United Prescription Services, Inc. Revocation of Registration, 50397-50410 [E7-17223]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 72, Number 169 (Friday, August 31, 2007)]
[Notices]
[Pages 50397-50410]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-17223]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 7-21]


United Prescription Services, Inc. Revocation of Registration

    On February 13, 2007, I, the Deputy Administrator of the Drug 
Enforcement Administration, issued an Order to Show Cause and Immediate 
Suspension of Registration to United Prescription Services, Inc. 
(Respondent), of Tampa, Florida. The Order immediately suspended 
Respondent's DEA Certificate of Registration, BU6696073, as a retail 
pharmacy, based on my preliminary finding that Respondent was diverting 
large quantities of controlled substances and that its continued 
registration during the pending of these proceedings ``would constitute 
an imminent danger to the public health and safety because of the 
substantial likelihood that [it would] continue to divert controlled 
substances.'' Show Cause Order at 4 (citing 21 U.S.C. 824(d)). The 
Order also sought the revocation of Respondent's registration on the 
ground that its ``continued registration is inconsistent with the 
public interest.'' Id. at 1 (citing 21 U.S.C. 823(f) & 824(a)(4)).
    The Show Cause Order alleged that Respondent distributed large 
quantities of controlled substances based on prescriptions that it knew 
or should have known ``were not written for a legitimate medical 
purpose or were written by a practitioner not acting in the usual 
course of professional practice.'' Id. More specifically, the Show 
Cause Order alleged that between

[[Page 50398]]

October 1, 2005, and January 31, 2006, Respondent distributed 1,808,693 
dosage units of controlled substances and that more than 1,275,000 
dosage units of these controlled substances were prescribed by a single 
physician. Id. at 3. Relatedly, the Show Cause Order alleged that 
during this period, Respondent filled 11,830 prescriptions which were 
written under a single physician's registration. Id.
    The Show Cause Order further alleged that Respondent ``is owned and 
operated by Mr. Samuel Ballinger,'' and that Mr. Ballinger also 
``controlled and operated University Physician Resources, Inc.,'' 
(hereinafter, University), which either employed or contracted with 
physicians and other persons who issued prescriptions for controlled 
substances that were ordered through several internet sites, and which 
were then filled by Respondent. Id. at 1-2. The Show Cause Order also 
alleged that Respondent filled prescriptions issued by physicians who 
were affiliated with other internet sites. Id.
    The Show Cause Order alleged that Respondent knew or should have 
known that the prescriptions were invalid. Id. at 2. Specifically, the 
Show Cause Order alleged that ``the prescribing physicians were 
geographically separated from the majority of their customers,'' thus 
indicating that it was likely that the physicians had not examined the 
customers, and that ``[t]he volume of the prescriptions generated by 
one physician in a given period of time was so excessive as to indicate 
that the practitioner could not have conducted an appropriate medical 
exam, obtained a medical history, or made a prior diagnosis.'' Id. 
Relatedly, the Show Cause Order alleged that while Respondent required 
the physicians ``to submit an affidavit indicating that [they] had 
supervised and directed a medical exam[,] [it] knew that, in many 
cases, the prescribing physician had not directed and supervised any 
examination.'' Id.
    As for those instances ``in which physicians obtained medical 
records from other medical professionals prior to issuing'' a 
controlled-substance prescription, the Show Cause Order alleged that 
Respondent ``knew the physicians did not consult with the medical 
professionals who conducted the physical examinations.'' Id. The Show 
Cause Order also alleged that ``Mr. Ballinger directed individuals 
without a DEA registration to issue prescriptions for controlled 
substances using the DEA registration of physicians employed by 
University'' and that Respondent ``then filled those invalid 
prescriptions for controlled substances.'' Id. Relatedly, the Show 
Cause Order alleged that Respondent filled numerous prescriptions 
issued by Dr. Wayne Starks after the expiration of Starks' registration 
and its retirement from the DEA database. Id. at 3.
    The Show Cause Order also alleged that Respondent violated various 
other provisions of Federal law and regulations. Specifically, the Show 
Cause Order alleged that Respondent was purchasing bulk hydrocodone 
powder and manufacturing controlled substances without a manufacturer's 
registration as required by 21 U.S.C. 822(b). Id. at 4. The Show Cause 
Order alleged that this activity was not compounding because it was not 
done ``pursuant to individual prescriptions.'' Id. The Show Cause Order 
also alleged that Respondent violated 21 CFR 1306.05(a) by filling 
prescriptions which ``either did not contain the full address of the 
patient or contained an incorrect address for the patient,'' id., and 
by dispensing a prescription which bore one physician's DEA number but 
which ``appeared to be signed by'' a different physician. Id. at 3.
    Finally, the Show Cause Order alleged that Respondent violated 
various provisions of state law. Specifically, the Show Cause Order 
alleged that Respondent ``dispensed controlled substances into a number 
of states in which the dispensing violated the state law'' because the 
prescription had not been written by a physician licensed under the 
laws of the patient's state. Id. (citing Cal. Health & Safety Code 
Sec.  11352). Relatedly, the Show Cause Order alleged that Respondent 
had ``shipped controlled substances into * * * Kentucky in violation of 
Kentucky law.'' Id. at 3-4 (citing Ky. Rev. Stat. Ann. Sec.  315.320).
    On February 14, 2007, the Show Cause Order was served on 
Respondent. Thereafter, on March 5, 2007, Respondent, through its 
counsel, requested a hearing. The matter was assigned to Administrative 
Law Judge (ALJ) Mary Ellen Bittner, who conducted a hearing on April 9 
through 13, 2007, in Arlington, Virginia. At the hearing, both parties 
elicited the testimony of witnesses and introduced documentary 
evidence. Following the hearing, both parties submitted briefs 
containing their proposed findings of fact and conclusions of law.
    On May 31, 2007, the ALJ issued her decision. In that decision, the 
ALJ found ``that the prescriptions that Respondent filled were not 
issued in the course of a legitimate physician-patient relationship'' 
and thus were ``not valid prescriptions.'' ALJ at 67. In support of 
this finding, the ALJ noted that it was ``undisputed that Dr. Reppy'' 
(who worked for University and wrote a large number of the 
prescriptions filled by Respondent), ``examined few, if any, of the 
patients to whom he issued prescriptions.'' Id. at 65. While the ALJ 
acknowledged Dr. Reppy's testimony that he had ``spoke[n] with some of 
the doctors who had previously treated patients with whom [he] 
consulted by telephone,'' the ALJ found dispositive that ``there is no 
evidence that any of these doctors referred their patients to 
University or Dr. Reppy.'' Id. Relatedly, the ALJ noted that there was 
also ``no evidence whatsoever that any physicians who had examined 
Respondent's customers had referred them to the physicians who 
prescribed to them and sent the prescriptions to Respondent to be 
filled.'' Id. at 66. Finally, the ALJ noted that ``in some instances 
the records show that physicians who had examined these individuals 
refused to prescribe analgesics to them.'' Id. The ALJ thus concluded 
``that there was no physician-patient relationship between Dr. Reppy--
or any of the other physicians discussed above who issued prescriptions 
that Respondent filled--and the customers to whom they issued those 
prescriptions.'' Id.
    Relatedly, the ALJ found that ``Mr. Ballinger established a scheme 
whereby University, which he controlled, would employ a physician to 
issue prescriptions for Respondent to fill, and that representatives of 
Respondent also actively arranged with operators of websites that 
solicited customers to obtain prescriptions after telephonic 
consultations with physicians that the physicians would send those 
prescriptions to Respondent to be filled.'' Id. at 66. The ALJ thus 
further found that Respondent knew the prescriptions were invalid and 
violated 21 CFR 1306.04(a) when it filled them. Id. at 67.
    Moreover, having concluded that the prescriptions Respondent filled 
were invalid, the ALJ further held that ``Respondent's production of 
dosage form controlled substances was not compounding within the 
meaning of the Controlled Substances Act * * * and that * * * 
Respondent manufactured controlled substances without holding a DEA 
registration to do so.'' Id. The ALJ thus further found that Respondent 
violated 21 U.S.C. 841(a). Id. at 68.
    Finally, the ALJ rejected--as unsupported by the record--
Respondent's assertion that in January 2007, it changed its practices. 
Id. at 68-69 (quoting Resp. Br. at 12). The ALJ

