Grider Drug #1 & Grider Drug #2; Decision and Order, 44069-44105 [2012-17973]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 77, Number 144 (Thursday, July 26, 2012)]
[Notices]
[Pages 44069-44105]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-17973]



[[Page 44069]]

Vol. 77

Thursday,

No. 144

July 26, 2012

Part VI





Department of Justice





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Drug Enforcement Administration





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Grider Drug 1 & Grider Drug 2; Decision and Order; 
Notice

Federal Register / Vol. 77 , No. 144 / Thursday, July 26, 2012 / 
Notices

[[Page 44070]]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 08-19]


Grider Drug 1 & Grider Drug 2; Decision and 
Order

    On October 30, 2007, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Grider Drug 1, the holder of DEA Certificate of 
Registration No. AG3498347, and Grider Drug 2, the holder of 
DEA Certificate of Registration No. AG9715751, (hereinafter, Respondent 
or Respondents), of Russell Springs, Kentucky.\1\ ALJ Ex. 1, at 1. The 
Show Cause Order proposed the revocation of each Respondent's retail 
pharmacy registration, as well as the denial of any pending 
applications to renew or modify each registration, on the ground that 
the Respondents' ``continued registrations are inconsistent with the 
public interest.'' Id. (citing 21 U.S.C. 823(f); 824(a)). The Show 
Cause Order alleged that each Respondent had committed numerous 
violations of federal regulations, as well as that Leon Grider, the 
owner of Respondents, had been indicted on state law charges of 
trafficking in controlled substances and bribing a witness.\2\ Id. at 
4.
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    \1\ The Order also sought the revocation of the registration 
issued to a third pharmacy, Grider Drug Key Village. ALJ Ex. 1, at 
1. However, this store discontinued selling pharmaceuticals in 
November 2008 and the proceeding was subsequently terminated with 
respect to it. ALJ Ex. 5.
    \2\ The specifics of the various allegations are discussed 
below.
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    Subsequently, on June 22, 2010, the Government raised additional 
allegations that Respondents were dispensing prescriptions to six 
persons engaged in doctor-shopping and that ``Respondents knew or 
should have known that the above dispensed controlled substances were 
likely to be diverted or used for other than legitimate medical 
purposes'' and that they ``failed to fulfill their corresponding 
responsibility for the proper dispensing of controlled substances.'' GX 
21, at 1-3. Based on the allegations that this conduct had continued 
through early May 2010, I concluded that there was a ``substantial 
likelihood'' that it would continue. Id. at 3. Accordingly, I concluded 
that Respondents' continued registration during the pendency of the 
proceedings ``would constitute an imminent danger to the public health 
and safety'' and authorized the immediate suspension of each 
Respondent's registration.\3\ Id. at 3-4.
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    \3\ Apparently, the Government raised additional allegations in 
its pre-hearing statements.
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    Following service of the initial Show Cause Order, Respondents 
requested a hearing on the allegations and the matter was placed on the 
docket of the Agency's Office of Administrative Law Judges (ALJ) and 
assigned to an ALJ, who proceeded to conduct pre-hearing procedures. On 
June 6, 2008, the ALJ granted Respondents' motion to stay the 
proceedings pending the conclusion of a state-court criminal case 
against their owner Leon Grider, which was scheduled to conclude on 
October 10, 2008, noting that ``the parties believe that the 
presentation of evidence in the above-captioned matter will be 
facilitated.'' Order Granting Stay of Proceedings, at 1. However, nine 
months later, after further delays in the state proceeding, the ALJ 
terminated the stay, and finally, in August 2009, the ALJ commenced the 
hearing.\4\
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    \4\ The ALJ also granted three continuances because of the 
medical condition of Respondent's counsel. Tr. 3005.
    The proceeding also included an interlocutory appeal to this 
Office by Respondents of the ALJ's denial of their motion to stay 
the proceeding while they sought the return of numerous documents 
which were seized by the Kentucky Bureau of Investigation and the 
Medicaid Fraud Unit of the Kentucky's Attorney General's Office 
pursuant to a state criminal search warrant. See ALJ Ex. 10. I 
denied the interlocutory appeal. See ALJ Ex. 11.
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    Giving new force to Justice Douglas's dissenting opinion in Sierra 
Club v. Morton,\5\ the parties proceeded to take twenty-seven days of 
testimony over the ensuing twenty months and create a record comprised 
of more than 6200 pages of transcript as well as several thousand pages 
more of various exhibits, with much of the record devoted to litigating 
issues which are plainly irrelevant. Primary responsibility for the 
state of the record lies with the ALJ, who failed to exercise anything 
more than minimal control over the parties' respective presentations.
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    \5\ See 405 U.S. 727, 741 (1972) (citing Stone, 45 S. Cal. L. 
Rev. 450 (1972)).
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    After the hearing, both parties submitted briefs containing their 
proposed findings of fact, legal conclusions and argument.\6\ 
Thereafter, on September 23, 2011, the ALJ issued her recommended 
decision.
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    \6\ These submissions will be cited as Gov. Post-Hearing Br. and 
Resp. Post-Hearing Br., respectively.
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    With respect to factors two (Respondents' experience in dispensing 
controlled substances) and four (Respondents' compliance with 
applicable laws related to controlled substances), the ALJ found, inter 
alia, that Respondents' owner, Leon Grider, had, on various occasions, 
distributed controlled substances to several persons without a 
prescription. ALJ at 85-85. Based on audits which Respondents paid an 
accounting firm to conduct on themselves, the ALJ further found that 
Respondents could not ``account for a substantial number of dosage 
units of controlled substances'' including hydrocodone and methadone. 
Id. at 85-86. In addition, the ALJ found that Respondents did not 
report various thefts of controlled substances and failed to reduce to 
writing and maintain called-in prescriptions. Id. at 87.
    The ALJ further found that Respondents had violated their 
corresponding responsibility under 21 CFR 1306.04(a) by dispensing to 
the six persons (as alleged in the Immediate Suspension Order) 
controlled-substance prescriptions which lacked a legitimate medical 
purpose and that Respondents' pharmacists ignored various red flags 
indicative that the patients were engaged in drug abuse or diversion. 
Id. at 89-90.
    Next, the ALJ rejected various allegations of violations that were 
based on data from the State of Kentucky's Prescription Monitoring 
Program (KASPER) on the ground that the Government had not obtained a 
court order as required by state law to render these reports and the 
underlying data contained in them admissible in this proceeding. ALJ at 
91. However, the ALJ found that Respondents had violated federal 
regulations by dispensing schedule II controlled substances without 
retaining the hard copy of the prescription, as well as by dispensing 
prescriptions ``that were never called-in or authorized by the 
prescribing physicians.'' Id. at 92.
    As for factor five--such other conduct which may threaten public 
health and safety--the ALJ found that Respondents' pharmacists had 
improperly billed Medicaid for medications (including controlled 
substances) by billing for one medication while actually dispensing 
another and that this conduct circumvented ``the prescription check and 
balance such Medicaid reporting creates.'' ALJ at 94. In addition, the 
ALJ found that Leon Grider had ``inaccurately'' labeled prescription 
bottles as well as placed false prescription labels on bottles he 
provided to a confidential informant. Id.
    Based on her findings under factors two, four, and five, the ALJ 
thus concluded that the Government had satisfied its prima facie case 
by showing that Respondent had committed acts inconsistent with the 
public interest. Id. at 95. The ALJ then held that

[[Page 44071]]

Respondents had failed to rebut the Government's prima facie showing, 
noting that Respondents' owner did not testify and thus had not shown 
``any remorse for the past failings of the Respondents or [that] he 
ha[s] implemented any procedures that would ensure such failings do not 
occur in the future.'' Id. In addition, the ALJ noted that Eric Grider 
(Respondents' owner's son and the pharmacist in charge at Grider 
2) testified that ``Respondents had not implemented any 
operational or policy changes in response to this proceeding,'' and 
that even after the service of the first Show Cause Order, Respondents 
had continued to violate 21 CFR 1306.04(a) by failing to fulfill their 
corresponding responsibility to not dispense unlawful prescriptions. 
Id. at 95-96. Finally, the ALJ rejected Respondents' contentions that 
the violations proved by the Government were ``so minor and 
understandable in pharmacies doing extensive filling of controlled 
substances that those violations are insufficient * * * to justify 
suspension, revocation and/or denial of'' their registrations. Id. at 
96. The ALJ thus recommended the revocation of Respondents' 
registrations and the denial of their pending applications. Id.
    Respondents filed exceptions to the ALJ's decision.\7\ Thereafter, 
the ALJ forwarded the record to me for final agency action.
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    \7\ Respondent's Exceptions have been thoroughly considered and 
are discussed throughout this decision.
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    Having considered the entire record, I adopt the ALJ's conclusions 
of law with respect to factors two and four, as well as her ultimate 
conclusion that Respondents have committed acts which render their 
registrations inconsistent with the public interest.\8\ I also adopt 
the ALJ's legal conclusion that Respondents have not rebutted the 
Government's prima facie case. I therefore also adopt her recommended 
order. I make the following findings.
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    \8\ The ALJ's factual findings comprise 270 paragraphs, many of 
which contain multiple findings. As explained below, I adopt some of 
the findings and reject others for a variety of reasons. For 
example, the ALJ made extensive findings based on KASPER data and 
reports only to ultimately conclude that the KASPER data and reports 
were not admissible. Compare ALJ at 49-54, with id. at 91-92. 
However, because I conclude that the ALJ correctly held that the 
KASPER data were not admissible, and cannot be disclosed other than 
in accordance with the KASPER statute, she should not have made 
these findings. The ALJ also made extensive findings as to the 
result of a Government audit of Respondents' handling of controlled 
substances which was performed by a new Diversion Investigator. Id. 
at 59-63. However, the Government did not rely on this audit, and 
its lead witness candidly acknowledged that the audit was flawed. 
Because these findings are not probative of any issue in the case, 
they should not have been made. Other findings of the ALJ are 
discussed throughout this opinion.
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Findings of Fact

Respondents' Registration and License Status

    Respondent Grider Drug 1 is the holder of DEA Certificate 
of Registration AG3498347, under which it was authorized to handle 
controlled substances at the registered location of 539 Main St., 
Russell Springs, Kentucky. GX 1. While this registration was due to 
expire on September 30, 2005, on August 23, 2005, Respondent filed a 
renewal application. GX 2. According to an affidavit of an official in 
charge of the DEA Registration Unit, upon filing this application, 
Respondent was authorized to continue dispensing controlled substances 
until the issuance of the immediate suspension order on June 22, 2010. 
Id. I therefore find that Grider Drug 1 has both a 
registration and an application currently pending before the Agency.
    Respondent Grider Drug 2 formerly held DEA Certificate of 
Registration AG9715751, which authorized it to handle controlled 
substances at the registered location of 124 Dowell Rd., Russell 
Springs, Kentucky. GX 3. The expiration date of this registration was 
September 30, 2008, and Respondent did not file a renewal application 
until September 25, 2008. GX 4. According to an affidavit of the 
official in charge of the DEA Registration Unit, upon filing this 
application, Respondent was authorized to continue dispensing 
controlled substances until the issuance of the immediate suspension 
order on June 22, 2010. However, while the official's affidavit states 
that this was timely renewal application, id., it was not because on 
October 30, 2007, the instant Order to Show Cause was issued to Grider 
2, and under the Agency's regulation, when an Order to Show 
Cause has been issued to a registrant, the registrant must submit its 
renewal application ``at least 45 days before the date on which the 
existing registration is due to expire'' in order for its registration 
to be continued pending the issuance of the final order. 21 CFR 
1301.36(i). Accordingly, I find that Respondent Grider Drug 
2's registration expired on September 30, 2008. However, 
Respondent's Grider Drug 2's application is pending before the 
Agency. See Paul H. Volkman, 73 FR 30630, 30641 (2008), pet. for rev. 
denied 567 F.3d 215 (6th Cir. 2009).
    The record contains evidence that Leon Grider, who is the 
pharmacist-in-charge at Grider Drug 1, owns both pharmacies. 
However, there is also some evidence that other Grider family members 
own shares in the pharmacies.

The Substantive Allegations

    In the initial Show Cause Order, the Government raised a plethora 
of allegations. ALJ Ex. 1. These allegations included, inter alia, 
that:
    (1) Grider 1 and 2 had refilled schedule II 
controlled substances seventeen and eight times respectively, in 
violation of 21 CFR 1306.12;
    (2) Grider 1 and  2 had refilled prescriptions 
for schedule III-V controlled substances without the prescribing 
physician's authorization fifty-seven and seventeen times respectively, 
in violation of 21 CFR 1306.21(a);
    (3) Grider 1 and 2 filled prescriptions bearing 
invalid or expired DEA registration numbers 186 and 161 times 
respectively, in violation of 21 CFR 1306.05;
    (4) Grider 1 refilled prescriptions for schedule III and 
IV controlled substances more than six months after the date of the 
original prescription, in violation of 21 CFR 1306.22(a);
    (5) Grider 1 and Grider 2 engaged in the 
unauthorized transfer of prescriptions and prescription refills from 
Grider Drug Key Village 289 and 40 times respectively, in violation of 
21 CFR 1306.25(a); \9\
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    \9\ The Show Cause Order also alleged that Grider Drug Key 
Village engaged in 139 unauthorized transfers of controlled 
substance prescriptions and refills from Grider Drug 1 to 
Grider Drug Key Village and 150 unauthorized transfers of 
prescriptions and refills from Grider 2 to Grider Drug Key 
Village. ALJ Ex. 1, at 3-4.
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    (6) data from the Kentucky All-Schedule Prescriptions Electronic 
Reporting System (hereinafter, KASPER) show that Grider 1 had 
filled schedule III-V prescriptions for which it could not produce the 
actual prescription in nine instances, in violation of 21 CFR 
1306.21(a);
    (7) Grider 1 and 2 failed to take and maintain a 
biennial inventory, as required by 21 CFR 1304.11(c);
    (8) ``[a]n accountability audit of 50 controlled substances 
covering [the] period of May 31, 2003 to August 19, 2004, revealed a 
shortage of 22,219 dosage units of controlled substances'' at Grider 
1 and 105,913 dosage units at Grider 2;
    (9) Grider Drug 1 ``filled four controlled-substance 
prescriptions which incorrectly listed Grider Drug 2 as the 
`issuing physician' and that Grider 2 filled several schedule 
II controlled-substance prescriptions which listed itself as the 
physician, in violation of 21 CFR 1306.05(a); and
    (10) Grider Drug 1 and Grider Drug 2 engaged in 
133 unauthorized

[[Page 44072]]

transfers of prescriptions and prescription refills between themselves, 
in violation of 21 CFR 1306.25(a).

Id. The Government raised additional allegations in its Pre-Hearing 
Statements, as well as in the Immediate Suspension Order. ALJ 21.

The Admissibility of KASPER Data

    With respect to most of these allegations, a principal component of 
the Government's proof was reports and/or data contained in reports 
which were obtained by law enforcement personnel from the State of 
Kentucky's KASPER system. Notwithstanding Respondents' repeated 
objection to the use of this data on various grounds, the ALJ relied on 
it to make numerous findings regarding the allegations that Respondents 
had filled prescriptions under expired, invalid, or surrendered DEA 
numbers, that Respondents listed themselves as the prescribing 
physician in numerous instances, that Respondents refilled schedule II 
controlled substance prescriptions, that Respondent dispensed 
prescriptions without retaining a hard copy of them, and that 
Respondents dispensed refills of prescriptions for schedule III-V drugs 
which were not authorized. ALJ at 49-54. However, in her conclusions of 
law, the ALJ noted that Respondents also challenged the admissibility 
of the KASPER reports, and held that under Kentucky law, a court order 
is required for the reports and the data contained therein to be 
admissible in this proceeding. ALJ at 91 & n.46 (citing Ky. Rev. Stat. 
Sec.  218A.202(8); Sangster v. Kentucky Bd. of Med. Lic., 2010 WL 
4294213 (Ky. Ct. App. 2010)).\10\
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    \10\ Given the ALJ's conclusion that this evidence was not 
admissible, it is perplexing that the ALJ made numerous factual 
findings relying on this evidence.
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    In its post-hearing brief, the Government argued that in several 
previous proceedings, the Agency's final orders had relied on KASPER 
data in making various findings. Gov. Br., at 101. See Paul Volkman, 73 
FR 30630, 30633 (2008). However, as the ALJ recognized, the 
admissibility of KASPER reports and data has not been previously 
challenged in a DEA proceeding.
    Under Kentucky law, KASPER data may only be disclosed ``to persons 
and entities authorized to receive that data under this section. 
Disclosure to any other person or entity, including disclosure in the 
context of a civil action where the disclosure is sought either for the 
purpose of discovery or for evidence, is prohibited unless specifically 
authorized by this section.'' Ky. Rev. Stat. Sec.  218A.202(6). The 
statute authorizes disclosure of KASPER data to eight categories of 
persons or entities, including: (1) ``[a] designated representative of 
a board responsible for the licensure, regulation, or discipline of 
practitioners, pharmacists, or other person authorized to prescribe, 
administer, or dispense controlled substances and who is involved in a 
bona fide specific investigation involving a designated person''; and 
(2) a certified peace officer of a State, ``or a federal peace officer 
whose duty is to enforce the laws of this Commonwealth, of another 
state, or of the United States relating to drugs and who is engaged in 
a bona fide specific investigation involving a designated person.'' Id.
    However, ``[a]uthorized users must apply for an account'' and 
provide appropriate proof of their identity and credentials. RX 42, at 
20. Most significantly, applicants must also execute an account use 
agreement pursuant to which they agree that access to KASPER ``is 
granted only with the authority and rights allowed under KRS 
218A.202,'' as well as ``to use the reports only in manners set forth 
under KRS 218A.202.'' RX 52, at 1. See also Tr. 179 (testimony of 
supervisory DI: ``We have an account with KASPER and in order to get 
that account we had to apply to KASPER and get all our information 
notarized and then approved by the Cabinet for Health Services.'').
    The KASPER statute further provides that ``[a] person who receives 
data or any report of the system from the cabinet shall not provide it 
to any other person or entity except by order of a court of competent 
jurisdiction and only to a person or entity authorized to receive the 
data or the report under this section, except'' when done pursuant to 
three exceptions, none of which apply here. KRS Sec.  218A.202(8). 
While one of these exceptions provides that ``[t]he Department for 
Medicaid Services may submit the data as evidence in an administrative 
hearing held in accordance with KRS Chapter 13B,'' an Opinion of the 
Kentucky Attorney General explains that:

    The fact that the General Assembly deemed it necessary to make a 
special exception for Medicaid hearings indicates that 
administrative hearings, in general, were not contemplated as a 
permissible forum for disclosure of KASPER data. We must therefore 
conclude that data from the KASPER system cannot, without a court 
order, be used as either documentary or testimonial evidence in an 
administrative hearing before the Board of Medical Licensure. Any 
drug transactions at issue in the hearing must be proved from other 
sources.

