The Lawsons, Inc., t/a The Medicine Shoppe Pharmacy; Denial of Application, 74334-74339 [E7-25346]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 72, Number 249 (Monday, December 31, 2007)]
[Notices]
[Pages 74334-74339]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-25346]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 05-24]


The Lawsons, Inc., t/a The Medicine Shoppe Pharmacy; Denial of 
Application

    On March 4, 2005, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to The Lawsons, Inc., t/a The Medicine Shoppe Pharmacy 
(Respondent) of Cheverly, Maryland. The Show Cause Order proposed the 
denial of Respondent's application for a DEA Certificate of 
Registration as a pharmacy on various grounds.
    More specifically, the Show Cause Order alleged that in October 
1999, the Prince George's County, Maryland, Police Department received 
information that Ms. Tina M. Hart-Lawson, Respondent's chief 
pharmacist, was filling fraudulent prescriptions. Show Cause Order at 
1. The Show Cause Order further alleged that on multiple occasions 
between November 11, 1999, and February 9, 2000, two undercover 
officers had presented fraudulent prescriptions for Percocet, a 
schedule II controlled substance, and Vicodin, a schedule III 
controlled substance, to Ms. Lawson, who filled the prescriptions 
without first verifying them. Id. at 1-3. The Show Cause Order alleged 
that all of the prescriptions presented by the undercover officers 
``had indicia of fraud'' and ``were written in the name of a fictitious 
doctor and DEA registration,'' and that Ms. Lawson did not report any 
of the fraudulent prescriptions to the police. Id. at 3.
    The Show Cause Order also alleged that on February 4, 2000, Ms. 
Lawson told one of the undercover officers that she knew that the 
prescriptions presented by the officer two days earlier were forged, 
but then proceeded to partially fill one of them anyway. Id. at 2. The 
Show Cause Order alleged that Ms. Lawson had told the undercover 
officer that a local police officer was present when the undercover 
officer presented the prescriptions and had asked Ms. Lawson about 
them. Id. at 2-3. Ms. Lawson allegedly told the undercover officer that 
because she did not want the latter ``to get in trouble,'' she told the 
local police officer that the undercover officer ``was a cancer 
patient.'' Id. at 3.
    Next, the Show Cause Order alleged that on February 9, 2000, the 
other undercover officer presented a fraudulent prescription for 
Percocet. Id. The Show Cause Order alleged that Ms. Lawson filled the 
prescription, and after being paid for it, told the undercover officer 
that she ``knew the prescription was fraudulent,'' but ``would not call 
the police'' because the undercover officer was ``a sister.'' Id. The 
Show Cause Order further alleged that Ms. Lawson was subsequently 
arrested, and on March 8, 2002, pled guilty to having unlawfully 
distributed oxycodone in violation of 21 U.S.C. 841(a)(1). Id.
    Finally, the Show Cause Order alleged that on September 13, 2003, 
Samuel L. Lawson, M.D., filed an application on behalf of Respondent 
for a new DEA registration. Id. The Show Cause Order alleged that in 
support of its application, Respondent had attached a signed statement 
of Ms. Lawson which contained several material falsehoods and 
omissions. Id. at 3-4. The Show Cause Order thus concluded by alleging 
that because Ms. Lawson ``has a felony conviction and made false 
statements in the Medicine Shoppe's application, granting a DEA 
registration to [Respondent] would not be consistent with the public 
interest.'' Id. at 4.
    Respondent, through its counsel, requested a hearing. The matter 
was

[[Page 74335]]

