Coming Clean with DEA: No Good Deed Goes Unpunished

 By John A. Gilbert & Delia A. Stubbs –

In a decision published this week, DEA denied an application for a pharmacy registration on the basis that the owner-pharmacist had previously ignored “red flags” and generally failed to exercise her corresponding responsibility in filling prescriptions.  Wheatland Pharmacy; Decision and Order, 78 Fed. Reg. 69,441 (Nov. 19, 2013).  While these factors have been used by DEA on numerous occasions to deny or revoke DEA registrations, it is worth noting that in this case the pharmacist had apparently self-reported to DEA concerns about suspicious prescriptions received at the pharmacy.  However, DEA found that the pharmacist had otherwise misrepresented her involvement and culpability in filling prescriptions that were not for a legitimate medical use.  DEA also found that the pharmacist had filled prescriptions even after her prior DEA registration had been voluntarily surrendered.  To be sure, the pharmacist’s attempt to curry favor with DEA seems rather short-sighted in light of other actions that clearly violated the law and DEA regulations.  But the lesson here is that registrants should not expect to receive brownie points for reporting suspicious activity, especially if their own conduct raises serious compliance concerns.

This case also raises several procedural and substantive issues worth noting.  First, DEA issued a final order denying the pharmacy’s application, despite the pharmacy’s request that the application be withdrawn and where the pharmacy requested to waive its right to a hearing.  Id. at 69,441.  Pursuant to 21 C.F.R. § 1301.37, if the Administrator finds the registration is inconsistent with the public interest, DEA may serve upon an applicant an Order to Show Cause (“OTSC”) why the application should not be denied.  Prior to issuance of an OTSC, the Administrator must grant an applicant’s request to withdraw his application.  Id. § 1301.16(a).  After issuance of an OTSC, the Administrator may, but is not required by regulation, to permit withdrawal of the application.  Id.  In Wheatland, the Deputy Assistant Administrator denied the applicant’s request to withdraw the application for registration (the record is silent, but we presume the request was made after the OTSC).  78 Fed. Reg. 69,441.  The applicant subsequently waived its right to a hearing, and DEA then filed a request with the Administrator pursuant to DEA regulations that permit the Administrator to issue a final order based on the “findings of fact and conclusions of law upon which the order is based.”  21 C.F.R. §§ 1301.43(e), 1301.46. 

This summary judgment process used in Wheatland is not commonly exercised by DEA, but may signal a wave of the future.  The process was previously considered in a decision issued earlier this year, where DEA, overruling prior agency precedent, held that the Administrator may deny an application based on findings made in an OTSC on the person’s prior application – where the person declined to request a hearing on that OTSC.  The Administrator ruled its decision was permitted by the doctrine of res judicata.  See Jose G. Zavaleta, M.D.; Decision and Order, 78 Fed. Reg. 27,431 (May 10, 2013).

Second, the decision states that the government argued that the pharmacist had previously violated the law and regulations by dispensing a prescription to someone other than the “ultimate user.”  The Administrator noted that the definition of ultimate user means a person who “has lawfully obtained” and possesses a controlled substance.  78 Fed. Reg. at 69,446.  The Administrator found that the pharmacist had filled prescriptions written by a physician assistant that were fraudulent.  Thus, the Administrator ruled that the persons obtaining the medicine could not be the “ultimate user because the prescriptions themselves were fraudulent.  Interestingly, the Administrator did not address another potential “ultimate user” issue described in the case.  The government found that the pharmacist delivered or dispensed controlled substances to a home healthcare service provider for dispensing to the patients.  Id. at 69,444.  If we read this correctly, the pharmacist was not delivering or dispensing to the “ultimate user” in this case either.  However, the decision does not address this issue, but rather focuses on the facts that the dispensing occurred after the pharmacist had lost her registration.  This highlights what, in our opinion, has been an ongoing controversy of whether non-family members (e.g., hospice nurses) may pick up prescriptions and/or whether patients can designate an agent to pick up prescriptions.

Finally, the opinion cites to the affidavit of a Special Agent wherein the Special Agent states that DEA instructed the pharmacist “to fill some of the prescriptions,” so that law enforcement could monitor an alleged fraudulent patient.  Id. at 69,442.  So while DEA found that the pharmacist knowingly filled prescriptions that were not legitimate as a basis for a prior immediate suspension of the pharmacy registration, the Special Agent also apparently instructed the pharmacy to fill some of these fraudulent prescriptions to assist DEA in its investigation.  We always recommend that registrants who cooperate with DEA obtain a written agreement so as to avoid potential liability in the future.  In this case, such cooperation apparently was not enough to save the pharmacist from a revocation and later a denial of a new application.