[[Page 50399]]

thus concluded that ``Respondent's continued registration would be 
inconsistent with the public interest'' and recommended that its 
registration be revoked and that its pending application for renewal be 
denied. Id. at 69.
    Thereafter, Respondent filed exceptions. Therein, Respondent 
``agrees with the Recommended Ruling's finding that the evidence showed 
that in many instances, prescriptions by Dr. Reppy were issued based on 
a telephonic interaction with the patient after review of medical 
records that included a physical examination which was conducted by a 
practitioner who did not necessarily have a referral arrangement with 
Dr. Reppy.'' Resp. Exceptions at 4 n.4.
    Respondent argues, however, that the ALJ's proposed decision 
imposes ``a requirement that a prescribing practitioner either 
personally conduct a physical examination of a patient or have a 
referral arrangement with another health care practitioner who 
personally conducts a physical examination of a patient in order to 
have a valid doctor-patient relationship.'' Id. at 3. Respondent argues 
that the ALJ's decision thus ``adopts a new national standard for the 
requirements of a valid doctor-patient relationship that is completely 
unsupported by current federal law and regulation and which is outside 
the scope of the Controlled Substances Act.'' Id. Respondent thus 
contends that the ALJ's decision ``seeks to * * * regulate the practice 
of medicine.''\1\ Id. at 3 n.2 (citing Gonzales v. Oregon, 126 S.Ct. 
904, 923 (2006)).
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    \1\ Relatedly, Respondent also contends that it was improper for 
the ALJ to rely on the testimony of DEA's expert witness, Dr. Carmen 
Catizone, ``as the basis for a legal standard applicable to the 
regulation of the practice of medicine.'' Id. at 6.
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    On June 26, 2007, the ALJ forwarded the record to me for final 
agency action. Having reviewed the entire record, I hereby issue this 
Decision and Final Order. While I do not adopt the ALJ's reasoning with 
respect to the validity of the prescriptions, the record nonetheless 
establishes that both Dr. Reppy and the other physicians issued 
prescriptions in violation of various state laws because the physicians 
were engaged in unlicensed activity and/or failed to comply with 
applicable state standards of practice for issuing treatment 
recommendations including the prescribing of controlled substances. I 
further conclude that the record establishes that Respondent had reason 
to know that numerous prescriptions it filled were unlawful because the 
prescribing physicians either did not establish a valid doctor/patient 
relationship or were engaged in the unlicensed practice of medicine.
    Relatedly, I find Respondent violated Federal law by filling 
numerous prescriptions issued by a physician whose DEA registration had 
expired and a physician assistant who lacked authority to prescribe 
controlled substances under Florida law. I therefore adopt the ALJ's 
ultimate conclusion that Respondent's continued registration would be 
inconsistent with the public interest and will revoke its registration 
and deny its pending application for renewal. I make the following 
findings.

Findings

    Respondent United Prescription Services, Inc., is licensed in the 
State of Florida as a community pharmacy and as a retail pharmacy 
wholesaler. Resp. Ex. 1, at 2-5. Respondent also holds or has held\2\ 
numerous out-of-state or non-resident pharmacy licenses. See id. at 6-
124.
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    \2\ As the ALJ observed, some of these licenses had expired.
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    Respondent is also the holder of DEA Certificate of Registration, 
BU6696073, which authorizes it to dispense controlled substances in 
schedules II through V as a retail pharmacy at the registered location 
of 2304 E. Fletcher Ave., Tampa, Florida. Gov. Ex. 1, at 1. While 
Respondent's certificate indicates that its registration expired on May 
31, 2006, id., Respondent submitted a timely application for renewal of 
its registration. ALJ Ex. 4, at 1. I therefore find that Respondent 
holds a current registration (albeit in suspended status) pending the 
issuance of this Final Order. See 5 U.S.C. 558(c).
    Respondent was founded by Mr. Robert Carr, a Tampa, Florida 
personal injury lawyer, ``to fill prescriptions for personal injury 
patients.'' Gov. Ex. 87, at 2. Mr. Samuel Ballinger, Respondent's 
current owner, was an administrator at a law firm where Carr practiced. 
Id. According to a statement given by Mr. John Todd Miller, Ballinger 
and Carr were partners in Respondent. Id. However, Respondent 
introduced into evidence a copy of a sales agreement dated March 25, 
2005, under which Carr, who was then the sole shareholder and owner of 
Respondent sold his interest to Ballinger. Resp. Ex. 5, at 1.
    In addition to Mr. Miller's statement, the record contains evidence 
indicating that Ballinger was involved in the operation of Respondent 
from before the date of this transaction. For example, Ballinger was 
listed on several of Respondent's Uniform Business Reports as a 
corporate officer or director. See GX 97, at 6 (Jan. 27, 2001 filing 
listing Ballinger as Respondent's President/Director); GX 74 (August 
18, 2002 filing listing Ballinger as Respondent's President). While on 
Respondent's January 2003 filing Ballinger was no longer listed as 
Respondent's President, GX 97, at 9; the record also contains a July 
16, 2003 letter from a physician, Mildred E. Watson, to Ballinger, at 
Respondent's address, in which she expressed her excitement at joining 
Respondent's ``nationwide physicians network.'' GX 62, at 83.
    Moreover, during the cross-examination of Robert Reppy, a physician 
who worked for Ballinger at University Physician Resources\3\ between 
early 2004 and October 2006, Respondent's counsel stipulated that 
Ballinger had a relationship/affiliation with Respondent during the 
period of Reppy's employment at University. Tr. 1172-73. Consistent 
with Mr. Miller's statement that Carr and Ballinger were partners, see 
GX 87, at 2; Reppy testified that ``Ballinger was a major stockholder'' 
in Respondent and was Carr's partner. Tr. 1173. Furthermore, Reppy 
testified that Ballinger directed that the prescriptions he issued be 
faxed to Respondent. Id. at 1179; see also GX 87, at 4 (statement of 
Miller). Thus, even if Ballinger did not have an equity interest in 
Respondent prior to the sale, it is clear that Ballinger had a 
relationship with Respondent and its owner during Reppy's employment 
with University.
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    \3\ University's role is discussed below.
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    According to Mr. Miller, Respondent ``did not do well initially.'' 
GX 87, at 3. Eventually, Mr. Ballinger obtained ``a computer program 
for an Internet pharmacy business'' and Ballinger and Carr opened 
``their own Internet pharmacy site and began filling internet 
prescriptions.'' Id. Miller also introduced a Florida-based physician, 
Juan Ibanez, to Ballinger and Carr. Id. Thereafter, Ibanez began 
issuing prescriptions for persons who visited Ballinger's and Carr's 
Web site. Id. Numerous patient files (that were seized from Respondent) 
indicate that it filled these prescriptions. See, e.g., GX 110 (Excerpt 
2 at 4893-94); id. (Excerpt 3, at 5277, 5279, 5284), id. (Excerpt 6, at 
9750, 9758, 9764, 9770), id. (Excerpt 9, at 3937, 3938). According to 
Miller, both the computer servers and call center for the internet 
business ``were located inside'' Respondent at its Tampa location. GX 
87, at 3.
    Miller further stated that five or six internet pharmacy Web sites 
were affiliated with Respondent. Id. at 5.