assigned to Administrative Law Judge (ALJ) Mary Ellen Bittner, who 
conducted a hearing in Arlington, Virginia, on April 18, 2006. At the 
hearing, both parties introduced documentary evidence and called 
witnesses to testify. Following the hearing, both parties submitted 
briefs containing proposed findings of fact, conclusions of law, and 
argument.
    On November 6, 2006, the ALJ issued her initial Opinion and 
Recommended Decision (ALJ 1). In this decision, the ALJ concluded that 
granting Respondent's application ``would not be inconsistent with the 
public interest.'' ALJ 1, at 19. The ALJ further noted, however, that 
Respondent did not currently hold a Maryland controlled dangerous 
substances license and therefore recommended the denial of its 
application. Id. at 20. The ALJ further stated that in the event 
Respondent obtained the state license before the record was submitted 
to my office, she would change her recommendation. Id.
    Thereafter, on November 27, 2006, the Government filed exceptions 
to the ALJ's decision. ALJ Supplemental Decision at 2 (hereinafter, ALJ 
Dec). The next day, Respondent moved for reconsideration on the ground 
that it had received a state controlled-substance license. Id. On 
January 10, 2007, the ALJ granted Respondent's motion, and on February 
12, 2007, the ALJ issued her supplemental decision which recommended 
that Respondent's application be granted. The record was then 
transmitted to me for final agency action.
    Having considered the entire record, I hereby issue this Decision 
and Final Order. For reasons set forth below, I reject the ALJ's 
conclusion that ``granting Respondent's application . . . would not be 
inconsistent with the public interest.'' ALJ Dec. at 19. In so holding, 
I adopt the ALJ's finding ``that Dr. Lawson made substantial 
misrepresentations in the letter she attached to Respondent's . . . 
application.'' Id. I also note that the ALJ found credible Ms. Lawson's 
``acknowledgments at the hearing that she made mistakes . . . and her 
expressions of remorse for those mistakes.'' Id. at 19-20. But as the 
ALJ also found, Ms. Lawson ``provided no testimony as to why she'' made 
several materially false statements in connection with the application. 
Id. at 19. Thus, even if Ms. Lawson has acknowledged her wrongdoing in 
filling fraudulent prescriptions, she entirely failed to address her 
later misconduct in submitting a false statement in connection with her 
application. Because I conclude that the falsifications cannot be 
attributed to mere carelessness or negligence, I conclude that Ms. 
Lawson (and Respondent) cannot be entrusted with a registration. I make 
the following findings.

Findings

    Respondent, a franchise of The Medicine Shoppe International, Inc., 
is a retail pharmacy located in Cheverly, Maryland. GX 1, RX 14. 
Respondent is owned by Samuel Lawson, M.D., and Tina Hart-Lawson, Ph.D. 
and R.Ph., who are married to each other. ALJ at 2. Ms. Hart-Lawson 
began practicing as a pharmacist in 1981, Tr. 193, and was Respondent's 
Chief Pharmacist in the fall of 1999 when Ms. Lawson and the pharmacy 
first came to the attention of the Prince George's (P.G.) County Police 
Department when the latter received information that Ms. Lawson was 
knowingly filling fraudulent prescriptions. GX 14, at 1.
    During the initial phase of the investigation, a DEA Diversion 
Investigator (DI) went to Respondent and retrieved the prescriptions 
that it had filled for a person that the P.G. County police had 
recently arrested. Tr. 19. During the visit, the DI noticed that when 
Respondent's customers dropped off their prescriptions, Ms. Lawson did 
not verify them with their physicians. Id. at 20.
    Thereafter, the DI suggested to the P.G. County Police that further 
investigation of Ms. Lawson and Respondent was warranted. Id. at 20-21. 
Accordingly, the investigators decided to create fictitious 
prescriptions using the name of Deleon E. Ambrozewicz, M.D., and a 
false DEA registration number. Id. at 21. The prescriptions also 
included a telephone number, which if called, would result in the 
caller hearing that the number was not available. Id. The investigators 
also decided to use two persons to fill out the prescriptions and to 
leave out essential information necessary to fill a prescription such 
as the date, the quantity to be dispensed, and the number of refills. 
Id. at 47.
    Between October 18, 1999, and February 9, 2000, two P.G. County 
detectives carried out a total of 10 undercover visits to Respondent 
during which they presented fraudulent prescriptions to Ms. Lawson. ALJ 
at 4. Using the undercover name of Amber Johnson, the first detective 
(hereinafter, Detective I) visited Respondent on October 18, November 
11, November 16, December 1, and December 7, 1999, as well as on 
February 9, 2000. Id. Using the undercover name of Colleen Talliver, 
the second detective (hereinafter, Detective II) visited Respondent on 
January 7, January 12, February 2, and February 4, 2000. Id.
    On October 18, 1999, Detective I visited Respondent and presented 
to Ms. Lawson prescriptions for Percocet and Soma,\1\ which were 
``issued'' under the name of Dr. Ambrozewicz. Tr. 76, GX 15. Ms. Lawson 
called the telephone number on the prescription, determined that it was 
not a ``good number,'' and refused to fill the prescription. Tr. 75-76.
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    \1\ Soma (carisoprodol) is not a controlled drug.
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    On November 11, 1999, Detective I returned to Respondent and 
presented to Ms. Lawson another fraudulent prescription for Percocet 
``issued'' by Dr. Ambrozewicz. Id. at 78-80. According to the 
Detective, Ms. Lawson asked her only if she had insurance. Id. at 82-
83. Ms. Lawson then filled the prescription. Id. at 81-82; see also GX 
10, at 2-3.
    Five days later, Detective I returned to Respondent and presented 
to Ms. Lawson another fraudulent Percocet prescription ``issued'' by 
Dr. Ambrozewicz. Tr. 84; GX 11. On this occasion, Ms. Lawson asked the 
Detective whether she had been to the pharmacy before. Tr. 84. The 
Detective told Ms. Lawson that she had been there the week before to 
which Ms. Lawson responded: ``Oh, you must be in pain.'' Id. The 
Detective answered affirmatively and Ms. Lawson filled the 
prescription. Id. at 84-85; see GX 11, at 2.
    On December 1, 1999, Detective I returned to Respondent and 
presented to Ms. Lawson fraudulent prescriptions for both Percocet and 
Vicodin ``issued'' by Dr. Ambrozewicz. Id. at 86. According to the 
Detective, Ms. Lawson may have asked her whether she had been there 
before but did nothing to verify whether the prescriptions were valid. 
Id. at 86-87. Moreover, while these drugs are contraindicated, id. at 
217, Ms. Lawson filled both prescriptions. Id. at 87-88; GX 7 & 8.
    Six days later, Detective I returned to Respondent and again 
presented to Ms. Lawson fraudulent prescriptions for Percocet and 
Vicodin ``issued'' by Dr. Ambrozewicz. Tr. 88-89. According to the 
Detective, Ms. Lawson asked only whether she had insurance and had been 
to the pharmacy before; the Detective affirmatively answered the latter 
question. Id. at 89. Ms. Lawson did nothing to verify the validity of 
the prescriptions and filled both of them. Id. at 89-90; see also GXs 5 
& 6.
    Detective I did not return to Respondent until February 9, 2000, 
when she presented to Ms. Lawson another Percocet prescription 
``issued'' by Dr. Ambrozewicz. GX 9; Tr. 90-91.