5 Op. Ky. Att'y Gen. 7, at 6 (2005). However, as the Kentucky Attorney 
General further explained, ``there is no `fruit of the poisonous tree' 
doctrine associated with KRS 218A.202, which would make the use of the 
KASPER information as a starting point for seeking confirming evidence 
into the equivalent of a `disclosure.' '' Id. at 7.
    More recently, the Supreme Court of Kentucky has held that the 
KASPER statute creates an evidentiary privilege, which fosters 
important objectives, even if it is not absolute. Commonwealth Cabinet 
for Health and Family Services v. Chauvin, 316 SW.3d 279, 288 (Ky. 
2010). In Chauvin, the Kentucky Supreme Court further explained that 
the statute's exceptions which permit disclosure ``are rather limited 
and do not undermine the general prohibition on disclosure.'' Id.\11\
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    \11\ Under 21 U.S.C. 876(a), the Attorney General is authorized 
to ``require the production of any records * * * which the Attorney 
General finds relevant or material to'' an investigation under the 
CSA. This case does not, however, present any question as to whether 
the CSA preempts the KASPER statute's prohibition against disclosure 
in a proceeding under 21 U.S.C. 824(a).
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    Here, while there is no argument that DEA Investigators were 
authorized to obtain KASPER data to pursue their investigation, they 
agreed, as a condition of obtaining this data, to use the reports only 
in the manners permitted under Kentucky law. However, as explained 
above, with the exception of a state Medicaid proceeding, Kentucky law 
does not authorize disclosure of this information in an administrative 
proceeding without a court order. Because DEA Investigators did not 
obtain a court order authorizing the use of the KASPER data in this 
proceeding and agreed to use the reports and data only as authorized by 
Kentucky law, the reports and data contained therein were not 
admissible.
    Accordingly, the ALJ should not have made any findings based on 
them. However, where DEA Investigators merely used the KASPER reports 
and data as an investigative tool to facilitate the search for other 
evidence which establishes violations on the part of Respondents, that 
other evidence is admissible. Accordingly, I turn to whether the 
various allegations set forth above are supported by substantial 
evidence.\12\
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    \12\ The Government also introduced data from the DEA ARCOS 
system to show Respondents' purchases of oxycodone and hydrocodone 
in various years and compare them with the average purchases of 
pharmacies in the local area, the State of Kentucky, and United 
States. However, while some of the figures show that Respondents 
were purchasing greater quantities than the average of the 
pharmacies in these categories, some of the data shows the opposite. 
And while the hydrocodone data generally shows that Respondents 
purchased more than the average pharmacy in each of the three 
categories, no further evidence was offered to explain the 
statistical significance of Respondents' purchases. Moreover, in its 
brief, the Government offered no further explanation as to what this 
evidence proved.

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[[Page 44073]]

Allegation One--Refilling Schedule II Controlled Substances

    The Controlled Substances Act explicitly prohibits the refilling of 
a schedule II controlled substance. See 21 U.S.C. 829(a).\13\ With 
respect to Grider 1, the Government produced copies of fifteen 
schedule II prescriptions which it alleged were refilled. GX 13. 
However, with respect to many of these prescriptions, the DI testified 
(and/or the copies of the prescriptions include a handwritten notation) 
that his finding was based on his review of the KASPER report. Tr. 357-
371; GX 13, at 3, 7, 9, 15, 17, 19. In another instance, the DI 
identified two prescriptions for OxyContin issued to a patient on 
December 20, 2002 (with a fill date of 1/30/03) and February 13, 2003. 
GX 13, at 5-6; Tr. 361. However, when questioned regarding these 
prescriptions, the DI testified that ``I made no annotations. I don't 
think I saw anything really wrong with these two.'' Tr. 361. And with 
respect to other prescriptions in this exhibit (See GX 13, at 11-14), 
the DI offered no explanation at all as to why they were included. Tr. 
364-65.
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    \13\ However, under a DEA regulation promulgated several years 
after the prescriptions at issue here, a practitioner ``may issue 
multiple prescriptions authorizing the patient to receive a total of 
up to a 90-day supply of a schedule II controlled substances 
provided'' that several ``conditions are met,'' including that the 
``practitioner provides written instruction on each prescription * * 
* indicating the earliest date on which a pharmacy may fill each 
prescription.'' 21 CFR 1306.12(a).
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    The Government's Exhibit with respect to Grider 2's 
refilling of schedule II drugs contained thirteen prescriptions (two of 
which were actually for Lortab, a schedule III drug, and Xanax, a 
schedule IV drug). See GX 15. Here again, the Government's contention 
that Grider 2 refilled the schedule II prescriptions was based 
on inadmissible KASPER data. Tr. 418-35 (DI's testimony at Tr. 427: 
``[a]ll the prescriptions and the annotations [in GX 15] were done in 
comparing and contrasting with KASPER.''). In addition, with respect to 
the first prescription contained in this exhibit (which was for a 
schedule II drug), the DI acknowledged that the prescription had not 
been refilled. Id. at 420. Instead, the DI's concern was prompted by 
the fact that the KASPER report indicated that it had been filled on a 
Sunday, when the pharmacy was closed. Id. Even if this fact was adduced 
by admissible evidence, by itself, it would not constitute substantial 
evidence of any violation of the CSA.
    However, another document in this exhibit is a copy of a label for 
a hydrocodone prescription. GX 15, at 4. Consistent with the annotation 
on this document, the DI testified that during a 2004 search of 
Respondents, Investigators did not find either a hard copy (i.e., a 
prescription signed by the prescriber) or a called-in prescription. Tr. 
422. Rather, the only document found by the Investigators was the 
label. Id. See also Tr. 468-74 and GX 39, at 4 (dispensings for 
Duragesic (fentanyl) and Roxicet filled on April 8, 2003 to patient 
LC). As explained more fully below, this evidence does constitute 
substantial evidence of a violation of the CSA, which prohibits the 
dispensing of controlled substances by a pharmacist without a 
prescription. See 21 U.S.C. 829(a) (schedule II) & (b) (schedules III & 
IV).
    The DI also testified to a split distribution of a prescription for 
15 Duragesic patches, noting that ten of the patches had been dispensed 
initially and the remaining five had been dispensed eight days later 
and that this was ``an instance where it seems the pharmacy didn't have 
enough in stock.'' Tr. 426. However, once again, this allegation was 
based on inadmissible KASPER data and no other evidence establishes 
that the prescription was dispensed in this manner.

Allegation Two--Refilling Schedule III Through V Prescriptions Without 
Authorization of the Prescriber

    As noted above, the Government alleged that both Respondents 
dispensed numerous unauthorized refills of schedule III through V 
controlled substances. However, the documentary evidence with respect 
to Grider 1 included only four prescriptions (two for 
hydrocodone combination drugs, and two for Ambien (zolpidem)); with 
respect to Grider 2, the evidence included only six 
prescriptions (three for Xanax, one for diazepam, and two for Lorcet 
(hydrocodone)). See GXs 14 & 16. In addition, the Government offered 
the testimony of its lead DI and Dr. CS and two exhibits regarding 
Grider 1's dispensing of multiple refills for Dr. CS's patient 
BW. See GXs 30 & 31.
    As for the prescriptions contained in GX 14 (Grider 1), 
once again the DI relied on the KASPER data in concluding that Grider 
1 had dispensed unauthorized refills. GX 14, at 1-2. As for 
the Grider 2 prescriptions, the first prescription found in GX 
16 (a Xanax prescription to BP, which authorized no refills) was the 
subject of the DI's concern because while both the prescription and the 
label were dated June 5, 2003, KASPER data indicated that it was filled 
eighteen days later. GX 16, at 1-2. However, there is no contention 
that the KASPER data shows that the prescription was filled on both 
dates, and thus, even if this data was admissible, it would not 
establish that this was an unauthorized refill as there is otherwise no 
indication that this prescription was filled more than once.
    The DI further asserted that per KASPER records, a June 18, 2003 
prescription for Xanax issued to JB, which authorized no refills, was 
filled on both June 18 and June 19, 2003. Id. at 3. Once again, the 
Government produced no other evidence to prove its allegation.\14\ 
However, the Government did produce a copy of a label for a Xanax 
prescription which was dispensed on March 12, 2003 to JB. Id. at 6. 
According to the DI's testimony (and a notation on the copy), 
Investigators could not find either the original signed prescription or 
a called-in prescription for this dispensing. Id.; Tr. 442.
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    \14\ This page of GX 16 also includes a March 26, 2003 
prescription for Xanax with no refills issued by the same physician 
to JB and a copy of the prescription label which bears the date 
``03/26/03.'' GX 16, at 3-4. No contention was made that this 
prescription was improperly refilled. In addition, the exhibit 
contains an August 14, 2003 prescription for diazepam issued by a 
Dr. JE with two refills, and a label for the dispensing which is 
dated ``09/16/03.'' Id. at 5-6. Here again, no contention was raised 
that this prescription was improperly refilled.
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    Also included in this exhibit were two prescriptions for 30 Lorcet 
(TID, a 10-day supply), with no refills, which were dated December 24, 
2002, and January 3, 2003, as well as labels indicating that the 
prescriptions were filled on December 31, 2002 and January 6, 2003. GX 
16, at 7-8. Next to the signed prescription which is dated January 3, 
2003, is the handwritten notation: ``Script filled 1-6-2003, just one 
(1) day after refilling script above!'' Id. at 7. However, the 
Government elicited no testimony from the DI explaining the basis for 
this statement. Tr. 441-44. Here again, this does not constitute 
substantial evidence of the allegation.
    However, the evidence also shows that on June 6, 2007, Dr. CS 
issued a prescription for 91 Lortab 7.5/500 to BW, with no refills, 
with instructions to take a decreasing dose of the medicine at two-week 
intervals and then stop. GX 30, at 1. The evidence further shows

[[Page 44074]]

that the prescription was dispensed on the date of issuance. Id.
    Dr. CS testified that in 2006, she instituted a policy that her 
staff was not authorized to call in refills because she had received 
two phone calls from pharmacies that patients were ``masquerading as 
[her] office staff, trying to obtain * * * Lortab.'' Tr. 3031-32. Dr. 
CS further testified that on June 6, 2007, BW had wanted to get off of 
Lortab and that the prescription she wrote was to taper BW off of the 
drug. Tr. 3050-52, 3056.
    According to the evidence, another doctor had run a KASPER on BW 
and upon noticing that she was getting Lortab refills, contacted Dr. CS 
regarding the refills. GX 30, at 2. On November 9, 2007, Dr. CS's 
Office Manager (LBB) then called Grider 1 and spoke with Leon 
Grider regarding the refills and documented this conversation in BW's 
medical record. Tr. 3040, 3054-55. According to the note:

    He [Leon Grider] stated that the DEA has the original 
prescription and he would contact them to fax it to us. He also 
stated that Richard Potters filled the original prescription and it 
showed 0 refills. He said someone from our office must have called 
in refills. The last one filled was on 10/18/07. I informed him that 
we do not call in controlled's-which is stated in our policy. We 
also discussed that controlled's prescribed from our office are not 
to be refilled earlier than one day.--lbb
GX 70.\15\ Dr. CS further testified that no one from her office had 
called in refills for BW. Tr. 3055-56. Dr. CS subsequently filed a 
complaint with the State Attorney General regarding the refills.\16\ 
Id. at 3056.

    \15\ Dr. CS testified that GX 70 ``are notes that I made from my 
chart records concerning the patient who had brought complaints to 
me about discrepancies or discrepancies that we found during their 
visits, and also [a] note about one patient who actually had 
unauthorized refills.'' Tr. 3040.
    \16\ Respondent's star witness was James Faller, a federally 
convicted swindler and money launderer, see GXs 79 (judgment of 
conviction) & 80 (opinion of the Eleventh Circuit denying appeal), 
who was allowed to sit in on the entire proceeding as a 
representative of Respondents and then testify regarding the various 
allegations. Faller asserted that Dr. CS ``was in some kind of 
trouble'' and ``was under some kind of investigation'' because her 
prescription pads had been stolen and that these were used to obtain 
controlled substances which were used by employees of the call 
center Faller ran. Tr. 5508. He then maintained that he had evidence 
to contradict Dr. CS's testimony, stating ``we have the records of 
what actually took place, not only the state's records, and her 
records and the pharmacy records. And they contradict that.'' Id. at 
5509. As was typically the case throughout his testimony, Faller's 
bark was stronger than his bite, as notwithstanding his statement, 
Respondents produced no such records.
    While Faller's felony conviction does not render him incompetent 
to testify, there is ample reason to reject nearly all (if not all) 
of his testimony as incredible. According to Faller, his legal 
troubles which led to the federal convictions began back in 1993, 
when he had ``blown the whistle'' on his boss, who was purportedly 
stealing from various people to fund the PKK, a terrorist 
organization, and that his boss was doing this ``on behalf of the 
United States Government.'' Id. at 5519. Faller claimed that 
following this, threats were made on the lives of his attorneys; 
that he was falsely incarcerated; that shortly before he was 
indicted on the money laundering and fraud charges, an FBI agent had 
``contacted my attorneys and I [sic] * * * and said [that] if I 
wouldn't shut up and go away, if I wouldn't pay him money he would 
destroy my life.'' Id. at 5521. According to Faller, following this, 
the FBI ``had [his] car stolen in Europe''; caused his daughter to 
be ``sexually assaulted,'' by tampering with a custody dispute he 
had with his ex-wife, id. at 5523 & 5540; ``threatened to rape and 
murder my wife and cut the baby out of her stomach,'' id. at 5523; 
then ``were going to try to shoot'' him; and tried to kill his 
attorney and her husband by running them off the road. Id. at 5526-
27.
    Faller also alleged that upon moving to Russell Springs in April 
2001 to run a call center, he developed new legal troubles because 
both the Police Chief and the Commonwealth Attorney ``wanted me out 
because we were knocking down * * * drug problems'' by ``start[ing] 
mandatory drug testing for all the employees.'' Id. at 5011. Faller 
then claimed that the Police Chief and Commonwealth Attorney had 
interfered with his efforts to address Russell Spring's drug problem 
because the Police Chief was ``a part of it.'' Id. at 5569. As for 
why the Commonwealth Attorney also ``wanted [him] out,'' Faller 
stated this was because he had ``raised so much cane all across the 
board'' with the Commonwealth Attorney, id., even though he had only 
recently moved to Russell Springs.
     Faller further testified he had filed a lawsuit alleging public 
corruption against the Police Chief, the State Police Detective who 
investigated the Respondents, and other officials of Russell 
Springs, and ``got the grand jury fired up,'' but that the grand 
jury ``actually had convicted drug dealers on'' it and that ``[i]t 
was incredible what they did to tamper with'' it. Id. at 5570. He 
then claimed that ``there would have been indictments,'' but that 
the State of Kentucky moved to stop them by bringing in a KBI 
[Kentucky Bureau of Investigation] Agent (Agent Dudinsky), who had 
assisted in executing the 2007 state search warrants at Respondents; 
he also claimed that ``[t]hey immediately removed the foreperson of 
the grand jury'' and replaced him/her with DB, who he alleged was a 
drug dealer associated with the Police Chief. Faller asserted that 
the Police Chief and the KBI agent ``were using a cell phone to 
eavesdrop on the grand jury,'' id. at 5574, and that he was going to 
be held in contempt by the state judge, R. Cletus Maricle, who was 
supervising the grand jury, because he found this out, but that the 
FBI arrested Judge Maricle and charged the Judge with various crimes 
of which he was eventually convicted. Id.
     However, a report issued by the Grand Jury states that it 
believed that the KBI Agent ``ha[d] very efficiently carried out our 
instructions in investigating the matter we have asked him to 
investigate,'' that he had provided ``able assistance,'' and that he 
``ha[d] been unfairly vilified for simply doing his job.'' GX 85, at 
2-3. The Grand Jury further stated that the original foreperson 
``was excused due to illness.'' Id. Moreover, the Grand Jury report 
was signed by its foreperson, whose name was not DB. Id. at 3. 
Apparently the Grand Jury did not return any indictments as, in 
Faller's words, ``[i]t was another one of these whitewashing grand 
juries.'' Tr. 5104. Faller further claimed that he had been asked by 
the FBI and U.S. Attorney to prepare ``an aid in sentencing Judge 
Maricle, which [he] did,'' (which seems rather strange given his 
past history with the FBI) and that he said ``in the sentencing 
memorandum'' that Judge Maricle ``was involved in the same exact 
conduct in Russell County to protect Chief Irvin'' as the conduct 
which led to his conviction. Tr. 5577.
    Faller asserted the existence of still other conspiratorial acts 
on the part of various governmental entities. These included the 
Kentucky Attorney General, who ``somehow managed to get the 
Department of Defense * * * to ask Express Scripts to cut off Grider 
Drug and all insurance carriers,'' Tr. 5456; that during the 2007 
search, KBI Agent Dudinsky had planted drugs in Leon Grider's 
office, which Faller purportedly based on a videotape he viewed but 
which was not presented at the hearing, id. at 5448-53; and then the 
IRS, which had recently searched Faller's home (for reasons unclear 
on the record), and which, following the search, ``accidentally 
turned over'' files that Faller had been working on for the Griders 
which Faller alleged had been stolen during a break-in of his home 
``years ago.'' Id. at 5436-38.
    It is further noted that much of Faller's testimony, which went 
on for nearly three days, was plainly irrelevant, and even when he 
testified regarding one of the Government's allegations, it was 
typically clear that he lacked personal knowledge of the allegation. 
See Tr. 5018 (Faller's testimony that he was first contacted by Leon 
Grider in April 2006). The ALJ ultimately ignored nearly all (but 
not all) of Faller's testimony, which was typically provided in a 
rambling narrative even when questioned by Respondents' counsel 
(notwithstanding the Government's objections and the ALJ's 
instructions), and did not even address whether she found it 
credible. It is perplexing that the ALJ did not exercise more 
control over Faller's typically irrelevant and ludicrous testimony.
---------------------------------------------------------------------------