[[Page 50400]]

Throughout the patient files, there are numerous documents indicating 
that Respondent filled prescriptions that were sent to it through 
internet sites such as https://www.fedxmeds.com, PhoneConsultation.Com, 
and accuratemd.com. Id.; see also GX 110 (Excerpt 3, at 5202-03; and 
Excerpt 4, at 6980, 6994-96); GX 84 at 2 (affidavit of Robert Reppy).
    Ballinger was also the owner of University, a clinic which provided 
both in-office medical treatment and what it termed ``telemedicine.'' 
See GX 22; GX 87, at 4; GX 84, at 1 (affidavit of Robert Reppy). 
University employed various physicians including Dr. Robert Reppy, a 
doctor of osteopathy, and a physician's assistant, John Protheroe. GX 
84, at 2-4. Ballinger hired Reppy in early 2004, to replace other 
physicians (Juan Ibanez, M.D., and Richard Long, M.D.) who had left the 
clinic. Id. at 2. With the exception of the period between November 
2004 and March 2005 when he was on a leave of absence, Reppy worked for 
University until October 2006. Id. at 2-5. During the course of his 
employment at University, Ballinger ``directed [its] operations.'' Id. 
at 5.
    At University, Reppy, who was licensed only in the State of 
Florida, id. at 1, reviewed the medical records provided by individuals 
and conducted telephone consultations with them. Id. at 3. According to 
Reppy, ``most of [his] patients * * * were telephone consultation 
patients who were referred to University by an Internet Web site.''\4\ 
Id. Moreover, ``many of [his] patients were from outside the [S]tate of 
Florida.'' Id. Based on his review of a person's medical records and 
the telephone consultation, Reppy would decide whether to issue a 
prescription for the person's purported condition. Id. Most of the 
prescriptions Reppy issued were for controlled substances such as 
schedule III drugs containing hydrocodone and schedule IV 
benzodiazepines such as alprazolam and diazepam. See GX 99, at 15; see 
also GX 66.
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    \4\ According to Dr. Reppy's sworn statement, when he started 
working at University, his ``patients'' were referred to him by 
fedexmeds.com and this continued until he went on his leave of 
absence. GX 84, at 2-3. When, in March 2005, Reppy returned to 
University, fedexmeds was no longer referring ``patients'' to it. 
Id. at 3. Other websites were, however, and Reppy admitted that he 
continued to issue prescriptions based on medical records and a 
telephonic consultation. Id.
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    At University, Reppy ``consulted with approximately 30 patients per 
day.'' GX 84, at 3. Reppy also ``reviewed the * * * files for the 
patients for whom Mr. Protheroe wrote prescriptions,'' which were also 
based on a review of medical records and a telephone consultation. Id. 
at 2. According to Reppy's affidavit, ``[m]ost of the prescriptions 
written by Mr. Protheroe were for controlled substances,'' and were 
then ``sent to [Respondent] to be filled unless otherwise directed by 
the patient.'' Id.; see also Tr. at 1139. Reppy further testified that 
Ballinger directed that University's prescriptions be faxed to 
Respondent. Id. at 1179.
    While Reppy was on his leave of absence, ``Protheroe continued to 
write prescriptions for controlled substances using [Reppy's] DEA 
number and electronic signature.'' GX 84 at 4. According to Reppy, 
Protheroe did not have ``permission to issue prescriptions in my name 
while I was on leave,'' and was authorized ``to issue prescriptions 
[only] while he worked under [Reppy's] supervision.'' Id.
    In his testimony, Reppy stated that Protheroe wrote ``over 14,000 
prescriptions'' without his permission during the period of his leave 
of absence. Tr. at 1182-83, 1193, 1198. To rebut this testimony, 
Respondent introduced Protheroe's sworn statement in which he 
``specifically denied'' having issued prescriptions without Reppy's 
``knowledge or permission.'' Resp. Ex. 33.
    Respondent also introduced into evidence the affidavit of Richard 
Furlong, who asserted that he worked at University from February 
through May 2005. See Resp. Ex. 23. In his declaration, Mr. Furlong 
stated that ``Reppy supervised and authorized prescriptions issued by 
Mr. Protheroe and was uncompromising that the decision to issue a 
prescription rested with him.'' Id. at 1. Furlong added that while he 
``was there on an everyday basis, [he] never heard any discussion about 
nor saw information indicating that Mr. Protheroe was not practicing 
under the supervision of Dr. Reppy, or that he took direction from 
anyone, including Samuel Ballinger, other than Dr. Reppy.'' \5\
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    \5\ In his testimony, Reppy denied knowing Furlong. Tr. 1207-08.
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    The ALJ did not make any findings regarding this factual dispute. 
See ALJ at 67 n.97. As ultimate fact finder, I do. I credit Dr. Reppy's 
testimony noting that he was subject to Respondent's re-direct 
examination \6\ and stuck to his story. In contrast, Respondent did not 
call either Protheroe or Furlong to testify and thus they were not 
subject to cross-examination by the Government. Furthermore, Mr. 
Furlong was at University for only a short period after Reppy returned 
to work, and Reppy, in his April 4, 2007 affidavit, stated that he had 
only ``recently bec[o]me aware'' of these prescriptions. GX 84, at 4. I 
thus find that at the time Furlong worked at University, Reppy was 
unaware of Protheroe's activities during his leave of absence. I 
further find that because Ballinger allowed Protheroe to work out of 
the office, Tr. 1199-1200, 1210; the records may not even have been in 
the clinic.
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    \6\ Reppy was called by Respondent.
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    In his testimony, Reppy maintained that his practice did not 
involve making new diagnoses, but rather, ``monitoring stable patients 
whose diagnoses are already well known.'' Id. at 1109. Dr. Reppy 
further asserted that many of his patients contacted him because their 
original doctors were ``not willing to do pain management for them 
because that's not their main purview.'' Id. at 1116. Dr. Reppy also 
stated that ``many'' of his patients ``have tried to get pain 
management from their local hospital or pain management centers,'' but 
``they are expected to come in'' either every two weeks or every month, 
and that their ``prescriptions are not refilled unless they show up in 
person,'' and that these office visits ``will often cost them $150 or 
more.'' Id.
    Reppy further asserted that he had ``rejected hundreds'' of 
``patients'' because they ``cannot prove that they have the condition 
they claim'' or had submitted ``fraudulent records.'' Id. at 1117-18. 
Reppy also maintained that he never ``diagnose[d] over the phone'' 
because ``[t]hat would be inappropriate medicine,'' id. at 1123, that 
the initial diagnosis was performed by the ``local doctor that actually 
saw them and performed the physical examination,'' id., and that the 
``patients are required to submit documentation from their own local 
physicians, including radiology reports'' before he would conduct a 
consultation. Id. at 1124. Reppy also testified that there are certain 
conditions that are too complex to be ``appropriately * * * treated in 
a telemedicine format'' such as heart conditions and pancreatitis. Id. 
at 1125-26.
    Reppy further testified that during his consultations he would ask 
his patients to subjectively rate their pain on a scale of one-to-ten, 
with the latter being ``the worst pain they can imagine.'' Id. at 1129-
30. Reppy acknowledged, however, that this was ``not as useful as the 
evaluation of the pain you're getting from the'' notes of the doctor 
who examined the patients, ``but it's still useful because you're 
getting an idea of the patient's own perception of'' his pain level, 
and that it was useful to evaluate the evolution of a patient's ``pain 
over time.'' Id.