[[Page 74336]]

On this occasion, Ms. Lawson told the Detective that she knew that the 
prescription was ``fake,'' because she had another customer who had 
used the same doctor's name and had determined that the ``doctor did 
not exist.'' GX 14, at 2. After telling the Detective that she would 
let it go this time because she had already filled the prescription, 
Tr. 91, Ms. Lawson placed her telephone on its speaker-phone function 
and dialed the phone number listed on the prescription. GX 14, at 2-3. 
Ms. Lawson then stated: ``I will let you go this time, and I'm not 
going to call the police because you're a sister.'' Id. at 3; Tr. at 
91. The Detective paid cash for the Percocet and left Respondent. Tr. 
at 91.
    On January 7, 2000, Detective II visited Respondent and presented 
to Ms. Lawson a fraudulent Soma prescription ``issued'' by Dr. 
Ambrozewicz. Id. at 26. The prescription did not include the quantity, 
id.; Ms. Lawson proceeded to ask the Detective if thirty tablets 
``would be enough?'' Id. at 27. After the Detective told Ms. Lawson 
that thirty tablets ``would be fine,'' Ms. Lawson filled the 
prescription. Id. at 27.
    On January 12, 2000, Detective II returned to Respondent and 
presented to Ms. Lawson a fraudulent prescription for Percocet. Id. at 
28. The prescription, which was ``issued'' by Dr. Ambrozewicz, was 
undated and left blank the number of refills. GX 12. According to the 
Detective, who remained present upon tendering the prescription, Ms. 
Lawson filled the prescription without verifying it. Tr. 30-31; GX 12, 
at 2-3.\2\
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    \2\ On April 3, 2000, the police executed a search warrant at 
Respondent and seized the various prescriptions. This prescription 
bore the handwaritten notation ``fraudulent.'' GX 12, at 1. 
According to the Detective, the notation was not on the prescription 
when she tendered it to Ms. Lawson. TR. 29.
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    On February 2, 2000, Detective II returned to Respondent and 
presented to Ms. Lawson fraudulent prescriptions for Vicodin and 
Percocet. Tr. 32. The Vicodin prescription, which was ``issued'' by Dr. 
Ambrozewicz, was again undated and left blank the number of refills.\3\ 
GX 13, at 1. Ms. Lawson informed Detective II that because of a bad 
snowstorm two days earlier, a shipment had not come in, and therefore, 
she was unable to fill the Percocet prescription and could only fill 
half of the Vicodin prescription. Tr. 32. Ms. Lawson then dispensed 
tablets of generic Vicodin to the Detective. GX 13, at 2-3.
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    \3\ The record does not include a copy of the Percocet 
prescription which Detective II presented to Ms. Lawson. The Vicodin 
prescription bears the notations ``forged'' and ``Called 911.'' GX 
13. It also included information describing the Detective's physical 
appearance and automobile. See id. at 2. Ms. Lawson did not, 
however, testify regarding this information. ALJ at 8.
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    On February 4, 2000, the Detective returned to Respondent in an 
attempt to obtain the remaining half of the Vicodin prescription and 
the Percocet prescription which had not been filled. Tr. 36. Ms. Lawson 
pulled the Detective aside and told her that she knew the prescriptions 
were fraudulent, and that Dr. Ambrozewicz did not exist. Id. at 36-37. 
Ms. Lawson also told the Detective that during her previous visit, a 
local police officer was in the store. Id. at 37. Ms. Lawson told the 
Detective that ``she did not say anything in front of the police 
officer'' because she did not want the Detective to get in ``trouble.'' 
GX 14, at 2; see also Tr. 37. Ms. Lawson then told the Detective that 
she had only given her half the Vicodin prescription because she wanted 
the Detective to leave. Tr. 37. Ms. Lawson also told the Detective that 
she knew the latter needed help and hoped she would get it. Id.
    Thereafter, the United States Attorney indicted Ms. Lawson. Tr. 
122. Ms. Lawson pled guilty, and, on April 29, 2002, the United States 
District Court convicted her of the unlawful distribution of oxycodone 
on February 9, 2000, in violation of 21 U.S.C. 841(a)(1). GX 3. Ms. 
Lawson was sentenced to five months imprisonment and three years of 
supervised release, which also included a five-month term of home 
detention. GX 3, at 2-4. Prior to entering her plea, Ms. Lawson met 
with P.G. County Detectives and submitted to an interview. Tr. 56. 
Moreover, at some point not specified in the record, Respondent 
surrendered its DEA registration. Tr. 134.
    On September 13, 2003, Respondent submitted an application for a 
new registration which was completed by Respondent's husband. GX 1. On 
the application, Respondent answered ``yes'' to the question whether it 
had ``ever surrendered or had a federal controlled substance 
registration revoked * * * or denied?'' GX 1, at 1. Respondent also 
answered ``yes'' to the question which asks a non-publicly traded 
corporate entity whether ``any officer, partner, stockholder, or 
proprietor [has] been convicted of a crime in connection with 
controlled substances under state or federal law?'' Id. In explaining 
its answer to the latter question, Respondent referred to the attached 
statement of Ms. Lawson regarding the events surrounding her 
conviction. GX 1, at 2.
    In this statement, Ms. Lawson wrote:

    Approximately 3 years ago (March 2000), a female patient 
exhibiting excruciating pain, came to the pharmacy with a 
prescription for a scheduled drug (percocet). Inspite (sic) of the 
fact that this patient was extremely conniving, I followed my usual 
professional protocol of verifying and authenticating the said 
prescription. My finding lead me to believe that, this was a 
fraudulent prescription. My professional judgment at the time on a 
very busy day, was to inform the police of this occurrence. However, 
in order to substantiate my finding, I decided to partial (sic) fill 
so that the police will apprehend the patient with the item in hand.
    For the past 20 years as a licensed pharmacist, I have turned 
away several such prescriptions. On this busy day in question, I was 
trying to perform my civic duty by involving the police. No sooner 
had I made this professional judgement (sic), than I was later 
informed that this was a set up by an agent.
    Upon further investigation, it was concluded that I had 
performed my duties in the past with distinction and without prior 
criminal record, but the professional judgment made by me on this 
day in question was in error and uncharacteristic.

    Id. at 3. Upon receipt of Respondent's application, DEA commenced 
this investigation.
    Based on Ms. Lawson's guilty plea, on March 25, 2005, the Maryland 
Board of Pharmacy charged Ms. Lawson with violating Md. Health Occ. 
Code Ann. Sec.  12-313, a provision which authorizes the Board to 
discipline a licensee upon a conviction or guilty plea ``to a felony or 
to a crime involving moral turpitude.'' RX 16, at 1. On the same day, 
the Board also charged Respondent with a violation of Maryland law 
based on Ms. Lawson's criminal conduct. See GX 17.
    On August 1, 2005, ``over the objection of the [State's] 
prosecutor,'' GX 16 at 2, the Board and Ms. Lawson agreed to a 
settlement under which her license was ``suspended for three years, 
with all three years immediately [s]tayed.'' Id. at 3. The Board also 
placed Ms. Lawson on ``probation for a minimum of three years,'' and 
ordered her to complete an ethics course. Id. at 4. Relatedly, the 
Board also suspended Respondent's pharmacy permit for three years with 
all three years stayed and imposed a fine of $2,500. See GX 17, at 4.
    Both Mr. and Mrs. Lawson testified at the hearing. Mr. Lawson 
testified that he and his wife ``met on several occasions with the 
agents that * * * testified'' in the proceeding, and that during these 
meetings, he ``was able to find out a lot of things that had happened 
in terms of all the different incidents.'' Tr. 156. Mr. Lawson further 
testified that the various investigations had concluded that Ms. Lawson 
had received ``negligible''