    While the note recorded by Dr. CS's Office Manager is hearsay, I 
conclude that it is sufficiently reliable to constitute substantial 
evidence. Leon Grider's statements establish that he did in fact refill 
Dr. CS's prescription and constitute an admission. While that statement 
was made to Dr. CS's Office Manager, it was recorded in the patient's 
medical record, a source of evidence which the Supreme Court has long 
recognized as inherently reliable. See Richardson v. Perales, 402 U.S. 
389 (1971). Moreover, Leon Grider did not testify and refute this 
evidence. Thus, this allegation is proved without resort to the KASPER 
data.\17\
---------------------------------------------------------------------------

    \17\ In his affidavit, the supervisory DI also stated that a 
review of the prescriptions (which was completed by November 1, 
2004) issued at Grider Drug 2 and seized during the August 
2004 search showed ``sixteen (16) instances of refilling a schedule 
III-V controlled substances [sic] prescription without authorization 
in violation of 21 U.S.C. 829(b) and 21 CFR 1306.21 and 1306.22.'' 
GX 9, at 16. These provisions require that any controlled substance, 
which is a prescription drug, may only be dispensed pursuant to a 
prescription and that ``[s]uch prescriptions may not be filled or 
refilled more than six months after the date thereof or be refilled 
more than five times after the date of the prescription unless 
renewed by the practitioner.'' See 21 U.S.C. 829(b).
    Noting the above statement, Government Counsel then asked the 
supervisory DI: ``With regard to this particular paragraph, during 
the course of your investigation did you come across a physician by 
the name of Robert Shipp.'' Tr. 436. The DI answered ``[y]es,'' and 
then explained that ``[i]n July of 2004, Dr. Shipp surrendered his 
DEA registration to us as a result of an investigation that we 
conducted of his medical clinic in Columbia, Kentucky, which is 
about a 30 minute drive from Russell Springs.'' Id. at 437. 
According to the DI, ``[t]he case was well publicized'' and that 
``Dr. Shipp is very well known, or was very well known in the 
area.'' Id. The DI then explained that in July 2008, he had obtained 
a further KASPER report on the Respondents for the period of January 
1, 2005 through July 7, 2008, and found that several prescriptions 
had been dispensed by Grider 2 under the registration 
number of Dr. Shipp after he had surrendered his registration. GX 
18.
    When the Government moved for the admission of the KASPER report 
(GX 18), the Respondent objected to the admission of this exhibit 
both because it was a KASPER report and on grounds of relevancy. Tr. 
440. However, the ALJ admitted the exhibit. Even if this evidence 
was relevant to prove the allegation (which does not appear to have 
been made in either the Show Cause Order or the Government's various 
pre-hearing statements), here again, the Government's proof of the 
dispensings was based solely on an inadmissible KASPER report. The 
allegation is therefore not supported by substantial evidence.

---------------------------------------------------------------------------

[[Page 44075]]

Allegation Three--Respondents Filled Prescriptions Bearing Invalid or 
Expired DEA Numbers

    Next, the Government alleged that Respondent filled numerous 
prescriptions that bore invalid or expired DEA numbers. While the 
Government submitted copies of various prescriptions which Respondent 
filled, see GXs 23 & 26; it produced no evidence that any of the DEA 
numbers on the prescriptions themselves were either expired or invalid. 
Rather, the Government's proof was based on KASPER reports submitted by 
Respondents which listed DEA numbers which differed from those on the 
actual prescriptions. See id; see also GX 9; Tr. 316, 321. Here again, 
the Government relied on inadmissible evidence to prove the violations. 
Accordingly, the allegation is not supported by substantial evidence.
    There is, however, evidence that Respondents violated DEA 
regulations because, in some instances, the labels they affixed to 
prescriptions contained the wrong physician's name. See GX 26, at 1-2; 
7-8; 9-10.

Allegation Four--Grider 1 Refilled Prescriptions More Than Six 
Months After the Date of the Original Prescription

    In support of this allegation, the DI asserted that on four 
occasions between January 2003 and August 2004, Grider filled schedule 
III and IV controlled substance prescriptions that had been issued more 
than six months earlier. GX 9, at 14. With respect to Grider 
1, the Government's proof was limited to the bare assertion by 
the DI that he had ``reviewed prescriptions seized from Grider 
1, and compared and contrasted these prescriptions with 
prescription logs, transfer records, and KASPER reports.'' \18\ Id. No 
further evidence was offered specifically identifying the 
prescriptions, their date of issuance, and the date on which they were 
refilled. Moreover, here again, it appears that this allegation was 
based on KASPER data.
---------------------------------------------------------------------------

    \18\ This statement was made in support of six different 
allegations which the DI raised in his affidavit. See GX 9, at 14.
---------------------------------------------------------------------------

    The Government did submit an exhibit which purports to show that 
Grider Key Village engaged in the same practice. GX 24. Although this 
allegation is properly considered given the common ownership of the 
three pharmacies, the documentary evidence, which includes four 
prescriptions and four labels for refills, does not support the 
allegation as the dates of the refills are all well within six months 
of the date of the original prescriptions. See id. And while the 
exhibit contains various handwritten comments asserting that refills 
occurred more than six months after the original prescription was 
issued (two were allegedly refilled one day late), when asked by the 
ALJ what was the source of the information as to the refill dates, the 
DI testified that it came from the KASPER report. Tr. 308. Here again, 
the Government's reliance on inadmissible KASPER data precludes a 
finding that the allegation is supported by substantial evidence.

Allegations Five and Ten--Grider 1 and Grider 2 
Engaged In the Unauthorized Transfer of Prescriptions and Refills To 
and From Grider Key Village, as Well as To and From Each Other

    In his affidavit, the supervisory DI stated that his review of 
Grider 1's ``prescription logs, transfer records, and KASPER 
reports'' showed that there were 289 ``instances of unauthorized 
transfer of controlled substances [sic] prescriptions and/or 
prescription refills from Grider Drug-Key Village to Grider Drug 
1,'' and 453 ``instances of unauthorized transfer of 
controlled substances [sic] prescriptions and/or prescription refills 
from Grider Drug 2 to Grider Drug 1.'' GX 9, at 14. 
The supervisory DI further testified that during the August 2004 search 
of the pharmacies, one of his investigators relayed information to him 
regarding the existence of logbooks listing prescriptions which were 
transferred between the pharmacies. Tr. 695-96. The supervisory DI 
testified that ``[t]here were two logs,'' which were provided to DEA by 
either Mr. Grider or another employee, and which bore on their cover, 
the titles of either ``Grider-Key Village transfers or Grider Drug 
2 transfers.'' Id. at 696-97.
    The DI further testified that the logs contained ``the date and the 
prescription that was being or had been courtesy filled.'' Id. at 697. 
Explaining the term ``courtesy fill,'' the DI gave the example of where 
``the prescription was originally brought * * * to Grider 2, 
but for some reason or other it was * * * actually filled at Grider 
1, but the records and the distribution of that filling, when 
you look at the KASPER and you get the actual prescriptions, is at 
Grider Drug 2.'' Id. The DI subsequently testified that the 
only information in the log was ``the date and the prescription 
number,'' and acknowledged that he determined that the prescriptions 
had been filled at the other pharmacy by looking at KASPER data. Id. at 
699. However, the DI then explained that pharmacy's employees had told 
the Investigators that the log was used to list prescriptions that were 
actually filled by other pharmacies. Id.
    The DI then added that this was not permitted under the law because 
while ``you can transfer a prescription from one pharmacy to the other 
* * * once you transfer that prescription, you can't transfer that 
prescription back.'' Id. at 701. Continuing, the DI explained that this 
``is a violation'' of regulations requiring the pharmacy ``to maintain 
complete and accurate records of receipt and distribution'' and that 
this is ``what causes the skewage'' in ``the audit figures'' with one 
pharmacy being short of a drug and the other pharmacy having an 
overage.\19\ Id. at 701-02.
---------------------------------------------------------------------------

    \19\ This allegation might well have been proved without 
introducing KASPER data (given the testimony that pharmacy employees 
had stated what the logs documented). However, the Government did 
not introduce the logbooks into the record and thus there is a lack 
of evidence to substantiate the number of instances in which the 
prescriptions were transferred.
---------------------------------------------------------------------------

Allegation Six--KASPER Data Shows That Grider 1 Filled Nine 
Schedule III--V Prescriptions for Which It Could Not Produce the Actual 
Prescriptions

    On its face, proof of this allegation requires KASPER data for 
which the Government did not obtain the required court order. 
Accordingly, the allegation is not supported by substantial evidence.

Allegation Seven--Grider 1 and Grider 2 Failed to 
Take and Maintain a Biennial Inventory, as Required by 21 CFR 
1304.11(c)

    As evidence of this violation, the Government submitted the DI's 
affidavit. GX 9. Therein, the DI stated that he ``developed further 
information

[[Page 44076]]

during the execution of the * * * search warrants [on August 19, 2004] 
that each of the three Grider Drug locations failed to take and 
complete a biennial inventory as required by 21 U.S.C. 827(a) and 21 
CFR 1301.11(c).'' \20\ Id. at 13.
---------------------------------------------------------------------------

    \20\ The Show Cause Order had also alleged that Grider Drug--Key 
Village did not take and maintain a biennial inventory. ALJ Ex. 1, 
at 4.
---------------------------------------------------------------------------

    However, less than a month after executing his affidavit, the DI 
testified that he had done an audit of the three pharmacies' handling 
of certain drugs. Tr. 606-13. Contradicting the statement in his 
affidavit, the DI testified that in performing the audit, he had used 
Grider 1's and Grider 2's biennial inventories of May 
31, 2003 as the initial inventories, and that there was no biennial 
inventory for Grider Drug--Key Village, ``because it wasn't required 
for them at that time.'' Tr. 609. Given the DI's testimony at the 
hearing, this allegation is not supported by substantial evidence.

Allegation Eight--The Accountability Audits

    The Government further alleged that it had performed an audit of 50 
controlled substances for the period May 31, 2003 through August 19, 
2004 and that the audit ``revealed a shortage of 22,219 dosage units of 
controlled substances'' at Grider Drug 1 and ``105,913 dosage 
units of controlled substances'' at Grider Drug 2. ALJ Ex. 1, 
at 2-3. The evidence shows that this audit was done by a DI \21\ who 
was a recent graduate of the Basic Diversion Investigators Course, and 
who told her supervisor that she ``did not have the experience'' and 
``really was unsure [of] what [she] would be doing.'' Tr. 2863. 
According to the supervisory DI, the DI's audit was flawed because it 
included both invoices for Respondents' purchases and some 
distributions which occurred outside of the audit period. Id. at 607-
08.
---------------------------------------------------------------------------

    \21\ To make clear, this DI did not take the closing 
inventories; these were done by inspectors from Kentucky Drug 
Control and Kentucky Board of Pharmacy. Tr. 608.
---------------------------------------------------------------------------

    The Government did not, however, introduce this audit into 
evidence. Rather, it relied on a separate audit of three drugs (Xanax, 
alprazolam (the generic for Xanax), and methadone) which was done by 
the supervisory DI. GX 11. According to the DI, this audit found 
numerous shortages and overages, some of which would be significant if 
the audit was accurate. See, e.g., id. (finding shortages of 5,842 and 
5,225 dosage units of alprazolam .5mg and 1mg respectively at Grider 
Drug 1 and 3,271 and 8,900 dosage units of same drugs at 
Grider 2, and a shortage of 3,562 and 2,786 dosage units of 
methadone 5 and 10mg respectively at Grider 2). However, in 
doing his audit, the DI used KASPER information to determine the 
distributions by each Respondent. Tr. 617-19. The DI did not verify the 
totals provided by KASPER against the individual patient information he 
had also obtained from KASPER. Id. at 619. Most significantly, in 
determining the quantity of the drugs that Respondents distributed, the 
DI did not use the pharmacies' dispensing records, even though they 
were required to maintain these records under the CSA and DEA 
regulations. See 21 U.S.C. 827(a)(3); 21 CFR 1304.22(c). Moreover, on 
cross-examination, the DI acknowledged that he had ``no idea how 
accurate'' the KASPER data was. Tr. 622.
    Respondents put on extensive evidence challenging the DEA audits. 
More specifically, the evidence shows that shortly after DEA executed 
the August 19, 2004 search warrant, Respondents hired an entity 
(McDonald Group) to conduct inventories at each store on August 28, 
2004. Tr. 1987-88. Respondents also hired Stivers and Associates, an 
accounting firm, to review the DEA audit results. Tr. 1980. David W. 
Hicks, CPA, who has been Stiver's Auditing Director for the past twelve 
years and has nearly twenty years of professional auditing experience, 
RX 101, at 1-2, conducted what he termed a ``consultation examination'' 
of Respondents. Id. at 3; Tr. 2009. According to Mr. Hicks, ``[a]n 
audit differs from our consultation examination in that our 
consultation examination focuses directly in one specific area and 
tests at 100% with available information, whereas an audit provides 
only reasonable assurance and sample tests available information to 
provide an opinion on the reliability of the information.'' RX 101, at 
3; Tr. 2010.
    In its report, Stivers detailed the procedures it used in 
conducting its examination. Id. at 62. For the beginning or initial 
inventory, Stivers used the same May 31, 2003 inventories taken by 
Grider 1 and 2 as DEA did in doing its audits. To 
determine Respondents' purchases of controlled substances, Stivers 
received reports directly from Respondents' suppliers and compiled a 
schedule for each store which tabulated the quantity purchased by drug 
name and strength. Id. at 62. In obtaining this information, Stivers 
also obtained credit memos for Respondents' returns of drugs to their 
suppliers. Id. Stivers then added the purchases and subtracted the 
returns to the initial inventory figures to determine the total amount 
for which Respondents were accountable (Total Accountable For). Id.
    To determine the amount of drugs Respondents could account for 
(Total Accounted For), Stivers used the inventories conducted on August 
28, 2004 by the McDonald Group. Id. at 63. With respect to outdated/
expired drugs, Stivers explained that they were set aside in a separate 
bin apart from the pharmacies' stock until they could be disposed of, 
and that on September 2, 2006, Stivers inventoried the drugs that had 
expired prior to August 28, 2004, when the McDonald Group performed its 
inventory. Id. Mr. Hicks maintained that these drugs ``would have been 
removed from [the] current inventory prior to the McDonald Group's 
inventory'' and were thus not included in the August 28, 2004 counts. 
Id. Stivers counted a total of 2,414 dosage units of expired drugs. Tr. 
2043.
    As for Respondents' dispensings, Stivers tabulated the quantities 
for each drug ``for each location from the PC V computer software 
system Narcotic and Controlled Substance Drug Sales Report,'' obtaining 
monthly reports for the audit period for each of the fifty drugs that 
were initially audited by DEA. RX 101, at 63. Stivers totaled the 
monthly quantities for each drug to determine the total number of 
dosage units sold during the audit period. Id. Stivers then added the 
August 28, 2004 inventories, the outdated drugs, and Respondents' sales 
to determine the ``Total Accounted For'' for each drug. Id.
    While Stivers' results demonstrate that both DEA audits were flawed 
(largely because the DIs used KASPER data to determine the amounts of 
the dispensings), they provide little comfort to Respondent because 
they point to massive accountability problems at each of the 
pharmacies. For example, at Grider 1, Stivers found that the 
pharmacy had the following shortages (by number of dosage units): (1) 
Alprazolam, 2,316; (2) Ambien, 170; (3) diazepam, 6,372; (4) Duragesic, 
462; (5) Endocet, 214; (6) hydrocodone, 28,097; (7) lorazepam, 2,191; 
(8) Lorcet, 500; (9) Lortab, 375; (10) Valium, 40; and (11) Vicodin, 
200. Id. at 14. Stivers also found that Grider 1 had overages 
in the following drugs: (1) Clonazepam, 7,568; (2) methadone, 3,025; 
(3) oxycodone, 1,335; (4) OxyContin, 262; (5) phentermine, 1,751; and 
(6) Stagesic, 514. Id.
    At Grider 2, Stivers found that the pharmacy had the 
following shortages: (1) Ambien, 428; (2) Duragesic, 290; (3) 
hydrocodone, 8,135; (4) lorazepam, 1,253; (5) methadone, 3,207; (6) 
oxycodone, 1,240; (7) OxyContin,