[[Page 50401]]

    Reppy also stated that ``[i]t's always preferable to see * * * the 
patient face to face,'' and that he ``strongly urge[s] the patient to 
make a visit to the office here in Florida.'' Id. at 1130. Reppy 
further testified that he took a medical history on every patient, that 
he was convinced that each patient had a medical complaint, that there 
was a logical connection between the prescription he wrote and the 
complaint, and that there was a valid doctor-patient relationship with 
every person he issued a prescription for. Id. at 1164-65; see also id. 
at 1152.
    On cross-examination, Reppy admitted that since the year 2000, he 
has not held a medical license in any State other than Florida. Id. at 
1166. Reppy also admitted that the medical records of his telemedicine 
patients were ``usually'' sent to him by his patients rather than by 
the physician who had examined them. Id. at 1170-71. Reppy also 
admitted that sometimes the records for the patients that were referred 
to him by fedexmeds.com were provided by the Web site. Id. at 1171.
    Reppy admitted that ``less than five percent'' of his 
``telemedicine patients'' went to Florida to obtain a physical exam 
from him. Id. at 1174. Reppy also acknowledged that he ``generally did 
not'' consult ``on a regular basis'' with the physicians who had 
performed the physical examinations of his telemedicine patients, and 
that he did so ``less than once a day'' and only when he ``had specific 
questions.'' Id. at 1175. Finally, Reppy stated that when his patient's 
refills ran out, he required a new physical exam before issuing a new 
prescription only if the physical exam was ``too dated.'' Id. at 1176. 
The Government did not, however, ask Reppy at what point a physical 
exam becomes too dated.
    The record establishes that during the period between October 1, 
2005, and January 31, 2006, Respondent filled 11,830 prescriptions 
issued by Dr. Reppy, which totaled 1,275,400 dosage units of both 
controlled and non-controlled drugs. GX 99, at 13-16. Approximately 
1.058 million of these dosage units (83%) were for drugs containing 
hydrocodone. Id. at 15-16. During this period, Reppy also authorized 
prescriptions totaling 41,651 dosage units of alprazolam, a schedule IV 
controlled substance, and approximately 84,000 dosage units of other 
controlled substances. Id.
    Moreover, during this period, Reppy's prescribing accounted for 
approximately seventy-one percent of the prescriptions filled by 
Respondent and seventy percent of the dosage units dispensed by it. Id. 
at 8-11. Moreover, only 1094 (approximately 9.2%) of Reppy's 
prescriptions were for Florida residents. Id. at 13-14.
    Respondent's dispensing log for December 2005 establishes that 
Reppy issued numerous controlled-substance prescriptions to persons 
resident in States where he was not licensed to practice. See GX 101, 
Excerpt 18. My review of the log found that during this month alone, 
Reppy issued new controlled-substance prescriptions to residents of 
Tennessee (89 Rxs), California (65 Rxs), Illinois (32 Rxs), North 
Carolina (18 Rxs), and Louisiana (14 Rxs).
    In addition, during December 2005, Reppy issued numerous 
controlled-substance prescriptions to persons resident in States which 
clearly require that the prescribing physician perform a physical exam 
of a patient except in limited situations not applicable here. These 
States include California, Tennessee, Louisiana, and Indiana (9 new 
Rxs).
    I take official notice \7\ of the following State statutes: Cal. 
Bus. & Prof. Code Sec. Sec.  2052 \8\ (unlicensed practice) & 2242.1(a) 
(internet prescribing); Cal. Health & Safety Code Sec.  11352(a) 
(prohibiting furnishing a controlled substance ``unless upon the 
written prescription of a physician * * * licensed to practice in this 
state''); 225 Ill. Comp. Stat. Ann. Sec.  60/3 (licensure requirement), 
Sec.  60/3.5 (prohibiting unlicensed practice); Sec.  60/49 (listing 
acts constituting holding oneself out to the public as a physician); 
Sec.  60/49.5 (requiring persons engaged in telemedicine to hold 
Illinois license); N.C. Gen. Stat. Sec.  90-18 (``prescribing 
medication by use of the Internet or a toll-free telephone number, 
shall be regarded as practicing medicine'' in the State).
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    \7\ In accordance with the Administrative Procedure Act (APA), 
an agency ``may take official notice of facts at any stage in a 
proceeding--even in the final decision.'' U.S. Dept. of Justice, 
Attorney General's Manual on the Administrative Procedure Act 80 
(1947) (Wm. W. Gaunt & Sons, Inc., Reprint 1979). In accordance with 
the APA and DEA's regulations, Respondent is ``entitled on timely 
request to an opportunity to show to the contrary.'' 5 U.S.C. Sec.  
556(e); see also 21 CFR 1316.59(e). To allow Respondent the 
opportunity to refute the facts of which I take official notice, 
Respondent may file a motion for reconsideration within fifteen days 
of service of this order, which shall commence with the mailing of 
the order.
    \8\ In Hageseth v. Superior Court, 59 Cal. Rptr.3d 385 (Ct. App. 
2007), the California Court of Appeal upheld the State's 
jurisdiction to criminally prosecute an out-of-state physician who 
prescribed a drug to a California resident over the internet, for 
the unauthorized practice of medicine.
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    I also take official notice of the following state administrative 
rules: 844 Ind. Admin. Code Sec.  5-3-3 (``issuing a prescription, 
based solely on an on-line questionnaire or consultation is 
prohibited'') & id. Sec.  5-4-1 (prohibiting the issuance of a 
controlled-substance prescription ``to a person who the physician has 
never personally physically examined and diagnosed'' except for ``in 
institutional settings, on-call situations, cross-coverage situations, 
and situations involving advanced practice nurses with prescriptive 
authority practicing in accordance with standard care arrangements''); 
Tenn. Comp. R. & Regs. 0880-2.14(7) (prerequisites to issuing 
prescriptions); \9\ & id. 0880-2.16 (requiring telemedicine 
license).\10\
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    \9\ The text of this rule is discussed shortly below.
    \10\ I also take official notice of the Medical Board of 
California's Decision and Order in Jon Steven Opsahl, M.D., at 3 
(Med. Bd. Cal. 2003) (revoking medical license and finding that ``a 
physician cannot do a good faith prior examination based on a 
history, a review of medical records, responses to a questionnaire 
and a telephone consultation with the patient, without a physical 
examination of the patient'' and that ``[a] physician cannot 
determine whether there is a medical indication for prescription of 
a dangerous drug without performing a physical examination''); see 
also id. at 17.
    In addition, the Medical Board of California has issued numerous 
Citation Orders to out-of-state physicians for internet prescribing 
to State residents. See, e.g., Citation Order Harry Hoff (June 17, 
2003); Citation Order Carlos Gustavo Levy (Nov. 30, 2001). It has 
also issued press releases announcing its position on the issuance 
of prescriptions by physicians who do not hold a California license. 
See Medical Board of California, Record Fines Issued by Medical 
Board to Physicians in Internet Prescribing Cases (News Release Feb. 
10, 2003) (available at https://www.mbc.ca.gov/NR_2003_02-10_
Internetdrugs.htm). I also take official notice of these materials.
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    I also take official notice of the Louisiana State Board of Medical 
Examiner's Statement of Position on ``Internet/Telephonic 
Prescribing,'' which was issued on May 24, 2000. According to the 
Louisiana Board, ``it is unlawful for a physician to prescribe 
medication, treatment or a plan of care generally if the physician has 
not examined the patient and established a diagnostic basis for such 
therapy.'' Id. at 2. After discussing the acts which establish a 
doctor-patient relationship, the Board further stated that ``an online 
or telephonic evaluation by questionnaire for an individual that a 
physician has never seen is inadequate.'' Id. at 2-3. The Board also 
explained that ``[a]n individual who issues a prescription or orders 
medication for an individual who is a resident of or located in 
Louisiana, who does not possess a Louisiana medical license or other 
authorization to practice medicine in this state, is necessarily 
engaged in the unauthorized practice of