[[Page 74337]]

financial gain from her misconduct. Id. at 157. Mr. Lawson stated that 
when the Lawsons went before the Maryland Board ``the incidents that 
had been put forward by DEA and also by the prosecuting attorney during 
the first adjudication process, all that information was relayed * * * 
to them.'' Id. at 162. Mr. Lawson also testified that to his knowledge, 
his wife had not received any further complaints regarding her 
dispensing of controlled substances. Id. at 172-73.
    Mr. Lawson testified that a DEA diversion investigator was aware 
that his wife had pled guilty to the criminal charge. Id. at 174. Mr. 
Lawson also testified that another diversion investigator had 
``objected'' to the answers that Respondent had provided to the 
liability questions (in section 4) of the application because they did 
not reflect his wife's conviction; the DI then sent him a new 
application and instructed him to ``fill [it] out correctly.'' Id. at 
178; see also id. at 188-89. Mr. Lawson testified that he did so, id. 
179 & 189, and that the information in his wife's statement:

was constructed by me after listening to [her] years later as to 
what may have happened when the particular application that she pled 
guilty to, that one count, what had transpired in my absence based, 
on her best recollection. * * * I put those words together, not to 
mean those were the exact things that this agent might have 
purported before Tina. It was based on her physical appearance and 
whatever other demeanors that she may have had on that particular 
day.

Id. at 179.
    Mr. Lawson testified that his wife had taken continuing education 
courses and completed the ethics course mandated by the Maryland Board. 
Id. at 183. Mr. Lawson further testified that since the events that led 
to her conviction, his wife ``has been extremely cautious and she does 
her best to follow all the regulations.'' Id.
    Ms. Lawson testified that in the past, she ``used to take [her 
customer's] word,'' but that since her arrest, she had become ``more 
careful'' and ``more suspicious of anybody that comes into the 
pharmacy.'' Id. at 195. Ms. Lawson further stated that while taking the 
required ethics course, she recognized that she had not been ``dealing 
with [her customers] on a professional basis'' because she would talk 
to them about ``their private life and everything,'' but now she keeps 
her interactions ``short and simple'' and only ``deal[s] with them 
professionally.'' Id. at 197.
    Ms. Lawson testified that even when she fills pain medications 
which are not controlled substances, she now verifies the prescription 
with the prescribing physician. Id. at 198. Ms. Lawson added that she 
also takes more time to fill the prescription and tells her customers 
that ``if they cannot wait, they can go to another pharmacy.'' Id. Ms. 
Lawson further testified that she had attended a number of continuing 
education courses. Id. at 200-01. Finally, Ms. Lawson testified that 
she ``should have done things differently and * * * I made a big 
error,'' and wanted a second chance ``to show [DEA] that I'm a changed 
person.'' Id. at 201.
    Ms. Lawson offered no testimony, however, regarding the statement 
she signed and submitted in support of Respondent's application. See 
generally id. 191-203. Moreover, when asked by her counsel whether 
there was ``anything else'' she wanted the ALJ to know as to why it 
would be ``in the public interest to'' grant the application, Ms. 
Lawson answered: ``I can't think of anything right now.'' Id. at 
203.\4\
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    \4\ Ms. Lawson also produced several letters of recommendation 
including one from her probation officer. See RX 5.
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    On cross-examination, Ms. Lawson testified that she did not recall 
the Detective who presented the prescription which led to her 
indictment having ever been in her store. Id. at 211. She also 
testified that she did not recall the other Detective having been in 
her store until meeting the Detective during a de-briefing after her 
arrest. Id. Ms. Lawson further testified that she did not remember to 
which Detective she had given the partial prescription, that it had 
``been a very long time [since] all these things happened,'' and that 
she had only a ``vague recollection of any of these prescriptions being 
presented to me.'' Id. at 212. Moreover, when asked whether she knew on 
December 7, 1999, whether ``DeLeon Ambrozewicz was a legitimate 
doctor?,'' Ms. Lawson answered: ``I really don't remember. It's been a 
long time.'' Id. at 215.
    Ms. Lawson admitted that Percocet and Vicodin are contraindicated, 
but then testified that she did not remember whether she had advised 
Detective II of this fact when she dispensed both drugs to her on 
December 1, 1999. Id. at 216-17. Ms. Lawson also could not explain why 
her pharmacy's computer-generated prescription printout indicated that 
one refill was authorized for the February 2, 2000 Vicodin prescription 
issued to Det. II when the initial script had left this blank. Id. at 
218; see also GX 13 at 1-2. Ms. Lawson testified that she ``should have 
* * * checked'' the prescription and ``done things differently.'' Tr. 
218. Ms. Lawson further maintained that ``[i]n those days, it used to 
be very busy at the pharmacy'' and that she ``did not have any help,'' 
but that she now ``double-checks'' prescriptions, ``scrutinizes 
anything that leaves the pharmacy,'' and doesn't ``rush.'' Id. at 219.