[[Page 44077]]

17,875; (8) phentermine, 3,203; and (9) Stagesic, 2,013. Id. In 
addition, Stivers found that Grider 2 had the following 
overages: (1) Clonazepam, 3,979; (2) diazepam, 2,787; (3) Endocet, 425; 
(4) Lorcet, 619; (5) Lortab, 342; (6) Valium, 662; and (7) Vicodin, 
109. Id.
    Moreover, even after Stivers took the figures for all three 
pharmacies (including Grider Key Village) to determine the combined 
shortages and overages, there were still substantial shortages and 
overages of various drugs (all figures in d.u.). The combined shortages 
included: (1) Alprazolam, 1,496; (2) diazepam, 7,329; (3) Duragesic, 
605; (4) hydrocodone, 35,418; (5) lorazepam, 4,928; (6) OxyContin, 
16,998; (7) phentermine, 2,791; and (8) Stagesic, 717. Id. The combined 
overages included: (1) Clonazepam, 31,951; (2) Endocet, 871; (3) 
Lorcet, 1,051; (4) Lortab, 889; (5) methadone, 15,747; (6) oxycodone, 
900; and (7) Valium, 872. Id.
    Regarding the results of his examination, Mr. Hicks testified that 
when all the drugs for the three stores were added up, Respondents only 
failed to account for an overage of 644 pills. Id.; Tr. 2035. He then 
asserted that this result is ``so minute, it's just totally 
immaterial.'' Tr. 2035.
    This conclusion is properly characterized as ``fuzzy math,'' as 
contrary to Mr. Hicks' understanding, the various controlled substances 
which a DEA registrant handles are not fungible. Rather, pursuant to 
the CSA and DEA regulations, a registrant which dispenses is required 
to maintain ``a complete and accurate record of each such substance * * 
* received, sold, delivered, or otherwise disposed of by'' it. 21 
U.S.C. 827(a)(3) (emphasis added); 21 CFR 1304.21(a). This means that 
each drug (including a generic (alprazolam) v. a legend drug (Xanax)), 
must be separately accounted for. Moreover, ``[s]eparate records shall 
be maintained by a registrant for each registered location.'' 21 CFR 
1304.21(a). As Mr. Hicks' examination demonstrated, both Grider 
1 and Grider 2 had numerous material shortages and 
overages of the controlled substances they handled.\22\
---------------------------------------------------------------------------

    \22\ For reasons explained in my discussion of the public 
interest factors, I reject Respondents' exception that the Stivers' 
audit was not accurate and reliable as to the overages and 
shortages. While I conclude that the DEA audits were inaccurate, I 
am not required to ignore other reliable evidence in the record.
---------------------------------------------------------------------------

Allegation Nine--Grider Drug 1 Filled Four Controlled 
Substance Prescriptions Which Listed Grider Drug 2 as the 
Issuing Physician and Grider Drug 2 Listed Itself as Issuing 
Physician On Several Schedule II Controlled Substance Prescriptions

    In support of this allegation, the Government offered the testimony 
and affidavit of the supervisory DI. See GX 9, at 3-11. The Government 
did not enter into evidence any of the prescriptions which the DI 
asserted listed Respondents as the prescribing physician, and the DI's 
affidavit makes clear that the evidentiary basis for this allegation is 
the data contained in KASPER reports the DI obtained on Respondents. 
See id. Because the Government produced no evidence other than the 
inadmissible KASPER data to prove the allegation, it is not supported 
by substantial evidence.

Allegation Eleven--Respondent[s] Filled Prescriptions Issued by a 
Tennessee Mid-Level Practitioner in Violation of Kentucky Law

    In support of this allegation (which was raised in the Government's 
pre-hearing statement), the supervisory DI stated in his affidavit that 
the Louisville District Office ``Diversion Unit completed a * * * 
review of prescriptions seized on August 18, 2004 from Grider Drug 
2,'' and that ``the review of these prescriptions revealed * * 
* [t]welve (12) instances of filling prescriptions issued by a Mid-
Level Practitioner licensed in Tennessee, who is not authorized to 
prescribe controlled substances in Kentucky in violation of 21 U.S.C. 
829(b) and 21 U.S.C. 842(a)(1) and [KRS Sec.  ] 314.011(8) and [Sec.  ] 
314.042.'' GX 9, at 16. Yet, when asked at the hearing to ``elaborate 
further'' on this assertion, the supervisory DI testified that ``[i]n 
conducting my review of the KASPER reports and of course running the 
DEA numbers through our system and trying to identify the prescribers, 
I came upon the fact that--I identified 12 prescriptions that were 
being filled for a nurse practitioner out of Tennessee.'' Tr. 200-01; 
see also GX 9, at 7-11 (listing KASPER data for Grider 2 
including prescriptions issued by a ``TN MLP''). The DI then explained 
that at the time the prescriptions were filled, nurse practitioners 
were not authorized to prescribe drugs in Kentucky and thus the 
pharmacy should not have filled the prescriptions. Tr. 201.
    The Government offered no further evidence establishing the 
identity of the prescriber and his/her licensing status. Nor, 
notwithstanding the DI's statement in his affidavit that he had 
reviewed the prescriptions, did the Government introduce into evidence 
the prescriptions, the pharmacy's dispensing log, or copies of the 
labels for the dispensed prescriptions. Indeed, given the DI's 
testimony at the hearing, it is unclear whether the DI based this 
allegation on anything other than the KASPER data. I therefore conclude 
that this allegation is not supported by substantial evidence.

Allegation Twelve--Respondents Failed to Report All Thefts of 
Controlled Substances to DEA

    The Government put forward evidence that numerous break-ins and 
thefts had occurred at the Respondents and that several of them were 
not reported to DEA as required by federal regulations. According to 
the supervisory DI, he received information from Narcotics Detective 
with the Kentucky State Police (Scott Hammond) and the Police Chief of 
Russell Springs (Joe Michael Irvin), who alleged that Leon Grider was 
trading controlled substances for sex and ``hiding * * * the 
distribution[s] by reporting theft and losses for the pharmacy.'' Tr. 
160. In addition to the theft and loss reports which he obtained from 
the Police Chief and the State Pharmacy Board, the DI also obtained 
from the Russell Springs Police Department a chronology of the various 
break-ins which had occurred at Respondents.\23\ Id. at 162-63; see 
also GX 32.
---------------------------------------------------------------------------

    \23\ It does not appear that the Government provided adequate 
notice of its intent to litigate this allegation in either the Show 
Cause Order or the Pre-Hearing Statements. However, Respondents did 
not object that the allegation was beyond the scope of the 
proceeding and that they were denied adequate notice of it. 
Moreover, Respondent fully litigated the issue. As judicial 
decisions make clear, even where the Government fails to provide 
notice of an allegation in the Show Cause Order or Pre-Hearing 
Statements, the parties, in the absence of objection, can be deemed 
to have litigated the allegation by consent where the parties fully 
litigate the issue. See Citizens State Bank v. FDIC, 751 F.2d 209, 
213 (8th Cir. 1984) (citing Kuhn v. Civil Aeronautics Bd., 183 F.2d 
839, 841-42 (D.C. Cir. 1950)); Yellow Freight System, Inc., v. 
Martin, 954 F.2d 353, 358 (6th Cir. 1992).
---------------------------------------------------------------------------

    The Government introduced into evidence an exhibit which contains 
sixteen police reports \24\ documenting the various incidents; also 
included in this exhibit were a number of DEA Form 106s, a form which a 
registrant is required to submit to report the theft of controlled 
substances. See 21 CFR

[[Page 44078]]

1301.76. However, there was not an accompanying DEA Form 106 for each 
incident for which the police filed a report and the DI testified that 
on comparing the theft and loss reports which DEA had received from 
Respondents with the police reports, he determined that Respondents had 
not filed reports with DEA for some of the incidents. Tr. 169. More 
specifically, there were four instances in which a theft of controlled 
substances occurred at one of the Respondent's locations which was not 
also reported to DEA. See GX 33, at Tab E (Feb. 22, 2002 theft from 
Grider 2); id. at Tab L (Oct. 28, 2003 theft from Grider 
1); id. at Tab M (November 2, 2003 theft from Grider 
2); id. at Tab N (November 3, 2003 theft from Grider 
2).\25\
---------------------------------------------------------------------------

    \24\ While the cover of GX 33--Tab E states that it includes a 
report for a February 22, 2002 break-in at Grider Drug 2, 
the tab actually includes reports for both this break-in and a 
second incident, which occurred later that morning at Grider 
1; however, the report for Grider 1 stated that 
while the store's window had been broken with a large rock, no entry 
was made. GX 33, Tab E, at 5.
    \25\ Not proved by credible evidence was Respondents' far-
fetched contentions that: (1) The Russell Springs Police Chief was 
actually behind the break-ins because he sold alarm systems on the 
side and Leon Grider refused to buy one from him, and/or (2) that 
the Russell Springs Police Chief was behind the break-ins because he 
was dealing the drugs that were stolen.
     With respect to the latter contention, James Faller testified 
that he had been called by one Bobby Bunch, who ``said that he had 
burglarized Grider drugs'' and that when he was caught by the 
police, he had ``a whole lot more [pills] than what were turned into 
evidence,'' Tr. 5086, and that Bunch '' had agreed to testify about 
what had happened to him,'' but was murdered and no one has been 
charged with the crime because ``[i]t was another one of these 
whitewashing grand juries.'' Id. at 5103. No further evidence was 
offered to corroborate Faller's testimony regarding Bunch's 
purported statements regarding the disposition of the drugs the 
police seized from him, or even that Bunch had, in fact, been 
murdered.
     Another of Faller's incoherent tales was that Leon Grider had 
received a call from a prisoner Brian Lawless (which Grider 
purportedly had on tape, but which was not produced at the hearing), 
who, according to Faller, had written a letter to the Commonwealth 
Attorney stating ``that Leon had left money for him that was paying 
him to break into these stores,'' and that this letter was used to 
get Leon Grider indicted. Tr. 5085-86. According to Faller, Lawless 
had stated that he wrote the letter because the Chief ``told [him] 
he was going to kill [his] little brother if I didn't write them.'' 
Id. While Respondents introduced a transcript of a sworn statement 
given by Kevin Lawless, Brian's brother, which Faller obtained in 
his pursuit of his public corruption claims, the only persons 
present were Mr. Lawless, Faller, and Grider. RX 13. Moreover, 
nothing in Kevin Lawless's statement corroborates Faller's 
contention that Brian Lawless made up his story. Id. Contrary to 
Faller's assertion that Brian Lawless's letter was used to procure 
Leon Grider's indictment, the record seems clear enough that the 
only indictments brought against Leon Grider were based on his 
having unlawfully trafficked in controlled substances to LW and PG 
and not on conduct related to the break-ins. GXs 44, 45.
---------------------------------------------------------------------------

Allegation Thirteen--Respondents' Owner, Leon Grider, Unlawfully 
Distributed Controlled Substances

    In the initial Order to Show Cause, the Government alleged that in 
August 2005, Leon Grider had been indicted in both the Russell County 
and Adair County Circuit Courts on state felony charges of trafficking 
in controlled substances. ALJ Ex. 1, at 4. The Show Cause Order further 
alleged that Leon Grider had also been indicted in Russell County on 
charges of bribing a witness. Id. In its initial pre-hearing statement, 
the Government provided further notice that it intended to elicit 
testimony from Scott Hammond, a narcotics detective with the Kentucky 
State Police, regarding ``illicit distributions of controlled 
substances from'' the Respondent and various ``undercover operations.'' 
Gov. Pre-Hearing Statement, at 7.
    As part of its case-in-chief, the Government called Detective 
Hammond who testified regarding the decision to initiate undercover 
operations and the undertaking of the operations in the investigation 
of Respondents. The ALJ found Detective Hammond's testimony 
credible.\26\ ALJ 56 at nn.22 & 23. In addition, as part of its 
rebuttal case, the Government called LW, who had acted as a 
confidential informant and who obtained controlled substances from Leon 
Grider on various occasions without a prescription. Notwithstanding the 
determined efforts of Respondents' counsel to destroy the credibility 
of the Detective and LW, the ALJ found their testimony credible as do 
I. ALJ at 56 n.52.
---------------------------------------------------------------------------

    \26\ The Detective acknowledged that his mother had formerly 
worked as a cashier at Grider 2, and that she was either 
fired or quit on her own after the August 2004 DEA search in which 
the Detective assisted. Tr. 1389, 1540, 1617-18. In addition, the 
Detective testified that his wife's sister was married to Greg 
Grider, Leon Grider's oldest son. Tr. 1388.
     In an attempt to impeach Detective Hammond's credibility, Mr. 
Faller asserted that Hammond had threatened to have LW's children 
murdered, that he had gotten her thrown out of her apartment, that 
PG (LW's former boyfriend) had told him that he had things he wanted 
to share but ``was afraid for his life,'' and that Hammond had 
``start[ed] harassing me [Faller] and running witnesses off the 
road.'' Tr. 5098.
    LW testified, however, that Detective Hammond had never 
threatened her. Tr. 5935. Moreover, while LW testified that 
Detective Hammond had moved her to a safe house, he had done so at 
her request. Id. at 6131.
     Respondents introduced into evidence a transcription of an 
unsworn interview Faller conducted of PG, during which Faller made 
numerous suggestive statements to PG regarding the conduct of 
Hammond and Irvin. See RX 25, at 22 (p. 51,''my guess is, what 
happened is, they created a crime against you, too. That's my 
belief.''); id. (``I think they've threatened you ruthlessly. I 
think they're telling you you're going to come up with the testimony 
they want you to come up with. I think that they've . . . used the 
kids and the threat of the kids and everything else to try to force 
you to go along with this stuff. * * * And I think, quite frankly, 
you're scared to death. * * * In fact, the * * * scared to death 
part I'm sure of it, because I can see it. This isn't a guess * * * 
you know, it's nothing against you. It's clear to me you're scared 
to death.''). Subsequently, PG related a conversation during which 
Hammond and Irvin were attempting to recruit him and LW to work as 
informants PG said:
    Leon's got enough money. If we done something like this to him, 
it wouldn't be no problem for him to have us took care of. And the 
statement was made to me not to worry about Leon, that we'd be more 
or less--I think their words were, they could help us or they could 
hurt us, make our life easier or make our life hell, and, more or 
less to watch what's I'm doing. And their exact words were, that 
they could take us out and nobody would ever find us was their exact 
words.
    RX 25, at 32. Faller then asked, ``In other words, they'd kill 
you,'' to which PG said, ``uh-huh.'' Id. Faller then asked: That's 
the way you took it?'' Id. PG replied: ``That was their exact words, 
without saying, I'm going to kill you, but just, I'll take you out 
and nobody will ever find you. You don't have to worry about Leon.'' 
Id. Another participant in the interview then asked PG: ``They 
didn't use the words, I'll kill you, though?'' Id. PG responded: 
``No. They said you don't have to worry about Leon killing you. We 
can take you out, nobody will ever find you. And he would, too.'' 
Id. Later, PG asserted that ``they did threaten us with Federal 
charges and to hurt the kids.'' Id.
     Putting aside the ambiguity of PG's statement as to whether his 
life was threatened by either Hammond or Irvin, because both 
Detective Hammond and LW were placed under oath and were subject to 
cross-examination and the ALJ found them to be credible, I reject 
the unsworn hearsay statement of PG as inherently unreliable.
    It is further noted that Respondents did not take exception to 
the ALJ's finding that Detective Hammond's testimony was credible. 
See generally Respondents Exceptions.
---------------------------------------------------------------------------

    According to the Detective, sometime in May or June 2003, SD, a 
female in her early to mid-twenties,\27\ was arrested by the Russell 
Springs Police Department on a DUI charge; at the time of the arrest, 
PC was her passenger.\28\ Tr. 1404. A day or so after their arrests, 
the Detective interviewed them and asked them where they got their 
drugs. Id. at 1404-5. While they were initially ``uncooperative,'' they 
told the Detective that they were getting drugs from Leon Grider 
without a prescription. Id. SD agreed to cooperate and told the 
Detective she would see Leon Grider after the pharmacy's closing, knock 
on the door, go in if the door was open, ask him for controlled 
substances, and that most of the time he gave them to her. Id. at 1406. 
When asked what she provided in return, SD denied paying for the drugs 
or providing stolen property to Leon Grider. Id. at 1407. However, when 
then asked if she had sex with him, SD would neither confirm nor deny 
doing so. Id. SD also admitted that she was addicted to drugs and had 
previously been arrested for possession of some unidentified drug. Id. 
at 1408.
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    \27\ The Detective described SD as having blond hair, brown 
eyes, and being ``probably five-four or five-five,'' and ``115 or 
120 pounds.'' Tr. 1407.
    \28\ According to the Detective, he had first received 
information about SD and PC from an Investigator with the State 
Pharmacy Board and had discussed them with Chief Irvin of the 
Russell Springs Police Department. Tr. 1403.
---------------------------------------------------------------------------