[[Page 50402]]

medicine in contravention of the Medical Practice Act.'' Id. at 3.\11\
---------------------------------------------------------------------------

    \11\ The Board recognized that ``prescribing for a patient whom 
the physician has not personally examined may be suitable under 
certain, limited circumstances.'' Internet/Telephonic Prescribing, 
at 3 n. 7. According to the Board, these ``may include admission 
orders for a newly hospitalized patient, prescribing for a patient 
of another physician for whom the prescriber is taking the call or 
continuing medication on a short-term basis for a new patient prior 
to the patient's first appointment.'' Id. The Board also explained 
that it was not ``attempt[ing] * * * to limit true consultations 
between out-of-state physicians and Louisiana licensed physicians.'' 
Id. at 4. None of these exceptions applies to the conduct of the 
prescribing physicians in this case.
---------------------------------------------------------------------------

    In addition to the prescriptions issued by Reppy, Respondent also 
filled numerous prescriptions issued by physicians who were affiliated 
with phoneconsultation.com. These physicians included Dr. Dora 
Fernandez, who was located in, and licensed by, the Commonwealth of 
Puerto Rico, see GX 58 at 3, 7, 16; and George Wallace Merkle, who was 
located in, and licensed by the State of Indiana. See GX at 64, at 5, 
9-10. Neither of the files which Respondent kept on these two 
physicians contains any additional medical licenses. See generally GX 
58 & 64. Moreover, Respondent produced no evidence to show that either 
of these physicians had additional medical licenses beyond those 
contained in their files. I therefore find that Dr. Fernandez was 
licensed only in Puerto Rico and Dr. Merkle was licensed only in 
Indiana.
    According to the December 2005 Daily Audit Log, in just the last 
twelve days of the month, Dr. Fernandez issued new controlled-substance 
prescriptions to residents of various States where she was not licensed 
including Tennessee (35 Rxs), California (29 Rxs), Louisiana (26 Rxs), 
Illinois (9 Rxs), and North Carolina (8 Rxs). Dr. Fernandez violated 
the laws of these States by engaging in the unlicensed practice of 
medicine. Moreover, in light of the respective locations of Dr. 
Fernandez and her ``patients,'' it is most unlikely that she complied 
with the laws of Tennessee, California, Louisiana, and Indiana (8 new 
Rxs) regarding the prerequisites for prescribing a drug.
    During December 2005, Respondent also filled new controlled-
substance prescriptions issued by Dr. Merkle to residents of States 
where he was not licensed including California (17 Rxs), North Carolina 
(9 Rxs), and Louisiana (2 Rxs). Likewise, given the respective 
locations of Dr. Merkle (in Indiana) and his ``patients,'' it is highly 
improbable that he complied with either the regulations of his own 
State or the laws of California and Louisiana which require the 
performance of a physical examination before prescribing a drug.
    Finally, Respondent also filled numerous controlled substances 
prescriptions issued by Dr. Elizabeth Jamieson, another Tampa-based 
physician, who is licensed only in Florida and Pennsylvania. See GX 63, 
at 3. During December 2005, Dr. Jamieson issued new controlled-
substance prescriptions to residents of Tennessee (31 Rxs), California 
(23 Rxs), Illinois (6 Rxs), Louisiana (5 Rxs), and North Carolina (5 
Rxs).\12\
---------------------------------------------------------------------------

    \12\ A review of Respondent's January 2006 daily audit log shows 
that Reppy issued new controlled-substance prescriptions to 
residents of Tennessee (121 Rxs), California (72 Rxs), Illinois (30 
Rxs), North Carolina (16 Rxs), Louisiana (15 Rxs), and Indiana (10 
Rxs). Dr. Fernandez issued new controlled-substance prescriptions to 
residents of California (23 Rxs), Tennessee (22 Rxs), Louisiana (6 
Rxs), North Carolina (5 Rxs), Illinois (5 Rxs), and Indiana (3 Rxs). 
Dr. Merkle issued new controlled-substance prescriptions to 
residents of California (43 Rxs), Louisiana (10 Rxs), Tennessee (9 
Rxs), and North Carolina (6 Rxs).
---------------------------------------------------------------------------

    The patient files also establish that Respondent filled numerous 
prescriptions issued by Dr. Wayne Starks of Detroit, Michigan, who was 
affiliated with ermeds.com. GX 101 (Excerpt 8, at 9998). While Dr. 
Starks held a DEA Registration, it expired on February 28, 2003, and 
Starks did not submit a new application until August 23, 2004, which he 
withdrew on March 21, 2005.\13\ See GX 103; see also GX 93, at 12 
(Stark's file maintained by Respondent). Starks was therefore without 
authority to prescribe controlled substances after February 28, 2003. 
GX 103.
---------------------------------------------------------------------------

    \13\ Starks has also submitted two additional applications, 
which are currently under review. GX 103.
---------------------------------------------------------------------------

    The patient file for J.I., a resident of Alabama, indicates that 
Starks issued him prescriptions for 120 Lortab (10 mg.), a schedule III 
controlled substance containing hydrocodone and acetaminophen on 
January 9, 2004 (with two refills), April 16, 2004 (with two refills), 
June 24, 2004 (with no refills) and September 22, 2004 (with two 
refills). GX 101 (Excerpt 8, at 9997-99, 10008). Respondent filled each 
of these prescriptions including the refills. See id.
    The patient file of K.Q., a resident of Texas, includes numerous 
prescriptions which Starks issued for Xanax (alprazolam) and Norco 
(hydrocodone/acetaminophen) after the expiration of his DEA 
registration and which Respondent filled. See GX 101 (Excerpt 9). More 
specifically, Starks issued K.Q. prescriptions for these drugs with 
refills on July 29, 2003; October 14, 2003; December 31, 2003; March 
16, 2004; May 25, 2004; August 12, 2004; and October 27, 2004.\14\ See 
id. at 3877, 3885, 3895, 3905, 3907, 3912, 3914, 3917, 3921, 3923, 
3928, 3930. Respondent filled each of the new prescriptions and 
refilled these prescriptions numerous times.
---------------------------------------------------------------------------

