; the Evidence § 1531, at 463 (Chadbourn rev. employee in the ‘Decision By’ column
ALJ also failed to acknowledge both the 1974) (citing cases); see also United and, in most cases, notes in the ‘Notes’
representations made by Respondent in column.’’ Id. Respondent contends that
States v. De Georgia, 420 F.2d 889, 891
the SOMS Appendix and what the the ALJ’s misinterpretation of the SOMS
(9th Cir. 1969) (noting that Wigmore
SOMS notes actually showed. As found notes led her to ‘‘vastly overstate[ ] the
‘‘expressed the view that the absence of
above, the SOMS Appendix states that: number of orders’’ that were held. Id.
an entry concerning a particular Notwithstanding that Respondent put
‘‘[t]he ultimate status, accept or reject, transaction in a regularly-maintained
will be shown along with the date/time forward no direct evidence as to the
business record of such transactions, is interpretation of the SOMS notes,
and user associated with the action. A equivalent to an assertion by the person
Reason code and notes will also be having reviewed the entire record I
maintaining the record that no such agree with Respondent that the ALJ
provided as additional detail supporting transaction occurred’’); A.Z. v. Shinseki,
the decision.’’ RX 78, at 64 (emphasis misinterpreted the notes and overstated
731 F.3d 1303, 1311 (Fed. Cir. 2013) the number of held orders. Indeed,
added). Thus, I respectfully reject the (‘‘The absence of certain evidence may
ALJ’s premise that Respondent’s Respondent’s materials indicated that
be pertinent if it tends to disprove (or all controlled substances orders were
Policies and Procedures did not require
prove) a material fact.’’) (other citation evaluated by the SOMS, and it seems
it to document the inquiries it made of
the pharmacies in the course of and quotation omitted); cf. Fed. R. Evid. logical that if an order did not exceed
reviewing those orders that were held r. 803(7). one of the three parameters, a review of
by the SOMS. Accordingly, as a general matter, I the order would not be conducted and
Moreover, as will be explained in the respectfully reject the ALJ’s conclusion no name would be listed in the
findings made with respect to each that the Government’s reliance on the ‘‘Decision By’’ column. I find this
pharmacy, the SOMS notes did typically lack of documentation in Respondent’s conclusion to be supported by my
contain an explanation regarding the records does not prove that its review of the numerous oxycodone
review of those orders that were held by compliance department failed to contact orders set forth in the Government’s
the SOMS. However, that explanation ARCOS data in light of the SOMS
the pharmacy and obtain an explanation
invariably did not reflect that parameters. Accordingly, I do not adopt
for the orders that were held by the
Respondent had contacted the the ALJ’s findings as to the number of
SOMS (as well as that it failed to
pharmacy and obtained an explanation held orders and instead, I make findings
independently verify any such
for why the order had exceeded the specific to the respective orders. See
explanation) but were subsequently also RX 78, at 64.
SOMS parameters, but rather, some released.21 To the contrary, where there
other explanation, such as that the order Next, Respondent argues that the ALJ
is an absence of documentation that erred in concluding that the Show
was released because it was supported
Respondent performed the respective Cause Order was not based on the
by the pharmacy’s utilization report
(which the evidence will show was act, that absence is substantial evidence covered conduct (i.e., those claims
infrequently obtained). This begs the that Respondent did not perform the act. based on Respondent’s conduct prior to
question, which the ALJ did not answer: And as will be shown below, with April 1, 2009) which was resolved by
why, if the Compliance Department had respect to most of the orders that were the MOA. Id. at 16. Respondent argues
actually contacted the pharmacy and held by the SOMS, there is additional that, because following the August 2009
obtained a legitimate explanation for evidence that supports the conclusion Compliance Review, the Agency ‘‘never
why the order exceeded the SOMS that Respondent failed to contact the advised [it] of any deficiencies in its
parameters, it then documented a reason pharmacies and obtain an explanation compliance program, its suspicious
for releasing the order which had for the orders, as most of the relevant order reporting, or its due diligence
nothing to do with anything the entries provide a justification for investigations as required under the
pharmacy may have told it? shipping the order which has nothing to MOA,’’ the Agency ‘‘breached the terms
As for the ALJ’s reliance on the fact do with the type of explanation one of the MOA by . . . asserting claims for
that such documentation is not required would expect from a pharmacist. which [the Agency] has already
by DEA regulations or any established provided a release, and by seeking to
industry standard, this is beside the 21 Even if the Agency’s regulations do not require impose liability for conduct [it] took in
a distributor to document the reason provided by reliance on its successful Compliance
20 Nor did Ms. Seiple, who headed the a customer to justify a suspicious order, Review.’’ Id. at 16–17. Respondent
Compliance Department, assert that its employees documenting that reason is still an essential part of
actually contacted the pharmacies whenever the maintaining effective controls against diversion
further argues that ‘‘while the ALJ
SOMS held orders but simply failed to document because subsequent events may provide excluded some so-called ‘Period of
doing so. See RX 103. information which show that the reason was false. Review’ evidence, she failed to make
factual findings . . . to ensure that [it] other administrative proceeding against the compliance review must be
received the full benefit of its bargain the Released Parties for non-covered evaluated by applying the principles of
set forth in the 2009 MOA.’’ Id. at 17– conduct.’’ GX 6, at 6 (emphasis added). equitable estoppel. See, e.g., Dantran,
18. As for Respondent’s contention that Inc., v. U.S. Dept. of Labor, 171 F.3d 58,
More specifically, Respondent argues the ALJ failed to make findings to 66 (1st Cir. 1999) (applying equitable
that ‘‘[t]he due diligence [it] conducted ensure that it received ‘‘the full benefit estoppel and rejecting contractor’s
on its customers was deemed of its bargain,’’ Resp. Exceptions, at 17– contention ‘‘that the government should
satisfactory in 2009, but DEA now 18; nothing in the MOA provides a be estopped from pursuing an action
deems it insufficient.’’ Id. at 18. remedy in the event the Government’s based on practices . . . that drew no
Respondent further contends that ‘‘DEA representatives provided an inadequate criticism at that time’’ because it
expressed no concern about any order compliance review.22 Because the MOA ‘‘reasonably relied’’ on ‘‘the clean bill of
for controlled substances [it] shipped in provides no such remedy, Respondent’s health’’ it received following
2009, but [DEA] now claims Masters contention that it should be afforded investigation and compliance officer’s
should have reported many of those immunity for its conduct after April 1, failure to question its practices).
same orders as suspicious.’’ Id. 2009 because it relied on the Under the traditional principles of
Continuing, Respondent argues that Government’s failure to identify any equitable estoppel, ‘‘ ‘the party claiming
‘‘[t]he policies and procedures DEA deficiencies in its procedures following the estoppel must have relied on its
deemed satisfactory in 2009 are now adversary’s conduct ‘in such a manner
deemed inadequate’’ and that ‘‘DEA has 22 Respondent actually got more than it bargained
as to change [its] position for the worse,’
for, at least from the ALJ, when she ‘‘ruled that the and that reliance must have been
built its entire case on actions Masters Government will be precluded from asserting any
took in reliance on that MOA.’’ Id. evidence of [Respondent’s] failures to report reasonable in that the party claiming the
Respondent then argues that, to protect suspicious orders during the Period of Review,’’ the estoppel did not know nor should it
its rights under the MOA and the Due period from April 1, 2009 through the Compliance have known that its adversary’s conduct
Review. Order Granting In Part Respondent’s
Process Clause, the ALJ should have Motion in Limine to Preclude Admission of
was misleading.’’ Heckler v. Community
made the following three findings: Irrelevant, Immaterial, and/or Incompetent Health Services of Crawford Cty., Inc.,
Evidence and to Adopt Findings, at 14. Nothing in 467 U.S. 51, 59 (1984) (quoting Wilber
That as of August 18, 2009, it ‘‘had enacted the MOA provided Respondent with immunity for
policies and procedures that constituted Nat’l Bank v. United States, 294 U.S.
potential violations during this additional period,
effective controls against diversion regarding and the ALJ’s ruling ignores that even if Respondent
120, 124–25 (1935)). Moreover, with
the distribution of any controlled substance’’; was unclear as to what its regulatory obligations respect to claims of estoppel against the
That as of August 18, 2009, it ‘‘had were, it always had the option not to accept and/ Government, the Supreme Court has
detected and reported to DEA suspicious or fill orders from the seven pharmacies during this explained that:
orders of controlled substances after April 1, period.
Moreover, even though the Government did not [w]hen the Government is unable to enforce
2009’’; and
take exception to the ALJ’s ruling, in its Exceptions, the law because the conduct of its agents has
That as of August 18, 2009, it ‘‘had Respondent specifically requests that I make the given rise to an estoppel, the interest of the
meaningfully investigated all new or existing factual finding that ‘‘[a]s of August 18, 2009, [it] had citizenry as a whole in obedience to the rule
customers, including each of the . . . detected and reported to DEA suspicious orders of of law is undermined. It is for this reason that
pharmacies identified in the’’ Show Cause controlled substances after April 1, 2009.’’ Resp. it is well settled that the Government may
Order, ‘‘regarding the customer’s legitimate Exceptions, at 18. While I consider the suspicious
not be estopped on the same terms as any
need to order or purchase controlled order reports which are contained in RX 61, I
conclude that any such finding should be based on other litigant.
substances.’’
a consideration of the entire record in this Id. at 60.
Id. Respondent thus contends that proceeding. Accordingly, I also consider the
evidence as to whether the orders placed by the Accordingly, the D.C. Circuit has
because the ALJ ‘‘fail[ed] to make these
seven Florida pharmacies during the period from explained that:
findings, [it] was required to defend April 1 through August 18, 2009 were suspicious
conduct that it took in reliance on and, if so, whether Respondent ‘‘detected and [a] party attempting to apply equitable
DEA’s inaction following the reported’’ them to DEA. estoppel against the government must show
As for the facts that the MOA provided that ‘‘[t]he that ‘‘(1) there was a definite representation
Compliance Review.’’ Id. It therefore to the party claiming estoppel, (2) the party
Compliance Review will be deemed satisfactory
requests that I make these findings and unless DEA determines that [Respondent] failed to relied on its adversary’s conduct in such a
hold ‘‘that this proceeding was based, at detect and report to DEA suspicious orders of manner as to change [its] position for the
least in material part, on ‘Covered controlled substances after April 1, 2009,’’ GX 6, at worse, (3) the party’s reliance was
Conduct’ as defined in the MOA.’’ Id. at 5; and that the DI did not specifically identify any reasonable[,] and (4) the government engaged
such orders as suspicious either at the time of the in affirmative misconduct.’’
18–19. briefing or thereafter, Respondent’s argument fails
I reject Respondent’s request. for the same reasons that I reject its contention Keating v. FERC, 569 F.3d 427, 434 (D.C.
Contrary to Respondent’s contention, regarding the DI’s failure to identify specific Cir. 2009) (quoting Morris Comm. Inc. v.
the MOA granted Respondent immunity deficiencies in its policies and procedures. As
explained above, its contention that it relied on the
FCC, 566 F.3d 184, 191–92 (D.C. Cir.
only for its conduct prior to April 1, DI’s failure to identify any order as suspicious must 2009)).
2009, and none of the orders which are rest on the principles of equitable estoppel. See, Applying this test, Respondent cannot
at issue in this proceeding occurred e.g., Dantran, 171 F.3d at 66. prevail.23 Even assuming that
before this date. Moreover, to the extent In short, Respondent’s reliance on the DI’s failure Respondent has made the requisite
to identify any specific order as suspicious was not
Respondent’s due diligence efforts prior reasonable given that the DI identified its sales to showing as to the first two prongs, its
to April 1, 2009, are at issue (i.e., to several of the pharmacies as being of concern and contention fails because its reliance on
justify Respondent’s failure to report an asked its Compliance Director if she was still selling the DIs’ failure to identify specific
order as suspicious and/or to ship the to them. Moreover, even were I to conclude deficiencies in its policies was not
otherwise on the issue of the reasonableness of its
orders which are at issue), the MOA reliance, Respondent cannot claim that the DIs reasonable and there is no evidence that
specifically provides that engaged in affirmative misconduct when they failed
‘‘[n]otwithstanding the releases by DEA to identify any specific orders as suspicious. 23 Notably, while in its Exceptions, Respondent
contained in this Paragraph, DEA For the same reasons, I reject the ALJ’s ‘‘find[ing] argues that it engaged in ‘‘conduct that it took in
that DEA is barred by the MOA from sanctioning reliance on DEA’s inaction following the
reserves the right to seek to admit Respondent for not implementing additional UR Compliance Review,’’ it does not acknowledge that
evidence of the Covered Conduct for analyses into its Policies and Procedures.’’ R.D. at its claim is subject to the principles of equitable
proper evidentiary purposes in any 186. estoppel.
the Government’s representatives potentially diverting controlled evidence, the record shows that
engaged in affirmative misconduct. substances. Respondent cannot credibly Respondent rarely complied with its
As the Supreme Court has explained, argue that it reasonably relied on the policies and procedures with respect to
to establish that one’s reliance was DI’s failure to object to the limited the seven Florida pharmacies.
reasonable, ‘‘the party claiming the manner in which it used the URs or that Thus, while Respondent contends
estoppel [must show that it] did not it had the right to ignore the evidence that DEA is improperly seeking to
know nor should it have known that its it obtained through the URs because the impose liability for failing to report
adversary’s conduct was misleading.’’ DI did not specifically instruct its orders as suspicious, claiming that
Heckler, 467 U.S. at 59 (citing Wilber employees to use the URs in this ‘‘[t]he policies and procedures . . .
Nat’l Bank, 294 U.S. at 124–25). manner. deemed satisfactory in 2009 are now
Moreover, ‘‘ ‘if, at the time when [the Nor does the evidence support a deemed inadequate,’’ its contention is
party] acted, [it] had knowledge of the finding that Respondent was unavailing given the extensive evidence
truth, or had the means by which with affirmatively misled by either the DI’s that it repeatedly failed to comply with
reasonable diligence [it] could acquire statement at the completion of the these policies. Moreover, as
the knowledge so that it would be review or by the Government’s failure to demonstrated below, Respondent
negligence on [its] part to remain subsequently identify any deficiencies repeatedly justified its failure to report
ignorant by not using those means, [it] in Respondent’s policies and these orders (as well as its subsequent
cannot claim to have been misled by procedures. As the First Circuit has filling of the orders), notwithstanding its
relying upon the representation or explained, ‘‘[i]t is common ground that failure to follow these policies, on the
concealment.’ ’’ Id. at 59 n.10 (quoting 3 affirmative misconduct requires ground that as a part of its ongoing due
J. Pomeroy, Equity Jurisprudence § 810, something more than simple diligence, it had conducted an extensive
at 219 (S. Symons ed. 1941)). negligence.’’ Dantran, 171 F.3d at 67; investigation and determined that the
As found above, while the DI did not see also U.S. v. Hemmen, 51 F.3d 883, orders were not suspicious and were
identify any specific deficiencies in 892 (9th Cir. 1995) (‘‘When a party seeks consistent with the respective
Respondent’s policies and procedures, to invoke equitable estoppel against the pharmacy’s business model. See
he advised Respondent’s employees that government, we . . . require a showing generally RX 103 (Seiple Decl.).
he perceived ‘‘potentially problematic that the agency engaged in affirmative Respondent thus placed the adequacy of
trends’’ in its sales to several of the conduct going beyond mere its due diligence efforts at issue. I
pharmacies of various highly abused negligence[.]’’) (other citations and therefore reject its contention.24
controlled substances including internal quotations omitted). Having addressed the relevant
oxycodone 30 mg, methadone 10 mg, In this case, there is simply no exceptions, I now turn to the pharmacy-
alprazolam 2mg, and hydrocodone. The evidence that the DI’s statement at the specific evidence.
DI also identified the expected ratio of conclusion of the compliance review
controlled to non-controlled (that Respondent ‘‘ha[d] progressively Tru-Valu Drugs, Inc.
dispensings at pharmacies. This engaged in actions to implement into According to Respondent’s due
testimony was corroborated by the [sic] policies and procedures to promote diligence file, Tru-Valu Drugs, Inc., was
testimony of Messrs. Harmon and an effective system’’ to prevent a pharmacy located in Lake Worth,
Corona. Indeed, as found above, Mr. diversion, GX 48A, at 8 ¶ 15) was made Florida which had been in business for
Harmon testified that as one of the DIs with the ‘‘intent to mislead 43 years and had the same ownership
reviewed Respondent’s files, with [Respondent] about [its] for 32 years. RX 2A, at 76–77. According
respect to several of the pharmacies responsibilities.’’ Dantran, 171 F.3d at to a Pharmacy Evaluation done on May
whose orders are at issue in this 67. The same is true with respect to the 28, 2008 by a consultant retained by
proceeding, he turned to Ms. Seiple and Government’s failure to identify any Respondent, Tru-Valu filled 150
specifically asked her if Respondent was deficiencies in writing following the prescriptions per day, of which 40
still selling to them. review. In short, ‘‘there is not the percent were for controlled substances.
As also noted above, after the slightest whiff of affirmative Id. at 78–81. Tru-Valu reported that 60
Compliance Review, Mr. Harmon also misconduct’’ on the part of the DI. Id. percent of its business was cash and that
wrote a memo setting forth various steps There is a further reason for rejecting insurance and Medicare/Medicaid
Respondent should undertake, Respondent’s exception. As the DI together comprised 40 percent. Id. at 78.
including using the utilization reports testified, his statement that Respondent
submitted by the pharmacies whose had ‘‘progressively engaged in actions’’ 24 For the same reasons, I reject Respondent’s
dispensings of controlled substances to implement an effective system of further contention that because ‘‘the Government
comprised more than 50 percent of their diversion controls was based on failed to provide any notice to [it] regarding the use
of [the] URs, the ALJ should not have allowed the
dispensings and thus, in the memo’s Respondent’s policies and procedures Government to introduce any evidence in regard to
words, suggested that they were being ‘‘properly implemented.’’ GX 48A, such use’’ to show that it did not ‘‘comply with the
‘‘engaged in inappropriate business at 8 ¶ 15. MOA, or otherwise failed to maintain effective
activity.’’ GX 38. Thus, the fact that the As found above, during the controls again diversion.’’ Resp. Exceptions, at 19.
DI did not specifically instruct Compliance Review, Respondent Respondent further ignores that it put in issue the
manner in which used the URs. As will be shown
Respondent’s employees that the represented to the Government that in the discussion of the pharmacy-specific
procedures were deficient because they when an order was held for exceeding evidence, with respect to each of the pharmacies,
did not use the URs to analyze whether the SOMS parameters, it would take Ms. Seiple stated that Respondent ‘‘was aware of
the respective pharmacies’ controlled various actions to investigate whether the volume of oxycodone and other controlled
drugs being dispensed by [the pharmacy], and the
substance dispensing ratios were the order was legitimate, which percentage of controlled drugs dispensed relative to
consistent with legitimate dispensing included contacting the pharmacy to other drugs,’’ that it ‘‘specifically investigated the
activity provides no support to obtain an explanation for the order, reasons why [each pharmacy’s] ordering and
Respondent. As will be shown below, independently verifying the dispensing patterns were as indicated on the URs,’’
and that ‘‘[t]he URs and other information provided
the URs provided extensive evidence explanation, and obtaining a new UR. by [the pharmacy] were consistent with the
that the identified pharmacies were Yet, as demonstrated below in the pharmacy’s business model.’’ See, e.g., RX 103, at
placing suspicious orders and discussion of the pharmacy-specific 40.
It also disclosed that it had purchased oxycodone 30 mg was the top drug with showed that Tru-Valu’s dispensings of
from four other pharmaceutical 132,506 dosage units dispensed, oxycodone 15 totaled 38,563 du and its
distributors in the last 24 months, followed by methadone 10 mg at 53,842 dispensings of alprazolam 2mg totaled
including Amerisource Bergen, H.D. du, alprazolam 2 mg at 55,120 du, 30,655 du. Id. These three drugs alone
Smith, ANDA, and Mason Vitamin. Id. sterile water for irrigation at 24,000 accounted for more than 81 percent of
at 77. units (a non-controlled prescription Tru-Valu’s dispensings. Moreover, the
Tru-Valu was not located in a medical product), Endocet 10/325 mg top ten drugs by dispensing volume
center. Id. at 79. It did not serve nursing (oxycodone/acetaminophen) at 4,146 were comprised entirely of oxycodone
homes, hospice programs or inpatient du, Hibiclens 4% liquid (a non- products in various dosages,
facilities. Id. at 78. However, it did fill controlled topical anti-microbial), methadone, and alprazolam, and 17 of
prescriptions for pain management carisoprodol 350 mg at 3,703 du (then the top 20 drugs were federally
clinics, and its owner and pharmacist- controlled under Florida law and since controlled substances. Id.
in-charge (PIC) advised that ‘‘[t]hey do placed in schedule IV of the CSA), Tru-Valu’s July 2010 UR showed a
fill a large number of narcotic valproic acid 250 mg (non-controlled) at further increase in its dispensing of
prescriptions each day’’ and ‘‘that he 2,400, and OxyContin 80 mg oxycodone 30 mg to 206,132 units out
has pushed for this business with many (oxycodone continuous release) at 2,220 of total dispensings for all prescription
of the area pain doctors.’’ Id. at 79–81. du. Id. at 70. Thus, oxycodone 30 mg, products of 337,314.28 RX 2A, at 29, 36.
Tru-Valu’s owner also advised methadone 10 mg, and alprazolam 2 mg It also showed that Tru-Valu had
Respondent’s consultant that ‘‘[h]e is constituted more than 241,000 dosage dispensed 32,441 du of oxycodone 15
concerned about the current restrictions units out of the total quantity of more and 31,271 du of alprazolam 2 mg
put on his buying by several suppliers.’’ than 340,000 du dispensed that during the month. Id. at 29–30. With the
Id. at 81. month.26 Id. at 70, 75. In contrast, Tru- exception of carisoprodol (which was
Tru-Valu provided the names of five Valu dispensed only 2,479 dosage units the tenth-most dispensed drug), each of
pain management doctors whose of hydrocodone 10 mg, 120 du of the top ten drugs was a formulation of
prescriptions it filled. Id. at 79. Tru- hydrocodone 7.5, and 390 du of oxycodone, methadone, or alprazolam.
Valu’s due diligence file contains no hydrocodone 5 mg, even though So too, with the exception of
evidence that Respondent performed hydrocodone was the most widely carisoprodol and ibuprofen, each of the
any check on the licensure and prescribed drug nationally from 2006 top 20 drugs dispensed was either a
registration status of these physicians through 2010. See id. at 70–76; RX 81, schedule II narcotic or a schedule IV
and whether the physicians had any at 46–47. benzodiazepine (alprazolam or
specialized training or held board Tru-Valu’s file also includes diazepam).
certification in pain management or additional URs for the months of The final UR in Tru-Valu’s file (Sept.
addiction medicine. Nor is there any December 2008, October 2009, February 2010) showed that it dispensed 146,560
evidence that Respondent inquired of 2010, July 2010, and September 2010. dosage units of oxycodone 30 mg during
Tru-Valu’s pharmacist as to the nature Tru-Valu’s December 2008 UR listed the the month. Id. Of further note, for each
of the prescriptions these physicians top 200 prescription drugs it dispensed, of the five URs in Tru-Valu’s file,
were writing (i.e., the quantity and which totaled more than 300,000 units. controlled substances were predominant
whether drug cocktails such oxycodone Id. at 64. Notably, Tru-Valu dispensed among the drugs dispensed.
30 mg and alprazolam were being more than 192,000 dosage units of Tru-Valu’s file also includes a form
prescribed for patients). Moreover, two oxycodone 30 during the month. Id. at entitled ‘‘DEA Schedule Orders—Due
of these doctors (Joel Panzer and 61. With the exception of carisoprodol Diligence Report Form,’’ the purpose of
Stephanie Sadick) appear on (which was then non-controlled under which was ‘‘to evaluate customers who
Respondent’s list of terminated federal law), each of the top ten drugs demonstrate a pattern of large orders of
customers, the former having been Tru-Valu dispensed was a controlled control [sic] product.’’ Id. at 41. This
terminated on September 3, 2008 and substance; these included alprazolam 2 form, which is dated ‘‘1–9–09,’’ noted
the latter on April 3, 2009. RX 62A, at mg (27,268 du), methadone 10 mg that Tru-Valu had requested an increase
3; RX 62E, at 2. (11,848 du), and Endocet (oxycodone) in its oxycodone purchases. Id. The
Apparently seeking an increase in the 10/325 mg (6,976 du). Id. form, which apparently reflected
amount of oxycodone it could purchase, While Tru-Valu’s October 2009 UR information the pharmacy provided in a
on May 22, 2008, Tru-Valu provided showed a decline in its dispensings of phone survey, noted that Tru-Valu’s
Respondent with a utilization report for oxycodone 30 mg to a total of 83,830 du daily script average was 200, that 50
April 2008 which listed and ranked the out of its total dispensings of percent of the prescriptions were for
top 300 prescription drugs (both the approximately 167,000 du, id. at 51, 58; controlled drugs, and that 25 percent of
controlled and non-controlled) it its February 2010 UR showed that in the prescriptions were schedule II
dispensed by the quantity.25 RX 2A, at just these four months, its dispensings drugs. Id. The form also noted that 25
70–76. The report showed that of oxycodone 30 had more than doubled percent of the prescriptions were paid
to 192,110 du.27 Id. at 47. The UR also for by insurance. Id.
25 Twelve days before the site visit, Tru-Valu had The form further noted various
requested an increase in the quantity of solid dose procedures employed by the pharmacy.
26 These were not the only controlled substances
oxycodone it could purchase from Respondent.
According to the form, which appears to have been listed on the report. The report lists additional
completed by an account manager, Tru-Valu was dispensings of oxycodone 30 mg under different During the cross-examination of the DI,
using 750 bottles per month and the account drug codes, likely because the products were Respondent’s counsel pointed out that some of the
manager sought an exemption from Respondent’s manufactured by a company other than the URs only listed the top 200 or 300 drugs that were
sales limit on the basis that it qualified as a ‘‘[l]arge manufacturer whose products comprised the bulk dispensed. However, Respondent’s Policy 6.2
full line pharmacy.’’ RX 2A, at 93. of Tru-Valu’s dispensings. See id. at 70 (also directed that it obtain ‘‘[a] current utilization report,
According to the file, Respondent obtained a showing at line 28, dispensing of 540 Roxicodone listing all of the pharmaceuticals’’ (including both
utilization report that listed only controlled 30; at line 43, 360 oxycodone 30; at line 44, 354 controlled and non-controlled), dispensed by the
substances and then requested a report which oxycodone 40 mg). pharmacy ‘‘in the most recent calendar month.’’
included non-controlled drugs as well. The form 27 The Feb. 2010 UR listed the top 200 drugs and 28 The July 2010 UR listed 377 line items of
bears the notations: ‘‘Approved 25k/mo’’ and ‘‘6/4/ total dispensing of approximately 321,400 dosage dispensings down to a quantity of one. RX 2A, at
08.’’ Id. units. RX 2A, at 47. 36.
For example, to prevent doctor In February 2010, Tru-Valu again Respondent failed to comply with its
shopping, the pharmacy stated that it submitted orders in excess of the 25,000 policy by verifying the reason for the
did not fill prescriptions if patients du threshold. According to increase in the orders. Moreover, this
changed doctors and that it kept a list Respondent’s records, Mr. Schulze, a order was not reported as suspicious.
of where patients were getting scripts; as compliance clerk, called Tru-Valu and In April 2010, Tru-Valu did not place
to how the pharmacy ensured that the spoke with its pharmacist-in-charge any orders until April 27, when it
prescribers were exercising proper about the oxycodone order. RX 2A, at 9. ordered a total of 36,000 oxycodone 30
standards of care, the pharmacy replied The pharmacist in charge reported that and 12,000 oxycodone 15. GX 15, at
that ‘‘they set limits on what they fill an Albertson’s (a supermarket) had 112; GX 10F, at 1–2. While the orders
and they watch there [sic] patients very ‘‘closed by him’’ and that he was were held for review by the SOMS
careful [sic] and never do early refill. ‘‘getting some of [its] business.’’ Id. (either because of frequency or pattern),
They also don’t fill for some docs.’’ Id. However, even though Respondent’s because the orders were under the
at 42. Policy 6.2 required that the pharmacist’s previous month’s total of 55,200,
With respect to whether it had ever explanation then be independently Respondent did not deem the order to
refused to fill a prescription (to which verified, there is no documentation to be excessive and filled the orders. GX
the pharmacy’s answers was ‘‘yes, every support that this was done. Moreover, 15, at 112 (SOMS notes). Respondent
day’’), the pharmacy reported that the while the SOMS note for this order did not, however, contact the pharmacy
most common reasons were ‘‘early states: ‘‘Ship with reservation UR and obtain an explanation for the order,
refill[s],’’ if the patients were ‘‘under supports Oxy order reviewed by JEN,’’ which it independently verified.
21,’’ if patients lived ‘‘out of area,’’ or GX 15, at 111; Respondent did not On May 10, Tru-Valu ordered 12,000
if it did not fill for a doctor. Id. As for obtain a new UR for ‘‘the most recent du of oxycodone 30. GX 10F, at 1. A
whether the pharmacy had ever calendar month’’ as required by its notation in the SOMS Notes states: ‘‘Ok
‘‘stopp[ed] filling prescriptions for a Policy 6.2, and had last obtained a UR to ship first monthly purchase of Oxy
certain physician,’’ the pharmacy in October 2009. Notwithstanding its leaves 13k.’’ GX 15, at 112. Additional
reported that it had when it was ‘‘not failure to comply with its policy, during SOMS notes dated May 13 and 14
comfortable with there [sic] prescribing February 2010, Respondent shipped indicate that Tru-Valu placed additional
license.’’ Id. The pharmacy also stated Tru-Valu 39,600 dosage units of orders on these dates and a notation
that it did not fill prescriptions written oxycodone 30 mg and 7,200 dosage made on the latter date states: ‘‘RWR do
by out-of-state and out-of-area doctors units of oxycodone 15 mg for a total of nto [sic] ship over 25k without review
and that if it got a prescription from a 46,800 du. GX 10F, at 1–2. Although the by committee see mas and mfr.’’ Id.
new doctor, it would call the DEA and orders exceeded the CSL by nearly As for the MFR, it contains a
check the license, and that it 22,000 du, Respondent did not report handwritten note (of marginal legibility)
‘‘belong[ed] to a network of pharmacies any of the orders as suspicious. dated May 14, which states ‘‘increase on
that warn each other.’’ Id. Finally, the Even assuming that this figure became oxy—why orders increasing’’ and that
form noted that Tru-Valu had been the new CSL for Tru-Valu’s oxycodone Tru-Valu’s pharmacist had stated that
asked to submit its most recent orders (notwithstanding Respondent’s H.D. Smith (another distributor) had
pharmacy inspection report; a UR, failure to verify the legitimacy of the ‘‘cut back 60–70k’’ and from ‘‘40 bottles
which ‘‘should include all controls and order), in March 2010, Tru-Valu again to 8 bottles’’ a day, as well as a note that
non-controls’’; and any written policies ordered in excess of the CSL. According ‘‘Started to cut back in March/Feb?’’ RX
and procedures for controlled to an entry dated March 15, 2010 in the 2A, at 7. The MFR note then states that
substances. Id. at 43. Memo for Records, compliance Tru-Valu had ‘‘purchased 120 bottles on
Tru-Valu’s controlled substance limit ‘‘requested UR for file to support this. 5–10–10’’ and that there was a ‘‘change
(the SOMS trigger) for oxycodone was Need site visit. RWR [release with in buy[ing] patterns due to HD Smith
initially set at 25,000 dosage units and, reservation] until site visit completed.’’ dropping allocation.’’ Id. The entry
according to the SOMS notes, remained RX 2A, at 9. The Memo for Records continues with the following notation:
at this level through January 2010. Id. at includes a further note on this date ‘‘RWR 120 bottles of oxy under CSL of
93; see also GX 15, at 111 (SOMS Notes stating: ‘‘Increase in Business Due to 25 k. Don’t ship over 25 k w/out rev @
of 10/27/09: ‘‘Ok to ship . . . oxy @ Albertson’s Closing.’’ Id. However, 61k rolling 30 high due to pattern
limit 25k with this order’’ and Jan. 29, while a UR was obtained for the month change due to allocation decreasing
2010—‘‘ok to ship, under the CSL of of February 2010, it was not obtained from wholesaler.’’ Id.
25k’’). However, in November 2009, until April 1, 2010. Id.; see also id. at However, here again, while the SOMS
Respondent filled orders totaling 26,200 47. Once again, there is no evidence that had placed the order on compliance
du of oxycodone products, which Respondent independently verified that hold, there is no evidence that
included 1,200 du of oxycodone 80; the Albertson’s had closed. See Respondent’s compliance department
9,600 du of oxycodone 30; 14,400 du of generally RX 2A. Respondent independently verified Tru-Valu’s claim
oxycodone 15; and 1,000 du of nonetheless shipped to Tru-Valu 43,200 that H.D. Smith had reduced its
oxycodone 10/325. GX 10F, at 1–2. All du of oxycodone 30 and 12,000 du of allocation to the pharmacy. Nor did
but 3,600 du were ordered on the last oxycodone 15 for a total of 55,200 du. Respondent obtain a new UR. Moreover,
day of the month. Id. at 1–2. While these GX 10F, at 1–2. three days later (May 17), Respondent
orders placed Tru-Valu over the 25,000 An MFR entry dated March 31, 2010, filled an additional order and shipped
CSL, the SOMS notes do not contain the states: ‘‘Called to mention Oxy 15 need 12,000 du of oxycodone 30 to Tru-Valu.
name of a reviewer or an explanation for to be deleted. Pharmacy closed.’’ RX 2A, GX 10F.

why the orders were shipped. GX 15, at at 9. While there is no evidence On May 18, Tru-Valu apparently
111.29 establishing the size of the oxycodone placed a further order. GX 15, at 112.
15 order, as explained above, even According to the Memo for Records, the
29 The actual oxycodone orders placed by Tru-
assuming that the CSL had been raised order was ‘‘deleted due to past 30 days
Valu (as opposed to the amount shipped) are not to 46,800 as a result of Tru-Valu’s @73k.’’ RX 2A, at 7. Continuing, the
in the record. However, various entries in the Memo
for Records and SOMS notes include notations as February orders, its March orders again entry states: ‘‘Can place order after 5–
to the size of various orders. exceeded the CSL. Yet, here again, 27–10 Committee Rev.’’ Id. However,
while the order again placed Tru-Valu to the effect: ‘‘release with reservation ‘‘Oxy CSL is @ 33,600 do not go over
well over its CSL, the order was not per committee.’’ GX 15, at 112. Here this amount w/o review.’’ RX 2A, at 2.
reported to DEA as suspicious.30 again, while the orders exceeded the Even assuming that Tru-Valu’s
On May 27, Tru-Valu placed CSL as determined by the committee, oxycodone CSL had been raised to
additional orders for both oxycodone 30 there is no evidence that Tru-Valu was 33,600 du (and excluding the deleted
and 15. GX 10F, at 1–2. According to the contacted after it placed the June 15 June 30 order and the amount deleted
Memo for Records, Tru-Valu requested order for 12,000 oxycodone 30. Nor did from the July 1 order), Tru-Valu’s July
12,000 du of oxycodone 15 in addition Respondent obtain a new UR. And 2010 orders still totaled 46,800 du and
to 24,000 du of oxycodone 30. RX 2A, Respondent did not report the orders as thus exceeded the CSL. Yet Respondent
at 7. The Memo for Record further suspicious. again failed to obtain an explanation
includes an illegible word (or two) According to an email train, on June from Tru-Valu for why it was ordering
followed by the words ‘‘allotment 21, Tru-Valu placed an additional order the quantities that it was, and obviously,
55,200—Current size in Soms is @24 k/ for 120 bottles of oxycodone 30. RX 95, having failed to obtain an explanation,
can get 31,200 for current period.’’ Id. at 2. Here again, this order placed Tru- there was nothing to independently
Further notations on the same day Valu’s orders over its oxycodone CSL. verify. Nor did Respondent obtain a new
indicate that Respondent talked to the While the order was cancelled, UR. And it failed to report the order as
pharmacist and that he requested that apparently at the request of the PIC suspicious.
72 bottles (of 100 du each) ‘‘be sent from because insurance paid less than On August 2, Tru-Valu ordered and
the Oxy 15’s of 120.0 requested,’’ id., Respondent’s price, id. at 1–2, it was not Respondent shipped to it 25,200 du of
and other evidence shows that reported as suspicious even though it oxycodone 30 and 1,200 du of
Respondent shipped 24,000 du of placed Tru-Valu’s orders over its CSL. oxycodone 15. GX 10F. The same day,
oxycodone 30 and 7,200 du of Still later that month, the Memo for Respondent obtained a UR for the
oxycodone 15 to Tru-Valu on this date. Records includes a note for June 30, month of July, and on August 6, its
GX 10F, at 1–2. with the entry: ‘‘order deleted placed inspector conducted a site visit. RX 2A,
Thus, during May, Respondent had too early[.] See SOMs review of last 30 at 2.
shipped 65,200 du of oxycodone to Tru- days.’’ RX 2A, at 2. Here again, even According to the site visit report, Tru-
Valu; it had also deleted the May 18 assuming that Respondent contacted Valu was a retail community pharmacy
order, the size of which is unknown, Tru-Valu regarding this order before filling 200 prescriptions per day, of
and edited 4,800 du off the May 27 deleting it, there is no documentation as which 60 to 80 percent were controlled
order. Yet even though the orders to what the pharmacist may have told substances and ‘‘60% of total’’ were
clearly exceeded the CSL and Respondent as to why he placed the schedule II drugs. RX 2A, at 12, 18. Tru-
Respondent had never verified Tru- order, and a new UR was not obtained. Valu reported that H.D. Smith was its
Valu’s explanation, it did not report the Tru-Valu apparently resubmitted the primary wholesaler and that
orders as suspicious. order the following day (July 1), as Amerisource and Respondent were its
A note in the Memo for Records dated Respondent shipped to it 13,200 du of secondary wholesalers. Id. at 18. While
June 2, 2010, states that ‘‘this account to oxycodone 30. GX 10F, at 1. After Respondent’s inspector noted that Tru-
be reviewed @25 Do not ship over 25 w/ noting ‘‘RWR’’ (release with Valu appeared to have ‘‘a full selection
out committee review. . . . order on 5– reservation), the SOMS note states: of pharmaceuticals’’ and an ‘‘extensive
27 was released w/out review by ‘‘order for 132.0 bottles from 288 per selection of front store merchandise,’’ he
committee/management this was a may-30 on the pattern high of 46,800 also wrote that the pharmacy was ‘‘very
mistake the account can not [sic] receive rest of order can be resubmitted for busy’’ with a ‘‘long line of mostly
any more.’’ Id. The Memo for Records review after 7/15/10.’’ GX 15, at 112. younger people’’ who were ‘‘thin,
includes a notation that the committee However, on shipping the 132 bottles, tattooed, casually dressed,’’ and that
conducted its review the next day and Respondent had shipped 46,800 du of there were ‘‘10 people’’ and ‘‘more
determined that ‘‘25k is place for oxycodone on a rolling 30-day basis and coming in.’’ Id. at 19. The inspector
review.’’ Id. The notes also indicate that Tru-Valu’s orders totaled 62,400 du. noted the time of his report as 2:44 p.m.
Tru-Valu was contacted and told that Even assuming that the CSL was raised Id.
‘‘the account has received over to 33,600 du from the 25,000 du level The inspector further documented
allotment mistake both months’’ (discussed in the notes for the June 3rd that the pharmacy had posted signs
followed by illegible writing. Id. committee review) based on Tru-Valu’s stating ‘‘No insurance for: Oxycontin,
Notwithstanding the above entry, June orders, there is no documentation oxy solution, [and] oxycodone by
Respondent shipped 12,000 du of that Respondent contacted Tru-Valu to Mallinckrodt, Actavis.’’ Id. at 20. The
oxycodone 30 and 9600 du of obtain an explanation for the increase in pharmacist on duty had only worked at
oxycodone 15 to Tru-Valu on June 9, its orders or that it verified Tru-Valu’s Tru-Valu for two months and did not
followed by an additional 12,000 du of previous assertion that H.D. Smith had know why the signs were posted. Id.
oxycodone 30 on June 15, for a total of reduced its allocation. Nor did it obtain According to an MFR note, several
33,600 du. GX 10F, at 1–2. The SOMS a new UR. And it did not report the weeks later, a member of Respondent’s
notes for both orders include notations orders as suspicious. compliance department spoke with Tru-
On July 15, 2010, Tru-Valu apparently Valu’s PIC, who stated that insurance
30 According to the SOMS Appendix, ‘‘[t]o resubmitted the rest of its order as did not reimburse at ‘‘high enough’’ rate
determine if an order . . . is invalid for size, the Respondent shipped 20,400 du of ‘‘to make up for the expense.’’ Id.; see
system calculates the total number of doses oxycodone 30 to it. GX 10F, at 1. The also RX 2A, at 2. The inspector also
invoiced in the past 30 days plus the total doses on
open orders plus the number of doses on the corresponding note states: ‘‘ok to ship a observed signs stating that there was a
received order and compares it to the monthly total of 204 Oxy,31 order was edited ‘‘pill limit’’ of 180 du on oxycodone 30
limit.’’ RX 78, at 60. While this suggests that from 336 to 204 to meet csl of 33600.’’ and 90 du on oxycodone 15, as well as
quantities that were edited downwards or deleted GX 15, at 112. Moreover, a note in the a sign stating: ‘‘must have recent MRI
from an order were not counted in evaluating a new
order, it also suggests that the entire quantity of a Memo for Records for this date states: report.’’ Id. However, in contrast to the
new order was to be considered in determining questions about whether Tru-Valu
whether a new order exceeded the CSL. 31 This is a reference to 100 du bottles. accepted insurance on oxycodone
prescriptions, there is no evidence that Respondent did not, however, obtain an The order was not reported as
Respondent asked about the pill-limit explanation as to why Tru-Valu was suspicious.
signs or the MRI requirement. running out of oxycodone product. A SOMS note of October 13, 2010 for
A note in the margin next to the Additional notes for this date indicate an order placed the previous day states:
August 2 MFR entry, which is dated that an account review was conducted, ‘‘order reviewed edited to 60 bottles to
August 16, states that an order, the size during which the compliance committee keep mfr csl of 46800.’’ Id. Yet on filling
of which is unclear, was deleted ‘‘per and Wayne Corona reviewed the site the October 13 order, Respondent had
review until [the] review completed.’’ visit, the UR, and information about actually shipped 64,800 du on a rolling
RX 2A, at 2. However, the order was not Tru-Valu’s Web site.33 Id. at 3. The MFR 30-day basis. Here again, while Tru-
reported as suspicious. notes indicate that Corona directed that Valu’s filled orders exceeded the CSL by
While no additional oxycodone orders Tru-Valu be approved to increase its 18,000 du, there is no evidence that
were filled during August, on oxycodone purchases up ‘‘to the pattern Respondent contacted Tru-Valu’s PIC
September 1, Respondent shipped to high of 46800 over the last 12 months.’’ and asked why he was ordering in
Tru-Valu 24,000 du of oxycodone 30 Id. at 2. Additional notes cryptically excess of this amount.35
and 2,400 du of oxycodone 15. GX 10F. state: ‘‘to pattern high of 46,800 less On November 1, 2010, Tru-Valu
An MFR note of the same date states: than 70% of UR 34 on fill with current placed orders, which Respondent filled,
‘‘under compliance for [illegible] of site allotment from Masters taken into for 24,000 du of oxycodone 30 and
visit.’’ RX 2A, at 2. A second entry of consideration 46,800 42% of UR.’’ Id. at 2,400 du oxycodone 15. GX 10F, at 2.
the same date memorializes a discussion 3. Respondent then approved the Thereafter, on November 8, Tru-Valu
with Tru-Valu’s PIC regarding why he shipment of an additional 13,200 du of placed additional orders, which
did not accept insurance on oxycodone oxycodone 30 to Tru-Valu. See id. at Respondent filled, for 14,400 du of
with the further notation of ‘‘RWR 2–3; GX 10F, at 1. oxycodone 30. Id. A note dated
Orders pending.’’ Id. However, there is Apparently, because Respondent had November 9 states: ‘‘CH Review
no evidence that Respondent questioned edited 19,200 du off the order Tru-Valu Business Model Re-Review’’ followed
Tru-Valu’s PIC about the other had placed the day before, the new by the initials of JS. RX 2A, at 1. Notes
observations recorded by its inspector, order did not place Tru-Valu’s orders dated November 10 state that the
including the signs imposing pill limits over the new CSL of 46,800 du. Tru- account was ‘‘placed in non-control
on oxycodone and requiring that the Valu’s file offers no explanation for why status permanently’’ and that the
patients have a recent MRI, or the long Corona disregarded the information as ‘‘account has been monitored closely on
line of mostly younger people who were to the highly suspicious circumstances and off [compliance hold] monitoring
apparently filling their prescriptions documented in the recent site visit business model’’ and that ‘‘the account
and doing so in the middle of the report and the most recent UR. As for was reviewed by’’ the compliance
afternoon. committee, apparently after Respondent
the latter, it showed that 18 of the top
On September 21, Respondent received a letter from Mallinckrodt (a
20 drugs being dispensed were
shipped 7,200 du of oxycodone 30 mg. manufacturer) raising ‘‘concerns on the
controlled substances, including 11
GX 10F, at 1. The SOMS note for this account.’’ Id. An entry for the following
oxycodone products, three alprazolam
dates states: ‘‘oxy edited for csl on day states that Tru-Valu was getting
products, two diazepam products,
product.’’ GX 15, at 113. Likewise, the ‘‘rebates’’ from a ‘‘buying group’’ and
methadone, and dilaudid. Moreover,
MFR notes include the notation ‘‘RWR’’ that Ms. Seiple told the PIC that it was
Tru-Valu’s dispensings of oxycodone 30
and the statements: ‘‘order edited from on non-controlled status. Id; see also GX
mg products alone totaled 206,132 du
15, at 109.
264—72 per SOMS’’ and ‘‘Do not release and its dispensings of oxycodone 15 There is no evidence that Respondent
any more product [illegible] reservations totaled 32,441 du. RX 2A, at 29–34. filled any more controlled substances
addressed.’’ RX 2A, at 2. Here again, Thus, out of its total dispensings of thereafter. However, none of Tru-Valu’s
Tru-Valu’s orders had totaled 52,800 du 337,314 du, Tru-Valu’s dispensings of orders were ever reported as suspicious.
and exceeded the CSL, yet Respondent oxycodone 30 alone comprised 61 In her declaration, Ms. Seiple asserted
did not contact the pharmacy to obtain percent of its dispensings of all that Tru-Valu’s PIC explained that its
an explanation for the order and a new prescription products, and its ‘‘business model included active
UR. Nor did it report the order as dispensings of both the 30 and 15 marketing to various nearby pain
suspicious. milligram dosages (which totaled clinics,’’ and that he ‘‘provided the
The next day, Respondent shipped an 238,603 du) comprised nearly 71 names and DEA . . . numbers of the
additional 13,200 du of oxycodone 30 to percent of its total dispensings. doctors writing prescriptions for
Tru-Valu. GX 10F. According to the On October 1, 5, and 13, Respondent patients of those clinics.’’ RX 103, at 39.
MFR notes, on this day, Respondent filled orders for oxycodone 30 in the She then offered the conclusory
contacted Tru-Valu’s PIC to discuss the amounts of 24,000 du, 14,400 du, and assertion that ‘‘[t]hese marketing efforts
edit of his order and asked him if he got 6,000 du respectively; on October 1, it accounted for the volume of pain
a lot of out-of-state customers. RX 2A, also filled an order for 2,400 du of medications being dispensed, and the
at 2. According to the notes, the PIC oxycodone 15. GX 10F, at 2. Upon percentage of oxycodone dispensed
said: ‘‘not any more since we stopped filling the October 5 order, Respondent relative to other drugs.’’ Id.
filling out of state scripts about a year had shipped 58,800 du on a rolling 30-
ago.’’ Id. Tru-Valu’s PIC stated that he day basis, thus exceeding the CSL of 35 The records show that several weeks later,
‘‘runs out of product’’ and ‘‘only fills for 46,800 du. Yet the only notation in the Respondent contacted Tru-Valu’s PIC in response to
regulars,’’ followed by the words ‘‘in SOMS notes is ‘‘RWR.’’ GX 15, at 113. his having placed orders for morphine and
state customers w/Florida ID’’ which is methadone for the ‘‘first time . . . since 2009.’’ RX
2A, at 1. The PIC stated that he ordered the drugs
in clearly different handwriting.32 Id. after the initials of Mr. Corona and the words ‘‘No from Respondent because it had cheaper prices and
Servicing Out of State.’’ RX2A, at 2. Respondent obtained a new UR for the month of
32 It is noted that the words ‘‘a couple’’ are 33 There is no evidence that Tru-Valu was using
September 2010. Id. No explanation was offered as
written in the date column immediately preceding its Web site to distribute controlled substances. to why similar inquiries were not documented
the words ‘‘a year ago’’ in the notes area of the MFR 34 A note on the previous page states: ‘‘within following the October 12 oxycodone order that took
form, suggesting that these words were inserted parameters 70%.’’ RX 2A, at 2. Tru-Valu over its limit.
Ms. Seiple further asserted that cards’’ from some patients who actually more than one year), none of the
‘‘[a]fter Tru-Valu’s account was did not ‘‘have current valid insurance exemptions was checked. Id.
approved, [Respondent’s] SOMS system coverage’’ and ‘‘was concerned that if The Due Diligence Report noted that
identified and held any order for [he] submitted invalid claims, it would The Drug Shoppe had a daily script
controlled substances placed by Tru- jeopardize [his] relationship with average of 150, that 40 percent of the
Valu that deviated from its typical insurers.’’ Id. According to Ms. Seiple, prescriptions were for controlled
volume, pattern or frequency. All such the PIC stated that ‘‘he placed the sign substances, that 20 percent of the
orders were released only after review to try and limit the number of new prescriptions were for schedule II drugs,
by [Respondent’s] Compliance patients who attempted to use and that 70 percent of the prescriptions
Department’’ and that ‘‘[o]n some insurance’’ for oxycodone but that he were paid by insurance. Id. at 126. The
occasions, the Compliance Department did accept insurance for oxycodone Report also stated that The Drug Shoppe
would request Tru-Valu to provide a UR from those patients he knew had valid prevented doctor shopping by verifying
as part of its review of orders that had insurance. Id. prescriptions and that its PIC knew
been held.’’ Id. Ms. Seiple’s statement is Yet this story was inconsistent with ‘‘most of his patients,’’ that its PIC knew
misleading because the SOMS was not the PIC’s previous explanation that the the doctors and that ‘‘most are
even in operation until August 2009. reason for the sign was that insurance anesthesiologists,’’ and that it was
Ms. Seiple further asserted that ‘‘[a]s did not pay enough. And even if the located ‘‘next to [sic] hospital.’’ Id.
a result of our ongoing due diligence, PIC’s subsequent explanation was true, According to the form, the PIC had
[Respondent] was aware of the volume Ms. Seiple did not address why she did refused to fill a prescription for several
of oxycodone and other controlled drugs not find it concerning that the inspector reasons, including that a prescription
being dispensed by Tru-Valu, and the had reported that the pharmacy had also was for ‘‘too high Qtys.’’ Id. at 127.36
percentage of controlled drugs posted signs stating that there was a pill
dispensed relative to other drugs. limit of 180 du of oxycodone 30 (and 90 On April 15, 2008, the Account
[Respondent] specifically investigated du of oxycodone 15) and that the Manager completed a second Drug Limit
the reason why Tru-Valu’s ordering and patients ‘‘must have a recent MRI Increase Request, again indicating that
dispensings patterns were as indicated report.’’ Nor did Ms. Seiple address why The Drug Shoppe was seeking an
on the UR’s.’’ Id. at 40. She then she did not find it concerning that the increase in solid dose oxycodone, solid
asserted that ‘‘[t]he UR’s and other inspector found the pharmacy was dose hydrocodone, and alprazolam. Id.
information provided by Tru-Valu were ‘‘very busy’’ with ‘‘a long line of mostly at 119. A note on this form indicates
consistent with the pharmacy’s business younger people’’ who were ‘‘thin, that Respondent had ‘‘already received’’
model as explained by [its PIC] and tattooed, [and] casually dressed.’’ a UR for ‘‘all items . . . they fill.’’ Id.
confirmed in the May 2008 site Notably, even after the concerns raised The UR, which covered the month of
inspection. Tru-Valu appeared to be a during this site visit, Respondent February 2008, showed that The Drug
full line pharmacy that was dispensing continued filling Tru-Valu’s orders for Shoppe dispensed 181 prescriptions
a large of variety of both controlled and another three months and did not report totaling 38,689 du of oxycodone 30, for
non-controlled drugs, and that serviced a single order to DEA as suspicious. an average quantity of 214 du per
the patients of several nearby pain prescription.37 Id. at 214–15. It also
The Drug Shoppe showed that the pharmacy had
management physicians.’’ Id.
However, Tru-Valu had provided the According to Respondent’s due dispensed 43 prescriptions totaling
names of only five pain management diligence file, The Drug Shoppe is a 8,239 du of oxycodone 15, for an
physicians. Moreover, while it retail or community pharmacy located average quantity of 192 du per
dispensed a variety of non-controlled in Tampa, Florida. RX 2B, at 27, 126. prescription. The Drug Shoppe
drugs, Ms. Seiple did not refute the DI’s While it is unclear when The Drug dispensed more than 56,600 du of
contention that ‘‘oxycodone 30 [was] Shoppe first began purchasing oxycodone products (including
being dispensed in significantly larger controlled substances from Respondent, Endocet) out of its dispensings of all
volume than any other drug; [that] the the due diligence file includes a Dunn prescription products, which totaled
majority of the top 20 drugs dispensed and Bradstreet Report dated March 28, 165,068 du. Id. at 209, 214–15, 218.
are controlled substances; [and that 2008, along with printouts of the same The next day, Matt Harmon sent an
there was] an absence of more date showing that Respondent verified email to The Drug Shoppe informing it
commonly dispensed drugs by a retail that it had a valid Florida pharmacy that Respondent had reviewed its
pharmacy.’’ GX 49B, at 20–21. license and DEA registration, and that account and was increasing its
Ms. Seiple further asserted that its PIC had a valid pharmacist’s license. ‘‘purchase limit of Oxycodone solid
‘‘[b]ased on [Respondent’s] extensive Id. at 121–39. dose products to 25,000 doses (pills) per
investigation, it determined that the The file also includes a Schedule calendar month.’’ Id. at 219. While
orders it shipped to Tru-Valu were not Drug Limit Increase Request Form dated Respondent held off on The Drug
suspicious.’’ RX 103, at 41. Yet, as March 28, 2008 and a Due Diligence Shoppe’s requests to increase its
found above, Respondent repeatedly Report Form dated Mar 31, 2008. Id. at hydrocodone and alprazolam purchases,
failed to comply with its policies and 120, 126–27. The Drug Limit Increase it approved the oxycodone increase
procedures when reviewing those orders form shows that The Drug Shoppe was before it had even inspected the
that were held. seeking an increase in solid dose pharmacy.
Finally, Ms. Seiple declared that she oxycodone and noted that its monthly
was concerned that during the August 6, usage in February and March was ‘‘323– 36 The Drug Shoppe’s PIC also stated that he did
2010 site visit, Respondent’s inspector 192.’’ Id. at 120. The form also includes not fill if a refill was ‘‘too early,’’ if he did not know
had observed a sign stating that Tru- the notation: ‘‘CSOS Report Over the doctor and could not get hold of the doctor, and
Valu did not accept insurance for Limit.’’ Id. While the form includes a if a patient ‘‘ha[d] been to too many docs.’’ RX 2B,
oxycodone products manufactured by section in which the account manager at 127. He also represented that he checked the
doctor’s license, and if a doctor was ‘‘more than 20
Mallinckrodt or Actavis. Id. Ms. Seiple could check various exemptions that a miles away [he] will visit, call or not fill.’’ Id.
stated that the PIC explained that customer could qualify for, such as its 37 This total includes a 240 du prescription for
because he ‘‘had received insurance having been a long-term customer (i.e., Roxicodone 30 mg, a branded drug. RX 2B, at 215.
On April 28, 2008, Respondent’s to The Drug Shoppe did not exceed the Although the SOMS was supposed to
consultant conducted a site visit and 50,000 du purchasing limit, in July it place an order on hold even if it
determined that the pharmacy was a shipped 60,000 du of oxycodone 30; exceeded the CSL by a single dosage
compounding pharmacy. Id. at 27. 1,000 du of Endocet 10; and 1,000 du of unit and thus trigger the requirements
While the pharmacy reported that it did Endocet 5 for a total of 62,000 du. See that the Compliance Department obtain
not engage in internet business, it id. The Drug Shoppe’s due diligence file an explanation for the order, which was
acknowledged filling prescriptions for contains no explanation for why it was independently verified, as well as that
five pain management doctors, whose allowed to exceed the purported it obtain a new UR, the only notation in
names were listed on the evaluation purchasing limit. Respondent’s file states: ‘‘ok to ship
form; however, there is no evidence that On or about July 14, 2009, within current limit.’’ GX 16, at 234.
Respondent verified that these Respondent obtained a new UR from An entry dated August 20, 2009 in the
physicians were properly licensed and The Drug Shoppe, which covered the Memo for Records notes: ‘‘order deleted
registered, let alone whether they held period of May 14 through July 14, 2009. over current limit compliance review[.]
any specialty training or board Id. at 148–204. Oxycodone 30 mg was Hold for review.’’ RX 2B, at 4. A
certification in pain management. Id. at the number one drug dispensed. Id. at subsequent entry for the same day
27–30. 148. Indeed, the UR showed that The states: ‘‘Requested Review of Disc Docs
According to the report, the pharmacy Drug Shoppe had dispensed 595 and File.’’ Id.
did not service nursing homes, hospice prescriptions of oxycodone 30 totaling The next day, Respondent shipped
programs, or inpatient facilities. Id. at 105,570 du, for an average of 52,785 du 19,500 du of oxycodone 30 to the Drug
29. The pharmacy reported that it filled per month and an average prescription Shoppe. GX 10F, at 29. Of note, on a
100 prescriptions per day, of which 50 size of 177 du. Id. at 148 & 161. While rolling 30-day basis, The Drug Shoppe’s
percent were for controlled substances, The Drug Shoppe dispensed only 54 orders totaled 74,000 du of oxycodone,
and that cash and insurance each oxycodone 15 prescriptions totaling with 72,500 du being for 30 mg
comprised 50 percent of the payments it 9,360 du (an average of 4,680 per tablets.41
received. Id. month), the average prescription size An MFR entry of the same date states:
Respondent’s consultant reported that was 173 du. Id. at 149–50. Including all ‘‘Request Update Survey,’’ ‘‘U/R Looks
The Drug Shoppe ‘‘appears to be a very formulations of oxycodone, Respondent Strong + Voluminous,’’ ‘‘OK TO
professionally run pharmacy,’’ which dispensed more than 136,400 du or 62,000—oxy family,’’ ‘‘HIV,’’ ‘‘Large #
took ‘‘exceptional care in secure storage 68,200 du per month.39 RX’s For HIV Disease State,’’
of [its] controlled substances A Ship to Memo note dated July 28, ‘‘Methadone Ok’d @10k.’’ RX 2B, at 4.
inventory.’’ Id. at 30. The consultant 2009 states: ‘‘increase accepted from 50k Unexplained is how it was ‘‘ok to
further noted the PIC’s complaint that to 62k on oxy.’’ GX 16, at 221. There is, 62,000’’ when, with this order, The Drug
he was ‘‘finding it hard to fill some of however, no further documentation Shoppe was over its CSL by more than
the prescriptions presented because of explaining the justification for the 12,000 du. Also, notwithstanding
the limitation placed on the quantities increase. During the month of July 2009, Respondents’ representation (to the DI
he can purchase.’’ Id. at 30–31. The Respondent shipped 60,000 du of only days before) that its policy required
consultant also obtained a copy of the oxycodone 30 as well as 2,000 du of it to independently verify the
pharmacy’s most recent state inspection combination oxycodone products to The information it obtained from its
Drug Shoppe. GX 10F, at 29, 31–33. customers, there is no evidence that
report, which showed no violations. Id.
During August 2009, Respondent Respondent did so with respect to The
at 32.
shipped to The Drug Shoppe a total of Drug Shoppe’s claim that a large
On or about August 14, 2008,
60,500 du of oxycodone 30, as well as number of the prescriptions were for
Respondent approved an increase in
1,000 du of Endocet 10/325 and 500 du HIV patients.42
The Drug Shoppe’s oxycodone
of oxycodone/apap 5 mg. See id. In September 2009, Respondent
purchasing limit from 25,000 to 50,000 However, while the total monthly
du.38 Id. at 115. Notes on a form entitled shipped an additional 62,000 dosage
shipments did not exceed the recently units of oxycodone 30 mg. However, on
‘‘Limit Increase Request Conclusion’’ approved 62,000 du limit, the SOMS
state: ‘‘Previously raised to 25k. Clean each occasion on which the orders were
had gone into effect on August 1 and on shipped, The Drug Shoppe’s orders
license. Satisfactory visit by L. Fisher,’’ several occasions during the month, The
who was Respondent’s consultant. Id. exceeded the 62,000 CSL by a wide
Drug Shoppe’s orders exceeded the CSL
In April 2009, Respondent shipped to on a rolling 30-day basis. 41 The total includes orders for oxycodone 30 in
The Drug Shoppe 43,000 du of For example, on August 13, the following amounts: 12,000 du on July 28; 20,000
oxycodone 30; 10,800 oxycodone 15; Respondent filled an order for 1,000 du du on Aug. 3; 20,000 du on Aug. 7; 1,000 du on
600 du of Endocet 10/650; 600 du of of Endocet 10/325, thus placing The Aug. 10; 19,500 on Aug. 21; it also includes orders
oxycodone/apap 10/325; and 200 du of for 500 du of Endocet 5 on August 6 and 1,000 du
Drug Shoppe’s total of filled orders at of Endocet 10 on Aug. 13. GX 10F, at 29, 32–33.
oxycodone/apap 5/325, for a total of 62,500 du on a rolling 30-day basis.40 42 The file includes a due diligence survey of the
55,200 du. GX 10F, at 29–33. same date. According to the survey, The Drug
Notwithstanding that The Drug 39 As for other formulations, the UR showed that Shoppe reported that it filled 160 prescriptions per
Shoppe’s purchasing limit was still set The Drug Shoppe dispensed 2,843 du of OxyContin day, of which 60 percent were controlled and 40
at 50,000 du for all oxycodone products, 80; 600 du of OxyContin 60; 3,394 du of OxyContin percent were schedule II drugs. RX 2B, at 6. The
40; and 480 du of OxyContin 20. RX 2B, at 148– Drug Shoppe asserted that it declined 20
Respondent’s records contain no 205. It also dispensed 8,886 du of oxycodone/ prescriptions a day, and that in ensuring that the
documentation as to why it was allowed acetaminophen (apap) 10/325; 2,320 du of doctors were exercising proper standards of care, it
to exceed its purchasing limit. oxycodone/apap 10/650; 2,031 du of oxycodone/ looked at the age of its patients, talked to the doctor,
While in both May and June 2009, apap 5/325; and 950 du of oxycodone 5 mg. Id. and asked about the kind of pain and reason. Id.
40 The total includes orders for oxycodone 30 in The Drug Shoppe also asserted that it had stopped
Respondent’s shipments of oxycodone the following amounts and on the following dates: filling prescriptions for a certain physician because
8,000 du on July 16; 12,000 du on July 28; 20,000 the doctor was ‘‘writing too much pain med or staff
38 The document also indicates that Respondent du on Aug. 3; 20,000 du on Aug. 7; 1,000 du on gives run around.’’ Id. However, the size of the
set The Drug Shoppe’s purchasing limit for Aug. 10; it also includes orders for 500 du of oxycodone 30 prescriptions that The Drug Shoppe
hydrocodone and alprazolam at 25,000 du for each Endocet 5 on Aug. 6; and 1,000 du of Endocet 10 was fillings begs the question of what quantity was
drug. RX 2B, at 115. on Aug. 13. GX 10F, at 29, 32–33. ‘‘too much.’’
margin. Specifically, on September 1, Drug Shoppe’s filled orders totaled and extended release oxycodone,49 as
Respondent filled an order for 17,500 du 81,500 du on a rolling 30-day basis.47 A well as 480 du of oxycodone 5mg and
of oxycodone 30, bringing the total of SOMS note of this date states: ‘‘ok to 4,650 du of combination oxycodone
the filled orders to 79,500 du.43 GX 10F, ship at current limit this order is 62k.’’ drugs (including Endocet), for a total of
at 29; 32–33. The only note pertaining GX 16, at 235. Unexplained is how The 80,606 du of oxycodone products. Id. at
to the order is a SOMS note indicating Drug Shoppe’s order placed it at its 77, 142.
that Ms. Seiple released the order, the current limit when its orders exceeded On November 16, Respondent filled
reason being: ‘‘shipping under current the CSL by 19,500 du. And here again, an order for 2,400 du of oxycodone 30;
limit of 175 bottles.’’ GX 16, at 234. there is no evidence that Respondent upon filling the order, Respondent had
Despite the representations Respondent contacted The Drug Shoppe to obtain an shipped 63,900 du of oxycodone on a
made to DEA regarding its policy for explanation for the order and a new UR. rolling 30-day basis, thus placing The
reviewing those orders held by the Nor did it report the order as suspicious. Drug Shoppe’s orders over the CSL.50
SOMS, there is no evidence that it In October, Respondent shipped to GX 10F, at 29. The corresponding SOMS
contacted The Drug Shoppe and The Drug Shoppe 55,200 du of note states: ‘‘ok to ship w/reservation
obtained an explanation for the order oxycodone 30 mg; 3,600 du of oxy within size for period. Current site
and a new UR. Nor did it report the oxycodone 15 mg; 600 oxycodone 20 visit needed.’’ GX 16, at 237. There is,
order as suspicious. mg; and 2,600 du of combination however, no evidence that Respondent
Two days later, Respondent shipped oxycodone products for a total of 62,000 contacted the pharmacy and obtained an
15,000 du of oxycodone 30; with this du. GX 10F, at 29, 31–33. None of the explanation for the order.
shipment, The Drug Shoppe’s filled orders placed The Drug Shoppe over its The next day, Respondent filled
orders totaled 74,500 du on a rolling 30- CSL. orders for 2,400 du of oxycodone 30;
day basis.44 GX 10F, at 29, 32–33. There 2,400 du of oxycodone 15; 1,200 du of
On November 9, Respondent shipped oxycodone 10/325; and 500 du of
are SOMS notes corresponding to two
to The Drug Shoppe 14,400 du of oxycodone 5/325. GX 10F, at 29, 32–33.
orders on this date: The first, entered by
oxycodone 30 and 1,000 du of Upon filling the orders, Respondent had
Ms. Seiple, states: ‘‘shipping with
oxycodone 10/325. Thus, on a rolling shipped 70,400 du of oxycodone to The
reservation review with wayne’’; the
30-day basis, Respondent had filled Drug Shoppe on a rolling 30-day basis,
second, entered by Mr. Schulze, states:
orders totaling 74,700 du.48 again placing its orders over the CSL.51
‘‘ok to ship under current size limit.’’
GX 16, at 234. However, here again, An MFR entry dated November 9 A SOMS note for this date states: ‘‘ok
there is no evidence that Respondent states: ‘‘update UR last on file w 5/09’’ to ship oxy within size for period see
contacted The Drug Shoppe and and ‘‘called to get updated UR.’’ Further mfr.’’ GX 16, at 237; see also RX 2B, at
obtained an explanation for the order notes state: ‘‘Per Jen ship w/reservation’’ 4. (MFR note: ‘‘ok to ship under current
and a new UR. Nor did it report the and ‘‘still need UR for future orders.’’ limit’’). Here again, it is unexplained
order as suspicious. RX 2B, at 4; see also GX 16, at 236 how this order could be deemed to be
On September 8, Respondent shipped (SOMS note: ‘‘Ship update reservation ‘‘within size for period’’ or ‘‘under [the]
another 15,000 du of oxycodone 30; getting an updated ur’’). current limit’’ given Respondent’s
with this shipment, The Drug Shoppe’s The next day, Respondent obtained a representation that the orders were
filled orders totaled 69,000 du on a UR for the month of October 2009. Id.; reviewed on a rolling 30-day basis.
rolling 30-day basis.45 GX 10F, at 29, 32. see also id. at 72–80, 140–146. However, Moreover, here again, there is no
A SOMS note corresponding to this date the UR listed the drugs in alphabetical evidence that Respondent obtained an
indicates that Ms. Seiple approved an order (rather than the drugs by the explanation for these orders from The
order and states: ‘‘ok to ship see UR on quantity dispensed) and did not provide Drug Shoppe. Nor did it report the
miox.’’ 46 GX 16, at 234. Here again, a figure for the pharmacy’s total orders as suspicious.
there is no evidence that Respondent dispensings. See id. Moreover, there is Yet, the next day (Nov. 18),
contacted the pharmacy and obtained an no evidence that Respondent obtained Respondent shipped an additional 3,000
explanation for the order and a new UR. an explanation for the order from The du of oxycodone 30 to The Drug
Nor did it report the order as suspicious. Drug Shoppe. Shoppe, thus bringing its rolling 30-day
On September 16, Respondent total to 73,400 du. GX 10F, at 30. The
As for the UR, it showed that The
shipped another 14,500 du of Drug Shoppe had dispensed 357 49 This included 21 prescriptions totaling 2,078
oxycodone 30; with this shipment, The prescriptions totaling 66,271 du of du of OxyContin 80 mg (for an average quantity of
oxycodone 30 (for an average of 186 du 99 du per Rx), as well as 26 prescriptions totaling
43 This total includes orders for oxycodone 30 in
per prescription) and 33 prescriptions 1,590 du of OxyContin (and oxycodone er) 40 mg.
the following amounts: 20,000 du on Aug. 3; 20,000 50 This total includes orders for oxycodone 30 in
du on Aug. 7; 1,000 du on Aug. 10; 19,500 du on totaling 4,997 du of oxycodone 15 (for
the following amounts: 14,400 du on Oct. 20; 7,200
Aug. 21; it also includes 500 du of Endocet 5 on an average of 151 du per prescriptions). du on Oct. 23; 14,400 du on Nov. 2; 14,400 du on
Aug. 6 and 1,000 du of Endocet 10 on Aug. 13. GX Id. at 141–42. The UR also showed that Nov. 9; 2,400 du on Nov. 12; and 2,400 du on Nov.
10F, at 29, 32–33. The Drug Shoppe had dispensed 4,208 13. It also includes an order for 600 du of
44 This total includes orders for oxycodone 30 in
du of various formulations of OxyContin oxycodone 20 on Oct. 22; an order for 3,600 du of
the following amounts: 20,000 du on Aug. 7; 1,000 oxycodone 15 on Oct. 20; orders for 300 and 800
du on Aug. 10; 19,500 du on Aug. 21; and 17,500 du of Endocet 10 on Oct. 20 and 26; and an order
du on Sept. 1; it also includes 500 du of Endocet 47 This total includes orders for oxycodone 30 in for 1,000 du of oxycodone/apap 10/325 on Nov. 9.
5 on Aug. 6 and 1,000 du of Endocet 10 on Aug. the following amounts: 19,500 du on Aug. 21; GX 10F, at 29, 32–33.
13. GX 10F, at 29, 32–33. 17,500 du on Sept. 1; 15,000 du on Sept. 3; and 51 This total includes orders for oxycodone 30 in
45 This total includes orders for oxycodone 30 in 15,000 du on Sept. 8. the following amounts: 14,400 du on Oct. 20; 7,200
the following amounts: 1,000 du on Aug. 10; 19,500 48 This total includes orders for oxycodone 30 in du on Oct. 23; 14,400 du on Nov. 2; 14,400 du on
du on Aug. 21; 17,500 du on Sept. 1; and 15,000 the following amounts: 18,000 du on Oct. 12; Nov. 9; 2,400 du on Nov. 12; 2,400 du on Nov.13;
du on Sept. 3; it also includes 1,000 du of Endocet 14,400 du on Oct. 20; 7,200 du on Oct. 23; and and 2,400 du on Nov. 16. It also includes an order
10 on Aug. 13. GX 10F, at 29, 32–33. 14,400 du on Nov. 2; it also includes an order for for 600 du of oxycodone 20 on Oct. 22; an order
46 The last four letters of this entry could also be 600 du of oxycodone 20 on Oct. 22; an order for for 3,600 du of oxycodone 15 on Oct. 20; orders for
‘‘mlox.’’ GX 16, at 234. Regardless, Respondent’s 3,600 du of oxycodone 15 on Oct. 20; and orders 300 and 800 du of Endocet 10 on Oct. 20 and 26;
records contain no explanation for what either miox for 300 and 800 du of Endocet 10 on Oct. 20 and and an order for 1,000 du of oxycodone/apap 10/
or mlox means. 26. GX 10F, at 29, 33–33. 325. GX 10F, at 29, 33–33.
corresponding SOMS note states: ‘‘ok to Moreover, the next day, Respondent contacted The Drug Shoppe and
ship, at 43,500 for this month, this order shipped 13,500 du of oxycodone 30 to obtained an explanation for the order.
of 3,000 OXY puts them at their limit for The Drug Shoppe. GX 10F, at 30. On Nor did it obtain a new UR.
the month.’’ GX 16, at 237. filling this order, Respondent had On January 7, Respondent filled
MFR notes state that on November 17, shipped 60,000 du of oxycodone since another order for 9,600 du of oxycodone
2009, the committee reduced The Drug December 3, with the 30 mg dosage 30 (and 100 du of Endodan 4.8/325),
Shoppe’s oxycodone CSL by 25 percent accounting for 58,600 du, and The Drug thus placing The Drug Shoppe’s filled
to 46,500 du. Id. at 3; GX 16, at 221 Shoppe had again exceeded the CSL. GX orders at 69,500 du on a rolling 30-day
(Ship to Memo). However, here again, 10F, at 30, 32–33. The only SOMS note basis. GX 10F, at 30, 34. Here again,
there is no explanation as to why for December 24 does not even appear there are SOMS notes for two orders on
Respondent ignored that The Drug to pertain to the order as it states: ‘‘ok this date, both of which refer to
Shoppe’s orders exceeded the CSL on to ship-hydro @7,700. for period with oxycodone. The first states: ‘‘ok to ship
rolling 30-day basis by nearly 27,000 du this order.’’ GX 16, at 238. Consistent file current this order for Oxy puts them
and failed to obtain an explanation for with the SOMS note, the Government’s @25,200 for Jan.’’ GX 16, at 239. The
the orders. evidence shows that Respondent filled second note states: ‘‘ok to ship-file
While during November 2009, orders for 2,000 du of combination current-oxycodone @15,700. w/this
Respondent limited its shipments of hydrocodone drugs on this date.56 GX order for Jan-frequency @29/31.’’ Id.
oxycodone to 46,500 du,52 in December 10F, at 35. Here again, there is no evidence that
it shipped 58,600 du of oxycodone 30 Even assuming that Respondent relied Respondent contacted The Drug Shoppe
mg, as well as 1,200 du of Endocet 10/ on the explanation it had obtained the and obtained an explanation for the
325 and 200 du of oxycodone/apap 7.5/ day before, the record is devoid of an order. Nor did it obtain a new UR.
325, for a total of 60,000 du. GX 10F, at explanation as to why the CSL was On January 12, Respondent filled
30, 32–33. Indeed, as early as December ignored and the order was shipped. And orders for 500 du of oxycodone 5 and
16, The Drug Shoppe’s orders exceeded here again, Respondent did not obtain a 100 du of oxycodone 7.5/500, thus
the new CSL on a rolling 30-day basis new UR. placing The Drug Shoppe’s filled orders
when Respondent filled an order for On nine occasions during January at 55,700 du on a rolling 30-day basis
12,000 du of oxycodone 30, thus 2010, Respondent filled orders for and above the 46,500 du CSL. GX 10F,
bringing the total filled orders to 51,700 oxycodone products, which repeatedly at 33. A SOMS note dated Jan. 13,
du.53 GX 10F, at 29–33. The SOMS note placed The Drug Shoppe’s orders above which appears to discuss the order,
for this order states: ‘‘ok to ship-file the CSL of 46,500. Indeed, several of states: ‘‘ok to ship under csl for oxy
current-oxy @42200 w/this order.’’ GX these orders even placed The Drug 25,900 as of 1/13/10.’’ 58 Here again,
16, at 238. Here again, there is no Shoppe above the previous CSL of there is no evidence that Respondent
evidence that Respondent contacted the 62,000 du. And as explained below, contacted The Drug Shoppe and
pharmacy and obtained an explanation while on or about January 25, The Drug obtained an explanation for the order.
for the order. Nor did it obtain a UR for Shoppe’s oxycodone CSL was raised to Nor did it obtain a new UR.
the month of November. And it did not 60,000 du, GX 16, at 221; four days On January 13, 2010, Jeffrey Chase, an
report the order as suspicious. later, Respondent filled an order for employee of Respondent, conducted a
An MFR note for Dec. 23 states: site visit at The Drug Shoppe. In
15,000 du of oxycodone,
‘‘Order for 15,500 Oxy 30, already at multiple places on his reports, Mr.
notwithstanding that the order placed
their . . . CSL 46,500[.] Called to let Chase noted that the pharmacy’s
its total shipments on a rolling 30-day
customer know order will be deleted, dispensing ratio of controlled to non-
basis at 75,000 du.
customer said that Rep said their controlled drugs was 40 percent for
More specifically, on January 4,
allotment was at 62,000[.] Said that they controlled drugs and that this was ‘‘a
Respondent filled an order for 6,000 du
will call their sales rep. Spoke to little high.’’ RX 2B, at 21, 24. While Mr.
of oxycodone 30, thus placing The Drug
Laurie.’’ RX 2B, at 3.54 This order placed Chase noted that The Drug Shoppe
Shoppe’s filled orders on a rolling 30-
The Drug Shoppe’s oxycodone orders at ‘‘appears to be a well run pharmacy,’’ he
day basis at 61,200 DU. GX 10F, at 30.
62,000 on a rolling 30-day basis (as well recommended that ‘‘we need a
as on a calendar-month basis) and thus Yet the corresponding SOMS note
merely states ‘‘ok to ship—oxycodone @ utilization report to compare to site
exceeded the CSL.55 Yet Respondent did visit.’’ Id. at 21.
not obtain a new UR. 6k with this order.’’ GX 16, at 238.
The next day, Respondent filled an On January 20, Mr. Corona reviewed
52 The shipments included 41,400 du of order for 9,600 du of oxycodone 30, thus Mr. Chase’s recommendation. Id.
oxycodone 30; 2,400 du of oxycodone 15; 2,200 of placing The Drug Shoppe’s filled orders However, as the evidence shows,
oxycodone/apap 10/325; and 500 du of oxycodone/ at 70,800 du on a rolling 30-day basis. Respondent did not obtain a new UR for
apap 5/325. GX 10F, at 29–33. GX 10F, at 30. While there are SOMS another five months. Nor did it compare
53 The total includes orders for oxycodone 30 of
notes on this date for two orders, one the utilization report it had last obtained
2,400 du on Nov. 17; 3,000 du on Nov. 18; 4,800
du on Dec. 3; 9,600 du on Dec. 8; 7,200 du on Dec. stating ‘‘ok to ship, under the CSL,’’ the with The Drug Shoppe’s representation
10; 7,200 du on Dec. 11; and 12,000 du on Dec. 16. other ‘‘ok to ship, frequency not as to its dispensing ratio, as
It also includes orders filled on Nov. 17 for 2,400 excessive,’’ what is clear 57 is that there recommended by Mr. Chase.
du of oxycodone 15; 500 du of oxycodone 5; and The day after the site visit,
1,200 du of oxycodone 10/325; and orders filled on
is no evidence that Respondent
Dec. 7 for 1,200 du of oxycodone 10/325 and 200
Respondent filled orders for 9,600 du of
oxycodone and 1,000 du of oxycodone
du of oxycodone 7.5/325. GX 10F, at 29–33. on Dec. 10; 7,200 du on Dec. 11; 12,000 du on Dec.
54 A later MFR entry of the same date states: 16; and 4,300 du on Dec. 17; it also includes orders
‘‘Shipped w/reservation W OK. See email from filled on Dec. 7 for 1,200 du of oxycodone 10/325 58 While the dates of the order and the SOMS note
Diane per Wayne.’’ RX 2B, at 3. The due diligence and 200 du of oxycodone 7.5/325. GX 10F, at 29– do not match, this was not unusual. Moreover, The
file does not, however, contain the email and it is 33. Drug Shoppe did not order any oxycodone on
unclear whether this entry applies to this order or 56 There is a SOMS note for December 23, 2009
January 13, see GX 16, at 252 (showing that only
the order for 13,500 du of oxycodone 30 that by Ms. Seiple, which states: ‘‘shipping with non-controlled drugs ordered on this date); and the
shipped the following day. reservation see mfr.’’ GX 16, at 238. total referred to in the SOMS note of 25,900 equals
55 The total includes orders for oxycodone 30 of 57 Neither of the notes identifies the drug that was the total of The Drug Shoppe’s January oxycodone
4,800 du on Dec. 3; 9,600 du on Dec. 8; 7,200 du ordered. See GX 16, at 238. orders through that date.
10/325, thus bringing The Drug further note, none of these documents Drug Shoppe and obtained an
Shoppe’s total of filled orders to 66,300 contain any explanation for why Ms. explanation for the order and a new UR.
du on a rolling 30-day basis. GX 10F, at Seiple approved the increase in the On February 13 (a Saturday), The
30, 32. The SOMS note for the oxycodone CSL. Drug Shoppe placed an order for 12,000
transaction states: ‘‘ok to ship under csl Notwithstanding the purportedly new du of oxycodone 30 and 600 du of
for Oxy 36500 with this order frequency oxycodone limit of 60,000 du, on oxycodone 10/325. GX 16, at 240; GX
not excessive.’’ GX 16, at 239. Of course, January 29, Respondent shipped an 10F, at 30, 32. On filling these orders
the order was not under the CSL, and additional 15,000 du of oxycodone 30 (on February 15), Respondent had
here again, there is no evidence that mg. Upon Respondent’s filling of the shipped 63,100 du of oxycodone to The
Respondent contacted The Drug Shoppe order, The Drug Shoppe’s filled orders Drug Shoppe on a rolling 30-day basis.
to obtain an explanation for the order or totaled 75,000 du on a rolling 30-day While it is unclear whether The Drug
a new UR. (and monthly) basis. GX 10F, at 30–33. Shoppe’s CSL was 60,000 du or 75,000
On January 18, Respondent filled an An MFR note (date Jan. 29) du, the orders were nonetheless held for
order for 9,600 du of oxycodone 30, and acknowledged that The Drug Shoppe review by the SOMS for some reason.
on January 19, it filled orders for 9,600 was ‘‘already at 60 k this month need to GX 16, at 240. Two SOMS notes dated
du of oxycodone 30, 900 du of review w/Jen.’’ RX 2B, at 3. A note in February 13, state: ‘‘ok to ship oxy and
oxycodone 10/325, and 500 du of the Ship to Memos (which is actually methadone [sic] under csl’’ and ‘‘ok to
oxycodone 5. GX 10F, at 30, 32–33. dated two days before the above note) ship with reservations.’’ Id. As
Upon Respondent’s filling of the states: ‘‘OK to ship controls requested explained previously, Respondent’s
January 18 order, The Drug Shoppe’s up to current UR if supported.’’ GX 16, Policy 6.2 imposed the same obligations
filled orders totaled 59,600 du, and at 221. SOMS notes for two orders of obtaining an explanation for the
upon its filling of the January 19 orders, (which are dated January 29) and made order, which was then independently
The Drug Shoppe’s filled orders totaled by Ms. Seiple state: ‘‘rele3ase [sic] order verified, and obtaining a new UR,
70,600 du. Yet the SOMS note for the regardless of the reason the order was
supported by ur plus 10% committee
January 18 order states: ‘‘ok to ship, held. See RX 78, at 32. Yet none of these
ok’’ and ‘‘release order supported by
under the CSL of 46,500 on Oxy, this steps were taken during the review of
ur.’’ GX 16, at 240. And an MFR note
order puts them at 46,100 for the this order.
dated five days later (February 3), which On February 18, Respondent shipped
month.’’ GX 16, at 239. As for the bears Ms. Seiple’s initials, states: ‘‘Ship
January 19 orders, only one of the three 9,600 du of oxycodone 30; 2,400 du of
to UR per committee review per oxycodone 15; and 1,000 du of
SOMS entries contains a note and the company policy.’’ RX 2B, at 3. Here
name of a reviewing employee. The note oxycodone 10/325. GX 10F, at 30–32.
again, even though the order clearly According to the SOMS notes, the order
states: ‘‘ok to ship order reviewed by placed The Drug Shoppe’s orders over was held but subsequently released, the
Jen.’’ Id. the new increased CSL, there is no
Here again, there is no evidence that reason documented being: ‘‘ok to ship
evidence that Respondent contacted the oxy under csl and frequency not
Respondent contacted The Drug Shoppe pharmacy to obtain an explanation for
and obtained an explanation for either excessive.’’ GX 16, at 240. Again, there
why it needed still more oxycodone and is no evidence that Respondent
the January 18 or 19 orders. Nor did it to obtain a new UR.
obtain a new UR. contacted The Drug Shoppe and
On February 1, Respondent shipped obtained a reason for the order. Nor did
On January 23, The Drug Shoppe 9,600 du of oxycodone to The Drug
placed an order for 2,900 du of it obtain a new UR.
Shoppe. GX 10F, at 30. On filling the So too, on February 25, Respondent
oxycodone 30 and on January 25, order, Respondent had shipped 84,600 filled an order for 3,600 du of
Respondent filled the order, thus du of oxycodone to The Drug Shoppe on oxycodone 15. GX 10F, at 31. While the
placing The Drug Shoppe’s total filled a rolling 30-day basis and had thus order was held by the SOMS, it was
oxycodone orders at 60,000 du on a exceeded the CSL, whether it was set at released with the following reasons
rolling 30-day basis.59 GX 16, at 239; GX 60,000 du as per the January 25 note or provided: ‘‘ok to ship frequency not
10F, at 30. The SOMS note for the order based on the highest monthly total excessive-oxycodone within csl for
states: ‘‘ok to ship-oxycodone @60k for within the last six months, this being period.’’ GX 16, at 241. Again, there is
current period.’’ GX 16, at 239.60 A the January total of 75,000 du. no evidence that Respondent contacted
January 25 MFR entry notes that the Yet the SOMS note for the order The Drug Shoppe and obtained a reason
‘‘oxycodone @57,100—requesting merely states: ‘‘ok to ship jen reviewed for the order. Nor did it obtain a new
2,900—more would place @60 k for 30 day rolling for oxy.’’ GX 16, at 240. UR.
period’’ and that ‘‘Per Jen Oxy @60k.’’ Here again, there is no evidence that Likewise, through the ensuing
RX 2B, at 3; see also GX 16, at 221 (Ship Respondent contacted The Drug Shoppe months, The Drug Shoppe placed
to Memo dated 1/25/10 with subject of to obtain an explanation for the order multiple orders for oxycodone products
‘‘oxycodone limit’’; memo states and a new UR. Nor did Respondent that were held by the SOMS. See GX 16,
‘‘currently set @60k for a period’’). report the order as suspicious. at 241. Even if these orders did not
Here again, there is no evidence that The next day, Respondent shipped place The Drug Shoppe’s orders over the
Respondent contacted The Drug Shoppe 2,400 du of oxycodone 15 to The Drug CSL but were held because they were of
and obtained an explanation for the Shoppe, thus bringing the rolling 30-day either unusual frequency or unusual
order. Nor did it obtain a new UR. Of total of the filled orders to 87,000 du. pattern, the evidence still shows that
59 The order was apparently placed on a Saturday