    SD agreed to attempt a controlled drug buy which both the Detective 
and

[[Page 44079]]

the Police Chief (Joe Michael Irvin) observed; however, upon SD's going 
to Grider 1, the door was locked and she was unable to get in. 
Id. at 1409-10. After debriefing SD, who said that Grider would answer 
the door, the Detective went to SD's apartment complex to do 
surveillance (which was ``right down the road'' from Grider 1) 
and the Police Chief watched the back of Grider 1. Id. at 
1410. Shortly after he arrived at SD's apartment complex, the Detective 
was called by the Chief and told that Grider had left the store and was 
carrying something. Id. The Detective returned to Grider 1, 
picked up the Chief, and the two observed Leon Grider go to his house, 
stay a few minutes and then leave. Id. at 1411-12. The Detective and 
Chief then watched Grider drive to a ``community called Salem,'' where 
he met up with a red Jeep that was behind a church. Id. at 1412. A 
woman got out of the Jeep and entered Grider's car. Id. at 1415. After 
fifteen minutes, Grider and the Jeep departed; the Detective and Chief 
followed the Jeep to a ``community called Eli'' and obtained its 
license plate number, which was traced to a female, PL. Id. at 1412.
    Either the next day or the day after, the Detective and the Chief 
went to PL's residence and asked to speak with her. Id. at 1413. PL did 
not want to do so at her residence, but agreed to meet the officers at 
the Russell Springs Police Department, where she was interviewed. Id.
    During her interview, PL admitted that Leon Grider had brought her 
both Xanax and hydrocodone, for which she did not have a prescription. 
Id. at 1414-15. When asked what she was doing in Grider's car, PL 
admitted to ``just messing around,'' but when asked to define what she 
meant, she stated ``let's just leave it at that. We were just messing 
around.'' Id. at 1415. While PL said that she also received methadone 
prescriptions from a physician, id.at 1418-19, she further stated that 
she had gotten controlled substances from Leon Grider both with and 
without a prescription, id. at 1416, and that when she had a 
prescription, she would ask for some extra. Id. at 1418.
    PL agreed to act as a cooperating witness, and was approved by the 
Detective's supervisors; her background check did not reveal any 
felonies. Id. at 1416. On October 21, 2003, PL obtained a methadone 
prescription and met with the Detective on the outskirts of town, where 
she was searched, interviewed, had a transmitting/recording device 
placed on her, and was driven to Grider 1. Id. at 1419-20. PL 
entered the pharmacy, spoke with Leon Grider, and asked him to come out 
from behind the counter and into an aisle, where she gave him her 
methadone prescription and said that she ``need[ed] some Zs,'' street 
slang for Xanax. Id. at 1420-21.
    Leon Grider did not say anything and went back behind the counter 
and filled PL's methadone prescription. Id. at 1420. PL left the 
pharmacy and had a smoke, while standing around its back entrance. Id. 
PL then re-entered the pharmacy and came back out with a white bag; PL 
was then picked up by the Detective, and after being searched, gave him 
the bag. Id. at 1420-21. Upon opening the bag, the Detective found a 
pill bottle containing methadone, as well as ``thirty orange, oval-
shaped pills that were loose in the bottom of the bag.'' Id. at 1421. 
The Detective gave PL the methadone and placed the other pills in 
evidence bags, which he turned in to the Kentucky State Police; the 
orange pills were subsequently tested by the lab and determined to be 
Xanax. Id. at 1421-22. PL was debriefed and confirmed what the 
Detective heard through the transmitter; she was then allowed to leave. 
Id. Detective Hammond further testified that PL did not have a 
prescription for the Xanax. Id. at 1422. PL was used to obtain drugs 
only this one time. Id.
    In either late November or early December 2003, the Detective 
received a phone call from SD, who stated that she had been at ``the 
Manor,'' a Government housing project in Russell Springs and had seen 
Leon Grider there. Id. at 1423. SD also stated that LW was receiving 
hydrocodone from Leon Grider. Id.
    Upon receiving this information, the Detective interviewed LW, who 
initially denied that she received controlled substances from Leon 
Grider. Id. at 1424. However, LW then admitted ``that she was getting 
controlled substances from'' Grider. Id. During the interview, LW 
admitted that she had obtained hydrocodone, Xanax, and alprazolam from 
Leon Grider, both with and without a prescription; she also told the 
Detective that she believed she could get more drugs from him without a 
prescription. Id. LW, who was then in her early twenties,\29\ denied 
trading either money or sex for the drugs. Id. at 1426.
---------------------------------------------------------------------------

    \29\ The Detective described LW as being ``five-two, blond hair, 
blue eyes, [and] 115 pounds the last time I saw her.'' Tr. 1426.
---------------------------------------------------------------------------

    While during the interview, LW agreed to perform undercover 
transactions for the Detective, sometime in December 2003, she then 
told Leon Grider about her having been contacted by the Detective, that 
the police knew what was going on, and that she was ``scared to 
death.'' Id. at 1427, 1435. Grider told her she ``needed to leave the 
county for a little while just to let them cool off of'' her.\30\ Id. 
at 6019. LW then left town and would not ``answer her cell phone.'' Id. 
at 1426. However, eventually, the Detective regained contact with LW, 
who told him that she had gone to Leon Grider and told Grider that the 
state police knew what was going on. Id. at 1427, 1435. LW told the 
Detective that Grider ``gave her some money'' and ``an undetermined 
amount of hydrocodone and told her to leave.'' Id. at 1435. LW told the 
Detective that she had gone to Bowling Green and Somerset, Kentucky 
with PG, her boyfriend. Id.
---------------------------------------------------------------------------

    \30\ According to LW, Leon Grider never told her not to become a 
CI. Tr. 6020.
---------------------------------------------------------------------------

    The Detective developed additional information showing that on six 
occasions beginning on December 19, 2003 and ending on January 14, 
2004, Leon Grider wired a total of $2800 to PG through Western Union 
offices in Bowling Green and Somerset, Kentucky. See GX 46; Tr. 1490. 
In a second interview he conducted with LW in January 2004, she stated 
that Leon Grider ``told her to leave town and stay from us.'' Id. at 
1489.
    On some date not specified in the record, LW agreed again to work 
as a cooperating witness and was signed up to do so.\31\ Tr. 1495. LW 
contacted Leon Grider and said she needed to see him; Grider told her 
to come to Grider 1 before it opened on February 24, 2004. Id. 
Before LW went to the store, she was searched, a recorder was placed on 
her, and she was given instructions. Id. The Detective followed LW and 
PG to the store; upon their arrival, LW, accompanied by PG, went inside 
and told Leon Grider that they were going to court and were ``short on 
their pills'' and were concerned that they would be subjected to a pill 
count.\32\ Id. at 1495-96. Grider gave them 40 hydrocodone tablets and 
40 alprazolam tablets in two pill bottles, which LW brought to the 
Detective. Id. at 1496. LW did not have a prescription for the drugs. 
Id. at 1497.
---------------------------------------------------------------------------

    \31\ At one point, LW testified that she was in Bowling Green 
for six months. Tr. 6066-67. However, other evidence suggests that 
she was in Bowling Green for a considerably shorter period of time. 
Tr. 1496; GX 46.
    \32\ According to the Detective, PG accompanied LW on the 
undercover transaction. Tr. 1498-99.
---------------------------------------------------------------------------

    On June 4, 2004, LW performed undercover transactions in both the 
morning and either the afternoon or evening. Id. at 1499; 1513-14. In 
the morning, the Detective drove LW, who was wearing a recorder, to 
Grider 1. Tr. 1515. LW went into the store and obtained Lortab 
and alprazolam, which

[[Page 44080]]

Leon Grider placed loose in a brown bag; she then got back in the 
Detective's car and they left the scene. Id.; see also id. at 6033 
(testimony of LW that ``I just went in and asked him [Leon] for some 
pills, and he gave them to me.''); id. (testimony of LW that she 
received Lortab and Xanax at first transaction); GX 48. Notably, the 
pills were not placed in a prescription bottle. Tr. 6033.
    As for the second set of transactions, LW and PG lived together in 
a trailer in Adair County, the county next to Russell County. Id. at 
1500. LW called Leon Grider and asked him to bring some methadone to 
her. Id. During a phone call, Leon Grider explained that he needed to 
go to Grider 2; in a subsequent phone call, Grider told LW 
that he would bring some methadone to her at her residence. Id. Another 
officer followed Leon Grider to within a short distance of LW's 
residence, with the detective being ``just around the corner'' from 
LW's residence. Id.
    Upon his arrival, Leon Grider gave LW 60 alprazolam in an envelope 
and 100 dosage units of methadone, which were in a sealed 
``distributor's bottle.'' Id. at 1501. After Grider left, the Detective 
entered the residence and obtained the controlled substances. Id. LW 
did not have a prescription for either drug. Id.
    On April 24, 2005, a further undercover transaction occurred. On 
some date not clear on the record, LW and PG contacted the Detective 
and indicated that they could still obtain controlled substances from 
Leon Grider. Tr. 1507. The Detective (along with the Police Chief) met 
with LW and PG, who offered to call Leon Grider and seek more drugs 
from him; LW and PG stated that they believed that he would give them 
Duragesic (fentanyl) patches. Id.
    On the date of the transaction, LW and PG were searched and 
recorders were placed on them. Id. At 3:49 p.m., LW called Leon Grider 
and left a voicemail message in which she asked to meet with him; a 
short while later, Leon Grider returned the call. GX 27. Because Leon 
was going to see his mother, he agreed to meet LW (and PG) at a church 
graveyard on the Adair and Russell County line; the Detective and Chief 
observed Leon Grider arrive at the graveyard and watched the 
transaction from the back side of the graveyard. Id. at 1507-08.
    The Detective used a scanner to listen to the conversation between 
Leon Grider, LW, and PG, during which LW asked if she could get 
Duragesic patches from Leon Grider. Id. at 1508; GX 27. Leon Grider 
explained what strength the patches were and that he had to go back to 
town to get the patches, after which he would meet LW and PG at 
Houchens Supermarket in Key Village. GX 27, at 3-4. However, while 
driving back to town, Leon Grider observed the Detective and Police 
Chief and called LW and PG to tell them that they were being watched; 
however, he still told LW and PG to go to Houchens but that he was 
going stay at Grider 1 for fifteen to twenty minutes. Id. at 
4. LW passed this information on to the Detective. Id. Grider then told 
LW and PG to go to the parking lot of Houchens. Id.
    Leon Grider returned to Grider 1. Id. In the meantime, the 
Detective also told LW to call Leon and tell him that he and the Chief 
were no longer around; LW did so. Id. The Detective and Chief switched 
vehicles, drove to Key Village, and parked across the parking lot from 
Houchens. Id.
    Upon arriving, Leon Grider entered the store and PG went in and met 
him. Id. at 1508-09. Following a conversation, Leon Grider gave PG 
twenty Duragesic patches and 88 alprazolam; PG did not have a 
prescription for either drug Id. at 1509; GX 27. After PG left the 
store, he (and LW) met the Detective and Chief who searched them and 
their car; the Detective also took possession of twenty Duragesic 
patches and 88 Xanax pills.\33\ GX 27, at 2, 4. The CIs did not have 
prescriptions for the drugs. Id. at 2.
---------------------------------------------------------------------------

    \33\ It is acknowledged that there is a conflict in the evidence 
as to the number of patches. I conclude that the conflict is not 
material to the resolution of this matter.
---------------------------------------------------------------------------

    LW testified that while she initially had legitimate prescriptions 
for both Lortab and Xanax, she had heard from acquaintances that Leon 
Grider would provide extra pills and that she noticed that she would 
get extra pills in her prescriptions Tr. 5911, 5915. Eventually, LW 
started asking Leon Grider ``if there was any way possible'' he could 
``double'' her prescriptions; Grider did so. Id. at 5916-17. LW 
testified that about a year to a year and a half later, she started 
getting 500-1000 Lortab 10mg a week in commercial-size containers,\34\ 
and that this continued for a period of ``about two years.'' Id. at 
5917, 5925. LW took 50 to 60 pills a day and also sold some of them. 
Id. at 5918. According to LW, Leon Grider expressed his attraction to 
her and asked if he could stay at her house; however, LW denied 
engaging in sexual activities with him. Id. at 5920. LW also stated 
that Leon Grider had given her his cell phone number so that she could 
reach him without calling the store. Id. at 5921.
---------------------------------------------------------------------------

    \34\ LW also testified that her physician eventually stopped 
prescribing to her. Tr. 5928.
---------------------------------------------------------------------------

    Leon Grider also told LW that some of the commercial bottles that 
were labeled for hydrocodone actually had pinto beans in them and were 
marked with either a red line or a red X. Id. According to LW, Leon 
Grider did this in the event he was robbed. Id. at 5921-22. LW 
testified that Leon Grider never gave her a hydrocodone bottle which 
actually contained pinto beans rather than hydrocodone. Id. at 5922, 
6039. LW also testified that Leon Grider had told her ``not to come in 
the store when [his wife, Anna Mae] was around'' and that Leon Grider 
would leave drugs for her outside of the store in the gutter of Grider 
1.\35\ Id. at 5923, 5926-27.
---------------------------------------------------------------------------

    \35\ According to LW, the gutter was at her ``head-level,'' and 
standing ``flat-footed,'' she could reach into it with her hand. Tr. 
6042.
---------------------------------------------------------------------------

    LW testified that sometime probably in 2004,\36\ she asked Leon 
Grider for some pills and Grider told her to meet him at Grider Key 
Village. Id. at 5930-31. LW parked in front of the store, knocked on 
the door and was let in by Leon. Id. at 5931. Grider gave LW a bottle 
with 500 pills; however, before LW could leave, Anna Mae Grider pulled 
up in the front and entered the store. Leon told LW to leave out the 
back, but the rear door was locked; LW sat in a storage room but Anna 
Mae came to the room, found LW, and took the pills from her. Id. at 
5931-32. LW then left the store. Id. at 5932.
---------------------------------------------------------------------------

    \36\ However, LW later testified that this incident occurred 
before she agreed to work as a confidential informant. Tr. 6037.
---------------------------------------------------------------------------

    The next day, LW called Leon and told him that she was ``starting 
to detox really bad'' and asked ``if there was any way possible [she] 
could get that bottle back.'' Id. Leon told LW to meet him later, and 
upon meeting at Grider 1, gave her two 500-count bottles. Id. 
at 5932-33.
    Anna Mae Grider also testified regarding this incident. At the 
hearing, Mrs. Grider asserted that the bottle contained pinto beans, 
Tr. 4802, and that Leon had given it to LW, who ``was in there begging 
for pills,'' id. at 4803, ``[p]robably to get her off his neck.'' Id. 
at 4804. However, in a deposition she had previously given in a civil 
action, Mrs. Grider testified that the bottle contained hydrocodone, 
that the bottle was a white bottle and not a prescription vial, and 
that she did not give the bottle back to LW. GX 68, at 212-15. Given 
the inconsistency between Mrs. Grider's testimony at the hearing and at 
her earlier deposition as to the contents of the bottle, I find that 
her deposition testimony is more credible than her testimony at the 
hearing. I further find that Mrs. Grider's deposition testimony 
corroborates LW's

[[Page 44081]]

testimony regarding the Key Village incident.
    LW further testified that neither Detective Hammond nor Chief Irvin 
threatened her or threatened to take her children away from her. Tr. 
5935. She also testified that neither Detective Hammond nor Chief Irvin 
had ever engaged in inappropriate conduct towards her. Id. at 5953. She 
further testified that neither Detective Hammond nor Chief Irvin 
threatened PG. Id. at 5936.
    LW also acknowledged that she had become addicted to drugs and that 
she was paid $150 to $300 for each undercover transaction. Id. at 6046. 
In addition, LW ``guessed'' that her addiction had caused ``a little 
bit of damage'' to her brain and had caused, in the words of 
Respondent's counsel, ``little problems with [her] recall sometimes.'' 
Id. at 6099-6100. She further noted that it had been six or seven years 
since the events to which she testified. Id. However, LW later 
testified that her past drug use had no effect on her recollection of 
her interactions with Leon Grider. Id. at 6124. As noted above, the ALJ 
generally found LW's testimony credible as do I.\37\ See also ALJ at 
84-85.
---------------------------------------------------------------------------

    \37\ Respondents took exception to the ALJ's finding that LW was 
credible, noting her testimony as to her drug addiction and its 
effect on her memory, her having admitted to selling controlled 
substances, as well as the incentives she had to lie about her work 
(such as the money she was paid for her work as a confidential 
informant and that she was still at risk for criminal prosecution 
because under Kentucky law, there is no statute of limitations for 
felonies). Resp. Exceptions at 11-12.
     However, LW's testimony was corroborated in large part by 
Detective Hammond and her testimony was internally consistent. 
Moreover, having personally observed LW's testimony, the ALJ's 
finding is entitled to deference. See Universal Camera Corp. v. 
NLRB, 340 U.S. 474, 496 (1951).
---------------------------------------------------------------------------