    \14\ The Norco prescriptions were for 120 Norco 10/325 
(hydrocodone/acetaminophen); the Xanax (alprazolam) prescriptions 
were either for 45 (2 mg.) tablets or 30 (1 mg.) tablets.
---------------------------------------------------------------------------

    The patient files also indicate that Respondent filled 
prescriptions issued by Dr. Richard Kienzle of Copperhill, Tennessee, a 
Tennessee-licensed physician. See GX 101 (Excerpts 6, 7, & 14); GX 60, 
at 2. More specifically, Kienzle issued T.H., a California resident, 
prescriptions for 90 Norco (10/325) with two refills on January 25, 
2003; April 22, 2003; July 10, 2003; October 1, 2003; and 120 Norco on 
December 19, 2003. GX 101 (Excerpt 6 at 9744, 9738, 9732, 9726, & 
9720). Respondent filled all of the prescriptions including the 
refills. See generally id. at 9720-44.
    Respondent also filled several Vicodin prescriptions Kienzle issued 
to K.H., a Pennsylvania resident. Specifically, on December 7, 2003, 
and March 1, 2004, Kienzle prescribed 120 Vicodin ES (hydrocodone/apap 
7.5/750) with two refills.\15\ Id. (Excerpt 7, at 9585 & 9579), 
Respondent filled both the initial prescriptions and the refills. See 
id. On November 18, 2003, Kienzle issued to R.J., another Pennsylvania 
resident, prescriptions for 120 Norco (10/325) with two refills, and on 
February 2, 2004, a prescription for 120 Lortab (10/500) with two 
refills. Id. (Excerpt 14 at 4731, 4736). Respondent filled both the 
initial prescriptions and the refills. Id. The patient file also 
includes copies of documents entitled ``Fedxmeds Management Index,'' 
which were faxed to Respondent by Kienzle. Id. at 4674-75.
---------------------------------------------------------------------------

    \15\ The record also includes copies of a document entitled 
``Fedxmeds Management Index'' for K.H., which indicate that they 
were faxed to Respondent from Dr. Kienzle on December 7, 2003, and 
February 3, 2004. GX 101 (Excerpt 7, at 9530-31).
---------------------------------------------------------------------------

    On July 20, 2005, pursuant to an Agreed Order with the Tennessee 
Board of Medical Examiners, Kienzle agreed to surrender his medical 
license. See GX 60, at 29. Kienzle also admitted that he had prescribed 
through several internet sites including FedexMeds.com, numerous dosage 
units of various controlled substances including compounds containing 
hydrocodone and codeine, as well as alprazolam, diazepam, and lorazepam 
and other scheduled drugs, to persons located in forty-six different 
States. Id. at 20. The Order also related that Kienzle had ``admitted 
in correspondence to treating

[[Page 50403]]

via the internet or other electronic means, approximately one thousand 
eighty four (1,084) patients by and through his affiliation with'' two 
websites which included FedexMeds.Com. Id. at 20-21. Kienzle also 
admitted that ``as a matter of routine course, [he] utilized `telephone 
consultations' conducted in reliance on data derived from the * * * 
FedexMeds.com internet database[ ], to speak with patients whose 
credibility and authenticity he could not verify, and whose symptoms he 
could not evaluate through tactile examination, visual observation, or 
through other means of clinical evaluation required by the standard of 
care.'' Id. at 23.
    Kienzle further admitted that his internet prescribing violated 
various provisions of the Tennessee Medical Examiners Practice Act, 
including prohibitions on unprofessional conduct and dispensing 
controlled substances in violation of State or Federal law. Id. at 24-
28. Most significantly, Kienzle admitted that his internet prescribing 
violated the Board's Rule 0880-2-.14(7), which sets forth the 
``prerequisites to issuing prescriptions or dispensing medications in 
person, electronically, and over the internet.'' Id. at 27. This 
provision states that it is ``a prima facie violation'' of the State's 
Medical Practice Act:

for a physician to prescribe or dispense any drug to any individual, 
whether in person or by electronic means or over the internet or 
over telephone lines, unless the physician, or his/her licensed 
supervisee pursuant to appropriate protocols or medical orders, has 
first done and appropriately documented, for the person to whom a 
prescription is to be issued or drugs dispensed * * * an appropriate 
history and physical examination[.] \16\
---------------------------------------------------------------------------

    \16\ The rule also requires that the physician has ``[m]ade a 
diagnosis based upon the examination and all diagnostic and 
laboratory tests consistent with good medical care,'' ``[f]ormulated 
a therapeutic plan and discussed it, along with the basis for it,'' 
and ``[i]nsured availability of the physician or coverage for the 
patient for appropriate follow-up care.'' GX 60, at 28.

GX 60, at 27 (quoting Tenn. Comp. R. & Regs. 0880-2-.14(7)).
    The Government also introduced evidence showing that Respondent was 
engaged in the compounding of large quantities of controlled 
substances. More specifically, Respondent was purchasing hydrocodone 
bitartrate powder and compounding it with either acetaminophen or 
dextromethorpan hydrobromide in various combinations. See GX 37 
(invoices for hydrocodone bitartrate powder); see also GX 36 
(compounding log). Moreover, Respondent was also compounding a 
formulation of phentermine and lorazepam (both schedule IV controlled 
substances, see 21 CFR 1308.14). GX 36, at 16. The run size of the 
compoundings was 7500 capsules. See generally GX 36.
    In another proceeding, Mr. Decker, Respondent's pharmacist-in-
charge, testified that approximately one-third of the drugs it 
dispensed were compounded. See Resp. 25, at 177. Mr. Decker also 
testified that Respondent never had on hand ``more than 15 days'' 
supply of compounded drugs. Id. at 178. Mr. Decker further stated in an 
affidavit that the drugs were ``compounded only to the extent that they 
are prescribed by the physician, and to fulfill remaining refills as 
indicated on the original prescription.'' GX 70, at 1. Respondent is 
registered as a retail pharmacy and not as a manufacturer. See GX 1.
    The record further establishes that Respondent violated Kentucky 
law by failing to report its dispensing of controlled substances to 
Kentucky residents through the State's electronic monitoring system 
(KASPER). See GX 85 (affidavit of Jennifer Shearer, Agent Manager, 
Kentucky Bureau of Investigation (KBI) (citing KRS Sec. Sec.  218A.202 
& 315.0351)). More specifically, Agent Shearer recounted that on June 
1, 2006, a KBI agent received information from the United Parcel 
Service that it was ``shipping `a lot' of packages'' that came from 
Respondent. GX 85, at 1. Upon receiving this information, Agent Shearer 
contacted the Inspector General's office of the Kentucky Cabinet of 
Health Services and determined that Respondent had not filed its KASPER 
reports since April 2005. Id.
    On June 9, 2006, KBI agents obtained a search warrant ``for any and 
all packages being shipped by [Respondent] by [UPS] from June 5, 2006-
June 9, 2006.'' Id. The agents subsequently seized fifty-four bottles 
of prescription drugs which included the controlled substances 
alprazolam, diazepam, clonazepam and hydrocodone. Id. On the same date, 
Agent Shearer was contacted by an employee of Respondent who wanted to 
know why its shipments had been seized. Id. Agent Shearer told the 
employee that the packages had been seized because Respondent ``had not 
been reporting to KASPER.'' Id. Agent Shearer also advised Respondent's 
employee that the prescriptions it was dispensing were illegal because 
``none of the Kentucky residents * * * had ever seen'' the prescribing 
physician and ``there was no physician/patient relationship.'' Id. 
Agent Shearer then told the employee that Respondent must stop shipping 
to Kentucky residents until it complied with the State's law.\17\
---------------------------------------------------------------------------

