Three Entities (and a Part Owner and Pharmacist in Charge) Likely Must Swallow A Bitter PIL for Their Role in the Opioid Crisis; But … For Now, The District Court Denies Government’s Motion for Preliminary Injunction

The Justice Department’s Prescription Interdiction and Litigation (PIL) task force strikes again?  Not quite yet, but maybe soon, as explained below.

The United States filed a Complaint against Texas entities Zarzamora Healthcare LLC,  Rite-Away Pharmacy and Medical Supply #2– and its Pharmacist-in-Charge (PIC), and part owner.  The Press Release announces and the Complaint alleges that the defendant entities illegally filled opioid controlled substances that ignored numerous “red flags” of diversion.  In addition, the Complaint alleges inappropriate dispensing to numerous individuals, multiple DEA recordkeeping violations, improper alteration of prescriptions, and violations Texas law and federal corresponding responsibility obligations required of pharmacists that dispense opioid prescriptions.  Like other recent federal enforcement actions involving opioids against pharmacies filed by the Department of Justice’s Consumer Protection Branch (here and here for example) and local U.S. attorneys’ offices since 2019, the Complaint seeks monetary and permanent injunctive relief (see 21 U.S.C. §§ 832(f)(1) and 882(a)).  Interestingly, in particular for a pharmacy CSA enforcement matter, the Complaint also alleges the knowing operation of Rite-Away Pharmacy and Medical Supply #2 to unlawfully distribute controlled substances as a prohibited “drug-involved premises” in violation of 21 U.S.C. § 856.  Specifically, a person “maintains a drug-involved premises by (1) knowingly opening, leasing, renting, using or maintaining any place for the purpose of unlawfully distributing a controlled substance, or (2) managing or controlling any place and knowingly maintaining that place available for use for the purpose of unlawfully distributing a controlled substance. 21 U.S.C. § 856.” (Complaint ¶ 38.)  Penalties for a violation of section 856 are not more than “$250,000 for each violation occurring on or before November 2, 2015, and not more than $379,193 for each violation after November 2,2015, or two times the gross receipts either known or estimated that were derived from each violation attributable” to defendants.  Id. ¶ 118.

While injunctive enforcement tools have been statutorily available for years, they were first successfully dusted off in 2019 to assist the government in its efforts to stem the tide of inappropriate dispensing in the wake of the country’s opioid crisis (blogged about here).  Use of a federal civil injunction action is likely effective in these situations because it may serve to more efficiently terminate the offending DEA registrant’s – and, importantly, other non-registrant defendants’ — ability to handle controlled substances at the outset of an enforcement action.  It may also obviate the need for DEA to take administrative action, which is solely applicable to a DEA registrant and not the offending entity’s non-registrant owners, employees, or pharmacists.

Notwithstanding the powerful effect of a federal injunction action to “halt” offending conduct in its tracks, this time the District Court is ensuring that the Government complies with fairly straightforward procedural hurdles before temporarily or preliminarily enjoining named defendants from handling controlled substances.

Specifically, the Government filed the Complaint for a permanent injunction, and then moved for a preliminary injunction seeking an order to immediately stop defendants from handling and dispensing controls. The District Court denied the Government’s motion for a preliminary injunction because it failed to comply with the most rudimentary of procedural steps — notice to defendants:

[Fed. R. Civ. P.] Rule 65(a)(1) expressly prohibits courts from issuing a preliminary injunction absent “notice to the adverse party.”  Because Plaintiff has provided no notice to defendants, the Court is precluded from issuing any preliminary injunction.  And, although Rule 65(b)(1) permits courts to “issue a temporary restraining order without written or oral notice to the adverse party or its attorney,” they may only do so if:

(A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adverse party can be heard in opposition; and

(B) the movant’s attorney certifies in writing any efforts made to give notice and the reasons why it should not be required.

Because the Government also failed to provide the Court a written certification in order to comply with Fed. R. Civ. P. Rule 65(b)(1)(B), the Court lacked authority to issue a temporary restraining order as well.  Thus, regardless of what the Government must surely believe is an exceedingly compelling need to cause defendants imminently to stop dispensing opioids, the failure to comply with simple but wholly necessary procedural hoops caused the Court to deny the Government’s requests.  While the Government is likely to obtain either a settlement or its requested injunctive relief down the road, it is at least interesting that the quicker federal injunction hit was not quite effective here.  Will this identical fact pattern repeat itself in similar opioid injunction enforcement matters? Unlikely…