    Regarding her decision to leave Russell County upon being 
approached by Detective Hammond and Chief Irvin, LW testified that Leon 
Grider gave her $1000 and three 500-count bottles of hydrocodone and 
told her that she ``needed to leave town'' and ``to let them slack off 
of me for a while.'' Id. at 5939; see also id. at 5941-42. She also 
testified that when she and PG were staying in Bowling Green, Leon 
wired the money in PG's name because ``it would look better.'' Id. at 
5942-43.
    LW testified that in 2004, she had asked for and received a bottle 
of 100 methadone from Leon Grider without having a prescription. Id. at 
5939-40. LW also testified that after she had stopped talking to Leon 
Grider ``as much'' and was coming off of methadone, she obtained four 
Suboxones from him to help her ``from detoxing.'' Id. at 5946. LW 
testified that she eventually had a seizure and woke up in an ambulance 
on her way to the hospital. Id. at 5946-47. LW further testified that 
she had received about twenty-five morphine \38\ patches worth about 
$2,500 to $3,500, as well as 98 OxyContin tablets, from Leon Grider. 
Id. at 5948, 6096. Regarding her obtaining of the morphine patches, LW 
testified that she told Leon Grider that she needed money and was going 
to sell them. Id. at 6092.
---------------------------------------------------------------------------

    \38\ LW testified that the patches were turned over to Detective 
Hammond and Chief Irvin. Thus, I find that this is actually the 
incident in which Leon Grider provided the Duragesic patches to LW. 
Duragesic patches actually contain fentanyl, a drug which is 
considerably more powerful than morphine. However, both drugs are 
schedule II narcotic controlled substances. See 21 CFR 1308.12(b) & 
(c).
---------------------------------------------------------------------------

    As for the 98 OxyContin tablets, LW testified that she obtained 
this drug from Leon Grider before she agreed to work as a confidential 
informant and that she needed the drug for her addiction because she 
was concerned about the number of Lortab tablets she was taking and the 
effect of the Tylenol (acetaminophen, which is combined with 
hydrocodone in Lortab) on her liver. Id. at 6095-96. LW testified that 
she consumed the OxyContin in five days but did not ask Leon Grider for 
more because she did not think that he would provide the drug to her 
again. Id. at 6097. LW also testified that after she ``didn't have a 
prescription anymore,'' Leon Grider created false prescription labels 
so she would not ``get caught'' with the drugs if she was stopped by 
the police.\39\ Id. at 6126.
---------------------------------------------------------------------------

    \39\ In his testimony, Faller alleged that various recordings 
that were made of the undercover transactions had been tampered 
with. Tr. 5045-64. However, Faller's testimony was (as was typical) 
confused and incoherent.
     It is further acknowledged that Respondents submitted several 
affidavits of an individual who maintained that he is a Forensic 
Audio and Video Examiner, which were prepared for other litigation 
between Leon Grider and the Commonwealth and Chief Irvin. Therein, 
the affiant asserts that various tapes were either copies, have 
erasures, or were edited. RX 28. While in an affidavit (dated 
October 2, 2007), Respondent's Expert made reference to tapes which 
appear to be of the various undercover transactions engaged in by 
LW, even here, the affidavits fall short of establishing that any of 
the original tapes were altered. See id. at 9 (``Q-4 is a `copy' of 
a video tape (not the original) of a scene behind a commercial 
location where an alleged transaction took place.''); (``Q-5 has 
been identified as a `copy' (not the original) of a video tape with 
a portion of the tape as a tape over edit. I will need the original 
tape and proper recorder to properly determine the extent and 
content of the edits. (This video tape is of some sort of 
surveillance at a cemetery.)''). Notwithstanding that the record in 
this proceeding did not close for another three years, Respondents 
produced no credible evidence that the original recordings of these 
transactions had been tampered with.
    Most significantly, the Government did not introduce the tapes 
into evidence. Nor was the Government required to as the testimony 
of Detective Hammond and LW, which the ALJ found to be credible, is 
substantial evidence that Leon Grider distributed controlled 
substances to LW, even though she did not have a prescription for 
the drugs. I thus reject Respondent's suggestion that because 
Detective Hammond did not actually view Leon Grider distribute the 
drugs to LW, the Government was required to produce the tapes. See 
Resp. Exceptions at 12-13.
     I further reject the ALJ's finding that ``[t]he record casts 
serious doubts as to the reliability of any audio or video tapes 
made related to this proceeding,'' ALJ at 56 n.22, as unsupported by 
substantial evidence. Given that neither party introduced the tapes 
into evidence and the ALJ observed both Detective Hammond and LW 
testify and found them to be credible, this finding is both 
incorrect and unnecessary.
---------------------------------------------------------------------------

    In addition to the incidents involving PL and LW, the record 
contains substantial evidence that Leon Grider distributed controlled 
substances to BL without a prescription. More specifically, JD, who is 
BL's daughter, testified that her mother sold Suboxone (buprenorphine 
and naxalone) and Klonopin (clonazepam), which she obtained through 
prescriptions, the majority of which she filled at Grider 1. 
Id. at 3139. JD admitted that she participated in the transactions, 
which took place at her mother's house, by handing the drugs over to 
the buyer and obtaining the money. Id. at 3139-40. JD further testified 
that her mother had obtained Lortab 7.5 and Klonopin from Leon Grider 
without a prescription, and that while her mother initially had a 
prescription for the Klonopin, she had run out and yet Grider had gone 
to BL's house and given her more of the drug using ``the same label of 
the original prescription.'' Id. at 3142. Moreover, while JD was not 
present at her mother's house when Leon Grider delivered the drugs, she 
``saw the medication that [her mother] didn't have a prescription 
for.'' Id. at 3173.
    JD also testified that on March 15, 2006, she had spoken with Chief 
Irvin regarding her mother's ``slurring speech, stumbling, drunken 
behavior, [and] drug behavior.'' Id. at 3144. JD further testified that 
she ``had found two bottles with the same date and [that] there was 
another bottle of Klonopin that had been duplicated'' and that she 
reported this to Chief Irvin. Id. According to Irvin, he then met with 
JD who told him that Leon Grider had provided her mother with ``pills 
that she wasn't supposed to be getting'' when she was hospitalized. Id. 
at 3201. JD also told Irvin ``this was being done * * * with multiple 
pill bottles with duplicat[e] labels.'' Id. Irvin then told JD, who 
``claimed to have'' the bottles, that if she gave them to him, he would 
see what he could do. Id. Later that day, JD called Irvin and asked to 
meet again; Irvin agreed and during the meeting, JD gave him the pill 
bottles. Id.

[[Page 44082]]

at 3202. The Government subsequently introduced into evidence 
photographs of two pill bottles; the bottles bear prescriptions labels 
for 28 Suboxone tablets under the prescription number 4439582, and list 
BL as the patient and a Dr. WLS as the prescriber. GX 71.
    On March 18, BL called the dispatch center and the call was patched 
through to Chief Irvin, who was then at home. Tr. 3203. The call was 
recorded and played into the record; in addition, a copy of the 
recording was submitted into evidence. Id. at 3204; 3215.
    During the call, BL complained that her daughter had seen Irvin 
``the other day about Leon.'' Id. at 3215. BL further stated that her 
daughter had attempted to fill an outdated prescription but that Leon 
Grider had refused to so and that JD had told her that because Grider 
wouldn't fill her prescriptions, she was going to ``get him.'' Id. at 
3216. BL accused her daughter of making up the allegations she raised 
with Irvin. Id. at 3216-17.
    When BL maintained that Grider had not been giving out pills, Irvin 
responded: ``Well, can you explain to me why that there are bottles 
with your name on them, with your name on them, that are exactly 
duplicated, that's a violation of the law?'' Id. at 3217. BL replied: 
``no, no, no, no, no, no, no, no,'' and in response to Irvin's follow-
up question, stated: ``he has not done that.'' Id. After stating that 
he had a different view of Grider's conduct and he knew that the 
allegation was true, BL explained that ``[t]he only time he ever 
fronted me--and that was when I was in the hospital, because I missed 
my doctor's appointment, and he g[a]ve me a couple but he took it right 
back out when I came in and went to the doctor's.'' Id. at 3218. Asked 
by Irvin to explain her answer, BL then stated: ``What I mean by that 
is he went to the hospital. He knew I needed that medication. He knew 
that I was going to the doctor. And he took that back out of my 
prescriptions. * * * I don't see anything wrong with that.'' Id. BL 
then asserted that ``as soon as [she] got out of the hospital, [she] 
went to the doctor,'' and that upon filling the prescription, Grider 
took out ``what he had given me'' and that she did not ``see anything 
wrong with that.'' Id. When asked why she needed a pharmacist to give 
her medication when she was in the hospital, BL stated that she ``was 
getting ready to leave and * * * didn't know how quickly I could get in 
to my doctor.'' Id. at 3219. BL further asserted that Grider ``was 
doing this to help me out. He knew I needed the medication'' and that 
``I was going to get them and that I would pay him right back.'' Id. at 
3221.
    Respondents introduced into evidence an affidavit of BL (dated 
April 17, 2006) which she provided in a civil action brought by Leon 
Grider and others against Irvin and others. RX 106. Therein, BL stated 
that she ``had a valid prescription for [c]lonazepam which [she] had 
filed [sic] at Grider Drug'' and that she had ``asked the pharmacist to 
provide [her with] two (2) bottles so that [she] could legally carry 
and possess this medication'' when she was not home as she ``did not 
want to carry an entire, full bottle'' on her person. Id. at 1. In the 
affidavit, BL further stated that ``Leon Grider has never provided me 
any prescription medications without a Doctor prescribing them.'' Id. 
at 2.
    Respondents also introduced into evidence various pharmacy records 
including a Narcotic and Controlled Drug Sales Report (compiled from 
the Grider 1 pc V Pharmacy System software) listing BL's 
prescriptions from December 2005 through July 1, 2010, as well as 
copies of her prescriptions. See RX 121. While the sales report lists 
prescription number 4439582, with a date of ``01/30/06'' for Suboxone 
and lists Dr. WLS as the prescriber, see id. at 1, the exhibit does not 
contain a copy of the prescription. Moreover, while the sales report 
also lists a January 3, 2006 Suboxone prescription issued by Dr. WLS, 
the report indicates that no refills were authorized by it. See id.
    Having reviewed the relevant evidence (including having listened to 
the recording of BL's phone conversation with Chief Irvin), I find that 
BL's statement in her affidavit was false. I further conclude that 
substantial evidence supports a finding that Leon Grider distributed 
Suboxone to BL on or about January 30, 2006, at which time she did not 
have a prescription for the drug.\40\
---------------------------------------------------------------------------

    \40\ I have considered the various issues raised by Respondents 
to impeach both JD's and Chief Irvin's credibility. With respect to 
JD's credibility, I note that the ALJ repeatedly found her testimony 
credible notwithstanding that at the time of her testimony, she was 
under indictment for drug trafficking charges. ALJ at 47-48. It is 
further noted that BL's statement during her phone call to Chief 
Irvin corroborated JD's testimony with respect to Leon Grider's 
having distributed Suboxone to BL when she was in the hospital.
    Respondents also waged an extensive assault on Chief Irvin's 
credibility. In her opinion, however, the ALJ cited Chief Irvin's 
testimony as support for her finding that BL obtained controlled 
substance from Leon Grider without a prescription. See ALJ at 48 
(FoF 187 (citing Tr. 3204-05)). I also find Chief Irvin's testimony 
credible.
    The ALJ nonetheless made several findings regarding Irvin which 
can only be described as gratuitous. For example, she found that 
``Anna Mae Grider provided uncontested testimony concerning'' a 
traffic stop that Irvin made of a Grider employee (ML), which Grider 
alleged was done to harass ML. ALJ at 58 (FoF 227). Anna Mae Grider, 
however, had no firsthand knowledge of this incident and the only 
other evidence supporting it is an unsworn letter by ML. Thus, even 
if this finding would tend to show bias on the part of Chief Irvin, 
it is not supported by substantial evidence.
    Next, the ALJ also found that ``[t]he record contains evidence 
of other complaints being made against Irvin'' and ``Mrs. Grider 
believes Det. Hammond and Chief Irvin `have it out' for the 
Griders.'' Id. at 59 (FoFs 229 and 232).
    This proceeding is neither an internal affairs review board nor 
an investigating grand jury such as the one which Mr. Faller got 
``fired up.'' Rather, the ALJ's sole function is to make findings 
that are relevant and material to the allegations raised by the 
Government. The ALJ's findings numbers 229 and 232 are not probative 
of any material issue in the case.
    The ALJ made a further finding based on Anna Mae Grider's 
testimony that following a burglary at one of the Respondents, Chief 
Irvin retrieved a surveillance tape at the store and that ``faces 
were seen on the tape,'' but that Irvin took the tape and when Mrs. 
Grider went to the police station to view the tape, it had been 
erased. Id. (FoF 231). However, Mrs. Grider was not present when the 
tape was initially viewed. Tr. 4758. Moreover, while Greg Grider 
(another son of Anna Mae and Leon) testified that a face was visible 
on the tape, the ALJ did not cite this testimony as a basis for her 
finding and did not make any finding as to whether his testimony was 
credible. Thus, as ultimate factfinder, I reject this finding.
---------------------------------------------------------------------------

Allegation Fourteen--Respondents Violated Their Corresponding 
Responsibility by Distributing Controlled Substance Prescription to 
Patients Engaged in Doctor-Shopping

    As explained above, during the course of the proceeding, the 
Government issued a second Show Cause Order which also immediately 
suspended Respondents' registrations. ALJ Ex. 21. The Order raised 
additional allegations that Respondents were filling controlled 
substance prescriptions for six patients (TA, RB, JB, JR, SR, CR), who 
were obtaining the prescriptions from multiple doctors, and that in 
doing so, Respondents were violating their corresponding responsibility 
because they ``knew or should have known that the * * * dispensed 
controlled substances were likely to be diverted or used for other than 
legitimate medical purposes.'' Id. at 2-3.
    As proof of the allegation, the Government submitted exhibits 
showing Respondents' dispensings of controlled substances to each of 
these patients, which were prepared by Detective Hammond. See GXs 52-
57. While Detective Hammond reviewed KASPER reports and developed 
information regarding the patients, he also subpoenaed each patient's 
profiles from the pharmacies, as well as his/her medical records from 
their doctors. Tr. 3299-301. Finally, Detective Hammond interviewed 
many of the prescribing physicians and/or dentists and prepared

[[Page 44083]]

spreadsheets for each patient listing their prescriptions, the date 
issued, the quantity dispensed and the number of days of supply it 
provided, the prescriber, and the dispensing pharmacy. Id.
    The Government also elicited the testimony of Donald Sullivan, 
Ph.D.,\41\ a registered pharmacist who is also a Professor of Pharmacy 
Practice and the Department Chair of Pharmacy Practice at Ohio Northern 
University. Dr. Sullivan was qualified as an expert and testified as to 
the standards of pharmacy practice with respect to the dispensing of 
controlled substances; Dr. Sullivan also prepared a report based on his 
review of the prescriptions issued to each of the six patients and 
testified as to whether Respondents dispensings violated the Controlled 
Substances Act. GXs 65-66, Tr. 3405, 3414-26.
---------------------------------------------------------------------------

    \41\ Dr. Sullivan obtained his Ph.D. in Pharmaceutical 
Administration; he also holds an M.S. in this area and a B.S. in 
Pharmacy; he obtained all three degrees from The Ohio State 
University. GX 65. Dr. Sullivan has published dozens of articles on 
pharmacy practice in peer-reviewed journals, as well as several 
books. Id. In addition, he has made numerous presentations on 
pharmacy-related topics including state and federal pharmacy laws. 
Id.
---------------------------------------------------------------------------

    To refute the Government's contentions, Respondents called Eric 
Grider, the son of Leon Grider and pharmacist in charge of Grider 
2, as well as Tonya Moses, a pharmacist and employee of 
Respondents who worked at each of the stores. In addition, Respondents 
called each of the six patients who were accused of doctor-shopping to 
testify, as well as several of the practitioners who prescribed to 
them. Additionally, Respondents introduced various documents.

The Expert's Testimony and Report

    The ALJ found that Dr. Sullivan credibly testified as an expert 
witness in the areas of the standards of pharmacy practice and the 
standards for dispensing controlled substances. ALJ at 25; see also Tr. 
3402. In preparing his report, Dr. Sullivan reviewed prescriptions, a 
report prepared by Detective Hammond, patient profiles from the 
Respondents, Kentucky pharmacy regulations, and KASPER reports. Tr. 
3393, 3427-28, 3429-33, 3442-43, 3497-98. However, because Dr. Sullivan 
clearly reviewed the prescriptions and patient profiles, the Government 
has established that his testimony was based on sources other than the 
KASPER data.
    Dr. Sullivan testified that the concept of ``corresponding 
responsibility'' means that the pharmacist and the physician ``have a 
shared responsibility to make sure that each prescription is for a 
legitimate medical purpose.'' Tr. 3403, 3418. According to Dr. 
Sullivan, pharmacists are taught to question prescriptions that they 
may find are unlawful or suspicious. Dr. Sullivan identified the 
following examples of ``red flags'' which should lead a pharmacist to 
question the legitimacy of a prescription: (1) When a patient is 
obtaining controlled substances from multiple doctors, (2) when 
patients are being prescribed duplicate controlled substances that 
treat the same indications, (3) when patients seek early refills, (4) 
when patients obtain prescriptions for large quantities and large 
doses, and (5) when patients travel long distances from where they live 
to either the prescriber or the pharmacy. Id. at 3404; see also GX 66, 
at 3.
    Dr. Sullivan further testified as to the obligation of a pharmacist 
under Kentucky law to review a patient's profile and conduct a drug 
utilization review (DUR) prior to dispensing a prescription. Tr. 3410. 
As he explained in his report:
    Kentucky and federal law states that, prior to dispensing every 
prescription, the pharmacist shall review the patient profile 
(prospective drug utilization review or DUR) for the following:
    (a) Over-utilization or under-utilization,
    (b) Therapeutic duplication,
    (c) Drug-disease state contraindications,
    (d) Drug-drug interactions,
    (e) Incorrect drug dose or duration of treatment,
    (f) Drug-allergy interaction,
    (g) Abuse/misuse,
    (h) Inappropriate duration of treatment,
    (i) Documented food/nutritional supplements-drug interactions.