GX 10F, at 31. There are two SOMS Respondent released numerous orders
and not shipped until the following Monday. notes which are potentially applicable without having contacted The Drug
60 Through the first 25 days of January 2010, to the order: One, by Ms. Seiple, stating Shoppe to obtain an explanation for the
Respondent shipped orders totaling 56,900 du of ‘‘release order within the csl,’’ and the orders, which it then verified, and that
oxycodone 30; 1,900 du of oxycodone/apap 10/325; second, by Mr. Schultze, stating ‘‘ok to it rarely obtained a new UR. See GX 16,
100 du of both Endocet 7.5/500 and Endodan; and
1,000 du of Endocet 5 mg, thus bringing its total
ship frequency not excessive.’’ GX 16, at at 241–42, 222–32.
shipments of oxycodone to The Drug Shoppe to 240. In any event, here again, there is no In March, Respondent shipped 55,200
60,000 du. See GX 10F, at 30, 32–33. evidence that Respondent contacted The du of oxycodone 30 mg; 2,400 du of
oxycodone 15 mg; and 4,500 du of for two weeks and was ‘‘stocking back to Ms. Seiple states: ‘‘oxy edited to zero
various oxycodone combination up,’’ RX 2B, at 2; once again, per csl and policy.’’ GX 16, at 225.
products, for a total of 62,100 du. GX Respondent did not obtain a UR. Yet the Respondent offered no evidence to
10F, at 30–34. Of note, a SOMS note SOMS note for the order states: ‘‘ok to explain this inconsistency.
dated March 22 (which corresponds to ship UR supports Oxy order puts thm Moreover, SOMS notes and an MFR
an order for 600 du of oxycodone 10/ [sic] @39,500—5/7.’’ 62 GX 16, at 223. In note dated June 28 show that The Drug
325) states: ‘‘ok to ship, size not total, during May 2010, Respondent Shoppe placed an order for 3,600 du of
excessive on OXY, CSL is 46,500, this shipped to The Drug Shoppe 57,600 du oxycodone but that the order was
order is for 600. Putting them at 44700 of oxycodone 30 mg; 1,200 du of deleted. Id.; see also RX 2B, at 2. A
for the month.’’ GX 16, at 242. oxycodone 15 mg; and 1,800 du of further entry in the MFR notes of the
And on March 30, Respondent filled oxycodone combination products, for a same date states: ‘‘can place another
an order for 16,800 du of oxycodone 30. total of 60,600 du. GX 10 F, at 30–33. order after 6/30/10.’’ RX 2B, at 2.
GX 10F, at 30. On filling this order, In June 2010, The Drug Shoppe However, the order was not reported as
Respondent had shipped 62,700 du of placed orders for 9,600 du of oxycodone suspicious. During the month of June
oxycodone on a rolling 30-day basis and 30 mg on June 1, 3, 8, 14, and 15. GX 2010, Respondent shipped a total of
thus The Drug Shoppe’s orders 10, at 30; RX 2B, at 2. According to the 49,800 du of oxycodone 30 mg, 1,200 du
exceeded both the CSL referred to in the MFR and SOMS notes, on June 15, 2010, of oxycodone 15 mg, and 1,500 du of
March 22nd SOMS note and the CSL an order for 96 bottles of oxycodone 30 combination oxycodone products, for a
referred to in the January 25 Ship to mg was edited to 54 bottles and the total 52,500 du. GX 10 F, at 30, 32–33.
Memos and MFR notes.61 A SOMS note ‘‘difference of 42 bottles can be place[d] In July 2010, Respondent shipped to
for the order states that it was released for review after June 20th.’’ GX 16, at The Drug Shoppe 9,600 du of
because ‘‘ur on file supports oxy order.’’ 225; see also RX 2B, at 2. As a result, oxycodone 30 mg on the 1st, 6th, 12th
GX 16, at 222. However, the most recent The Drug Shoppe’s oxycodone orders on and 19th of the month, as well as 2,400
UR was from October 2009. Moreover, a rolling 30-day basis totaled 67,600 and 1,600 du of the same dosage on July
once again, Respondent failed to contact du.63 However, Respondent contacted 15th and July 26th. Id. at 30. According
The Drug Shoppe and inquire as to why The Drug Shoppe and obtained a UR for to a SOMS note dated July 19, The Drug
it was ordering in excess of its CSL and the month of May 2010. RX 2B, at 2. Shoppe’s oxycodone CSL was 42,420
obtain a new UR. The UR shows that during May 2010, du. GX 16, at 226. Yet as of July 19,
On four occasions in April, The Drug The Drug Shoppe dispensed 316 Respondent had filled orders totaling
Shoppe’s filled oxycodone orders prescriptions totaling 64,250 du of 46,800 du of oxycodone 30 on a rolling
exceeded 60,000 du on a rolling 30-day oxycodone 30 mg, an average of 203 du 30-day basis, placing it over the CSL.64
basis including April 2 (rolling total of per prescription. RX 2B, at 66. As for A further SOMS note dated July 26
60,600 du); April 5 (rolling total 70,200 oxycodone 15 mg, the UR showed that states: ‘‘rwr oxy edited to meet CSL for
du); April 7 (rolling total 70,400 du); The Drug Shoppe dispensed 29 July.’’ Id. Here again, there is no
and April 9 (rolling total 67,500 du). prescriptions totaling 3,524 du, an evidence that Respondent contacted The
SOMS notes indicate that several of average of 121.5 du per prescription. Id. Drug Shoppe regarding either the July
these orders were held for review. GX It also showed that The Drug Shoppe 19 or 26 orders or obtained a new UR.
16, at 222. However, each order was dispensed 18 prescriptions of Nor did it report either order to DEA as
released, with the reasons provided oxycodone/apap 10/325 mg totaling suspicious.
being that the order was ‘‘within csl for 2,851 du, an average of 158 du per In August 2010, Respondent shipped
period’’ and/or ‘‘frequency was not prescription. Id. at 60 & 66. 40,000 du of oxycodone 30 mg, 2,400
excessive.’’ Id. Notably, notwithstanding On June 25, Respondent shipped an oxycodone 15 mg, and 700 du of
that the orders were held, there is no additional 6,000 du of oxycodone 30 mg combination oxycodone products,
evidence that Respondent contacted The to The Drug Shoppe. GX 10F, at 30. Yet totaling 43,100 du. Here again, on
Drug Shoppe to obtain an explanation a SOMS note of the same date attributed multiple occasions, The Drug Shoppe’s
for the order and a new UR. oxycodone exceeded the CSL as referred
Likewise, in May, The Drug Shoppe’s 62 As for the May 18 order (9,600 du of oxycodone to in the July 19 SOMS note.
30 and 1,200 du of oxycodone 15, see GX 10F, at Specifically, on August 4, Respondent
filled oxycodone orders totaled 63,300 30–31), there are three entries in the SOMS notes
du (on May 7); 64,900 du (on May 18); for this date, two of which contain the name of a
filed an order for 1,200 du of oxycodone
73,000 du (May 19); and 60,600 du (May reviewer and a notation. These notations simply 30, placing The Drug Shoppe’s orders at
26) on a rolling 30-day basis. The MFRs state: ‘‘Ok to ship under CSL’’ and ‘‘RELEASE 43,600 du on a rolling 30-day basis.65
ORDER SUPPORTED BY UR.’’ GX 16, at 223. GX 10F, at 31. Yet a SOMS note of the
contain a note dated May 7, 2010, after However, it is unclear which of the three entries
The Drug Shoppe had placed 4 orders, pertain to this order.
same date establishes that the order was
each for 9,600 du of oxycodone 30, There are two SOMS notes dated May 19, which approved, the reason noted as ‘‘oxy
within the first seven days of the month, correspond to shipments of 9,000 du of oxycodone under csl.’’ GX 16, at 227. Here again,
apparently because this was an unusual 30 and 300 du of oxycodone 10/325. See GX 10F, there is no evidence that Respondent
at 30, 33. However, only one includes the name of contacted The Drug Shoppe and
pattern. See GX 10F, at 30. While the reviewer (J. Seiple); it states ‘‘rwr.’’ GX 16, at
Respondent contacted The Drug Shoppe 224. So too, there are two entries dated May 26, but obtained an explanation for the order.
and documented that it had not ordered only one contains the name of a reviewer; it states Nor did it obtain a new UR.
for a week and a half because an ‘‘ok to ship under CSL UR on File is from OCT.’’ So too, on August 9, Respondent
Id. filled an order for 9,600 du, bringing
employee named Laurie had been out
63 This total includes orders for 9,600 du of
oxycodone 30 on May 18 and 19, June 1, 3, 8, and

The Drug Shoppe’s total orders to
61 There were several other instances in which 14, as well as orders for 9,000 du on May 19 and
64 This includes the June 25 order for 6,000 du.
The Drug Shoppe’s orders on a rolling 30-day basis 600 du on May 26. GX 10F, at 30, 32–33. The total
may have placed it over the CSL, including on also includes orders for 1,200 du of oxycodone 15 65 On August 2, Respondent had filled an order
March 11, 15, and 19, when the orders totaled on May 18 and June 1; orders for 400 and 600 for 9,600 du of oxycodone 30, which when added
60,600 du, 60,900 du and 61,100 du. However, it Endocet 10/625 on May 17 and June 10; orders for to the orders filled on July 6, 12, 15, 19, and 26,
remains unclear whether The Drug Shoppe’s 300 and 600 oxycodone/apap 10/325 on May 19 totaled 42,400 du. GX 10F, at 30–31. Thus, the Aug.
oxycodone CSL was set at 60,000 du, 75,000 du, or and June 1, and an order for 300 oxycodone 5/325 4 order placed The Drug Shoppe at 43,600 du on
46,500 du. on June 10. Id. a rolling 30-day basis.
44,800 on a rolling 30-day basis.66 GX On September 1, Respondent filled total to 55,300 du. GX 10F, at 31. While
10F, at 31. The SOMS note for the order orders for 9,600 du of oxycodone 30 and the SOMS notes include two entries for
states: ‘‘rwr Oxy within buying pattern 300 du of oxycodone 10/325, placing Sept. 20, only one of them lists the
leaves 20820.’’ GX 16, at 227. Here The Drug Shoppe’s orders on a rolling name of a reviewer, again Ms. Seiple,
again, there is no evidence that 30-day basis at 43,400 du. The next day, who wrote: ‘‘rwr under csl.’’ GX 16, at
Respondent contacted The Drug Shoppe Respondent filled an order for 300 du of 228. Likewise, the SOMS entry for the
and obtained an explanation for the oxycodone 5, placing The Drug September 23 order again lists Ms.
order. Nor did it obtain a new UR. Shoppe’s orders on a rolling 30-day Seiple as the reviewer and provides the
On August 23, Respondent filled basis at 43,700 du.69 Both orders were reason as: ‘‘rwr.’’ 72 Id. Again, there is no
orders for 8,400 du of oxycodone 30; released with reservation because the evidence that Respondent contacted The
1,200 du of oxycodone 15; and 200 du orders were ‘‘within [the] monthly Drug Shoppe to obtain an explanation
of Endocet 7.5/500; the next day, it buying pattern.’’ GX 16, at 228. for either order and a new UR.73 Nor did
filled orders for 300 du of oxycodone However, in neither case did it report the orders as suspicious.
10/325 and 200 du of Endocet 7.5/500. Respondent contact The Drug Shoppe In October 2010, Respondent filled
GX 10F, at 31–33. On their respective and obtain an explanation for the order orders from The Drug Shoppe totaling
dates, the orders placed The Drug and a new UR. 39,600 du of oxycodone 30 and 1,700 du
Shoppe’s orders at 44,200 and 44,700 du On September 7, Respondent filled of three oxycodone combination
on a rolling 30-day basis.67 A SOMS orders for 9,600 du of oxycodone 30; products, for a total of 41,300 du. GX
note for August 23 states: ‘‘oxy at 42,400 600 du of oxycodone 10/325; and 200 10F, at 31, 33–34. Here again, on four
as of 8/20/10—at csl, need reviewed du of oxycodone 7.5/325; bringing The occasions, Respondent filled orders that
[sic] if order [sic] again’’ and ‘‘ok to Drug Shoppe’s rolling 30-day total to placed The Drug Shoppe over the
ship, size not excessive on 2 ENDO 7.5/ 51,700 du. GX 10F, at 31, 33. Two 42,420 du CSL.
500 under CSL of 42420 this order puts SOMS notes of the same date made by Specifically, on October 4,
them at 33000 for the month.’’ GX 16, Ms. Seiple state: ‘‘rwr over 30 days Respondent filled an order for 9,600 du
at 227. under csl supported by u r dd of oxycodone 30, bringing The Drug
A note in the MFR of the same date complete’’ and ‘‘rwr.’’ GX 16, at 228. Shoppe’s rolling 30-day total to 44,400
states: ‘‘The UR Supports—Qty 60 Endo However, with the order, The Drug du. GX 10F, at 31, 33. While a SOMS
7.5–500, Endo 10/325 = 2371, Oxy 15mg Shoppe was more than 9,000 du over note lists the name of the reviewer, it
3404, Oxy 30 61285 mal + Oxy 30mg the CSL as documented in Respondent’s then merely states: ‘‘oxy at 9600 10/4/
Act—2965 totaling 70,085.’’ RX 2B, at 1. records.70 Moreover, Respondent had 10,’’ ignoring that the order placed The
A further note in the same entry states: not obtained a new UR in three months, Drug Shoppe over its CSL. GX 16, at
‘‘CSL is already @42,600.’’ However, as and there is no evidence that it 229.
contacted The Drug Shoppe and On October 7, Respondent filled an
found above, The Drug Shoppe’s August
obtained an explanation for its order. order for 600 du of oxycodone 5,
23 orders placed it at 44,200 du, 1,800
On September 13, Respondent filled bringing The Drug Shoppe’s rolling 30-
du over its CSL, and its orders for the
another order for 9,600 du of oxycodone day total to 45,000 du. GX 10 F, at 33.
month were already nearly 10,000 du
30; this order brought The Drug Here again, while the SOMS note shows
more than the 33,000 du figure used to
Shoppe’s rolling 30-day total to 52,100 that the order was reviewed, it then
justify shipping the orders.
du.71 GX 10F, at 31. While the SOMS states: ‘‘rwr Oxy within monthly buying
As for the August 24 orders, the
notes show that three orders were pattern,’’ ignoring that the order placed
SOMS notes show that Ms. Seiple
placed that day, only one of the orders The Drug Shoppe over its CSL. GX 16,
released the order. As for Ms. Seiple’s
lists the name of a reviewer, Ms. Seiple, at 229.
reason, the SOMS note merely states: On October 11 Respondent filled an
‘‘rwr.’’ GX 16, at 227.68 Yet for both who simply wrote ‘‘rwr.’’ GX 16, at 228.
order for 9,600 du of oxycodone 30,
days’ orders, Respondent made no Again, there is no evidence that
bringing The Drug Shoppe’s rolling 30-
inquiry as to why The Drug Shoppe was Respondent contacted The Drug Shoppe
day total to 43,800 du. GX 10F, at 31.
ordering in excess of the CSL and a new to obtain an explanation for the order
While the SOMS notes show that the
UR (the UR in the file being three and a new UR. Nor did it report the
order was reviewed, it was released
months old) was not obtained. order as suspicious.
So too, on September 20, Respondent with the reviewer noting only that: ‘‘oxy
In September 2010, Respondent filled at 19800 as of 10/11/10,’’ again ignoring
orders for 43,200 du of oxycodone 30 filled an order for 9,600 du of
oxycodone 30, bringing The Drug that the order placed The Drug Shoppe
mg and 1,800 du of three oxycodone over its CSL. GX 16, at 229.
combination products, for a total of Shoppe’s rolling 30-day total to 50,500
On October 18, Respondent filled
45,000 du. GX 10F, at 31–33. Moreover, du, and on September 23, it filled an
orders for 9,600 du of oxycodone 30 and
on each date during the month that order for 4,800 du of oxycodone 30,
200 du of Endocet 10/650, bringing The
Respondent filled The Drug Shoppe’s bring The Drug Shoppe’s rolling 30-day
Drug Shoppe’s rolling 30-day total to
oxycodone orders, The Drug Shoppe 44,300 du and over the CSL. GX 10F, a
69 These totals include orders for 1,200 du on
exceeded the CSL of 42,400 du that was 31–33. While both orders were
Aug. 4 and 5; 9,600 du on Aug. 9 and 16; 400 du
documented in the SOMS and MFRs. on Aug. 18; and 8,400 du on Aug. 23; it also reviewed, the reviewer simply noted
includes orders for 1,200 du of oxycodone 15 on ‘‘oxy at 29700 10/18/10’’ (upon review
66 This total includes the orders from July 12 Aug. 18 and 23; 300 du of oxycodone 10/325 on
of the oxycodone 30 order) and ‘‘oxy at
forward, including an order for 1,200 du of Aug. 24; and 200 du of oxycodone 7.5/500 on Aug.
oxycodone 30 placed on August 5. 23 and 24. GX 10F, at 31–34. The total of the orders 29900 2nd order today 10/18/10’’ (upon
67 These totals include orders on August 16 for as of Sept. 2 includes the 9,600 du of oxycodone
9,600 du of oxycodone 30, and orders on August 30 and 300 du of oxycodone 10/325. Id. 72 While there is a second SOMS entry dated
18 for 400 du of oxycodone 30 and 1,200 du of 70 In addition to the previous references that the Sept. 23, the accompanying note shows that it was
oxycodone 15. GX 10F, at 31–32. CSL had been set at 42,420 du, a SOMS entry for for ‘‘[h]ydro’’ and not oxycodone. GX 16, at 228.
68 According to Mr. Corona, if an order placed a October 26 also states that the CSL was set at 73 Of further note, there are no entries in either
customer even one pill over its CSL, the SOMS 42,420. GX 16, at 230. the Ship to Memos or the MFRs for any of
placed the order on hold and subjected it to review. 71 This total includes a Sept. 8 order for 400 du September orders. See GX 16, at 221; RX 2B,
Tr. 1000–01. of oxycodone 10/325. GX 10F, at 33. at 1–2.
review of the Endocet order). GX 16, at told that controlled drugs comprised 40 Drug Shoppe was on CR (compliance
229. percent of the prescriptions the review) ‘‘for re-review,’’ another note in
Of note, there is no evidence that pharmacy filled and that 10 percent of the ‘‘sign off’’ column states ‘‘RWR
Respondent contacted The Drug Shoppe its prescriptions were for any schedule [release with reservation] until file
to obtain an explanation for any of these II drug. Id. at 13. The inspector was reviewed [unintelligible].’’ RX 2B, at
orders, let alone that it independently further told that 85 percent of the 1.79 Moreover, after January 11,
verified any such explanation. Nor, in controlled substance prescriptions were Respondent filled orders for 12,000 du
reviewing these orders, did Respondent paid for with cash. Id.77 Respondent did of oxycodone 30 and 1,200 du of
obtain a new UR. not, however, obtain a new UR (and had oxycodone 15.
During November, Respondent filled not obtained a new UR since June (for On February 8, 2011, Respondent
orders from The Drug Shoppe totaling the month of May)) and would not filled orders from The Drug Shoppe for
10,800 du of oxycodone 30 and 1,300 du obtain a new UR until December 15. RX 3,000 du of oxycodone 30 mg; 900 du
of combination oxycodone products.74 2B, at 1, 52. According to a note in the of oxycodone 15 mg; 200 du of
GX 10F, at 31, 33. To be sure, this Ship to Memos, Respondent requested oxycodone 5mg; and 800 du and 1,100
marked a substantial decrease in the that The Drug Shoppe provide a UR for du of various oxycodone combination
amount of oxycodone Respondent the month of October because of products. GX 10F, at 31–34. The same
shipped to The Drug Shoppe. ‘‘allocation issues in November for day, several DEA Diversion Investigators
However, on November 1, Respondent Oxy.’’ GX 16, at 221. went to Respondent’s Kemper Springs
filled an order for 9,600 du of The UR shows that during October, facility and requested The Drug
oxycodone 30, bringing The Drug The Drug Shoppe dispensed 262 Shoppe’s file. RX 2B, at 1. While it is
Shoppe’s total of filled orders to 50,900 prescriptions totaling 49,637 du of unclear whether the Investigators
du on a rolling 30-day basis.75 GX 10F, oxycodone 30 mg, for an average of 189 discussed with Respondent’s staff that
at 31. While the SOMS note indicates du per prescription. RX 2B, at 46. Yet The Drug Shoppe had been issued an
that the order was reviewed, the The Drug Shoppe’s total dispensings of Order to Show Cause based on
reviewer released the order noting: ‘‘ok all drugs (including non-controlled) allegations that its owner and PIC
to ship 96 OXY 30mg, order os within were 184,679 du. Id. at 51. Thus, (Bhupendra Agravat) had engaged in the
roling [sic] 30 day.’’ GX 16, at 230. Here oxycodone 30 mg alone comprised 27 unlawful distribution of controlled
again, while the order exceeded the percent of The Drug Shoppe’s substances,80 or that Mr. Agravat had
CSL, there is no evidence that dispensings. recently agreed to settle the matter on
Respondent obtained an explanation for With respect to oxycodone 15 mg, the the pharmacy’s behalf by, in part,
the order and a new UR. UR showed that The Drug Shoppe having no management, operational, or
Likewise, on November 9, Respondent dispensed 21 prescriptions totaling ownership interest in it, an MFR note
filled an order for 1,200 du of 3,140 du of oxycodone (and states that ‘‘file was reviewed/requested
oxycodone 30, bringing The Drug Roxicodone) 15 mg, for an average of by DEA on 2/8/11’’ and that ‘‘the
Shoppe’s total filled orders to 42,500 du 149.5 du per prescription. Id. at 46, 48. account was placed on NC [non-
on a rolling 30-day basis.76 The order In addition, the UR showed that The controlled] for review.’’ RX 2B, at 1. A
was released with the reviewer Drug Shoppe also dispensed 1,653 du of further MFR note states that during a
providing the following reason in the continuous release oxycodone products phone call on February 10, Mr. Agravat
SOMS note: ‘‘rwr Oxy order under last (e.g., OxyContin), 3,171 du of admitted that during 2004–05, he was
monthly purchse[sic] pattern leaves combination oxycodone drugs, and 560 involved in distributing hydrocodone
29,900—11/9/10.’’ GX 16, at 230. Here du of oxycodone 5 mg, for a total of and Xanax over the internet but ‘‘did
again, there is no evidence that 58,161 du, or more than 31 percent of not know [he] was being prosecuted by
Respondent contacted The Drug Shoppe its total dispensings.78 RX 2B, at 39, 46. DEA.’’ Id. Thereafter, Respondent
to obtain an explanation for the order Notwithstanding this information, finally terminated The Drug Shoppe as
and a new UR. during December 2010, Respondent a controlled substance customer. Id.
On November 18, 2010, Respondent shipped 24,400 du of oxycodone 30 and On February 23, 2011, The Drug
conducted another site visit. RX 2B, at 2,000 du of oxycodone 15 mg, for a total Shoppe placed an order for 500 du of
12. During the visit, Respondent’s of 26,400 du. GX 10F, at 31. Notably alprazolam 2mg. GX 40, at 14.
inspector was told by a pharmacy most of the orders were shipped on or Respondent reported the order to DEA
technician that The Drug Shoppe’s PIC after December 15, the date it received as suspicious. Id.
would be changing the following week. the UR. Id.; RX 2B, at 52. In her declaration, Ms. Seiple asserted
RX 2B, at 12. The inspector was also In January 2011, Respondent shipped that because The Drug Shoppe’s PIC
17,000 du of oxycodone 30 mg, 2,700 du provided a written description of its
74 Evidence in the record suggests that the of oxycodone 15 mg, and 2,100 du of policies and procedures to prevent
reduction in the orders Respondent filled during five combination oxycodone products. diversion, Respondent’s ‘‘Compliance
this month was ‘‘due to allocation issues.’’ GX 16, GX 10F, at 31–34. While an MFR note
at 221. There is some evidence that late in a year, 79 There is no corresponding entry in the SOMS
there could be a supply shortage of oxycodone.
dated January 10, 2011, which is of
notes for the same date. GX 16, at 232.
75 The total includes orders for 9,600 du of marginal legibility, suggests that The 80 The Show Cause Order issued to The Drug
oxycodone 30 on Oct. 4, 11, 18, and 25, and an Shoppe alleged that: 1) Mr. Agravat had engaged in
order for 1,200 du on Oct. 26; it also includes orders 77 Immediately following the inspector’s report in
an unlawful internet distribution scheme by filling
for 600 oxycodone 5 on Oct. 7; 200 du of Endocet the due diligence file is a page with the following controlled substances prescriptions which violated
10/650 on Oct. 18; 600 du of oxycodone 10/325 on handwritten notations: ‘‘Assumption-,’’ 21 CFR 1306.04(a) because the physicians, who
Oct. 25; and 300 du of oxycodone 5/325 on Oct. 13. ‘‘Comparisons of Business Norms,’’ ‘‘Patterns of were located in different States than their patients,
GX 10F, at 31,33. Distribution,’’ and ‘‘compare like Nationally.’’ RX did not establish a valid doctor-patient relationship;
76 The total included orders for 9,600 du of 2B, at 15. However, the record does not establish 2) on May 22, 2009, Agravat had pled guilty in
oxycodone 30 on Oct. 11, 18, 25, and Nov. 1, and who wrote the notations and his/her purpose in Arizona Superior Court to facilitation to commit the
1,200 du of oxycodone 30 on Oct. 26. It also doing so. sale of narcotic drugs; and 3) Agravat had
includes orders for 200 du and 300 du of Endocet 78 The October 2010 UR also showed that The distributed 480 du of OxyContin to a single
10/650 on Oct. 8 and Nov. 3 respectively; 600 du Drug Shoppe had dispensed 9,697 tablets of individual, by filling four prescriptions written in
and 300 of oxycodone 10/325 on Oct. 25 and Nov. methadone 10 mg, another schedule II drug. RX 2B, four different names, in exchange for $5,350. GX 17,
3; and 300 du of oxycodone 5/325 on Oct. 13. at 44. at 10.
Department believed that Drug Shoppe Policy 6.2 required doing so on the that occurred in 2004 or 2005.’’ Id. at 47.
understood its obligations to prevent review of each held order. She further asserted that DEA does not
diversion . . . and was taking In her declaration, Ms. Seiple failed to publish information to the
affirmative steps to meet those specifically address the numerous pharmaceutical industry regarding the
obligations.’’ RX 103, at 42–43. She instances in which the Compliance issuance of Show Cause Orders. Id.
further asserted that because its PIC told Department released orders which Even accepting that Respondent was
Respondent’s consultant that its placed The Drug Shoppe over its CSL unaware of the criminal case against Mr.
‘‘business model included filling without obtaining an explanation Agravat until February 2011 and that
prescriptions for a number of patients (which was independently verified), as the record does not establish the date on
suffering from . . . HIV/AIDS[,] [t]his well as its repeated failure to obtain new which he was charged by the State of
accounted for the volume of pain URs. Instead, she offered only Arizona, it is notable that, with the
medications being dispensed, and the conclusory assertions to the effect that exception of the May 2008 site visit
percentage of oxycodone dispensed Respondent ‘‘was aware of the volume report, the various forms used by
relative to other drugs.’’ Id. at 43. Yet of oxycodone and other controlled drugs Respondent’s employees and
Respondent simply accepted this being dispensed by Drug Shoppe, and consultants in performing due diligence
assertion without any further inquiry the percentage of controlled drugs did not even contain a question as to
into how many HIV/AIDS patients The dispensed relative to other drugs,’’ that whether the pharmacists had ever been
Drug Shoppe was dispensing to, let it ‘‘specifically investigated the reasons criminally charged with offenses related
alone how many of these patients were why Drug Shoppe’s ordering and to controlled substances. See generally
being prescribed oxycodone 30. Nor did dispensing patterns were as indicated RX 2B. Moreover, while the form used
she identify the other drugs which the on the URs,’’ and that ‘‘[t]he URs and for the May 2008 site visit included a
HIV/AIDS patients, who filled their other information provided by Drug question which asked if ‘‘any of the staff
oxycodone prescriptions at The Drug Shoppe were consistent with the pharmacists’’ had ever ‘‘been criminally
Shoppe, were presumably taking, and pharmacy’s business model as prosecuted[] or subjected to civil fines
compare the number of prescriptions for explained by Mr. Agravat and confirmed relative to the sale or dispensing of
these drugs with the number of the in the April 2008 site inspection.’’ Id. at controlled substances,’’ Respondent’s
oxycodone prescriptions. 44. consultant did not document an answer.
Addressing the January 2010 site visit, Id. at 28. Yet there is no evidence that
Next, Ms. Seiple asserted that both a
after which Mr. Chase noted that The Respondent ever followed up on this
sales manager and sales representative
Drug Shoppe’s dispensing ratio of omission.
‘‘were personally acquainted with Mr.
controlled to non-controlled drugs
Agravat (they referred to him as ‘Boo’) seemed ‘‘a little high’’ and Englewood Specialty Pharmacy
and vouched for his character and that recommended that a new UR be Englewood Specialty Pharmacy,
of the pharmacy.’’ Id. However, the fact obtained, Ms. Seiple offered the which did business as Gulf Coast
that these two employees referred to unresponsive assertion that Pharmacy and was located in Port
Agravat by his nickname hardly Respondent’s policies and procedures Charlotte, Florida, first became a
establishes that they had sufficient ‘‘do not specify any particular customer of Respondent on January 29,
personal knowledge to vouch for his percentage of controlled . . . to non- 2008. RX 2C, at 71, 74. According to the
character. controlled drugs that the Company due diligence file, the pharmacy, which
Ms. Seiple also asserted that ‘‘[a]fter considers ‘high’ or ‘a little high.’ ’’ Id. at had opened three years earlier, had
Drug Shoppe’s account was approved, 45. She then maintained that ‘‘Mr. begun ‘‘as almost all compounding’’ but
[Respondent’s] SOMS . . . identified Chase did not recommend that had since become ‘‘more of a retail
and held any order for controlled [Respondent] stop selling controlled pharmacy.’’ Id. at 81. Printouts (dated
substances placed by Drug Shoppe that drugs to Drug Shoppe following his March 14 & 17, 2008) in the due
deviated from its typical volume, inspection,’’ Id., while entirely failing to diligence file establish that Respondent
pattern or frequency’’ and that ‘‘[a]ll address why Respondent ignored his verified the license and registration
such orders were released only after recommendation to obtain a new UR status of the pharmacy, as well as the
review by [the] Compliance and did not obtain a new UR until five license status of a pharmacist named
Department.’’ Id. at 43–44. However, as months later. Id. at 46. Kevin Parkosewich. Id. at 86, 91–92. Of
found above, this statement is As for the circumstances surrounding note, however, Respondent’s ‘‘DEA
misleading as the SOMS did not become the eventual termination of The Drug Schedule Orders—Due Diligence Report
operational until August 2009, and Shoppe, Ms. Seiple asserted that Form,’’ which indicates that a review
during the period from April 1, 2009 Respondent was unaware that Mr. was done on March 17, 2008, lists one
through the date on which the SOMS Agravat had ‘‘any drug-related criminal Dan Farris as the pharmacist and owner
became operational, Respondent issues’’ and believed that he left the but there is no license verification for
shipped to The Drug Shoppe quantities country because he had a visa problem. him in the due diligence file.81 Id. at 81.
that placed the pharmacy over its Id. at 46–47. She stated that while Mr. According to the Due Diligence
oxycodone purchasing limit and failed Agravat had admitted (in 2008) that in Report Form, Englewood had requested
to document why it did so; it also did 2006, he had been disciplined by the an increase in its purchasing limits for
not report the orders as suspicious. Florida Board of Pharmacy, he did not hydrocodone and oxycodone. Id.; see
Moreover, as found above, even after the inform Respondent ‘‘of any other also id. at 89. On the form, Englewood
SOMS became operational, on criminal, regulatory, or disciplinary disclosed that its daily prescription
numerous occasions Respondent actions [including any action by DEA] average was 190, that 30 percent of the
shipped oxycodone in quantities that taken against him or [The] Drug
placed The Drug Shoppe over the CSL Shoppe,’’ and that it was only in 81 There is a license verification dated Sept. 8,
and yet failed to obtain an explanation February 2011 that Agravat told 2008 for a Michael A. Farris, who was listed as the
pharmacy ‘‘prescription department manager’’ on a
for the order from the pharmacy, which Respondent ‘‘that he was under Florida Department of Health Inspection Report
it then independently verified, and only investigation for issues relating to dated August 30, 2007. RX 2C, at 74. The Report
rarely obtained URs, even though its pharmaceutical sales on the internet was signed, however, by ‘‘D. Farris.’’ Id.
prescriptions were for controlled drugs, oxycodone limit ‘‘be bumped up to the schedule III through V drugs (excluding
and that 15 percent of the prescriptions next level.’’ Id. According to the form, carisoprodol); and 2,238,571 du of all
were for schedule II drugs. Id. It also Englewood now reported that its prescription drugs. Thus, schedule II
reported that 60 percent of its monthly usage of oxycodone was 95,000 drugs comprised a total of 57 percent of
prescriptions were paid for by insurance du. Id. According to a Due Diligence Englewood’s total dispensings, and all
and that they had a ‘‘good relationship’’ Report Form (dated September 8) which controlled substances comprised 75
with a pain clinic doctor who was noted that Englewood had requested an percent of its dispensings.
located ‘‘across the street.’’ Id. increase for oxycodone, the pharmacy The UR also showed the number of
Englewood represented that to prevent reported that it filled 220 prescriptions prescriptions Englewood filled for each
doctor shopping it made ‘‘sure the RX per day, of which 30 percent were drug and provided a separate total for
is valid’’; that if a doctor was from controlled drugs and 20 percent were all schedule IIs (9,928 Rxs), all schedule
outside the area, it called the doctor; schedule II drugs. Id. at 71. Respondent III through V (6,724 Rxs), and Legend
and that it validated the doctors’ DEA again asked Englewood for information drugs (5,663 Rxs), for a total of 22,315
numbers. Id. at 82. regarding its policies and procedures; in prescriptions. Id. at 122, 127, 128. Thus,
Respondent also obtained a UR the words of Respondent’s account schedule II prescriptions comprised
showing Englewood’s dispensings manager, its owner/pharmacist 44.5 percent of all prescriptions, nearly
during the month of January 2008. RX ‘‘basically sa[id] the same answers as three times what the PIC had reported
2C, at 129–162. The UR shows that before.’’ Id. at 73. While Respondent re- during the initial due diligence survey.
Englewood had dispensed a total of verified Englewood’s pharmacy license Moreover, even after subtracting out the
342,760 dosage units for all prescription and DEA registration, as well as the 1,129 prescriptions for carisoprodol
drugs; this included 161,729 du of pharmacists’ licenses of Michael Farris from the total for schedules III through
schedule II drugs; 19,953 du of schedule and Kevin Parkosewich, it again failed V, id. at 114, 117; controlled substance
III drugs; 45,817 of schedule IV drugs; to verify the license of Dan Farris, its prescriptions totaled 15,523
2,518 du of schedule V drugs; and owner and pharmacist-in-charge. See prescriptions and nearly 70 percent of
112,743 du of non-controlled legend generally RX 2C. all prescriptions, more than double the
drugs. See id. at 131, 134, 137–38, 162. On September 22, Respondent figure reported by the PIC.
By dosage units, Englewood’s controlled obtained a new UR from Englewood On November 3, 2008, Respondent’s
substance dispensings constituted 67 which listed the pharmacy’s consultant performed a site visit at
percent of its dispensings, and schedule dispensings of all prescription products Englewood. RX 2C, at 75. On his report,
II drugs comprised 47 percent of its total from March 1 through that morning. RX the consultant listed Dan Farris as the
dispensings.82 2C, at 114–28. The report showed that Pharmacist-in-Charge. Id. He also noted
The UR also showed the total number during that period, Englewood that the pharmacy filled 220
of prescriptions for each scheduled and dispensed 345,175 du of oxycodone 30, prescriptions per day, but did not
legend drug. Specifically, it showed that an average of 51,355 du per month, and service nursing homes, hospice
the pharmacy had filled 1,286 schedule 154,008 du of oxycodone 15, an average programs or inpatient facilities. Id. at
II Rxs, 208 schedule III Rxs, 513 of 22,947 du per month.83 The report 77. He also noted that 25 percent of the
schedule IV Rxs (after subtracting out also showed that Englewood dispensed prescriptions were for controlled
carisoprodol), 11 schedule V Rxs, and 185,426 du of various dosage strengths substances, and that the pharmacy filled
1,952 legend drug Rxs (including of oxycodone continuous release drugs prescriptions for pain management
carisoprodol). Thus, the schedule II (including OxyContin), an average of clinics and listed the names of six pain
prescriptions actually comprised more 27,268 du per month. Finally, the report management physicians. Id. at 77–78.
than 32 percent, and all controlled showed that Englewood dispensed While the consultant then wrote that
substances comprised 51 percent of the 118,420 du of combination oxycodone Englewood was ‘‘[a]djacent to 2 large
total prescriptions dispensed, both products, an average of 17,645 du per hospitals and several buildings with
figures being substantially larger than month, as well as 27,768 du of doctors offices in them,’’ and ‘‘appears
the figure reported by the PIC. oxycodone 10 mg and 5 mg, an average to be a busy prescription store,’’ he
Respondent nonetheless approved of 4,137 du per month. In total, further noted that ‘‘[h]e [the PIC]
Englewood to purchase oxycodone, with Englewood dispensed 830,797 du of appears to be doing a larger narcotic
documents suggesting that the amount oxycodone during the period of the business than he admits to.’’ Id. at 78
was initially set at 250 bottles or 25,000 report, an average of 123,789 du per (emphasis added).
du per month. Id. at 87, 89. month. By contrast, even including The due diligence file contains no
A ‘‘Schedule Drug Limit Increase Englewood’s dispensings of evidence that Respondent did anything
Request’’ form states that on September carisoprodol (99,222 du) (which was to address the consultant’s observation,
3, 2008, Englewood requested that its then controlled in the State of Florida even though it had the UR. Nor does it
but not under the CSA) in calculating its contain any evidence that Respondent
82 On a Schedule Drug Limit Increase Request
dispensing of non-controlled compared the prescription percentage
Form dated March 13, 2008, an account manager for prescription drugs, Englewood’s reported by the consultant with the
Respondent noted that Englewood used 70,000 du most recent UR. Instead, a notation on
of solid dose oxycodone per month. RX 2C, at 89. dispensings of these drugs totaled only
However, the data in the January 2008 UR show 556,938 du. the Schedule Drug Limit Increase
that the pharmacy was actually dispensing more In total, Englewood’s UR showed that Request form from two months earlier
than 102,000 du of all formulations of oxycodone, it dispensed more than 1,280,332 du of indicates that on November 25, 2008,
which included 39,469 du of oxycodone (and Respondent approved Englewood to

Roxicodone) 30; 17,303 du of oxycodone 15; 13,040
schedule II drugs; 84 400,581 du of
du of OxyContin 80 and 450 du of oxycodone 80
purchase 50,000 du per month of
CR; 10,254 du of OxyContin 40; 2,725 du of 83 The monthly averages were calculated by oxycodone. Id. at 87. The due diligence
oxycodone 5; 1,678 of oxycodone 20 CR; 880 du of dividing 30.5 by the total number of days from
OxyContin (and oxycodone CR) 10; 1,170 du of March 1 through and including September 21 (205), 128,033. RX 2C, at 122. As the first entry on the UR
Endocet 10/650; 11,675 du of Endocet 10/325; 350 and then multiplying this figure (.149) by the total indicates that Englewood dispensed 183,154 du of
du of Endocet 7.5/500; 860 du of Endocet 7.5/325; dispensings. methadone, see id. at 119, it is apparent that the
and 2,447 du of Endocet 5/325, for a total of 84 The UR for Englewood’s schedule II total figure is in error and that the last digit was
102,301 du. RX 2C, at 129–31. dispensings lists the number of units dispensed as cut off.
file contains no documentation that The UR showed that during that oxy to contain purchasing.’’ Id. Ms.
Englewood’s oxycodone purchasing month, Englewood dispensed a total of Seiple also noted that Englewood’s PIC
limit was raised between this date and 302,459 du of schedule II drugs; 20,608 had ‘‘indicate[d] [that] he will be
April 1, 2009. du of schedule III drugs; 52,283 du of doin[sic] the bulk of his purchasing now
However, in April 2009, Respondent schedule IV drugs (excluding at the end of the month to take
filled multiple orders placed by carisoprodol); 1,480 du of schedule V advantage of the full 45 days.’’ Id.
Englewood for 71,900 du of oxycodone drugs; and 112,947 du of non-controlled A handwritten MFR note by Ms.
30 and 8,400 du of oxycodone 15, for a prescription drugs (including Seiple of the same date states: ‘‘we need
total of 80,300 du of oxycodone. GX carisoprodol). RX 2C, at 43, 45, 48–49, to override limits @ 12k methadone 500
10F, at 16–17. Notwithstanding that 69. Of Englewood’s total dispensings of on Oxy’’ and ‘‘very concerned w/
these orders (and in particular the April 489,777 du, schedule II drugs comprised quantity dispensed per ur.’’ RX 2C, at 4.
29 order for 30,300 du) exceeded the 62 percent and all controlled substances Indeed, while Englewood’s pharmacist
purported oxycodone purchasing limit were 77 percent. had previously stated that the
by more than 30,000 du, the due The UR further showed that during methadone prescriptions averaged 480–
diligence file contains no explanation that month, Englewood dispensed a 600 pills per script, the September UR
for why this order was approved. total of 123,476 du of oxycodone 30 mg; showed that Englewood had dispensed
Moreover, the order was not reported as 26,097 du of oxycodone 15 mg; 41,619 194 prescriptions totaling 50,004 du, an
suspicious. du of various strengths of oxycodone average of 258 du per prescription.
In May 2009, Respondent filled orders extended release and OxyContin; and Yet there is no evidence that
21,485 du of other oxycodone drugs Respondent compared the PIC’s
totaling for 50,000 du of oxycodone 30.
including oxycodone 5 mg (2,930 du) statement with what the UR actually
GX 10F, at 16–17. However, on June 1,
and combination drugs. Id. at 40, 42–43. showed. This was just one of multiple
it filled an order for 50,000 du of
Englewood’s dispensings of oxycodone times when Englewood’s PIC had made
oxycodone 30, and on June 11, it filled
alone totaled 212,677 du, more than 43 false statements to Respondent’s
orders for 52,000 du of oxycodone 30,
percent of all dispensings. employees regarding his controlled
for a monthly total of 102,000 du. Id. at As for the number of prescriptions,
17. Here again, notwithstanding that substance dispensings, which could
the UR showed that Englewood had have been easily verified but were not.
Englewood’s June 11 orders placed it dispensed 2,392 sch. II Rxs, 218 sch. III
more than 50,000 du over (and at more According to the SOMS notes, on
Rxs, 870 sch. IV Rxs (excluding
than double) its oxycodone purchasing October 27, 2009, Englewood ordered
carisoprodol), 9 sch.V Rxs, and 1,804
limit, the due diligence file contains no 100,000 du of oxycodone 30 and 20,000
legend drug Rxs (including
explanation as to why the June 11 du of oxycodone 15; however, the order
carisoprodol). Thus, the schedule II
orders were approved. And here again, was held for review by the SOMS. GX
prescriptions alone accounted for 45
the orders were not reported as 18, at 163. Notes in the MFR and Ship
percent and all controlled substances
suspicious. to Memos showed that the committee
were 66 percent of all prescriptions
On July 1, 2009, Respondent filled reviewed Englewood’s account and
dispensed.
orders for 100,000 du of oxycodone 30, On October 8, Ms. Seiple spoke with approved the limits of 50,000 du of
and 2,000 du of oxycodone 15, for a Englewood’s PIC who now claimed that oxycodone and 12,000 du of methadone,
total of 102,000 du. Id. at 17. Again, his pharmacy was filling 250 to 300 which Ms. Seiple had previously
Englewood’s due diligence file contains prescriptions per day. GX 18, at 166. imposed pending the review. Id.; see
no documentation explaining why these The PIC also claimed that his pharmacy also RX 2C, at 4. A note in the MFR
orders, which were more than double was located ‘‘in close proximity’’ to two further shows that Respondent
the oxycodone purchasing limit, were hospitals and that it got ‘‘most of [its] contacted Englewood’s PIC and was
approved. And here again, the orders business from pain clinics in the area,’’ made ‘‘aware’’ that his ‘‘order was
were not reported as suspicious. including a clinic which was ‘‘lacated edited’’ and ‘‘[r]educed from 100k to
On August 3, Respondent filled orders [sic] across the street.’’ 86 Id. The PIC 50k.’’ RX 2C, at 4; see also GX 18, at 163
for 90,000 du of oxycodone 30 and further stated that his methadone (SOMS note: ‘‘order revised shipped 50k
12,000 du of oxycodone 15, for a total prescriptions ‘‘range from 60–1000 pills on oxy for the month edited order from
of 102,000 du. Id. And on September 28, per script’’ and they averaged ‘‘480–600 100k on oxy 30 and 15 mg edit from 20
Respondent filled orders totaling 90,000 pills per script.’’ Id. to 0’’). Respondent did not, however,
du of oxycodone 30 mg, as well as for Ms. Seiple also noted that ‘‘[t]he report the order as suspicious.
10,000 du of oxycodone 15, for a total account is showing usage of 150k oxy in On October 29, Respondent filled an
of 100,000 du. Id. The SOMS notes month of September’’ and that order for 50,000 du of oxycodone 30. GX
indicate that neither set of orders were Englewood was also purchasing 10F, at 17. Respondent did not,
held for review. See GX 18, at 163. controlled substances from Amerisource however, report the order as suspicious.
An MFR note dated October 1, states: Bergen. Id. Continuing, Ms. Seiple noted In November, the compliance
‘‘need updated UR report. [P]urchased that her ‘‘recommendation is to review committee further reduced Englewood’s
1000 pills in two days on CH. [Talked [the] account and reduce limits . . . on oxycodone CSL from 50,000 to 37,500
To] Michele K.85 Will be purchasing these two products until committee du.87 GX 18, at 166. Consistent with the
Oct. 26th.’’ RX 2C, at 4. And an MFR review to 12k on methadone and 50k on new limit, on November 30, Respondent
note dated October 5 states that filled Englewood’s order for 37,500 du
Respondent contacted Englewood to