Discussion

    Section 303(f) of the Controlled Substances Act provides that an 
application for a practitioner's registration may be denied upon a 
determination ``that the issuance of such registration would be 
inconsistent with the public interest.'' 21 U.S.C. 823(f). In making 
the public interest determination, the CSA requires the consideration 
of the following factors:

    (1) The recommendation of the appropriate State licensing board 
or professional disciplinary authority.
    (2) The applicant's experience in dispensing * * * controlled 
substances.
    (3) The applicant's conviction record under Federal or State 
laws relating to the manufacture, distribution, or dispensing of 
controlled substances.
    (4) Compliance with applicable State, Federal, or local laws 
relating to controlled substances.
    (5) Such other conduct which may threaten the public health and 
safety.

Id.
    ``These factors are * * * considered in the disjunctive.'' Robert 
A. Leslie, M.D., 68 FR 15227, 15230 (2003). I ``may rely on any one or 
a combination of factors, and may give each factor the weight [I] 
deem[] appropriate in determining whether * * * an application for 
registration [should be] denied.'' Id. Moreover, I am ``not required to 
make findings as to all of the factors.'' Hoxie v. DEA, 419 F.3d 477, 
482 (6th Cir. 2005).
    Furthermore, under Section 304(a)(1), a registration may be revoked 
or suspended ``upon a finding that the registrant * * * has materially 
falsified any application filed pursuant to or required by this 
subchapter.'' 21 U.S.C. 824(a)(1). Under agency precedent, the various 
grounds for revocation or suspension of an existing registration that 
Congress enumerated in section 304(a), 21 U.S.C. Sec.  824(a), are also 
properly considered in deciding whether to grant or deny an application 
under section 303. See Anthony D. Funches, 64 FR 14267, 14268 (1999); 
Alan R. Schankman, 63 FR 45260 (1998); Kuen H. Chen, 58 FR 65401, 65402 
(1993). Thus, the allegation that Respondent materially falsified its 
application is properly considered in this proceeding. See Samuel S. 
Jackson, 72 FR 23848, 23852 (2007).
    In this case, I agree with the ALJ that Respondent and Ms. Lawson 
materially

[[Page 74338]]