GX 66, at 2. Dr. Sullivan further explained that over-utilization could 
involve ``a couple of different things,'' including ``using more than 
one prescription drug for the same indication'' and patients seeking 
refills ``too early.'' Tr. 3411. As an example of incorrect/
inappropriate dosing and/or duration of treatment, Dr. Sullivan 
explained that ``some narcotic cough syrups * * * should only be used 
for a limited period of time, based on the diagnosis.'' Id. at 3412. 
And as examples of abuse or misuse, Dr. Sullivan testified ``[t]hat's 
where you would look for patterns of patients getting things filled too 
early, going to multiple doctors, traveling long distances, therapeutic 
duplication, just a pattern of there's something not quite right going 
on with how this patient is using this therapy.'' Id.
    Regarding the statement in his report that it was ``clear that the 
pharmacists at the Grider Drugs did not do prospective DUR,'' GX 66, at 
2; Dr. Sullivan explained that this is a legal requirement, which is 
``very easy'' to comply with, as it can be done ``[j]ust by pulling up 
the patient profile and looking at it.'' Tr. 3413. Dr. Sullivan also 
testified that even though a pharmacist does not have access to a 
patient's medical file, the pharmacist should not simply defer to the 
prescribing physician and fill the prescription because the 
corresponding responsibility requires that the prescription be issued 
for a legitimate medical purpose. Id. at 3417-18.
    Dr. Sullivan testified that when confronted with these ``red 
flags,'' a pharmacist can take a number of steps in response, including 
having an extensive conversation with the patient, calling the 
physician, or refusing to fill the prescription. Id. at 3448-49. While 
in some instances, a pharmacist fulfills his obligation by calling the 
prescriber, Dr. Sullivan testified that ``there's nothing in the law 
that says [pharmacists] have to fill anything,'' especially if they 
feel that a prescription has not been issued for a legitimate medical 
purpose. Id. at 3474-75, 3477-84. Dr. Sullivan also testified that it 
is a pharmacist's primary responsibility to ensure patient safety. Id. 
at 3407-08; Govt. Exh. 66, at 1.
    With respect to his review of patient profiles for the six patients 
identified in the Suspension Order, Dr. Sullivan opined that ``these 
patients all exhibited multiple instances of'' several of the red flags 
he identified. Govt. Exh. 66, at 3. Dr. Sullivan further opined that 
any ``reasonable and prudent pharmacist would have caught this behavior 
and refused to dispense controlled substances to these patients. These 
are all textbook examples of drug abuse and/or drug diversion. Any 
reasonable and prudent pharmacist would quickly recognize this based on 
their education, training, and experience.'' Id. at 8. And in his 
testimony, Dr. Sullivan opined that the manner in which controlled 
substances were dispensed by the Respondents was not in compliance with 
the accepted standards of practice observed by pharmacies and 
pharmacists in the Commonwealth of Kentucky. Tr. 3426. A discussion of 
the patient-specific evidence follows.\42\
---------------------------------------------------------------------------

    \42\ Noting the ALJ's ruling on the admissibility of the KASPER 
data, Respondents also contend that Dr. Sullivan's opinions ``were 
based almost exclusively on the prescriptions information he was 
provided based on KASPER report data provided him.'' Resp. 
Exceptions at 15. Dr. Sullivan made clear, however, that he had also 
reviewed copies of the prescriptions. Tr. 3430-31.

---------------------------------------------------------------------------

[[Page 44084]]

TA

    TA (GX 52) is a woman in her early to mid-thirties. Between June 
19, 2009 and April 29, 2010, TA obtained thirty-four prescriptions for 
federally-controlled substances such as Duragesic (fentanyl, a schedule 
II drug); Endocet (oxycodone, a schedule II drug); hydrocodone with 
acetaminophen (schedule III); alprazolam and clorazepate (both schedule 
IV drugs); as well as eight prescriptions for carisoprodol, which at 
the time was scheduled only under Kentucky law but which has since been 
placed in schedule IV of the Controlled Substances Act. GX 52, Tab C; 
see also 21 CFR 1308.12 (listing schedule II drugs), 1308.13 (schedule 
III), 1308.14 (schedule IV); ALJ at 5-6 (stipulated facts); 76 FR 77330 
(2011) (scheduling of carisoprodol).\43\ All but three of the thirty-
four prescriptions were filled by either Grider 1 or Grider 
2, with all but three of the prescriptions being filled by 
Grider 1. GX 52, Tab B, at 3 & Tab C; Tr. 3298, 3857-3859.
---------------------------------------------------------------------------

    \43\ The Final Order scheduling carisoprodol discussed the 
extensive evidence of the abuse of carisoprodol, especially when 
taken in conjunction with other drugs such as narcotics and 
benzodiazepines. See 76 FR 77330.
---------------------------------------------------------------------------

    TA's prescriptions were written by twelve different prescribers. GX 
52, at Tab C. The prescribers included two pain clinic doctors (Dr. H 
and Dr. P); three dentists practicing at a clinic named Associates in 
Dentistry (Dr. C, Dr. S, and Dr. M); another dentist (Dr. G); two oral 
surgeons who did not practice together (Dr. A and Dr. H); a 
psychiatrist (Dr. M); and his nurse practitioner (NP W). Tr. 3844-47, 
4435.
    While the prescriptions written by the various dentists who treated 
TA were typically only for a few days' supply of hydrocodone, 
throughout this period TA was also receiving prescriptions from pain 
management doctors for thirty-day supplies of both schedule II and III 
drugs such as Duragesic (fentanyl), Endocet (oxycodone), and 
hydrocodone/apap. GX 52, at Tab C. For example, on June 19, 2009, TA 
received prescriptions from Dr. H for 10 Duragesic patches and 90 
tablets of hydrocodone 10/500, both being a thirty-day supply. Id. Yet 
on June 24, 2009, TA received an additional twelve hydrocodone/apap 
from Dr. C, a dentist. Id. Similarly, on August 15, 2009, TA received 
another 100 hydrocodone 10/500 (this being a twenty-five day supply) 
from Dr. H, and on August 24, she received another sixteen tablets of 
hydrocodone from Dr. G. Id.
    On September 4, TA obtained another prescription for 100 
hydrocodone 10mg, a twenty-five day supply from Dr. H (her pain 
doctor), followed by a prescription on September 16 for twenty 
hydrocodone 10mg from Dr. H (the oral surgeon), which she refilled on 
September 18; followed by a September 24 prescription for 120 Endocet, 
a thirty-day supply, from Dr. P, her new pain doctor. \44\ Id.; see 
also Tr. 3882. On October 22, Dr. P issued TA a second prescription for 
120 Endocet (also a thirty-day supply), and yet TA received twenty 
hydrocodone from Dr. S on October 31, twenty-four hydrocodone from Dr. 
A on November 4, and sixteen hydrocodone from Dr. C on November 16. GX 
52, at Tab C.
---------------------------------------------------------------------------

    \44\ In addition to Endocet, Dr. P prescribed thirty-day 
supplies of carisoprodol to TA numerous times. GX 52, at Tab C.
---------------------------------------------------------------------------

    On November 18, Dr. P issued TA another prescription for 120 
(thirty-day supply) Endocet; TA then obtained ten hydrocodone from Dr. 
G on November 30, twelve hydrocodone from Dr. M on December 3, and 
twenty hydrocodone from Dr. A on December 10. Id. Continuing this 
pattern, on December 17, Dr. P issued TA another prescription for 120 
(thirty-days) of Endocet; TA then obtained twelve hydrocodone from Dr. 
C on December 28, twelve hydrocodone on January 2, 2010 from Dr. M, 
twelve hydrocodone from Dr. S on January 4, and twelve more hydrocodone 
on January 6 also from Dr. M. Id. In addition to the various narcotics 
she received (and the carisoprodol), beginning on December 31, 2009, TA 
obtained prescriptions for thirty-day supplies of benzodiazepines 
including clorazepate and alprazolam from NP W, and Dr. M.
    Over the course of time, TA had all of her teeth extracted; she 
also testified that she was never told that any of the extractions were 
unnecessary. Tr. 3912, 3926, 3969. Dr. G, one of the dentists who 
treated TA on various occasions in 2006 (when he extracted two of her 
teeth) and 2009, testified at the hearing that he had reviewed her 
chart and that she had ``bad teeth. They weren't in great shape and she 
needed extractions.'' Id. at 4446. Dr. G also testified that at one of 
TA's visits, which probably occurred in 2009, she complained that an 
extraction, which had recently been done by another dentist, was 
causing lots of pain. Id. at 4447. Dr. G testified that it was ``hard 
to tell exactly what [was] going'' and because TA claimed she had 
``lots of pain,'' he referred her to an oral surgeon. Id. at 4448. Dr. 
G testified that he wrote TA a prescription for ``a few days of pain 
pills to give her time to get into the oral surgeon.'' Id. at 4449. 
While Dr. G testified that TA's pain complaint seemed reasonable, he 
further explained that when a patient comes in after having seen 
another doctor, he would start checking up on the patient. Id. at 4449-
50.
    Following this incident, Dr. G saw TA several more times. At the 
first of these visits, TA wanted another tooth extracted; however, 
because Dr. G ``thought that it would be a difficult extraction,'' he 
referred her to an oral surgeon. Id. at 4457. At the second visit, Dr. 
G told TA that she needed to have a ``full mouth extraction'' and would 
need to have this done by an oral surgeon. Id. After referring TA to an 
oral surgeon, Dr. G made a chart entry on TA's chart indicating that 
she was not to be prescribed any more pain medications. Id. at 4490-91.
    In his report, Detective Hammond noted that TA engaged in a pattern 
of going to a dentist to have a procedure performed and then going to 
another dentist or oral surgeon to complain about the procedure that 
was done and to seek hydrocodone. GX 52, at Tab B, at 3. During his 
interview with Dr. A, one of the oral surgeons who treated TA, Dr. A 
noted that during her last visit (January 26, 2010), TA had complained 
about a procedure performed by another practice, Dental Associates, and 
had asked him to look at it. Id. However, Dr. A referred her back to 
Dental Associates and noted in TA's chart that ``she was seeking pain 
medications.'' Id. Detective Hammond further noted that the dental 
providers TA saw ``ranged from Somerset, KY to Campbellsville, KY which 
are about 75 miles apart.'' Id.
    Dr. G acknowledged that it would be the ``norm'' for a patient 
whose teeth have deteriorated to the point of requiring a total 
extraction to have pain. Tr. 4459. However, when questioned as to 
whether he would have prescribed hydrocodone 5/500 to TA (as he did on 
August 24, 2009) if he had known that she had received 100 hydrocodone 
10/500 from Dr. H (her first pain doctor) on August 15th, Dr. G stated 
that ``he wouldn't have prescribed that with knowledge of the previous 
prescription'' because the earlier prescription was ``twice as strong 
as what [he] prescribes for four days.'' Id. at 4467. Upon being asked 
by Respondents' counsel whether he ``would prescribe this limited 
amount as a booster on top of what she was already prescribed,'' Dr. G 
stated that he ``would not prescribe'' it even for a limited 
period.\45\ Id. Moreover, on

[[Page 44085]]

cross-examination, Dr. G was asked whether he would have issued his 
November 30 prescription for ten hydrocodone 5/500 if he had known that 
TA had obtained a prescription for Endocet twelve days earlier. Id. at 
4479-80. Dr. G answered ``no'' and explained that he ``wouldn't have 
prescribed something that's not near as strong just because the 
stronger medication should normally take care of the pain.'' Id. at 
4480. And later in his testimony, Dr. G explained that while he did not 
``know what's considered a lot of medication in the world of pain 
clinics * * * I just know that there is no reason for me to prescribe 
it, and there are different doctors.'' Id. at 4520.
---------------------------------------------------------------------------

    \45\ Dr. G did testify that on occasion he has had chronic pain 
patients, who would require extra medication for four days after a 
procedure, because otherwise they would run out of the medication 
they take for chronic pain. Tr. 4451-52. However, Dr. G explained 
that in this situation he would ``have to get with the pharmacist * 
* * or have to call [the patient's] physician.'' Id. at 4451. 
However, on both Respondents' direct examination and the 
Government's cross-examination, Dr. G was adamant that he would not 
have prescribed to TA if he had known about her prescription for 120 
hydrocodone 10/500. Id. at 4478.
---------------------------------------------------------------------------

    Dr. G reiterated that he did not receive a phone call from Grider 
1 regarding any of the prescriptions that TA was receiving 
from other practitioners. Id. at 4511. Indeed, he testified that he was 
never contacted by either Grider 1 or Grider 2 
regarding any of his patients. Id. at 4479. Moreover, upon reviewing 
the spreadsheet (Tab C) and examining the names of the various 
prescribers, Dr. G testified that ``[t]he only prescriber [he] 
recognize[d] are a few of the dentists and oral surgeons. All of the 
physicians, I assume they are physicians, I don't recognize any of 
their names. I don't even know what county they are in.'' Id. at 4468.
    In her testimony, TA denied ever having sold prescriptions. Tr. 
3901. However, on May 11, 2010, Detective Hammond went to Dr. P's 
clinic and interviewed him regarding TA; he also reviewed the medical 
record which Dr. P maintained on her and observed that Dr. P had 
performed several urine drug screens on her. GX 52, at Tab B, at 2-3. 
While the report for TA's March 10, 2010 urinalysis noted that she had 
listed that she was taking Percocet, hydrocodone, Soma, and Xanax, the 
results came back negative for benzodiazepines, opiates, and oxycodone. 
Id. TA, however, had received a prescription for 60 tablets (a thirty-
day supply) of alprazolam on February 18, as well as a prescription for 
120 tablets (also a thirty-day supply) of oxycodone on February 11.\46\ 
GX 52, Tab B, at 3.
---------------------------------------------------------------------------

    \46\ While TA's urine drug screen was negative for opiates, and 
Detective Hammond noted that she had listed hydrocodone as a drug 
she was taking, TA's last hydrocodone prescriptions provided only a 
two-day supply and had been issued approximately two weeks earlier.
---------------------------------------------------------------------------

    TA testified that she was unsure whether the dentists knew about 
the controlled substance prescriptions from Dr. H or Dr. P. Id. at 
3915, 3941. However, she testified that she believed that she did not 
inform her dentists of those prescriptions. Id. at 3915-3916. TA 
believed the pain management doctor was the one who had to know about 
all of the controlled substances that were being prescribed to her. Id. 
at 3942.
    Tonya Moses, a pharmacist and former employee of Respondents, also 
testified for Respondent. Ms. Moses acknowledged that Grider 1 
had filled prescriptions for TA for a lesser strength of hydrocodone 
from a dentist (Lortab 5) which overlapped with prescriptions for 
Lortab 10 from a pain management doctor. Id. at 4203. The ALJ found 
credible Ms. Moses' testimony that the second, lesser strength 
prescription would not be justified, because ``[i]f the 10 mg is not 
controlling the pain, the five isn't. So, she had no reason to get 
that.'' Id. Ms. Moses acknowledged that this was an example of 
therapeutic duplication. Id. Ms. Moses further testified that it was 
``incumbent upon a pharmacist to verify with the doctor if he sees 
multiple physicians prescribing, basically, the same medication.'' Tr. 
4214.
    Respondents also called Dr. M, a family practitioner with thirty 
years of medical practice, whose wife's sister is married to Eric 
Grider, and who is a partner with Leon Grider in the medical office 
building where he maintains his office and Grider 2 is 
located. Id. at 5266-67. Dr. M acknowledged the existence of doctor-
shopping and the prevalence of prescription drug abuse in Eastern 
Kentucky. Id. at 5962-63. Dr. M did not treat TA. Id. at 5357, 5361. 
However, upon being shown the spreadsheet listing TA's prescriptions, 
Dr. M acknowledged that TA's pattern of obtaining prescriptions and 
``taking about four [hydrocodone] a day on a regular basis,'' as well 
as other drugs, and seeing different doctors, ``would be a matter of 
major concern'' and ``probably [wa]s a potential'' doctor-shopping 
situation. Id. at 5364-65.
    Dr. Sullivan noted the multiple instances in which Grider Drug 
1 filled hydrocodone and/or oxycodone prescriptions issued by 
different doctors days before the date on which an earlier prescription 
for either of these drugs would have been totally consumed. Tr. 3416-
17; Govt. Exh. 66, at 3-4. As Dr. Sullivan wrote in his report: 
``[t]his pattern of filling hydrocodone and oxycodone prescriptions 
early when the patient still had medication left from a previous 
prescription occurred a total [of] 11 times during a ten-month 
period.'' Id. at 4. Dr. Sullivan also noted that ``[i]n addition to the 
hydrocodone and Endocet prescriptions, the patient was also receiving 
alprazolam and carisoprodol, which are known to be heavily abused. This 
provides further evidence that the patient was engaged in the abuse 
and/or diversion of controlled substances.'' Id. Finally, Dr. Sullivan 
opined that ``[a]ny reasonable and prudent pharmacist would have 
determined that the patient was either abusing and/or diverting these 
controlled substances.'' Id.
    Notably, Leon Grider, who was the pharmacist at Grider 1, 
did not testify in the proceeding.