86 While at the Nov. 2008 site visit, Respondent’s of oxycodone 30. GX 10F, at 17; RX 2C,
consultant had noted that Englewood was located at 3.
request a UR, spoke with Dan (the PIC), ‘‘adjacent’’ to ‘‘several buildings with doctors
and received a UR for the month of offices in them,’’ he did not specify that there was
a pain clinic across the street. RX 2C, at 78. 87 Entries in the MFR dated December 17 suggests
September later that day. Id.
Moreover, while Englewood’s PIC attempted to that this reduction was not motivated by concern
justify the pharmacy’s orders for narcotics by that Englewood was diverting the drugs but by
85 Various documents in the due diligence file list claiming that a pain clinic—which he named—was Respondent’s decision to ‘‘allocate’’ its supply of
a Michelle Kostoff as Respondent’s account located across the street, there is no evidence that oxycodone because it had a reduced inventory. See
manager for Englewood. RX 2C, at 84–85, 89. Respondent did anything to verify this statement. RX 2C, at 3.
However, just three days later, On December 28, 2009, the (underlining in original). The form bears
Englewood placed an order for 50,000 compliance committee conducted a new the circled initial of ‘‘W’’ and the date
du of oxycodone 30 and 24,000 du of review and approved Englewood for an ‘‘1/20/10,’’ id., and an MFR note, which
methadone. RX 2C, at 3. An MFR note order of 50,000 oxycodone 30 and discusses the site visit, states that it was
states that the oxycodone order was 24,000 methadone, which was shipped. ‘‘signed by Wayne.’’ RX 2C, at 2.
deleted because Englewood had ‘‘just RX 2C, at 2; see also GX 10F, at 17. The However, here again, Mr. Chase’s
purchased’’ on November 30 with the MFR note further states that Englewood recommendation was disregarded.
further notation of ‘‘rolling 30.’’ Id. The was on the site visit list. RX 2C, at 2. Instead, a new UR was not obtained
MFR notes further show that Ms. Seiple On January 12, 2010, Jeff Chase until August 12, 2010. See id. at 2, 13.
called the PIC and told him that the conducted a site visit at Englewood. Id. On January 26, Respondent filled
‘‘order was deleted’’ and that orders for at 34–38. Mr. Chase noted that Dan Englewood’s order for 47,600 du of
the account would not be filled until Farris was the owner/PIC. Id. at 35. The oxycodone 30 and 2,400 du of
there was a review by the committee. Id. form included the question: ‘‘Has the oxycodone 15. GX 10F, at 17. This order
Of further note, the MFR contains no Pharmacy, the PIC, or the owner ever placed Englewood’s total oxycodone
reference as to the PIC’s explanation for had their DEA license, or any other orders at 100,000 du on a rolling 30-day
the order and a new UR was not license in any State, suspended, basis and again exceeded the CSL
obtained. Here again, the order was not revoked, or disciplined?’’ Id. Mr. Chase (which, according to a Jan. 27 note by
reported as suspicious, even though the checked ‘‘No.’’ Id. However, once again, Ms. Seiple, was still set at 37,500 du).
order placed Englewood’s oxycodone there is no evidence that Chase or GX 18, at 163. Moreover, it was more
orders on a rolling 30-day basis at anyone else at Respondent verified this than double the amount approved by
87,500 du, more than double its CSL. information even though this could the compliance committee in December.
On December 17, Englewood placed have been easily done by accessing the As for why the order was approved, an
another order for 50,000 du of Florida Department of Health’s Web MFR note of the same date states: ‘‘Ship
oxycodone and 24,000 du of methadone. page and had never been done with per UR per Committee signed by
RX 2C, at 3. While Wayne Corona respect to the PIC. Wayne.’’ RX 2C, at 2.
directed that the orders not be filled Mr. Chase noted that Englewood filled The next day, Respondent filled
because they exceeded Englewood’s an average of 265 prescriptions per day. Englewood’s orders for an additional
CSLs on a ‘‘rolling 30’’ day basis, the Id. at 36. He then noted that ‘‘40%’’ 20,000 du of oxycodone 30. GX 10F, at
note further indicated that the were for any controlled substances— 17. Thus, with the order, Englewood’s
committee would review the account adding the comment ‘‘A little high!’’— oxycodone orders on a rolling 30-day
after 12–21–09 and that Respondent and that ‘‘25% were for schedule II basis totaled 70,000 and again exceeded
‘‘only will allocate 37,500 oxy [and] 12k drugs.’’ Id. the CSL.
meth[adone] per committee review.’’ Id. In contrast to the PIC’s representation While the order was held, a SOMS
Continuing, the note states: ‘‘get w/ in October that a pain management note made by Ms. Seiple states:
Wayne to see if he wants to ship 37,500 practice was located across the street, ‘‘releasing order supported by ur csl
or decrease,’’ as well as ‘‘see email to Mr. Chase noted that a ‘‘G.P. Doctor 37500 on oxy committee ok 50k in dec
wayne’’ and ‘‘correspondence on [was] next door and a couple [of] pain and to ur in jan.’’ GX 18, at 163. And
account.’’ Id. However, neither the clinics [were] in the area.’’ Id. at 37. He a note in the Ship to Memos by Ms.
email nor any ‘‘correspondence on also noted that there were ‘‘two Seiple states: ‘‘per committee 50k in dec
account’’ is in the due diligence file hospitals down the street.’’ Id. However, and ship to ur on 1/26/10. Order for 20k
submitted by Respondent. no further information was documented releasing on 1/27/10 month to date on
A second entry for December 17 as to how many controlled substance oxy 70k.’’ Id. at 167. See also RX 2C, at
indicates that Ms. Seiple called prescriptions issued by physicians at 2 (MFR note: ‘‘Order for 20,000 Oxy 30
Englewood’s PIC and ‘‘advised [that] the hospitals were being filled at mg,’’ ‘‘Release order @50k w/order,’’
order is not shipping’’ and ‘‘referred to’’ Englewood, nor the types of drugs and ‘‘70k on the month for oxy’’).
their conversation of two weeks earlier. involved in those prescriptions. While Here again, there is no evidence that
RX 2C, at 3. The PIC asked Ms. Seiple Mr. Chase further noted that pharmacy Respondent contacted Englewood to
if an order placed on December 21 appeared to have a full selection of obtain an explanation for the January 26
would be shipped and if he was pharmaceuticals available, he also noted and 27 orders. And notwithstanding
‘‘guaranteed product this month.’’ Id. that it had a ‘‘small selection of OTCs.’’ that: (1) It had not obtained a new UR
Seiple noted that she referred to Id. in four months; (2) its inspector had
Respondent’s ‘‘script and reasoning on As part of his visit, Mr. Chase also recommended that it obtain a new UR;
allocation in industry per training,’’ and prepared a ‘‘Site Visit and (3) its policy required that it obtain
that after assuring the PIC that the Recommendation’’ form. Id. at 34. While a new UR whenever it reviewed an
decision ‘‘was not personal,’’ she told Mr. Chase indicated that the site visit order held by the SOMS; Respondent
him that she would ‘‘advise Michele was acceptable, he recommended that a still failed to obtain a new UR.
[the account manager] to place [the] new UR be requested. Id. Mr. Chase On February 25, Respondent filled
order on 12–21–09 for review.’’ Id. A checked three reasons for his Englewood’s order for 50,000 du of
further note in the margin adjacent to recommendation, noting that the oxycodone 30; the order placed
this entry states: ‘‘will be resubmitting pharmacy had ‘‘Minimal OTCs,’’ that Englewood’s oxycodone orders at
if approved to ship only can have 375 controlled drugs were ‘‘40%’’ which 70,000 du on a rolling 30-day basis. GX
of oxy 120 of meth.’’ Id. was ‘‘a little high,’’ a point he reiterated 10F, at 17. There are two SOMS notes
While the order clearly placed under ‘‘Other’’ reasons. Id. (underlining of the same date, but neither specifically
Englewood above its CSL, here again in original). As to the latter, Mr. Chase refers to oxycodone. The first
there is no evidence that Ms. Seiple wrote: ‘‘This pharmacy appears to be a establishes that an order was reviewed
asked its PIC why his pharmacy needed well ran [sic] pharmacy but is a little by Ms. Seiple, who released the order,
so much oxycodone 30. Nor did she high on CII–Vs!! We need to get a because it was ‘‘supported by ur.’’ GX
obtain a new UR. Moreover, Respondent Utilization Report & compare it to what 18, at 164. The second shows that an
did not report the order as suspicious. was reported to site visit.’’ Id. order was reviewed by another
employee, who wrote: ‘‘ok to ship all basis and thus clearly exceeded the CSL. 28 order, the only other order that had
controls within csl for period.’’ Id. Here again, there is no evidence that been filled on a rolling 30-day basis was
However, as found above, the February Respondent obtained an explanation for the June 25 order for 50,000 du, the
25 oxycodone order placed Englewood the order from the pharmacy and it did SOMS note establishes that Englewood’s
over its CSL. not report the order as suspicious. oxycodone CSL was then set at 63,000
The next day, Respondent filled Thereafter, on April 26, Englewood du. Yet this order was not reported as
Englewood’s orders for another 14,000 ordered an additional 30,000 du of suspicious. Moreover, here again there
du of oxycodone 30 and 6,000 du of oxycodone 30 and 10,000 du of is no evidence that Respondent obtained
oxycodone 15, again totaling 70,000 du oxycodone 15, placing its total orders at an explanation for the order and a new
on a rolling 30-day basis (as well as for 99,600 du on a rolling 30-day basis. GX UR.
the month). Id. A SOMS note dated Feb. 10F, at 17; RX 2C, at 2. According to an Moreover, a note made by Ms. Seiple
26, 2010 shows that Ms. Seiple released MFR note, the order was released with in the Ship to Memos dated June 30
the order because it was ‘‘supported by ‘‘reservation per committee’’ as it was suggests that Englewood made an
UR.’’ GX 18, at 164. ‘‘supported by [the] UR.’’ RX 2C, at 2; additional order for oxycodone two days
Here again, there is no evidence that see also GX 18, at 164 (SOMS note: later as it states: ‘‘left a message for
Respondent obtained an explanation ‘‘order supported by ur per committee pharmacy recieved [sic] vm again orders
from Englewood for either the Feb. 26 order is released see mfr’’). Here again, for 96 each on oxy deleted at csl per
or 27 orders. Moreover, the last UR there is no evidence that Respondent policy[.] have been unable to get a hold
Respondent obtained was five months obtained an explanation for the order of dan,’’ the Owner/PIC. GX 18, at 167.
old. from the pharmacy and it did not report Notwithstanding that Englewood had
In March, Respondent filled even the order as suspicious. again ordered in excess of its CSL,
larger orders for Englewood. On May 17, Englewood ordered
Respondent again failed to report the
Specifically, on March 17, it filled an 70,000 du (700 bottles) of oxycodone 30
order as suspicious.
order for 50,000 du of oxycodone 30, mg. RX 2C, at 2; GX 18, at 164. The
order (before it was edited) placed On July 13, Respondent shipped an
and on March 26, it filled an order for
Englewood’s oxycodone orders at order for 50,000 du of oxycodone 30. GX
another 30,000 du of oxycodone 30. GX
110,000 du on a rolling 30-day basis and 10F, at 17. This order brought the
10F, at 17. The March 17 order placed
well over its CSL. GX 10F, at 17. rolling 30-day total of Englewood’s
Englewood’s oxycodone orders at
According to notes in the SOMS and oxycodone orders to 113,000 du, nearly
120,000 du on a rolling 30-day basis,
MFRs, the order was edited from 700 double its CSL.89 A SOMS note of the
and the March 26 order placed
bottles to 500 bottles ‘‘due to [its] same date shows that Ms. Seiple
Englewood’s oxycodone orders at
pattern and size.’’ RX 2C, at 2; GX 18, released the order, explaining that ‘‘dan
150,000 du on a rolling 30-day basis. Id.
A SOMS note shows that the March at 164. While the MFR states ‘‘[s]till [the PIC] is not ordering allotment
17 order was released by Mr. Schulze, only using Masters & ABC,’’ it further anymore at the end of the month was
who noted: ‘‘oxy supported by ur.’’ GX states ‘‘pattern & size was always 500 in only doing so for 60 day billing.’’ GX 18,
18, at 164. Likewise, Ms. Seiple released middle of month.’’ RX 2C, at 2. at 164. It is unclear what to make of this
the March 26 order noting that it was However, here again, even inferring that given that the PIC had ordered large
‘‘supported by ur.’’ Id. Notwithstanding Respondent contacted Englewood to quantities of oxycodone (typically
that Englewood’s orders exceeded the determine what distributors it was 50,000 du) on multiple occasions in the
previously set CSL by a factor of three using, it did not obtain a new UR and middle of the months of March, April,
to four (and 82,500 and 112,500 du), failed to report the order as suspicious. and May. See GX 10F, at 17. Moreover,
Respondent did not contact the In addition to filling the above order the PIC subsequently continued to order
pharmacy and obtain an explanation for at 50,000 du, on May 26, Respondent substantial quantities (13,000 du) of
the orders. Nor did it obtain a new UR. filled an order for an additional 30,000 oxycodone 30 towards the end of
And it did not report either order as du of oxycodone 30, and on May 28, it subsequent months, including on July
suspicious. filled an order for an additional 10,000 27. See id. And in any event, Ms. Seiple
On March 29, Respondent filled an du of oxycodone 30. GX 10F. These did not obtain a new UR and had not
order for 9,600 du of oxycodone 15, thus orders placed Englewood’s oxycodone done so in nine months.
totaling 89,600 du for the month and orders at 80,000 and 90,000 du on a As for the latter order, a SOMS note
again exceeding the CSL by more than rolling 30-day basis. Moreover, during dated July 26, which is the only order
50,000 du.88 GX 10F, at 17. Id. the month, Respondent again shipped a noted in the SOMS between July 16 and
According to a SOMS note, the March total of 90,000 du of oxycodone to August 10, shows that Ms. Seiple
29 order was ‘‘ok to ship-oxycodone ur Englewood. reviewed the order. The note then
supported increase for period.’’ GX 18, While there is a SOMS note dated states: ‘‘rwr edit order 300 to 130.’’ GX
at 164. Here again, Respondent failed to May 26 by Ms. Seiple, which states 18, at 164. As found above, Respondent
obtain an explanation for the order and ‘‘release order under csl,’’ it is unclear had filled oxycodone 30 orders on June
a new UR. It also failed to report the what Englewood’s oxycodone CSL was 28 for 13,000 du and on July 13 for
order as suspicious. at this point, and notes pertaining to the 50,000 du. Thus, on placing the order,
On April 15, Respondent filled an following month suggest that the CSL Englewood’s orders totaled 93,000 du
order for 50,000 du of oxycodone 30, was considerably lower than 90,000 du. on a rolling 30-day basis.
which according to the SOMS was GX 18, at 164. Here again, even though the order
On June 25, Respondent shipped an

approved because it was ‘‘under [the] clearly placed Englewood over its
order for 50,000 du of oxycodone 30,
CSL.’’ GX 18, at 164. Yet on placing the oxycodone CSL, Respondent did not
and on June 28, it shipped an additional
order, Englewood’s oxycodone orders obtain an explanation for the order or a
13,000 du of oxycodone 30 to
totaled 139,600 du on a rolling 30-day
Englewood. GX 10F, at 17. A SOMS 89 As previously explained, this total does not
88 Moreover, even on a calendar-month basis,
note dated June 28, states: ‘‘order edited include the 370 bottles (37,000 du) that were
Englewood’s March orders were nearly 20,000 du from 400 bottles of oxy to 130 per csl.’’ deleted from the June 28 order or the June 30 order
greater than its February orders. GX 18, at 164. Given that as of the June for 96 bottles which was entirely deleted.
new UR. And it did not report the order du (25,000 du more than its CSL), and that it was placed on compliance hold
as suspicious. even after Ms. Seiple edited the order, based on ‘‘suspicious activity outside of
On August 10, Respondent shipped Englewood’s orders still exceeded its pharmacy.’’ RX 2C, at 1. The noted
an order for 50,000 du of oxycodone 30. CSL by 13,000 du. further stated that the account was
On a rolling 30-day basis, Englewood’s On September 10, Respondent filled terminated, and that when the decision
orders (not counting what was deleted) an order for 50,000 du of oxycodone 30. was communicated, Respondent PIC
totaled 113,000 du. A SOMS note by GX 10F, at 17. While this order did not ‘‘was upset’’ and ‘‘felt that [Respondent
Ms. Seiple states: ‘‘rwr pending updated place Englewood over its CSL, a SOMS was] being a little harsh.’’ Id.
ur.’’ GX 18, at 164. Unexplained is why note establishes that on September 27, Regarding Respondent’s sales to
the order was released given that it: (1) 2010, Englewood ordered an additional Englewood, Ms. Seiple offered
Was now seven months since Mr. Chase 18,000 du of oxycodone 30. GX 18, at testimony similar to that which she
had conducted his site visit, after which 165. Ms. Seiple edited the order ‘‘from offered with respect to the pharmacies
he warned that Englewood seemed ‘‘a 180 to 130 for csl on oxy,’’ id., and previously discussed. For example, she
little high’’ on its controlled substance Respondent shipped 13,000 du to asserted that because the PIC had
dispensings, and recommended that a Englewood. GX 10F, at 17. provided copies of its policies and
new UR be obtained, and (2) it was also However, once again, Englewood had procedures for preventing diversion and
ten months since Respondent had placed an order that exceeded its CSL, described them to Respondent, the
obtained the last UR. Moreover, the and once again, Respondent failed to ‘‘Compliance Department believed that
order was not reported as suspicious. obtain an explanation for the order and Englewood understood its obligations to
An MFR note made the next day to report the order as suspicious. prevent . . . diversion . . . and was
states: ‘‘compliance hold until ur The next day, Respondent filled taking affirmative steps to meet those
updated provided.’’ RX 2C, at 2. On orders for 1,200 du of oxycodone 20 mg obligations.’’ RX 103, at 48–49. She
August 11, Englewood provided and 600 du of oxycodone 10 mg, further asserted that ‘‘before shipping
Respondent with a UR for the month of bringing its rolling 30-day total to any pharmaceutical products to
July 2010. Id. at 13. 64,800 du and over its CSL. GX 10F, at Englewood, [Respondent] verified that
The UR showed that Englewood had its Florida pharmacy license and DEA
17. While the orders were held for
dispensed 204,291 du of oxycodone 30 registration were valid, current, and in
review, the orders were released with
(including 80 du of Roxicodone 30) and good standing.’’ Id. at 49. Yet Ms. Seiple
the SOMS note stating: ‘‘ok to ship with
15,210 du of oxycodone 15 (including made no claim that Respondent had
reservations [sic] first time purchase on
60 du of Roxicodone 15) during the verified the status of the PIC’s license
Oxy since 2009.’’ GX 18, at 165. Yet, as
month. Id. at 13, 28–29. It also showed and there is no evidence that it ever did
found above, Englewood had repeatedly
significant dispensings of other so.
purchased oxycodone from Respondent
oxycodone products, as well as other Next, Ms. Seiple asserted that because
throughout 2010. Once again,
schedule II drugs and schedule IV during the 2008 site visit, the PIC
Respondent did not obtain an
benzodiazepines.90 Notably, ‘‘explained that Englewood’s business
Englewood’s total dispensings of all explanation for the order and failed to
model included servicing patients from
prescriptions drugs totaled 519,071 du. report it as suspicious.
two large hospitals and a number of
Id. at 32. Moreover, with the exception On October 6, 2010, Respondent
[nearby] physician offices,’’ as well as
of carisoprodol, each of the top ten performed another site visit at
‘‘patients from several nearby pain
drugs dispensed by quantity was an Englewood. RX 2C, at 5–7. According to
clinics[,] . . . this accounted for the
oxycodone product, methadone, or the inspector’s report, the PIC stated
volume of pain medications and other
alprazolam, and of the top 20 drugs that he did not fill for out-of-state or
controlled substances, including
dispensed, the only other non- out-of-area patients. Id. at 6. He also
oxycodone, being dispensed relative to
controlled drug was albuterol. Id. at 13. stated that 40 percent of the
other drugs.’’ Id. at 49. However,
Notwithstanding the information prescriptions it filled were for
hospitals usually have their own
provided by the UR, on August 23, controlled substances, and 20 percent
pharmacies and, in any event, a
Respondent filled an additional order were for schedule II drugs. Id. at 6. After
pharmacy’s mere proximity to a hospital
for 13,000 du of oxycodone 30. GX 10F, noting that the pharmacy had a ‘‘small
does not explain why the quantity of
at 17. MFR notes of the same date state: selection of OTCs,’’ the inspector wrote
oxycodone 30 prescriptions being
‘‘250 oxy 30 mg currently at 50k[.] CSL the following:
dispensed at Englewood dwarfed the
is 63k,’’ and ‘‘Edited oxy from 250 to When I arrived I observed a man appearing quantity of the most commonly
130.’’ RX 2C, at 1; see also GX 18, at 165 to be in his mid 20’s waiting in a KY licensed prescribed non-controlled prescription
(SOMS notes entry dated Aug 23: ‘‘order car in front of the store. While waiting I drugs, such as those used to treat high
edited per mfr’’). On a rolling 30-day observed other men appearing to be in their
cholesterol, hypertension, or
basis, Englewood’s orders totaled 88,000 late 20’s to early 30’s taking large trash bags
out from the pharmacy to a dumpster. The hypothyroidism. See RX 81 (showing
men spoke to and went into the KY licensed top five prescription drugs from 2006
90 As for other oxycodone products, Englewood
vehicle. When leaving, I observed other men through 2010, which did not include
dispensed 13,436 du of OxyContin 80; 7,266 du of
OxyContin 40; 2,025 du of OxyContin 60; 800 du in their mid 30’s in the pharmacy waiting oxycodone).91 So too, a pharmacy’s
of OxyContin 30; 644 du of OxyContin 20; 70 du area. A TN temporary licensed car was in the mere proximity to buildings with
of OxyContin 10. See RX 2C, at 13–15, 28. It also parking lot. There were no other businesses doctors’ offices falls well short of what
dispensed 12,183 du of Endocet 10/325; 2,250 du open near the pharmacy and open at that is necessary to explain why a
of oxycodone 20; 710 du of Endocet 10/650; 594 du time. Front of store was designed more as a
of oxycodone 5/325; 402 du of oxycodone 5; 140 pharmacy’s dispensings of oxycodone
waiting room rather than a store front. Owner
du of oxycodone 7.5/500; 90 du of oxycodone 7.5/
325; and 120 du of Endodan (oxycodone and
reported filling for patients from local Pain 91 As Respondent’s Exhibit 81 shows, while
aspirin). See id. at 13, 15–16, 18–19, 22, 24–25. Its Clinic. combination hydrocodone drugs were the most
total dispensings of oxycodone came to nearly Id. at 7. frequently prescribed drugs during 2008 through
258,000 du. 2010, the next most frequently prescribed drugs
It also dispensed 53,583 du of methadone 10 mg;
An MFR note of October 7 states that were non-controlled drugs including Lipitor (a
20,407 du of alprazolam 2 mg; and 9,899 of the ‘‘site visit [was] questionable,’’ that statin), Simvastatin, Lisinopril, Levothyroxine, and
alprazolam1 mg. See id. at 13. the account needed to be reviewed, and Azithromycin.
30 prescriptions dwarf its dispensings of Englewood were not suspicious,’’ id. at See generally RX 2C. Indeed, throughout
non-controlled prescription drugs. 50–51, it did no such thing. As an the course of its dealings with
While it is true that Respondent’s example, during the initial site visit, Englewood, its PIC repeatedly
consultant also obtained the names of Respondent’s consultant wrote that understated the level of its controlled
six pain clinic doctors, two of these ‘‘[h]e [the PIC] appears to be doing a substance (including its schedule II)
doctors were located in Sarasota, which larger narcotic business than he admits dispensings and did so by a wide
is more than 47 miles from Port to.’’ RX 2C, at 78. In her declaration, Ms. margin and Respondent was put on
Charlotte.92 See http:// Seiple offered no explanation as to what notice of this as early as the November
maps.randmcnally.com/mileage- was done in response to this 2008 site visit. RX 2C, at 78. The PIC’s
calcualtor.do. Moreover, there is no observation, and her assertion that ‘‘the false statements as to the percentage
evidence that Respondent verified the URs and other information provided by levels of his controlled substances
licensure and registration status of any Englewood were consistent with the dispensings were another red flag that
of these doctors, let alone whether they pharmacy’s business model as he was engaged in the diversion of
had any specialty training or board explained by Mr. Farris and confirmed controlled substances and the falsity of
certification in pain management. in the November 2008 site inspection’’ his representations could have been
Ms. Seiple further asserted that is just one example as to how easily determined because the URs
‘‘[a]fter Englewood’s account was Respondent’s Compliance Department calculated the total number of
approved, [the] SOMS . . . identified simply accepted the inadequate prescriptions for each schedule of
and held any order for controlled explanations provided by its consultant controlled substances and the non-
substances placed by Englewood that and employees to support its continued controlled prescription drugs the
deviated from its typical volume, selling of controlled substances to pharmacy dispensed. Instead,
pattern or frequency’’ and that ‘‘[a]ll Englewood, while ignoring numerous Respondent’s Compliance Department
such orders were released only after red flags as to the legitimacy of the ignored available information (and
review by [the] Compliance pharmacy’s dispensings of controlled failed to request information) which
Department.’’ RX 103, at 49. As substances. would have shown that the PIC was
explained previously, this statement is Ms. Seiple provided still another providing false information.
misleading because the SOMS was not example of this in her discussion of the It is true that after the October 6, 2010
even operational until August 2009. Compliance Department’s response to inspection, during which Respondent’s
Moreover, notably absent from this the January 2010 site visit by Mr. Chase. inspector observed that Englewood’s
paragraph of Ms. Seiple’s declaration is As found above, following the visit, Mr. clientele included persons who were
any claim that the Compliance Chase recommended that Respondent driving vehicles with Kentucky and
Department’s employees followed the obtain a new UR and compare it with Tennessee license plates and who were
policies and procedures which required Englewood’s claim that 40 percent of engaged in suspicious activity (and yet
contacting the pharmacy and obtaining the prescriptions it dispensed were for was told by the PIC that he did not fill
a reason for why a held order exceeded control substances, which in Mr. for out-of-state patients), Respondent
the SOMS parameters, followed by Chase’s view, was ‘‘a little high.’’ finally made the decision to terminate
independently verifying that reason. As Respondent did not, however, obtain a Englewood. However, Englewood had
found above, Respondent’s Compliance new UR in response to his been purchasing controlled substances
Department repeatedly failed to comply recommendation and failed to obtain a (including oxycodone) from Respondent
with its policies and procedures. new UR until August 11, some seven for at least two years at this point and
While it is true that ‘‘[o]n some months later. yet, only in the face of the above, did
occasions, the Compliance Department As with the pharmacies previously it finally stop selling controlled
would request . . . a UR as part of its discussed, Ms. Seiple’s explanation of substances to Englewood. The evidence
review of orders that had been held by this was that Respondent’s policies and thus suggests that Respondent’s
the SOMS,’’ the evidence shows that it procedures did ‘‘not specify any Compliance Department was primarily
obtained a new UR infrequently. As the particular percentage of controlled concerned with justifying the continued
evidence shows, after April 1, 2009, it drugs to non-controlled drugs that the sale of controlled substances and not
did not obtain a new UR until October Company considers ‘high’ or ‘a little with identifying those entities that were
5, 2009, at which point it had not high,’ ’’ and that ‘‘Mr. Chase did not engaged in diversion. Moreover,
obtained a new UR in more than a year, recommend that [Respondent] stop Respondent did not file a single
and it did not obtain the next UR until selling controlled drugs to Englewood suspicious order report during the
August 11, 2010, ten months later. Yet following his inspection in January course of its dealings with Englewood.
Respondent’s policy required that it 2010.’’ RX 103, at 51. Ms. Seiple’s
testimony fails to explain why the City View Pharmacy
obtain a new UR whenever an order was
held for review. Compliance Department ignored Mr. City View Pharmacy, a retail
As for Ms. Seiple’s assertions that Chase’s recommendation to obtain a community pharmacy located in
Respondent ‘‘specifically investigated new UR and did not do so until seven Orlando, Florida, opened in January
the reasons why Englewood’s ordering months later. 2005. RX 2D, at 74. While it is unclear
and dispensings patterns were as While Ms. Seiple acknowledged that when City View first became a
indicated on the URs’’ and that ‘‘[b]ased Respondent was aware of the volume of controlled substance customer of
on [its] extensive investigation, it oxycodone and other controlled Respondent, a Schedule Drug Limit
determined that the orders it shipped to substances being dispensed and the Increase Request Form dated March 17,
percentage of controlled drugs being 2008, indicates that City View was
92 Pursuant to 5 U.S.C. 556(e), I take official dispensed relative to other drugs, id. at seeking an increase in its purchasing
notice of the distance between Port Charlotte and 50, there is no evidence in the limit for both alprazolam and solid dose
Sarasota as determined by using the online Rand Englewood file that Respondent ever oxycodone. Id. at 73. According to the
McNally mileage calculator. Pursuant to 21 CFR
1316.59(e), Respondent may dispute this finding by
actually calculated the ratio of its form, City View was using 200 100-
filing a properly supported motion no later than 10 dispensings of oxycodone and count bottles or 20,000 du of oxycodone
days from the date of this Order. controlled substances to other drugs. per month. Id.
After verifying that City View held a Alprazolam 2 mg (6,940 du), a schedule View to purchase 25,000 du of
DEA registration and state license, on IV controlled substance, and oxycodone per month. Id. at 73.95
March 25, Respondent contacted City carisoprodol 350 mg (5,609 du In April 2009, Respondent filled
View and prepared a DEA Schedule dispensed), a drug which was then orders placed by City View for 18,500
Order-Due Diligence Report Form; it controlled under Florida law and which du of oxycodone 30 and 1,200 du of
also obtained from City View a State has since been controlled under the oxycodone 15, and in May, it filled
Inspection Report and a UR. According CSA. See id. at 89, 91. orders for 24,000 du of oxycodone 30
to the Due Diligence Report Form, City As found above, City View also and 1,000 du of oxycodone 15. GX 10F,
View reported that it filled 80 provided Respondent with a copy of a at 3–4. In June, Respondent filled orders
prescriptions per day, that 60 percent of Florida Department of Health inspection for 28,000 du of oxycodone 30 and
the prescriptions were for controlled report dated November 29, 2006. Id. at 2,000 du of oxycodone 15 (as well as
drugs, and 40 percent were for schedule 76. The Report identified multiple 200 oxycodone 80), followed by orders
II drugs. Id. at 74. City View also deficiencies, including that City View in July for 26,000 du of oxycodone 30;
reported that it accepted insurance and did not maintain ‘‘[c]omplete pharmacy 3,000 du of oxycodone 15; 1,000 du of
well as Medicare and Medicaid and that prescription records’’ and the Endocet 10/325; and 300 du of
80 percent of the prescriptions were ‘‘[p]rescription records did not identify oxycodone 80 mg. Id. at 3–5.
paid for by insurance. Id. As for its the responsible dispensing pharmacist’’; On August 3, 2009, Respondent filled
policies and procedures, City View’s the pharmacist was not initialing the orders placed by City View for 20,000
pharmacist represented that to prevent controlled substance prescriptions (as du of oxycodone 30, as well as 2,400 du
doctor shopping, it worked ‘‘mainly’’ well as the refills) that were filled; DEA of oxycodone 15. Id. at 3. A note in the
‘‘with three doctors,’’ and that it Schedule II order forms were not being Ship to Memos added by Ms. Seiple on
‘‘call[ed] any new doctors.’’ Id. As for properly completed; and several August 5 states: ‘‘8/3/09 please keep on
how it ensured that doctors exercised controlled substance prescriptions were hold until UR is received per file.’’ GX
proper standards of care, City View’s missing required information such as 19, at 111. Of note, Respondent had not
pharmacist stated that he called a pain the prescriber’s name, address and DEA obtained a new UR since February 2008
management clinic. Id. As for whether number as well as the patient’s name and would not do so until October 5. RX
he had ever refused to fill a and address. Id. at 76. 2D, at 5–6. Yet, on August 25—a week
prescription, City View’s pharmacist On June 25, Respondent’s consultant after it had presented its Policies and
represented that he did so ‘‘all the time’’ conducted an onsite inspection of City Procedures to the DIs—Respondent
as he required the patients to present a View. Id. at 104. According to the filled City View’s order for an additional
driver’s license and would refuse to fill consultant’s report, City View 7,600 oxycodone 30, GX 10F, at 3,
the prescriptions ‘‘if they don’t supply represented that it had purchased drugs bringing its total filled orders on a
it.’’ Id. at 75. Finally, City View’s from five different distributors rolling 30-day basis to 33,000 du, even
pharmacist represented that he refused including Respondent during the past though it had not received a new UR.96
prescriptions written by physicians who 24 months. Id. at 105. It also represented According to a SOMS note for this
had problems with their DEA that it filled an average of 100 to 120 order, the order was ‘‘ok to ship’’
registrations or other disciplinary prescriptions per day, that 35–40 because it was at City View’s ‘‘oxy limit
actions. Id. percent of the prescriptions were for for the month.’’ GX 19, at 118.
The UR provided by City View controlled substances, and that only 20 Yet on September 1, 8, and 14,
covered the month of February 2008, percent of the prescriptions were paid Respondent filled three separate orders
and showed that the pharmacy had for with cash. Id. at 106. It also by City View for 10,000 du of
dispensed a total of 101,908 du of all acknowledged that it filled for pain oxycodone 30, notwithstanding that
prescription products. Id. at 100. The management clinics and identified six Respondent had yet to receive a UR and
UR further showed that during the physicians and their DEA numbers.94 the account was supposedly on hold.
month, City View dispensed 150 The consultant also reported that City GX 10F, at 3. As for the September 1
prescriptions totaling 24,928 du of View was located next door to the order, it placed City View’s oxycodone
oxycodone 30, an average of 166 du per Police Department and that this ‘‘does orders at 40,000 du on a rolling 30-day
tend to keep some of the drug abusers basis and thus over the previously noted
prescription. Id. at 97. It also showed
away according to the pharmacist.’’ Id. limit. Yet the order was released by Ms.
that City View dispensed 20
at 108. Seiple, who noted in the SOMS that it
prescriptions for 2,300 du of oxycodone Finally, the consultant noted that the
15, as well as 32 prescriptions totaling was ‘‘under current limit.’’ GX 19, at
pharmacy was willing to provide a copy
3,525 du of Endocet 10/325.93 Id. at 92, 118. And while it is clear that the order
of its most recent state inspection
97. In total, City View dispensed more was held for review, there is no
report, and a report dated May 1, 2008
than 36,000 du of oxycodone products is in the due diligence file. Id. at 105, evidence that Respondent contacted
(35.5 percent of all its dispensings), and 109. Notably, while the report showed City View and obtained an explanation
its dispensings of oxycodone 30 alone that several of the deficiencies for the order.
accounted for more than 24 percent of The September 8 order did not place
identified at the previous inspection
its dispensings. Indeed, the UR showed City View over the CSL. However, with
had been corrected, City View’s
that the next largest drugs dispensed the September 14 order, City View’s
pharmacist was still not properly
were two other highly abused drugs: oxycodone orders totaled 37,600 du on
completing the Schedule II order forms.
93 As for other oxycodone products, the UR

Id. at 109. Several weeks later, on July 95 A note on the Schedule Drug Limit Increase
showed that City View dispensed 1,310 du of 1, 2008, Respondent approved City Request Form indicates that Respondent did not
OxyContin (and generic OxyContin) 40 mg, 990 du approve City View’s request to purchase alprazolam
of OxyContin (and generic OxyContin) 80 mg, 906 94 With respect to whether the pharmacy serviced because it was ‘‘too new’’ a customer. RX 2C, at 73.
du of oxycodone 5 mg, 1,035 du of Endocet 5/325, nursing homes, hospices, and inpatient facilities, Unexplained is why City View was not too new a
300 du of Endocet 10/650 mg, 240 du of OxyContin the consultant wrote the word ‘‘pending’’ next to customer to purchase oxycodone.
20 mg, 210 du of Endocet 7.5/325 mg, 200 du of each of these categories and did not identify a 96 City View had placed an order for 3,000 du of
Endocet and generic oxycodone 7.5/500 mg, and 38 single such facility which City View actually oxycodone 30 on July 28, thus bringing the rolling
du of oxycodone/apap 5/500. RX 2D, at 92, 97. serviced. RX 2D, at 106. 30-day total to 33,000 du. GX 10F, at 3.
a rolling 30-day basis. A SOMS note note dated October 1 noting that oxycodone orders over its 30,000 du
establishes that Ms. Seiple released the message was left for pharmacist ‘‘to call CSL on a rolling 30-day basis. Yet
order and provided the following me back need UR or order will not ship Respondent did not report the order as
reason: ‘‘ok to ship puts them at their & will be deleted’’). suspicious.
current limit.’’ GX 19, at 119. Here On October 5, Respondent finally On November 2 and 6, Respondent
again, notwithstanding Respondent’s obtained a new UR from City View. RX filled orders totaling 10,000 du of
purported policies and procedures, 2D, at 5–6. The UR showed that during oxycodone 30 on each date. GX 10F at
there is no indication that City View the month of September, City View 3. Even ignoring the deleted order of
was contacted to provide an explanation dispensed 324 prescriptions totaling Oct. 29, each of the orders placed City
for the order, which was then 47,472 du of oxycodone 30, an average View’s orders at 40,000 du on a rolling
independently verified, and Respondent of 146.5 du per prescription, as well as 30-day basis.
still had not obtained a new UR. 30 prescriptions totaling 3,505 du of As for the November 2 order, a SOMS
Moreover, according to an MFR noted oxycodone 15, an average of 124 du per note made by Ms. Seiple states: ‘‘ok to
dated September 23, City View placed prescription. RX 2D, at 62–71. City ship is provided non control business
an additional order for 10,000 du of View’s dispensings of all prescription per committee limit 22500.’’ GX 19, at
oxycodone 30 mg which Respondent products totaled 116,180 du. Thus, 119. Entries in the MFRs and Ship to
deleted. RX 2D, at 6. The note further oxycodone 30 alone comprised nearly Memos show that on either November 3
states that City View’s ‘‘calendar limit 41 percent of City View’s total or 4, the compliance committed had
[was] 30,000’’ and that it had ‘‘already dispensings. Moreover, the top ten conducted a review and reduced City
received 37,600 within 30 days.’’ Id. drugs dispensed were comprised View’s oxycodone limit by 25 percent to
A second MFR note of the same date entirely of three oxycodone products 22,500 du. RX 2D, at 5; GX 19, at 112.
shows that Ms. Seiple called City View’s (oxycodone 30, oxycodone 15, and As for the November 6 order, the
pharmacist a second time that day and 2,340 du of Endocet 10/325), four corresponding SOMS notes states: ‘‘ok
that the pharmacist stated that he ‘‘did alprazolam products (9,722 du of four to ship oxycodone @20k with this
not want the 100 bottles only [the] different manufacturers’ version of 2 mg order—within size for current period.’’
hydromorphone 8mg.’’ Id. Ms. Seiple dosage and 1,230 du of one GX 19, at 120. However, whether City
further documented that she ‘‘tried to manufacturer’s 1 mg tablet), View’s oxycodone CSL was 22,500 du or
get info’’ but the pharmacist said he had carisoprodol 350 mg (5,124 tablets), and 30,000 du, the orders clearly exceeded
to go, and that after she ‘‘asked him to hydrocodone/apap 10/500 (2,423 the CSL and yet there is no evidence
call [her] back,’’ the pharmacist said he tablets). See id. that Respondent contacted the
would ‘‘and hung up.’’ Id. Ms. Seiple A second MFR note dated October 5 pharmacy and obtained an explanation
then documented that she had talked to states that Respondent was ‘‘shipping for the November 2 and 6 orders and a
Mr. Corona about the situation and was 100 bottles’’ and that the order had been new UR. Nor did it report the orders as
told to place City View ‘‘on compliance put in the same day. RX 2D, at 5. The suspicious.
hold.’’ Id. The same day, Ms. Seiple also On November 16, City View placed an
note further states: ‘‘however, his limit
made a note in the Ship to Memos for order for 10,000 du of oxycodone 30.
is 30,000 current limit No.’’ Id. A Ship
the account, which states: ‘‘Need to See RX 2D, at 4 (MFR note: ‘‘release 25
to Memo note of the same date states:
have an updated survey and UR before Qty. requested 100.0—limit of oxy @
‘‘Released oxy order for 100 bottles
ordering any CONTROLS.’’ GX 19, at 22,500’’). While Respondent edited the
based on UR and clean file.’’ GX 19, at
111. Yet the order was not reported as order and only shipped 2,500 du, id.,
111. Thereafter, Respondent filled
suspicious. the order still placed City View’s orders
additional orders by City View for
An MFR note dated September 28 at 40,000 du on a rolling 30-day basis.
10,000 du of oxycodone 30 on both
made by Ms. Seiple again acknowledged GX 10F, 3; see also GX 19, at 120.
that Respondent did not have a current October 12 and 20. GX 10F, at 3. (SOMS note: ‘‘ok to ship—oxy revised to
On October 29, City View placed still
UR on file. RX 2D, at 6. The note further 25.0 to met [sic] current size
another order for oxycodone 30 mg. GX
states: ‘‘put 1k pills for oxy back in allotment’’).
19, at 111; RX 2D, at 5. According to Here again, City View had placed
today’’ and refers to Ms. Seiple’s having
called another employee of Respondent, both the Ship to Memos and MFRs, City orders which, on a rolling 30-day basis,
and that the employee was ‘‘getting’’ View’s oxycodone order was edited off exceeded the CSL. Yet there is no
with City’s View pharmacist. Id. the order. See id. Ms. Seiple further evidence that Respondent obtained an
According to a note made the next day, noted that City View’s oxycodone limit explanation for the order from the
this order was placed on hold. Id. needed ‘‘to be reviewed’’ because the pharmacy and a new UR. Nor was the
However, notwithstanding that City pharmacy ‘‘only buys 30 mg Mall,’’ 97 order reported to DEA as suspicious.
View was on compliance hold, on that the ‘‘UR is 46k as of September,’’ Moreover, on December 1, 2009,
October 1—and before City View and added, ‘‘decrease limit to 20k see Respondent filled two orders totaling
provided a new UR—Respondent filled Wayne.’’ See id. However, the same 20,000 du of oxycodone 30. GX 10F, at
an order for 2,000 tablets of entry then contains an additional note 3. With these orders, Respondent had
hydrocodone/apap 10/500 mg. GX 10F, (in different color ink) that: ‘‘No limit is filled orders totaling 42,500 du on a
at 5. Moreover, there is no evidence that 30k—please call,’’ and further noted rolling 30-day basis. A SOMS note of
Respondent did a new due diligence that an employee had spoken with City the same date states: ‘‘ok to ship-oxy
survey. View’s pharmacist and that oxycodone within size for period @10K with this
The evidence also suggests that on or had been ‘‘cut from order.’’ RX 2D, at 5. order.’’ GX 19, at 120. The same
about October 1, City View placed an While it is unclear what the size of reviewer made a second SOMS note,
order for 10,000 du of oxycodone 30. the order was, it is clear that the order which, while bearing the date of ‘‘11/24/
Specifically, a Ship to Memo dated would have placed City View’s 09,’’ is interspersed between the above
October 2, 2009 by Ms. Seiple states: 97 This is likely an abbreviation for Mallinckrodt,
note and another note of ‘‘12/1/09’’
‘‘TIL ur IS RECEIVED THE ORDER WAS a manufacturer of controlled substances. Other
which states: ‘‘ok to ship oxy @20K with
DELETED FOR OXY 30 100 BOTTLES.’’ evidence establishes that Respondent distributed this order for period 12–1–09.’’ Id.
GX 19, at 111; see also RX 2D, at 5 (MFR oxycodone manufactured by Mallinckrodt. Notwithstanding that City View had
again clearly exceeded its CSL, there is thus releasing w/reservation.’’ Id. And a placed City View’s orders at 30,000 du
no evidence that Respondent contacted separate MFR note of the same date on a rolling 30-day basis, and thus the
City View to obtain a reason for the states: ‘‘shipped 10k w/reservation CSL order actually placed City View above
orders and a new UR. Nor did it report @32500’’ and ‘‘Must be reviewed w/ the CSL level referred to in the SOMS
the orders as suspicious. committee along w/[illegible].’’ RX 2D, note. A March 15 MFR note by Ms.
On December 14, Respondent filled at 5. Additional notes in the same entry Seiple justified the shipment stating:
an additional order for 2,500 du of state: ‘‘30k on oxy’’ and ‘‘CSL for month ‘‘order above supported by UR and last
oxycodone 30. GX 10F, at 3. Thereafter, @[ ] 15k.’’ Id. month of 30k supported by UR per
on January 4 and 11, 2010, it filled As for the February 1 and 8 orders, committee.’’ RX 2D, at 3. Notably, Ms.
orders for 10,000 du of oxycodone 30 on while they clearly exceeded the CSL— Seiple did not state that Respondent had
each date, followed on January 19 by an indeed, during this period, contacted the pharmacy and obtained an
additional order for 2,500 du of Respondent’s records repeatedly explanation for the order as well as a
oxycodone 30, for a monthly total of indicate that the CSL was 22,500 du and new UR.
22,500 du. Id. do so even in notes made after the Feb. On March 18, Respondent shipped a
On February 1, 8, and 18, Respondent 18 MFR entry—there is no evidence that new order for 10,000 du of oxycodone
filled three separate orders for 10,000 du Respondent complied with its policies 30. GX 10F, at 3. A SOMS note of this
of oxycodone 30. Id. Upon filling both and procedures by contacting the date states: ‘‘ok to ship, order supported
the Feb. 1 and 8 orders, Respondent had pharmacy and obtaining an explanation by UR on the OXY, this order for 10k
shipped 32,500 du on a rolling 30-day for the increase in its orders, which was puts them at 30K for the month.’’ GX 19,
basis and thus exceeded the CSL then independently verified. Nor did at 114. However, when added to the
whether it was set at 22,500 or 30,000 Respondent obtain a new UR. Moreover, previous orders Respondent shipped to
du.98 However, the SOMS note for the Respondent provided no explanation at City View on February 18, as well as
Feb. 1 and 8 orders respectively state: the hearing as to why the SOMS notes March 3 and 12, each of which was for
‘‘ok to ship, under the CSL’’ and ‘‘ok to state that the CSL was 22,500 but then 10,000 du, Respondent had shipped
ship oxy under csl.’’ GX 19, at 113. was suddenly increased to 32,500 du on 40,000 du on a rolling 30-day basis, and
Of note, on February 17, 2010, Mr. February 18. As these notes indicate, thus again exceeded the CSL, whether it
Chase conducted a site visit at City Respondent simply ignored the CSL and was set at 22,500 or 30,000 du. Once
View. According to his report, City manipulated it to justify the again, there is no evidence Respondent
View filled an average of 100 distributions. contacted City View and obtained an
prescriptions per day, with controlled There is also no evidence that Mr. explanation for the order and a new UR.
substances comprising 30 percent of the Chase’s site visit and recommendation On March 22, Respondent filled an
prescriptions. RX 2D, at 43. Mr. Chase were reviewed before the February 18 order for 1,200 du of oxycodone 30, thus
reported that schedule II controlled order was shipped. Indeed, a SOMS bringing City View’s rolling 30-day total
substances comprised 15 percent of all note of February 23 clearly suggests that to 31,200 du. GX 10F, at 3. Various
prescriptions. Id. While Mr. Chase the site visit report and notes explain that the order was
reported that City View appeared to be recommendation were not reviewed released because it was supported by
a full service pharmacy with a ‘‘good until that date. GX 19, at 112. the UR, even though Respondent still
selection’’ of front store items, he did Significantly, this note also states: ‘‘CR had not followed the recommendation
not document that City View serviced [compliance review]—CH [compliance of its inspector to obtain a new UR and
any pain clinics. Id. at 40, 45. hold] UR on file needs to be reviewed the previous UR was nearly six months
While on the Site Visit with site visit.’’ Id. old. RX 2D, at 3; GX 19, at 114.
Recommendation Form, Mr. Chase Here again, there is no indication that Two days later, Respondent filled an
checked that the site visit was the previous UR was reviewed and order for an additional 10,000 du of
acceptable, he also recommended that a compared with the information Mr. oxycodone 30. GX 10F, at 3. The
new utilization report be obtained, Chase had reported as to the percentage corresponding notes states: ‘‘ok to ship,
noting that controlled substances were of City View’s dispensings comprised by CSL is 22,500, they have already
30 percent of City View’s dispensings. controlled substances and the purchased 31,200 this month, this order
Id. at 40. And on the Recommendation percentage comprised by schedule II is for 10K, putting them at 41200 for the
Form, Mr. Chase further wrote: ‘‘We drugs. As for the recommendation that month, UR supports order see file.’’ GX
Need A Utilization Report & Compare it a new UR be obtained, Respondent did 19, at 114. Here again, there is no
to Site Visit.’’ Id. not obtain a new UR until late April, evidence that Respondent obtained an
As for the Feb. 18 order, an MFR entry more than two months later. explanation from City View’s
dated February 18 states: ‘‘Order for On March 3, Respondent filled an pharmacist regarding the increase in its
10,000 Oxy 30 mg CSL Is 22,500, order for 10,000 du of oxycodone 30, orders (which it independently verified)
already at 20,000 this month—last order which according to the SOMS was and obtained a new UR. Nor did it
on Oxy 30 was 2/8/10 + 2/1/10.’’ RX 2D, released, with the reason being that it report the order as suspicious even
at 4. An additional entry below the was ‘‘under csl.’’ GX 10F, at 3; GX 19, though the order placed City View’s
above states: ‘‘limit approved on 10/09 at 114. orders at nearly double its CSL.
for 30k’’ and ‘‘order would be 2500 over On March 12, Respondent filled an Moreover, on March 27 (a Saturday),
additional order for 10,000 du of City View placed two orders, each being
98 Both SOMS notes and an MFR note indicate oxycodone 30. GX 10F, at 3. The SOMS for 10,000 du of oxycodone 30. GX 19,
that City View also placed an order for 2,000 du of note of this date states: ‘‘ok to ship, at 114; RX 2D, at 3. City View’s orders
oxycodone on February 16. See GX 19, at 113 (‘‘ok
to ship, under the CSL of 22,500 on OXY, this order
under the CSL of 22,500, this is their thus totaled 61,200 du on a rolling 30-
puts them at 22,000 for the month’’); RX 2D, at 4 2nd order for 10k OXY 30mg this day (as well as on a calendar month)
(‘‘Order for 2000 oxy CSL 22,500 already ordered month.’’ GX 19, at 114. See also RX 2D, basis, and were nearly three times the
20,000 this month. This order puts them at 22,000 at 3 (MFR note: ‘‘Order for 10,000 Oxy CSL and more than double the previous
for the month.’’). The ARCOS report does not,
however, list an order on either this date or of this
30 mg—this order is under CSL of highest month’s shipments. While on
size as having been filled by Respondent. GX 10F, 22,500 they purchased 30k last March 29 Respondent shipped only
at 3–5. month.’’). However, the March 12 order 10,000 du, it again justified the
shipment on the ground that the ‘‘UR oxycodone 30 to City View on a rolling today.’’ RX 2D, at 1. An additional MFR
supports release—places CSL @51,200 30-day basis. Id. The SOMS note for the note of the same dates states: ‘‘UR
for current period.’’ RX 2D, at 3; GX transaction states: ‘‘ok to ship, OXY received—supports Oxy increase CSL @
10F, at 3. 30mg, already purchased 20K this 54k for current Period.’’ Id.
An MFR note corresponding to the month this order is for 10K putting them The UR covered March 1–30, 2010.
second March 29 order states that at 30K for the month UR supports order RX 2D, at 26–34. However, the UR was
Respondent called City View’s (4/12/10) (last month they were at clearly incomplete as it did not list the
pharmacist, who ‘‘said that he placed 51200).’’ GX 19, at 114. Here again, total number of prescriptions and
this order to be released on April 1, while the order exceeded the CSL, there dosage units which were dispensed
2010, please hold order until 4/1/10.’’ is no evidence that Respondent during the period. Compare id. at 34,
RX 2D, at 3. While that may be, contacted the pharmacy to obtain an with id. at 71 (last page of March 09 UR
Respondent did not document that it explanation for the order and a new UR. providing this information) and id. at
questioned the pharmacist about the On April 19, Respondent filled a 100 (last page of Feb. 08 UR providing
order it did fill that day, further order by City View for 10,000 du this information). However, a Diversion
notwithstanding that the orders it filled of oxycodone 30. GX 10F, at 4. Here Investigator calculated the total
during March represented a more than again, upon filling the order, dispensings listed on the UR at 178,458
70 percent increase from the previous Respondent had shipped 61,200 du of du. GX 49B, at 53.
month’s orders, and it also failed to oxycodone 30 to City View on a rolling The UR showed that City View had
obtain a new UR. Nor did Respondent 30-day basis. Id. The MFR note dispensed 586 prescriptions totaling
report the orders as suspicious. Yet here pertaining to the order states: ‘‘released 93,943 du of oxycodone 30 during the
again, City View’s CSL was increased order for 10k Oxy 30mg, with this order period as well as 98 prescriptions
even though Respondent repeatedly they are at 40k for the month,’’ RX 2D, totaling 10,746 du of oxycodone
failed to follow its own policies and at 3; and the SOMS note states: ‘‘puts 15.100 Id. at 32–33. Of consequence, City
procedures for verifying the legitimacy them at 40k for the month, UR soppurts View’s dispensings of oxycodone 30 had
of the pharmacy’s orders. [sic] order (4/19/10).’’ GX 19, at 114. nearly doubled from the amount on the
In April, Respondent continued its Again, there is no evidence that previous UR (47,472 du) and comprised
practice of failing to follow its policies Respondent obtained an explanation for more than 52.5 percent of its total
and procedures when City View’s the order and a new UR from City View. dispensings. The UR also showed that
oxycodone orders clearly exceeded the On April 21, Respondent filled an City View’s dispensings of oxycodone
CSL. On April 1, Respondent filled the order by City View for 2,000 du of 15 had more than tripled from the
order for 10,000 du of oxy 30 which City oxycodone 15 mg, and on April 22, it amount on the previous UR (3,715 du).
View had previously submitted. GX filled an order for 2,000 du of And the UR further showed that City
10F, at 4. Even assuming that oxycodone 30. GX 10F, at 4. Upon View’s dispensings of alprazolam 2 mg,
Respondent had a valid basis for filling the April 21 order, Respondent another controlled substance highly
resetting City View’s oxycodone CSL to had shipped 62,000 du within the sought after by narcotic abusers for use
51,200 du based on the March rolling 30-day period, and on filling the as part of a drug cocktail, now totaled
shipments, upon filling this order, April 22 order, it had shipped 64,000 du 19,738 du, more than double the
Respondent had shipped 61,200 du of within the rolling 30-day period. GX amount on the previous UR (9,722). Id.
oxycodone 30 on a rolling 30-day basis. 10F, at 3–4. A SOMS note dated April at 26.
GX 10F, at 3–4. Yet the MFR note 21 simply says ‘‘ok to ship,’’ 99 and two However, here again, notwithstanding
corresponding to the order states only SOMS notes dated April 22 state: ‘‘ok to that its policies and procedures required
that ‘‘order was released from 3/29’’ and ship-oxycodone increase released off ur Respondent to obtain a reason for why
the SOMS note states: ‘‘ok to ship- support’’ and ‘‘ok to ship-oxycodone City View’s order exceeded the CSL,
oxycodone within csl for period.’’ RX increase-current ur supports.’’ GX 19, at and also required a review of its file to
2D, at 3; GX 19, at 114. determine whether the order was
114.
On April 5, Respondent filled another However, at this point, the most ‘‘consistent with legitimate business
order by City View for 10,000 du of recent UR was more than six months practices,’’ RX 78, at 32–33; Respondent
oxycodone 30. GX 10F, at 4. Here again, old, and neither note acknowledges that ignored this information and shipped
upon filling the order, Respondent had City View’s orders were more than the order. It also failed to report the
shipped 61,200 du to City View on a 10,000 du over the purported CSL. And order as suspicious.
rolling 30-day basis and City View’s On May 5, Respondent filled an order
once again, there is no evidence that
orders exceeded the CSL. Id. Yet for 10,000 du of oxycodone 30; on May
Respondent obtained an explanation for
Respondent’s records contain no 10, it filled two orders totaling 20,000
the order and a new UR from City View.
documentation to explain why it du of oxycodone 30 as well as an order
On April 26, Respondent filled an
shipped the order. See generally RX 2D, for 1,000 du of Endocet 10/325; and on
order by City View for 10,000 du of
at 1–6 (MFRs); GX 19, at 111–12 (Ship May 18, it filled a further order for
oxycodone 30, thus again resulting in
to Memos); id. at 114 (SOMS notes 10,000 du of oxycodone. GX 10F. at 4–
the rolling 30-day total of orders (and
during relevant time period). Indeed, 5. Here again, even if the CSL had been
shipments) of 64,000 du. GX 10F, at 3–
there is no SOMS entry for April 5 and raised to 54,000 du based on the April
4. An MFR note discussing the order
the next SOMS entry (April 8) does not orders, upon filling the May 10 orders,
explains: ‘‘Order for 100—Oxy 30mg
contain the name of a reviewer and a City View’s oxycodone orders totaled
already at 44,000 this month[.] [T]his
reason, thus indicating that the order 65,000 du on a rolling 30-day basis and
order will put them at 54,000[,] most
(whether it was for oxycodone or some thus exceeded the CSL. Incredibly, a
they have gotten was 51,200 (last SOMS note of the same dates states: ‘‘Ok
other drug) was not reviewed. month)[.] [C]alled to get an updated
So too, on April 12, Respondent filled UR[.] TT [pharmacist] he will fax it over 100 In contrast to the previous UR which ranked
a further order by City View for 10,000
City View’s dispensing by the quantity dispensed
du of oxycodone 30. GX 10F, at 4. Here 99 While this note does not refer to a specific for each drug by NDC, this UR listed the drugs in
again, upon filling the order, drug, it is the only SOMS note dated April 21, 2010. alphabetical order. Compare RX 2D, at 26–34, with
Respondent had shipped 61,200 du of GX 19, at 114. id. at 62–71.
to ship-oxy within csl for period.’’ GX business was ‘‘slow while [he] was orders for 5,000 du of oxycodone 30 and
19, at 115. there’’ and that he observed ‘‘nothing 1,600 du of oxycodone 15) states that
So too, upon filling the May 18 order, untoward.’’ Id. City View’s order was ‘‘edited to meet
Respondent had shipped 65,000 du of On July 1, Respondent filled an order CSL,’’ GX 19, at 117; and on a rolling
oxycodone to City View on a rolling 30- for 10,000 du of oxycodone 30, and on 30-day basis, City View’s oxycodone
day basis and thus exceeded the CSL. July 6, it filled orders for 5,000 more du orders actually totaled 34,700 du.103 GX
Yet the corresponding SOMS note of oxycodone 30 and 2,000 du of 10F, at 4–5. Here again, while the
states: ‘‘ok to ship undr [sic] CSL leave oxycodone 15. GX 10F, at 4. An MFR September 28 orders clearly placed City
10,200 for May on 5/18.’’ Id. at 115. And note dated July 7 states that the site visit View over its CSL, there is no evidence
a note in the Ship to Memos states: was reviewed and that the account was that Respondent obtained an
‘‘PER COMMITTEE CSL IS 51200 placed on compliance hold pending the explanation for the orders and a new
WHICH IS THE MARCH CSL. PLEASE receipt of an updated UR and that the UR. And it also failed to report the
DO NOT SHIP OVER 51200 WITHOUT CSL was set at 28,700. RX 2D, at 1; see orders as suspicious.
REVIEWS.’’ Id. at 111. See also RX 2D, also GX 19, at 111 (noting compliance In October, Respondent filled orders
at 1.101 While Respondent conducted a hold and that ‘‘full ur for june is placed on five different days totaling
due diligence survey by telephone, even needed’’). 29,300 du, including 20,000 du of
assuming that it considered the various Notwithstanding this entry, oxycodone 30; 8,000 du of oxycodone
statements discussed in the footnote to Respondent did not obtain a new UR 15; and 1,300 du of Endocet. GX 10F, at
be the explanation for the order (such as from City View until on or about 4–5. Moreover, on each date, upon
that it was servicing two small nursing December 2, nearly five months later. filling the orders, City View exceeded
homes), there is no evidence that it RX 2D, at 7. According to the Ship to the CSL of 28,700 du on a rolling 30-day
independently verified any of these Memos, on July 13, Respondent basis.
statements. Nor did it obtain a new UR. conducted an account review using the Specifically, on October 5,
And it did not report the order as previous UR and the recent site visit, Respondent filled orders for 7000 du
suspicious. after which it took City View off of the (5,000 oxycodone 30 and 2,000
On June 1, 7, and 14, Respondent compliance hold and apparently oxycodone 15), bringing City View’s
filled three separate orders for 10,000 du maintained its CSL at 28,700 du. GX 19, rolling 30-day total to 35,300 du.104 Id. A
of oxycodone 30 mg, for a total of 30,000 at 111. SOMS note of this date simply states:
du for the month. GX 10F, at 4. A SOMS Yet on July 13, Respondent also filled ‘‘ok to ship order for 20 OXY 15mg &
note of June 1 states that this order was an order for 10,000 du for oxycodone 50 OXY 30mg is under CSL.’’ GX 19, at
‘‘flagged for frequency’’ but was released 30, bringing City View’s total filled 117.
because the order was ‘‘not excessive.’’ orders to 37,000 du on a rolling 30-day On October 12, Respondent again
GX 19, at 115. A subsequent MFR note basis. GX 10F, at 4. Respondent’s filled orders for 7000 du (5,000
states that Respondent decreased City records contain no explanation for why oxycodone 30 + 2,000 oxycodone 15),
View’s allocation of oxycodone per the order was shipped given that it bringing City View’s rolling 30-day total
policy. RX 2D, at 1. The note, however, placed City View’s orders at more than to 35,200 du.105 GX 10F, at 4–5. The
does not state what City View’s new 8,000 du above the new CSL and that corresponding SOMS notes states: ‘‘rwr
oxycodone CSL was. City View had not provided a new Oxy under CSL leaves 14,400 as of 10/
On June 28, Respondent performed a UR.102 Nor was the order reported as 12.’’ GX 19, at 117.
new site inspection of City View. See id. suspicious. On October 20, Respondent again
at 35–37. During the inspection, City Next, on July 28, Respondent filled an filled orders for 7,000 du (5,000
View asserted that it filled ‘‘only in order for 1,700 more du of oxycodone oxycodone 30 + 2,000 oxycodone 15),
town RX,’’ that it filled an average of 30. GX 10F, at 4. While City View’s bringing City View’s rolling 30-day total
100 prescriptions per day, that 30 filled orders totaled 28,700 du, a SOMS to 35,200.106 GX 10F, at 4–5. Here again,
percent of the prescriptions were for note of the same date states: ‘‘rwr Oxy a SOMS note simply states ‘‘oxy under
controlled substances, and that 20 edited to meet CSL for July.’’ GX 19, at csl.’’ GX 19, at 117.
percent were for schedule II drugs. Id. 116. Here again, City View’s oxycodone On October 26, Respondent again
at 36. The inspector reported that City orders exceeded the CSL, and yet there filled orders for 7,000 du (5,000
View was located two blocks from a is no evidence that Respondent obtained 103 In addition to the September orders, this total
hospital and that there were pain clinics an explanation for the order as well as includes orders filled on August 30 for 5,000 du of
in the area. Id. at 37. He also reported a new UR. Nor did it report the order oxycodone 30 and 1,000 du of oxycodone 15. GX
that City View appeared to have a full as suspicious. 10F, at 4; GX 19, at 116.
selection of pharmaceuticals available In August, Respondent filled orders 104 The total includes Sept. 9 orders for 7,400 du
and that it had a limited supply of front totaling 20,300 du, including 15,000 du (5,000 oxycodone 30; 2,000 oxycodone 15; and 400
Endocet 10/650); Sept. 16, orders for 7,000 du
store items. Id. Finally, he reported that of oxycodone 30, and 3,000 du of (5,000 oxycodone 30 and 2,000 oxycodone 15);
oxycodone 15. GX 10F, at 4–5. In Sept. 23 orders for 7,300 du (5000 oxycodone 30;
101 On May 18, 2010, Respondent conducted an
September, Respondent filled orders 2,000 oxycodone 15; and 300 Endocet 5); and Sept.
updated due diligence survey, apparently by 28 order for 6,600 du (5,000 oxycodone 30 and
telephone. RX 2D, at 38. According to the survey, totaling 28,700 du, including orders for 1,600 oxycodone 15). GX 10F, at 4–5.
City View reported that its daily prescription 20,000 du of oxycodone 30; 7,600 du of 105 The total includes Sept. 16 orders for 7,000 du
average was 100–120, that the ratio of controls to oxycodone 15; and 1,100 du of Endocet (5,000 oxycodone 30 and 2,000 oxycodone 15);
non-controls was 30–70 percent, that it was near a products. However, a SOMS note dated Sept. 23 orders for 7,300 du (5000 oxycodone 30;
medical center, and that it was now servicing two 2,000 oxycodone 15; and 300 Endocet 5); and Sept.
small nursing homes. Id. Here again, there is no September 28 (which corresponds to 28 order for 6,600 du (5,000 oxycodone 30 and
evidence that Respondent attempted to verify City 1,600 oxycodone 15), and the October 5 orders for
View’s claims regarding the ratio of controlled to 102 A Ship to Memo of the same date made by Ms. 7,000 du. GX 10F, at 4–5.
non-controlled drugs dispensed which was clearly Seiple merely states: ‘‘accoutn [sic] review using ur 106 The total includes the Sept. 23 orders for 7,300
inconsistent with the March 2010 UR. Nor did it on file for 3/10 new site visit complete 6/28/10 du (5000 oxycodone 30; 2,000 oxycodone 15; and
inquire as to the names of the nursing homes City maintaining soms csl.’’ GX 19, at 111. A July 12, 300 Endocet 5); the Sept. 28 orders for 6,600 du
View was servicing, how many residents the homes 2010 SOMS note (there being no SOMS note for (5,000 oxycodone 30 and 1,600 oxycodone 15), and
had, and the types and quantities of prescriptions July 13) made by Ms. Seiple states: ‘‘rwr order the October 5 and 12 orders for 7,000 and 7,300 du.
it filled for their residents. sitevisit [sic] and ur on fiel [sic].’’ Id. at 116. GX 10F, at 4–5.
oxycodone 30 + 2,000 oxycodone 15), any of the orders as suspicious. On and alprazolam 2 mg dispensed by City
bringing City View’s rolling 30-day total December 2, Respondent filled an order View with the quantities Respondent
to 34,900 du.107 GX 10F, at 4–5. A for 700 du of two Endocet products. GX distributed to it, with the notes
SOMS note of this date states: ‘‘ok to 10F, at 5. According to MFR notes, the indicating that City View’s Xanax CSL
ship, size not excessive on a total of 70 same day, an employee of Respondent was being reduced to 3,800 du or 70
OXY this order puts them at 28300 for requested that City View provide a new percent of the November UR. Id.
the month, CSL is 28700.’’ GX 19, at UR; City View provided a UR for the Thereafter, the notes state ‘‘hold order
117. month of November. However, the UR until review complete’’ and ‘‘concerns
Finally, on October 27, Respondent was incomplete, a fact which Ms. Seiple regarding # of doses dispensed as
filled an order for 1,000 du of Endocet herself noted in an MFR dated opposed to noncontrols’’ and then refer
10, bringing City View’s rolling 30-day December 17. RX 2D, at 1. Indeed, this to a phone call made to City View’s
total to 35,900 du. GX 10F, at 4–5. A UR clearly did not list City View’s total pharmacist on December 15. Id.
SOMS note merely states: ‘‘rwr under 30 dispensings of all prescription (emphasis added). According to the
on csl of oxy.’’ GX 19, at 117. products.108 Id. at 14. note, during the call Respondent told its
With respect to each of these dates, Notwithstanding that City View had pharmacist that its ‘‘order will hold.’’ Id.
Respondent filled orders which clearly provided an incomplete UR, and that Further notes state ‘‘only purchases
placed City View’s orders over the this was the first UR it had obtained from Cardinal & Masters’’ and
oxycodone CSL on a rolling 30-day since the March 2010 UR, on December ‘‘insurance how does he make profit??’’
basis. Yet, there is no evidence that 6, Respondent filled orders for 8,000 du Id.
Respondent ever obtained an of oxycodone 30 and 1,000 du of A note dated December 16 recounts
explanation for the order, which it then oxycodone 15.109 GX 10F, at 4–5. While that City View’s file was ‘‘reviewed in
independently verified, and a new UR. there are three entries in the SOMS length.’’ Id. Therein, Ms. Seiple further
And it did not report any of the orders notes for this date, only one lists the wrote that she ‘‘spoke to customer on
as suspicious. name of a reviewer (Ms. Seiple) with the phone multiple times regarding ratio of
Similarly, Respondent filled orders following explanation: ‘‘rwr under csl controls & noncontrols,’’ as well as ‘‘in
totaling 28,700 du for the month of and last 30 days not excessive due to regards to ratio cash vs. insurance,’’ and
November. This included orders for allocation of market producet [sic].’’ GX that per Respondent’s policy, City View
5,000 du of oxycodone 30 and 2,000 du 19, at 118. was ‘‘placed in noncontrolled status due
of oxycodone 15 on November 2; orders A note in the Ship to Memos (made to customer indicating cash in OXY.’’
for 6,500 du of oxycodone 30 on and on Jan. 8, 2011) states that City View’s Id.111
500 Endocet on November 9; 8,000 du account was placed on compliance hold On December 17, City View requested
of oxycodone 30 on November 18, and on December 9 ‘‘due to updated a review of its status. GX 19, at 111.
6,700 du of oxycodone 30 on November information [being] needed’’ and that Respondent requested that City View
29. GX 10F, at 4–5. Here again, on each the account was terminated on provide a UR for the month of October,
occasion, City View’s orders placed its December 16 ‘‘due to business model of which it did. RX 2D, at 1. The UR
oxycodone orders over 28,700 du CSL insurance ratio.’’ GX 19, at 111; see also showed that during October 2010, City
on a rolling 30-day basis. RX 2D, at 1. View had dispensed a total of 310
Specifically, City View’s filled orders Additional notes which are dated prescriptions totaling 51,725 du of
from October 5 through November 2 December 2, but which may have been oxycodone 30 and 148 prescriptions
totaled 36,300 du; its filled orders from added after the fact,110 state that City totaling 11,259 du of oxycodone 15. RX
October 12 through November 9 also View’s November 2010 UR ‘‘will be low 2D, at 16–17. According to the UR, City
totaled 36,300; and its filled orders from due to allocation in market.’’ RX 2D, at View’s total dispensings for the month
October 20 through November 18 2. Other notes for the entry list figures were 122,626 du.112 Id. at 25. Thus, City
totaled 37,000 du. GX 10F, at 4–5. of 35,530 and 5,400; these figures View’s dispensings of oxycodone 30
SOMS notes for both November 2 and correspond to line entries on the UR for alone amounted to 42 percent of its total
18 show that Ms. Seiple released the City View’s dispensings of oxycodone dispensings, and its dispensings of both
orders; as for the reason, Ms. Seiple 30 (with the NDC for product oxycodone 30 and 15 amounted to 51
wrote ‘‘rwr’’ for both orders. GX 19, at manufactured by Mallinckrodt) and percent of its total dispensings.
alprazolam 2 mg. Compare id. with id. Thereafter, Respondent did not re-
117–18.
at 7 (UR line entries #s 1 & 5). instate City View as a controlled
As for the November 9 order, the
Additional notes state: ‘‘11/10 25200 substance customer. However, there was
SOMS note states: ‘‘rwr Oxy within
buying pattern under CSL leaves 14,700 Malinkrodt [sic] purchased’’ and ‘‘1000
as of 11/09/10 @947am.’’ GX 19, at 118. KVK.’’ Id. at 2. As found above, these 111 This entry includes an additional statement
numbers correspond to Respondent’s which suggests that Respondent was ‘‘not clear on
As for the November 29 order, the [City View’s] business model.’’ RX 2D, at 2.
SOMS note states: ‘‘order edit to 67 total shipments of 26,200 du of However, because of legibility issues, the meaning
bottles from 70,’’ id., thus once again oxycodone 30 during the month of of the rest of the sentence cannot be determined.
establishing that City View’s actual November 2010. Still more notes appear 112 This included three prescriptions for Gavilyte-
to compare the number of oxycodone 15 N Solution, which according to the UR totaled