falsified its application for registration. ALJ Dec. at 19. While 
noting that Ms. Lawson ``provided no testimony as to why she'' made 
these ``significant misrepresentations,'' the ALJ apparently treated 
the material falsification as just ``other conduct'' to be considered 
under Factor Five of the public interest analysis and recommended that 
the application be granted. Id. at 19-20.
    The ALJ's approach gave insufficient weight to Ms. Lawson's 
separate act of misconduct in making several false statements in 
connection with Respondent's application. Just as materially falsifying 
an application provides a basis for revoking an existing registration 
without proof of any other misconduct, see 21 U.S.C. Sec.  824(a)(1), 
it also provides an independent and adequate ground for denying an 
application. Cf. Bobby Watts, M.D., 58 FR 46995 (1993).
    Ms. Lawson's statement was offered as an explanation of the events 
which surrounded her dispensing of Percocet to Detective I on February 
9, 2000. With respect to that statement, the ALJ concluded that Dr. 
Lawson made several ``false statements in the letter.'' ALJ at 19. In 
particular, Ms. Lawson attempted to portray herself as the victim of 
deception stating that she filled the prescription in part because the 
Detective was ``extremely conniving'' and exhibited ``excruciating 
pain.'' GX 1, at 3. The Detective--whom the ALJ found credible (ALJ at 
19)--testified, however, that Ms. Lawson told her that she knew that 
Dr. Ambrozewicz ``was a fictitious doctor,'' Tr. 91, but would ``let 
this one go because she had already filled the prescription'' and ``was 
looking out for her.'' Id.
    Moreover, while Ms. Lawson represented that it was ``very busy'' 
when she filled the prescription, GX 1, at 3; DI Valentine testified 
that both Detectives told her that ``each time they went in there, it 
was not busy.'' Tr. 114. Indeed, Ms. Lawson's statement to the 
Detective that she knew the prescription was fraudulent but filled it 
because she was looking out for her, implicated her in the criminal act 
of unlawful distribution of a controlled substance. See 21 U.S.C. 
841(a). This is not the type of conversation that one would expect to 
occur in a ``very busy'' pharmacy.
    The evidence thus establishes that Ms. Lawson was neither duped 
into filling the prescription nor harried by the demands of a ``very 
busy'' work environment. I thus find that her representations that the 
Detective was ``conniving'' by exhibiting ``excruciating pain'' and 
that the pharmacy was ``very busy'' were false.
    Ms. Lawson further asserted that her ``professional judgment at the 
time * * * was to inform the police of this occurrence,'' and that ``to 
substantiate [her] finding'' that the prescription was fraudulent, she 
``decided to partial[ly] fill [the prescription] so that the police 
will apprehend the patient with the item in hand.'' GX 1, at 3. As the 
ALJ found, there is no evidence that Ms. Lawson contacted the police on 
the date in question, February 9, 2000.\5\ Indeed, as recounted in the 
police report, Ms. Lawson put her telephone on its speaker function so 
that the Detective could hear, dialed the number for Dr. Ambrozewicz 
(to show that she knew that there was no such doctor) and stated: 
``see, I will let you go this time, and I'm not going to call the 
police because you're a sister.'' GX 14, at 3. I thus find that Ms. 
Lawson's representations that it was her judgment ``to inform the 
police'' and that she filled the prescription ``so that the police 
[would] apprehend the patient with the item in hand'' were both false.
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    \5\ In discussing this part of Ms. Lawson's statement, the ALJ 
also noted that ``Detective Muldoon testified to Dr. Lawson's 
statement that she partially filled the prescription so that 
Detective Muldoon would not get in trouble with the police.'' ALJ at 
19. Detective Muldoon's statement was, however, in reference to the 
February 2 and 4, 2000 undercover visits, and not to Ms. Lawson's 
criminal conduct on February 9, 2000. Ms. Lawson was indicted for, 
and convicted of, only her conduct on February 9, 2000; her written 
statement was offered only in explanation of the events pertaining 
to her conviction. Detective Muldoon's statements are therefore not 
probative of the events occurring on this date. Accordingly, I 
reject the ALJ's reasoning to the extent it relied on the statement 
to Detective Muldoon in finding that Ms. Lawson's statement was 
false.
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    Having found that these various statements were false does not, 
however, close the inquiry because it must also be determined whether 
they were material. ``The most common formulation'' of the concept of 
materiality ``is that a concealment or misrepresentation is material if 
it `has a natural tendency to influence, or was capable of influencing, 
the decision of the decisionmaking body to which it was addressed.'' 
Kungys v. United States, 485 U.S. 759, 770 (1988) (quoting Weinstock v. 
United States, 231 F.2d 699, 701 (D.C. Cir. 1956)) (other citation 
omitted); see also United States v. Wells, 519 U.S. 482, 489 (1997) 
(quoting Kungys, 485 U.S. at 770). The evidence must be ``clear, 
unequivocal, and convincing.'' Kungys, 485 U.S. at 772. However, ``the 
ultimate finding of materiality turns on an interpretation of 
substantive law.'' Id. at 772 (int. quotations and other citation 
omitted).
    DEA has previously held that ``[t]he provision of truthful 
information on applications is absolutely essential to effectuating 
[the] statutory purpose'' of determining whether the granting of an 
application is consistent with the public interest. See Peter H. Ahles, 
71 FR 50097, 50098 (2006). As the Sixth Circuit recently observed: 
``Candor during DEA investigations * * * is considered by the DEA to be 
an important factor when assessing whether a * * * registration is 
consistent with the public interest.'' Hoxie v. DEA, 419 F.3d 477, 483 
(6th Cir. 2005).
    An applicant's answers to the various liability questions are 
material because this Agency ``relies upon such answers to determine 
whether an investigation is needed prior to granting the application.'' 
Martha Hernandez, M.D., 62 FR 61145, 61146 (1997). The explanation 
given by an applicant who has affirmatively answered a liability 
question is likewise material because the public interest inquiry under 
section 303(f) requires, inter alia, that the Agency examine ``[t]he 
applicant's experience in dispensing * * * controlled substances,'' its 
``conviction record * * * relating to the * * * dispensing of 
controlled substances,'' and its ``[c]ompliance with applicable State, 
Federal, or local laws relating to controlled substances.'' 21 U.S.C. 
Sec.  823(f). Moreover, even where, as here, an applicant (or its 
related person) has been convicted of a controlled-substance related 
offense, that conviction does not impose a per se bar to the granting 
of a new registration. See, e.g., Scott H. Nearing, D.D.S., 70 FR 33200 
(2005). Rather, in evaluating such applications, the Agency looks at 
several factors including the egregiousness of the applicant's criminal 
conduct, its mitigating evidence, and whether the applicant has 
accepted responsibility for its prior criminal conduct. See id.; see 
also Jackson, 72 FR at 23853.
    While Ms. Lawson's misrepresentations were somewhat inconsistent in 
that they depicted her as a victim of a ``conniving'' customer and the 
circumstance of a ``very busy'' store, while then claiming that she 
filled the prescription so that police could apprehend the customer 
with the drugs in hand, I conclude that the statements were made to 
present her criminal conduct as less serious than it actually was. The 
statements were material because they had ``a natural tendency to 
influence,'' or were ``capable of influencing'' the Agency's evaluation 
of several of the public interest factors and the ultimate decision as 
to whether the Agency should grant Respondent's