    \17\ In similar vein, the record also contains a copy of various 
documents of the Wyoming Board of Pharmacy. See GX 41, at 1. These 
include a March 31, 2005 letter to Respondent notifying it that the 
Board had become aware that it had dispensed a prescription issued 
by Dr. Reppy to a Wyoming resident and expressing that the Board had 
``strong reasons to believe that no doctor/patient relationship has 
been established between [the resident] and the prescribing 
physician * * * other than via the internet,'' and that ``[a] 
prescription * * * dispensed based solely on a web-based 
questionnaire without establishing a valid doctor/patient 
relationship is considered to be a violation of the Wyoming Pharmacy 
Act.'' Id. The letter further requested that Respondent ``cease 
dispensing to Wyoming residents immediately.'' Id. The record also 
includes a copy of an April 8, 2005 letter from the Wyoming Board to 
the Florida Department of Health filing a complaint against 
Respondent for its dispensing to this resident. Id. at 12.
---------------------------------------------------------------------------

    Thereafter, KBI agents received information that Respondent had 
begun shipping prescription drugs under the name of ``Makes and Models 
Magazine,'' another business owned by Ballinger. Id. at 2; see also GX 
84, at 5; GX 87 at 5. Accordingly, on June 16, 2006, KBI agents 
obtained another search warrant ``for any and all packages being 
shipped by [Respondent] and Makes and Models Magazine by [UPS] from 
June 9, 2006-June 16, 2006.'' GX 85, at 2. Upon executing the warrant, 
KBI agents seized twelve bottles of drugs which contained alprazolam, 
diazepam, and hydrocodone. Id. Makes and Models Magazine is not 
licensed as an out-of-state pharmacy under Kentucky law. Id.
    In another proceeding, Mr. Decker (Respondent's Pharmacist-in-
Charge) testified that Respondent had shipped under the ``Makes and 
Models'' name based on the suggestion of its UPS account 
representative. Resp. Ex. 25, at 171. In this testimony, Decker claimed 
that Respondent's personnel thought that the packages had been stolen 
and were unaware that they had been seized by the KBI. Id. at 174. 
Decker admitted, however, that Respondent did not report the purported 
thefts to either DEA or the KBI. Id. at 174-75; see also 21 CFR 
1301.76(b) (requiring reporting of a theft of controlled substances).
    Based on Respondent's failure to report the purported thefts and 
Agent Shearer's statement that on June 9, 2006 (the date the first 
warrant was executed), she was contacted by an employee of Respondent 
who wanted to know why the packages had been seized, I reject 
Respondent's claim that the reason it shipped controlled substances 
under the ``Makes and Models'' label was to prevent them from being 
stolen. See Resp. Proposed Findings at 21. Instead, I find that 
Respondent knew that the packages had

[[Page 50404]]

been seized by the KBI and that it used the ``Makes and Models'' label 
to circumvent Kentucky law.
    The record also includes files that Respondent maintained on the 
various prescribing physicians. The files typically include copies of 
each physician's state license and DEA registration. See generally GXs 
55-65. Most of the files also include a copy of an affidavit and/or 
letter in which the physician was required to state that ``any 
prescription sent to [Respondent] will be for a legitimate medical 
purpose within the usual course of professional practice and based on 
[a] legitimate patient-physician relationship.'' See, e.g., GX 56, at 
74 (Reppy).
    These affidavits and/or letters also required the physicians to 
state that their practice had policies and procedures in place to 
satisfy the following criteria:

    Our records include a positive identification of the patient.
    The patient's medical complaint has been verified.
    The patient's chart includes copies of prior medical records.
    An extensive physician interview and consultation has been 
accomplished.
    That if an in-person examination was not possible that we have 
supervised and directed an examination by a consulting medical 
professional, for which a copy is in the patient file.
    That in review of all of the above criteria contained in our 
medical file we have determined the appropriateness of medications 
and have issued a prescription based upon our patient/physician 
relationship.

Id.

The Expert Testimony

    The Government called as an expert witness, Carmen Catizone, 
Executive Director, National Association of Boards of Pharmacy. GX 81. 
Mr. Catizone is a registered pharmacist in Illinois and holds a 
Bachelor of Science degree in pharmacy and a Master of Science degree 
in pharmacy administration and has worked as a pharmacist and as a 
pharmacist-in-charge. Id. at 2-5. Mr. Catizone also holds an honorary 
Doctor of Pharmacy license from the Oklahoma State Board of Pharmacy. 
Id. Mr. Catizone has been qualified as an expert in administrative 
proceedings in all States except Alaska and has previously been 
qualified as an expert in the United States District Court for the 
District of Minnesota and in other DEA proceedings. Tr. 313. The 
Government offered Mr. Catizone ``as an expert witness in pharmacy 
practice, pharmacy regulation, pharmacy legislation and internet 
pharmacy practices.'' Id.
    Mr. Catizone testified that under ``all state pharmacy practice 
acts,'' a ``pharmacist is responsible to ensure that the prescription 
is valid, has been written within the scope of practice for that 
prescriber, [that] the prescriber is appropriately licensed[,] and that 
[the] prescription is valid for [the] patient's disease, symptoms or 
conditions.'' Id. at 323. Mr. Catizone also testified that for a 
prescription to be valid under federal and state laws, it must be based 
on ``a bona fide relationship between the prescriber and the patient.'' 
Id. at 322.
    Mr. Catizone also reviewed Respondent's daily audit logs for the 
periods March 30-31, 2005, and November 9 through December 9, 2006 (GXs 
18 & 39). Based on his review, Mr. Catizone opined that the 
prescriptions showed ``disturbing patterns.'' Tr. 333. Most 
significantly, Mr. Catizone observed that ``the overwhelming majority 
of prescriptions [were] written by one physician, and that physician is 
located in [a] different state[] than all of the patients.'' Id. 
Moreover, ``the overwhelming prescription drug written for is 
hydrocodone, which you do not see that volume or that selectivity in 
any other retail pharmacy that I'm aware of.'' \18\ Id.
---------------------------------------------------------------------------

    \18\ Mr. Catizone also noted the absence of prescriptions for 
non-controlled drugs that are used to treat such conditions as 
diabetes, asthma, and high blood pressure that are found ``in a 
traditional retail pharmacy.'' Tr. 333.
---------------------------------------------------------------------------