orders totaled 29,000 du and again 12,000 units. RX 2D, at 17. Gavilyte-N Solution is
exceeded the CSL. 108 The UR also listed substantially fewer drugs
a product which is mixed with water to create a
Here again, notwithstanding that each solution with a volume of four liters; it is used to
than other URs. Compare RX2D, at 14 (listing 272 clean a patient’s bowels before undergoing
of City View’s November orders placed
drugs), with id. at 34 (Mar. 2010 UR listing 396 procedures such as a colonoscopy. See http://
it over the oxycodone CSL, Respondent drugs although also missing total dispensings); id. www.drugs.com/pro/gavilyte-n.html. Thus, while
failed to obtain an explanation for the at 71 (Sept. 2009 UR listing 401 drugs); id. at 100 Gavilyte-N is a prescription product, assigning a
(Feb. 2008 UR listing 495 drugs). quantity of 12,000 du to three prescriptions
orders, which it then verified, as well as 109 A SOMS note dated Dec. 4, 2010 states: ‘‘oxy
arguably distorts City View’s total dispensings of all
new URs. And again, it did not report edited off order mallinkrodt [sic].’’ GX 19, at 118. drugs, as well as its dispensing ratio of controlled
110 This note is written on a blank sheet following to non-controlled drugs. However, the total quantity
107 The total includes the Sept. 28 orders for 6,600 the lined MFR page which contains notes dated of dispensings as listed on the UR was used in
du (5,000 oxycodone 30 and 1,600 oxycodone 15), Dec. 16 and 17, but not Dec. 2. See RX 2D, at 1– calculating the dispensing percentages for
and the prior October orders. GX 10F, at 4–5. 2. oxycodone 30 and oxycodone 15 and 30.
really nothing new in the information substances, and was taking affirmative pattern or frequency’’ and that ‘‘[a]ll
Respondent had developed on City steps to meet those obligations.’’ RX such orders were released only after
View. 103, at 53. review by [the] Compliance
In her declaration, Ms. Seiple asserted In her declaration, Ms. Seiple also Department.’’ RX 103, at 54. As found
that because City View’s PIC had asserted that City View’s PIC had previously, the SOMS did not become
‘‘provided an explanation of the policies explained that the pharmacy’s ‘‘business operational until August 2009.
and procedures [it] used to prevent model included marketing to ‘closed Moreover, as found above, numerous
diversion,’’ the ‘‘Compliance door’ facilities such as nursing homes, orders were released even though
Department believed that City View hospice programs, and in-patient Respondent’s personnel failed to
understood its obligations to prevent the medical facilities.’’ Id. Yet, there is no comply with its purported policy which
diversion of controlled substances, and indication that this explanation was required that it contact the pharmacy
was taking affirmative steps to meet provided during the initial due and obtain an explanation for the order,
those obligations.’’ RX 103, at 53. The diligence survey, RX 2d, at 73–75; and which it then independently verified, as
answers provided by City View’s PIC during the June 2008 site visit, the well as that it obtain a new UR. Indeed,
reflected only that when confronted consultant had noted only that City Respondent rarely obtained new URs, as
with a suspicious prescription, he View’s servicing of each of these types Ms. Seiple’s declaration makes clear. Id.
would call the prescriber; more, of facilities was ‘‘pending.’’ Id. at 106. Ms. Seiple further acknowledged that
however, is required under federal law. Significantly, nearly two years later, Respondent ‘‘was aware of the volume
See United States v. Hayes, 595 F.2d City View reported only that it serviced of oxycodone and other controlled drugs
258, 261 (5th Cir. 1979) (‘‘Verification two small nursing homes, with 20–30 being dispensed by City View, and the
by the issuing practitioner on request of beds. Id. at 38. percentage of controlled drugs
the pharmacist is evidence that the Ms. Seiple also asserted that the dispensed relative to other drugs.’’ Id.
pharmacist lacks knowledge that the pharmacy was located within two Unexplained by Ms. Seiple is why she
prescription was issued outside the blocks of two hospitals. RX 103, at 53. did not find it suspicious that City
scope of professional practice. But it is Yet this was not noted by either the View’s actual dispensings of controlled
not an insurance policy against a fact consultant following the June 2008 site substances (including its schedule II
finder’s concluding that the pharmacist visit or by Mr. Chase after the February dispensings) constituted a much greater
had the requisite knowledge despite a 2010 inspection. While it was noted in percentage of its total dispensing than
purported but false verification.’’). the report for a third site visit (June 28, the dispensing ratio identified in the
Significantly, when asked whether he 2010), the names of the hospitals were August 2009 Compliance Review.
ever refused to fill prescriptions, the PIC not identified, and in any event, the Compare RX 2D, at 62–63, 71 (Sept.
responded that he did so only if a mere proximity of a pharmacy to a 2009 UR showing that oxycodone 30
patient would not present his driver’s hospital does not justify dispensing dispensings alone comprised 41 percent
license or if the physician had a levels of oxycodone 30 which are of total dispensings) with RX 13, at 1
problem with his/her DEA registration grossly disproportionate to the (suggested questions document with
or other disciplinary action. dispensings of the most commonly notation that typical pharmacy’s
However, a pharmacist has a duty to prescribed drugs. Indeed, in City View’s dispensing ratio of controlled to non-
fill only those prescriptions which are case, its URs consistently showed that controlled drug as 20 to 80 percent); GX
issued for a legitimate medical purpose highly abused controlled substances 51B, at 4 ¶ 12 (testimony of Wayne
by a practitioner acting within the usual (including other strengths of oxycodone Corona that DEA ‘‘advised us to focus
course of professional practice, see 21 and alprazolam) were predominant on whether a customer . . . dispensed
CFR 1306.04(a), which requires that a among the pharmacy’s dispensings. a high percentage of controlled
pharmacist must ‘‘pay[] attention to the Ms. Seiple stated that City View had substances as compare[d] to non-
‘number of prescriptions issued, the informed Respondent ‘‘that it filled controlled substances’’).
number of dosage units prescribed, the prescriptions for patients from several Indeed, discussing the February 2010
duration and pattern of the alleged pain clinics, and identified the site visit, Ms. Seiple simply noted that
treatment,’ the number of doctors physicians who wrote the prescriptions ‘‘Mr. Chase did not note any suspicious
writing prescriptions and whether the for those patients.’’ RX 103, at 53–54. activity during his inspection, and
drugs prescribed have a high rate of While it is undoubtedly true that this determined that the site inspection was
abuse.’’ Medicine Shoppe-Jonesborough ‘‘accounted for the volume of pain acceptable.’’ RX 103, at 55. Yet Mr.
v. DEA, 300 Fed. Appx. 409, 412 (6th medications being dispensed, and the Chase recommended that a new UR be
Cir. 2008). Moreover, during the June percentage of oxycodone dispensed obtained and compared to the site visit.
25, 2008 site visit, Respondent’s relative to other drugs,’’ id. at 54, this RX 2D, at 40. Ms. Seiple entirely failed
consultant simply drew a dash in the does not establish that the oxycodone to address why Mr. Chase’s
place for answering the question was being dispensed by City View recommendation was not followed until
whether the pharmacy could supply a pursuant to prescriptions that were more than two months later. See RX
copy of any written policies and issued by the identified physicians for 103, at 55. Moreover, as found above,
procedures it ‘‘might have in place to a legitimate medical purpose. See 21 while City View’s pharmacist had told
prevent drug diversion and doctor CFR 306.04(a). Nor is there any Mr. Chase that schedule II drugs were
shopping,’’ thus suggesting that there evidence that Respondent verified the 15 percent of all dispensings, the March
were no written policies, a fact licensure status of the identified 2010 UR showed that City View’s
confirmed during the June 2010 site physicians and whether they had any dispensings of oxycodone 30 had nearly
visit. RX 2D, at 36, 105. Thus, I find that specialized training or board doubled from the level of the previous
the explanation City View provided as certification in pain management. UR (totaling nearly 94,000 du on the
to its policies and procedures to prevent Next, Ms. Seiple asserted that after new UR), and its dispensings of this
diversion was clearly inadequate to City View’s account was approved, the drug alone comprised 52.5 percent of its
support the conclusion that the SOMS ‘‘identified and held any order total dispensings. So too, the UR
pharmacy ‘‘understood its obligations to for controlled substances . . . that showed a doubling in City View’s
prevent the diversion of controlled deviated from its typical volume, dispensings of alprazolam 2 mg, another
controlled substance highly sought after Medical Plaza Pharmacy Hillmoor Plaza, d/b/a IV Plus pharmacy.
by drug abusers. Medical Plaza Pharmacy was a See id. at 133–34. On the checklist for
As for why Respondent continued to community pharmacy located in the due diligence review on Hillmoor
fill City View’s orders and failed to Plantation, Florida. RX 2F, at 137. Plaza, Ms. Seiple wrote: ‘‘N/C too new
report them as suspicious even when According to Respondent’s due 6 month review.’’ Id. at 130. Notably, no
diligence file, Medical Plaza became a such note appears on the checklist for
they were held by the SOMS, Ms. Seiple
customer of Respondent in November Medical Plaza Pharmacy, and while the
offered several inadequate explanations.
2008. Id. at 131. However, documents in words ‘‘site visit’’ are written on the top
These included that Respondent
the due diligence file indicate that the of this document, id. at 129, the
‘‘specifically investigated the reasons
pharmacy was sold the next month and evidence shows that Respondent did not
why City View’s ordering and
a printout verifying the pharmacy’s perform a site visit until June 18, 2009.
dispensing patterns were as indicated Id. at 56. Moreover, Respondent did not
on the URs,’’ that ‘‘it appeared to be a license states that the new owner’s
license was issued on December 30, obtain a UR from the pharmacy until
full-line pharmacy that was dispensing August 11, 2009, nearly five months
a large variety of both controlled and 2008. Id. at 131, 137.114 Respondent also
verified the license of its PIC; the after it had approved Medical Plaza to
non-controlled drugs, and appeared to purchase controlled substances.
be servicing patients of nearby verification showed that he had not
been subject to discipline. Id. at 138. In April 2009, Respondent filled three
hospitals, closed-door facilities, and orders placed by Medical Plaza totaling
On March 24, 2009, Respondent
pain management physicians,’’ RX 103, conducted an initial due diligence 5,000 du of oxycodone 30; on May 1, it
at 54, and that ‘‘based on [Respondent’s] survey for purchasing controlled filled an order for 4,800 du of
extensive investigation, it determined substances, speaking to the pharmacy’s oxycodone 30; and on June 2, it filled
that the orders it shipped to City View PIC. Id. at 131. According to the survey, an order for 5,000 du of oxycodone 30.
were not suspicious.’’ Id. at 55. the PIC reported that Medical Plaza’s GX 10F, at 42. Respondent thus shipped
I find, however, that the reality is far daily prescription average was 120 and to Medical Plaza 14,800 du of the drug
different, as Respondent simply that it filled schedule II prescriptions. before it even conducted a site visit,
accepted at face value whatever Id. He further reported that 35 to 40 which took place on June 18. RX 2F, at
superficial explanation it believed percent of the prescriptions were for 56.
would support its continued selling of schedule II drugs. Id. However, with During the site visit, Respondent’s
controlled substances while ignoring respect to the percentage of its inspector noted that Medical Plaza was
numerous red flags as to the legitimacy dispensings comprised by all controlled located in a medical center next to a
of the pharmacy’s dispensing of substances, the PIC stated that he was hospital and appeared to be very busy.
controlled substances. And with respect ‘‘unsure’’ and ‘‘didn’t want to give [the] Id. at 61. He also noted that the
to those orders which were held by the wrong answer.’’ Id. pharmacy was not a specialty pharmacy,
The PIC also reported that did not engage in mail order business,
SOMS, Respondent typically did not
Amerisource was Medical Plaza’s that it sold front store items and
investigate the orders as it routinely
primary wholesaler, that he did not fill appeared to be a full service pharmacy,
failed to contact City View to obtain a
prescriptions that had been issued ‘‘via that it was not affiliated with any Web
reason for the order, which it
the Internet,’’ that the pharmacy sites, and did not fill prescriptions for
independently verified.
accepted insurance, and that 70 to 80 physicians who were primarily engaged
Remarkably, Ms. Seiple explained percent of the prescriptions were paid in pain management. Id. at 58–60. He
that City View’s account was terminated for by insurance. Id. With respect to its also documented that the pharmacy had
because Respondent ‘‘developed policies and procedures, the PIC stated used at least two other
concerns following its review of URs [it] that he had refused to fill prescriptions distributors.115 Id. at 59.
obtained from City View,’’ and that if he did not have the ‘‘item in stock’’ Respondent’s inspector then noted
‘‘[d]uring a discussion of City View’s or if he felt that the prescription was that the pharmacy filled 100–120
dispensing patterns and volume [she] ‘‘not valid.’’ Id. at 132. He also reported prescriptions per day, that controlled
had with [its PIC] on or about December that he did not fill controlled substance substances comprised 60 percent of the
6, 2010, [she] became concerned prescriptions written by out-of-area or prescriptions, and that schedule II drugs
because of discrepancies in the out-of-state doctors. Id. As for whether comprised 20 percent of the
information he provided to [her] and the he filled controlled substance prescriptions. Id. According to the
dispensing history set forth on the UR.’’ prescriptions for out-of-area or out-of- inspector, 25 percent of the
Id. at 55–56. As found above, notes in state patients, the PIC reported that he prescriptions were paid for with cash.
Respondent’s records show that there ‘‘normally’’ did not for ‘‘CS,’’ but did if Id. at 60. The inspector further noted
were concerns as to the number ‘‘of the patient was ‘‘visiting’’ and ‘‘g[o]t that Medical Plaza ‘‘want[ed] an
doses dispensed as opposed to hurt or something.’’ Id. At the bottom of increase in Oxy’s—Maybe to Next
noncontrols,’’ and the ‘‘ratio of controls the form, Respondent’s employee noted Tier?’’ and that this was ‘‘ok by
& noncontrols.’’ RX 2D, at 2. Yet these that the PIC had ‘‘answered questions me!’’ 116 Id. at 58. In his concluding
issues had been present for the entire ok.’’ Id. comments, the inspector further wrote:
period in which Respondent distributed On the same day, Respondent also ‘‘Masters needs to meet this pharmacy’s
controlled substances to City View, and conducted the same survey of the needs.’’ Id. at 61.117
Ms. Seiple offered no credible
115 The form actually lists a fourth distributor;

explanation for why it took Respondent 114 The due diligence file also includes
documents establishing that the owners of Medical however, the name of the distributor is in a
so long to terminate the account.113 different color and different handwriting than the
Plaza also owned Hillmoor Plaza Pharmacy, Inc.,
which did business under the name of IV Plus, and majority of the notations on the form. RX 2F, at 59.
113 While Respondent’s records note that there 116 Next to this is the following notation: ‘‘will be
was located in Wellington, Florida. RX 2F, at 139–
were concerns over the ratio of cash to insurance 40. However, the Government’s evidence focused reviewed by committee JS. 8–21–09.’’ RX 2F, at 58.
and the ‘‘business model of insurance ratio,’’ in her entirely on Respondent’s distributions to the 117 In addition, Respondent’s inspector obtained a
testimony, Ms. Seiple did not cite these as reasons pharmacy located in Plantation. See GX 10F, at 41– copy of a December 23, 2008 Florida DOH
for the termination of the account. 42. Continued
On July 15, 2009, Respondent filled during the June inspection, the was not shipping today[.] The
an order by Medical Plaza for 5,000 du pharmacy’s PIC had represented that ph[arma]cy] was closed.’’ RX 2F, at 1.
of oxycodone 30, and on August 6, it schedule II drugs comprised only 20 Medical Plaza’s orders for 7,000 du of
filled an order for 10,000 du of percent of its prescriptions. oxycodone 30 and 3,000 du of
oxycodone 30. GX 10F, at 42. Moreover, while the UR ranked the oxycodone 15 placed its total
The due diligence file includes a drugs by the number of prescriptions oxycodone orders at 23,600 du on a
‘‘Schedule Drug Limit Increase Request (per NDC) as opposed to the quantity of rolling 30-day basis; however, its
Form.’’ RX 2F, at 110. The form, which dosage units dispensed, with the highest monthly total during the
is dated August 11, appears to have exception of carisoprodol, controlled previous six months was 18,600 du
been submitted by Respondent’s substances were predominant by either during August. GX 10F, at 41–42. Thus,
account manager for the pharmacy. Id. measure. Id. The UR also contained the November 17 orders for oxycodone
A handwritten notation states: ‘‘order on financial information for each drug placed Medical Plaza’s oxycodone
hold’’ and ‘‘please see if we can release including the adjudicated amount, the orders at 5,000 du more than its CSL.
it—Thanks!’’ Id. Further notations, acquisition cost, the profit in dollars, On November 18, a member of the
which were apparently also made by the and profit percentage. See RX 2F, at compliance department contacted
account manager, state: ‘‘Please Review 111–17. However, the data for the most Medical Plaza and conducted a second
customer, In a medical building of 60 dispensed controlled substances were due diligence survey. Id. at 68.
doctors, and next to a hospital. blacked out.120 See id. According to the form, Respondent’s
Dispenses many controls. Thanks,’’ The next day (Aug. 12, 2009), representative asked its owner: ‘‘what is
followed by the initials of the account Respondent filled Medical Plaza’s the pharmacy’s primary customer
manager. Id. The form also includes two orders for 5,000 du of oxycodone 15 and base?’’ Id. Respondent’s representative
additional notes which were 3,600 du of Endocet 10/325. GX 10F, at checked the box for ‘‘community,’’
handwritten diagonally across the page 42. A SOMS note of the same date leaving blank such boxes as ‘‘Geriatric,’’
and initialed by Ms. Seiple. The first states: ‘‘order does not exceed current ‘‘Worker Comp,’’ and ‘‘Pain
states: ‘‘We Donot [sic] Do limit size limit, ok to ship.’’ GX 22, at 143. Management.’’ Id. Respondent’s
increases’’; the second states: Please Moreover, the MFR notes establish that representative also documented that the
have UR sent in for review by the compliance committee did not pharmacy did not do any ‘‘Institutional’
committee.’’ Id. conduct its review of the site visit and or ‘‘Closed Door Business.’’ Id.
The same day, Respondent finally UR until August 21. RX 2F, at 1. Yet the According to the form, Medical Plaza
obtained a UR from Medical Plaza. The two orders were shipped nine days reported that McKesson was its primary
UR covered the month of July and earlier.121 wholesaler and that it also purchased
showed that the pharmacy had Respondent did not ship any from Anda. Id. It also reported that its
dispensed a total of 201,444.74 du for oxycodone to Medical Plaza during daily prescription average was 120, that
all prescription products. RX 2F, at 127. September 2009, and in October, it it filled ‘‘C2s,’’ and that its ‘‘daily ratio
The UR further showed that Medical filled a single order for 10,000 du of of controls to non controls’’ was ‘‘40/
Plaza had dispensed 369 prescriptions oxycodone 30 and two orders totaling 60.’’ Id. It further reported that it
totaling 61,130 du of oxycodone 30 mg 1,000 du of OxyContin 80. GX 10F, at accepted insurance as well as Medicare
and 229 prescriptions totaling 27,122 du 41–42. An MFR note dated November and Medicaid and that ‘‘70–80%’’ of the
of oxycodone 15 mg.118 Id. at 111–12. 11 states that ‘‘UR was received on 8/ prescriptions were paid for ‘‘by
Thus, Medical Plaza’s dispensings of 11 for month of July’’ and ‘‘Need survey insurance.’’ Id.
As for its policies and procedures,
oxycodone 30 mg alone amounted to updated—completed 11/18.’’ RX 2F, at
Medical Plaza again reported that it
more than 30 percent of its total 1.
filled prescriptions for out-of-state or
dispensings, and its dispensings of both On November 17, Respondent filled
out-of-area patients visiting the area but
dosage strengths (which totaled 88,252 Medical Plaza’s orders for 1,200
that it did not fill prescriptions written
du) amounted to nearly 44 percent of its OxyContin 80, 1,200 of Endocet 10/325
by out-of-state or out-of-area physicians.
total dispensings. Moreover, Medical and 200 du of Endocet 5/325. GX 10F,
Id. at 69. It also denied soliciting
Plaza’s dispensings of all oxycodone at 41–42. An MFR note dated November
practitioners and retirement
products including OxyContin and 17 states: ‘‘order flagged for oxy 15 + 30
communities for business. Id.
combination drugs such as Endocet 10/ order is for 100, CSOS limit is 5000 To prevent doctor shopping, Medical
325 and 10/650 totaled 112,401 du, 56 already order 1400 on 11–17–09’’ and Plaza stated that it ‘‘check[ed] profile’’
percent of its total dispensings.119 Yet, ‘‘[c]alled to let customer know order and ‘‘verif[ied] w/doctor.’’ Id. And to
ensure that doctors were exercising
Inspection Report. RX 2F, at 62. The report noted prescriptions totaling 1,700 du of oxycodone/apap
that it was for ‘‘an OPENING INSPECTION’’ and 5/325; 14 prescriptions totaling 1,656 du of Endocet proper standards of care, Medical Plaza
that ‘‘many responses [were] NOT APPLICABLE.’’ 10/650; 10 prescriptions totaling 1,140 du of reported that it ‘‘call[ed] to verify doctor
Id. oxycodone 5 mg; 7 prescriptions totaling 840 du of information.’’ Id. Medical Plaza also
118 For each NDC, the report also calculated the OxyContin (and oxycodone er) 10 mg; 10 advised that it had a refused to fill a
average quantity dispensed per prescription. prescriptions totaling 720 du of OxyContin
Specifically, the first line entry for oxycodone 30 (oxycodone er) 20 mg; 4 prescriptions totaling 295 prescription because the prescription
(34,784 du) showed an average of 157 du per du of Endocet 7.5/325; and 3 prescriptions totaling was not valid. Id. However, when asked
prescription; the second entry for oxycodone 30 190 du of Endocet 7.5/500. RX 2F, at 111–22. whether it had ‘‘ever decided to
(25,356 du) showed an average of 178.5 du per 120 Given that the financial data for particular
permanently stop filling scripts for a
prescription; and the third entry (810 du) showed drugs on URs from other pharmacies were not
an average of 162 du per prescription. RX 2F, at blacked out, the fair inference is that Medical Plaza
certain physician,’’ it answered ‘‘No.’’
111, 114. blacked out the data. Id.
119 The UR also showed that Medical Plaza had 121 Another SOMS note dated August 7 made by Notwithstanding that it conducted the
dispensed 75 prescriptions totaling 9,654 du of Ms. Seiple states: ‘‘Or [sic] to ship please see UR due diligence survey, there is no
Endocet 10/325; 59 prescriptions totaling 5,047 du and site visit.’’ GX 22, at 143. Even if this entry does evidence that Respondent’s employee
of OxyContin (and oxycodone er) 80 mg; 35 not correspond to one of the oxycodone orders that
prescriptions totaling 2,487 du of OxyContin (and were filled the previous day, it should be noted that
obtained an explanation for the
oxycodone er) 40 mg; 23 prescriptions totaling Respondent had yet to obtain a UR from Medical November 17 orders or a new UR as
2,120 du of oxycodone (and Roxicet) 5/325; 21 Plaza. required by its Policy 6.2 Yet the same
day (Nov. 18), Respondent filled the average of 193 du per Rx) and 348 based on ‘‘[t]he highest monthly total
aforesaid orders which were for 7,000 prescriptions totaling for 44,051 du of from the preceding six months.’’ RX 78,
du of oxycodone 30 and 3,000 du of oxycodone 15 (an average of 127 du per at 60. Thus, the CSL should have been
oxycodone 15. GX 10F, at 41–42. Rx); 124 it also showed that Medical set at 12,600 du.
According to notes in both the SOMS Plaza’s total dispensings of prescription On March 11, Respondent filled
and MFRs, the orders were ‘‘shipped products were 246,255 du. RX 2F, at 72, Medical Plaza’s orders for 4,000 du of
[with] reservation’’ and an ‘‘updated UR 74, 83, 90. Thus, since the previous UR, oxycodone 30 and 4,000 du of
was requested.’’ RX 2F, at 1; GX 22, at Medical Plaza’s dispensings of oxycodone 15. GX 10F, at 41–42. With
143. oxycodone 30 had increased by 31,274 these orders, Medical Plaza’s rolling 30-
On December 14, Medical Plaza du, an increase of 51 percent, and its day total of oxycodone was 17,600 du,
placed an order for 15,000 du of dispensings of oxycodone 15 had 5,000 du more than its CSL. According
oxycodone 30. RX 2F, at 2. On a rolling increased by 16,929 du, an increase of to a SOMS note, the order was ‘‘ok to
30-day basis, Medical Plaza’s oxycodone 62.4 percent.125 ship’’ because its ‘‘size was not
orders totaled 27,600 du, 9,000 du over Moreover, Medical Plaza’s excessive.’’ GX 22, at 144. Here again,
the CSL of 18,600 (with August being dispensings of oxycodone 30 comprised there is no evidence that Respondent
the highest monthly total). Respondent 37.5 percent of its total dispensings, and obtained an explanation for the order
contacted Medical Plaza to obtain a new its dispensings of oxycodone 15 and a new UR.
UR, and the next day, Medical Plaza comprised 17.9 percent. Thus, these two On March 16, Respondent filled
provided a UR for the month of dosages alone accounted for 55.4 Medical Plaza’s orders for 10,000 more
November 2009. Id.; see also id. at 72– percent of its total dispensings, and its du of oxycodone 30, raising its total
90. While Respondent did not fill the dispensings of all oxycodone products orders on a rolling 30-day basis to
order, apparently because Medical Plaza comprised nearly 64 percent of its 27,600 du, a level more than double the
was not ordering enough non-controlled dispensings. Yet during the previous CSL. GX 10F, at 41. The corresponding
products, there is no evidence that due diligence survey, Medical Plaza had SOMS notes states: ‘‘oxy 30 supported
Respondent obtained an explanation for represented that all controlled bu [sic] UR increase due to getting
the order. RX 2F, at 2. (MFR note substances constituted 40 percent of its things squared away with AR.’’ GX 22,
stating: ‘‘Per Diane Customer need [sic] dispensings. And once again, the at 144. An MFR note which is dated
to order 3800 in non control [sic] financial data pertaining to the most either March 11 or 16 states: ‘‘Oxy
products as of 12.15’’).122 Nonetheless, dispensed controlled substances were orders have varied due to understanding
Respondent failed to report the order as blacked out. Id. ratio & problems with AR.’’ RX 2F, at 2.
suspicious even though it had been Respondent did not ship any more While Respondent provided no further
placed on hold because of its unusual oxycodone to Medical Plaza until explanation as to the meaning of
size. February 24, 2010, when it filled orders ‘‘problems with AR,’’ this order also
As for the November 2009 UR, it for 3,600 du of oxycodone 30 and 6,000 placed Medical Plaza over its CSL, and
showed that Medical Plaza had du of oxycodone 15. GX 10F, at 41–42. even assuming that this explanation was
dispensed 479 prescriptions totaling In March 2010, Respondent filled provided by the pharmacy, Respondent
92,404 du of oxycodone 30 mg 123 (an orders for Medical Plaza for 49,000 du did not obtain a new UR.
of oxycodone 30 and 31,500 du of On March 18, Respondent filled an
122 The evidence shows that this policy was not oxycodone 15, for a total of 80,500 du. order for 7,500 du of oxycodone 30. GX
motivated by the concern that a customer that GX 10F, at 41–42. Notably, during the 10F, at 41. With this order, Respondent
ordered only controlled substances was likely preceding six months, Medical Plaza’s had filled orders for 25,500 du just in
diverting drugs, but rather, out of the sales
department’s interest in using the availability of highest monthly total purchase of March, as well as 9,600 du on February
controlled substances to increase sales of other oxycodone was 12,600 du during the 24, for a total of 35,100 du on a rolling
products. See GX 25, at 19 (email (Feb. 25, 2010) month of November. Id. As found above, 30-day basis, placing Medical Plaza’s
from Diane Garvey, Senior Vice President to Sales according to Respondent, the SOMS filled orders at nearly three times the
Department: ‘‘DO NOT EVER ENTER A C2 ORDER
UNLESS THE SYSTEM IS SHOWING 10% . . . .
reset the CSL ‘‘for each control [sic] CSL.
also the second you receive an csos [controlled group . . . on the first of every month’’ The corresponding SOMS note states:
substances ordering system] email and you see your ‘‘ok to ship over 1,763 over UR for Oxy
customer has not reached the 10% that order will oxycodone 30 and oxycodone 15. However, the UR 30.’’ GX 22, at 144. Once again, there is
be put on hold for one day ONLY to try to secure also includes an entry for 600 tablets of Roxicodone
the 10% then it will be deleted.’’); id. (email (Feb.
no evidence that Respondent contacted
30 mg (the same drug as oxycodone 30), see id. at
25, 2010) from Jennifer Seiple to Compliance 74, and an entry for 60 tablets of oxycodone 15 the pharmacy to obtain an explanation
Department: ‘‘Compliance does not hold orders for under a different NDC. See id. at 83. for the order as well as a UR. Of further
ratio. Ratio is controlled by sales. It is not factored 124 The UR also showed that Medical Plaza had note, while on numerous occasions
in when the order is reviewed.’’). See also id. at 5 dispensed a total of 20,095 du of other oxycodone
(email Dec. 1, 2010 from Diane Garvey to Sales
Respondent filled orders
products including OxyContin (and oxycodone
Department: ‘‘When you get a csos order and your extended release) and oxycodone combination
notwithstanding that the orders
customers are NOT at 10% the order will hold no drugs. See RX 2F. These included 6,740 du of exceeded the CSL, it typically justified
need to email us simply call the customer and get Endocet and generic oxycodone 10/325; 4,469 du of doing so (even if improperly) because
them to 10%. You should be calling them anyway OxyContin 80; 2,700 du of Percocet and generic
and thanking them for the order and selling the
the order was under the dispensing
oxycodone 5/325; 1,812 du of OxyContin 40; 1,158
daily specials, syringes, etc.’’); Tr. 1276 (testimony du of Endocet 10/650; 984 du of OxyContin 10; 780 levels showed by the UR. In short, the
of former compliance department employee du of OxyContin 20; 420 du of Endocet and generic justification documented in the SOMS
regarding Ms. Garvey’s Dec. 1, 2010 email that it oxycodone 7.5/325; 364 oxycodone 5; 360 makes no sense.
was ‘‘correct’’ that Respondent ‘‘did not want its OxyContin 60; 150 du of OxyContin 30; and 150 du On March 19, Respondent filled
customers to . . . purchase nothing but controlleds. of Endocet 7.5/500. See id.
It wanted to maximize its revenue by selling other 125 The UR also showed the quantity per
Medical Plaza’s orders for 7,500 du of
products, specifically noncontrolleds, to the same prescription for each drug by NDC code—thus oxycodone 30 and 7,500 du of
customers, correct?’’). Respondent’s employees who reviewed the UR did oxycodone 15, thus placing its total
123 Of further note, the first page of the UR not even have to calculate this figure; the UR orders on a rolling 30-day basis at
contains the following handwritten notations: showed that for oxycodone 30 with NDC 00406–
‘‘91,804 oxy 30’s’’ and ‘‘43,991 Oxy 15’s.’’ RX 2F, 8530–01, the average quantity was 195.59, and for
50,100, a level more than four times the
at 72. These figures are the sum of the quantities NDC code 52152–0215–02, the average quantity was CSL. GX 10F, at 41–42. A note in the
listed in the entries on the first page of the UR for 186.91. RX 2F, at 72. MFR states: ‘‘RWR [Release with
Reservation]—order supported by UR during the previous six months. Yet Medical Plaza’s oxycodone orders at
fluctuation in buying pattern due to Respondent failed to report any of the 140,700 du, a level more than 60,000 du
credit & sales,’’ RX 2F, at 2; and a SOMS March orders as suspicious. above the March shipments.126
note states: ‘‘ok to ship UR supports Oxy On April 1, Respondent filled Medical Regarding the April 23 orders, an
order.’’ GX 22, at 144. Plaza’s order for 10,000 du of MFR note states: ‘‘order pending 15k
Regarding the MFR’s reference to the oxycodone 30, bringing its total orders oxy 15 oxy 30, 30 K.’’ Id. The note then
fluctuation in Medical Plaza’s buying on a rolling 30-day basis to 90,500. GX states that the account was ‘‘currently @
pattern because of credit and sales, the 10F, at 41. Yet a SOMS note on the 55k on OX 30 mg for month & 20k on
record does contain a February 8, 2010 order states: ‘‘ok to ship-morphine and Oxy 15 mg’’ and that the order was ‘‘not
email from Dennis Smith, Respondent’s oxycodone within csl for period.’’ GX supported [by] the UR.’’ Id. The note
CEO, to various employees including 22, at 144. However, even assuming that then states: ‘‘get updated UR from
Ms. Seiple and Mr. Corona which states: Medical Plaza’s oxycodone CSL was March for Review’’ and ‘‘let them know
‘‘Sales on these Oxycodone and and automatically increased to 80,500 du order will not ship & will be reviewed
[sic] SOMS activity should grow based on the March 2010 orders, the in [illegible] days.’’ Id. A further note in
significantly due to reduced prices on April 1 order still placed it 10,000 du the Ship to Memos states: ‘‘In April
these products to the retail trade. Look over the CSL. Here again, there is no shipped 75700 Oxy. The account was
for KVK Oxycodone sales to increase evidence that Respondent contacted reviewed to not ship over this amount[.]
dramatically.’’ RX 20. However, while it Medical Plaza and obtained an An order was deleted for 450 bottles
would be reasonable for a pharmacy to explanation for the order and a new UR. above the 75700 already shipped.’’ GX
increase its purchases of a product to Nor did it report the order as suspicious. 22, at 141.
take advantage of a discount being Thereafter, on April 8, Respondent Other MFR notes show that
offered by a manufacturer or distributor, filled Medical Plaza’s orders for 3,700 Respondent contacted the pharmacy
there is no evidence that any of du of oxycodone 30 and 10,000 du of and was told that the order was because
Respondent’s employees who reviewed oxycodone 15, bringing its total orders of ‘‘price’’ and that the pharmacy was
Medical Plaza’s orders contacted the on a rolling 30-day basis to 104,200 du ‘‘stocking up.’’ RX 2F, at 3. The
pharmacy and were provided this and nearly 24,000 du over its CSL . GX pharmacist also said he would accept a
explanation by it for any order until late 10F, at 41–42. Incredibly, a SOMS note lower quantity and that ‘‘business [wa]s
April. for the transactions states: ‘‘ok to ship, still about the same.’’ Id. According to
On March 24, Respondent filled size & [f]requency not excessive on OXY the note, Respondent’s employee told
Medical Plaza’s orders for 10,000 du of CSL is 15k, this order is for (100) OXY the pharmacist that the last UR was
oxycodone 30 and 10,000 du of 15mg & (37) OXY 30mg already from November,127 to which the
oxycodone 15, thus placing its total purchased 10k this month.’’ GX 22, at pharmacist replied that ‘‘nothing
orders during the rolling 30-day period 144. Here again, there is no evidence changed.’’ Id. Respondent’s employee
at 70,100 du, a level nearly six times the that Respondent contacted Medical told the pharmacist that the order would
CSL. GX 10F, at 41–42. A SOMS note Plaza and obtained an explanation for be reviewed, and in a later phone call,
states that the order was ‘‘ok to ship- the orders and a new UR. Nor did it told the pharmacist that the order would
oxycodone increase ur supported- report the orders as suspicious. not be shipped that day. Id. According
frequency not excessive.’’ GX 22, at 144. On April 15, Respondent filled to the MFR, the pharmacist said ‘‘ok it
Again, there is no evidence that Medical Plaza’s orders for 42,000 du of was for over stock anyway.’’ Id.
Respondent contacted Medical Plaza to oxycodone 30 and 10,000 du of An MFR note of April 26 indicates
obtain an explanation for the increase in oxycodone 15, thus bring its total orders that Ms. Seiple called Medical Plaza and
its orders, or that it obtained a new UR on a rolling 30-day basis to 138,200 du, talked with its pharmacist. Id. The
even though the UR on file was then nearly 58,000 du over its CSL. GX 10F, additional note states: ‘‘McKesson is
four months old. at 41–42. Two SOMS notes of the same wholesaler—Advertise promoting
On March 25, Respondent filled two date state: ‘‘ok to ship oxy ur supports sending out flyers.’’ Id. A further note
more orders from Medical Plaza for order’’ and ‘‘ok to ship Oxy 15 & 30 ur states that the account was reviewed
10,000 du each of oxycodone 30 and 15, supprts [sic].’’ GX 22, at 144. A note in with Wayne Corona and that the
thus placing its total orders during the the Ship to Memos states: ‘‘Oxy 30mg- pharmacy’s oxycodone limit was
rolling 30-day period at 90,100 du, a 91,804’’ and Oxy 15mg–43,991.’’ Id. at currently at 75k. Id. The notes also
level more than seven times its CSL. GX 141. These numbers correspond to the indicate that Respondent had already
10F, at 41–42. A SOMS note by Ms. numbers in the handwritten notation on shipped 75,700 du in April and that the
Seiple states: ‘‘rwr [release with the first page of the November 2009 UR. decision was made to keep the limit at
reservation] per committee supported by See RX 2F, at 72; see also supra n. 125. 75k and to not ship ‘‘over 75K.’’ Id.
ur on file please do not exceed quantity And a second note in the Ship to Further notes establish that Medical
on ur for roxy 30 and 15.’’ GX 22, at 144. Memos, which was added later that day, Plaza’s pending order for 450 bottles of
An MFR note by Ms. Seiple further states: ‘‘released 10k of Oxy 15mg leaves oxycodone (45,000 du) was then deleted
states: ‘‘Ship to UR per committee order 23,991 . . . 30k of the Oxy 30mg leaves and that Respondent contacted the
released for 20k (10k Oxy 30 10k OX 15) 14,804 for the month of April.’’ GX 22, pharmacist and ‘‘explained not able to
only ship to UR on file Do not ship over at 141. Once again, there is no evidence ship more than the 75,700 Oxy already
UR.’’ RX 2F, at 2. Here again, there is that Respondent contacted Medical shipped.’’ Id.
no evidence that Respondent contacted Plaza and obtained an explanation for
126 This total includes the Mar. 25 orders for

Medical Plaza and obtained an the order and a new UR. Nor did it
10,000 du of oxycodone 30 and 10,000 du of
explanation for the order and a new UR. report the orders as suspicious. oxycodone 15; the April 1 order for 10,000 du of
Medical Plaza’s March orders marked The evidence also shows that on or oxycodone 30; the April 8 orders for 3,700 du of
a more than four-fold increase in its about April 23, Medical Plaza placed oxycodone 30 and 10,000 du of oxycodone 15; and
oxycodone purchases over its previous additional orders for 30,000 du of the April 15 orders for 42,000 du of oxycodone 30
and 10,000 du of oxycodone 15. GX 10F, at 41–42.
highest month’s purchases (18,600 du in oxycodone 30 and 15,000 du of 127 According to another note, Respondent’s
August), and a nearly six-fold increase oxycodone 15. RX 2F, at 2. On a rolling employee had called the pharmacy earlier, spoken
over its highest month’s purchases 30-day basis, these orders placed the to a floater, and asked for a new UR. RX 2F, at 3.
Notably, the April 23 orders were not has been reduced to 140 bottles @CSL However, there is no evidence that
reported as suspicious, even though for June 14K. Called + spoke w/Jeffery Respondent obtained an explanation for
Medical Plaza’s employees gave + told him he can reorder after the the order.
inconsistent explanations for the order, 30th.’’ RX 2F, at 4; see also GX 22, at Only four days later on August 3,
with one saying the order was placed 145 (SOMS note: ‘‘releasing Oxy with Respondent filled Medical Plaza’s order
because of price, that it ‘‘was for reservation reduced to be @CSL for for 12,200 du of oxycodone 30. GX 10F,
overstock anyway,’’ and that the June.’’). While the CSL is far closer to at 42. Moreover, while the order clearly
‘‘business [wa]s still about the same,’’ the CSL which should have been in placed the pharmacy over the 14,000 du
and the other indicating that the order place at the time of the March 2010 CSL on a rolling 30-day basis,130 the
was needed because Medical Plaza was orders, there is no evidence as to how SOMS notes contain no indication that
promoting its business. This was so this new CSL level was set. the order was flagged for additional
even though the orders placed Medical On July 1, 2010, Medical Plaza placed review.131
Plaza’s oxycodone orders at more than an order for 20,000 du of oxycodone 30 On August 17, Medical Plaza placed
60,000 du over its CSL. mg. GX 22, at 145. However, an order for 20,000 du of oxycodone 30.
Moreover, while the orders had Respondent shipped only 14,000 du. GX GX 22, at 145. While both the MFRs and
initially prompted Respondent to 22, at 145. A SOMS note for the order SOMS notes state that the order was
request a new UR, Medical Plaza did not states: ‘‘ok to ship 140 Oxy 30 mg, order reduced to 1,800 du to keep Medical
provide one. Indeed, Respondent did has been edited from 200 to meet CSL Plaza at its CSL of 14,000 du, other
not obtain another UR until August 19, of 14000.’’ Id. Yet, on filling the order, notes state that Respondent deleted the
2010, even though it continued to ship Respondent had actually shipped order and told its pharmacist that he
oxycodone to Medical Plaza. Id. at 12; 28,000 du in the last three days, thus needed to provide an ‘‘updated UR’’ and
GX 10F, at 42. exceeding the CSL on a rolling 30-day needed to re-order after the UR was
On May 3, 2010, Medical Plaza placed reviewed. RX 2F, at 4; GX 22, at 145.
basis. However, Respondent did not
orders for 30,000 oxycodone 30 mg and On August 19, Medical Plaza faxed to
contact the pharmacy to obtain an
20,000 oxycodone 15 mg. GX 22, at 145. Respondent a UR for the month of July
explanation for the order and it again
On a rolling 30-day basis, Medical 2010. RX 2F, at 12–30. The UR showed
failed to obtain a new UR.
Plaza’s orders thus totaled 115,700 du, that during that month, Medical Plaza
According to a July 14 note in the had dispensed 118,848 du of oxycodone
40,000 du above the CSL of 75,700 Ship to Memos made by Ms. Seiple, on
(calculated based on the orders filled in 30 and 41,160 du of oxycodone 15; its
that date, Respondent placed Medical total dispensings of just these two drugs
April). GX 10F, at 41–42. A note in the Plaza’s account ‘‘on termination per
MFR states: ‘‘Called @1.46 p.m. spoke were 160,008 du, out of its total
sales surrounding issues of customer dispensings of 285,977.85 du. RX 2F, at
w/Dana Call back @ 2:30 TT—Jeff.’’ RX and ratio.’’ GX 22, at 141. However, on
2F, at 3. Not only is it unclear whether 12–13, 20, 30. Thus, Medical Plaza’s
July 22, Ms. Seiple created a second dispensings of oxycodone 30 alone
Respondent’s employee called back the Ship to Memo which states that Medical
pharmacy and spoke with Jeff, but even comprised 41.6 percent of its total
Plaza was actually only ‘‘on noncontrol dispensings, and its dispensings of
if he/she did, there is no evidence as to status per sales until further notice’’ and
what explanation was provided for the oxycodone 15 comprised 14.4 percent.
that she would ‘‘get [an] update from Moreover, the UR showed that Medical
order. However, what is clear is that a sales’’ four days later. Id. at 142. Ms.
new UR was not obtained. Moreover, Plaza had also dispensed 21,455 du of
Seiple noted that she had ‘‘request [an] other oxycodone products including
while the evidence shows that updated ur’’ and placed Medical Plaza
Respondent edited the orders to 10,000 OxyContin and combination oxycodone
on the ‘‘tentative site visit list.’’ Id. drugs.132 Thus, Medical Plaza’s
du for each dosage strength, it did not
An initial entry in the MFRs for July dispensings of oxycodone amounted to
report the orders as suspicious. GX 10F,
30 states that an order for 10,300 63.5 percent of all drugs it dispensed.
at 42; GX 22, at 145 (SOMS note: ‘‘ok
oxycodone 30 was deleted because These figures were again flatly
to ship qty was reduced from 200 OXY
Medical Plaza was on non-control inconsistent with what the pharmacy
15mg to 100 & 300 OXY 30mg to 100’’).
status. RX 2F, at 4. However, a further had reported during the last due
Respondent did not fill another
entry establishes that the same day, the diligence survey. RX 2F, at 68
oxycodone order for Medical Plaza until
sales department approved the
June 28, 2010, when it shipped 14,000
pharmacy to resume purchasing effect on whether subsequent orders exceeded the
du of oxycodone 30 mg to it.128 GX 10F,
controlled substances. Id. While Ms. CSL on a rolling 30-day basis.
at 42. An MFR note for the transaction
Seiple had requested that Medical Plaza 130 Notwithstanding that the SOMS materials
states that ‘‘Order for 200 bottles of Oxy state that returned product would be counted in
provide a new UR eight days earlier,
calculating the CSL, an August 17 SOMS note states
128 There are, however, entries in both the SOMS Respondent filled its order for 10,300 du that the CSL remained at 14,000 du. GX 22, at 145.
notes and MFRs dated May 10, 2010. The MFR note of oxycodone 30 mg without obtaining 131 As discussed above, in its Exceptions,
states ‘‘UR on file Oxy 30 68k 15 mg 23k’’ and the UR. GX 10F, at 42. Moreover, the Respondent contended that ‘‘the only orders that
‘‘Only purchases 30’s & 15’s.’’ RX 2F, at 4. To be order placed Medical Plaza’s orders on were held by SOMS were those that also have the
clear, the last UR on file had been obtained on name of a Compliance Department employee in the
December 15, 2009 and covered the month of
a rolling 30-day basis at 24,300 du, more ‘‘Decision By’’ column and in most cases, notes in
November 2009. Further entries in the MFR notes than 10,000 du over its CSL.129 the ‘‘Notes’’ column. Resp. Exceptions, at 13. While
state ‘‘April 75K, March 80K,’’ an apparent there are two entries for orders in in the SOMS
reference to the pharmacy’s oxycodone purchases 129 A Ship to Memo dated July 14 states that the notes on August 3, 2010, neither entry includes the
from Respondent in the two previous months, and ‘‘last control [sic] purchase’’ was ‘‘being returned’’ name of an employee or notes explaining the
then lists the names of its distributors: ‘‘McKesson, because the ‘‘wrong product’’ was ordered. GX 22, decision that was made on the shipment.
Anda[,] Masters.’’ Id. The final entry in this note at 141. However, according to materials Respondent 132 The dispensings included 4,493 du of
states: ‘‘120 scripts a day, currently.’’ Id. provided on the SOMS, the monthly totals used in OxyContin 80; 1,915 du of OxyContin 40; 60 du of
As for the SOMS note, it states ‘‘rlease [sic] order determining whether an order exceeded the CSL OxyContin 30; 1,800 du of OxyContin 20; 690 du
do nto [sic] ship over 50k without review.’’ GX 22, ‘‘include product returned when it is calculated’’ of OxyContin 10; and 810 du of oxycodone 5; it also
at 145. As stated above, there is no other evidence and ‘‘[t]he rolling 30 day invoice history will included 1,723 du of Endocet 10/650; 7,352 du of
that Medical Plaza placed any order for oxycodone include invoices and credit memos from the past 30 Endocet 10/325; 162 du of Endocet 7.5/325; 2,075
on or about May 10 and it is unclear to which drug days.’’ RX 78, at 60. Thus, the fact that Medical du of oxycodone 5/325; and 375 du of Roxicet 5/
this note pertains. Plaza returned the July 1 order should have had no 325. RX 2F, at 12–13, 15, 17, 20, 23.
(representing that all controlled which placed the pharmacy over its oxycodone ($39.00) and was ‘‘losing
substances comprised 40 percent of all CSL. Yet there is no evidence that money.’’ 133Id.
dispensings). Respondent contacted the pharmacy The same day, Respondent obtained a
As with the previous URs, with the and obtained an explanation for the new UR from Medical Plaza. Id. at 31.
exception of carisoprodol, the top ten order or a new UR. The UR, which covered the month of
drugs dispensed were controlled On October 1, Respondent filled an December 2010, showed that Medical
substances, whether this was order for 16,800 du of oxycodone 30. GX Plaza had dispensed 58,173 du of
determined on the basis of the number 10F, at 42. Upon filling this order, oxycodone 30 mg and 7,006 du of
of prescriptions or the number of dosage Respondent had shipped 25,400 du of oxycodone 15 mg and that its total
units. Id. at 12. So too, the financial data oxycodone 30 within the rolling-30-day dispensings of all drugs were 190,760
for drugs such as oxycodone 15 and 30, period and thus exceeded the CSL. Id. du.134 Id. at 31–32, 42, 53. Moreover, in
as well as alprazolam 2, were blacked While there are multiple SOMS entries contrast to the previous URs, the
out. Id. And once again this information for orders that were placed on this date, financial data for oxycodone and other
was ignored by Respondent. two of which indicate that Ms. Seiple highly abused drugs were not blacked
Also on August 19, Medical Plaza out and showed that Medical Plaza was
reviewed them, the only notation for
placed an order for 20,000 du of making profits approximately three
either of these orders is ‘‘rwr’’ or release
oxycodone 30 mg. GX 22, at 145. Upon times its acquisition cost for oxycodone
placing this order, Medical Plaza’s with reservation. GX 22, at 146. No
further explanation exists anywhere in 30.135 Thus, contrary to what Ms. Seiple
oxycodone orders totaled 42,500 du on expressed in the MFR, Medical Plaza
a rolling 30-day basis, more than three Medical Plaza’s file explaining why
Respondent filled the oxycodone 30 was clearly not losing money on
times the CSL of 14,000 du. GX 10F, at oxycodone.
42. order, and there is no evidence that
Respondent contacted the pharmacy to On February 1, 2011, Respondent
Regarding the order, the SOMS note filled an order from Medical Plaza for
states: ‘‘ok to ship 64 bottles of Oxy obtain an explanation for the order and
a new UR. 10,000 du of oxycodone 30, and on
30mg, order was edited from 200 to 64. February 2, it filled an order for 6,800
Another order can be resubmitted after On November 5, Respondent filled an du of the drug. GX 10F, at 42. Notes
9/1/10.’’ GX 22, at 145. Moreover, a note order for 8,400 du of oxycodone 30 mg, written on the UR and in the MFRs
in the Ship to Memos of the same date and on December 1, it filled two orders show that Ms. Seiple reviewed the UR
states: ‘‘maintain 18600.’’ GX 22, at 142. totaling 16,800 du of oxycodone 30 mg. and determined that oxycodone in the
While Respondent shipped only 6,400 GX 10F, at 42. While the November 5 dosage strength of 30 mg and 15 mg
du (bring the total filled orders to 28,900 order did not exceed the CSL, upon amounted to ‘‘63K’’ out of ‘‘190K’’ or
du), GX 10F, at 42; Respondent’s filling the December 1 order, ‘‘33%’’ of its dispensings.136 RX 2F, at
various records contain no explanation Respondent had shipped to Medical 5. An MFR note of February 2 indicates
as to why the order was approved even Plaza 25,200 du on a rolling 30-day that Ms. Seiple raised with Wayne
though the order placed the Medical basis and thus exceeded the CSL. GX Corona the ‘‘reimbursement issue w/
Plaza over the CSL (both before and 10F, at 42. As for the two December 1 insurance’’ and that Corona stated that
after editing), whether the CSL was SOMS entries, only one provides the the issue was ‘‘not a problem.’’ Id. at 4.
14,000 du, 18,600 du, or even if the CSL name of a reviewer (Ms. Seiple) and the Still another MFR note made by Ms.
had been revised upwards (to 24,300) accompanying note merely states: Seiple on the same day states: ‘‘68
based on the July orders. Moreover, the ‘‘rwr.’’ GX 22, at 146. Again, no further bottles of oxy released per committee
order was not reported as suspicious. explanation exists in Medical Plaza’s RWR’’ and ‘‘purchasing multiple NDC
On September 1, Respondent filled file for why Respondent filled the order, on product—Monitor.’’ Id. at 5.
Medical Plaza’s order for 10,000 du of and there is no evidence that According to an MFR note, on March
oxycodone 30 mg. GX 10F, at 42. On a Respondent contacted the pharmacy to 2, 2011, Medical Plaza placed an order
rolling 30-day basis, Medical Plaza obtain an explanation for the order and for 16,800 du of oxycodone 30mg,
orders totaled 28,600 and thus again a new UR. which was released with reservation. Id.
exceeded the CSL. Id. The SOMS note
On January 4, 2011, Medical Plaza However, an MFR note of March 3 made
for the order states: ‘‘rwr Oxy w/in
placed an order for 20,000 du of
monthly buying pattern leaves 8600 as
oxycodone 30 mg. GX 22, at 143. 133 The entry also states that ‘‘released 100 of 168
of 9/1.’’ GX 22, at 145. Here again, the bottles ordered.’’ RX 2F, at 4. However, while I find
According to the SOMS, the order was
fact that the CSL had been exceeded was that the order was edited, the Government’s
edited to 16,800 du, id., and according evidence establishes that Respondent shipped
ignored and Respondent failed to
to the Government’s evidence, this 16,800 du of oxycodone 30 to Medical Plaza. GX
contact Medical Plaza and obtain an
amount was shipped. GX 10F, at 42. An 10F, at 42.
explanation for the order and a new UR. 134 While this represented a decrease in Medical
MFR note of the same date states: ‘‘Keep
On September 7, Medical Plaza Plaza’s dispensings, by this date, law enforcement
Oxy @16,800’’ and ‘‘Don’t Ship over’’
placed an additional order for and regulatory authorities had begun cracking down
with an arrow pointing to ‘‘16,800,’’ as on rogue pain clinics in Florida.
oxycodone and the evidence shows that
well as ‘‘CSL is 14k.’’ RX 2F, at 4. 135 With respect to oxycodone (NDC 00406–8530–
Respondent shipped 8,600 du of
Additional notes in the same MFR 01), Medical Plaza dispensed 23,960 du; its
oxycodone 30. GX 10F, at 42. The acquisition cost was $11,631.61 and its profit was
corresponding SOMS note states: ‘‘rwr entry, which appear to have been made $35,482.44. RX 2F, at 31. With respect to oxycodone
Oxy edited to meet CSL.’’ GX 22, at 145. by Ms. Seiple, state: ‘‘inquire on (NDC 57664–0224–88), Medical Plaza dispensed
While the evidence does not establish vendors McKesson/? ’’ and ‘‘said they 14,078 du; its acquisition cost was 11,262.40 and
use quite a bit of insurance on oxy? How its profit was $32,483.17. Id. With respect to
order’s size before it was edited, upon oxycodone 30 (NDC 52152–0215), Medical Plaza
filling the order, Respondent had then can their [sic] be a profit? ’’ Id. A dispensed 10,721 du; its acquisition cost was
shipped 25,000 du of oxycodone 30 on further entry includes the names of two $4,458.87 and its profit was $25,190.92. Id. With
a rolling 30-day basis. GX 10F, at 42. distributors (McKesson and Keysource) respect to oxycodone 30 (NDC 10702–0000–01), it
and indicates that Medical Plaza was dispensed 8,014 du; its acquisition cost was
Thus, even if the CSL had been reset at $6,972.18 and its profit was $19,108.37. Id.
24,300 du based on Medical Plaza’s July being reimbursed by insurance at a 136 The actual figures are 65,179 du and 34
orders, Respondent again filled an order lower rate ($32.00) than the cost of the percent.
by Ms. Seiple states: ‘‘suspended sales accounted for the volume of pain distributed oxycodone to the pharmacy.
until physicians list is provided and medications being dispensed, and the And when it obtained URs for the
reviewed by compliance committee in percentage of oxycodone dispensed months of November 2009 and July
addition to site visit.’’ Id. Continuing, relative to other drugs.’’ Id. Yet during 2010, it ignored information showing
the note states: ‘‘Account will remain on the site visit, Respondent’s inspector that the pharmacy was dispensing
CH [compliance hold] until detailed had noted that the pharmacy did not fill increasing quantities of oxycodone, as
physicians list and review is prescriptions for practitioners who were well as that Medical Plaza’s dispensing
completed.’’ Id. primarily engaged in pain management. of oxycodone products comprised 62
Yet a SOMS note dated March 4, 2011 See RX 2F, at 60. percent of its total dispensings.
states: ‘‘rwr-oxy @qty 168.0 3–4–11,’’ So too, the mere presence of 60 So too, while Medical Plaza
thus indicating that the March 2 order doctors located in the same medical represented at various points that 70 to
was filled after Medical Plaza had office building, without any 80 percent of the prescriptions were
purportedly been placed on compliance investigation into the doctors’ paid for by third party payors (such as
hold. GX 22, at 143; see also GX 10F, specialties and the drugs they would insurance and Medicare/Medicaid), the
at 42. Notably, Medical Plaza’s file does prescribe in the course of their financial data showing the profits on its
not contain a physicians list and an respective professional practices does sales of oxycodone 30 and 15 were
MFR entry for April 1, 2011 states: not justify the volume of pain blacked out on all but the final UR it
‘‘CH—no information sent to date for medications being dispensed by provided. Yet there is no evidence that
review.’’ RX 2F, at 5. While the SOMS Medical Plaza or the percentage of Respondent ever questioned Medical
notes contain entries suggesting that oxycodone the pharmacy was Plaza as to why it blacked out the data.
additional controlled substance orders dispensing relative to other drugs. Also, Moreover, when Respondent did obtain
were placed on March 7 and April 13, Respondent did not even obtain a UR the final UR, the data (which were not
2011, see GX 22, at 143; the until August 11, 2009, at which point it blacked out) showed that Medical Plaza
Government’s printout of filled orders had been selling oxycodone to Medical was making profits three times or more
does not include any additional orders Plaza for more than four months, and its acquisition cost on generic
after March 4, 2011.137 However, that UR showed that oxycodone oxycodone 30 and 15 products.
Respondent never reported any of comprised more than 51 percent of the Ms. Seiple documented her concerns
Medical Plaza’s orders as suspicious. pharmacy’s total dispensings. Moreover, as to how Medical Plaza could be
As for Respondent’s distributions to the percentage of Medical Plaza’s total making any money given that its cost for
Medical Plaza, Ms. Seiple’s declaration dispensings comprised by oxycodone the oxycodone was more than the
was comprised primarily of the same alone was more than 2.5 times the 20 amount that insurance would reimburse
testimony she provided with respect to percent figure provided by DEA during for it, as well as that she had raised the
the previous pharmacies. For example, the Compliance Review for all issue with Wayne Corona, who
Ms. Seiple noted that before shipping controlled substances as a percentage of overruled her concerns. While Ms.
controlled substances to Medical Plaza, a pharmacy’s total dispensings. Seiple asserted that the URs and other
Respondent verified that its Florida As with the previous pharmacies, Ms. information were ‘‘consistent with the
pharmacy license and DEA registration Seiple asserted that ‘‘[a]fter Medical pharmacy’s business model as
were valid and that it obtained a copy Plaza’s account was approved, [the] explained by [its PIC] and confirmed in
of the most recent DOH inspection. She SOMS . . . identified and held any the June 2009 site inspection,’’ she
also asserted that based on the order for controlled substances placed failed to address why Respondent did
description provided by Medical Plaza by Medical Plaza that deviated from its not question Medical Plaza as to why
as to its policies and procedures, typical volume, pattern or frequency’’ the financial data for its controlled
Respondent believed that the pharmacy and that ‘‘[a]ll such orders were released substance dispensings were blacked out
understood its obligations to prevent only after review by [the] Compliance on the URs. Ms. Seiple also failed to
diversion ‘‘and was taking affirmative Department.’’ RX 103, at 67. Here again, address why Respondent continued
steps’’ to prevent diversion. RX 103, at the SOMS was not even operational selling controlled substances even after
66. Yet in contrast to previous surveys, until August 2009, more than four the fourth UR showed that Medical
Respondent did not ask how the months after Medical Plaza had begun Plaza was not ‘‘losing money’’ on its
pharmacy ensured that the prescriptions purchasing controlled substances from dispensings of oxycodone but making
were issued by doctors acting in Respondent. substantial profits.
accordance with the standard of care, let Moreover, even after the SOMS Ms. Seiple acknowledged that
alone how the pharmacy ensured that became operational, there were Respondent did not report any of
the prescriptions it filled were being numerous instances in which Medical Medical Plaza’s orders as suspicious,
issued for a legitimate medical purpose. Plaza’s orders placed it over the CSL on asserting that ‘‘[b]ased on [its] extensive
Ms. Seiple further asserted that based a rolling 30-day basis and yet investigation, it determined that the
on a due diligence survey and the onsite Respondent failed to obtain an orders it shipped to Medical Plaza were
inspection that was conducted on June explanation for the order, or a new UR, not suspicious.’’ RX 103, at 68. Here
18, 2009, Respondent obtained even though these steps were required again, however, Respondent simply
information that ‘‘Medical Plaza was by Respondent’s policy and procedure accepted whatever reason it could find
located in a medical center with 60 for reviewing held orders. And in that it believed would justify ignoring
physicians, and the pharmacy serviced numerous instances when orders were the evidence provided by the URs
patients from that medical center and an either deleted or edited, Respondent regarding the level of Medical Plaza’s
adjacent hospital.’’ Id. at 66–67. Ms. failed to file a suspicious order report. dispensings of oxycodone and
Seiple then asserted that ‘‘[t]his While Ms. Seiple further asserted that continued to distribute the drugs to
‘‘[o]n some occasions, the Compliance Medical Plaza. Thus, while—as Ms.
137 The Government’s printout of ARCOS data
Department would request [Medical Seiple admitted—Respondent was
would not have included schedule IV drugs such Plaza] to provide a UR,’’ id., it obtained obviously ‘‘aware of the volume of
as alprazolam. 21 CFR 1304.33(d). Nor would it
have included drugs such as tramadol and only four URs over the course of the oxycodone and other controlled drugs
carisoprodol, which were subject to the SOMS. nearly two-year period in which it being dispensed by Medical Plaza and
the percentage of controlled drugs looked strange, or it could not verify the Medicare/Medicaid. Id. Next, Superior
dispensed relative to other drugs,’’ it prescriptions with the doctor. Id. As for reported that it had three distributors in
had no valid basis for failing to report whether it had ever refused to fill addition to Respondent. Id. at 67.
the orders as suspicious. prescriptions written by ‘‘a certain Superior also acknowledged that it
physician,’’ Respondent’s employee filled prescriptions for pain
Temple Terrace Pharmacy D/B/A noted that Superior had ‘‘not cut off management clinics and provided the
Superior Pharmacy doctor, but refuses scripts often.’’ Id. names of four pain management
Superior Pharmacy, a community While the form also included the physicians, their DEA numbers, and
pharmacy located in Temple Terrace, question of whether ‘‘the pharmacy indicated that they practiced in
Florida, became a customer of practices due diligence on specific Tampa.140 Id. at 70.
Respondent in January 2008. RX 2H, at prescribers,’’ the box next to this In the additional comments section of
81; RX 103, at 72. Prior to Superior’s question was left blank with a small line his report, Respondent’s consultant
first purchase of controlled substances, drawn in the space for providing a wrote that the pharmacy shared its
Respondent obtained copies of its DEA description.139Id. ‘‘waiting area’’ with ‘‘a pain/weight
registration and State license. RX 2H, at Finally, Respondent’s employee noted control clinic.’’ Id. The consultant
18–19. that she had requested that Superior further documented that ‘‘[t]he
On May 2, 2008, an account manager provide its ‘‘[m]ost recent state pharmacy is located within a space that
completed a Schedule Drug Limit inspection report’’ and a ‘‘[c]omplete it shares with Superior Medical Center.
Increase Request Form, requesting an usages controls/non-controls of one full This center specializes in weight loss
increase in the amount of solid dose calendar month.’’ Id. Of further note, and pain management. Many of their
oxycodone products Superior could Respondent’s employee noted that prescriptions originate within the
purchase and noting on the form that Superior’s pharmacist had said ‘‘they clinic.’’ Id. at 69–70. Included with the
Superior was using 25,000 du per are way to busy to deal with this,’’ and report were two photographs which
month. Id. at 83. Thereafter, on May 9, that after she requested the additional showed the front of the pharmacy and
2008, Respondent verified that documents, the pharmacist ‘‘said she its signage. The top portion of
Superior’s PIC, as well as another officer doubts she will ever fax that to me.’’ Id. Superior’s sign read: ‘‘SUPERIOR
of the entity, held active Florida However, on June 11, Superior faxed PHARMACY • WALK IN CLINIC’’ and
pharmacist licenses. Id., see also id. at to Respondent a UR and a copy of its the bottom portion read: ‘‘Pain
79–80.138 most recent DOH inspection report. As Management & Weight Loss.’’ Id. at 68.
As part of reviewing Superior’s the fax cover sheet from Superior notes, On July 1, 2008, Respondent printed
request, on June 6, 2008, Respondent the documents were faxed ‘‘so that our out the Web page for Superior Medical
contacted Superior to complete a Due quota on C2 may be increased.’’ Id. at Center. Id. at 49. The left side of the
Diligence Report Form. Id. at 81. On the 74. But as the cover sheet explained, the page promoted Superior Medical Center
form, Respondent documented that UR, which covered the period of with the words ‘‘Pharmacy • Pain
Superior filled an average of 130 January 1 to through June 10, 2008, only • Weight Loss’’ underneath. Id. On the
prescriptions per day and that 15 included Superior’s ‘‘top 100 drugs right side, the page promoted Superior
percent of the prescriptions were for dispensed.’’ Id.; see also id. at 71–72. Pain Clinic with a banner that read:
schedule II drugs; Superior also As for the UR, it showed that ‘‘Are You Experiencing Pain?’’ then
reported that controlled substance oxycodone 30 mg was the drug most
listing various cause of pain, followed
prescriptions comprised 20 percent of dispensed by Superior during the
by ‘‘Stop suffering in silence. >> Let us
the prescriptions. Id. Superior period, with total dispensings of
help you!’’ Id.
represented that it did not do mail 337,201 du or 63,503 du per month. Id. The center of the page contained the
order, that it serviced one nursing home at 71. It also showed that Superior had heading ‘‘Superior Medical Centers are
but had no contracts with such dispensed 21,779 du of oxycodone 15 here to help you!’’ along with additional
facilities, that it accepted insurance as and 48,341 du of Endocet 10/325 during
blurbs promoting its pain management
well as Medicare and Medicaid, and the period. Id.
clinic (‘‘Don’t live in pain. Trust the
that 90–95 percent of the prescriptions On June 24, 2008, a consultant for
Respondent conducted a site visit at medical professionals at Superior Pain
were paid for by insurance. Id. Clinic to help you enjoy life again!’’), its
Elsewhere on the form, Respondent Superior. Id. at 65. According to the
consultant’s report, Superior did not weight loss and walk-in clinics,141 and
lined out the section which asked the pharmacy (‘‘Superior Pharmacy is
whether the pharmacy had engage in internet business and sold
‘‘minimal’’ front store items. Id. at 65. your neighborhood drug store offering
‘‘[r]elationships with specific doctors/ personalized customer service and free
clinics,’’ thus indicating that Superior The consultant also reported that
Superior filled 100 prescriptions per home delivery.’’). Id. Still other blurbs
had no such relationship. Id. As for its offered a ‘‘free office visit or $20 dollar
policies and procedures, Superior day, of which 25 percent were for
controlled substances. Id. at 66. While credit on RX’’ for referring ‘‘a friend or
reported that it prevented doctor family’’ and promoted that ‘‘No
shopping by verifying prescriptions, by Superior reported that it did not service
nursing homes and hospice programs, it Appointment Needed.’’ Id.
not providing early refills, and by On the same day, Respondent
keeping a patient profile. Id. at 82. As reported that it serviced a juvenile
approved an increase in Superior’s
for how it ensured that doctors inpatient facility. Id. The pharmacy
oxycodone purchasing limit to 25,000
exercised proper standards of care, further reported that 10 percent of its
Superior replied that it did a ‘‘license business was cash and 90 percent was 140 In the form’s section which lists the names of
check.’’ Id. Superior also reported that paid for by either insurance or the four pain physicians, the name ‘‘Merced’’ is also
listed without a DEA number and the name of the
it had refused prescriptions because the 139 Off to the right of this question (in and near city in which he practiced. RX 2H, at 70. A note
quantities were large, the prescription the margin) is the notation: ‘‘Tampa—100 mile in the margin dated ‘‘9–25–09’’ suggests that this
radius.’’ RX 2H, at 82. While the form contains name was added on that date.
138 It also re-verified that the Superior held a other notations in the right margin, including one 141 Other photographs in the due diligence file
valid state license and a DEA registration. RX 2H, which is dated ‘‘6/23/09,’’ id., it is unclear when show that the Pain Clinic and Walk-In Clinic were
at 77–78. this notation was made. one and the same. RX 2H, at 28.
du per month. Id. at 83. While the On June 23, Respondent conducted a management at Superior. See generally
record contains no evidence regarding due diligence assessment (apparently by RX 2H. As for the latter, MFR notes
the level of Superior’s oxycodone telephone) and re-verified that Superior dated September 25 spell the latter’s
purchases before April 1, 2009, the held a DEA registration and a Florida name as Mubang. RX 2H, at 1. Yet there
evidence shows that during April 2009, Pharmacy license. RX H2, at 53, 56. is no evidence that Respondent’s
Respondent filled numerous orders According to the due diligence compliance department conducted a
totaling 16,800 du of oxycodone 30; assessment, Superior did not claim that license verification on a Dr. Mubang
4,800 du of oxycodone 15; 1,200 du of its primary customer base was workers either, even though the notes indicated
Endocet 10/650; and 6,000 du of compensation, pain management, or that Respondent was aware that he was
Endocet 10/325; for a total of 28,800 bariatric patients.142 Id. at 51. Yet as writing prescriptions at the Superior
oxycodone products. GX 10F, at 43–44. found above, during the site visit, Pain Clinic. See generally RX 2H. Nor
There are, however, no notes discussing Respondent’s consultant had reported did it check the license status of any of
any of these orders. that Superior shared space with a pain the physicians who Superior had
On May 1, 2009, Superior placed management and weight loss clinic 143 previously identified as pain
orders, which Respondent filled, and that Superior’s staff had told him management physicians whose
totaling 25,000 du of oxycodone 30. GX that ‘‘[m]any of their prescriptions prescriptions it filled. And while
10F, at 44. Here again, there are no notes originate within the clinic.’’ Id. at 70. various forms in the Due Diligence file
discussing the orders. Moreover, Superior now reported that indicate that Respondent conducted a
On June 2, Superior placed orders, it filled ‘‘280’’ prescriptions per day and Google Search of Superior Pharmacy, id,
which Respondent filled, totaling that its ‘‘daily ratio of controls to at 50–52, it did not conduct a Google
25,000 du of oxycodone 30. Id. noncontrols [was] ‘‘50/05’’ [sic]. Id. Yet Search of the doctors who were working
Moreover, on June 24, Superior placed during the site visit, Superior had at the Superior Medical Center. Had it
orders, which Respondent filled, for reported that it filled 100 prescriptions done so, it would likely have come
30,000 du of oxycodone 30; 5,000 du of per day and that 25 percent of the across a press release issued on July 16,
oxycodone 15; and 5,000 du of Endocet prescriptions were for controlled 2008 by the Florida Department of Law
10/325. Id. Respondent thus shipped a substances. Id. at 66. Enforcement announcing the arrest of
total of 65,000 du of oxycodone As for its policies and procedures, John Nkolo Mubang ‘‘for allegedly
products to Superior during the month. Superior reported that it did not fill trafficking in prescription drugs while
Here again, there are no notes prescriptions for patients and he worked as an internal medicine
discussing any of these orders and the prescriptions written by doctors, unless doctor at a Tampa medical facility he
orders were not reported as suspicious the patients and doctors were within ‘‘a owns and operates.’’ 144
even though they were more than 100 mile radius around Tampa.’’ Id. at Finally, the form provided a place to
double the April and May orders. 52. As for its procedures to prevent note either ‘‘unusual answers’’ or other
On June 18, Respondent obtained a doctor shopping, Superior advised that relevant information. Id. at 52. In this
second UR from Superior, which it called and verified all controlled place, Respondent noted: ‘‘60% open
covered the month of May. Id. at 57–64; prescriptions and watched the patients, door and 45% clinic’’ [sic]. Id.
96–104. Notably, with the exception of and as for its procedures to ensure the The next day (June 24), Respondent
carisoprodol, which was then controlled prescribers were exercising proper filled Superior’s orders for 30,000 du of
under Florida law but not the CSA, each standards of care, it asserted that it oxycodone 30; 5,000 du of oxycodone
of the top 25 drugs was a controlled would ‘‘[c]all and verify.’’ Id. While 15; and 5,000 du of Endocet 10/325. GX
substance under federal law. Id. at 96. Superior reported that it had ‘‘refused to 10F, at 44. It did not report the orders
Moreover, the top four drugs were fill a prescription’’ if it was ‘‘too soon,’’ as suspicious, notwithstanding that
oxycodone products, three of which it also advised that it had never Superior’s June orders were 40,000 du
were different manufacturers’ ‘‘decided to permanently stop filling and 2.6 times greater than its May
oxycodone 30 products, the other being scripts for a certain physician.’’ Id. orders and despite the various
Endocet 10/325. Id. Also among the Next, Superior provided the names of inconsistencies in the information it
most dispensed drugs were the stronger two physicians whose controlled possessed regarding Superior’s business.
formulations of the benzodiazepines substance prescriptions it filled (Dr. On July 1, Respondent filled
alprazolam (1 mg and 2 mg) and Mercedes and Dr. Hubang). Id. The same Superior’s orders for 45,000 du of
diazepam (5 mg and 10 mg), as well as day, Respondent printed out a license oxycodone 30 and 200 du of Endodan,
other narcotics including oxycodone 15 verification and practitioner profile for a drug combining oxycodone and
mg and the strongest formulation of the aforementioned Dr. Merced (but not aspirin. GX 10F, at 43–44. Moreover, on
combination drugs containing either 7.5 a Dr. Mercedes) from the Florida DOH July 23, Respondent filled Superior’s
or 10 mg of hydrocodone. Id. Web site. Id. at 54–55. Of note, the orders for 20,000 du of oxycodone 30,
As for Superior’s dispensings of printouts showed that Dr. Merced’s thus resulting in total shipments of
oxycodone, the UR showed that during address of record was in Jamestown, 65,200 du for the month. Id. at 44. There
May, it had dispensed a total of 60,274 North Carolina and not Tampa. Id. is, however, no documentation
du of oxycodone 30; 6,272 du of Moreover, Respondent did not obtain explaining why the orders, which
oxycodone 15; and 11,641 du of Endocet printouts for either a Dr. Mercedes or a exceeded Superior’s purchasing limit,
10/325. RX 2H, at 96, 99, and 103. Dr. Hubang, and it did not conduct any were filled. Nor were the orders
During the month, Superior’s total further investigation into these reported as suspicious.
dispensings of all prescriptions physicians who were practicing pain