[[Page 74339]]

application.\6\ Kungys, 485 U.S. at 770 (internal quotations and other 
citations omitted).
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    \6\ My decision in Jackson is not to the contrary. In Jackson, I 
found that the respondent provided a factually accurate disclosure 
of his conviction; this act thus rendered immaterial the 
respondent's ``no'' answer to question of whether he had been 
convicted of a controlled substance offense. 72 FR at 23852-53. 
Similarly, respondent's statement that he had voluntarily 
surrendered his registration when it had actually been revoked was 
not consequential in light of fact that no regulation defines the 
difference between the terms and the respondent had provided an 
accurate disclosure of the conduct that led to the loss of his 
registration. Id. In addition, I also adopted the ALJ's finding that 
the respondent had not intentionally falsified his application. Id. 
at 23852.
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    That the Agency did not rely on Ms. Lawson's false statements and 
grant Respondent's application does not make the statements immaterial. 
As the First Circuit has noted with respect to the material 
falsification requirement under 18 U.S.C. Sec.  1001, ``[i]t makes no 
difference that a specific falsification did not exert influence so 
long as it had the capacity to do so.'' United States v. Alemany 
Rivera, 781 F.2d 229, 234 (1st Cir. 1985). See also United States v. 
Norris, 749 F.2d 1116, 1121 (4th Cir. 1984) (``There is no requirement 
that the false statement influence or effect the decision making 
process of a department of the United States Government.'').\7\
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    \7\ The fact that a DEA Diversion Investigator from a local 
field office may have been present when Ms. Lawson entered her plea, 
Tr. 174, also does not render her representations immaterial. As the 
ALJ found, Respondent's application was submitted to a different 
section of the Agency, ALJ at 11, where it was initially reviewed.
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    I further conclude that Ms. Lawson's material falsifications cannot 
be attributed to mere negligence or carelessness, and that she either 
``knew or should have known'' that the statements were false. Dan E. 
Hale, D.O., 69 FR 69402, 69406 (2004); The Drugstore, 61 FR 5031, 5032 
(1996). The circumstances surrounding the February 9, 2000 visit, in 
which Ms. Lawson indicated that she knew the prescription was 
fraudulent and proceeded to dial the phone number of Dr. Ambrozewicz to 
demonstrate to the Detective that she knew that the doctor did not 
exist, are sufficiently different from the typical filling of a 
prescription that one should accurately recall them. Furthermore, the 
experience of being indicted and pleading guilty in a federal district 
court to the unlawful distribution of Percocet on the above date are of 
such significance that one should have a fairly accurate recollection 
of the underlying circumstances. Moreover, only three and a half years 
had elapsed between her criminal conduct in filling the fraudulent 
prescription and her submission of the statement. Significantly, 
Respondent provided the statement to DEA after the rejection of an 
earlier application.
    I further note that Ms. Lawson did not testify regarding the 
circumstances surrounding the preparation of the statement. Ms. 
Lawson's failure to testify on the issue supports an adverse inference 
that she knew the statements were false. See Wiliam M. Knarr, 51 FR 
2772, 2773 (1986). Cf. Baxter v. Palmigiano, 425 U.S. 308, 319 (1976). 
Both the circumstantial evidence and Ms. Lawson's silence thus support 
the conclusion that she knowingly made false statements in an attempt 
to obtain a favorable decision from the Agency on Respondent's 
application.
    I recognize that the ALJ found that Ms. Lawson credibly 
acknowledged ``that she made mistakes'' and expressed ``remorse for 
those mistakes.'' ALJ Dec. at 19-20. But because Ms. Lawson did not 
address the issues surrounding the material falsification of her 
statement, the ALJ's findings are relevant only with respect to the 
issues related to Respondent's dispensing's of controlled substances to 
the two Detectives.
    Because Ms. Lawson failed to offer any explanation as to why she 
submitted her statement, I further conclude that she has not accepted 
responsibility and expressed remorse for the separate act of misconduct 
that she committed in submitting her written statement. Her failure to 
do so precludes a finding that granting Respondent a new registration 
would be consistent with the public interest.

Order

    Pursuant to the authority vested in me by 21 U.S.C. Sec.  823(f), 
as well as 28 CFR 0.100(b) & 0.104, I order that the application of The 
Lawsons, Inc., t/a The Medicine Shoppe Pharmacy, for a DEA 
Certification of Registration as a pharmacy, be, and it hereby is, 
denied. This order is effective January 30, 2008.

    Dated: December 13, 2007.
Michele M. Leonhart,
Deputy Administrator.
[FR Doc. E7-25346 Filed 12-28-07; 8:45 am]
BILLING CODE 4410-09-P