    Mr. Catizone testified that he had not seen a dispensing mix like 
Respondent's ``except for internet pharmacies that we've studied in the 
past that have been involved in illegal activities involving controlled 
substances.'' Id. at 334. Mr. Catizone further testified that he had 
``not seen these types of prescribing patterns for physicians unless 
they were pain medication specialists * * * except in instances where 
we've looked at internet pharmacies that were operating illegally and 
prescribing controlled substances illegally.'' Id. at 335.
    Finally, Mr. Catizone testified that based on the dispensing 
records, Respondent had not met its corresponding responsibility to 
ensure that the prescriptions it filled had been issued in the usual 
course of professional practice. Id. at 343-44. Moreover, based on his 
review of the dispensing records and the fact that Reppy was licensed 
only in Florida, Mr. Catizone further testified that Respondent had not 
fulfilled its responsibility to ensure that that there was sufficient 
evidence of a legitimate doctor-patient relationship before filling Dr. 
Reppy's prescriptions. Id. at 344.
    On cross-examination, Mr. Catizone explained that he formed his 
opinion solely on the basis of the dispensing records and had not done 
any further investigation to determine whether Reppy's prescriptions 
were issued pursuant to a legitimate doctor-patient relationship or 
whether Reppy treated chronic pain patients. Id. at 352-53. Mr. 
Catizone also testified he had not done any similar investigation with 
respect to the other doctors whose prescriptions were filled by 
Respondent. Id. at 353-54. Mr. Catizone further stated that his opinion 
was based strictly on ``the numbers and the prescribing patterns and 
the location of the patients.'' Id. at 355.
    Mr. Catizone agreed that under federal and state laws it is not ``a 
necessary prerequisite to the issuance of a prescription that the 
prescriber be the person who conducted the physical examination.'' Id. 
at 355-56; see also id. at 359-61. He further asserted, however, that 
``[t]he federal requirement is that there's a bona fide relationship. 
And if that relationship can be established as a referral from another 
prescriber or physician that's made that examination,'' then the 
prescriber does not have to have performed the physical examination. 
Id. at 356. Clarifying his testimony, Mr. Catizone asserted that there 
had to be a relationship between the examining physician and the 
prescriber, ``as well as between the patient and the initial physician 
who has performed the medical examination. If care is shifted to the 
other physician, then that physician also has to have a relationship 
with that patient to ongoingly prescribe medications.'' Id. at 357.
    Relatedly, Mr. Catizone acknowledged that under Florida law, a 
physician may issue a prescription even though he did not physically 
examine the patient. Id. at 359. Mr. Catizone then testified that if 
one physician ordered a diagnostic test and the results of those tests 
were sent to another practitioner for review and that practitioner took 
a medical history and talked to the patient, the practitioner could 
then issue a prescription. Id. at 361.
    On further cross-examination, Mr. Catizone was shown Government 
Exhibit 86 which memorialized several interviews conducted by a 
Diversion Investigator of Dr. Reppy's patients. In some instances, 
these persons told the DI that they had been required to obtain a 
physical exam from another physician or that they had at some point 
been physically examined by Reppy. GX 86 at 2, 10, & 12. Others, 
however, told the investigator that they had not been seen by Reppy and 
had not been required to obtain a physical exam. Id. at 4, 6-9. While 
Mr. Catizone acknowledged that it was ``important to have the entire 
picture,'' he also noted that in some instances the ``patients'' could 
not even recall the prescribing physician's name.

[[Page 50405]]

Tr. 366; see also GX 86 at 3, 7 & 8. Mr. Catizone then added that this 
exhibit ``substantiate[d] my contention * * * that the practices were 
not legal and not meeting the standards of care.'' Tr. 367.
    Finally, Respondent's counsel asked Mr. Catizone whether his 
conclusion that Respondent had dispensed invalid prescriptions would be 
altered by the fact that Respondent had verified that the prescriber 
was licensed and had a DEA registration, that ``there had been direct 
communication between the patient and the physician,'' and that it had 
obtained ``an affidavit from the physician attesting to the existence 
of a physician/patient relationship.'' Id. at 371-72. Mr. Catizone 
testified that these facts would not lead him to change his testimony 
``unless [it] was documented for every single patient.'' Id. at 372.
    Respondent excepted to the testimony of Mr. Catizone, asserting 
that he ``is not competent to offer any expert opinion, much less an 
opinion on the requirements of a valid doctor-patient relationship.'' 
Resp. Exceptions at 4. Respondent asserts that Mr. Catizone is ``little 
more than a fraud'' because he ``refers to himself as `Dr. Catizone''' 
when ``he has never earned a doctorate degree nor even been conveyed 
with an honorary one from an academic institution,'' but rather, holds 
an ``honorary title'' granted by the Oklahoma Board of Pharmacy. Id. at 
4-5.
    The short answer to Respondent's contention is that whether Mr. 
Catizone can properly call himself Dr. Catizone is irrelevant because 
what matters are his qualifications to testify as an expert. And 
contrary to Respondent's contention, a witness can be qualified as an 
expert by virtue of his skill, training, knowledge, education or 
experience. Cf. F.R.E. 702. Accordingly, Mr. Catizone's lack of a 
degree at the doctoral level does not disqualify him from testifying as 
an expert. Nor does the fact that he ``has not worked in a clinical 
pharmacy setting since 1995.'' Resp. Exceptions at 5. Mr. Catizone's 
expertise in pharmacy practice is amply established by his prior work 
as a practicing pharmacist, his professional experience as the 
Executive Director of the National Association of Boards of Pharmacy, 
and his extensive writings. I therefore find that Mr. Catizone was 
competent to testify as to the scope of a pharmacist's obligations 
under Federal law and the pharmacy practice acts of the various States.
    Respondent also excepted to Mr. Catizone's testimony on the ground 
that there is no evidence that he has ``received any medical training 
or has ever been involved in patient care in any form which would 
provide him a basis to opine on the requirements of a doctor-patient 
relationship.'' Id. Relatedly, Respondent argues that the Government 
has not shown ``that Mr. Catizone has received any legal training which 
would qualify him to interpret uncited, yet apparently relied upon, 
court cases regarding same.'' Id.
    I need not resolve this issue because I decline to adopt the ALJ's 
reasoning as to why the prescriptions written by Dr. Reppy and the 
other physicians were not based on valid doctor-patient relationships. 
The States have the primary responsibility for regulating the practice 
of medicine. I therefore conclude that the appropriate course in 
determining whether Dr. Reppy and the other physicians prescribed 
pursuant to valid doctor-patient relationships is to examine the 
specific legal authorities of the various States.\19\
---------------------------------------------------------------------------

    \19\ This is not to say that Mr. Catizone is not competent to 
testify in this area. A pharmacist has a ``corresponding 
responsibility'' to ascertain whether a prescription has been 
``issued for a legitimate medical purpose by an individual 
practitioner acting in the usual course of his professional 
practice.'' 21 CFR 1306.04(a). Determining whether a physician has 
acted in accordance with this standard necessarily requires that the 
pharmacist have knowledge of the applicable State's law. See United 
States v. Smith, 2006 WL 3702656 (D. Minn 2006).
---------------------------------------------------------------------------

    The Government also introduced the declaration of George Van Komen, 
M.D., the former President of the Federation of State Medical Boards 
(FSMB), as well as Dr. Van Komen's testimony in In re Trinity Health 
Care Corp., 72 FR 30849 (2007). See GXs 78 & 83. In his written 
declaration, Dr. Komen explained the standard for establishing a 
legitimate doctor-patient relationship under the FSMB's guidelines:

    The standard in terms of forming a legitimate doctor-patient 
relationship is that there needs to be a documented face-to-face 
history and physical * * * evaluation of the patient, and then if 
this patient chooses to receive further consultative work or be 
established with a physician who practices on the Internet, that the 
Internet physician first of all and most importantly needs to be 
identified, and he needs to have a license in the state in which the 
patient resides.
* * * * *