products were 209,481 du. Id. at 64. 144 Pursuant to 5 U.S.C. 557(e), I take official
Thus, Superior’s dispensings of 142 Indeed, it is unclear what Superior reported as notice of the aforesaid press release, which can be
oxycodone 30 alone comprised 28.8 its primary customer base, as the box for a accessed at http://www.fdle.state.fl.us/Content/
percent of its total dispensings, and its ‘‘community’’ pharmacy was not checked (nor the News/2008/July-2008/Hillsborough-County-Doctor-
box for ‘‘other’’) and there is no description next to Charged-with-Prescripti.aspx. Respondent shall
dispensings of its top three oxycodone the box that was checked. RX 2H, at 51. have ten (10) business days from the date of
products (78,187 du) comprised 37.3 143 Superior did report that it was located within issuance of this order to refute the above facts by
percent of its total dispensings. a medical clinic. RX 2H, at 51. filing a motion with this Office.
On August 11, Respondent filled ‘‘File updated,’’ ‘‘location inside clinic,’’ [sic] orders.’’ Id. at 105; see also RX 2H,
Superior’s order for 40,000 du of ‘‘limits reduced,’’ ‘‘280 scripts a day,’’ at 1. Neither the notes nor Ms. Seiple’s
oxycodone 30. GX 10F, at 43. However, and ‘‘practitioner that write scripts Dr. testimony explain why Superior’s limit
while there are SOMS notes for orders Mercedes’’ and ‘‘Dr. Mubang.’’ Id. Still had not actually been reduced on
placed on August 6 and 7—thus other notes for this entry included the September 25, as Ms. Seiple had
indicating that the system was then names ‘‘Dr—Merced’’ and ‘‘John documented in the MFR note of that
functioning—there are no entries for Mubang,’’ along with the number ‘‘280’’ date.
orders placed on August 11. GX 24, at surrounded by a circle, and ‘‘65k to According to an MFR note, on or
106. 25k.’’ Id. Of note, however, all of this about November 17, Superior placed an
Moreover, on August 28, Respondent information was at least three months order for 25,000 du of oxycodone. RX
filled Superior’s order for 35,000 du of old and much of it had been acquired 2H, at 2. The MFR note states that ‘‘as
oxycodone 30, thus bringing its total 14 months earlier. Also, while the order of 11/3 per committee [pharmacy] need
shipments of oxycodone 30 to 75,000 du was placed on compliance hold, [sic] to give a non control [sic] order
or the month. GX 10F, at 43. While there Respondent did not obtain an before releasing Oxy order sent email to
are multiple orders listed in the SOMS explanation for the order from Superior, rep.’’ Id. Continuing, the note states:
notes with the date of August 27, several which it then verified. ‘‘Acct is at their [sic] limit for the
of which list the name of an employee Respondent did, however, obtain a month[.] [O]rder will be deleted.’’ Id.
who approved the order and notations new UR, which covered the month of The note further states that an employee
such as ‘‘to ship within current size August 2009. Id. at 31–46. The UR of Respondent contacted Superior’s PIC,
limit for 30 day period,’’ the notes do showed that Superior had dispensed who stated that ‘‘he didn’t know his
not specify which drugs these orders 80,302 du of oxycodone 30; 4,070 du of limits were drop [sic] to 25k.’’ Id.
were for. GX 24, at 106. Moreover, oxycodone 15, and 7,655 du of Endocet Respondent did not, however, report
because the record contains no evidence 10/325; it also showed that its total Superior’s oxycodone order as
as to Superior’s orders before April 1, dispensings were 242,818 du. RX 2H, at suspicious. Moreover, the next day,
2009, there is insufficient evidence as to 32, 34, 41, 46. Thus, Superior’s Respondent approved orders totaling
its six-month ordering history and thus, dispensings of oxycodone 30 alone 2,500 du of hydrocodone, which were
its oxycodone CSL cannot be amounted to 33 percent of its shipped the following day. GX 10F, at
determined as of this month. dispensings, and its dispensings of the 43.
On September 14, Respondent filled three oxycodone products amounted to An MFR note of November 19 states
Superior’s orders for 30,000 du of 37.9 percent of its total dispensings. that Superior’s pharmacist was being
oxycodone 30 mg. GX 10F, at 43. Moreover, here again, most of the drugs called ‘‘due to wrong [sic] fill 8109
Moreover, on September 24, Respondent (19) among the top 25 drugs dispensed product’’ and that its ‘‘limits cut.’’ RX
filled an order for 5,000 du of Endocet by Superior were controlled substances 2H, at 2. Continuing, the note states:
10/325. GX 10F, at 43. According to a and included other narcotics such as ‘‘per Wayne collect moneys and
note in the MFRs, on September 24, methadone and hydrocodone, as well as terminate,’’ ‘‘put on CH until paid,’’
Superior placed three orders ‘‘for 30k three formulations of alprazolam and ‘‘gradually reduced allotment to collect
[thousand] pills’’ and the order was two formulations of diazepam. RX 2H, moneys’’ and ‘‘owes 46k.’’ Id. Still
‘‘held.’’ RX 2H, at 1. While this entry at 32. Of further note, carisoprodol was another note for this date (which is
does not specifically identify that the the third most dispensed drug. Id. written in the space for dating an entry)
order was for oxycodone, an MFR entry Notwithstanding this information and states: ‘‘partnership in clinic’’ and
for the next day supports the inference the notations indicating that Superior ‘‘[b]oth connected owns both.’’ Id.
that it was. had been placed on compliance hold According to an MFR entry of
The note, which bears Ms. Seiple’s and non-controlled status, or November 30, on this date Superior
initials, states that she ‘‘researched alternately, that its CSL had been placed two orders for 200 bottles
[Superior’s] file and looked [at] the site reduced to 25,000 du of oxycodone, on (20,000 du) of oxycodone 30. RX 2H, at
visit as well as Web sites from 2008,’’ September 30, Respondent filled three 2. Other notes in this entry include: ‘‘Ike
noting that ‘‘[t]he pharmacy is located orders totaling 30,000 du of oxycodone own [sic] clinic & pharmacy,’’ ‘‘1% on
inside clinic.’’ Id. Ms. Seiple then wrote 30 mg. GX 10F, at 43. Entries in the non-controls’’ and ‘‘owes 31k.’’ Id. A
that she called the ‘‘pain clinic and SOMS notes made the same day suggest SOMS note of the same date by Ms.
inquired about service’’ and ‘‘if I would that the orders did not even trigger a Seiple states: ‘‘ok to ship do not ship
come in for service d[id] they have a review as they do not contain the name over 10k on oxy this month without
pharmacy inside [the] clinic. They said of a person who reviewed the order nor committee review.’’ GX 24, at 107. And
yes.’’ Id. Continuing, Ms. Seiple wrote contain any notes regarding the order. while a December 1 MFR entry then
that ‘‘per Web site & pics [photos,] GX 24, at 106. states: ‘‘order holding’’ and ‘‘TT [talk to]
orders are being deleted customer on On October 26, Respondent shipped Teri,’’ an MFR entry for December 2
CH.’’ Id. Ms. Seiple further noted that to Superior orders for 20,000 du of reads ‘‘CSL reduced in SOMS to 10k,’’
Superior ‘‘owes 60 K most due 10/10 9/ oxycodone 30. GX 10F, at 43. Yet on followed by (in blue ink) ‘‘RWR
21’’ and ‘‘will tell account @ limit for November 2, Respondent shipped to terminate—once bill is pd.’’ Id.
month.’’ Id. Ms. Seiple then wrote that Superior three orders totaling 25,000 du The same day (December 2),
she would encourage another employee of oxycodone 30. Id. The SOMS notes Respondent shipped to Superior 10,000
‘‘to get payment’’ and she would ‘‘not for this date include three entries, none du of oxycodone 30. GX 10F, at 43.
tell customer’’ that it was ‘‘on non of which include the name of a reviewer Respondent did not report the order as
controls til [sic] paid in full.’’ Id. Ms. or a note, thus indicating that the orders suspicious even though it knew that
Seiple then noted that Superior was ‘‘on were not held for review. GX 24, at 106. Superior’s pharmacist owned both the
compliance review.’’ Id. Yet entries in the Ship to Memos and pharmacy and the pain clinic.
To the right of this statement are more MFRs state that on November 3, the Moreover, on December 7,
notes stating ‘‘Additional updated Due account was reviewed by the committee Respondent filled an order for 200 du of
Diligence Survey updated,’’ below and ‘‘reduce[d] from 65k to 25k’’ and hydrocodone/ibuprofen tablets, a
which were the following bullet points: that Superior had to ‘‘give non control schedule III controlled substance. Id.
According to an MFR note, on December substances to the pharmacy, Respondent one-stop shopping. And a second
10, the compliance committee reviewed verified that its Florida pharmacy printout of Superior’s Web page—which
Superior’s status. RX 2H, at 2. While the license and DEA registration were valid was not obtained until September
MFR note states that the account was and obtained a copy of the most recent 2009—provided the same street address
terminated (and also that Superior still DOH inspection. She also asserted that for both the pharmacy and the pain
owed money), id., a note in the Ship to based on the description provided by clinic. Thus, while the presence of
Memo states: ‘‘do not ship controls Superior as to its policies and Superior’s pain clinic may well have
without review by jen or wayne.’’ GX procedures, Respondent believed that been a factor which ‘‘accounted for the
24, at 105. the pharmacy understood its obligations volume of controlled substances being
While there is no evidence that to prevent diversion ‘‘and was taking dispensed, and the percentage of
Respondent filled any controlled affirmative steps’’ to prevent diversion. oxycodone dispensed relative to other
substance order for Superior after RX 103, at 73. Ms. Seiple did not, drugs,’’ this does not establish that those
December 7, 2009, on January 11, 2010, however, address what significance she dispensings were for a legitimate
Respondent conducted a site visit at the attached to the note on the Due medical purpose.
pharmacy. RX 2H, at 21–29. On the Diligence Report Form (next to the In her declaration, Ms. Seiple did not
form, Respondent’s inspector question whether the pharmacy address why, in light of the information
documented that Superior reported that practiced due diligence on specific she had obtained that the clinic and
controlled substances (in schedule II–V) prescribers) which states, ‘‘Tampa—100 pharmacy shared the same space and
constituted 50 percent of its mile radius,’’ and thus suggests that were marketed together, Respondent
dispensings; the inspector circled the Superior would fill prescriptions for failed to investigate the relationship
figure and wrote ‘‘too high,’’ which he prescribers as long as they were located between the pharmacy and pain clinic
underlined for emphasis. Id. at 23. He within 100 miles of Tampa. until 15 months later.145 See generally
further noted that there was ‘‘[a] pain Next, Ms. Seiple asserted that because RX 103, at 72–75. Nor did Ms. Seiple
management doctor in the same place of during the June 2008 site inspection, explain why it took 17 months for her
business,’’ which he also circled. Id. at Superior’s PIC had ‘‘explained that [its] to even ask Superior’s PIC about the
24. And in the space for providing a business model included filling ownership of the clinic. See id.
general description of the pharmacy, he prescriptions for a juvenile in-patient Moreover, while at the hearing
wrote: ‘‘A busy 4-lane roadway in a strip facility, and a weight-loss and pain Respondent asserted that in early 2009,
mall w/a pain clinic inside the management facility located in an it had cut off selling to physicians who
pharmacy.’’ Id. adjacent office . . . [t]hese factors were directly dispensing oxycodone to
The inspector further recommended accounted for the volume of controlled their patients, Ms. Seiple offered no
that a compliance review be conducted substances being dispensed, and the explanation for why this policy did not
based on the fact that controlled percentage of oxycodone dispensed warrant cutting off Superior given that
substances comprised 50 percent of relative to other drugs.’’ Id. However, it promoted itself as both a pain clinic
Superior’s dispensings. Id. at 21. The while the consultant reported that and pharmacy. See id. Nor did she
inspector also checked that he had Superior claimed it was servicing a explain why Respondent continued to
observed suspicious activity outside of juvenile in-patient facility, Respondent distribute oxycodone to Superior even
Superior, noting that there were obtained no information regarding the after she called the pain clinic and was
‘‘several persons hanging outside facility, including its name, the number told that there was ‘‘a pharmacy inside
pharmacy & sitting in vehicles—20–30 of patients it treated, the type of [the] clinic.’’ See id.; see also RX 2H, at
year olds—not using canes or walking conditions it treated and the drugs 1.
with limps—talking about getting their prescribed in the course of treatment, The rest of Ms. Seiple’s assertions
meds!’’ Id. and the names of its doctors. Thus, the regarding Superior’s ordering and
On a second site visit mere fact that Superior provided dispensing patterns are similarly
recommendation which is dated two prescriptions for this facility falls well unavailing. For example, she asserted
days later, the inspector noted that he short of justifying the volume of its that ‘‘[a]fter Superior’s account was
had observed ‘‘6 people out front of oxycodone dispensings and the approved, [the] SOMS . . . identified
pharmacy talking about getting their percentage of its dispensings comprised and held any order . . . that deviated
oxys as I walked in!’’ Id. at 29. He also by oxycodone. from its typical volume, pattern or
noted that there were ‘‘[n]umerous As for Ms. Seiple’s assertion that the frequency’’ ’ and that these orders were
persons 20–35 yrs. old, hanging inside pain management and weight loss clinic released only after review by the
& outside pharmacy to by [sic] oxys were ‘‘located in an adjacent office,’’ Compliance Department. RX 103, at 73–
with no apparent disabilities! No one Respondent’s consultant actually 74. She also asserted that ‘‘[b]ased on
limping or using canes.’’ Id. reported that ‘‘[t]he pharmacy is located [Respondent’s] extensive investigation,
While Respondent subsequently within a space that it shares with
terminated Superior, Respondent’s Superior Medical Center.’’ RX 2H, at 70. 145 As found above, two weeks before the site
compliance staff had known since the Of further note, interspersed with the visit, Respondent conducted a phone survey to
evaluate Superior for an increase in its oxycodone
original site visit that both a purported pages of the consultant’s report were purchasing limit. RX 2H, at 81. One of the questions
pain management clinic and the photographs showing the store front and on that form specifically asked if the pharmacy had
pharmacy were operating out of the its signage; these photos clearly showed ‘‘[r]elationships with specific doctors/clinics?’’ Id.
same retail space. Yet for nearly a year that the pharmacy and clinic were Respondent’s reviewer left the answer block blank
and added scribble on the line provided for

and a half, Respondent failed to raise located in the same space. Id. at 68. explaining the answer. Id.
any questions as to the ownership of the Moreover, one week after the While this non-answer was clearly inconsistent
clinic and the relationship between the consultant conducted his inspection, with the information obtained during the site visit,
physicians who practiced there and the Respondent obtained a printout of there is no evidence that Respondent investigated
pharmacy owner. Superior’s Web page. The Web page whether the form was completed in this manner
because Superior’s PIC had denied the existence of
Regarding Respondent’s distributions clearly showed that Superior was any such relationship, or because Respondent’s
to Superior Pharmacy, Ms. Seiple noted marketing itself as both a pain clinic employee falsified the form or failed to ask the
that before shipping controlled and pharmacy, thus providing a form of question.
it determined that the orders it shipped suspicious’’ (RX 103, at 75) is no evidence that the licenses were
to Superior were not suspicious.’’ Id. at disingenuous. verified until an April 2008 site visit.
75. And she asserted that ‘‘[t]he URs and As for her further assertion that the As for Respondent’s initial due
other information provided by Superior URs and other information provide by diligence survey, Morrison’s reported
were consistent with the pharmacy’s Superior were consistent with the that its daily prescription average was
business model as explained by the pharmacy’s business model as 265 and that controlled substances
customer. Id. at 74. explained by its PIC, the evidence does comprised 60 percent of the
Here again, Respondent filled show that the PIC explained at various prescriptions; it also reported that 35
numerous orders for oxycodone points that much of the pharmacy’s percent of the prescriptions were for
products during the period between business involved filling the schedule II drugs. RX 2G1, at 1. As for
April 1 and early August 2009 during prescriptions written by the doctors at Morrison’s due diligence procedures,
which the SOMS was not even his pain clinic. Indeed, this has been the PIC reported that she would call the
operational. Moreover, while the reported by Respondent’s consultant doctor when a physician was a new
evidence shows that Superior’s following the site visit, RX 2H, at 69–70; prescriber, for ‘‘unusual prescriptions,’’
oxycodone limit was set at 25,000 du as well as documented in the report of and if a patient was ‘‘too early.’’ Id. The
per month effective July 1, 2008, and the June 23, 2009 due diligence PIC further represented that patients
that Respondent shipped it a total of assessment which noted that 45 percent were required to provide their driver’s
28,800 du (for all oxycodone products) of the prescriptions were from the license number and that she would
in April 2009 and 25,000 of oxycodone clinic. See id. at 52. Yet while during refuse to fill prescriptions if she
30 during May 2009, Respondent the June 2008 site visit, the PIC had suspected a patient was ‘‘doctor
shipped it a total of 65,000 due of reported that 25 percent of the shopping,’’ was ‘‘too early,’’ was
oxycodone products during June 2009. prescriptions it filled were for presenting ‘‘forged scripts,’’ or was
Even though the June orders were more controlled substances, during the June ‘‘visibl[y] intoxicat[ed].’’ Id. Finally, the
than double the April and May orders 2009 due diligence assessment he now PIC stated that if a patient presented
and the purported 25,000 du limit, Ms. reported that 50 percent of the ‘‘too many scripts,’’ she would tell the
Seiple did not deem them suspicious. prescriptions were for controlled patient that he/she ‘‘can only fill one’’
So too, she did not report the July substances. Moreover, the May 2009 UR and that she would ‘‘[v]oid scripts when
orders, which totaled more than 65,000 showed that with the exception of the doctor authorizes.’’ Id.
carisoprodol, each of the top 25 drugs Prior to the completion of the due
du, as suspicious.
dispensed by NDC code was a diligence survey, Morrison’s provided
Notwithstanding that various orders
controlled substance, with three of the utilization reports but only for the
for 30,000 du of oxycodone 30 were oxycodone products it sold. Id. at 130–
top four drugs being oxycodone 30
held on September 24, 2009, prompting 46. It also provided a list of some 22
products (the other being Endocet 10).
Ms. Seiple to place a call to the pain pain management doctors whose
Also among the top 25 drugs were
clinic during which she was told that prescriptions it filled, along with the
multiple narcotics including still more
the pharmacy was located inside the names and addresses of their clinics. Id.
oxycodone products, including three
clinic, followed by her deleting the at 148–49. There is no evidence,
oxycodone 15 products, OxyContin in
orders, the orders were not reported as however, that Respondent’s staff
both 40 and 80 mg dosage, three
suspicious. Moreover, the compliance hydrocodone products, methadone, two conducted any further inquiries into the
hold was short-lived as only six days hydromorphone products, and five licensure status of these physicians.
later, Respondent filled three orders benzodiazepines. Id. at 96. Contrary to As for the URs, they showed
from Superior for 30,000 du of Ms. Seiple’s assertion, the information Morrison’s dispensings of each
oxycodone 30. And while notes made in Respondent obtained from Superior was oxycodone product (by dosage and by
various documents indicate that not consistent with that of a pharmacy NDC code) for the months of September
Superior’s CSL had been reduced to that was dispensing only legitimate and October 2007, as well as for a
25,000 du, these orders were shipped prescriptions but rather that of a portion of November. The URs did not,
without any review and were not pharmacy that was engaged in however, show Morrison’s total
reported as suspicious. suspicious activity. dispensings of all products.
Here again, Ms. Seiple failed to With respect to oxycodone 30, the
address why these orders were not Morrison’s Rx URs showed that during September,
reported as suspicious and were Morrison’s Rx (hereinafter, Morrison’s dispensed 1,256
shipped. She also failed to address why Morrison’s) is a community pharmacy prescriptions totaling 227,801 du, an
various orders in October and early located in Sunrise, Florida. RX 2G, at average of 181 du per prescription. RX
November 2009 did not even trigger 127. According to Ms. Seiple, 2G, at 135–36. As for October, the URs
review even though the orders placed Morrison’s established its account with showed that Morrison’s dispensed 1,466
Superior well over the 25,000 du CSL Respondent in September 2007. RX 103, prescriptions totaling 262,773 du, an
which was supposedly instituted on at 69. Also according to Ms. Seiple, average of 179 du per prescription. Id.
September 25, 2009. prior to Respondent’s first distribution With respect to oxycodone 15, the
So too, in her declaration, Ms. Seiple of controlled substances to Morrison’s, URs showed that during September,
failed to explain why in December 2009, Respondent conducted a due diligence Morrison’s dispensed 211 prescriptions
Respondent shipped 10,000 more du of survey, obtained a credit application totaling 23,814 du, an average of 113 du
oxycodone 30 even though Ms. Seiple and a Dun & Bradstreet report. Id. While per prescription. Id. at 132–33. As for
had by then determined that Superior’s the record also establishes that October, the URs showed that
PIC owned both the pharmacy and the Respondent obtained a copy of Morrison’s dispensed 227 prescriptions
pain clinic. And here again, Respondent Morrison’s DEA registration in totaling 24,449 du, an average of 108 du
failed to report the order as suspicious. September 2007, Ms. Seiple made no per prescription. Id.
In short, Ms. Seiple’s assertion that claim that Respondent verified that According to a memo in Morrison’s
Respondent ‘‘determined that the orders Morrison’s and its PIC held state due diligence file, on April 1, 2008, an
it shipped to Superior were not licenses prior to shipping, and there is employee of Respondent requested a re-
evaluation of Morrison’s purchasing held a valid state license and DEA Id. at 46. With respect to oxycodone 30,
limits ‘‘due to a glitch in the CSOS registration and that its PIC held a state the UR showed that Morrison’s
system which enabled the pharmacy to license, he also noted that the pharmacy dispensed 1,839 prescriptions totaling
order over their [sic] limit.’’ Id. at 128. sold a ‘‘very limited’’ selection of front 335,114 du, an average of 111,705 du
Respondent’s employee documented store items and did not sell medical per month and 182 du per prescription.
that she had verified the licenses of both supplies other than by special order. Id. Id. As for oxycodone 15, the UR showed
the pharmacy and its PIC; she also at 110–11. He further noted that the that Morrison’s dispensed 851
documented that Morrison’s had pharmacy had purchased drugs from prescriptions totaling 77,417 du, an
reported that 40 percent of the three other distributors, that it filled 200 average of 25,806 per month and 91 du
prescriptions were schedule II drugs prescriptions on an average day, that 30 per prescription. Id.
and that it was filling 250 rather than percent of the prescriptions were for Thereafter, on February 2,
265 prescriptions per day. Id. controlled substances, and that 20 Respondent’s account manager sought
As part of the update, Respondent’s percent of the pharmacy’s business was an increase in Morrison’s solid dose
employee obtained Morrison’s most paid for with cash. Id. at 112. He also oxycodone ordering limit, noting that its
recent state inspection reports (which noted that Morrison’s serviced ‘‘1 monthly usage was 200,000 du and that
found a single violation in that its nursing home’’ and one ‘‘inpatient it qualified for the increase both because
compounding records were not properly facility’’ which was identified as St. it was a ‘‘long-term’’ customer and a
maintained). Id. at 109. She also Joseph; however, the report included no ‘‘large full-line pharmacy.’’ Id. at 51.
obtained a UR for the period January 1 further information as to the type of Written on the form is the notation:
to April 1, 2008, which showed the treatment provided at the inpatient ‘‘Table need usage report.’’ Id. However,
dispensings of the top 500 drugs (by facility, its size, and the types and there is a further notation on the request
NDC code). Id. at 115. With respect to quantity of prescriptions that were being form stating that on a date, the month
oxycodone 30, the UR showed that filled for its patients. Id. So too, the of which is obscured, Morrison’s was
during the period, Morrison’s had report contained no information as to approved to purchase 200,000 du of
dispensed 1,088 prescriptions totaling the size of the nursing home, and the oxycodone per month.148 Id. Respondent
189,947 du, an average of 63,316 du per types and quantity of prescriptions that did not obtain a new UR until May 6,
month and 174.6 du per prescription. Morrison’s was filling for its patients. 2009. Id. at 100.
Id. The UR further showed that during Next, the consultant noted that the Subsequently, on February 17, an
the period, Morrison’s dispensed 153 pharmacy filled prescriptions for pain employee of Respondent completed a
prescriptions totaling 15,547 du of management clinics and listed the due diligence report form on Morrison’s.
oxycodone 15, an average of 5,149 du names of five doctors, their locations, Id. at 3–4. Therein, Morrison’s reported
per month and 101 du per and their DEA numbers. Id. at 113. that it was now filling 180 prescriptions
There is, however, no evidence that per day. Id. at 3. Morrison’s further
prescription.146 Id. at 115, 123.
Respondent conducted any further reported that controlled substances
Oxycodone 30 alone accounted for more
inquiries regarding these doctors such comprised 30 to 60 percent and
than 38 percent of the dispensings listed
as license verifications and whether schedule II drugs comprised 15 to 30
on the report. Moreover, while the UR’s
they had any specialty training or board percent of the prescriptions it filled. Id.
ranking did not actually list the drugs in The form also included several
decreasing order by the number of units certification in pain management.
Finally, the consultant provided questions regarding Morrison’s policies
dispensed, even a cursory review shows and procedures. Id. at 4. As for how it
that controlled substances (and ‘‘additional comments.’’ Id. Therein, the
consultant wrote: ensured that prescribers were exercising
carisoprodol) comprised nearly all of proper standard of care, Morrison’s
the top 15 drugs Morrison’s dispensed. The pharmacy is set up [with] only a
waiting area in the front—no front store
asserted that ‘‘[i]f they get a large Qty of
Notwithstanding the information CIIs they get a copy of [the] MRI and if
provided by the UR, a note on the merchandise. The pharmacy area has a small
stock of Rx drugs. It seems to be anything is ever questionable they call
bottom of the re-evaluation of limits professionally operated. The pharmacist the doctor.’’ Id. Morrison’s further
memo states that Respondent approved indicated that she isn’t filling as many CII asserted that it had refused to fill
Morrison’s ‘‘for 50k.’’ Id. at 128. The prescriptions as she used to as many of the prescriptions because the refill was too
note, however, is undated.147 Id. physicians in her area now dispense soon, the ‘‘script are [sic] questionable’’
On April 24, Respondent’s consultant themselves. The pharmacy services primarily and for an ‘‘extremely lrg. Qty.’’
made a site visit. Id. at 110–14. While elderly patients. Morrison’s PIC further reported that
the consultant verified that Morrison’s Id. at 113–14. she had stopped prescriptions for ‘‘1
A second ‘‘Schedule [sic] Drug Limit physician that was under investigation.’’
146 While these figures clearly represented a
Increase Request Form’’ establishes that Id. Apparently, short of an investigation,
substantial decrease in the volume of Morrison’s
oxycodone dispensings, the reason for this became on or about July 28, 2008, Morrison’s Morrison’s did not permanently stop
apparent three weeks later during a site visit, when requested an increase in its oxycodone filling prescriptions for any physician
Morrison’s PIC told Respondent’s consultant ‘‘that ordering limit to 100,000 du per month.
she isn’t filling as many CII prescriptions as she 148 There are additional documents in this time
used to as many of the physicians in her area now
Id. at 104. There is, however, no
period including the result of a Google search
dispense themselves.’’ RX 2G, at 113–14. documentation as to whether the conducted on Morrison’s, printouts from Morrison’s
147 The due diligence file also includes a request was granted. Web site, a printout on Morrison’s from a Web site
Schedule Drug Limit Increase Request Form, which On January 30, 2009, Respondent known as LegitScript.com, and a Dunn and
is dated ‘‘3/31’’ and which requested an increase in obtained from Morrison’s various Bradstreet report. RX 2G, at 54–74. While the
Morrison’s solid dose oxycodone ordering limit to printout from the LegitScript Web site stated that
50K based on an ‘‘exemption’’ Respondent provided
documents including its ‘‘policy and the pharmacy met LegitScript’s ‘‘Internet pharmacy
for a ‘‘large full line pharmacy.’’ RX 2G, at 105. The procedure’’ for dispensing controlled verification standards,’’ id. at 62–63, it did not
record is otherwise unclear as to what criteria were substances to treat pain. Id. at 48–50. It otherwise address whether Morrison’s was filling
used to determine if a pharmacy was qualified as also obtained a UR for the period of legitimate prescriptions. See id. at 62 (‘‘LegitScript
such. A further note on the bottom of this page simply represents that, at the time that LegitScript
which is dated April 29, 2008, states: ‘‘Leaving at
November 1, 2008 through January 30, reviewed the Web site, available information
50k Re-Eval 6 mos. Call & informed Jen Seiple sales 2009, which showed the dispensings of indicated that the Web site met or did not meet our
rep.’’ Id. 34 schedule II drugs listed by their NDC. standards as represented on this Web site.’’).
even though it claimed that it had Morrison’s average monthly Respondent failed to file a suspicious
refused to fill prescriptions because the dispensings. Yet there is no evidence order report for any of the oxycodone 30
refill was too soon, the ‘‘scripts [we]re that Respondent contacted Morrison’s and 15 orders.
questionable,’’ or were for an extremely and questioned the orders, and Through the first 17 days of August
large quantity. Respondent did not report any of the 2009, Respondent filled orders totaling
As for whether it filled prescriptions orders as suspicious.150 101,600 du of oxycodone 30; 39,600
written by out-of-state or out-of-area Throughout May 2009, Respondent oxycodone 15; 4,300 du of Endocet 10/
doctors, Respondent’s employee noted filled numerous orders totaling 141,200 325; 900 du of Endocet 10/650; 500 du
‘‘no. She’s in South Florida; if someone du of oxycodone 30; 10,800 du of of Endocet 5/325; 400 du of oxycodone
comes from N. Florida she wouldn’t or oxycodone 15; 9,300 of Endocet 10/325; 80; and 300 du of oxycodone 40. GX
if they came from the west coast they 1,000 du of Endocet 10/650; 500 du of 10F, at 22–26. These orders totaled
wouldn’t.’’ Id. Unclear is whether this oxycodone 5/325; 700 du of oxycodone 147,600 du.
answer was referring to the location of 40; and 300 du of oxycodone 80. GX In contrast to the orders that were
the prescriber or the persons presenting 10F, at 22–25. In total, Respondent placed between April 1 and July 31,
the prescriptions. Moreover, as for shipped 163,800 du of oxycodone 2009, there are SOMS notes for these
whether the PIC would fill prescriptions products to Morrison’s during the orders, including several entries
for out-of state patients, Respondent’s month. Here again, Respondent’s indicating that the orders were reviewed
employee noted that the PIC would fill shipments of oxycodone 30 exceeded prior to shipping. GX 23, at 151.
‘‘only if they are visiting or on Morrison’s monthly average dispensings Specifically, there is a SOMS note for an
vacation.’’ Id. (according to the previous UR) by a order placed on August 5, 2009 (on this
The final question on the form asked substantial margin, i.e., more than date 13,200 du of oxycodone 30 and
if ‘‘the pharmacy practice[d] due 59,000 du or more than 76 percent. 4,800 du of oxycodone 15 were shipped)
diligence on specific prescribers.’’ Id. Once again, there is no evidence that which lists Ms. Seiple as the decision-
Respondent’s employee wrote: ‘‘They Respondent contacted Morrison’s maker and states: ‘‘ok to ship UR
practice due dilligence [sic] on all regarding its oxycodone 30 orders—all supports order.’’ GX 23, at 151.
prescribers.’’ Id. No further explanation of which were placed over the course of Of note, there is no documentation
was provided as to what Morrison’s due three days (May 26–28), GX 10F, at 22; that Ms. Seiple contacted Morrison’s to
diligence involved. and questioned the orders. Nor did it obtain an explanation for the order
Thereafter, during the month of April report the oxycodone 30 orders as which she then independently verified.
2009, Respondent filled numerous suspicious. Moreover, Respondent did not obtain a
orders placed by Morrison’s for In June 2009, Respondent filled orders new UR until August 17. RX 2G, at 10–
oxycodone products which totaled totaling 81,600 du of oxycodone 30; 28.
171,700 du of oxycodone 30; 37,200 du 39,900 du of oxycodone 15; 14,300 du Likewise, while the SOMS notes
of oxycodone 15; 6,400 du of Endocet of Endocet 10/325; 1,000 du of Endocet indicate that the oxycodone orders that
10/325; 400 du of Endocet 10/650; 500 10/650; 400 du of oxycodone 80; and Morrison’s placed on August 11 and 12
du of oxycodone 5/325; 300 du of 300 du of oxycodone 40. GX 10F, at 22– were subject to review, the notes
oxycodone 80 mg; and 1,300 du of 25. While these orders, which totaled indicate that orders were released
oxycodone 40 mg. GX 10F, at 22–24. 137,500 du, marked a reduction from because they were under the current
During this month alone, Respondent the total amount Respondent had filled size limit.151 GX 23, at 151. Here again,
shipped to Morrison’s orders totaling for Morrison’s in the previous months, there is no evidence that Respondent
217,800 du of oxycodone. the pharmacy’s oxycodone 15 orders contacted Morrison’s and obtained an
On May 6, 2009, Respondent obtained were still more than double the amount explanation for the orders. So too, while
a UR which showed Morrison’s of its average monthly dispensings of the SOMS notes indicate that the
dispensings during the period of the drug according to the previous UR. oxycodone orders Morrison’s placed on
January 1, 2009 to May 6, 2009 but In July 2009, Respondent filled August 13 and 14 were also subject to
covered only the top 100 drugs numerous orders totaling 141,300 du of review, the accompanying explanations
dispensed. RX 2G, at 101–03. oxycodone 30; 48,000 du of oxycodone for why the orders were released merely
Oxycodone 30 was the top drug 15; 9,100 du of Endocet 10/325; 1,200 state: ‘‘Ok to ship reviewed by jss’’ and
dispensed, with 1,868 prescriptions du of Endocet 10/650; 700 du of ‘‘ok to ship per jss.’’ Id. Here again,
totaling 335,895 du, an average of oxycodone 80; and 200 du of oxycodone there is no evidence that Respondent
81,726 du per month 149 and 180 du per 40. GX 10F, at 22–25. Morrison’s
prescription. See id. at 101–2 (line oxycodone orders thus totaled 200,500 151 Of note, Respondent’s Policy 6.2, which set
entries #s 1 & 80). Moreover, oxycodone du. As was the case two months earlier, forth the procedures for the review and disposition
of those orders which were held by the SOMS, did
15 was the second largest drug Morrison’s orders for oxycodone 30 not distinguish between the various reasons why an
dispensed by quantity, with 882 were 61,000 du (76 percent) greater than order was held. Thus, whether an order was held
prescriptions totaling 79,991 du, an its average monthly dispensings of the because it was of an unusual size, it deviated
average of 19,463 du per month and drug per the existing UR, and its orders substantially from a normal pattern, or the orders
were of unusual frequency, the same procedure of
90.7 du per prescription. Id. at 101. for oxycodone 15 were nearly 2.5 times calling the customer and obtaining an explanation
Thus, Respondent’s April distributions larger than its average monthly for the order, which was independently verified,
of oxycodone 30 were more than double dispensings of the drug. Here again, followed by requesting a UR, was required by its
Morrison’s average monthly dispensings there is no evidence that Respondent Policy.
of the drug, and its April distributions inquired as to why Morrison’s was Policy 6.2 was revised on August 14, 2009 though
the manner in which it was revised is unclear on
of oxycodone was nearly two times (1.9) ordering these quantities. Moreover, the record. Even so, it is obvious that Morrison’s
orders were greatly in excess of the amounts its
149 The average was calculated by adding the total 150 As noted repeatedly, Respondent frequently most recent UR (which was then three months old)
days of the report through May 5 (125) and dividing used the URs to justify the release of orders, showed were being dispensed on a monthly basis.
it by the average number of days in a month in a reasoning that if an order was less than the amount Yet this did not prompt Respondent’s compliance
non-leap year (30.41); the total dispensings were shown to have been dispensed, it was supported by department to even obtain an explanation for the
then divided by this figure (4.11) to determine the the UR and was ‘‘ok to ship.’’ This, however, was orders, let alone a new UR, before shipping the
average monthly dispensings. not the case with Morrison’s. orders.
contacted Morrison’s and obtained an As before, Respondent did not inquire SOMS notes for several of them
explanation for the order or a new UR. further into the number of residents at indicating that the orders were held for
Yet Respondent’s SOMS materials state the nursing home who were receiving review. However, the notes show that
that ‘‘a [r]eason code and notes will also prescriptions for oxycodone 30. Nor did some of the orders were released
be provided as additional detail it even inquire into the type of treatment without the compliance department
supporting the decision’’ whether to being provided at the aforesaid obtaining an explanation for the orders
accept or reject an order. RX 78, at 64. ‘‘inpatient facility,’’ the number of from the pharmacy, and others were
As found above, on August 17, a DEA patients, and the number of patients released without documenting the
Diversion Investigator specifically who were receiving oxycodone reason for releasing the order. Of note,
identified Morrison’s as one of prescriptions. So too, Respondent made in her declaration, Ms. Seiple only
Respondent’s customers whose no inquiry into the number of elderly asserted that the orders were reviewed
oxycodone orders were of concern. Tr. patients who were receiving oxycodone and made no claim that the Compliance
217–18 (testimony of DI); id. at 1154–55 30. Thus, these factors do not account Department contacted Morrison’s and
(testimony of former employee); GX for the volume of pain medications obtained an explanation for the orders,
48A, at 5; GX 12, at 23. The same day, being dispensed and the percentage of which it then verified. Id.
Respondent obtained a new UR, which oxycodone dispensed relative to other Ms. Seiple acknowledged that
showed Morrison’s dispensings of some drugs. Respondent continued to sell
836 prescription products during July As for the lengthy list of pain oxycodone to Morrison’s until the DIs
2009. RX 2G, at 10–28. The UR showed management doctors which Morrison’s ‘‘inadvertently revealed during the
that Morrison’s had dispensed 1,006 PIC provided to Respondent, this may August 2009’’ meeting that the Agency
prescriptions totaling 196,069 du of well account for the large volume of was investigating the pharmacy and
oxycodone 30, an average of 195 du per pain medications being dispensed and ‘‘the account was then placed on non-
prescription, and 576 prescriptions the percentage of oxycodone dispensed controlled status.’’ Id. at 72. She then
totaling 63,658 du of oxycodone 15, an relative to other drugs. However, here asserted that Respondent ‘‘did not
average of 110.5 du per prescription. Id. again, notwithstanding that Morrison’s report a suspicious order placed by
at 11. Here too, the UR showed that was dispensing more than 250,000 du of Morrison’s because no order was
such highly abused drugs as alprazolam oxycodone 30 per month, Respondent pending at that time.’’ Id.
conducted no further inquiries into the However, as found above, the day
2 mg (more than 39,700 du), Endocet
physicians’ licensure status and after Morrison’s was identified by the
10/325, methadone, and carisoprodol
whether they had any specialized DIs (whether as a customer whose
were the largest drugs dispensed by
training or board certification in pain orders should be of concern or as a
quantity. Id.
management. Moreover, several target of an investigation), Morrison’s
The next day, Morrison’s placed placed four orders for nearly 10,000 du
physicians on this list were also
orders for 8,400 du of oxycodone 30; of oxycodone (most of which was for the
customers of Respondent who were
1,200 oxycodone 15; 300 Endocet 10/ terminated at various points prior to 30 mg tablets), as well as methadone.
325; and 200 methadone. RX 2G, at 9. April 1, 2009. Compare RX 2G, at 148– Yet none of these orders were reported,
The same day, Respondent placed 49, with RX 62, at A2–A3 (Drs. Moulton and while Ms. Seiple deleted the orders,
Morrison’s on compliance hold. GX 23, Keane, Martin E. Hale, Joseph M. this does not refute the fact that
at 150. According to an entry in the Ossorio, Gerald J. Klein, and Lucien Morrison’s placed the orders and
MFRs, on August 20, 2009, Respondent Armand). Thus, the fact that Morrison’s Respondent failed to report them.152
deleted Morrison’s August 18 orders provided this list does not establish that
and terminated it as a controlled its dispensings of oxycodone were 152 I acknowledge that the ALJ found Ms. Seiple’s
substances customer. RX 2G, at 8. consistent with legitimate medical testimony credible and clearly gave it substantial
However, Respondent did not report weight. However, much of Ms. Seiple’s testimony
purposes. is either amply refuted by the extensive
these four orders as suspicious. Next, Ms. Seiple asserted that ‘‘after documentary evidence of record or is unresponsive
In her declaration, Ms. Seiple offered Morrison’s account was approved, [the] to other evidence. Accordingly, I decline to give it
the same explanations as to why SOMS systems identified and held any substantial weight for reasons which should be
Respondent failed to report Morrison’s evident by now. See Universal Camera Corp. v.
orders for controlled substances placed NLRB, 340 U.S. 474, 496 (1951) (‘‘The findings of
orders as suspicious as she did with the by Morrison’s that deviated from its the [ALJ] are to be considered along with the
previous pharmacies. For example, she typical volume, pattern or frequency’’ consistency and inherently probability of
asserted that because Morrison’s testimony. The significance of [her] report, of
and that ‘‘[a]ll such orders were released course, depends largely on the importance of
provided a copy of its written policies only after review by [the] Compliance credibility in the particular case.’’).
and procedures to prevent diversion, Department.’’ RX 103, at 70. As found For example, in discussing Superior Pharmacy,
Respondent believed that the pharmacy above, Respondent filled numerous Ms. Seiple asserted that during the June 2008
understood its obligation to prevent oxycodone orders from April 1 through inspection, its pharmacist explained that its
business model including filling prescriptions for
diversion. RX 103, at 69–70. Next, she July 31, 2009, and on multiple . . . a weight loss and pain management facility
asserted that because Morrison’s PIC occasions, Morrison’s monthly orders located in an adjacent office.’’ RX 103, at 73
explained that the pharmacy’s ‘‘business were far in excess of what the most (emphasis added). Yet the 2008 inspector’s report
model included servicing a nearby clearly stated that ‘‘[t]he pharmacy is located within
recent UR showed it was dispensing on a space that it shares with Superior Medical
nursing home and an in-patient facility, a monthly basis. These orders clearly Center,’’ RX 2F, at 70; and the January 11, 2010
. . . filling prescriptions for a large were not held by the SOMS, because the inspection report noted that: ‘‘A Pain Mgmt doctor
number of elderly patients who lived in SOMS was not yet operational. Nor is in the same place of business,’’ as well as that the
pharmacy was located ‘‘in a strip mall w/a Pain
a nearby residential area,’’ as well as there any evidence that these orders Clinic inside the pharmacy.’’ Id. at 24. So too,
‘‘prescriptions for patients of pain were reviewed. And the orders were not photographs in Superior’s due diligence file show
management clinics,’’ this ‘‘accounted reported to DEA even though they that the pharmacy and clinic used the same waiting
for the volume of pain medications area and that the counters for the pharmacy and
deviated substantially in terms of their clinic were only feet apart.
being dispensed, and the percentage of size and were clearly suspicious. Ms. Seiple further mischaracterized the evidence
oxycodone dispensed relative to other As for the orders that Morrison’s when she asserted that Respondent ‘‘has never
drugs.’’ Id. at 70. placed during August 2009, there are Continued
Respondent’s Other Evidence shipments to the seven pharmacies were that being upon its termination of The
Respondent elicited the testimony of atypical when compared to the rest of Drug Shoppe for ordering alprazolam.
Joanna Shepherd-Bailey, Ph.D., who the shipments. Id. According to Ms. See GX 40, at 14; RX 103A, at 47.
testified as an expert in statistics. Tr. Shepherd-Bailey, her analysis ‘‘confirms Respondent also entered into
1576–77. Ms. Shepherd-Bailey testified that most of the monthly shipments to evidence copies of lists it had
that she reviewed Respondent’s the [seven] pharmacies do not stand out previously submitted to DEA of those
monthly oxycodone shipments to each as atypical’’ and that ‘‘fewer than half of customers it terminated. However, a
of its Florida pharmacy customers for the monthly shipments to the [seven] former member of Respondent’s
the period of April 2009 through July pharmacies are statistically significant compliance department testified that in
2011 and prepared charts which at the 0.05 significance level.’’ Id. Ms. his opinion, ‘‘the customers who were
compare the monthly shipments to the Shepherd-Bailey thus concluded that easily suspended or terminated from
seven pharmacies at issue (which are Respondent’s ‘‘shipments to the [seven] purchasing controlled substances from
represented by red dots) with the pharmacies did not stand out as [it] were not the big money accounts.’’
monthly shipments to all of Florida unusually large’’ and that ‘‘the shipment GX 52, at 7. (Decl. of Eric Schulze).
pharmacy customers (which are volume to [them] would not have As to whether Respondent
represented by blue dots). RX 102, at 7; appeared extraordinary to’’ Respondent. acknowledges any misconduct and has
see also RX 69–75. According to Ms. Id. undertaken any remedial measures,
Shepherd-Bailey, the charts show that However, to the extent this evidence Respondent stipulated that it:
the ‘‘shipments to the DEA-identified was offered to refute the allegation that does not accept responsibility for any alleged
pharmacies rarely stand out from the Respondent failed to report suspicious wrongdoing in this matter. Furthermore, any
rest of the monthly shipments’’ and that orders, I find it unpersuasive for several evidence presented by [it] of changes,
‘‘for many of the months, shipments to reasons. First, the analysis ignores the modifications or enhancements [it] made to
significant information obtained by its internal Policies and Procedures in the
the DEA-identified pharmacies are ordinary course of business, on its own
squarely in the mid-range of monthly Respondent with respect to each of the
seven Florida pharmacies. Second, there accord, or based on alleged guidance or
shipments.’’ RX 102, at 7. Ms. communications from the [DEA] does not
Shepherd-Bailey also testified that she is no evidence that Respondent’s constitute evidence of remedial measures.
prepared a Z-score analysis to determine compliance department ever conducted This stipulation is binding during the
the extent to which the monthly a similar analysis during the course of administrative hearing before DEA as well as
its dealings with the pharmacies. Third, any appellate litigation that may occur after
cancelled, deleted, or edited orders to bring in determining whether a pharmacy’s a Final Order is issued by the Administrator.
customers within their controlled substance limit order was of unusual size, Respondent’s ALJ Ex. 8.
. . . to make suspicious orders appear non- SOMS did not compare the order with
suspicious, or to otherwise thwart review by the
those of other pharmacies but compared Discussion
Compliance Department.’’ RX 103, at 13. However,
as found above, Respondent repeatedly engaged in the order only to the customer’s The Public Interest Analysis
these practices and Ms. Seiple offered no alternative previous orders. Fourth, because the
explanation for why Respondent deleted and edited Section 304(a) of the Controlled
analysis was based only on the
those orders that were held by the SOMS, especially Substances Act (CSA) provides that ‘‘[a]
shipments made to Respondent’s
those which placed a pharmacy over its CSL. registration . . . to manufacture,
Also, with respect to each of the pharmacies, Ms. Florida customers during the
distribute, or dispense a controlled
Seiple asserted that ‘‘after [the respective acknowledged oxycodone epidemic in
pharmacy’s] account was approved, the SOMS
substance or a list I chemical may be
the State to the exclusion of its
identified and held any order for controlled suspended or revoked by the Attorney
shipments to customers in other States,
substances . . . that deviated from its typical General upon a finding that the
volume, pattern or frequency.’’ See, e.g., id. at 54. I conclude that the analysis suffers from
registrant . . . has committed such acts
However, the SOMS was not even operational selection bias. Finally, even ignoring the
during the months of April through July 2009, and as would render [its] registration under
selection bias, in some instances, the
yet Respondent filled numerous oxycodone orders section 823 . . . inconsistent with the
charts show that the shipments to
during this period placed by each of the pharmacies public interest as determined under
while failing to report them as suspicious. several of the pharmacies were among
such section.’’ 21 U.S.C. 824(a)(4). With
The ALJ also gave weight to Ms. Seiple’s the highest monthly shipments. See RX
testimony ‘‘that orders held by SOMS for each of
respect to an entity registered to
71 (shipments to Englewood); RX 74
the . . . pharmacies in question were not shipped distribute controlled substances in
(shipments to Morrison’s).
until reviewed and approved by the Compliance schedules I or II, Congress directed that
Committee.’’ R.D. 172 (other citations omitted). The Respondent also submitted for the
the following factors be considered in
issue, however, is not simply whether the orders record copies of numerous suspicious
making the public interest
were reviewed and approved, but whether the order reports it filed with DEA.153 See
compliance department investigated those orders determination:
that were held by the SOMS, by obtaining an
RX 61A–C. However, these reports were
in the numerical format used to submit (1) maintenance of effective controls
explanation for the order which it then verified. Ms.
Seiple’s testimony is simply unresponsive to the them to the Agency and Respondent against diversion of particular controlled
evidence which shows that, with respect to nearly substances into other than legitimate
offered no evidence explaining the
every order discussed above, Respondent failed to medical, scientific, or industrial channels;
contact the pharmacy and obtain an explanation for
circumstances giving rise to the decision (2) compliance with applicable State and
the order which it then independently verified. to file the reports. Moreover, as to the local law;
Also, as found above, the evidence shows that, in pharmacies at issue in this proceeding, (3) prior conviction record of applicant
several instances, oxycodone orders were still it is undisputed that Respondent filed under Federal or State laws relating to the
shipped, notwithstanding that the pharmacy’s manufacture, distribution, or dispensing of
only a single suspicious order report,
account had been placed on compliance hold and

was to be reviewed by the compliance committee.
such substances;
Finally, as for Ms. Seiple’s testimony that based 153 As discussed previously, in its Exceptions, (4) past experience in the distribution of
on its due diligence, Respondent determined that Respondent sought a finding that ‘‘[a]s of August controlled substances; and
the orders placed by each of the pharmacies were 18, 2009, [it] had detected and reported to DEA (5) such other factors as may be relevant to
not suspicious notwithstanding the information it suspicious orders of controlled substances after and consistent with the public health and
had obtained as to the volume of oxycodone and April 1, 2009.’’ Resp. Exceptions, at 18. However, safety.
the percentage of controlled to non-controlled drugs the earliest suspicious order reports contained in
being dispensed, as explained above, I give little the Exhibit it submitted are dated August 6, 2009. 21 U.S.C. 823(b). These factors are
weight to her testimony. RX 61A, at 1. considered in the disjunctive. I may rely
on any one or a combination of factors procedures necessary to prevent also Dong v. Smithsonian Institution,
and give each factor the weight I deem diversion.’’ 21 CFR 1301.71(a). 125 F.3d 877, 880 (D.C. Cir. 1997)
appropriate in determining whether to At issue here is Respondent’s (citing Federal Land Bank) (‘‘the word
revoke a registration or to deny a compliance with the requirements ‘includes’ normally does not introduce
pending application for renewal of a pertaining to the detection and reporting an exhaustive list but merely sets out
registration. See Green Acre Farms, Inc., of suspicious orders which are found at examples of some ‘general principle’ ’’).
72 FR 24,607, 24,608 (2007); ALRA 21 CFR 1301.74(b). This regulation Indeed, ‘‘this interpretation fits with
Laboratories, Inc., 59 FR 50,620, 50,621 provides: common dictionary definitions and
(1994). Moreover, I am ‘‘not required to The registrant shall design and operate a examples.’’ DIRECTV Inc. v. Budden,
make findings as to all of the factors.’’ system to disclose to the registrant suspicious 420 F.3d 521, 527–28 (5th Cir. 2005)
Hoxie v. DEA, 419 F.3d 477, 482 (6th orders of controlled substances. The (discussing definitions given by The
Cir. 2005); Morall v. DEA, 412 F.3d 165, registrant shall inform the Field Division American Heritage Dictionary of the
173–74 (D.C. Cir. 2005). Office of the Administration in his area of English Language (1976) and Webster’s
The Government bears the burden of suspicious orders when discovered by the Third New World Dictionary (1961)).
proving that Respondent’s continued registrant. Suspicious orders include orders
of unusual size, orders deviating
See also Black’s Law Dictionary 831 (9th
registration would be inconsistent with substantially from a normal pattern, and ed. 2009) (defining ‘‘include’’ as
the public interest. 21 CFR 1301.44(e). orders of unusual frequency. meaning ‘‘[t]o contain as a part of
Where, however, the Government something • The participle including
establishes a prima facie case, the Id. at 1301.74(b). typically indicates a partial list’’).
burden shifts to Respondent to show The parties dispute the scope of this Nor do I attribute any significance to
why its continued registration would regulation. More specifically, the alteration of the regulation’s text
not be inconsistent with the public Respondent contends that ‘‘suspicious between the Notice of Proposed
interest. Holiday CVS, L.L.C., d/b/a orders are only those [orders] that are of Rulemaking and the Final Rule. As
CVS/Pharmacy Nos. 219 and 5195, 77 an unusual size, that deviate Black’s explains, ‘‘some drafters use
FR 62,315, 62,323 (2012); Southwood substantially from a normal pattern, or phrases such as including without
Pharmaceuticals, Inc., 72 FR 36,487, which are of an unusual frequency.’’ limitation and including but not limited
36,502 (2007). Resp. Exceptions, at 3 n.1. It argues that to— which mean the same thing’’ as
In this case, the Government contends the regulation’s use of the word ‘‘including.’’ Id. While it is true that the
that the evidence with respect to factors ‘‘include’’ was intended to limit the Federal Register notice which
one, four and five establishes that scope of the regulation to the three promulgated the final rule states that
Respondent’s continued registration enumerated categories. Id. at 24–27. As ‘‘[m]any manufacturers and distributors
would ‘‘be inconsistent with the public support for its contention, Respondent objected to security controls set forth in
interest.’’ 21 U.S.C. 823(b). The ALJ, points to the draft of the regulation as §§ 301.92 to 301.97’’ and that ‘‘[m]ost of
however, rejected nearly the entirety of published in the 1971 Notice of these paragraphs have been revised to
the Government’s case, including its Proposed Rulemaking, which provided meet the objections filed,’’ 36 FR 7776,
allegations that Respondent repeatedly that ‘‘suspicious orders may include, 3776 (1971), these provisions imposed
failed to obtain an explanation for but are not limited to’’ the three numerous other security requirements.
orders that were held by the SOMS, and categories, and argues that the rule was Thus, this statement is too general to
found that the Government has proved subsequently amended to its present conclude that the drafters of the
only that Respondent had failed to text to provide the industry with suspicious order reporting rule intended
report a single suspicious order, that ‘‘greater predictability and clarity with to depart from the common accepted
being an order placed by Englewood respect to the security requirements meaning of the term ‘‘include’’ and
Specialty Pharmacy the day before it (including the definition of ‘suspicious instead set forth a limit on the scope of
was terminated as a customer. As noted order’ ’’). Id. at 28–29. And finally, it the rule.
in the discussion of the procedural asserts that the ALJ’s reading of the Moreover, limiting the scope of
history, both parties also filed extensive regulation—as simply setting forth three suspicious orders to only those orders
exceptions to the ALJ’s legal non-inclusive examples of what which are of unusual size, deviate
conclusions. To the extent their constitutes a suspicious order—violates substantially from a normal pattern, or
contentions have not been previously due process by failing to provide fair are of unusual frequency would have ill-
addressed, they are discussed below warning ‘‘of what constitutes a served the CSA’s purpose of preventing
where applicable. suspicious order, or when a report is the ‘‘illegal . . . distribution, . . .
required of a registrant.’’ Id. at 30–31. possession and improper use of
Factors One and Four—Maintenance of I reject Respondent’s contentions. As controlled substances.’’ 21 U.S.C.
Effective Controls Against Diversion the ALJ recognized, the Supreme Court 801(2). Under Respondent’s view, even
Into Other Than Legitimate Channels has explained that ‘‘the term ‘including’ if it had acquired actual knowledge (let
and Past Experience in the Distribution is not one of all-embracing definition, alone developed a suspicion) that a
of Controlled Substances but connotes simply an illustrative customer was ordering controlled
Pursuant to 21 CFR 1301.71(a), ‘‘[a]ll application of the general principle.’’ substances from it for the purpose of
applicants and registrants shall provide Federal Land Bank of St. Paul v. diverting them, it would have no
effective controls and procedures to Bismarck Lumber Co., 314 U.S. 95, 100 obligation to report the order as long as
guard against theft and diversion of (1941) (citing Phelps Dodge Corp. v. the order was of a usual size, did not
NLRB, 313 U.S. 177, 189 (1941)).154 See
controlled substances.’’ This regulation deviate substantially from the

further directs that ‘‘[i]n order to 154 Respondent distinguishes Federal Land Bank
customer’s normal ordering pattern, or
determine whether a registrant has of St. Paul v. Bismarck on the ground that ‘‘in was consistent with the usual frequency
provided effective controls against Bismarck there was a ‘general principle’ to apply, of the customer’s orders. But even
diversion, the Administrator shall use and the Court interpreted the word ‘including’ orders that do not fall within the three
the security requirements set forth in consistent with that principle.’’ Resp. Exceptions, at categories set forth in 21 CFR 1301.74(b)
25. This argument goes nowhere because there is
§§ 1301.72–1301.76 as standards for the also a ‘‘general principle’’ to apply here, that being can be diverted. Thus, I agree with the
physical security controls and operating the duty to report suspicious orders. ALJ’s reasoning ‘‘that a pharmacy’s
business model, dispensing patterns, or Thus, viewed in light of the CSA’s illegally promulgated substantive
other characteristics might make an purpose of preventing drug abuse and rules.’’).
order suspicious, despite the particular diversion, ‘‘a person of ordinary It is true that the ALJ deemed herself
order not being of unusual size, pattern intelligence [has] fair notice of what’’ to be bound by the position taken in the
or frequency.’’ R.D. at 154. the regulation requires. FCC v. Fox 2007 letter issued by the Deputy
Nor do I find persuasive Respondent’s Television Stations, Inc., 132 S.Ct. 2307, Assistant Administrator of the Office of
contention that construing the 2309 (2012) (quoting United States v. Diversion Control. R.D. at 154 (‘‘I am
regulation as encompassing orders that Williams, 553 U.S. 285, 304 (2008)); see without authority to reject a position the
are suspicious by virtue of also General Elec. Co. v. EPA, 53 F.3d Agency has taken on a matter of law.
circumstances other than those of size, 1324, 1329 (D.C. Cir. 1995) (‘‘If, by This is true even where the Agency’s
pattern, or frequency denies it fair reviewing the regulations and other position is announced by means other
warning.155 The regulation requires a public statements issued by the agency, than the formal adjudication process.’’).
distributor to report suspicious orders, a regulated party acting in good faith In support of her conclusion, the ALJ
and those who participate in a highly would be able to identify, with cited CropLife America v. EPA, 329 F.3d
regulated industry such as the ‘ascertainable certainty,’ the standards 876 (D.C. Cir. 2003), a case involving
distribution of prescription controlled with which the agency expect parties to EPA’s decision to cease considering
substances should know that one of the conform, then the agency has fairly third-party human studies in evaluating
CSA’s core purposes is to prevent notified a petitioner of the agency’s the safety of pesticides, which was
prescription drug abuse and the interpretation.’’) (citing Diamond announced in a letter and press release.
diversion of drugs to persons who seek Roofing Co. v. OSHRC, 528 F.2d 645, In a parenthetical, the ALJ set forth her
to abuse them. 649 (5th Cir. 1976). understanding of CropLife as standing
Construing the regulation as requiring for the proposition ‘‘that an ALJ does
As the Supreme Court explained in the reporting of an order, when not have authority to ignore an Agency
United States v. Moore, 423 U.S. 122 circumstances other than the order’s position announced in a press release.’’
(1975), ‘‘Congress was particularly size, pattern, or frequency render the R.D. at 154.
concerned with the diversion of drugs order suspicious, is fully encompassed While in CropLife, the D.C. Circuit
from legitimate channels. It was aware by the regulation’s text. Cf. rejected the EPA’s argument that its
that registrants, who have the greatest Pennsylvania Dept. of Corrections v. ALJs could nonetheless ‘‘rule on
access to controlled substances and Yeskey, 524 U.S. 206, 212 (1998) (‘‘[T]he particular third-party human studies,’’ it
therefore the greatest opportunity for fact that a statute can be applied in noted that the directive ‘‘says no such
diversion, were responsible for a large situations not expressly anticipated by thing’’ and that the EPA Administrator’s
part of the illegal drug traffic.’’ Id at 135 Congress does not demonstrate ‘‘statement prohibiting the agency from
(citations omitted). See also 21 CFR ambiguity. It demonstrates breadth.’’) considering such studies’’ was
1306.04(a) (‘‘A prescription for a (internal quotations and citations ‘‘unequivocal.’’ 329 F.3d at 882. Indeed,
controlled substance . . . must be omitted). It is also supported by the contrary to the ALJ’s understanding (in
issued for a legitimate medical purpose Agency’s public statements, including this matter), in rejecting the EPA’s
by an individual practitioner acting in its administrative precedents. See contention that the position was merely
the usual course of his professional Southwood Pharmaceuticals, Inc., 72 FR a policy statement and not a binding
practice. The responsibility for the 36,487 (2007). regulation, the D.C. Circuit did not rest
proper prescribing and dispensing of Based in part on the ALJ’s conclusion on the fact that the position was taken
controlled substances is upon the that she was bound by the interpretation in a press release but on the agency’s
prescribing practitioner, but a of 21 CFR 1301.74 given by the Deputy intent to ‘‘create[ ] a ‘‘ ‘binding norm’ ’’
corresponding responsibility rests with Assistant Administrator in his that is ‘‘ ‘finally determinative of the
the pharmacist who fills the December 2007 letter, R.D. at 154, issues or rights to which it [was]
prescription.’’); Gonzales v. Oregon, 546 Respondent argues that the various addressed.’ ’’ ’’ 329 F.3d at 881 (quoting
U.S. 243, 274 (2006) (explaining that statements contained in ‘‘these letters Chamber of Commerce v. U.S. DOL, 174
‘‘the prescription requirement . . . . . . impose substantive and binding F.3d 206, 212 (D.C. Cir. 1999) (quoting
ensures patients use controlled requirements on DEA registrants’’ and Pacific Gas & Elec. Co. v. FPC, 506 F.2d
substances under the supervision of a therefore cannot be enforced absent 33, 38 (D.C. Cir. 1974))). As the D.C.
doctor so as to prevent addiction and their promulgation through notice and Circuit noted, the press release had
recreational abuse. As a corollary, the comment rulemaking.156 Resp. stated that ‘‘the [EPA] will not consider
provision also bars doctors from Exceptions, at 32; see also id. or rely on any [such] human studies in
peddling to patients who crave the (‘‘Ironically, the ALJ’s recognition of the its regulatory decision making.’’ Id.
drugs for those prohibited uses.’’). Rannazzisi Letters as binding on (emphasis added). Thus, the court
Masters and on herself—in this and in concluded that ‘‘EPA has enacted a firm
155 Of note, Respondent’s Policy 6.2 states that future cases—cements their status as rule with legal consequences that are
‘‘[a]ll orders that have been held for review that
Masters does not fill for the reasons set out in 156 It should be noted that the ALJ actually only
binding on both petitioners and the
Section III(b)(ii), above, shall be considered relied on the 2007 letter, and not the earlier letter agency, and petitioners will be afforded
‘Suspicious Orders’ according to 21 CFR 1301.74(b) of September 27, 2006. R.D. at 154. The latter set no additional opportunity to make the
and reported to the’’ DEA. RX 78, at 33. Among the forth multiple examples of characteristics present in arguments to the agency that they now
reasons listed are that ‘‘[t]he customer’s file, the ordering patterns of ‘‘pharmacies engaged in present in this petition.’’ Id. at 882.157
including survey responses and site visits, indicates dispensing controlled substances for other than a
that the customer may be engaged in inappropriate legitimate medical purpose.’’ GX 3, at 3. It also
business practices, [or] [t]he customer refuses to suggested a number of questions that a distributor 157 So too, in rejecting EPA’s contention that the
provide Masters with the information necessary to should ask a pharmacy customer in ‘‘determin[ing] press release was only a policy statement and thus
complete its evaluation.’’ Id. Unexplained by whether a suspicious order is indicative of not subject to judicial review, the court examined
Respondent is why evidence that a customer may diversion.’’ Id. The letter then advised that the both ‘‘the effects of the [EPA’s] action’’ and the
be engaged in inappropriate business practices questions were ‘‘not all-inclusive’’ and that ‘‘the EPA’s ‘‘expressed intentions.’’ 329 F.3d at 883
becomes relevant to the determination of whether answer to any of these questions’’ would not (citing, inter alia, Cmty. Nutrition Inst. v. Young,
an order is suspicious only if that order triggers a necessarily be determinative of ‘‘whether a 818 F.2d 943, 946 (D.C. Cir. 1987) and Molycorp.,
SOMS hold. suspicious order is indicative of diversion.’’ Id. Inc. v. EPA, 197 F.3d 543, 545 (D.C. Cir. 1999)). The
The ALJ did not analyze whether the Administrator and Deputy The Syncor court rejected the FDA’s
Rannazzisi letters were intended to, or Administrator. See 28 CFR 0.100(b) & contention that the Notice was merely
even could, have binding effect in this 0.104 (Appendix to Subpart R of Part an interpretive rule, explaining that the
proceeding. However, a review of the O—Redelegation of Functions); 158 see Notice ‘‘does not purport to construe
letters shows that they were not also Jeffery J. Becker, 77 FR 72,387, any language in a relevant statute or
intended to have binding effect but were 72,388–91 (2012) (rejecting regulations; it does not interpret
simply warning letters. Government’s interpretation of Agency anything. Instead, FDA’s rule uses
The 2007 letter, which primarily disposal rule); Edmund Chein, 72 FR wording consistent only with the
discussed the obligation to report 6580, 6593 (2007) (rejecting invocation of its general rulemaking
suspicious orders, also noted that Government’s interpretation of rule authority to extend its regulatory
‘‘registrants that routinely report requiring that electronic records be reach.’’ Id. at 95. The court specifically
suspicious orders, yet fill these orders readily retrievable). However, while the noted the FDA’s statement that ‘‘ ‘having
without first determining that [the] ALJ erred in deeming herself to be considered the available information,
order is not being diverted into other bound by the letters, I conclude that her including that presented to the agency
than legitimate medical, scientific, and error was non-prejudicial. at the hearing and in written materials,
industrial channels, may be failing to Respondent further argues that the FDA has concluded that
maintain effective controls against letters do not ‘‘merely restate or radiopharmaceuticals should be
diversion.’’ GX 4, at 2 (emphasis added). interpret obligations already present in regulated under the provisions of the
Continuing, the letter stated: ‘‘[f]ailure the regulations,’’ but rather Federal Food, Drug, and Cosmetic
to maintain effective controls against ‘‘supplement DEA regulations with Act.’ ’’ Id. And the court also noted that
diversion is inconsistent with the public additional and burdensome obligations in issuing the earlier guidelines, FDA
interest as that term is used in 21 U.S.C. on registrants’’ and ‘‘represent[s] a had ‘‘made a careful, considered
823 and 824, and may result in the fundamental change to the regulations.’’ decision not to exercise the full extent
revocation of the registrant’s DEA Resp. Exceptions, at 33 (citing Syncor of its regulatory authority . . . over
Certificate of Registration.’’ Id. Int’l. Corp. v. Shalala, 127 F.3d 90, 96 nuclear pharmacies in 1984,’’ and that
(emphasis added). Contrary to the ALJ’s (D.C. Cir. 1997) and Paralyzed Veterans the agency had previously said that
understanding, this simply is not of Amer. v. DC Arena, 117 F.3d 579, 586 ‘‘ ‘where the nuclear pharmacy is
language that manifests an intent to (D.C. Cir. 1997)). Thus, it argues that the operating within applicable local laws
bind the Agency. Agency was required to announce the regulating the practice of pharmacy and
Nor is the 2006 letter fairly read as positions taken in the letter by engaging only prepares and dispenses a
manifesting an intent to bind the in notice and comment rulemaking. radioactive drug upon receipt of a
Agency. While the letter notes that ‘‘in Respondent’s argument is not well ‘‘valid prescription,’’ the pharmacy
addition to reporting all suspicious taken. exemption [of section 510(g)(1)] clearly
orders, a distributor has a statutory At issue in Syncor was the FDA’s applies.’ ’’ Id. (quoting FDA, Nuclear
responsibility to exercise due diligence decision to supersede earlier guidelines Pharmacy Guideline; Criteria for
to avoid filling suspicious orders that which ‘‘unequivocally stated that Determining when to Register as Drug
might be diverted into other than nuclear pharmacists who operated an Establishment (1984)).
legitimate . . . channels,’’ the letter accelerator to produce radioactive drugs In Syncor, the court further explained
then explains that the ‘‘[f]ailure to to be dispensed under a prescription that a policy statement ‘‘merely
exercise such due diligence could, as . . . were not required to register under represents an agency position with
circumstances warrant, provide a [Section] 510 of the Food, Drug, and respect to how it will treat—typically
statutory basis for revocation or Cosmetic Act.’’ 127 F.3d at 93. The enforce—the governing legal norm. By
suspension of a distributor’s earlier guidelines also stated ‘‘that if a issuing a policy statement, an agency
registration.’’ GX 3, at 2 (emphasis nuclear pharmacist was not required to simply lets the public know its current
added). register,’’ other requirements of the enforcement or adjudicatory approach.
Moreover, that an official vested with FDCA, ‘‘including the new drug The agency retains the discretion and
prosecutorial authority issues a letter provision and compliance with current authority to change its position—even
advising entities that he views certain good manufacturing practices, would abruptly—in any specific case because a
conduct as violative of a regulation or as not apply.’’ Id. However, more than ten change in its policy does not affect the
conduct which is ‘‘inconsistent with the years later, the FDA issued a ‘‘Notice,’’ legal norm.’’ Id. at 94.
Thus, Syncor provides no support for
public interest,’’ does not establish that which the Agency alternatively referred
Respondent. As for its contention
those entities are foreclosed from to in its text as ‘‘guidance’’ and as a
regarding the scope of what constitutes
challenging that interpretation in any ‘‘policy statement.’’ Id. at 92. Therein,
a suspicious order,159 no decision of
subsequent proceeding. Indeed, under the FDA stated that manufacturers of
the Department of Justice’s regulations, these drugs were required to comply 159 The breadth of Respondent’s contention is not
the ultimate authority to determine the with several of the FDCA’s provisions, entirely clear. More specifically, it takes issue with
meaning of DEA’s regulations, as well as including those pertaining to the ALJ for ‘‘reiterat[ing] the conclusion that the
whether certain conduct is adulteration, misbranding, new drugs, regulatory criteria that define a suspicious order
. . . ‘are disjunctive and are not all inclusive,’ ’’
‘‘inconsistent with the public interest,’’ and registration listing of all drugs it thus suggesting that it believes that all three criteria
is vested in the Office of the manufactured. Id. must be met for any one order to be suspicious.
Resp. Exceptions, at 33 (quoting R.D. at 154). Yet

court concluded that ‘‘there is little doubt that the 158 While Section 7 of the Appendix authorizes the plain language of the regulation makes clear that
directive in the . . . Press Release ‘binds private the Deputy Assistant Administrator ‘‘to exercise all these are disjunctive as the word ‘‘orders’’ precedes
parties [and] the agency itself with the ‘‘force of necessary functions with respect to the each of the three criteria.
law,’’’ and thus constitutes a regulation,’’ because promulgation and implementation of’’ regulations While I reject Respondent’s contention that it has
it ‘‘clearly establishes a substantive rule declaring related to the Diversion Control Program, it further not received fair notice that suspicious orders are
that third-party human studies are now deemed provides ‘‘that final orders in connection with not limited to the three criteria set forth in the
immaterial in EPA regulatory decisionmaking.’’ Id. suspension, denial or revocation of registration regulation, as explained later, I agree with its
(quoting General Elec. Co. v. EPA, 290 F.3d 377, shall be made by the Deputy Administrator of contention insofar as the Government contends that
382 (D.C. Cir. 2002)). DEA.’’ Continued
this Agency has previously interpreted were analyzed ‘‘separately under factor The Supreme Court, however, long
the rule as being limited to only those one.’’ R.D. at 163 (citing 72 FR at ago rejected the contention that an
orders that meet all three criteria. Nor 36,487–98). See also 21 CFR 1301.71(a) agency must announce all rules it
has DEA ever held that suspicious (‘‘All applicants and registrants shall adopts only through notice and
orders are limited only to those orders provide effective controls and comment rulemaking. See NLRB v. Bell
that meet one of the criteria set forth. procedures to guard against theft and Aerospace Co., 416 U.S. 267, 290–95
Thus, in contrast to Syncor, this is not diversion of controlled substances.’’). (1974); SEC v. Chenery Corp., 332 U.S.
a matter in which DEA has changed its The ALJ further explained that under 194, 199–204 (1947). Moreover, because
position to impose a new requirement Southwood, ‘‘because registrants have a the due diligence rule was announced
beyond that already required by its general duty to maintain effective in an adjudication, Respondent was of
regulation. controls against diversion, they may not course, free to argue why the rule
As for Respondent’s reliance on ignore indicators of diversion simply should not be applied in this matter as
Paralyzed Veterans, that case has now because they come in forms other than it has here. However, the reasons offered
been expressly overruled by the suspicious orders. Southwood by Respondent for why Southwood
Supreme Court on the very proposition specifically mentions that this general should not be applied to its conduct are
for which it is cited by Respondent. See duty to prevent diversion includes the unpersuasive.
Perez v. Mortgage Bankers Ass’n, 135 S. duty to perform due diligence.’’ R.D. at As for Respondent’s contention that
Ct. 1199, 1206–07 (2015) (‘‘Because an 163 (citing 72 FR at 36,500). The ALJ Southwood should not be followed
agency is not required to use notice-and- thus explained that ‘‘Respondent has an because, in that case, the Agency relied
comment procedures to issue an initial ongoing duty to ensure that the in part on the 2001 Guidance Document,
interpretative rule, it also is not required controlled substances it distributes are Respondent’s argument is not entirely
to use those procedures when it amends not being diverted by at least performing clear. Apparently, Respondent’s
or repeals that interpretive rule.’’). As meaningful due diligence on its argument is that the 2001 Guidance
the Supreme Court further recognized in customers.’’ Id. Indeed, it was only in a Document (which was published in the
Perez, ‘‘[o]ne would not normally say footnote after her discussion of Federal Register and provided by DEA
that a court ‘amends’ a statute when it Southwood that the ALJ noted the personnel to Southwood during a
interprets its text. So too can an agency letters’ discussion of the due diligence briefing) had set forth the Agency’s view
‘interpret’ a regulation without responsibilities that are part of a as to the potential illegality of
‘effectively amend[ing]’ the underlying distributor’s obligation to maintain dispensing controlled substances via the
source of law.’’ Id. As explained above, effective controls against diversion. See internet because such prescriptions did
the suspicious order regulation requires id. n.94 (‘‘This interpretation of the not arise out of a valid doctor-patient
the reporting of all suspicious orders; interplay between the duty to maintain relationship.161 Thus, the company had
notice and comment rulemaking is not effective controls and the duty to report fair notice that the pharmacies to which
necessary to impose liability on suspicious orders comports with the it was distributing controlled substances
Respondent where the evidence shows guidance the Agency gave to were filling unlawful prescriptions. See
that it failed to report an order which Respondent in 2006 and 2007.’’) (citing 72 FR at 36,500–01 n. 23.
was suspicious because of the GXs 3 and 4). Yet Southwood also noted that during
circumstances surrounding a customer’s Eventually acknowledging that the a conference call conducted by a DEA
business or dispensing practices. Agency’s due diligence rule was representative with the firm, the DEA
Respondent also takes issue with the announced in an adjudication, thus representative had discussed several
ALJ’s discussion of the position taken in rendering its arguments regarding the Supreme Court decisions including
the letters that ‘‘ ‘ ‘‘in addition to effect of the letters irrelevant, United States v. Moore and Direct Sales
reporting all suspicious orders, a Respondent contends that ‘‘reliance on’’ Co., v. United States, 319 U.S. 703
distributor has a statutory responsibility Southwood ‘‘not only as a ‘basis for this (1943). 72 FR at 36,492. Of note, Moore
to exercise due diligence to avoid filling action,’ but also through the ALJ discussed the provisions of both the
suspicious orders’’ and that the duty to Recommendation, is in error.’’ Resp. CSA (and its predecessor, the Harrison
report suspicious orders ‘‘is in addition Exceptions, at 37. This is so, Narcotic Act, 38 Stat. 785 (1914)) that
to, and not in lieu of, the general Respondent argues, because ‘‘[t]he prohibit a physician from dispensing
requirement under 21 U.S.C. 823(e) that decision provided little legal controlled substances other than in the
a distributor maintain effective controls precedence’’ as ‘‘it relies on [a] 2001 course of professional practice. See 21
against diversion.’’ ’ ’’ Resp. Exceptions, DEA Guidance on internet pharmacies, U.S.C. 841(a)(1); 21 CFR 1306.04(a). As
at 33–34 (quoting R.D. at 163 n.94 and its opinion turns on the specific for Direct Sales, it upheld the conviction
(quoting GXs 3 and 4)). facts presented to the ALJ.’’ Id. of a registered manufacturer and
Respondent, however, misstates the Respondent thus contends that ‘‘[i]f the wholesaler for conspiracy to violate the
ALJ’s reasoning. The ALJ discussed the DEA, including the ALJ[,] wants to
letters only after noting that, under the apply Southwood’s approach in this or size, deviate substantially from a normal pattern, or
DEA regulations and the Agency’s future cases, then DEA must amend its are of unusual frequency, and the interpretation is
supported by the regulation’s plain meaning as well
decision in Southwood binding regulations through the as agency precedent. As the D.C. Circuit has
Pharmaceuticals, Inc., ‘‘the duty to processes set forth in the APA.’’ Id.160 recognized, ‘‘[a]lthough the agency must always
maintain effective controls against provide ‘fair notice’ of its regulatory interpretations
diversion is separate from the duty to 160 Respondent then contends that ‘‘ ‘an to the regulated public, in many cases the agency’s
administrative agency may not slip by the notice pre-enforcement efforts to bring about compliance
detect and report suspicious orders,’’ will provide adequate notice.’’ General Elec. Co. v.
and comment rule-making requirements needed to
and that in Southwood, the two duties amend a rule by merely adopting a de facto EPA, 53 F.3d 1324, 1329 (D.C. Cir. 1995).
161 The existence of a valid doctor-patient
amendment to its regulation through
‘‘pursuant to the regulation, it was the adjudication.’ ’’ Exceptions, at 37 (quoting relationship is a long-standing requirement for
responsibility of the registrant to review controlled Marseilles Land & Water Co. v. FERC, 345 F.3d 916, establishing that a prescription has been issued for
substance orders previously shipped to a 920 (D.C. Cir. 2003). However, Marseilles Land a legitimate medical purpose by a practitioner
terminated . . . customer to determine whether involved an ambiguous regulation. Moreover, DEA acting in the usual course of professional practice.
those previously shipped orders were in fact has not previously interpreted the regulation as See George Mathew, 75 FR 66,138, 66,145–46 (2010)
suspicious.’’ Gov. Br. 126. limited to only those orders which are of unusual (citing cases).
Harrison Narcotic Act by supplying a it’’ sells to the customer, and the explained that ‘‘the term ‘when
physician with morphine ‘‘in such distributor cannot ignore ‘‘information discovered’ implies a duty to report
quantities, so frequently and over so which raise[s] serious doubt as to the orders Respondent has actually
long a period it must have known he legality of [a potential or existing discovered to be suspicious.’’ R.D. at
could not dispense the amounts customer’s] business practices.’’ Id. 155 (quoting 21 CFR 1301.74(b)). The
received in lawful practice and was Thus, where, for example, a customer ALJ further reasoned that:
therefore distributing the drugs provides information regarding its When Respondent releases an order held
illegally.’’ 319 U.S. at 705. dispensing practices that is inconsistent by SOMS, decides to conduct additional due
The Southwood decision also noted with other information the distributor diligence, and then terminates the customer
that the DEA representative had has obtained about or from the based on the findings of the investigation,
discussed with the firm’s management customer, or is inconsistent with Respondent has in fact ‘‘discovered’’ a
the suspicious order reporting rule, the information about pharmacies’ suspicious order. Put another way, if the
requirement under the CSA that dispensing practices generally, the additional due diligence Respondent
prescriptions be issued for a legitimate distributor must conduct ‘‘additional conducts pursuant to a potentially suspicious
medical purpose in accordance with 21 order held by SOMS fails to justify the
investigation to determine whether [its shipment of that order, then the order is
CFR 1306.04(a), and its obligations to customer is] filling legitimate suspicious and must be reported. Similarly,
maintain effective controls against prescriptions.’’ Id. at 36,500. So too, if an order causes Respondent to conduct
diversion. 72 FR at 36,492. The DEA depending upon the circumstances, a additional due diligence and leads
representative also discussed with the distributor may need to perform site Respondent to believe that a pharmacy’s
firm’s management various facts that visits before it engages in any business model or other characteristics make
should be considered in evaluating its distribution of controlled substances. it likely that controlled substances will be
customers, including the percentages of Moreover, the obligation to perform due diverted, then the order should be reported
controlled to non-controlled drugs diligence is ongoing throughout the to DEA. This is so because an order is not
dispensed by the typical retail only suspicious by virtue of its internal
course of a distributor’s relationship properties—i.e., being of unusual size,
pharmacy (5 to 20 percent controlled with its customer. See generally id. at
versus 80 to 90 percent non-controlled), pattern, or frequency—but by virtue of the
36,498–36,500. suspicious nature of the pharmacy which
the typical monthly quantity being Accordingly, I reject Respondent’s placed [the order].
purchased by brick and mortar exceptions as set forth in pages 23–37 of
pharmacies of the drug at issue Id. at 155–56.
its Exceptions Brief.
(hydrocodone), the size and frequency While I agree with most of the ALJ’s
of orders, and the range of products Failure To Report Suspicious Orders analysis, I disagree with two aspects of
ordered by the pharmacy. See id. The As explained above, I agree with the it. First, as to the ALJ’s suggestion that
decision also noted that the DEA ALJ that ‘‘a pharmacy’s business model, only those orders which are ‘‘actually
representative had specifically dispensing patterns, or other discovered’’ are subject to reporting, the
identified several of the firm’s pharmacy characteristics might make an order ALJ asserted that ‘‘this does not
customers as engaged in suspicious suspicious, despite the particular order incentivize registrants to turn a blind
activity. Id. not being of unusual size, pattern or eye to suspicious activity’’ because
Thus, I am unpersuaded by frequency. In other words, orders placed ‘‘[w]hile a distributor-registrant
Respondent’s suggestion that by a pharmacy which engages in maintains an active account for a
Southwood should not be followed suspicious activity, but places orders of customer, the registrant has an ongoing
because it involved an entity engaged in regular size, pattern, and frequency, duty to conduct meaningful due
distribution to pharmacies that were could still be deemed suspicious.’’ R.D. diligence and to detect suspicious
filling internet prescriptions. Resp. at 154. orders from that customer.’’ Id. at n.88.
Exceptions, at 3. As Southwood makes Notwithstanding her conclusion, the The ALJ then reasoned that ‘‘[t]urning a
clear, a distributor’s duty to perform due ALJ analyzed only four orders placed by blind eye will not negate that duty, and
diligence on its customers stems from the pharmacies on or after April 1, 2009 the Government can prove a violation
the requirement that a registrant ‘‘shall to determine whether they were . . . by showing that a suspicious order
provide effective controls and suspicious, either because the should have been detected through
procedures to guard against theft and pharmacy’s business model, dispensing meaningful due diligence or an effective
diversion of controlled substances,’’ 21 patterns, or other characteristics made suspicious orders monitoring program.’’
CFR 1301.71(a), as well as the the orders suspicious, or because the Id.
registration requirements of section 823, orders were of unusual size, pattern or Yet turning a blind eye is an apt
which, in the case of a distributor, direct frequency. See generally R.D. at 154–60, description of the manner in which
the Agency, in making the public 168–70. Rather, her discussion focused Respondent reviewed the orders placed
interest determination, to consider the primarily on the Government’s theory by the seven Florida pharmacies and the
‘‘maintenance of effective controls that upon terminating a customer for information it obtained from them.
against diversion of particular compliance reasons, Respondent had an Moreover, the ALJ’s discussion of the
controlled substances into other than obligation to review the customer’s prior orders placed by City View shows that
legitimate medical . . . channels.’’ 21 orders, including those which were were her interpretation of the regulation
U.S.C. 823(b); see also id. § 823(e). shipped, to determine if any of them adopted, it would do exactly that, i.e.,
As for the scope of the duty to incentivize registrants to turn a blind
were suspicious, and if so, report
perform due diligence, Southwood eye.

them.162
makes clear that doing ‘‘nothing more More specifically, the ALJ reasoned
Noting that the regulation requires the
than verifying a pharmacy’s DEA that:
reporting of a suspicious order ‘‘when
registration and state license’’ is not
discovered by the registrant,’’ the ALJ The March 2010 UR showed a significant
enough. 72 FR 36,498. Rather, a increase in oxycodone dispensing by City
distributor must conduct a reasonable 162 This, however, was not the Government’s only View-almost double the amount it dispensed
investigation ‘‘to determine the nature theory as to why the orders were suspicious. Gov. in September 2009. Although these concerns
of a potential customer’s business before Br. 118, 121–24. were present since at least March 2010,
which was the time period covered by the lower standard of proof than whether it The ALJ rejected the Government’s
most recent UR, they were not actually is ‘‘likely’’ that the circumstance exists. contention, explaining that while the
discovered by Respondent until its review in For example, Black’s Law Dictionary regulation’s ‘‘ ‘when discovered’
December 2010. Thus, failing to report the
December 6 order was not a violation simply
defines suspicion as ‘‘[t]he provision implies a duty to report orders
by virtue of the order’s close proximity to the apprehension or imagination of the that are actually discovered, it implies
termination date. existence of something wrong based no duty to review all prior orders placed
only on inconclusive or slight evidence, by a pharmacy terminated for
R.D. at 159. or possibly no evidence.’’ Black’s Law
The ALJ’s reasoning is inconsistent compliance reasons.’’ R.D. at 156.
Dictionary 1,585 (9th ed. 2009); see also Continuing, the ALJ reasoned that:
with her previous statement that
Webster’s Third New International [a] registrant’s duty in regards to a certain
‘‘[l]imiting the duty to report suspicious
Dictionary of the English Language 2304 customer has ended when the registrant has
orders to orders actually discovered
(1976) (defining ‘‘suspicious’’ as made the decision to permanently
does not incentivize registrants to turn
‘‘arousing or tending to arouse discontinue sales of controlled substances to
a blind eye to suspicious activity.’’ Id.
suspicion’’ and defining ‘‘suspicion’’ as that customer and has reported to DEA all
at n.88. Rather, consistent with the
‘‘the act or an instance of suspecting: known suspicious orders from that customer.
ALJ’s earlier statement that a violation Imagination or apprehension of So long as past orders were, at the time they
can be proved ‘‘by showing that a something wrong . . . without proof or were placed and shipped, reasonably
suspicious order should have been on slight evidence’’). Moreover, even the justified by meaningful due diligence, the
detected through meaningful due concept of ‘‘reasonable suspicion,’’ see registrant has no duty to review all such past
diligence or an effective suspicious orders when new information places the
Terry v. Ohio, 392 U.S. 1 (1968), does legitimacy of the customer under question.
orders monitoring program,’’ id., I hold not require proof that it is likely a crime
that an order has been discovered to be will be committed, but only ‘‘[a] Id.
suspicious and the regulation has been particularized and objective basis, The ALJ then noted that the ‘‘only
violated where the registrant has supported by specific facts, for guidance’’ provided by the Agency as to
obtained information that an order is suspecting a person of criminal the meaning of the ‘‘when discovered’’
suspicious but then chooses to ignore activity.’’ Black’s, at 1,585. Accordingly, provision is that found in the 2007
that information and fails to report the the regulation’s adoption of suspicion as letter. As the ALJ noted, that letter
order. Moreover, a registrant cannot the threshold for triggering the explained that:
ignore information it obtains that raises requirement that a distributor inform [t]he regulation also requires that the
a suspicion not only with respect to a the Agency about the order does not registrant inform the local DEA Division
specific order, but also as to the even rise to the level of probable cause. Office of suspicious orders when discovered
legitimacy of a customer’s business Thus, while I agree that a distributor’s by the registrant. Filing a monthly report of
practices. Nor, in assessing whether a investigation of the order (coupled with completed transactions (e.g., [an] ‘‘excessive
pharmacy’s orders are suspicious, can it its previous due diligence efforts) may purchase report’’ or ‘‘high unit purchases’’)
ignore information it has obtained as to does not meet the regulatory requirement to
properly lead it to conclude that the
the scope of drug abuse in a particular report suspicious orders.
order is not suspicious, the investigation When reporting an order as suspicious,
area in which it distributes controlled must dispel all red flags indicative that registrants must be clear in their
substances. Certainly, a registrant a customer is engaged in diversion to communications with DEA that the registrant
cannot claim that it has conducted render the order non-suspicious and is actually characterizing an order as
meaningful due diligence or has an exempt it from the requirement that the suspicious. Daily, weekly, or monthly reports
effective suspicious orders monitoring distributor ‘‘inform’’ the Agency about submitted by a registrant indicating
program when it ignores information it the order. Put another way, if, even after ‘‘excessive purchases’’ do not comply with
has acquired which raises a substantial investigating the order, there is any the requirement to report suspicious orders,
question as to the legitimacy of a remaining basis to suspect that a even if the registrant calls such reports
customer’s dispensing practices. ‘‘suspicious order reports.’’
customer is engaged in diversion, the
The ALJ’s reasoning is erroneous for order must be deemed suspicious and Id. at 156–57 (quoting GX 4, at 1–2).
a second reason. In the ALJ’s view, the the Agency must be informed. The ALJ thus explained that ‘‘the
standard for reporting an order as Noting that Respondent eventually main purpose of the ‘when discovered’
suspicious is that due diligence must concluded that each of the pharmacies provision is to prevent distributors from
‘‘lead[ ] Respondent to believe that a were likely diverting controlled simply filing ‘daily, weekly, or monthly’
pharmacy’s business model or other substances and terminated them as suspicious order reports.’’ Id. at 157.
characteristics make it likely that customers, the Government points to the The ALJ also noted that ‘‘periodic
controlled substances will be diverted.’’ regulation’s provision which requires reports delay the reporting of suspicious
R.D. at 155. (emphasis added). I reject that a suspicious order be reported orders that are placed at the beginning
the ALJ’s reasoning because it conflates ‘‘when discovered’’ and argues that of the period, meaning that DEA cannot
the standard for whether an order can be ‘‘[t]he regulation makes no distinction act quickly when necessary,’’ and that
shipped consistent with the obligation between orders that are pending or have because periodic reports could include
to maintain effective controls against already been shipped.’’ Gov. Proposed multiple orders, these reports ‘‘can
diversion with that for whether the Findings of Fact and Conclusions of make it difficult for the Agency to
order must be reported as suspicious.163 Law, at 126. It further notes the determine why each order was deemed
Suspicion as to the existence of a testimony of a Diversion Investigator suspicious.’’ Id.
circumstance (i.e., that a customer is and argues that ‘‘[p]ursuant to the I agree with the ALJ that the purpose
engaged in diversion) is simply a far regulation, it was the responsibility of of the ‘‘when discovered’’ language is to
the registrant to review controlled impose a time period for ‘‘informing’’
163 It should be noted that while Respondent substance orders previously shipped to the Agency about a specific suspicious
agreed in the MOA to report suspicious orders in a terminated . . . customer to determine order. The plain language of the
a particular manner, the regulation requires only
that the registrant ‘‘inform the Field Division Office
whether those previously shipped regulation simply creates no express
. . . in his area.’’ 21 CFR 1301.74(b) (emphasis orders were in fact suspicious.’’ Id. at obligation on a distributor who has
added). 126. terminated a customer for engaging in
suspicious activity to go back through exceed the criteria set out in 21 CFR of the seven Florida pharmacies.
previously shipped orders and re- 1301.74(b),’’ those being ‘‘orders of Pertinent to each of the Florida
evaluate whether those orders should unusual size, orders deviating pharmacies, the evidence shows that
now be deemed suspicious, and if so, substantially from a normal pattern, and Respondent’s senior officials were, at
inform the Agency. orders of unusual frequency.’’ Id. at 32 the time of the orders at issue here, well
Moreover, while an Agency’s (emphasis added). aware of the serious problem of
reasonable interpretation of its own As found above, Respondent further diversion and drug abuse, and in
regulation is entitled to deference, represented that under its Policy 6.2, particular, the diversion and abuse of
Martin v. OSHRC, 499 U.S. 149, 150 where an order was held by the SOMS, oxycodone, then existing in the State of
(1991) (other citations omitted), the it would call the customer and obtain Florida.
Deputy Assistant Administrator’s letter ‘‘[a]n explanation for the order,’’ and As found above, both Mr. Corona,
suggests that the ‘‘when discovered’’ that it would then ‘‘independently Respondent’s former Vice-President,
language has an entirely different verify any information provided with and Mr. Smith, Respondent’s owner/
purpose than what the Government now this explanation.’’ Id. Respondent also CEO, acknowledged in their testimony
urges for it. But most significantly, represented that it would request ‘‘[a] that they were well aware of the
neither of the letters notified the current utilization report, listing all of oxycodone epidemic then occurring in
regulated community that upon the pharmaceuticals (DEA Schedule and the State of Florida and that oxycodone
terminating a customer for engaging in non-schedule) that the pharmacy has 30 was a highly abused substance which
suspicious activity, a distributor must dispensed in the most recent calendar was ‘‘being obtained surreptitiously and
then review the customer’s previous month.’’ Id. The Policy then required unlawfully in Florida.’’ Tr. 1072. As Mr.
orders (going back to some unspecified that the ‘‘customer’s entire file [be] Corona testified, Florida’s oxycodone
date) to determine if they were also examined.’’ Id. epidemic was common knowledge at
suspicious. In short, if the Government Thus, even were I to find that, both Respondent and in the drug
wishes to impose such a requirement on pursuant to its due diligence industry in general, with Corona further
distributors, it must provide pre- obligations, Respondent had conducted testifying that Florida was ‘‘the ‘wild
enforcement notice of its intent to do so. a meaningful investigation of each of the west and . . . a free for all’ when it
See General Elec. Co. v. EPA, 53 F.3d at pharmacies, upon receiving an order came to the sale and dispensing of
1329–30 (collecting cases); see also which met one of the aforesaid criteria, oxycodone.’’ GX 51B, at 9 ¶ 31. Indeed,
Gates & Fox Co., v. OSHRC, 790 F.2d Respondent was still required to it was this knowledge that prompted
154, 156 (D.C. Cir. 1986) (while investigate the order and determine that Mr. Smith to travel to the State in early
‘‘[c]ourts must give deference to an it was not suspicious. Accordingly, 2009 (before it entered the MOA) and
agency’s interpretation of its own where Respondent entirely failed to check out the pain clinics, only to
regulations . . . [w]here the imposition investigate an order by contacting the discover that the pain clinics were
of penal sanctions is at issue . . . the pharmacy and obtaining an explanation advertising in a manner that he thought
due process clause prevents that for why the order exceeded the was ‘‘very unethical’’ because the ads
deference from validating the aforesaid criteria, which it then would show ‘‘young kids sitting around
application of a regulation that fails to independently verified, it cannot now a pool in bathing suits with big smiles
give fair warning of the conduct it claim that the order was not suspicious. on their faces.’’ Tr. 1074.
prohibits or requires’’); see also If it chose not to investigate, then it was This is not to say that Respondent’s
Diamond Roofing Co., v. OSHRC, 528 obligated to report the order.164 knowledge of the extensive oxycodone
F.2d 645, 649 (5th Cir. 1976). Applying these principles, I find that problem in the State of Florida was, by
Thus, liability can be imposed on the Government has proved by a itself, enough to render suspicious all
Respondent only with respect to those preponderance of the evidence that orders Respondent received from all of
orders which, based on the then-existing Respondent repeatedly failed to report its Florida customers. It was, however,
circumstances, it should have suspicious orders with respect to each information that Respondent was
determined were suspicious and obligated to consider in evaluating the
reported to the Agency. However, this 164 While the above discussion is based on the orders it received from its Florida
matter presents the additional issue of specific policies at issue here, it should be clear that customers. Yet the evidence shows that
whether Respondent violated the while conducting a meaningful investigation of a Respondent’s employees did not
customer is a necessary part of a distributor’s due
suspicious order rule when it failed to diligence obligations, even where the investigation
‘‘consider the geographic locations of its
notify the Agency of numerous orders provides no reason to question the legitimacy of the Florida pharmacy customers’’ in
that were held by the SOMS and which customer’s dispensing practices, upon receipt of an reviewing their orders. I now turn to
were not properly investigated. order meeting one of the criteria set forth in 21 CFR each of the pharmacies.
As found above, the SOMS held those 1301.74(b), the order must either be reported as
orders that were of unusual size,
suspicious or investigated. However, where an Tru-Valu
order is investigated, the investigation must dispel
unusual pattern, or unusual frequency; the suspicion in order to excuse a distributor from The evidence shows that prior to
thus, where an order was held, that its obligation to report the order. Of further note, April 1, 2009, Respondent had acquired
order met the specific criteria of a reporting an order as suspicious does not excuse a substantial information raising a strong
distributor that seeks to fill that order from its
suspicious order as set forth in 21 CFR obligation to ‘‘to exercise due diligence to avoid
suspicion as to the legitimacy of Tru-
1301.74(b). Indeed, in the materials it filling suspicious orders that might be diverted.’’ Valu’s business practices. Specifically,
provided to the Agency, Respondent GX 3, at 2. See also GX 4, at 1 (‘‘Registrants are at various points, Respondent obtained
specifically represented that ‘‘[t]he reminded that their responsibility does not end information that controlled substances
merely with the filing of a suspicious order report.
purpose of the [SOMS] is to ensure that Registrants must conduct an independent analysis
comprised an abnormal percentage of its
potentially suspicious orders are flagged of suspicious orders prior to completing a sale to dispensings. On May 28, 2008,
and reviewed by the compliance determine whether the controlled substances are Respondent’s consultant noted that 40
department.’’ RX 78, at 59. As likely to be diverted. Reporting an order as percent of the prescriptions Tru-Valu
suspicious will not absolve the registrant of
Respondent also represented, the responsibility if the registrant knew, or should have
filled were for controlled substances
SOMS’ function was to ‘‘[h]old[ ] all known, that the controlled substances were being and that the PIC acknowledged that the
orders for controlled drugs that meet or diverted.’’). pharmacy ‘‘fill[ed] a large number of
narcotic prescriptions each day’’ and versus 80 to 90 percent for non- did not specifically identify this as a
had ‘‘pushed for this business with controlled drugs.166 See 72 FR at 36,492. deficiency in its policies and procedures
many of the area pain doctors.’’ Thus, based on the UR alone, as of April as part of the Compliance Review.
Moreover, just six days earlier, 1, 2009, Respondent had substantial While I have previously rejected
Respondent had obtained a utilization information which raised a strong Respondent’s contention that the
report for the month of April 2008, suspicion as to the legitimacy of Tru- Government should be estopped from
which showed Tru-Valu’s dispensings Valu’s dispensing practices. faulting it for failing to use the URs for
of its top 300 drugs. While this It is of no consequence that the this purpose, as well as the ALJ’s
apparently was not a complete UR, it Government did not produce a discussion that the MOA bars
nonetheless revealed significant statistical study to show how many sanctioning Respondent for failing to
information calling into question the standard deviations Tru-Valu’s use the URs for this purpose, the ALJ
legitimacy of Tru-Valu’s controlled dispensing ratio as reflected by the URs also opined that the Government had
substance dispensings. was outside that of a typical retail not proved that Respondent’s failure to
More specifically, the UR showed that pharmacy. As explained above, to use the URs for this purpose ‘‘rendered
Tru-Valu’s dispensings of three highly conclude that an order is suspicious, the [its] anti-diversion program ineffective
abused drugs were predominant, with information presented to the distributor under 21 CFR 1301.71(a).’’ R.D. at 190.
its dispensings of oxycodone 30 totaling is not required to establish, to a The ALJ explained that ‘‘the parties
132,506 du; its dispensings of statistical certainty, that a pharmacy seem to agree that controlled substance
methadone 10 totaling 53,842 du; and was likely diverting controlled ratios are an important aspect that
its dispensings of alprazolam 2mg substances. Rather, the evidence must should be investigated prior to shipping
totaling 55,120 du; these three drugs only create a suspicion, a standard controlled substances.’’ Id. at 188.
alone constituted 241,000 du out of a which is less than that of probable Noting Ms. Seiple’s declaration that
total of 340,000 du for that month. By cause. And aside from the volume of Respondent ‘‘was aware of the
contrast, even though hydrocodone was Respondent’s oxycodone and controlled dispensing ratio of controlled to non-
the most widely prescribed drug substance dispensings, Respondent also controlled substances’’ of the seven
nationally during this period, see RX 81, knew that Tru-Valu was actively seeking pharmacies, id. (citing RX 103, at
at 47; Tru-Valu’s dispensings of this out business from the area’s pain ¶¶ 158, 177, 204, 225, 244, 284, 303,
drug did not even total 3,000 du, a doctors, even though in early 2009, 319), the ALJ then noted that ‘‘[r]ather
fraction of the oxycodone. Respondent’s owner/CEO had than using URs for every customer . . .
Further, in January 2009, Tru-Valu determined to stop selling to pain Respondent used the information
requested an increase in its oxycodone doctors who were engaged in direct reported by site visits, phone surveys,
purchasing limit, and reported that 50 dispensing. and initial due diligence to estimate the
percent of the prescriptions it filled Throughout this proceeding, ratios.’’ Id. at 188.
were for controlled drugs and 25 Respondent has vigorously argued that The ALJ then explained that the issue
percent were for schedule II drugs. it is unfair to fault it for failing to appears to be ‘‘whether Respondent’s
Respondent obtained a UR for December analyze the URs to determine whether failure to analyze URs every time an
2008, and while it showed only the top the pharmacies’ dispensing ratios were order was held violated Respondent
200 drugs dispensed, it showed that consistent with the figures discussed at duties under DEA regulations.’’ Id. at
Tru-Valu had dispensed more than the August 2009 review (which had also 189. The ALJ opined:
192,000 du of oxycodone 30 during the been published several years earlier in
month (out of the total dispensings The Government has offered no evidence
Southwood) 167 because the Government
listed on the report of 300,000 du), an that accurate information regarding
controlled substance ratios can only be
increase of nearly 60,000 du and more 166 As noted previously, Southwood was
acquired through URs. In fact, the
than 50 percent from the previous UR. published in the Federal Register in 2007, as well
Government’s own guidance it provided to
The UR also showed that the pharmacy as on the Agency’s Web site. As a participant in a
highly regulated industry, Respondent is properly Respondent specifically instructed
had dispensed 27,628 du of alprazolam charged with knowledge of the contents of the Respondent to conduct this inquiry via
2 mg and 11,848 du of methadone 10, decision, which involved an entity registered as a questionnaires. This is precisely what
each of which is a highly abused distributor which was charged with similar Respondent has done. It is contradictory for
controlled substance.165 And the UR violations. See United States v. Southern Union Co., DEA to instruct Respondent at the
630 F.3d 17, 31 (1st Cir. 2010) (‘‘[T]hose who Compliance Review that it should ask its
showed that with the exception of manage companies in highly regulated industries
carisoprodol, which was then non- customers about their controlled substance
are not unsophisticated . . . . It is part of [a
controlled under the CSA (but company’s] business to keep abreast of government ratios, and now insist that only URs can be
regulations.’’); cf. Fed. Crop Ins. Corp. v. Merrill, the basis for such information.
controlled under Florida law and highly
332 U.S. 380, 384–85 (1947) (‘‘Just as everyone is The fact that Respondent actually analyzed
sought after by drug abusers for use with charged with knowledge of the United States URs on several occasions to determine
narcotics and benzodiazepines), each of Statutes at Large, Congress has provided that the customers’ controlled substance ratios is
the top ten drugs dispensed was a appearance of rules and regulations in the Federal evidence that such analysis is helpful.
controlled substance. Register gives legal notice of their contents.’’) Respondent does not dispute that. But the
As explained above, in the (citations omitted); California v. FERC, 329 F.3d
fact that a certain method of gathering and
700, 707 (9th Cir. 2003) (‘‘Publication in the Federal
Southwood decision, which was Register is legally sufficient notice to all interested analyzing information is helpful does not
published in the Federal Register, the or affected persons regardless of actual knowledge force the conclusion that the method is
Agency had noted that the ratio of or hardship resulting from ignorance, except those
controlled to non-controlled substances who are legally entitled to personal notice.’’). hydrocodone that the distributor was selling to
167 The ALJ opined that Southwood ‘‘includes no various internet pharmacies and its retail pharmacy
dispensed by a typical retail pharmacy
mention of controlled substance ratios as a red flag customers, as well as evidence that the pharmacies
ranged up to 20 percent for controlled for diversion.’’ R.D. at 188. However, as explained were engaged in filling unlawful prescriptions.
above, Southwood did discuss the ratio of Moreover, in the September 2006 letter, the Deputy
165 As found above, the UR only listed the top 200 controlled to non-controlled dispensing at a typical Assistant Administrator specifically advised
drugs dispensed. While the UR likely did not reflect retail pharmacy. Southwood did not further discuss distributors (including Respondent) that they
all of the dispensings, Respondent could have asked the ratio as an indicator of diversion because there should be asking their customers ‘‘[w]hat
Tru Valu for a complete UR. Thus, it cannot now were ample other red flags presented by percentage of the . . . business does dispensing
hide behind its failure to do so. Southwood’s customers, including the quantities of controlled substances constitute?’’ GX 3, at 3.
absolutely necessary to provide effective So too, the ALJ also rejected the increases in monthly dispensing
controls against diversion. This is especially Government’s contention that volumes could indicate diversion or that
true when there are other methods of Respondent ignored large increases in comparing URs is a necessary method of
gathering necessary information, as is the
case here.
the quantities of oxycodone being due diligence.’’ Id. at 192–93. The ALJ
dispensed, such as the increase in Tru- also noted that while the 2006 letter to
Id. Valu’s oxycodone dispensings between distributors addressed various
I agree with the ALJ that using the the April and December 2008 URs. See circumstances that may be indicative of
URs to actually determine a customer’s R.D. at 191–95. Framing the issue as diversion, it only ‘‘list[ed]
controlled to non-controlled dispensing ‘‘whether increases in monthly ‘characteristics in [illegitimate
ratio ‘‘is helpful’’ in assessing whether dispensing volumes are indicative of pharmacies’] pattern[s] of ordering
a pharmacy’s dispensing patterns are diversion,’’ the ALJ noted that controlled substances.’ ’’ Id. at 193
consistent with legitimate pharmacy ‘‘Southwood does not indicate that (quoting GX 3, at 3). According to the
dispensing practices. Indeed, because ALJ, the list provided in the letter was
the URs are compiled from a pharmacy’s Most significantly, the ALJ entirely ignored that ‘‘unhelpful . . . because the
dispensing records, the URs should the URs provided by Englewood actually totaled the comparisons . . . do not involve
typically present an accurate report as to number of prescriptions for each schedule of
controlled substances as well as for the non-
monitoring ordering patterns, but
the pharmacy’s actual dispensings. controlled prescription drugs, and yet Respondent dispensing patterns.’’ Id. The ALJ then
By contrast, surveys and failed to compare the data with what Englewood’s reasoned that because there is no
questionnaires typically rely on nothing pharmacist reported. evidence ‘‘that DEA told Respondent to
more than estimates, and it is certainly Respondent contends that comparing a compare URs in order to identify
within the realm of possibility (if not pharmacy’s representation as to the percentages of
prescriptions comprised by controlled substances increases in monthly dispensing
likely) that a pharmacist who was and schedule II drugs to the UR data showing the volumes,’’ it would be unfair to sanction
diverting drugs would report volume of dosages is an apples to oranges Respondent for failing to do so. Id. at
substantially lower levels of controlled comparison. This begs the question of to what
194.169
substance dispensings than he was Respondent intended to compare the prescription
percentages provided by each pharmacy to It is true that Southwood did not
actually engaged in; indeed, as determine if it was engaged in illegitimate discuss whether an increase in the
discussed throughout, this appears to dispensing. Of note, in the case of City View, Ms. monthly dispensing volume for a
have been the case with respect to Seiple documented her ‘‘concerns regarding [the particular drug is an indicator of
several of the pharmacies. The number] of doses dispensed as opposed to
noncontrols’’ and that she had spoken with the diversion. Yet in holding that the
distribution of controlled substances is pharmacy ‘‘multiple times regarding ratio of distributor’s due diligence program was
a highly regulated industry for good controls [sic] & noncontrols [sic].’’ ineffective, Southwood did note that in
reason. Those who choose to engage in So too, on several occasions, Respondent’s the case of several of the pharmacies,
the distribution of controlled substances inspector submitted a site visit report and a
‘‘Respondent actually distributed even
are not free to ignore relevant recommendation, noting that the dispensing
percentages reported by a pharmacy were either ‘‘a
information, and indeed are obligated to little high’’ or ‘‘high,’’ and recommended that the 169 The ALJ also asserted that ‘‘it appears that the
make distribution decisions based on Compliance Department obtain a new UR and only evidence that increases in a pharmacy’s
the most accurate information they have compare it with the information obtained during monthly sales are indicative of diversion was [the
the site visit. As found above, these DI’s] opinion, which was based solely on his
obtained. I thus reject the ALJ’s experience as a diversion investigator. This is not
recommendations were not followed. According to
reasoning. 168 Ms. Seiple, this was because Respondent’s Policies sufficient to put the industry on notice of DEA’s
did not ‘‘specify any particular percentage of position that such conduct is sanctionable.’’ R.D. at
168 As found above with respect to each of the controlled drugs to non-controlled drugs that the 194. The ALJ’s reasoning conflates the issue of
pharmacies, some (but not all) of the survey and site Company considers ‘high’ or ‘a little high.’ ’’ RX whether an increase in a pharmacy’s dispensings of
visit forms used by Respondent phrased the 103A, at 45. Ms. Seiple did not, however, address a particular drug is an indicator of diversion with
question in terms of the percentage of prescriptions what percentage, if any, Respondent considered to that of whether the Agency was required to provide
that were for controlled substances (and schedule be suspicious. This suggests that Respondent’s notice.
II controlled substances) rather than in terms of the purpose in asking the question was to create the As for whether the DI’s testimony is enough to
percentage of dosage units or ratio of controlled to illusion that it was conducting due diligence. establish that an increase in a pharmacy’s
non-controlled drugs. Of further note, the ALJ Notwithstanding that the dispensing ratio figures dispensing volume of a particular drug is an
rejected the testimony of a DI that Respondent provided in Southwood and during the August 2009 indicator of diversion, at least one federal appeals
should have been comparing the pharmacies’ briefing refer to dosage units, generally for most of court has held that a diversion investigator with
statements as to the percentage of the prescriptions these pharmacies, the percentage of prescriptions sufficient experience can testify as an expert
comprised by controlled substances (and schedule for controlled substances would actually be lower regarding the ‘‘common red flags suggestive of an
II drugs) with the information on the URs to look than the percentage of dispensings when calculated illicit pharmaceutical operation.’’ United States v.
for inconsistencies. Notwithstanding that she using dosage units, due in part, to the large Lovern, 590 F.3d 1095, 1102 (10th Cir. 2009).
‘‘recognize[d] that inconsistencies in information quantities of oxycodone being dispensed per According to the DI’s declaration, at the time of the
provided by a customer during the due diligence prescription. Moreover, in 2008, DEA noted that hearing, he had ten years of experience as a DI and
process can be a red flag that should at least trigger ‘‘controlled substances constitute between 10 had investigated nine distributors. GX 49B, at 1.
further investigation,’’ R.D. at 190 (citing percent and 11 percent of all prescriptions written Moreover, while there may be a legitimate
Southwood), she then concluded that using the URs in the United States.’’ DEA, Electronic Prescriptions explanation for why a pharmacy has experienced an
‘‘would not be helpful because it would amount to for Controlled Substances, 73 FR 36722 (2008) increase in the volume of its controlled substance
an ‘apples and oranges’ comparison.’’ Id. at 191. (Notice of Proposed Rulemaking). dispensings, it is hardly assailable that a large
However, while the URs provided by Tru-Valu Thus, while a comparison of the percentages increase is an indicator of diversion, especially
did not provide data as to the number of reported by Tru-Valu to the 20/80 ratio figure is not when the increase involves a drug highly sought
prescriptions filled for each drug, the ALJ ignored a precise comparison, when a pharmacist reports after by drug abusers. Indeed, it is within the
that the URs provided by five of the pharmacies that the percentage of the prescriptions comprised Agency’s experience that drug-seeking patients and
(Drug Shoppe, Englewood, City View, Medical by controlled substances is well above the 20 drug-dealing doctors seek out those pharmacies that
Plaza, and Morrison’s) did provide the data and yet percent figure, it nonetheless is an indicator (red will fill their prescriptions with no questions asked.
Respondent never compared the figures. And while flag) of diversion. As explained above, in May 2008, See East Main Street Pharmacy, 75 FR 66,149,
making those calculations may have required Tru-Valu told Respondent’s consultant that 66,152 (2010) (discussing relationship between
totaling the respective number of prescriptions for controlled substances comprised 40 percent of the physician convicted of drug dealing and pharmacy,
schedule II drugs and all controlled substances, prescriptions it dispensed (more than double the pursuant to which physician directed all of his
given the predominance of controlled substances in figure) and in July 2010, Tru-Valu told patients to fill their prescriptions at the pharmacy);
the dispensings, an accurate estimate generally Respondent’s inspector that 60 percent of the see also Holiday CVS, L.L.C., d/b/a CVS/Pharmacy
could have been made by simply totaling up the prescriptions were for schedule II drugs and that 60 Nos. 219 and 5195, 77 FR 62,316, 62,321 (2012)
controlled substances on the first few pages of the to 80 percent of the prescriptions were for all (discussing patients travelling 200 miles from
URs. controlled substances. doctor’s office to pharmacy).
larger quantities of the drug regulation, guidance, training, or case.’’ These facts alone created not merely a
[hydrocodone] to them’’ after it had R.D. at 194. To the extent the ALJ’s suspicion, but a strong one at that, that
received information that pharmacies opinion suggests that DEA has not Tru-Valu was diverting controlled
were likely engaged in unlawful provided the industry with sufficient substances. Also, the 2008 site visit,
dispensing. 72 FR at 36,500.170 notice ‘‘that such conduct is which was the only time Respondent
As for the 2006 letter, it is true that sanctionable,’’ id., as discussed obtained information as to the names of
the letter did not specifically identify previously, the suspicious order rule the pain management doctors whose
increases in a pharmacy’s dispensings of provides fair notice to distributors as to prescriptions were being filled by Tru-
highly abused controlled substances as their obligation to notify the Agency of Valu, revealed that two of them were
an indicator of diversion. However, the suspicious orders they receive. Due doctors Respondent terminated when its
letter did not purport to set forth an all- Process does not require the CEO decided to cut off sales to direct
inclusive list of the circumstances Government to identify every dispensers because of their unethical
present with those pharmacies engaged conceivable circumstance which may marketing practices.
in diversion, and some red flags are so render an order suspicious, or to Moreover, at the 2008 visit, the PIC
obvious that no one who engages in the identify every step a distributor must disclosed that he was actively seeking
legitimate distribution of controlled take to determine whether a particular out the business of area pain doctors.
substances can reasonably claim order is suspicious. I therefore Unexplained by Respondent is why a
ignorance of them. See Holiday CVS, respectfully reject her reasoning. pharmacist who was actively seeking
L.L.C., d/b/a/CVS/Pharmacy Nos. 219 I acknowledge that prior to April 1, out the business of physicians
and 5195, 77 FR 62,316, 62,322 (2012). 2009, Respondent engaged in various prescribing narcotics would then risk
This is especially true when the drug is due diligence efforts, including alienating those physicians by refusing
a potent narcotic which is known to be conducting a site visit and a phone to fill their illegitimate prescriptions.
highly sought after by drug abusers, and survey in response to Tru-Valu’s request Yet Respondent simply ignored this
even a cursory review of the pharmacy’s for an increase in the amount of potential conflict on the part of Tru-
dispensing data would establish that the oxycodone. I find, however, that these Valu’s PIC.
pharmacy’s already high levels of measures did not sufficiently dispel the As noted above, from April 1, 2009,
dispensing have increased even suspicion created by the other through the date of the Compliance
more.171 information Respondent had obtained Review, Respondent filled monthly
The ALJ further expressed her from Tru-Valu, particularly the orders for oxycodone products totaling
hesistancy ‘‘to recommend sanctions December 2008 UR data (that being the 25,300 du (April), 25,000 du (May), and
based on a method of due diligence that most recently obtained UR until October 24,000 du (both June and July). None of
has never been identified by DEA in any 2009). That UR showed that Tru-Valu’s the orders were reported to DEA as
dispensing of oxycodone 30 alone suspicious. For reasons explained
170 While Southwood did not specifically note the
accounted for nearly 64 percent of its previously, I hold that they were
preceding months’ orders in that portion of the dispensings and represented an increase
decision which held that the distributor had
suspicious.
violated the suspicious order rule when it failed to of more than 50 percent from the level Even were I to ignore the existence of
report the orders placed by a pharmacy which had of its previous UR. Thus, Tru-Valu’s these red flags (which I decline to do),
ordered 2.1 million du in a single month, the dispensings of this single dosage (which I further find that even after Respondent
opinion had earlier set forth the quantity of the is also the strongest dosage of implemented the SOMS and its new
distributions made to the pharmacy each month.
See 72 FR 36,489 (listing monthly orders); id. at
immediate release oxycodone which is policies and procedures, Respondent
36,501 (observing that distributor ‘‘did not report commercially available) were more than continued to fail to report suspicious
any of [pharmacy’s] purchases as suspicious. . . . three times the level of all controlled orders. As noted above, on November
It did not do so even in November 2006, when it substances dispensed by a typical retail 30, 2009, Tru-Valu placed orders for
distributed more than 2.1 million dosage units of
hydrocone to’’ the pharmacy).
pharmacy. 7,200 du of oxycodone 30; 14,400 du of
171 Citing Holiday CVS, the ALJ also reasoned that The UR also showed that, with the oxycodone 15; and 1,000 du of
‘‘DEA has recognized that increased sales by a exception of carisoprodol, which was oxycodone 10/325, bringing its total
pharmacy, alone, are not necessarily indicative of then controlled only under Florida law monthly orders to 26,200 du and
diversion.’’ R.D. at 193 (citing 77 FR at 62,324 n.33). (and which subsequently was federally
However, the ALJ then acknowledged that ‘‘[t]he
exceeding the 25,000 du CSL. Yet there
Administrator stopped short of stating that controlled, based in part on its abuse is no evidence that the orders were held
increased controlled substance sales are never a red potential when used as part of a drug for review and they were not reported
flag, but emphasized that such increases could be cocktail which included narcotics and as suspicious.
‘explained by an increase in legitimate benzodiazepines),172 each of the top ten Moreover, in February 2010, Tru-
prescriptions.’ ’’ Id.
In Holiday CVS, the Government took exception
drugs dispensed was controlled under Valu’s orders totaled 46,800 du, thus
to the ALJ’s ruling which barred it from admitting the CSA, including alprazolam 2 mg. exceeding the CSL by nearly 22,000 du.
evidence of the pharmacy’s oxycodone purchases. While Respondent’s Compliance
The Administrator upheld the ALJ’s ruling, noting 172 See Placement of Carisoprodol into Schedule
Department documented that it
that the evidence did not establish a violation of the IV, 76 FR 77,330, 77,338 (2011) (noting that ‘‘the
CSA’s prescription requirement, 21 CFR 1306.04(a),
contacted Tru-Valu and was told by its
drugs most frequently used in combination with
which requires proof by reference to a specific carisoprodol that presented in [Emergency pharmacist that a local supermarket had
prescription that a pharmacist knowingly (or with Department] visits were opioids (hydrocodone, closed and that he was ‘‘getting some of
willful blindness) dispensed a prescription which oxycodone), benzodiazepines (alprazolam, [its] business,’’ Respondent failed to
lacked a legitimate medical purpose and was issued diazepam, clonazepam), alcohol, and illicit drugs comply with its Policies and Procedures
outside of the usual course of professional practice. (marijuana, cocaine)); see also id. at 77,342–43
See 77 FR at 62,324 n.33. (testimony of various law enforcement officials by independently verifying the
Here, however, the issue is simply whether the regarding use of carisoprodol in combination with pharmacist’s explanation. It also failed
oxycodone orders placed by the seven pharmacies narcotics and benzodiazepines); Paul H. Volkman, to obtain a new UR as required by its
were suspicious. Certainly a substantial increase in 73 FR 30,630, 30,637 (2008) (testimony of expert in Policies and Procedures and did not do
a pharmacy’s oxycodone orders is an indicator of pain management noting that physician’s
suspicious activity, notwithstanding that upon prescribing of drug cocktails which included an so until April 1, 2010.173
investigating the orders, the pharmacy may have a opioids, a benzodiazepine, and carisoprodol
legitimate explanation for the increase, which ‘‘greatly increased the chance for drug abuse, 173 The ALJ rejected the Government’s contention
ultimately dispels the suspicion. diversion, [and]/or addiction’’). that Respondent did not follow its policies and
Not only does this evidence support the increased amount would become the the amount that is actually shipped. As
a finding that Respondent failed to new CSL and thus allow the customer explained in Southwood, the purpose of
comply with its Policies and to order even larger quantities of the regulation is ‘‘to provide
Procedures, it also supports a finding controlled substances without even investigators in the field with
that Respondent failed to report triggering a SOMS hold and further information regarding potential illegal
suspicious orders. As Respondent review. activity in an expeditious manner.’’ 72
represented to the Agency, ‘‘[t]he Thus, in April 2010, Respondent FR at 36,501. That purpose was
purpose of the [SOMS] is to ensure that filled orders totaling 48,000 du. While undermined by Respondent when it
potentially suspicious orders are flagged these orders were apparently held for either entirely deleted orders—thus
and reviewed by the compliance review because they violated either the treating them as if they had never been
department.’’ RX 78, at 59. As pattern or frequency parameter (as they placed—or edited the orders by
Respondent further represented, the were the first orders placed for the reducing their size to place the customer
SOMS’ function was to ‘‘[h]old all month and placed on the 27th day), at or below the CSL—thus treating them
orders for controlled drugs that meet or Respondent deemed the orders non- as if they had been placed in smaller
exceed the criteria set out in 21 CFR excessive because they were under the amounts than those that would trigger
1301.74(b),’’ those being ‘‘orders of previous month’s total of 55,200, even reporting. I thus find that Respondent
unusual size, orders deviating though the previous month’s orders repeatedly violated the regulation by
substantially from a normal pattern, and were never properly investigated and failing to report those orders which it
orders of unusual frequency.’’ Id. at 32. justified. I conclude, however, that the either deleted entirely or edited
Thus, where Respondent failed to orders were suspicious because they downwards in size.174
comply with its policies and procedures violated either the frequency or pattern
and obtain an explanation for an order parameter and were never properly 174 The Government argued ‘‘that Respondent
which it independently verified, as well justified. regularly edited and/or deleted held orders in order
Of further note, several weeks prior to to keep the particular customer within their CSL.’’
as a new UR, those orders are properly Gov. Proposed Findings of Fact and Conclusions of
deemed suspicious. I therefore find that filling the April 27 orders, Respondent Law, at 123. Rejecting this contention, the ALJ
Respondent violated 21 CFR 1301.74(b) obtained a UR for the month of February explained:
when it failed to report those orders in 2010. This UR showed that Tru-Valu This argument meets the common sense test, but
February 2010 which placed Tru-Valu had dispensed more than 192,000 du of fails to rise to the level of proving a violation of a
legal requirement. First, the Respondent’s witnesses
over its CSL. oxycodone 30; 38,563 du of oxycodone affirmatively asserted that their actions to edit or
The following month, Respondent 15; and 30,655 du of alprazolam 2 mg; delete an order were not linked to the suspicious
shipped an even larger quantity of these drugs alone accounted for more nature of the order itself. Rather, orders were edited
oxycodone to Tru-Valu (55,200 du, than 81 percent of Tru-Valu’s and deleted for business reasons, not diversion-
avoidance reasons. This testimony was not
including 43,200 du of 30 mg and dispensings. The UR also showed that contradicted by any other witnesses in this matter.
12,000 du of 15 mg). Tru-Valu’s orders the top ten drugs dispensed were Next, the record establishes that due diligence was
exceeded even the new CSL and were formulations of oxycodone, methadone, done upon the order prior to making the
again justified on the ground that a or alprazolam, and 17 of the top 20 determination to edit or delete it. Accordingly, I
find that the Government has failed to prove that
supermarket had closed, yet Respondent drugs were controlled. Yet the April 27 the Respondent’s practice of editing and deleting
still had not independently verified this orders were not reported as suspicious. orders violated [its] duty to maintain effective
explanation. Nor did it obtain a new UR The SOMS notes show that Tru-Valu controls against diversion or the duty to detect
until April 1, 2010, after it had filled the placed additional oxycodone orders in suspicious orders. R.D. at 196.
May 2010, which were flagged for I respectfully disagree with the ALJ’s reasoning.
March orders. Moreover, the evidence As for the assertion that the compliance
shows that on March 31, 2010, review because its orders were department’s ‘‘actions to edit or delete an order
Respondent deleted an order for increasing and there was a change in its were not linked to the suspicious nature of the
oxycodone 15. However, none of these buying pattern because another order itself’’ but were done for business reasons, as
distributor had cut back its allocation. found above, in nearly every instance in which an
orders were reported as suspicious even order was edited or deleted, the original order
though Tru-Valu had again exceeded the While notes in the MFRs suggest that placed the respective pharmacy over its CSL and
CSL and placed orders of unusual size. Respondent obtained this explanation thus rendered the order to be of unusual size. RX
These episodes provide a further from the pharmacist, there is no 78, at 60. Moreover, there are comparatively few
evidence that Respondent ever instances in which Respondent documented that an
reason to conclude that Respondent did order was edited or deleted for such reasons as that
not maintain effective controls against independently verified this explanation, the customer had not purchased enough non-
diversion. As found above, the SOMS as required by its Policies and controlled products to meet its ‘‘ratio’’ or because
calculated a customer’s CSL based on Procedures. product was being allocated due to a market
According to Respondent’s records, shortage.
‘‘[t]he highest monthly total [invoiced to
As for the ALJ’s further assertion that ‘‘[t]his
the customer] from the preceding six on May 18, 2010, Tru-Valu placed testimony was not contradicted by any other
months.’’ RX 78, at 60. Thus, if another order which clearly placed it witnesses,’’ R.D. at 196, earlier in her decision the
Respondent approved an increase in the over its CSL. While Respondent deleted ALJ specifically noted the testimony of both Mssrs.
quantity of a drug family, regardless of the order, it failed to report the order as Corona and Schulze on this issue. Id. at 98. Mr.
Corona testified, however, that ‘‘[i]t was common
whether it had complied with its suspicious. Later, it also edited an order practice for [the] Compliance Department to either
Policies and Procedures by obtaining an for oxycodone 15 (May 27), reducing it edit or delete orders for controlled substances if the
explanation for the order, from 12,000 to 7,200 du, while again order was above the customer’s threshold and there
independently verifying that failing to report it. Indeed, Respondent was not a reason to increase the threshold. Though
this was not intentionally done to subvert

explanation, and obtaining a new UR, frequently deleted or edited orders to [Respondent’s] responsibility to report suspicious
bring a customer within its CSL and yet order [sic], in effect, this practice did just that.’’ GX
procedures by independently verifying the never reported the original orders as 51B, at 9 ¶ 30.
pharmacist’s explanation, reasoning that ‘‘by suspicious. To similar effect, Mr. Schulze testified that ‘‘[i]t
relying solely on the lack of documentation, the However, the suspicious order was a common practice for compliance clerks to
Government is attempting to improperly shift the reduce orders or delete orders to keep a customer
burden of proof to Respondent.’’ R.D. at 173. As
regulation requires the reporting of an within its CSL for the rolling 30 day period, as can
explained in my discussion of the Government’s order, regardless of whether the order is be seen in the due diligence file Memo For Record
Exceptions, I respectfully reject the ALJ’s reasoning. rejected entirely or edited by reducing Continued
Moreover, Respondent failed to report order was apparently re-submitted the Respondent edited the order by
the May 18 and May 27 orders as next day, there is no documentation as reducing it to 7,200 du, here again,
suspicious notwithstanding that: (1) It to what explanation was offered by Tru- Respondent failed to obtain an
had shipped 65,200 du of oxycodone Valu’s pharmacist. Nor was a new UR explanation for the order and a new UR.
during the month; (2) it had deleted obtained. Here again, Respondent And here again, it failed to report the
entirely the May 18 order; (3) it had violated the regulation by failing to order as suspicious even though it noted
reduced the May 27 order; and (4) report the order as suspicious. that additional product should not be
several days later, it noted in the Memo While based on the June orders released until ‘‘reservations [were]
for Records, that the May 27 orders, Respondent filled, Tru-Valu’s CSL was addressed.’’
which resulted in the shipment of increased from the 25,000 du level Yet the following day, Respondent
24,000 du of oxycodone 30 and 7,2000 noted in the June 2nd MFR entry to shipped an additional 13,200 du of
du of oxycodone 15, had been released 33,600 du, Tru-Valu’s July orders oxycodone 30 to Tru-Valu. While
without committee review and been totaled 46,800 du. Yet Respondent again Respondent contacted the pharmacy
filled by mistake and that 25,000 du was failed to obtain an explanation for the and asked the PIC if he got a lot of out-
the level at which Tru-Valu’s oxycodone order and a new UR. Nor did it report of- state customers, it did not further
orders were to be reviewed. the order as suspicious. inquire as to why he had posted the
Notwithstanding the above, in June In August 2010, Respondent signs imposing pill limits and requiring
2010, Respondent filled orders totaling conducted a site visit. During the visit, an MRI. Nor did it question the PIC
33,600 du. While the June 15 order for Respondent developed significant regarding the inspector’s observation of
12,000 du of oxycodone 30 placed additional information which reinforces the pharmacy’s customers.
Respondent over its CSL, the order was the conclusion that Tru-Valu was Moreover, the same day, Respondent’s
released with reservation by the engaged in suspicious activity. This compliance committee conducted an
committee and not reported as included the pharmacy’s report that 60 account review, which included
suspicious. Likewise, Tru-Valu placed to 80 percent of the prescriptions it reviewing the site visit and its most
additional orders on June 21 and June filled were for controlled substances, recent UR, which covered the month of
30 which placed it over the CSL; while and that 60 percent of the total July 2010. This UR showed that Tru-
the June 21 order (for 12,000 du of prescriptions were for schedule II drugs. Valu’s dispensings of oxycodone 30
oxycodone 30) was cancelled by the The inspector also reported that while it totaled more than 206,000 du, which
pharmacist, it still was suspicious and was the middle of the afternoon, the was 61 percent of its total dispensings,
should have been reported for the pharmacy was ‘‘very busy’’ with a ‘‘long and with its dispensings of oxycodone
reasons set forth above. line of mostly younger people’’ 15 of 32,441 du, its dispensings of these
Although Respondent deleted the (reporting that there were 10 persons) two drugs were 70.7 percent of all
June 30 order because it was placed too who were ‘‘thin, tattooed, [and] casually dispensings. The UR also showed that
early, even assuming that Respondent dressed’’ and that ‘‘more [were] coming Tru-Valu had dispensed more than
contacted the pharmacist because the in.’’ The inspector further noted that the 31,000 du of alprazolam 2 mg and that
pharmacy had posted signs imposing a nine of the top ten drugs dispensed
(‘MFR’) and SOMS shipping notes.’’ GX 53, at 2– ‘‘pill limit’’ of 180 du on oxycodone 30 were federally controlled substances
3. Mr. Schulze also testified that he was ‘‘aware that and 90 du on oxycodone 15; that it did such as oxycodone, methadone,
Ms. Seiple also explicitly stated that Masters never not accept insurance on certain alprazolam 2 mg (the other being
cancelled, deleted, or edited orders to bring oxycodone products; and that patients carisoprodol). In addition, 18 of the top
customers within the limits established by SOMS.
That statement is simply not true.’’ Id. at 2. See also ‘‘must have a recent MRI report.’’ All of 20 were federally controlled drugs and
GX 52, at 14 (‘‘In the beginning of SOMS these were indicia of illegitimate included 11 oxycodone products, three
implementation, we deleted orders that exceeded activity. alprazolam products, two diazepam
the CSL and informed the customers when they Ten days after the site visit, products, methadone, and Dilaudid
could place another order. Later on, when an order
was held by SOMS due to size of the order
Respondent deleted an order, (hydromorphone).
exceeding the established limit, we would edit the documenting that the order was deleted Notwithstanding the information
orders, reducing the total amount shipped to keep ‘‘per review until [the] review provided by the UR and the recent site
the customers within the CSL.’’); id. at 15 (‘‘In completed.’’ Yet notwithstanding all of visit, Respondent approved the order for
practice, we did not analyze a customer’s orders to the additional information its inspector 13,200 du and increased the amount of
determine if they were ‘suspicious’ and as such
were required to be reported to DEA. We were had documented during the site visit, oxycodone Tru-Valu could purchase ‘‘to
looking at orders to determine what we could the order was not reported as the pattern high of 46,800.’’ Respondent
justify shipping out. If the order needed to be edited suspicious. Moreover, on September 1, further documented that the 46,800 du
to justify shipment, we would do that.’’). 2010, Respondent filled orders for figure was only 42 percent of Tru-Valu’s
As explained above, because the purpose of the
CSL was to determine whether a customer’s orders
24,000 du of oxycodone 30 and 2,400 du UR, in essence using the UR as a one-
were of unusual size and thus suspicious, of oxycodone 15. While there is way ticket to justify making additional
Respondent’s practice of editing or deleting those evidence documenting that distributions while ignoring the
orders which placed a customer over its CSL Respondent’s compliance department significant information it contained
subverted the SOMS. Whether Respondent’s
employees edited or deleted orders with the intent
spoke with Tru-Valu’s PIC regarding which raised a strong suspicion as to the
to subvert its obligation to report suspicious orders why he did not accept insurance on illegitimacy of its dispensings. Here
is irrelevant because the regulation does not require certain oxycodone products, there is no again, Respondent did not report the
proof of any level of scienter. documentation that Respondent order as suspicious.
As for the ALJ’s statement that ‘‘the record inquired about the signs imposing pill Moreover, upon filling an order for
establishes that due diligence was done upon the
order prior to making the determination to edit or limits and requiring an MRI, or about 14,400 du of oxycodone 30 on October
delete it,’’ R.D. at 196, as found above, the evidence the clientele observed by the inspector. 5, 2010, Respondent had shipped 58,800
shows that while the pharmacies submitted And here again, Respondent failed to du to Tru-Valu on a rolling 30-day basis,
numerous oxycodone orders which placed them report the orders as suspicious. and exceeded the 46,800 du CSL. Here
over their respective CSLs, Respondent only rarely
contacted the pharmacies and obtained an
Nearly three weeks later, Tru-Valu again, there is no evidence that
explanation for why they were ordering these ordered 26,400 oxycodone 30, thus Respondent contacted the pharmacy
quantities. placing it over its CSL. While and yet the order was released with
reservation. Nor was the order reported pharmacy’s business model as and Procedures per se ineffective,
as suspicious. represented by the PIC and confirmed regardless of whether such failure
Only eight days later, Respondent during the May 2008 site visit. However, would likely result in [the] diversion of
edited an order (placed the day before) the fact that ‘‘the URs and other controlled substances.’’ Id. In the ALJ’s
to 6,000 du (60 bottles) to keep Tru-Valu information provided by Tru-Valu were view, ‘‘[t]his argument falls short of the
at its CSL. Yet on filling the order, consistent with the pharmacy’s business standard set forth in Southwood that
Respondent had actually shipped model as explained by [its] PIC and due diligence efforts are ineffective
64,800 du of oxycodone on a rolling 30- confirmed in the May 2008 site when their ‘direct and foreseeable
day basis. Once again, Respondent did inspection’’ says nothing about whether consequence’ ’’ is the ‘likely diversion
not contact the pharmacy and obtain an the pharmacy was engaged in legitimate of’ controlled substances.’’ Id. (quoting
explanation for the order. Here again, it dispensing. 72 FR at 36,500). The ALJ thus
failed to report the order as suspicious. As for Ms. Seiple’s contention that concluded that the Government had not
Moreover, Respondent filled ‘‘[b]ased on its extensive investigation, proved that Respondent’s due diligence
additional orders on November 1, 2010 it determined that the orders it shipped program was rendered ineffective by its
(for 24,000 du of oxycodone 30 and to Tru-Valu were not suspicious,’’ the failure to obtain a UR every time an
2,400 du of oxycodone 15) as well as on fact remains that Respondent repeatedly order was held by the SOMS. Id.
November 8, 2010 for 14,400 du of failed to obtain an explanation for those While it is true that Southwood noted
oxycodone 30. While these orders orders that were held by the SOMS. And that the ‘‘direct and foreseeable
apparently were not held by the SOMS, even in those few instances in which it consequence of the manner in which
given the extensive red flags raised by did contact the pharmacy, it did not [the distributor] conducted its due
Tru-Valu’s business practices, the orders independently verify the pharmacy’s diligence programs was the likely
were suspicious and should have been explanation and it only rarely obtained diversion of’’ large quantities of
reported. Indeed, the evidence shows a new UR. controlled substances, this discussion
that Respondent placed Tru-Valu on As for Respondent’s failure to obtain occurred in the context of describing the
non-control status only after a new UR every time an order was held, company’s conduct in continuing to
Respondent received a letter from the ALJ found that the Government had distribute the drugs even after it had
Mallinckrodt raising concerns about proved the allegation, noting that ‘‘very obtained information from the Agency
Tru-Valu. few URs were collected, despite SOMS and some of its customers that the latter
Yet, even before April 1, 2009, holding hundreds of orders over several were likely filling unlawful
Respondent had ample evidence that years.’’ R.D. at 201. However, the ALJ prescriptions. 72 FR at 36,500; see also
raised a strong suspicion as to the then explained that ‘‘the relevant id. (noting that ‘‘in several cases,
legitimacy of Tru-Valu’s business question . . . is not simply whether Respondent actually distributed even
practices and this evidence became even Respondent failed to follow its policies, larger quantities of [hydrocodone] to’’
stronger over time. While Ms. Seiple but whether such failure rendered the pharmacies). Southwood did not,
justified Respondent’s failure to report Respondent’s system ineffective (factor however, address whether a
Tru-Valu’s orders as suspicious on the one) and/or constituted negative distributor’s failure to follow its
ground that the pharmacy was actively experience distributing controlled procedures for detecting and reporting
marketing to nearby pain clinics and substances so as to justify revocation suspicious orders must be shown to
had provided Respondent with the (factor four).’’ Id. (citing 21 U.S.C. have resulted in the likely diversion of
names of several doctors who were 823(e)).175 controlled substances in order to be
writing the prescriptions, it bears noting Citing Southwood, the ALJ opined actionable misconduct.
that Respondent had previously cut off ‘‘that an anti-diversion system is Respondent’s Policy 6.2 served the
sales to two of the physicians. It also ineffective if ‘the direct and foreseeable purpose of identifying both: (1) Those
bears noting that because only a consequence of the manner in which orders which could be shipped
practitioner (i.e., in this case, a licensed Respondent conducted its due diligence notwithstanding that they met the
physician) can issue a prescription, the program was the likely diversion of criteria of unusual size, unusual pattern,
fact that Respondent was provided with [controlled substances].’’ Id. (quoting 72 or unusual frequency, because the
the names of several doctors who were FR at 36,502). The ALJ then explained suspicion created by the order itself was
practicing pain management says that in contrast to Southwood, the sufficiently dispelled through the
nothing about whether those doctors Government had ‘‘made no showing that procedures set forth by the policy, and
were issuing legitimate prescriptions. Respondent’s failure to order a recent (2) those orders which were to be
Moreover, while Respondent’s CEO and UR for every SOMS-held order would considered as suspicious because the
former Vice-President acknowledge that likely result in diversion,’’ noting that information obtained through those
the company was well aware of the ‘‘the record is void of evidence that any procedures did not dispel the suspicion.
oxycodone crisis then ongoing in the controlled substances distributed by However, as explained above, an order
State of Florida, Respondent took no Respondent ha[ve] been diverted.’’ Id. at can still be suspicious even if the
further steps to verify the credentials of 201–02. The ALJ further reasoned that evidence available to the distributor
the physicians (indeed, while it ‘‘[t]here is also no evidence that updated does not establish that the order is likely
obtained their names at the initial site to be diverted. Thus, the Government
URs, had they been requested, would
visit, it did not subsequently update this was not required to show that
have indicated that the drugs were
information) and whether they had any Respondent’s failure to follow its policy
likely to be diverted.’’ Id. at 202.
specialty training in pain management, The ALJ then characterized the and obtain a UR was likely to result in
physical medicine, and/or addiction, all Government’s argument as being that diversion in order to establish liability.
of which was readily accessible at the ‘‘any failure to follow every policy, no It need only show that the failure to
Florida Department of Health’s Web matter how minute, renders the Policies follow the policy resulted in
site. Respondent’s failure to report
Respondent further justifies its failure 175 Because Respondent was distributing schedule suspicious orders.
to report the orders, asserting that the II drugs, the correct section is 823(b), which uses As explained above, the ALJ
orders were consistent with the the same factors as 823(e). characterized as ‘‘minute’’ the
requirement that a new UR be obtained various pain management physicians One week later, Respondent deleted
whenever an order was held by the and provided the names of five of the an order because it placed The Drug
SOMS. However, the record is replete physicians, there is no evidence that Shoppe over its current limit. Yet
with numerous instances in which Respondent even verified that the Respondent did not report the order as
orders held by the SOMS were physicians were licensed and registered. suspicious. Moreover, the next day,
nonetheless released without any Nor did it verify whether these Respondent filled an order for 19,500 du
investigation, based solely on the fact physicians had specialty training or of oxycodone 30, bringing The Drug
that the order was supported by the UR. board certification in pain management Shoppe’s orders to 74,000 du of
Indeed, this occurred even when a new or another related specialty. oxycodone products, with 72,500 du
UR had not been obtained in months. According to Respondent’s records, as being for 30 mg tablets. While
And it also occurred even after of April 1, 2009, The Drug Shoppe’s Respondent justified filling the order,
Respondent’s inspector noted, with monthly purchasing limit was set at documenting that there was a ‘‘Large #
respect to several of the pharmacies, 50,000 du for all oxycodone products. RX’s For HIV Disease State,’’ there is no
that their controlled substance Yet Respondent allowed The Drug evidence that it independently verified
dispensing ratios seem high and that a Shoppe to exceed the purchasing limit that The Drug Shoppe was filling a large
new UR should be obtained and by more than 5,000 du in April 2009. number of prescriptions for HIV patients
compared with the figure reported by In the middle of July 2009, as well as whether HIV patients would
the pharmacy. Respondent obtained a new UR which necessarily require oxycodone 30. Here
To be sure, Respondent may well covered the period of May 14 through again, while the order placed The Drug
have ignored any information on those July 14. Of note, the UR showed that Shoppe over its CSL by 12,000 du, it
URs raising a suspicion of diversion, as The Drug Shoppe’s monthly dispensings was not reported as suspicious.
it did with the few URs that were of oxycodone 30 had increased to nearly As noted in my findings, throughout
obtained. But as noted throughout this 53,000 du. Yet Respondent did not find the course of its relationship with The
decision, the URs it did obtain this suspicious, and approved an Drug Shoppe, the pharmacy repeatedly
contained significant information that increase from 50,000 to 62,000 du on placed orders which, on a rolling 30-day
raised a strong suspicion that the each The Drug Shoppe’s oxycodone basis, resulted in the pharmacy
of the pharmacies was engaged in purchasing limit and filled orders exceeding its oxycodone CSL by a large
illegitimate dispensing practices. I totaling that amount during July. amount. Invariably, Respondent failed
therefore also hold that Respondent’s to contact the pharmacy and obtain an
Thereafter, the SOMS went into effect.
repeated failure to obtain a new UR explanation for the order and it rarely
However, even as early as the first
whenever orders were held by the obtained a new UR. Instead, it typically
month that the SOMS was operational,
SOMS rendered its system for detecting justified shipping the order, noting that
Respondent filled orders, which were
suspicious orders ineffective.176 the order was under the current size
held for review because they exceeded limit, even when the order placed The
The Drug Shoppe The Drug Shoppe’s oxycodone CSL, Drug Shoppe over its CSL by tens of
Prior to April 1, 2009, Respondent without obtaining an explanation for the thousands of dosage units. And it never
had acquired information raising a orders and a new UR while failing to reported any of the orders as suspicious.
strong suspicion as to the legitimacy of report the orders as suspicious. For Moreover, during November 2009,
The Drug Shoppe’s dispensing example, on August 13, 2009, Respondent purportedly reduced The
practices. While The Drug Shoppe was Respondent filled an order for 1,000 Drug Shoppe’s oxycodone CSL to 46,500
a community pharmacy, it had Endocet which placed The Drug Shoppe du, yet Respondent continued to fill
previously reported that 40 percent of over its CSL. While the SOMS was orders which placed The Drug Shoppe
the prescriptions it filled were for supposed to hold an order even if it over the CSL, while also failing to
controlled substances and 20 percent of resulted from a pharmacy’s orders contact the pharmacy and obtain an
the prescriptions were for schedule II exceeding the CSL by a single dosage explanation for the orders and a new
drugs. unit, the order was approved because it UR. And it failed to report the orders as
Moreover, the first UR obtained by was ‘‘ok to ship within current limit.’’ suspicious.
Respondent showed that The Drug As previously explained, if Respondent Likewise on December 23, 2009,
Shoppe’s monthly dispensings of had actually contacted the pharmacy, Respondent deleted an order for 15,500
oxycodone 30 totaled 38,689 du and its one would expect the explanation it du of oxycodone 30 because the
dispensings of all oxycodone products obtained from it to have been pharmacy was already at the CSL. While
totaled 56,600 du out of total documented in the SOMS notes, rather Respondent contacted the pharmacy
dispensings of 165,068, or more than 34 than that the order was ‘‘ok to ship and was told that its sales representative
percent of the pharmacy’s dispensings. within current limit.’’ I therefore had said that it was allotted 62,000 du,
While The Drug Shoppe’s PIC had conclude that Respondent did not Respondent did not obtain a new UR.
stated that he had refused to fill contact the pharmacy and obtain an Moreover, the next day, Respondent
prescriptions when the quantity was explanation for the order, and that the shipped 13,500 du of oxycodone 30,
‘‘too high,’’ the UR previously obtained order, which was not reported, was thus bringing its shipments since
showed that the average quantity of suspicious. December 3, 2009 to 60,000 du (of
oxycodone 30 dispensed per Further, only days later during the which 58,600 were for oxycodone 30).
prescription was 214 du. Compliance Review, a DEA Investigator Respondent’s records contain no
Also, while during a site visit, the specifically identified Respondent’s explanation as to why it ignored that
pharmacy reported that it filled for distributions of oxycodone to The Drug The Drug Shoppe was nearly 14,000 du
Shoppe as ‘‘potentially problematic.’’ over its CSL and it did not obtain a new
176 Where, in a given month, multiple orders were GX 48A, at 3, 5; GX 12, at 23. This UR. Nor did it report the order as
held, it would have sufficed if Respondent had information obviously had no impact on suspicious.
obtained a new UR following the first held order,
as it said it would. If that were the case, I would
Respondent’s evaluation of the As found above, throughout January
not find liability for failing to obtain additional oxycodone orders thereafter placed by 2010, Respondent filled orders that
URs. The Drug Shoppe. placed Respondent above the 46,500 du
CSL on nine occasions, and on several SOMS because The Drug Shoppe had by the SOMS, several of them were
occasions, the orders even placed it placed four orders each for 9,600 du approved because Respondent counted
above the previous CSL of 62,000. between May 3 and 7 and thus were of them on a calendar month basis and
Respondent generally justified shipping an unusual pattern, Respondent failed deemed the size not excessive, thus
the orders, reasoning that the amount to obtain an explanation for any of these changing its own rule. Respondent did
ordered during the calendar month was orders from the pharmacy and a new not contact the pharmacy and obtain an
under the CSL, notwithstanding that the UR.177 Nor did it report any of the explanation for the orders or a new UR.
determination of whether the orders orders as suspicious. And later on August 24, 2010,
exceeded the CSL was supposed to be On June 15, 2010, Respondent edited Respondent filled an order,
calculated on a rolling 30-day basis. an oxycodone 30 order from 9,600 du to notwithstanding that the order placed
Here again, while the SOMS notes 5,400 du. Nonetheless, this resulted in The Drug Shoppe over the CSL,
typically contained this explanation, The Drug Shoppe’s orders totaling documenting the reason as ‘‘RWR’’
Respondent did not document that it 67,600 du and placing it over its CSL. (release with reservation). Yet
obtained an explanation for the order While Respondent finally obtained a Respondent’s Policy 6.2 contained no
from the pharmacy and a new UR. I new UR, there is no evidence that provision that allowed for the release of
conclude that the orders were Respondent actually obtained an an order on this basis.178 RX 78, at 32.
suspicious and should have been explanation for the order. Nor did it Respondent did not obtain an
reported but were not. report the order as suspicious. explanation from the pharmacy for any
Moreover, in the middle of January, Still later on June 25, Respondent of these orders, it did not obtain a new
Respondent conducted a site visit. On filled an order for 6,000 du of UR, and it failed to report any of the
the report, the inspector noted in oxycodone 30. Yet it documented in the orders as suspicious.
multiple places that The Drug Shoppe’s SOMS notes that ‘‘oxy edited to zero per On each date in September 2010 on
dispensing ratio of 40 percent was ‘‘a csl and policy.’’ Respondent offered no which it filled The Drug Shoppe’s
little high.’’ He recommended that evidence to explain the inconsistency oxycodone orders, the pharmacy
Respondent obtain a new UR and and did not report the order as exceeded the CSL. The explanations
compare it with the site visit. suspicious. And several days later, The offered for releasing the orders
Respondent did not, however, obtain a Drug Shoppe placed a further order for included: (1) That the orders were
new UR for another five months. Nor 3,600 du of oxycodone which was held ‘‘within [the] monthly buying pattern’’
did it follow its inspector’s by the SOMS. While Respondent even though the orders exceeded the
recommendation to compare the deleted the order, noting that it could be CSL (Sept. 1 and 2 orders); (2) the orders
pharmacy’s representation of its placed after June 30, it did not were ‘‘under csl [and] supported by ur’’
dispensing ratio with even the previous investigate the order and did not report or ‘‘rwr under csl’’ even when the orders
UR. the order as suspicious. placed the pharmacy more than 9,000
On January 25, 2010, The Drug According to the SOMS note dated du over its csl (Sept. 7), or nearly 8,000
Shoppe’s CSL was raised to 60,000 du. July 19, 2010, The Drug Shoppe’s du over (Sept. 20); or (3) merely ‘‘rwr’’
Only four days later, Respondent filled oxycodone CSL was then at 42,420 du. even when the orders placed the
more oxycodone orders, Yet on this date, Respondent filled an pharmacy over the CSL by nearly 10,000
notwithstanding that they placed the order for 9,600 du of oxycodone 30, thus du (Sept. 13) and 13,000 du (Sept. 23).
pharmacy at 15,000 du over the new placing the total of filled orders at Of note, Respondent did not document
CSL. According to various notes, 46,800 du on a rolling 30-day basis and that it had contacted the pharmacy and
Respondent’s Compliance Committee over the CSL. Of note, while the order obtained an explanation for any of the
approved the increase because the order was held by the SOMS, Respondent did orders and I find that it did not do so.
was supported by the ‘‘ur plus 10%’’ not contact the pharmacist and obtain Respondent also did not obtain a new
‘‘per company policy.’’ Here again, an explanation for the order. Nor did it UR. And it failed to report any of the
Respondent treated the UR as a one-way obtain a new UR. And it did not report orders as suspicious.
ticket to justify increasing the amount it the order as suspicious. October 2010 brought more of the
could ship, while ignoring that the UR Moreover, one week later, Respondent same, with The Drug Shoppe’s orders
was incomplete because it did not list edited an order to 1,600 du ‘‘to meet the exceeding the CSL on four occasions
The Drug Shoppe’s total dispensings, as CSL for July.’’ Notwithstanding that the and Respondent filling the orders,
well as the significant information it order (and not simply the filled amount) typically justifying its doing so by
contained. placed The Drug Shoppe over its CSL, counting the orders on a calendar-
As found above, on multiple there is no evidence that Respondent month basis. However, here again,
occasions thereafter through June 15, contacted the pharmacy and obtained an
2010, Respondent filled The Drug
explanation for the order. Nor did it 178 The ALJ rejected the Government’s contention
Shoppe’s oxycodone orders that Respondent’s compliance department used the
obtain a new UR. It did not report the
notwithstanding that the orders placed notation of ‘‘release with reservation’’ or ‘‘RWR’’ to
order as suspicious. And the deleted
it over its CSL (and on some occasions document its objection to the release of a held
amount was treated as if it had never order. R.D. at 168–69. The ALJ rejected the
because the orders were of unusual
been ordered. contention, reasoning that ‘‘Ms. Seiple credibly
frequency). Here again, Respondent As found above, on multiple explained that RWR was actually used to identify
released the orders on the basis of one occasions throughout August, orders that were not suspicious, but about which
of three reasons: (1) That the order was Respondent filled The Drug Shoppe’s
Respondent desired to collect more information.’’
under the CSL, (2) that the order was Id.

orders notwithstanding that the orders I conclude, however, that it is not necessary to
supported by the UR, or (3) that the exceeded the CSL referred to in the July determine what the purpose was of these notations,
frequency was not excessive, even 19 SOMS note on a rolling 30-day basis. because in those instances in which orders were
though the SOMS had apparently Here again, while the orders were held
held by the SOMS, the orders already met the
flagged some of the orders for this criteria of a suspicious order. Accordingly, even if
Respondent used the notations because it ‘‘desired
reason as well. However, with the 177 However, while Respondent contact The Drug to collect more information’’ about the customer,
exception of an order placed on May 7, Shoppe at the time of the May 7 order, it did not id., the order was still suspicious and subject to
2010, which was apparently held by the obtain a new UR. reporting.
Respondent failed to contact the accounted for because the pharmacy controlled substances comprised 51
pharmacy and obtain an explanation for was filling for AIDS patients, percent of the prescriptions dispensed.
the order and a new UR. And it failed Respondent simply accepted this In terms of dosage units, the UR
to report the orders as suspicious. assertion without any further inquiry as showed that out of Englewood’s total
While November 2010 brought a to how many HIV/AIDS patients the dispensings of 342,760 du for all
substantial decrease in the volume of pharmacy had, let alone how many of prescription drugs, schedule II drugs
oxycodone Respondent shipped to The these patients were actually being comprised 161,279 du, or 47 percent of
Drug Shoppe, both the November 1 and prescribed oxycodone 30. Nor did Ms. its total dispensings. Moreover,
November 9 orders placed the pharmacy Seiple address the many instances in controlled substances comprised 67
over its CSL on a rolling 30-day basis, which orders were held by the SOMS percent of its total dispensings, even
with the first order placing The Drug and yet Respondent filled the orders after counting carisoprodol as a non-
Shoppe nearly 8,700 du over its CSL. without contacting the pharmacy and controlled drug. Of further note, while
The order was released, obtaining an explanation (let alone then a Dan Farris was the owner of the
notwithstanding that Respondent failed independently verifying the pharmacy and listed as the Pharmacist-
to obtain an explanation for the order explanation) and a new UR. in-Charge by the consultant who
from the pharmacy and a new UR. Nor do I find persuasive Ms. Seiple’s performed the September 2008 site visit,
Again, it failed to report the order as explanation as to why it took until there is no evidence that Respondent
suspicious. Nor did Respondent obtain February 2011 for Respondent to ever verified Dan Farris’ licensure status
an explanation for the November 9 order discover that The Drug Shoppe’s PIC with the Florida Department of Health.
and a new UR. And it did not report the had been criminally charged with an In September 2008, Englewood sought
order as suspicious. offense related to controlled substances. a further increase in its oxycodone
On November 18, Respondent purchasing limit, with its PIC reporting
Even assuming that Respondent was
conducted a site visit during which its that 30 percent of the prescriptions it
unaware of Mr. Agravat’s criminal
inspector was told that 40 percent of the filled were for controlled drugs and 20
charge until February 2011, the due
prescriptions were for controlled drugs percent were for schedule IIs. However,
diligence file establishes that the form
and ten percent were for schedule II the UR Englewood submitted showed
for the 2008 site visit included a
drugs. The inspector was also told that that it filled 9,928 schedule II
85 percent of the controlled substance question which asked, in part, whether
any of the staff pharmacists had ever prescriptions and 5,595 schedule III
prescriptions it filled were paid for with through V prescriptions (after
cash. Both of these were additional been criminally prosecuted. Notably,
Respondent’s consultant left the answer subtracting out carisoprodol), out of a
indicia that the pharmacy was engaged total of 22,315 prescriptions. Thus,
in in suspicious dispensing practices. blank and there is no evidence that
Respondent ever followed up on the schedule II prescriptions comprised
See GX 51, at 4 ¶ 12 (declaration of 44.5 percent of all prescriptions and all
Wayne Corona). omission. Moreover, none of the forms
Respondent subsequently used to controlled substances prescriptions
Moreover, while Respondent obtained
document its due diligence and site comprised nearly 70 percent of all
a new UR on December 15, 2010, (for
visits even asked this question. And in prescriptions the pharmacy dispensed.
the month of October), that UR showed Moreover, in terms of dosage units,
that Respondent’s dispensings of any event, there were sufficient other
circumstances present that created a the UR showed that schedule II drugs
oxycodone 30 alone (49,637 du)
strong suspicion that The Drug Shoppe comprised 57 percent of the total
comprised 27 percent of all drugs
was engaged in illegitimate dispensing dispensings and all controlled
dispensed, and its dispensings of all
practices. I therefore reject Respondent’s substances (again after subtracting
oxycodone products totaled 57,601 du,
justifications as to why it did not report carisoprodol) comprised 75 percent of
or more than 31 percent of all drugs
any of The Drug Shoppe’s orders as the total dispensings. Even assuming
dispensed. Yet even after acquiring this
suspicious prior to February 2011. that the pharmacist’s representations as
additional information, Respondent
to the percentage of the prescriptions
continued to ship oxycodone to The Englewood Specialty Pharmacy comprised by schedule II and all
Drug Shoppe through February 8, 2011,
Prior to April 1, 2009, Respondent controlled substances were estimates,
the date on which DEA Investigators
had obtained substantial information the disparity between these statements
went to Respondent’s Kemper Springs
creating a strong suspicion as to the and the actual figures as shown in the
facility and requested its file on The
legitimacy of Englewood Specialty UR was too large to be ignored. Yet
Drug Shoppe. Respondent failed to
Pharmacy’s dispensing practices. For there is no evidence that Respondent
report any of these orders as suspicious.
I find unpersuasive Ms. Seiple’s example, in a due diligence review compared the prescriptions levels on
justifications for why Respondent failed conducted in March 2008 because the UR with the pharmacist’s
to report any of The Drug Shoppe’s Englewood was seeking an increase in statement.179
orders as suspicious. From early on in its purchasing limits for oxycodone and Most significantly, in early November
its relationship with The Drug Shoppe, hydrocodone, Englewood reported that 2008, Respondent finally conducted a
Respondent acquired substantial 30 percent of the prescriptions it filled 179 Throughout the proceeding Respondent has
information raising a strong suspicion were for controlled substances and 15 argued that is unfair to fault it for failing to compare
that the pharmacy was engaged in percent of the prescriptions were for the dispensing percentages as reported by the
illegitimate dispensing practices. schedule II drugs. Yet the UR provided pharmacies with those shown by the URs because
Moreover, during the August 2009 DEA by Englewood, which covered the neither before, nor as part of the August 2009
compliance review, did the Agency identify this as
briefing, Respondent’s distributions to month of January 2008, also showed the a deficiency in its procedures. While it is true that,
The Drug Shoppe were specifically number of prescriptions for each drug in some instances, the pharmacy’s URs did not
identified as being potentially and even totaled the prescriptions for include the number of prescriptions, in
problematic. the various schedules and the non- Englewood’s case, the URs did and yet the
information was still ignored. This suggests that
Regarding Ms. Seiple’s claim that controlled prescriptions. Notably, as Respondent’s purpose in asking these questions was
Respondent believed that the volume of found above, schedule II drugs actually simply to go through the motion of conducting due
pain medications being dispensed was comprised more than 32 percent and all diligence.
site visit at Englewood, during which its a customer whose oxycodone purchases While Respondent deleted the order and
PIC reported that all controlled were problematic. GX 48A, at 3; GX 12, told the PIC that it would not fill the
substance prescriptions comprised only at 23. Yet Respondent even failed to order until there was a review by the
25 percent of the prescriptions it filled. report the September orders as Compliance Committee, it did not
Tellingly, Respondent’s consultant suspicious. obtain an explanation for the order or a
wrote in his report that ‘‘[h]e [the PIC] In early October 2009, Respondent new UR and it failed to report the orders
appears to be doing a larger narcotic finally obtained a new UR (for the as suspicious.
business than he admits to.’’ RX 2C, at month of September), 11 months after it However, two weeks later, Englewood
78. Yet even this did not prompt had obtained the previous UR. Of note, placed more orders for 50,000
Respondent to review the information by du, the UR showed that schedule II oxycodone 30 and 24,000 du of
provided by the UR and compare it with drugs comprised 62 percent and all methadone. While Ms. Seiple
the various statements the PIC had controlled substances comprised 77 documented that she called the
made, and most incredibly, Respondent percent of Englewood’s total pharmacy and told the PIC that order
subsequently approved Englewood to dispensings. Moreover, Englewood’s would not be shipped but could be
purchase 50,000 du of oxycodone per monthly dispensings of oxycodone 30 resubmitted in four days, here again,
month. had increased from 51,341 to 123,476 there is no evidence that Ms. Seiple
Notwithstanding the purchasing limit, du. asked the PIC why his pharmacy needed
Respondent filled orders for more than Ms. Seiple noted that Englewood’s so much oxycodone. She also failed to
80,000 du in the April (30,000 over the account was ‘‘showing usage of 150k on obtain a new UR and failed to report the
purchasing limit), and 102,000 du in oxy in [the] month of September’’ 181 order as suspicious.
both June and July 2009 (52,000 over the and that the pharmacy was also Notwithstanding the extensive
purchasing limit).180 Respondent, purchasing from Amerisource Bergen, evidence that Englewood was engaged
however, had not obtained a new UR another distributor. Ms. Seiple further in illegitimate dispensing practices, on
since September 2008, and even then documented that she was ‘‘very December 28, Respondent’s compliance
the June and July orders exceeded its concerned w/quantity dispensed per committee conducted a new review and
average monthly dispensings of UR’’ and was recommending that approved the pharmacy to purchase
oxycodone 30 and 15 mg Englewood be limited to 50,000 du of 50,000 du of oxycodone 30 and 24,000
(approximately 74,000 for the two oxycodone until the Compliance du of methadone. However, the orders
dosages combined) as shown on that Committee reviewed the account.182 were not reported as suspicious. Based
report by approximately 28,000 du. Yet While the Compliance Committee on the evidence, I conclude that the
there is no evidence that Respondent reviewed the account and adopted Ms. orders were suspicious and should have
contacted the pharmacy and obtained an Seiple’s recommendation to reduced been reported.
explanation for the orders and there is Englewood’s oxycodone CSL to 50,000 Moreover, on Jan. 12, 2010,
no evidence explaining why du, on October 27, Englewood ordered Respondent conducted a second site
Respondent ignored the purported 100,000 du of oxycodone 30 and 20,000 visit at Englewood. While the inspector
purchasing limit. Based on the of oxycodone 15. While the order for 30 (Mr. Chase) documented that Dan Farris
circumstances presented, I conclude mg was reduced to 50,000 du and the was the owner and that he had never
that the orders during these months order for 15 mg was deleted, neither had his license suspended, there is no
were suspicious and that Respondent order was reported as suspicious as it evidence that Respondent ever verified
violated 21 CFR 1301.74(b) by failing to should have been. Indeed, Ms. Seiple’s this information. Mr. Chase further
report them. documented concern over the quantity noted that 40 percent of the
While the SOMS became operational of oxycodone being dispensed by prescriptions filled by Englewood were
in August 2009, Respondent filled Englewood begs the question of exactly for any controlled substances and that
orders placed on August 3 for 90,000 what additional evidence was required this was ‘‘a little high’’ and that ‘‘25
oxycodone 30 and 12,000 oxycodone 15, to render the orders suspicious. [percent] were for schedule II drugs.’’
totaling 102,000 du, and on September On December 3, Englewood placed While Chase recommended that
28, it filled orders for 90,000 du of orders for 50,000 du of oxycodone 30 Respondent obtain a new UR and
oxycodone 30 and 10,000 du of and 24,000 du of methadone. This, compare it with the figures provided by
oxycodone 15. Yet the SOMS notes however, was only three days after the pharmacist, it did not obtain a new
show that neither set of orders were Respondent had filled an oxycodone UR until August 11, 2010, seven months
held for review. GX 18, at 163. As order for 37,500 du which placed later. Moreover, as found above, the
previously explained, because the Englewood at its CSL, which apparently most recent UR showed that schedule II
SOMS recalculated the CSL every had been reduced due to supply issues. drugs comprised 45 percent and all
month based on the highest monthly controlled substances comprised 66
total of doses invoiced in the preceding 181 This would be accurate if one only counted percent of the prescriptions Englewood
six months, the CSL was increased even Englewood dispensings of oxycodone 30 and 15 dispensed. Yet there is no evidence that
(26,097 du). As found above, Englewood’s Respondent’s Compliance Department
where the orders were never properly dispensings of all oxycodone products, including
reviewed such as in the months of June extended release drugs, totaled nearly 216,000 du,
even examined the previous UR.
or 44 percent of its total dispensings. Thereafter, beginning in late January
and July 2009. Here again, this supports
182 Ms. Seiple also documented that she was very 2010, Englewood repeatedly placed
a finding that as implemented, the
concerned with the quantities of methadone being oxycodone orders that exceeded the CSL
SOMS was not an effective control
dispensed by Englewood and had discussed with its on a rolling 30-day basis. While the
against diversion. Moreover, with PIC the size of the prescriptions and been told that
orders were held by the SOMS, the
respect to the September 28 orders, they averaged 480 to 600 du per script. Yet the UR
showed that the prescriptions averaged only 258 evidence shows that the orders were
Englewood was specifically identified
du, provided one actually bothered to add up the filled, with the typical justification
during the August 2009 DEA briefing as two line items on the UR and calculate the average being that the orders were supported by
per prescription. RX 2C, at 41. This was another
180 As found above, the June 2009 orders were example of Englewood’s PIC providing information,
Englewood’s UR, which was already
comprised entirely of 30 mg tablets, and the July the falsity of which was easily ascertainable, which three months old (as of January) and
orders included 100,000 du of the 30 mg tablets. Respondent ignored. which had prompted Ms. Seiple to
initially limit the account because of her at the end of the month, the evidence of the top 20 drugs were federally
concern with the quantities being shows that Englewood had been controlled substances.
dispensed. See, e.g., RX 2C, at 2 (MFR ordering large quantities (typically Yet even after obtaining this UR,
note of Jan. 26; ‘‘Ship per UR per 50,000 du) in the middle of March, which showed an even higher level of
Committee signed by Wayne’’). And in April and May 2010. Thus, although oxycodone dispensing than the
other instances, the orders were justified Respondent could have verified the September UR which had prompted Ms.
as being within the CSL, even though PIC’s statement simply by reviewing its Seiple’s concern over Englewood’s
they clearly were not. See, e.g., GX 18, own records, there is no evidence that dispensing levels, Respondent
at 164 (April 15 order for 50,000 du of it did so and it again failed to obtain a continued to fill the pharmacy’s orders
oxycodone 30 approved as ‘‘under CSL’’ new UR. Nor did it report the order as for large quantities of oxycodone. On
even though the order placed suspicious even though the order placed both August 23 and September 27, 2010,
Englewood’s oxycodone orders at Englewood at more than 50,000 du over Englewood submitted orders which
139,600 du on a rolling 30-day basis); id. its CSL. I hold that the order was placed it over its oxycodone CSL, and
(May 26 SOMS notes: ‘‘release order suspicious. yet on both occasions Respondent failed
under CSL’’ even though filled orders Also, notwithstanding the PIC’s to obtain an explanation for the orders.
totaled 80,000 du on both a rolling 30- statement that he was no longer While Respondent edited the August 23
day and calendar month basis and ordering his allotment at the end of the order from 25,000 du to 13,000 du,
subsequent notes indicate the CSL was month, on July 27, 2010, Englewood Englewood’s orders were still over the
set at 63,000). None of these orders were ordered 30,000 du, which again placed CSL by 13,000 du and yet Respondent
reported as suspicious. I hold that they its orders over the CSL. While did not report the order as suspicious.
were. Respondent edited the orders to 13,000 And while Respondent edited the
Indeed, the evidence shows that at du, it did not contact the pharmacy and September 27 order from 18,000 to
Mr. Corona’s direction, Respondent obtain an explanation for the order. Nor 13,000 du and brought Englewood
adopted a policy of filling Englewood’s did it obtain a new UR. And while within its CSL, here again, Respondent
orders as long as the quantity was under its policies, Respondent was failed to obtain an explanation for the
supported by the UR and without required to review the entire file on order. Instead, Respondent treated the
obtaining an explanation from the Englewood before filling an order that 5,000 du that was edited off the order
pharmacy, which was independently was held by the SOMS, there is no as if Englewood had never ordered this
verified, and a new UR. See RX 2C, at evidence that it questioned why additional amount and failed to report
2. This was contrary to the Englewood had ordered 30,000 du, the order. I hold, however, that the
representations made by Respondent to given the PIC’s statement that he was no order was also suspicious and that
this Agency as to how its SOMS longer ordering at the end of the month. Respondent was required to report both
program would be operated and resulted Respondent did not report the order as the August 23 and September 27, 2010
in Respondent’s failure to report suspicious. Here again, I conclude that orders.183
numerous suspicious orders. And I the order was suspicious. Respondent only terminated
further hold that this policy rendered On August 10, 2010, Respondent Englewood as a customer after a
the SOMS an ineffective system for filled an order for 50,000 du, bringing subsequent site visit, during which its
disclosing suspicious orders. 21 CFR the total of Englewood’s filled orders to inspector observed cars with both
1301.74(b). 113,000 du on a rolling 30-day basis. Kentucky and Tennessee license plates
Thereafter, on June 28, 2010, Respondent did not contact the in the parking lot and documented that
Respondent, which had filled an order pharmacy and obtain an explanation for there was ‘‘suspicious activity outside of
for 50,000 du of oxycodone 30 three the order. Instead, Ms. Seiple released the pharmacy.’’ Yet Englewood had
days earlier, edited an order from 40,000 the order ‘‘with reservation’’—‘‘pending repeatedly presented numerous other
du (400 bottles) to 13,000 (du). While updated UR.’’ Notably, Respondent had suspicious circumstances during the
the SOMS notes indicate that the order not obtained a new UR in ten months course of Respondent’s dealings with it.
was edited down to keep Englewood at (even though Respondent’s policy As for Ms. Seiple’s explanations as to
its CSL, there is no evidence that required it to obtain a new UR every why Respondent did not report any of
Respondent contacted the pharmacy time an order was held by the SOMS) Englewood’s orders as suspicious, Ms.
and obtained an explanation for the and it had been seven months since its Seiple failed to address why
order. It did not obtain a new UR, even inspector had recommended that it Respondent did not verify the status of
though the last UR was then nine obtain a new UR. The order was not the PIC’s license. While Ms. Seiple
months old. Nor did it report the order reported as suspicious. I hold that the asserted that Respondent was aware of
as suspicious. I hold that it was. order was suspicious. the volume of oxycodone and other
So too, only two days later, Respondent finally obtained a UR (for controlled substances being dispensed
Englewood placed another order, this July 2010) the day after it filled the and the percentage of controlled to non-
being for 9,600 du of oxycodone, which order. The UR showed that Englewood controlled drugs, her claim that these
Respondent deleted. While Respondent had dispensed more than 204,000 du of were accounted for by the pharmacy’s
attempted to contact the pharmacy’s oxycodone 30 during the month. The ‘business model’’ of servicing patients
PIC, it was unable to get a hold of him dispensings of oxycodone 30 alone from two large hospitals, a number of
and it failed to obtain an explanation for comprised more than 39 percent of the
physician’s offices and ‘‘several nearby
the order. It also failed to report the pharmacy’s total dispensings, and the
pain clinics’’ is unpersuasive. As
order as suspicious. I hold that it was. July 2010 dispensings of oxycodone 30

On July 13, Respondent filled an showed an increase of more than 80,000 183 The next day, Respondent placed additional
order for 50,000 du of oxycodone, du from the prior UR. The UR also orders for 1,200 oxycodone 20 and 600 du of
bringing the rolling 30-day total of filled showed that with the exception of oxycodone 10, bringing Englewood’s rolling 30-day
orders to 113,000 du, nearly double the carisoprodol, the top ten drugs total to 64,800 du and over the CSL. Respondent
filled the orders, notwithstanding that it failed to
CSL of 63,000. While Ms. Seiple dispensed by volume included six obtain an explanation for the orders and did not
documented that the PIC had stated that oxycodone products, methadone, and report them as suspicious, noting that this was the
he was no longer ordering his allotment two alprazolam products. Moreover, 18 ‘‘first time purchase [sic] on Oxy since 2009.’’
previously explained, hospitals have explanation for the orders, and it above the controlled to non-controlled
their own pharmacies, and in any event, obtained only four URs during the dispensing ratio of a typical retail
Respondent produced no evidence to course of its relationship with pharmacy as discussed in Southwood.
support the conclusion that a Englewood, as Ms. Seiple conceded in As part of the review, City View
pharmacy’s mere proximity to a hospital her declaration. Notably, during the provided a UR for the month of
would result in controlled substances period from April 1, 2009 through February 2008. Notably, the UR showed
being dispensed at a level more than Respondent’s termination of Englewood that oxycodone 30 alone accounted for
three times (by ratio) than that of a in October 2010, it obtained a new UR more than 24 percent of its total
typical retail pharmacy. So too, even if only twice: Once in October 2009 (for dispensings and oxycodone products
there were a number of physician’s Sept.), more than one year after it had alone accounted for more than 35
offices near the pharmacy, this does not obtained the previous UR, and again in percent. Of note, during a site visit by
explain why controlled substances August 2010, ten months later. its consultant done three months later,
would be dispensed at a ratio more than Respondent also disregarded its City View reported that all controlled
three times that of a typical retail inspector’s recommendation to get a substances comprised 35 to 40 percent
pharmacy. new UR following the January 2010 site of the prescriptions it filled and that it
To be sure, Ms. Seiple also contended visit. had purchased drugs from five different
that Englewood ‘‘filled prescriptions for Ms. Seiple’s explanation for why it distributors during the previous 24
patients from several nearby pain clinics did not get a UR notwithstanding the months.
and identified the physicians,’’ and that inspector’s recommendation was that During the site visit, City View also
‘‘[t]his accounted for the volume of pain Respondent’s policies and procedures reported that it filled prescriptions for
medications and other controlled did ‘‘not specify any particular pain management physicians,
substances, including oxycodone, being percentage of controlled drugs to non- identifying six such physicians by name
dispensed relative to other drugs.’’ Yet controlled drugs that the Company and providing their DEA numbers. Yet
two of the doctors were located in considers ‘high’ or ‘a little high.’’ While there is no evidence that Respondent
Sarasota, a distance of approximately 47 that may be, Respondent’s policies and verified the credentials of these
miles from Port Charlotte, which is procedures did require that a new UR be physicians.
hardly ‘‘nearby,’’ and which begs the obtained whenever an order was held Shortly after the site visit, Respondent
question as to why the pharmacy’s for review by the SOMS, and as found
approved City View to purchase 25,000
patients were travelling this distance to above, the SOMS held numerous orders
du of oxycodone per month while at the
get their prescriptions. And while filling after October 2009, and this continued
same time rejecting its request to
prescriptions written by doctors through the following year. However,
purchase alprazolam because it was
working at pain clinics may well have Ms. Seiple offered no explanation for
‘‘too new’’ a customer. Unexplained is
accounted for the high volume of why Respondent failed to comply with
why City View was also not too new to
controlled substances being dispensed its Policy and Procedures applicable to
purchase oxycodone.
by Englewood, it says nothing about the the review of held orders.
legitimacy of those prescriptions. Moreover, the controlled substance Notwithstanding that City View’s
Respondent did not, however, conduct percentage (40) reported by the oxycodone purchasing limit was set at
any inquiry into whether these inspector was double the percentage 25,000 du, in both June and July 2009,
physicians even held licenses, let alone discussed at the August 2009 Respondent filled orders by the
whether they had any training or board compliance review, as well as double pharmacy totaling more than 31,000 du.
certification in pain management or the figure noted by the Agency in Respondent did not document that it
other related specialties. Southwood. Unexplained by Ms. Seiple obtained any explanation for why it
Moreover, in the initial site visit is what level of controlled substance allowed City View to exceed the
report, Respondent’s consultant dispensing was required to induce her purchasing limit. Moreover, Respondent
specifically noted that Englewood’s PIC to follow the inspector’s had not obtained a new UR since the
‘‘appears to be doing a larger narcotics recommendation. I therefore find Ms. March 2008 UR, more than one year
business then he admits to.’’ Ms. Seiple Seiple’s explanation for why it failed to earlier.
totally failed to address what action, if obtain a new UR unpersuasive. And I After Respondent filled an order (Aug.
any, she took in response to this further find that none of the reasons 3, 2009) for 20,000 du of oxycodone 30
observation as well as the other offered by Ms. Seiple for failing to and 2,400 du of oxycodone 15, Ms.
instances in which Englewood’s PIC report Englewood’s orders as suspicious Seiple made an entry in the Ship to
represented that the percentage of its excuse Respondent’s failure to do so. Memos stating ‘‘8/3/09 please keep on
dispensings comprised by both schedule hold until UR is received per file.’’ GX
City View Pharmacy 19, at 111. Yet on August 25, one week
II and all controlled substances were
substantially lower than what the URs More than one year before April 1, after Respondent had represented to
showed. This was so even though 2009, Respondent had acquired DEA that when an order was held by the
Englewood’s URs showed the total substantial information which created a SOMS, it would contact the pharmacy
number of prescriptions for each suspicion as to the legitimacy of City and obtain an explanation for the order
schedule of controlled substance as well View’s dispensing practices. More (which it would purportedly then
as for non-controlled prescriptions specifically, in March 2008, City View independently verify) as well as a new
drugs. requested an increase in the quantity of UR, Respondent filled an order for 7,600
So too, putting aside that the SOMS solid dose oxycodone it could purchase du (which placed it at 33,000 du on a
was not even operational until August to 20,000 du per month. In reviewing rolling 30-day basis), notwithstanding
2009, Ms. Seiple did not claim that for City View’s request, Respondent that it did not contact the pharmacy and
every order held by the SOMS, documented that 60 percent of the obtain an explanation for the order and
Respondent obtained an explanation for prescriptions filled by the pharmacy still had not obtained a new UR.
the order, let alone that it independently were for controlled substances and 40 Instead, it released the order on the
verified the explanation, and a new UR. percent were for schedule II drugs. ground that it was at the pharmacy’s
Indeed, Respondent rarely obtained an These figures placed City View well ‘‘oxy limit for the month.’’
Indeed, Respondent did not obtain a held by the SOMS. GX 19, at 119. Respondent had obtained regarding City
new UR until October 5, even though Respondent did not, however, report the View’s dispensing practices and
City View submitted orders on both order as suspicious. For the same Respondent’s failure to investigate the
September 1 and 14, 2009, which placed reason, I also hold that the orders for orders.
it over its CSL (according to the SOMS 10,000 du which Respondent filled on On February 17, Respondent
notes) on a rolling 30-day basis. October 12 and 20 were suspicious and conducted a site visit, during which its
Respondent did not contact City View should have been reported.184 inspector was told that schedule II drugs
and obtain an explanation for either On October 29, City View placed a comprised 15 percent and all controlled
order. Instead, it released the September further order for oxycodone 30, which substances comprised 30 percent of the
1 order, the explanation being that the placed its orders over its CSL on a prescriptions dispensed by City View.
order placed City View ‘‘under current rolling 30-day basis. While Respondent The inspector did not, however, note
limit,’’ and it released the September 14 contacted the PIC and told him that the that City View was servicing any pain
order, the explanation being that the order was being deleted, it did not clinics. And while he recommended
order placed it ‘‘at their [sic] current obtain an explanation for the order and that a new UR be obtained and
limit.’’ Neither order was reported as it failed to report the order as compared with the dispensing ratio
suspicious, even though they had suspicious, which it was based on the reported at the site visit,185 Respondent
triggered the SOMS review because they information provided by the recent UR did not obtain a new UR until April 26,
were of unusual size. However, I alone. 2010, more than two months later.
conclude that they were suspicious. Thereafter, the evidence shows that The evidence shows that on February
Still later in the month, City View City View submitted orders for 10,000 18, as well March 3, 12, 18, and 24,
placed an order for 10,000 du, which du on November 2, 6, and 16, as well 2010, City View placed orders for
Respondent deleted, noting that its limit as December 1, 2009, each of which 10,000 du of oxycodone 30 which were
was 30,000 du and that it had ‘‘already placed its oxycodone orders above the held by the SOMS, typically because the
received 37,600 within 30 days.’’ CSL (whether it was set at 30,000 du or orders placed the pharmacy over its CSL
Moreover, while Ms. Seiple contacted 22,500 du) on a rolling 30-day basis, and on a rolling 30-day basis and typically
the pharmacy the same date, the in some cases at 40,000 du. While the by thousands of dosage units.
pharmacist did not provide the November 16 order was edited to 2,500 Invariably, the orders were filled,
information she sought and hung up on du, Respondent failed to obtain an notwithstanding that Respondent failed
her. While Respondent went so far as to explanation for the orders from the to contact the pharmacy and obtain an
place City View on compliance hold, it pharmacy and a new UR. It also failed explanation for the order, with the
did not report the order as suspicious. to report the orders as suspicious. I hold reason given being either that the order
I conclude that the order was that the orders were suspicious based on was under the CSL (because Respondent
suspicious. both the information Respondent had counted the orders on a calendar-month
On October 1, City View placed an obtained which raised a strong basis) or that the order was supported
order for 10,000 du of oxycodone 30. suspicion as to the legitimacy of City by the dispensing levels shown on the
While Respondent deleted the order and View’s dispensings practices, and UR, which had not been obtained since
left a message for the pharmacist that it Respondent’s failure to investigate why early October. Respondent did not
would not ship without a new UR, it did City View was placing orders which the report any of the orders as suspicious.
not report the order as suspicious. SOMS had flagged for being of unusual Based on Respondent’s failure to
On October 5, Respondent finally size. investigate the orders and the
obtained a new UR, more than 17 Through the rest of December 2009 information it had obtained regarding
months after it had obtained the and January 2010, City View’s the pharmacy’s dispensing levels, I hold
previous UR. The UR showed that oxycodone orders did not place it over that the orders were suspicious.
during the month of September 2009, the CSL (whether it was set at 30,000 or Moreover, while a March 24, 2010
City View had dispensed 47,472 du of 22,500 du). However, on February 1 and SOMS note states that the CSL was
oxycodone 30. City View’s dispensings 8, Respondent filled orders for 10,000 22,500 du, on March 27 (a Saturday),
of oxycodone 30 alone comprised 41 du on each date, thus placing City City View placed two orders totaling
percent of its dispensings of all View’s orders at 32,500 du on a rolling 20,000 du, resulting in its rolling 30-day
prescription products. With the 30-day basis and over the CSL. orders being 61,200 du, nearly three
exception of carisoprodol, the top ten Respondent approved both orders, times the CSL listed in the note. While
drugs dispensed by quantity were documenting the reason as being that the evidence shows that Respondent
comprised of three oxycodone products the orders were under the CSL, when contacted the pharmacist and was told
(30 mg, 15 mg, and 10/325 mg), four they clearly were not. Respondent did that he placed the second order to be
different manufacturers’ alprazolam 2 not contact the pharmacy on either released on April 1, there is no evidence
mg products, one manufacturer’s occasion and obtain an explanation for that Respondent questioned him as to
alprazolam 1 mg product, and a the order and it did not obtain a new why City View’s orders during March
combination hydrocodone 10/500 mg UR. Nor did it report the orders as had increased by 70 percent from the
product. All of these are highly abused suspicious even though the orders were previous month. Instead, it approved
drugs. The UR thus created a strong flagged by the SOMS for being of the first order on the ground that the
suspicion that City View was not unusual size. I hold that the orders were ‘‘UR supports release-places CSL @
engaged in legitimate dispensing suspicious based on the information 51,200 for current period,’’ even though
practices. it had not obtained a new UR in more

Notwithstanding the information 184 The SOMS notes show that multiple orders
provided by the UR, on October 5, 2009, were placed on October 12. GX 19, at 119. However, 185 While on the Pharmacy Evaluation form, the
Respondent filled an order for 10,000 du only one of the entries lists the name of a reviewer questions which asked for the percentage of
of oxycodone 30. Based on the and a reason for why the order was shipped and controlled drugs and the percentage of schedule II
the note does not state what drug was ordered. As drugs, followed the questions: ‘‘What is the average
information provided by the UR, I hold for the October 20 order, the SOMS notes do not number of prescriptions filled per day?’’ the Site
that the order was suspicious, list a reviewer and a reason, thus suggesting that the Visit Recommendation form simply states:
notwithstanding that the order was not order was not held for review. ‘‘Control/Non-control ratio of 30%.’’
than five months. Nor did it report the properly investigated. Nor were any of this order placed City View at more than
order as suspicious. Here again, I hold the orders reported as suspicious. These 8,000 du above the new CSL, the
that the order was suspicious for the include orders on May 10 and 18 which explanation provided in the SOMS
reasons stated above. Moreover, this was placed City View’s orders at 65,000 du, merely states: ‘‘rwr order sitevisit [sic]
another example of the CSL having been thus exceeding the 51,200 du CSL set by and ur on fiel’’ [sic]. Here again, I
increased based on Respondent’s having the compliance committee, both of conclude that Respondent failed to
filled orders even though it failed to which were released, with the reasons obtain an explanation for the order.
properly review those orders. given that the orders were either within Based on both the information provided
As found above, on seven occasions or under the CSL. by the UR, and the fact that the order
during April, Respondent filled orders While on May 18, 2010, Respondent was placed on hold because it was of
by City View which placed its rolling conducted a due diligence survey by unusual size and Respondent failed to
30-day total at between 61,200 and telephone, during which City View properly investigate the order, I
64,000 du (depending on the date), again represented that its dispensing conclude that the order was suspicious.
when its CSL was 51,200. With the ratio was 30 percent controlled to 70 However, the order was not reported.
exception of the April 26 (the last April) percent non-controlled, there is no Later, on July 28, Respondent edited
order, when it finally obtained a new evidence that Respondent compared an oxycodone order to meet the CSL.
UR, Respondent did not even contact this statement with the recent UR as its Here again, there is no evidence that
City View, let alone obtain an inspector had previously Respondent obtained an explanation for
explanation for the orders. And even recommended.186 Nor is there any the order (and a new UR) and it failed
with respect to the April 26 order, there evidence that it compared the UR with to report the order. For the same reasons
is no evidence that Respondent obtained the information DEA had previously as stated above, I hold that the order
an explanation for the order. published and provided during the was suspicious but was not reported.
Here again, Respondent’s records August 2009 briefing as to the On September 28, Respondent filled
show that the orders were approved, the dispensing ratio. an order for 5,000 du of oxycodone 30
typical reason being that the UR (from Although City View also stated that it and 1,600 du of oxycodone 15, bringing
seven months earlier) supported the was servicing two small nursing homes the total of its filled orders to 34,700 on
order, although in one instance (April and was near a medical center, a rolling 30-day basis and exceeding the
1), the reason given was that the order Respondent did not even obtain the CSL of 28,700 du. Likewise, on five
was ‘‘within csl for period,’’ GX 19, at names of the homes, let alone inquire as different dates in October, Respondent
114, and in the instance of the April 5 to how many residents they had and the filled orders which brought City View’s
order, there is no evidence that the types and quantities of various rolling 30-day total to between 34,900
order was even held for review. Id. controlled substance prescriptions the and 35,900 du, again exceeding the CSL
As for the UR, which it finally pharmacy claimed it was filling for their which remained at 28,700. GX 19, at 117
obtained on April 26, it showed that (SOMS note entry for 10/26/10).
residents. In short, these superficial
during the period of March 1–30, 2010, With respect to each of these orders,
explanations do nothing to dispel the
City View had dispensed 93,943 du of Respondent failed to obtain an
strong suspicion created by the March
oxycodone 30, an amount which was explanation from the pharmacy and a
UR.
nearly double what it had dispensed new UR. Here again, the orders were
On June 28, 2010, Respondent
during September 2009. Indeed, City typically filled with Respondent
performed another site visit at City
View’s dispensings of oxycodone 30 documenting the reason as the orders
View. While City View’s pharmacist
alone now comprised more than 52.5 were under the CSL, even though they
reported a dispensing ratio consistent
percent of its total dispensings. were not. As explained previously, I
with what he had previously told
Moreover, the UR showed that City hold that the orders were suspicious
Respondent, I hold that this does not
View’s dispensings of alprazolam 2 mg, and should have been reported but were
dispel the strong suspicion created by
another drug highly sought after by drug not.
the amounts of oxycodone 30 and Finally, in November 2010,
abusers for use as a part of a drug
alprazolam 2 being dispensed by the Respondent filled oxycodone orders on
cocktail with narcotics such as
pharmacy. Nor do I find the inspector’s four separate dates, each of which
oxycodone, totaled 19,738 du, more
notations that City View was two blocks placed City View’s orders over its CSL
than double the amount (9,722) it
from a hospital and that there were pain on a rolling 30-day basis. On November
dispensed during September 2009.
Aside from the fact that the April 26 clinics in the area sufficient to dispel 2 and 9, City View’s orders totaled
order placed City View’s orders at the strong suspicion created by the UR 36,300 du, and on November 18, its
64,000 du on a rolling 30-day basis and that the pharmacy was engaged in orders totaled 37,000 du. For both the
nearly 13,000 du above the CSL and was illegitimate dispensing practices. November 2 and 18 orders, Ms. Seiple
not properly investigated, I find that the On July 7, 2010, Respondent reviewed noted only ‘‘rwr’’ as the reason for
March 2010 UR alone created a strong the site visit and lowered City View’s releasing them. As for the November 9
suspicion that City View was engaging CSL to 28,700 du; it also placed it on order, Ms. Seiple noted that the order
in illegitimate dispensing practices and compliance hold pending the receipt of was ‘‘being released with reservation’’
rendered the April 26 order suspicious. an updated UR. However, Respondent and that the oxycodone was ‘‘within
I further find that Respondent failed to did not obtain a new UR until buying pattern’’ and ‘‘under [the] CSL.’’
report the order as suspicious. December. Yet on July 13, it removed Here again, I conclude that Respondent
the compliance hold. That same day, it
Although this UR alone establishes failed to obtain an explanation from the

that all of City View’s subsequent orders filled an order for 10,000 du of pharmacy for each of the orders and a
through the termination of the oxycodone 30, bringing City View’s new UR. And as explained previously,
account—nearly eight months later— rolling 30-day total to 37,000 du. While I hold that the orders were suspicious
were suspicious, the evidence 186 Of note, this question did not refer to the
and should have been reported but were
establishes that City View continued to percentage of prescriptions. Rather, the question not.
place oxycodone orders which were simply stated: ‘‘What is your Daily ratio of On December 2, Respondent finally
held by the SOMS and were not controlled to non-controls?’’ GX 19, at 38. obtained another UR, eight months after
it had obtained the previous UR. with 20 to 30 beds; Respondent also Medical Plaza Pharmacy
However, the UR was incomplete. obtained no information as to how many On March 24, 2009, Respondent
Nonetheless, on December 6, of the nursing homes residents were conducted a due diligence survey for
Respondent filled orders for 8,000 du of being prescribed oxycodone 30. Medical Plaza’s request to purchase
oxycodone 30 and 1,000 du of Although Ms. Seiple also asserted that controlled substances. During the
oxycodone 15, before placing City View City View was located within two survey, the PIC reported that 35 to 40
on compliance hold three days later. blocks of two hospitals, Respondent percent of the prescriptions filled by the
While it is unclear whether these orders produced no evidence as to why this pharmacy were for schedule II
were held by the SOMS, I hold that the justified the pharmacy’s dispensing controlled substances but that he was
orders were suspicious based on the levels of oxycodone and other highly unsure of the percentage of dispensings
information provided by the previous abused drugs relative to non-controlled comprised by all controlled substances.
UR. However, Respondent failed to drugs. He also represented that 70 to 80
report the orders. percent of the prescriptions he filled
On or about December 15, 2010, City To be sure, City View also reported
that it filled prescriptions for patients were paid for by insurance.
View placed a further order for Thereafter, Respondent approved
controlled substances which, based on from several pain clinics. While this
undoubtedly accounted for both the Medical Plaza to purchase controlled
the various notes made by Ms. Seiple, substances, and while the date of this
was likely for oxycodone. Respondent large volume of pain medications and
the high percentage of oxycodone decision is unclear, the evidence shows
placed the order on hold, with Ms. that Respondent filled the pharmacy’s
Seiple documenting that she had called dispensed by City View, this does not
establish that the dispensings were orders for oxycodone 30 as early as
the PIC and her ‘‘concerns regarding # April 10, 2009. Notably, Respondent
of doses dispensed as opposed to legitimate. Indeed, notwithstanding that
approved Medical Plaza without having
noncontrols’’ and how the pharmacy Respondent’s CEO had earlier decided
performed a site visit or having obtained
made a profit (apparently because to cut off sales to pain physicians in
a UR.
insurance did not reimburse at a high Florida who were engaged in direct On June 18, 2009, Respondent finally
enough rate given the cost of the drugs). dispensing, it conducted no further performed a site visit. As found above,
RX 2D, at 2. The following day, Ms. investigation into the qualifications of prior to the site visit, Respondent had
Seiple noted that she had spoken to City the physicians that were identified by filled orders for 14,800 du of oxycodone
View ‘‘on phone multiple times the pharmacy as writing the oxycodone 30. During the site visit, Respondent’s
regarding ratio of controls & prescriptions. It did not even verify if inspector noted that the pharmacy did
noncontrols,’’ as well as ‘‘in regards to they were licensed by the State, let not fill prescriptions for physicians who
ratio cash vs. insurance,’’ and that the alone whether they had any training or were primarily engaged in pain
pharmacy was ‘‘placed in noncontrolled board certification in pain management management. Yet the inspector also
status due to customer indicating cash or another related specialty. Nor did it noted that schedule II drugs comprised
in OXY.’’ Id. While Respondent ask the pharmacy as to the nature of the 20 percent and all controlled substances
apparently deleted the December 15 prescriptions that these physicians were comprised 60 percent of the pharmacy’s
order, it did not report the order as writing and whether they included such prescriptions, this being the second time
suspicious. I hold that the order was cocktails as oxycodone and alprazolam. that Respondent had received
suspicious. Moreover, putting aside Ms. Seiple’s information that Medical Plaza’s
Significantly, Respondent had dispensing ratio of controlled to non-
misleading statement that after City
information that the ratio of controlled controlled drugs was suspicious. He
View’s account was approved, the
to non-controlled drugs being dispensed also noted that 25 percent of the
SOMS held any order that met the
by City View was suspiciously high well prescriptions were paid for with cash.
suspicious order criteria and that these
before April 1, 2009, and each of the Nonetheless, Respondent did not
orders were released only after review,
URs it obtained thereafter corroborated obtain a UR until August 11, after
the evidence shows that while
this. This information alone was enough Medical Plaza sought an increase in the
numerous orders were held, Respondent
to establish a strong suspicion as to the amount of controlled substances it
rarely, if ever, contacted the pharmacy
legitimacy of City View’s dispensing could purchase, apparently after orders
and obtained an explanation for the
practices.187 for 5,000 oxycodone 15 and 3,600
As for Ms. Seiple’s declaration, none order, which it then independently
oxycodone 10/325 were held by the
of the reasons she offered dispelled the verified. Also, Ms. Seiple did not
SOMS. Prior to this date, Respondent
strong suspicion created by the address why Respondent failed to
had filled orders for 19,800 du of 30 mg
information Respondent had obtained. obtain a new UR whenever an order was
tablets.188 Given the acknowledgement
While Ms. Seiple asserted that City held, nor did she explain why
of Respondent’s CEO and former Vice-
View’s business model involved Respondent ignored the information
President that they were aware of the
marketing to nursing homes, hospice which showed that City View’s
oxycodone abuse crisis ongoing in
programs, and in-patient medical dispensings of oxycodone 30 had nearly
Florida during this time period, as well
facilities, at the time of 2008 site visit, doubled between September 2009 and
the pharmacy did not identify any March 2010. And finally, while Ms. 188 It is noted that under Respondent’s Policies
actual customer and nearly two years Seiple asserted that Respondent and Procedures, it did not bind itself to obtaining
later, the pharmacy reported that it terminated City View after it developed a UR prior to selling controlled substances to a new
concerns over the pharmacy’s customer. See RX 78, at 30–31 (Policy 6.1).
serviced only two small nursing homes Moreover, while its Policy mandates the
dispensing volumes and ratio of performance of additional due diligence in various
187 Given that the record does not contain controlled to non-controlled drugs, the circumstances including where there are
evidence as to how much Respondent charged City same concerns were present well before ‘‘[i]ndications that the customer is or may be
View for the drugs and how much City View was April 1, 2009. I thus conclude that none diverting controlled drugs,’’ even then its Policy
paid by insurers, I do not address whether the does not require that a UR be obtained. Id. at 30–
concern as to how City View could make a profit
of Ms. Seiple’s explanations refute the 31 (‘‘Additional due diligence may include any or
on its oxycodone dispensings was present prior to conclusion that the various orders were all of the following steps, as determined by a
December 2010. suspicious. Compliance Manager: i. Drug Utilization Records.’’).
as the information Medical Plaza the blacked-out data provided an compensation. Respondent’s
provided the pharmacy during the additional basis of suspicion as to the representative also noted that Medical
March 2009 survey, which included that legitimacy of Medical Plaza’s dispensing Plaza did not do any institutional or
schedule II drugs comprised 35 to 40 practices.189 closed-door business. Medical Plaza
percent of the prescriptions it As noted above, on August 11, further represented that its ‘‘ratio of
dispensed, I conclude that Respondent’s Medical Plaza placed orders for 5,000 controls [sic] to non controls [sic]’’ 190
failure to obtain a UR prior to approving du of oxycodone 15 and 3,600 du of was ‘‘40/60’’ and that ‘‘70 to 80’’ percent
Medical Plaza to purchase controlled Endocet 10, thus triggering holds by the of the prescriptions were paid by
substances was reckless and a breach of SOMS. While the notations on a form insurance.
its due diligence duty to conduct a (used to review requests to increase a There is, however, no evidence that
meaningful investigation of its customer’s controlled substances Respondent questioned why Medical
customer. Southwood, 72 FR at 36,498– purchasing limits) state that Medical Plaza was dispensing the quantities of
99. Plaza was ‘‘[i]n a medical building of 60 oxycodone as shown on the last UR
As for the UR, which covered the doctors, and next to a hospital,’’ (July 2009) or why the ratio of
month of July, it showed that Medical Respondent conducted no further controlled to non-controlled
Plaza had dispensed 61,130 du of inquiry into the practice specialties of dispensings reported by the pharmacy
oxycodone 30 and 27,122 du of these physicians and whether they was double the level discussed in the
oxycodone 15, out of the pharmacy’s would be prescribing such powerful August 2009 briefing.
total dispensings of 201,445 du. Thus, narcotics as oxycodone 30 in the course Moreover, there is no evidence that
oxycodone 30 alone accounted for more of their medical practices. Respondent’s employee obtained an
than 30 percent of Medical Plaza’s While this review prompted explanation for the orders and it also
dispensings and the combined Respondent to obtain a UR, the failed to obtain a new UR. However,
dispensings of oxycodone 30 and 15 following day Respondent filled the Respondent filled the orders, noting that
accounted for nearly 44 percent of its orders. Moreover, while Ms. Seiple they were shipped with reservation and
dispensings. Also, as found above, documented that Medical Plaza’s that an updated UR was requested.
Medical Plaza’s dispensings of all request to increase its purchasing limit Based on the various information
oxycodone products accounted for more was to be reviewed by the Compliance Respondent had obtained, which raised
than 51 percent of its total dispensings. Committee, Respondent filled the orders a strong suspicion as to the legitimacy
Thus, even ignoring that during the June before the review was even conducted. of Medical Plaza’s dispensing practices,
2009 site visit, Medical Plaza had For the reasons explained above, I hold as well as the fact that these orders were
changed its story (from what it told that the information Respondent held by the SOMS because they were of
during the March 2009 due diligence obtained provided multiple grounds to unusual size and yet Respondent failed
survey) regarding the level of its suspect that Medical Plaza was engaged to obtain an explanation for the orders
schedule II dispensings, the level of the in illegitimate dispensing practices and and a new UR, I conclude that the
pharmacy’s oxycodone dispensings was that the two orders were suspicious and orders were suspicious and should have
more than sufficient to create a strong should have been reported. Respondent been reported but were not.
suspicion as to the illegitimacy of the did not, however, report the orders. It On December 14, Medical Plaza
pharmacy’s dispensing practices. also failed to report various orders placed an order for 15,000 du of
The UR also provided other indicia placed by Medical Plaza in October, oxycodone, which placed it over CSL by
that Medical Plaza was engaged in including an order for 10,000 du of 9,000 du on a rolling 30-day basis. As
illegitimate dispensing activity. As found above, while Respondent
oxycodone 30.
found above, whether by looking at the On November 17, Medical Plaza obtained a new UR, it failed to obtain
number of prescriptions or the quantity placed orders for 7,000 du of oxycodone an explanation for the order. Moreover,
of dosage units, even a cursory review 30; 3,000 du of oxycodone 15; 1,200 du as explained previously, while
of the UR shows that controlled
of OxyContin 80; 1,200 du of Endocet Respondent did not fill the order, it was
substances were predominant among
10/325; and 200 du of Endocet 5/325. nonetheless required to report it,
the most highly dispensed drugs. Also,
As found above, these orders placed because it was suspicious based on both
as found above, Medical Plaza blacked
Medical Plaza’s oxycodone orders at the information Respondent had
out the financial data (which included
23,600 du on a rolling 30-day basis, obtained regarding Medical Plaza’s
its costs and profits) for nearly all of the
which was 5,000 du over its CSL. While dispensing practices and because the
controlled substances it dispensed. Yet
Respondent filled the orders for order was held by the SOMS based on
Medical Plaza had previously
OxyContin and Endocet, it held the its unusual size.
represented that 70 to 80 percent of the
orders for the 30 and 15 mg tablets. As for the UR, which covered the
prescriptions it filled were paid for by
The next day, Respondent conducted month of November, it showed that
insurance and Respondent’s former
a new due diligence survey. Medical Plaza’s dispensings of
Vice-President testified that ‘‘DEA
Respondent’s representative noted that oxycodone 30 had increased by 31,274
advised us to focus on whether a
customer had a high percentage of cash Medical Plaza’s ‘‘primary customer du (51 percent) from the level of the
for controlled substance prescriptions base’’ was as a community pharmacy previous UR to 92,404 du. The UR also
(as compared to third-party insurance and did not check the form’s boxes for showed that Medical Plaza’s
payments) [and] refused to accept either pain management or workers dispensings of oxycodone 15 had
increased by 16,929 (62.4 percent) from
insurance for the payment of controlled

substance prescriptions.’’ GX 51B, at 4
189 It also noted that the pharmacy had
the previous level to 44,051 du. Thus,
represented that it did not fill prescriptions for Medical Plaza’s dispensings of
¶ 12. In short, the blacked-out financial physicians who were primarily engaged in pain
data begged the question, which management. The pharmacy’s representation and oxycodone 30 amounted to 37.5 percent,
Respondent did not ask until seventeen the quantity of oxycodone and other narcotics it
was dispensing begged the questions of who were 190 Here again, the question did not refer to
months later (when it ignored the the physicians writing these prescriptions and what percentages of prescriptions but was simply
answer anyway), what was the were their practice specialties? There is, however, phrased as: ‘‘What is your daily ratio of controls
pharmacy hiding? I hold, however, that no evidence that Respondent asked these questions. [sic] to non controls [sic]?’’
its dispensings of the 15 mg tablets because they were of unusual size and pharmacy, it is unclear whether it ever
amounted to 17.9 percent, and its were not properly investigated, I obtained an explanation for the order.
dispensings of all oxycodone products conclude that the orders were What is clear is that it did not obtain a
amounted to 63 percent of its total suspicious and should have been new UR. And while the evidence shows
dispensings for all drugs (246,255 du). reported but were not. that Respondent reduced both orders to
Moreover, the UR again showed that As found above, in April, Medical 10,000 du, it did not report the orders
controlled substance were predominant Plaza continued to place orders, which, as suspicious. For the reasons stated
among the most dispensed drugs, even if the CSL was increased based on previously, I hold that the orders were
whether this was determined by the the March orders (notwithstanding that suspicious.
number of prescriptions or quantity of they were not properly reviewed), still Thereafter, Respondent did not fill
dosage units, with only carisoprodol exceeded the CSL on a rolling 30-day any oxycodone orders until June 28,
being among the top 15 drugs basis. Indeed, on April 15, Medical when it shipped 14,000 oxycodone 30 to
dispensed. And once again, the Plaza placed orders for 42,000 du of Medical Plaza. According to a SOMS
financial data for the most highly oxycodone 30 and 10,000 du of note, Respondent had reduced Medical
dispensed controlled substances were oxycodone 15, bringing its rolling 30- Plaza’s CSL to 14,000 du. RX 2F, at 4
blacked out. day total to 138,200 du, which was (MFR entry for June 28). Yet this order
In sum, the UR provided nothing to nearly 58,000 du over the CSL. As with had actually been for 20,000 du and
dispel the strong suspicion that Medical the previous orders (April 1 and 8), while Respondent called the pharmacy,
Plaza was engaged in illegitimate Respondent approved the orders but did there is no evidence as to what
dispensing activities. Indeed, as it not obtain an explanation for the orders explanation Medical Plaza provided and
showed that the pharmacy’s dispensing and a new UR. Instead, the justification it did not obtain a new UR. Moreover,
of oxycodone had increased by a large for filling the orders was that they were three days later on July 1, Medical Plaza
margin from the previous UR, it should within the CSL (April 1 order), the size placed another order for 20,000 du.
have reinforced this conclusion. Yet was ‘‘not excessive’’ (April 8 orders) and Thus, on a rolling 30-day basis, Medical
Respondent failed to report the that the ‘‘ur supports order’’ (April 15). Plaza had placed orders that were more
December 14 order as suspicious. None of these orders were reported as than double its CSL. Here again, while
Thereafter, Respondent did not ship suspicious. For the same reasons as Respondent edited the order to 14,000
any more oxycodone until February 24, stated above, I conclude that these du, it did not obtain an explanation for
2010, when Medical Plaza placed orders orders were suspicious. the order and a new UR. Moreover, it
for 3,600 du of 30 mg and 6,000 du of On April 23, Medical Plaza placed an did not report the orders.
15 mg. As Respondent had not obtained order for 15,000 du of oxycodone 30 and Notwithstanding that the June 28 and
any new information since the previous 15,000 du of oxycodone 15, thus July 1 orders were substantially less
UR, I find that these orders, which were bringing its rolling 30-day total to than Medical Plaza’s orders during
not reported, were suspicious. 140,700 du, more than 60,000 over the March and April, I nonetheless hold
In March 2010, Medical Plaza’s March shipments. Respondent that the orders were suspicious based on
oxycodone orders increased contacted the pharmacy, and was Respondent’s failure to properly
dramatically, with Respondent filling initially told that the order was placed investigate the orders (by obtaining an
orders placed on six dates totaling because of price, that the pharmacy’s explanation and a new UR), as well as
49,000 du of oxycodone 30 and 31,500 business was about the same, and that the information it had previously
du of oxycodone. Significantly, the the pharmacy was stocking up. While obtained which raised a strong
highest monthly total of orders filled Respondent asked for a new UR, suspicion as to the legitimacy of
during the previous six months was Respondent’s PIC replied that ‘‘nothing Medical Plaza’s dispensing practices.
12,600 du (November 2009), and with changed’’ and did not provide a new While on July 22, Ms. Seiple
each successive order from March 18 UR. (Indeed, Respondent did not obtain documented that she had requested an
through March 25, Medical Plaza’s a new UR until August 19). Moreover, updated UR, on July 30, Respondent
orders on a rolling 30-day basis in a subsequent phone call, Medical filled an order for 10,300 du of
exceeded the CSL by a factor which Plaza now claimed that it was oxycodone 30 even though it had not
increased from three to seven times. promoting its business. obtained a new UR. As found above, the
While each of these orders was held While Respondent deleted the orders, order again placed Medical Plaza over
by the SOMS because it exceeded the it failed to report them as suspicious. I its CSL by 10,000 du and yet no
CSL, with the possible exception of the hold that they were suspicious based on explanation was obtained from the
March 16 order (the notes for which the information Respondent had pharmacy.192 See GX 22, at 145 (SOMS
refer to problems with AR 191), in each obtained regarding Medical Plaza’s note of 8/17/2010 indicating that CSL
other instance there is no evidence that controlled substance dispensing levels. I was still 14,000). And only four days
Respondent contacted the pharmacy further hold that the orders were later, Respondent filled an order for
and obtained an explanation for the suspicious because they were clearly of 12,200 du of oxycodone 30, which again
order. Nor did it obtain a UR on unusual size and Medical Plaza’s resulted in Medical Plaza exceeding its
reviewing any of the March orders. pharmacist gave inconsistent CSL by more than 8,000 du. Yet
Indeed, the orders were typically explanations for the orders. according to the SOMS, the order was
On May 3, Medical Plaza placed
released with the explanation being that
orders for 30,000 oxycodone 30 and 192 The SOMS notes for this date indicate that this
the UR supported the order. Based on
20,000 oxycodone 15, thus bringing its order was not held for review. See GX 22, at 145.
both the information Respondent had According to a note in the Ship to Memos, the July
rolling 30-day total of orders to 115,700
obtained regarding Medical Plaza’s 1 order was returned. Id. at 141. However,
du, 40,000 du over its CSL according to the materials Respondent provided on
dispensing practices and the fact that
(notwithstanding that the SOMS would the SOMS, ‘‘[t]he rolling 30 day invoice history will
the orders were held by the SOMS include invoices and credit memos from the past 30
recalculate the CSL based on the filled
days.’’ RX 78, at 60. Thus, even if the July 1 order
191 While this may be an abbreviation for orders which were never properly was returned, it still should have been counted in
accounts receivable, the record does not establish reviewed). While Respondent determining whether Medical Plaza’s orders placed
this. documented having called the it over the CSL.
not even held for review. Id. released because it was within the the pharmacy could be making a profit
Respondent did not report either order ‘‘monthly buying pattern’’ and the order when insurance reimbursed at a lower
as suspicious. For the reasons as left 8,600 du which could be filled. rate ($32) than what Master’s charged
discussed above, I hold that the July 30 However, with the September 1 order, for oxycodone ($39) and then noting
and August 3 orders were suspicious. Medical Plaza’s orders came to 28,600 that the pharmacy would be ‘‘losing
On August 17, 2010, Medical Plaza du on a rolling 30-day basis. Moreover, money.’’
placed an order for 20,000 du of Respondent did not report the order as The same day, Respondent obtained a
oxycodone 30. While Respondent suspicious. new UR from Medical Plaza. While that
deleted the order, the order placed As for the September 7 order, the UR showed that Medical Plaza’s
Respondent at 42,500 du, more than SOMS note shows that it was ‘‘edited to dispensing of oxycodone had declined
three times (and more than 28,000 du meet CSL,’’ even though upon filling the from the previous UR, in contrast to the
over) its CSL as reflected in the SOMS order, Medical Plaza’s filled orders on a previous URs, the financial data for the
notes of the same date. While rolling 30-day basis came to 25,000 oxycodone and other highly abused
Respondent called the PIC and du.193 Here again, the order was not drugs were not blacked out. Tellingly,
requested a new UR, told him that the reported as suspicious. And on filling the data showed that far from ‘‘losing
order was being deleted but that he the October 1 order, Medical Plaza’s money’’ on its oxycodone 30
could re-order after the UR was filled orders totaled 25,400 du on a dispensings, Medical Plaza was making
reviewed, Respondent failed to obtain rolling 30-day basis. Yet the only entries profits that were approximately three
an explanation for the order and it did in the SOMS note which could times its acquisition costs. Yet even
not report the order as suspicious. For correspond with this order merely states then, Respondent failed to report
the reasons discussed above, I hold that ‘‘rwr,’’ an abbreviation for release with Medical Plaza’s order as suspicious. I
the order was suspicious. reservation. Respondent did not report hold that the order was suspicious.
On August 19, Medical Plaza finally the order as suspicious. Based on the Moreover, on February 1 (10,000 du)
provided a new UR (eight months after information Respondent had obtained and 2 (6,800 du), Respondent filled
the previous UR), which covered the which raised a strong suspicion as to the more orders by Medical Plaza.
month of July 2010. The UR showed legitimacy of Medical Plaza’s dispensing Remarkably, the most recent UR
that the pharmacy had dispensed practices, as well the evidence showing contains a handwritten note by Ms.
118,908 du of oxycodone 30 and 41,160 that each of these three orders exceeded Seiple which indicates that she
du of oxycocodone 15; its total the CSL and was held by the SOMS but reviewed the UR on ‘‘2–2–11,’’ and in
dispensings of all prescription products that Respondent failed to investigate the an MFR note of the same date, Ms.
were 285,977.85 du. Thus, oxycodone orders, I hold that the orders were Seiple wrote that ‘‘63K of 190K
30 amounted to 41.6 percent of its total suspicious. dispensing is 33% of sales is oxy 30 &
dispensings, its dispensing of Thereafter, Respondent filled Medical 15 mg.’’ Yet the same day, Respondent’s
oxycodone 15 comprised 14.4 percent, Plaza’s orders for oxycodone 30 each compliance committee released the
and its dispensings of all oxycodone month through March 4, 2011, shipping order for 6,800 du. Here again,
products were 63.58 percent. Also, as 16,800 du each month with the Respondent failed to report the orders as
with the previous UR, controlled exception of November (when it suspicious. I hold that both orders were
substances were predominant among shipped only half this amount). While suspicious.
the most highly dispensed drugs (the Finally, on March 2, Medical Plaza
the evidence supports a finding that
only exception in the top ten being placed an order for 16,800 du. While an
each of these orders was suspicious
carisoprodol) and once again, Medical MFR note of March 3 states that the
based on the information provided by
Plaza had blacked out the financial data account was placed on compliance hold
the URs alone, several of the orders pending the pharmacy providing a
for oxycodone 30 and 15, as well as
were held by the SOMS. Here again, physician’s list and the performance of
alprazolam 2. As with the previous URs,
however, the evidence shows that the a site visit, Respondent filled the order
the July 2010 UR raised a strong
orders were released without the next day. Respondent did not,
suspicion as to the legitimacy of
Respondent obtaining an explanation however, report the order as suspicious.
Medical Plaza’s dispensing practices
for the orders. None of the orders was I hold that it was. And I further hold
which Respondent ignored.
The same day, Medical Plaza place an reported as suspicious. that Respondent repeatedly violated 21
order for 20,000 du of oxycodone 30, More specifically, the December 1 CFR 1301.74(b) by failing to report
bringing its rolling 30-day total to orders brought Medical Plaza’s rolling suspicious orders.
42,500 du, again exceeding the CSL (as 30-day total to 25,200 du. Yet according As for Ms. Seiple’s assertions that
noted in the 8/17 SOMS note) by a to a note in the MFR, Medical Plaza’s Respondent did not report Medical
factor of three. Respondent edited the oxycodone CSL was still at 14,000 du. Plaza’s orders because the pharmacy
order to 6,400 du, thus bringing the total As for why the orders were released, the was located in a medical center with 60
filled orders to 28,900 du. Respondent SOMS notes merely include the physicians and was adjacent to a
did not, however, obtain an explanation abbreviation for release with medical center, and that this accounted
for the order. Nor did it report the order, reservation. for the large of volume of pain
which I hold was suspicious. In January, Medical Plaza ordered medication being dispensed and the
As found above, Respondent filled 20,000 du. Respondent edited the order percentage of oxycodone being
orders on September 1 (10,000 du) and to 16,800. MFR notes show that dispensed relative to other drugs,
Respondent contacted the pharmacy
7 (8,600 du), as well as October 1 Respondent’s inspector specifically

(16,800 du), each of which placed and was told that the pharmacy ‘‘use[s] noted that pharmacy did not fill
Medical Plaza over its CSL, even if the quite a bit of insurance on oxy,’’ prescriptions for physicians who were
CSL had been recalculated based on the prompting Ms. Seiple to question how primarily engaged in pain management.
July orders. Respondent did not obtain 193 As found above, whether the CSL was
So too, in a subsequent survey,
an explanation for any of these orders or recalculated based on the July orders (including the
Respondent’s representative did not
a new UR. According to the SOMS one that was returned) or based on the August document that Medical Plaza’s primary
notes, the September 1 order was orders, the September order still exceeded the CSL. customer based was comprised of either
workers compensation or pain clinics,’’ and maintained that it had a totaling 25,000 du of oxycodone 30; and
management patients. variety of policies in place to prevent in June, it filled orders totaling 65,000
As explained above, the mere diversion. Yet even in this period, du of oxycodone products (of which
presence of 60 doctors in the same Superior began to present various 55,000 du were for oxycodone 30) and
building, without any investigation into indicia that it was not all that it claimed which included a June 24 order for
their specialties and the drugs they to be. 30,000 du of 30 mg, as well as 5,000 du
would prescribe in the course of their Specifically, while Respondent of both 15 mg and 10/325 mg.
respective medical practices does not requested a complete UR showing its Respondent did not report any of these
remotely justify either the volume of dispensings of both controlled and non- orders as suspicious. Based on the
pain medications or the percentage of controlled drugs, Superior provided a information Respondent had previously
oxycodone being dispensed by Medical report showing only the top 100 drugs obtained, I hold that these orders were
Plaza relative to other drugs. Indeed, it dispensed. Moreover, during a site suspicious.
while a pharmacy’s presence in a visit conducted several weeks later, Moreover, six days before it filled the
building with a large number of doctor’s Respondent’s consultant found that the June 24 order, Respondent finally
offices might explain why a pharmacy pharmacy shared its waiting area with a obtained a second UR from Superior.
dispenses a larger volume of all clinic that specialized in pain Notably, with the exception of
prescription products than a pharmacy management and weight loss and that carisoprodol, each of the top twenty-five
not located in the building, unexplained ‘‘[m]any of their prescriptions originate drugs dispensed was a controlled
is why this would render the pharmacy within the clinic.’’ The consultant’s substance under the CSA and three of
more likely to dispense a much greater report also included two photographs the top four drugs were different
percentage of controlled substances, showing the signage on the pharmacy’s manufacturers’ oxycodone 30 products.
especially of oxycodone 30, a drug storefront. On top, the sign read: Also among the most dispensed drugs
highly sought after by drug abusers, ‘‘SUPERIOR PHARMACY • WALK IN were the stronger formulations of
than any other pharmacy. CLINIC’’; below that the sign read: ‘‘Pain alprazolam (1 and 2 mg) and diazepam
As for Ms. Seiple’s statement Management & Weight Loss.’’ (5 and 10 mg), as well as other narcotics
regarding the SOMS, even ignoring that Moreover, within days of the site including oxycodone 15 and
her statement misleadingly suggests that visit, Respondent visited Superior’s combination hydrocodone drugs. The
all of Medical Plaza’s orders post-April Web page. As found above, the Web UR further showed that Superior’s
1 were reviewed, the evidence shows page included blurbs promoting dispensings of oxycodone 30 alone
that there were numerous instances in Superior as both a pain management totaled more than 60,000 du, nearly 29
which orders were held by the SOMS clinic (‘‘Don’t live in pain. Trust the percent of its total dispensings, and
but were released without Respondent medical professionals at Superior Pain combined with its dispensings of
obtaining an explanation for the order, Clinic to help you enjoy life again!’’) oxycodone 15 and Endocet 10, these
which it independently verified, as well and weight loss clinic, as well as a three products alone accounted for more
as a new UR. Moreover, while Medical pharmacy. than 37 percent of its total dispensings.
Plaza represented that 70 to 80 percent As found above, Respondent’s owner/ Also, on June 23, Respondent
of the prescriptions it filled were paid CEO testified that in early 2009, he had conducted a due diligence assessment
for with insurance, Ms. Seiple entirely decided to cut off sales to Florida pain by phone during which the pharmacy
failed to address why she did not management physicians who were was asked about its primary customer
question Medical Plaza as to why the engaged in the direct dispensing of base and denied that it was comprised
financial data for its controlled controlled substances, in part because of of pain management or bariatric
substance dispensings were blacked out his putative concern over their patients. Yet during the site visit
on the URs. And she also failed to unethical marketing practices. Yet here conducted a year earlier, Respondent’s
address why Respondent continued was a pharmacy and pain clinic consultant had noted that ‘‘many of the
selling oxycodone to Medical Plaza even occupying the same space and prescriptions originate within the
after she questioned how the pharmacy Respondent’s compliance department clinic.’’ Moreover, during the
could be making a profit on oxycodone failed to investigate the relationship assessment, Superior apparently
given that insurance paid less than the between the two. This was all the more acknowledged that controlled
cost of the product and the UR she then remarkable given that during the due substances comprised 50 percent of its
obtained showed that Medical Plaza was diligence survey conducted by dispensings.
obviously making substantial profits. Respondent in June 2008, its employee Superior also provided the names of
had entered scribble in the answer blank two physicians (written as a Dr.
Temple Terrace Pharmacy D/B/A with regard to the question of whether Mercedes and Dr. Hubang) who were
Superior Pharmacy the pharmacy had ‘‘[r]elationships with working at the Superior Pain Clinic.
In June 2008, Respondent conducted specific doctors/clinics,’’ thus While Respondent obtained a printout
a due diligence survey in response to suggesting that there were no such from the Florida DOH’s license
Superior’s request for an increase in the relationships. Indeed, the evidence verification Web page, the printout was
amount of solid dose oxycodone it suggests that Respondent did not even for a Dr. Merced, whose address was
could purchase. Notably, the answers inquire as to the relationship between listed as being in North Carolina, and
provided by Superior were not the pharmacy and the pain clinic until not a Dr. Mercedes. Moreover, there is
indicative of illegitimate dispensing November 2009. no evidence that Respondent verified
practices as Superior represented that Thus, as of April 1, 2009, Respondent the licensure status of a Dr. Hubang, or
twenty (20) percent of the prescriptions had obtained substantial information of any of the doctors previously
it filled were for controlled substances, which raised a strong suspicion as to the identified by its consultant as being
and that 90 to 95 percent of the legitimacy of Superior’s dispensing pain management physicians whose
prescriptions were paid for by practices. As found above, in April prescriptions were being filled at
insurance. Superior also apparently 2009, Respondent filled various orders Superior. While several months later,
represented that it did not have totaling 28,800 du of oxycodone Respondent eventually determined that
‘‘relationships with specific doctors/ products; in May 2009, it filled orders the doctor’s name was actually Dr.
Mubang, there is no evidence that the CSA. Moreover, while notations in filling of the pharmacies’ oxycodone
Respondent verified the latter’s Ms. Seiple’s September 24 note orders.
licensure status.194 indicated that Superior had either been
Even putting aside the substantial Morrison’s
placed on non-controlled status or had
information Respondent had acquired its oxycodone limit reduced to 25,000 Prior to April 1, 2009, Respondent
regarding the suspicious nature of du, on September 30, Respondent filled had acquired substantial information
Superior’s dispensings, Superior’s June three orders totaling 30,000 du of that raised a strong suspicion as to the
orders were 40,000 du (and 2.6 times) oxycodone. Yet the orders were not legitimacy of Morrison’s dispensing
above its May orders and its purported even held by the SOMS for review and practice. As early as its initial due
25,000 du purchasing limit (as well as Respondent provided no explanation for diligence survey, Morrison’s had
36,000 du greater than its April orders). why the orders were shipped. I find, reported that 60 percent of the
The June orders were thus of unusual however, that the orders were prescriptions it filled were for
size, and therefore suspicious for this suspicious and that Respondent violated controlled substances and 35 percent of
reason as well. Yet the orders were not the suspicious order rule when it failed the prescriptions were for schedule II
reported to the Agency. to report the orders. drugs. Moreover, while the UR obtained
As for the oxycodone orders Superior Respondent continued to fill in the spring of 2008 showed that
placed in July (totaling 65,000 numerous orders placed by Superior for Morrison’s was dispensing an average of
oxycodone 30 and 65,200 total du of oxycodone (as well as other controlled 63,315 du of oxycodone 30 per month
oxycodone) and August (totaling 75,000 substances) through December 7, 2009. (which accounted for 38 percent of the
oxycodone 30), I hold that aside from Indeed, on November 30, Respondent dispensings), the next UR (which was
whether the orders were of unusual size, filled two orders for 20,000 du of obtained on January 30, 2009) showed
pattern or frequency, the circumstances oxycodone 30 and on December 2, it that the pharmacy’s monthly
surrounding the Superior’s operation filled an additional order for 10,000 du, dispensings had nearly doubled to
establishes that the orders were even though it had determined on 111,705 du.195 Yet there is no evidence
suspicious. The orders were not, November 19 that Superior’s pharmacist that Respondent found this to be
however, reported as suspicious. suspicious.
owned both the pharmacy and the pain
The next month, Respondent filled an In April 2009, Respondent filled
clinic.
order (September 14) for 30,000 du of Morrison’s orders for 171,700 du of
oxycodone 30 but did not report the Based on the circumstances presented
by Superior, I find that each of these oxycodone 30 as well as its orders for
order as suspicious. Moreover, as found 37,200 du of oxycodone 15 mg; in total,
above, on September 24, Superior orders was suspicious and that
Respondent violated 21 CFR 1301.74(b) Respondent shipped to Morrison’s
placed orders for another 30,000 nearly 218,000 du of oxycodone
oxycodone 30 and 5,000 Endocet 10. by failing to report the orders. As for
Ms. Seiple’s proffered explanations for products. There is no evidence that
While the latter order was filled, the Respondent questioned Morrison’s as to
former order triggered a compliance why Superior’s orders were not
reported, as explained in my factual why it was ordering 60,000 du more of
hold which was conducted by Ms.
findings, I reject her explanations and oxycodone 30 than its average monthly
Seiple. Of note, Ms. Seiple documented
find it especially noteworthy that she dispensing level and it did not report
that she had reviewed the file and noted
entirely failed to address why, in light the orders as suspicious. Based on the
that the pharmacy was located inside
of the information she had obtained as circumstances presented, I conclude
the clinic and that she had called the
early as June 2008, which showed, inter that the orders were suspicious and
pain clinic and been told that if she
alia, that the pharmacy and pain/weight should have been reported.
came in, there was a pharmacy inside
loss clinic were located in the same In May, Respondent obtained another
the clinic. Ms. Seiple then documented
space and that Superior marketed itself UR. While the UR covered the period of
that the orders for 30,000 oxycodone 30
as both a pharmacy and pain/weight January 1 through May 6, 2009, it
were being deleted ‘‘per Web site’’ and
the photographs. Yet even then, management clinic, Respondent showed that Morrison’s was dispensing
Respondent failed to report the orders as continued to distribute oxycodone and an average of 81,726 du per month of
suspicious. And of further note, other controlled substances to it oxycodone 30. Yet during the month of
Respondent had known for fourteen thereafter. Indeed, Ms. Seiple’s May, Respondent shipped 141,200 du of
months that the pharmacy and pain statement that the ‘‘weight-loss and pain oxycodone 30, 59,000 du more than the
clinic shared the same space and jointly management facility [were] located in pharmacy’s average monthly dispensing
marketed themselves as a sort of one- an adjacent office’’ is downright of the drug.
stop shop. misleading. Here again, there is no evidence that
As found above, Respondent did Ms. Seiple further asserted that the Respondent questioned Morrison’s as to
obtain a new UR for the previous volume and percentage of Superior’s why it was ordering this quantity and it
month. Notably, the UR showed that dispensings of controlled substances did not report the orders as suspicious.
Superior’s dispensings of oxycodone 30 and oxycodone were accounted for (in Moreover, this was the second month in
alone accounted for 33 percent of its part) because Superior was ‘‘filling a row in which Morrison’s had ordered
total dispensings, and 19 of the top 25 prescriptions for a juvenile in-patient substantially more oxycodone that what
drugs dispensed were controlled under facility.’’ However, Respondent it was dispensing on a monthly basis.
obtained no information as to the type Based on the circumstances presented, I
194 Ms. Seiple also asserted that ‘‘[b]ased on

of treatment being provided by the conclude that the orders were
[Respondent’s] extensive investigation, it facility, the number of patients it had, suspicious and should have been
determined that the orders it shipped to Superior reported.
were not suspicious.’’ RX 103, at 75. and whether its patients would even be
Notwithstanding that Superior was also operating a treated with drugs such as oxycodone
pain clinic, Respondent’s ‘‘extensive investigation’’ 195 As found above, the UR obtain in the spring
30. Indeed, this is just another example
apparently did not uncover that Dr. Mubang had of 2008 covered the period of January 1 to April 1,
been criminally charged by the State of Florida with
of Respondent’s willingness to accept 2008; the UR obtained on Jan. 30, 2009, covered the
trafficking in prescription drugs, even though a any superficial explanation which it period of November 1, 2008 through January 30,
Google Search would likely have revealed this. believed would justify its continued 2009.
The UR also showed that Morrison’s previous UR. The UR also showed that one of the criteria set forth in 21 CFR
was dispensing an average of 19,463 du Morrison’s dispensings of oxycodone 15 1301.74(b) (typically, because they were
per month of oxycodone 15. While in had more than tripled to 63,658 du. of unusual size), the evidence shows
June, Respondent filled orders totaling The next day, Morrison’s placed that Respondent rarely investigated any
only 81,600 du of oxycodone 30, it also orders for 8,400 du of oxycodone 30 and of the orders. Rather, the evidence
filled orders totaling 39,900 du of 1,200 du of oxycodone 15, as well as shows that those orders were frequently
oxycodone 15, more than double the Endocet and methadone. While released without contacting the
amount of its average monthly Respondent placed Morrison’s on pharmacy and obtaining an explanation
dispensings of this dosage. Here again, compliance hold and deleted the orders, for the order, let alone independently
there is no evidence that Respondent it did not report the orders as verifying that explanation. Indeed, those
questioned Morrison’s regarding the suspicious. As explained above, orders were frequently released with the
quantity of oxycodone 15 it was deleting or refusing to fill an order does justification being that the order was
ordering, and it did not report the orders not excuse a distributor from its supported by the UR, even though the
as suspicious. obligation to report a suspicious order. URs invariably reflected dispensing
In July, Respondent filled orders As with the other pharmacies, Ms. levels of oxycodone and other
totaling 141,300 du of oxycodone 30 Seiple offered the same set of controlled substances that were highly
and 48,000 du of oxycodone 15. unresponsive explanations as she did suspicious.
Notwithstanding that Morrison’s orders for the other pharmacies, even going so Moreover, Respondent represented to
for the 30 mg dosage were 61,000 du (76 far as to declare under oath that ‘‘after the Agency that the SOMS would
percent) larger and the orders for Morrison’s account was approved, [the] determine whether a pharmacy’s orders
oxycodone 15 were nearly 2.5 times SOMS system identified and held any were of unusual size by counting the
larger than its average monthly orders for controlled substances placed orders on a rolling 30-day basis. While
dispensings per the previous UR, by Morrison’s that deviated from its the evidence shows that in numerous
Respondent failed to report the orders typical volume pattern or frequency’’ instances, the SOMS held an order
for either dosage as suspicious. when the SOMS was not even because it resulted in the pharmacy’s
Moreover, this was the third month in operational during the months of April orders exceeding its CSL on a rolling 30-
the last four in which Morrison’s through July 2009. As explained day basis, many of the orders were
oxycodone 30 orders had exceeded its previously, I do not find persuasive her subsequently filled because Respondent
monthly dispensings by 60,000 du, and explanations as to why Respondent then counted the pharmacy’s orders on
yet Respondent did not report the orders failed to report the multiple suspicious a calendar-month basis. And again,
as suspicious. orders placed by Morrison’s. Respondent filled the orders without
As found above, on or about August obtaining an explanation from the
1, 2009, the SOMS became operational. Summary pharmacy. Whether the orders were
See RX 78, at 59. While Respondent The evidence shows that Respondent filled because they were supported by
would eventually terminate Morrison’s failed to report hundreds of suspicious the UR, or because Respondent counted
on or about August 18, the day after the orders placed by these pharmacies. With them on a calendar-month basis, this
DI identified it as a customer whose respect to each of the seven pharmacies, also frequently resulted in the CSL
oxycodone orders were of concern, prior to April 1, 2009, Respondent had being increased even though
during the first seventeen days of the obtained information which created a Respondent had entirely failed to
month, Respondent had filled orders strong suspicion that the pharmacies investigate whether there was a
totaling 101,600 du of oxycodone 30 were engaged in dispensing illegitimate legitimate basis for the increase in the
and 39,600 du of oxycodone 15. prescriptions, and while Respondent orders. This resulted in an even greater
Moreover, the SOMS notes establish obtained additional information from amount of oxycodone being shipped
that between August 5 and 14, multiple the pharmacies at various points without being held by the SOMS for
orders were held by the SOMS for throughout the course of its dealings review.
review. GX 23, at 151. Yet in each with them, this information So too, the evidence shows that in
instance the orders were released, with corroborated rather than dispelled the other instances, an order which placed
such reasons given as that the UR already existing suspicion.196 Indeed, in a pharmacy over its CSL was entirely
supported the order, the order was several cases, even after Ms. Seiple deleted. Respondent thus treated the
under the current size limit, or the order documented her concerns as to the order as if it had never existed rather
was ‘‘ok to ship per’’ Ms. Seiple. legitimacy of a pharmacy’s dispensing than report it as suspicious and the
Notably, in no instance did practices, those concerns were either SOMS did not include it in calculating
Respondent contact Morrison’s and ignored or discounted for months the rolling 30-day total. And in still
obtain an explanation for the order, and thereafter. other instances, Respondent edited an
it did not obtain a new UR until the Moreover, even after the SOMS order by reducing its size so that the
same day the DI identified Morrison’s as became operational and the pharmacies’ pharmacy’s orders did not place it over
a customer whose oxycodone orders orders were held because they exceeded its CSL. Here again, Respondent failed
were concerning. Nor did it report any to report these orders.
of these orders as suspicious even 196 It is acknowledged that Respondent inquired It is true—as the ALJ noted—that
though the purpose of the SOMS was to as to the pharmacies’ policies to prevent diversion. under 21 CFR 1301.71(b), ‘‘[s]ubstantial
identify orders of unusual size, pattern Certainly doing so is a necessary component of a compliance with the standards set forth
or frequency. distributor’s due diligence obligations. However, in [21 CFR 1301.72–.76] may be deemed
even assuming that Respondent’s inquiries were
As for the UR, it showed that during adequate, whether the pharmacies were actually
sufficient by the Administrator after
July 2009, Morrison’s dispensings of following their policies is a totally different matter. evaluation of the overall security system
oxycodone 30 had more than doubled to Given the evidence discussed above, I hold that and needs of the . . . registrant.’’ R.D.
196,069 du of oxycodone 30 (at an even assuming each of the pharmacies had adequate at 199–201. Nor do I dispute the ALJ’s
policies to prevent diversion, in no case did this
average prescription size of 195 du), an dispel the strong suspicion that each of the
conclusion that perfection is not the
increase of more than 114,000 du from pharmacies was engaged in illegitimate dispensing standard for assessing Respondent’s
the average monthly dispensings per the practices. compliance with 21 CFR 1301.74(b). Id.
at 201 (‘‘one minor oversight does not inconsistent with the public interest’’ analyzing the remedial efficacy of
render the entire system ineffective’’). and thus subject to suspension or sanctions’’).
Here, however, the evidence with revocation, a respondent must come As found above, Respondent
respect to the seven pharmacies forward with ‘‘ ‘ ‘‘sufficient mitigating stipulated that it ‘‘does not accept
establishes a wholesale failure on evidence’’ ’ ’’ to show why it can
responsibility for any alleged
Respondent’s part to comply with the continue to be entrusted with its
regulation, both as to the manner in wrongdoing in this matter’’ and that
registration. Medicine Shoppe-
which Respondent actually operated its Jonesborough, 73 FR 364, 387 (2008) ‘‘any evidence . . . of changes,
SOMS (including the manner in which (quoting Samuel S. Jackson, 72 FR modifications, or enhancements [it]
it followed Policy 6.2) and in its failure 23,848, 23,853 (2007) (quoting Leo R. made to its internal Policies and
to report hundreds of suspicious Miller, 53 FR 21,931, 21,932 (1988))). Procedures in the ordinary course of
oxycodone orders.197 As for the ‘‘Moreover, because ‘past performance is business,’’ whether of ‘‘its own accord’’
numerous suspicious order reports it the best predictor of future or ‘‘based on alleged guidance or
did submit, Respondent produced no performance,’ ALRA Labs, Inc. v. DEA, communications from [DEA] does not
evidence explaining the circumstances 54 F.3d 450, 452 (7th Cir.1995), [DEA] constitute evidence of remedial
which led it to file those reports, and as has repeatedly held that where a measures.’’ ALJ Ex. 8. Respondent’s
one of its former employees testified, registrant has committed acts failure to acknowledge its misconduct is
‘‘the customers who were easily inconsistent with the public interest, the reason alone to revoke its registration,
suspended or terminated from registrant must accept responsibility for especially given the evidence which
purchasing controlled substances from its actions and demonstrate that it will shows that Respondent’s failure to
[it] were not the big money accounts.’’ not engage in future misconduct.’’ report suspicious orders placed by the
GX 52, at 7. Medicine Shoppe, 73 FR at 387; see also seven pharmacies was both extensive
I thus conclude that Respondent has Jackson, 72 FR at 23,853; John H. and egregious. See Holiday CVS, 77 FR
not substantially complied with 21 CFR Kennedy, 71 FR 35,705, 35,709 (2006); at 62,323; see also MacKay v. DEA, 664
1301.74(b). I further conclude that the Prince George Daniels, 60 FR 62,884, F.3d 808, 820 (10th Cir. 2011); Chein v.
Government has proved that 62,887 (1995). See also Hoxie v. DEA,
DEA, 533 F.3d 828, 837 (D.C. Cir. 2007).
Respondent ‘‘has committed such acts 419 F.3d at 483 (‘‘admitting fault’’ is
as would render [its] registration . . . ‘‘properly consider[ed]’’ by DEA to be Indeed, the egregiousness of
inconsistent with the public an ‘‘important factor[ ]’’ in the public Respondent’s misconduct is exacerbated
interest.’’ 198 interest determination). by the acknowledgement of its senior
Nor are these the only factors DEA officials that they were well aware of the
Sanction considers in setting the appropriate oxycodone epidemic then ongoing in
Where, as here, the Government has sanction. See, e.g., Southwood the State of Florida. It also exacerbated
met its prima facie burden of showing Pharmaceuticals, Inc., 72 FR 36,487, by the evidence which strongly supports
that a registrant has committed acts 36,504 (2007); Joseph Gaudio, 74 FR the conclusion that with respect to the
which ‘‘render [its] registration . . . 10,083, 10,094 (2009). Obviously, the seven pharmacies, its Policies and
egregiousness and extent of a Procedures for detecting and reporting
197 Throughout this proceeding, Respondent has registrant’s misconduct are significant suspicious orders were rarely, if ever,
argued that because it is tertiary distributor, it lacks factors in determining the appropriate
the data to ‘‘reliably compar[e] either its oxycodone followed. And finally, I conclude that
sanction. Cf. Jacobo Dreszer, 76 FR
distribution[s] to other wholesalers’ distributions or revocation is further supported by the
the oxycodone volumes purchased by a particular 19,386, 19,387–88 (2011) (explaining
that a respondent can ‘‘argue that even Agency’s interest in deterring future
pharmacy to the volumes purchased by an average
Florida pharmacy.’’ RX 102, at 9–10; see also RX though the Government has made out a misconduct on the part of both
104, at 8 (testimony of Respondent’s owner that its prima facie case, his conduct was not so Respondent, which retains a second
‘‘business model tends to make its customers’ distributor’s DEA registration, and the
purchasing patterns more difficult to predict and egregious as to warrant revocation’’); see
more variable than they would be if [it] were a full- also Paul H. Volkman, 73 FR 30,630, community of registrants. See
line wholesaler’’). Unexplained by Respondent is 30,644 (2008); Gregory D. Owens, 74 FR Southwood, 71 FR at 36,503 (citing Butz
why it could not have obtained the information 36,751, 36,757 n.22 (2009). v. Glover Livestock Comm’n Co., Inc.,
through the URs it acquired from all of its
customers.
Also, the Agency has held repeatedly 411 U.S. 182, 187–88 (1973)).
In the December 27, 2007 letter, the Deputy that ‘‘ ‘[n]either Jackson, nor any other
agency decision, holds . . . that the Order
Assistant Administrator explained that ‘‘[t]he
determination of whether an order is suspicious Agency cannot consider the deterrent Pursuant to the authority vested in me
depends not only on the ordering patterns of the value of a sanction in deciding whether
particular customer, but also on the patterns of the by 21 U.S.C. 824(a)(4) and 823(b), as
registrant’s customer base.’’ GX 4, at 1. The SOMS,
a registration should be [suspended or] well as 28 CFR 0.100(b), I order that
however, did not compare a pharmacy’s orders with revoked,’ ’’ or whether an application
DEA Certificate of Registration
those of Respondent’s other customers, and thus should be denied. Gaudio, 74 FR at
does not appear to be a system that complies with RD0277409, issued to Masters
10,094 (quoting Southwood, 72 FR at
21 CFR 1301.74(b). Because the Government did not
36,504 (2007)); see also Robert Raymond Pharmaceuticals, Inc., be, and it hereby
challenge the adequacy of Respondent’s SOMS on is, revoked. I further order that any
this basis, I do not consider it. Reppy, 76 FR 61,154, 61,158 (2011);
198 As explained above, I hold that the ALJ’s pre- Michael S. Moore, 76 FR 45,867, 45,868 application of Masters Pharmaceuticals,
hearing order barring the Government from (2011). This is so, both with respect to Inc., to renew or modify this registration
asserting any evidence of Respondent’s failure to the respondent in a particular case and be, and it hereby is, denied. This Order
report suspicious orders between April 1, 2009 and is effective October 15, 2015.
the Compliance Review was error. However, even
the community of registrants. See
were the Court of Appeals to disagree, the scope of Gaudio, 74 FR at 10,094 (quoting Dated: September 8, 2015.
Respondent’s failure to report suspicious orders Southwood, 71 FR at 36,504). Cf. Chuck Rosenberg,
following the compliance review is so extensive McCarthy v. SEC, 406 F.3d 179, 188–89
and egregious that I would come to the same Acting Administrator.
conclusion that the revocation of Respondent’s
(2d Cir. 2005) (upholding SEC’s express
adoption of ‘‘deterrence, both specific [FR Doc. 2015–23038 Filed 9–14–15; 8:45 am]
registration is warranted to protect the public
interest. and general, as a component in BILLING CODE 4410–09–P

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would often be documented in [the] anything nefarious, does it?

name of a reviewer or an explanation for to be deleted. Pharmacy closed.’’ RX 2A, GX 10F.

59 The order was apparently placed on a Saturday

63 This total includes orders for 9,600 du of

oxycodone 30 on May 18 and 19, June 1, 3, 8, and

which included 39,469 du of oxycodone (and Respondent approved Englewood to

Respondent contacted Englewood to

On June 25, Respondent shipped an

93 As for other oxycodone products, the UR

to compare the number of oxycodone 15 N Solution, which according to the UR totaled

115 The form actually lists a fourth distributor;

126 This total includes the Mar. 25 orders for

dispensings of all prescriptions physicians who were practicing pain

and added scribble on the line provided for

account had been placed on compliance hold and

controlled substances.’’ This regulation deviate substantially from the

Resp. Exceptions, at 33 (quoting R.D. at 154). Yet

perform due diligence, Southwood eye.

this was not intentionally done to subvert

under the CSL, (2) that the order was Id.

order as suspicious. I hold that it was. July 2010 dispensings of oxycodone 30

practices. it had not obtained a new UR in more

Although this UR alone establishes failed to obtain an explanation from the

insurance for the payment of controlled

7 (8,600 du), as well as October 1 Respondent’s inspector specifically

194 Ms. Seiple also asserted that ‘‘[b]ased on

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