RB

    RB (GX 53) is forty-year old female. Between December 2007 and 
April 2010, RB filled approximately 200 prescriptions which were 
written by two doctors (Dr. L & Dr. P) for such controlled substances 
as hydrocodone/apap tablets, alprazolam, and various narcotic cough 
syrups including Polytussin, Vicotuss, Z Hist, Tussionex, and Z 
Tuss.\47\ GX53, at Tab C. At least 172 of these prescriptions were 
filled at Respondents, with all but seven filled at Grider 2. 
Id. Moreover, approximately 100 of the prescriptions were for the 
narcotic cough syrups. Id. However, according to Dr. Sullivan, narcotic 
cough suppressants are intended for the short-term relief of cough due 
to upper respiratory conditions, and in 2006, the clinical guidelines 
were changed to ``strongly discourage the use of any type of cough 
suppressant in treating any type of cough.'' Tr. 3419. Yet for the 
entirety of the twenty-eight months covered by the spreadsheet, RB 
received prescriptions from both Drs. P and L for narcotic cough 
suppressants which authorized the dispensing of 15,000 milliliters of 
these drugs. Id. at 3419-21; GX 66, at 4; GX 53, at Tab C.
---------------------------------------------------------------------------

    \47\ This figure excludes the 52 prescriptions for Ultram 
(tramadol) which were listed on the spreadsheet. However, this drug 
is not currently controlled under federal law.
---------------------------------------------------------------------------

    RB also repeatedly obtained hydrocodone tablets throughout this 
period while she was receiving the narcotic cough suppressants. See GX 
53, Tab C, at 1. For example, on December 7, 2007, RB filled at Grider 
2 a prescription from Dr. L for 60 tablets (a thirty-day 
supply) of Lorcet 7.5/650mg; however, on December 12, 17, 20, as

[[Page 44086]]

well as January 2 and 4, 2008, she also filled at Grider 2 
four prescriptions for Polytussin and one for Codiclear. Id. Notably, 
while Dr. P wrote the Polytussin prescriptions, Dr. L wrote the 
Codiclear prescription. Id.
    Likewise, on January 7, 2008, RB filled at Grider 2 a 
prescription from Dr. L for another 60 tablets (again a thirty-day 
supply) of Lorcet. Id. However, RB filled at Grider 2 two 
prescriptions issued by Dr. P for Polytussin on January 11 and 16, a 
prescription for Codiclear issued by Dr. L on January 22, and 
prescriptions for Z Hist issued by Dr. P on January 30 and February 4, 
2008. Id.
    As another example, on March 18, 2009, RB filled at Grider 
2 a prescription issued by Dr. L for thirty tablets (a thirty-
day supply) of Lorcet. Id. at 3. RB then filled prescriptions issued by 
Dr. P for Z Hist on March 20 and 30, as well as April 13, and a 
prescription issued by Dr. L for Tussionex on March 26. Each of these 
prescriptions was filled at Grider 2, and while the Z Hist 
prescriptions were for either four or six-day supplies, the Tussionex 
prescription was for a twelve-day supply. Id. In addition, 
notwithstanding that RB had obtained a thirty-day supply of Lorcet on 
March 18, on both March 30 and April 6, RB also filled at Grider 
2 prescriptions issued by Dr. P for twenty additional tablets 
of Lorcet. Id.
    In addition, even putting aside that RB was obtaining prescriptions 
from both doctors, the evidence shows that on multiple occasions, RB 
obtained early fills (or refills) of her prescriptions. For example, on 
July 21, 2008, RB filled at Grider 2 a prescription issued by 
Dr. L for a twelve-day supply of Tussionex, yet only four days later, 
she again obtained at Grider 2, an additional twelve-day 
supply of Tussionex. Id. at 2.
    Moreover, on both April 28 and May 22, 2009, RB filled at Grider 
2 prescriptions issued by Dr. L, each being for thirty tablets 
of Lorcet (a thirty-day supply).\48\ Id. at 3. The latter prescription 
was thus filled six days early. Moreover, on June 16, RB filled a 
prescription (also written by Dr. L) for another thirty tablets of 
Lorcet at Grider 1, this also being a thirty-day supply; this 
dispensing was thus five days early.\49\ Id.
---------------------------------------------------------------------------

    \48\ Also, on both May 13 and June 18, Grider  2 filled 
a prescription for twenty tablets of Lorcet issued by Dr. P. GX 53, 
Tab C, at 3-4.
    \49\ While the spreadsheet does not list what pharmacy this 
prescription was filled at, a listing of RB's Medical Expenses 
establishes that she filled the prescription at Grider  1. 
GX 53, at Tab D.
---------------------------------------------------------------------------

    Also, on July 15, 2009, RB filled at Grider 2 a 
prescription for 60 tablets of Lorcet (this also being a thirty-day 
supply). Id. at 4. Yet on August 5, 2009, RB filled at Grider 
2 a prescription for 60 tablets of Lorcet; thus, this 
dispensing was nine days early. Id.
    As for the Xanax (alprazolam), on July 23, 2009, RB filled at 
Grider 2 a thirty-day supply. Id. Yet on August 12, 2009, RB 
obtained another thirty-day supply; thus, this dispensing was ten days 
early. Id. Moreover, on November 6, 2009, RB filled at Grider 
2 another thirty-day supply. Id. at 5. However, on November 
27, RB obtained at Grider 2 another thirty-day supply, this 
dispensing being nine days early. Id. Finally, RB obtained at Grider 
 2 a thirty-day supply on January 28, February 15, and March 
8, 2010. Id. The February 15 dispensing was thus twelve days early, and 
the March 8 dispensing was nine days early.\50\ Id.
---------------------------------------------------------------------------

    \50\ There is also evidence showing that RB also filled 
prescriptions for hydrocodone and alprazolam at other pharmacies, 
during the same period in which she was obtaining these drugs at 
Respondents. See GX 53, Tab C.
---------------------------------------------------------------------------

    On April 7, 2010, Detective Hammond interviewed Dr. L. GX 53, Tab 
B. Dr. L stated that he did not know that RB was also seeing Dr. P 
during the same period she was seeing him. Id. at 1. When Detective 
Hammond asked Dr. L whether he would have prescribed any controlled 
substances to RB if he had known that she was also obtaining the same 
or similar drugs from Dr. P, Dr. L answered ``absolutley [sic] not.'' 
Id.
    On April 9, 2010, Detective Hammond interviewed Dr. P, who likewise 
stated that he was unaware that RB was also seeing Dr. L at the same 
time she was seeing him. Id. at 2. Dr. P also stated that he would not 
have prescribed controlled substances to RB if he had known that she 
was also receiving the same or similar drugs from Dr. L.\51\ Id.
---------------------------------------------------------------------------

    \51\ Respondent introduced a statement from Dr. P. stating that 
RB ``has a legitimate reason to take pain medicine'' because of 
various displaced discs. RX 127. However, Dr. P further stated that 
he ``did not know until April 2010 she was seeing other 
physicians,'' thus corroborating in part the statement in Detective 
Hammond's written report. Id.
    However, even if RB has a legitimate reason to take pain 
medicine for her back, Dr. P's statement does not explain why she 
was obtaining narcotics from Dr. L as well. Nor does Dr. P's 
statement establish that RB had a medical condition which warranted 
the prescribing of narcotic cough syrups, or the alprazolam. Thus, 
this letter does not refute the Government contention that RB was 
engaged in doctor-shopping and that Respondents violated their 
corresponding responsibility under federal law in filling her 
prescriptions.
---------------------------------------------------------------------------

    Upon reviewing the spreadsheet of RB's prescriptions, Eric Grider 
testified that he did not find RB's controlled substance prescriptions 
unusual, given the limited number of days' supply provided by each 
prescription. Tr. 3607-08. Regarding RB's numerous prescriptions for 
narcotic cough medicines, Grider asserted that these drugs could be 
used on both a short and long term basis, and gave as an example of the 
latter, COPD or chronic coronary disease with a cough. Id. at 3673. 
However, Grider admitted that he did not know if RB had either 
condition and that he never asked her doctors whether she had one of 
these conditions. Id. Moreover, RB testified that she never talked to a 
pharmacist at Grider Drugs about her medications, id. 4676, and that no 
one at Grider Drugs ever questioned her about her prescriptions. Id. at 
4688-89.
    Eric Grider further testified that, notwithstanding that RB was 
being prescribed narcotic cough syrups by two different doctors, he did 
not see any potential for abuse or misuse of the medications. Id. at 
3678. However, in retrospect, Grider conceded that he should have 
contacted RB's doctors to ensure they were aware that the other was 
prescribing to her. Id.
    As for RB's having filled the prescriptions at several different 
pharmacies, Eric Grider acknowledged that this was ``sometimes'' 
indicative of doctor-shopping. Id. at 3680. However, Grider testified 
that because his store was not signed up to obtain KASPER reports and 
RB did not have insurance and was ``a cash-paying patient,'' there was 
``no way to know'' that she was getting prescriptions filled at other 
(non-Grider) pharmacies. Id. at 3602.
    Dr. Sullivan concluded that RB's behavior ``clearly indicates this 
patient was abusing and or diverting this medication.'' GX 66, at 4. 
Dr. Sullivan opined that this abuse and or diversion ``should 
definitely have been caught by the pharmacist.'' Id. Also, at the same 
time RB was taking this narcotic cough suppressant containing 
hydrocodone, RB was also taking hydrocodone-containing pain killers. 
Such drug overlap indicates a duplicate therapy was being used. Tr. 
3421. Dr. Sullivan also noted a pattern of early refills of Xanax 
prescriptions. He concluded that ``[n]o reasonable and prudent 
pharmacist would fill Xanax prescriptions this early on so many 
occasions.'' GX 66, at 5.

JB

    JB is a female in her mid-fifties. GX 54, Tab A. Between September 
2, 2009 and May 4, 2010, JB filled fifty-seven controlled substance 
prescriptions; fifty of the prescriptions were filled at Grider 
2, with the remaining seven being filled at the Russell 
Springs Pharmacy. Id. at Tab C. The prescriptions, which were issued by 
three different doctors,

[[Page 44087]]

were for Lyrica (pregabalin), Propoxyphene N/Apap, Tussionex (a 
schedule III drug containing hydrocodone indicated for cough and 
allergy), hydrocodone/apap, alprazolam and Valium (diazepam). Id.
    The evidence shows that Grider 2 repeatedly filled 
prescriptions presented by JB for alprazolam and Valium which were 
issued by two different doctors. Specifically, on September 17, 2009, 
Grider 2 filled a prescription issued by Dr. B for 90 
alprazolam .5mg (a thirty-day supply), and yet on September 24, Grider 
2 filled a prescription issued by Dr. E for 60 Valium 10mg (a 
twenty-day supply). Id. On October 13, Grider 2 filled a 
prescription issued by Dr. E for another 60 diazepam (also a twenty-day 
supply), and three days later, it filled a prescription issued by Dr. B 
for 90 alprazolam (thirty-day supply). Id. Respondent filled additional 
prescriptions issued by Dr. E for 60 diazepam (twenty-day supply) on 
October 31, December 7, 2009, and January 28, February 17, March 9, 
April 9, and April 30, 2010; it also filled additional prescriptions 
issued by Dr. B for 90 alprazolam (thirty-day supply) on November 19, 
December 18, 2009, and January 21, February 17, March 18, and April 21, 
2010. Id. In total, Grider 2 dispensed eight alprazolam 
prescriptions, each providing a thirty-day supply, for a total of 240-
days' supply of this drug, and nine diazepam prescriptions, each 
providing a twenty-day supply, for a total of 180-days' supply of this 
drug; these prescriptions thus provided 420-days' supply of medication 
for a period which was only eight-months in duration.
    With respect to these prescriptions, Dr. Sullivan explained that 
alprazolam and diazepam are controlled substances in the same 
therapeutic class of benzodiazepines. Continuing, Dr. Sullivan 
explained that:

    [t]he two drugs, diazepam 10mg and alprazolam 0.5mg are used for 
the same indication. I cannot think of any clinical reason why a 
patient would be using these two drugs at the same time for a period 
of seven months. Any reasonable and prudent pharmacist would not 
have filled prescriptions for these two medications to be taken at 
the same time. This is an obvious sign of either prescription drug 
abuse and/or diversion.

GX 66, at 5. Dr. Sullivan also observed that on February 17, 2010, 
Grider 2 had filled prescriptions for both diazepam and 
alprazolam presented by JB. Id.
    With respect to JB, the evidence also shows that throughout most of 
the period in question, she was simultaneously receiving prescriptions 
for hydrocodone from both Dr. E and Dr. J. GX 54, at Tab C. However, 
while JB filled Dr. E's prescriptions at Grider 2, she filled 
Dr. J's prescriptions at the Russell Springs Pharmacy. Id.
    Respondents called JB to testify. Tr. 5072. However, after some 
preliminary questions, JB informed the tribunal that she was under 
indictment for prescription fraud and that she was invoking her Fifth 
Amendment privilege. Id. at 5073. JB was excused, and although she was 
subject to recall, id. at 5077, Respondents did not recall her.
    Eric Grider, pharmacist at Grider Drug 2, also testified 
regarding JB's prescriptions. Grider, who offered the remarkable 
testimony that he did know of any doctor-shopping having occurred in 
Russell County, id. at 3639, testified that JB's prescriptions did not 
raise a red flag with him even though she was simultaneously obtaining 
them from three doctors.\52\ Id. at 3613. Regarding the hydrocodone 
prescriptions which JB was simultaneously filling at both Grider 
2 and the Russell Springs Pharmacy, Eric Grider testified that 
Russell Springs Pharmacy was not connected with Grider Drugs. Id. at 
3611. Mr. Grider then suggested that the only way he would have known 
about the prescriptions filled at Russell Springs Pharmacy was if it 
had billed Medicaid because JB had Medicaid, but if Russell Springs 
Pharmacy did not ``bill her Medicaid, [he] wouldn't [have] know[n]'' 
about those prescriptions. Id. However, in his testimony, Mr. Grider 
admitted that Respondents did not subscribe to KASPER and thus did not 
check to see whether their patients were obtaining drugs from multiple 
doctors or pharmacies. Id. at 3539-40, 3551.
---------------------------------------------------------------------------

    \52\ According to Eric Grider, Dr. J is a family physician, Dr. 
E is an ear, nose and throat specialist, and Dr. B is a 
psychiatrist. Tr. 3612-13.
---------------------------------------------------------------------------

    As for the prescriptions that Grider 2 filled, Mr. Grider 
maintained that he had talked with the patient and that ``the rest of 
them [we]re legitimate prescriptions for her symptoms.'' Id. at 3613. 
He also asserted that the prescriptions were not a large number given 
the number of days' supply they provided. Id. at 3615; RX 120F; GX 54, 
Tab C. However, Grider offered no further explanation as to why it was 
appropriate to fill JB's prescriptions for alprazolam and diazepam, and 
as found above, the prescriptions for these two drugs provided 420 
days' supply for period of eight months' duration.

JR

    JR is a male in his late fifties. GX 55, Tab A. Between November 2, 
2009 and April 29, 2010, JR filled thirty-four prescriptions for 
narcotics including hydrocodone, OxyContin, and Tussionex, which were 
issued by five different doctors; all but one of the prescriptions were 
filled at Grider 1. Id. at Tab C. However, JR testified that 
he was diagnosed with colon cancer in September or October 2009, and 
that he was terminally ill at the time of his testimony in December 
2010.\53\ Tr. 4235. JR further testified that Dr. W was his family 
doctor and that Dr. M worked with Dr. W, that Dr. N was his oncologist, 
that Dr. K was a surgeon who had performed various procedures on him, 
and Dr. B was a pain management specialist. Id. at 4238-39. In 
addition, a Dr. JB performed a surgical procedure on JR. RX 120B, at 9, 
34.
---------------------------------------------------------------------------

    \53\ The ALJ did not, however, make a finding as to whether she 
found this testimony credible. See ALJ at 37-39.
---------------------------------------------------------------------------

    JR testified that he had several bulging or ruptured disks in his 
back and that he had been on disability for a long time and been 
receiving painkillers for fifteen years. Id. at 4243. According to JR, 
Dr. W issued the November 2 prescription for 90 hydrocodone 7.5/500 (a 
thirty-day supply) for his back pain; Dr. K issued the November 23 
prescription for 20 hydrocodone 10/500 (for a three-day supply) for 
post-surgery pain, likely following a biopsy. Id. at 4244. On December 
1, JR received an additional 60 hydrocodone 7.5/500 (this also being a 
thirty-day) supply, and two days later, Dr. JB wrote him an additional 
prescription for twenty hydrocodone 10/500 (also a three-day supply), 
for pain following the installation of a chemotherapy port.\54\ GX 55, 
at Tab C; RX 120B, at 34; Tr. 4246. Dr. W wrote additional 
prescriptions for 60 hydrocodone 10/500 (these being fifteen-day 
supplies) on December 31, as well as on January 14 and 28, and February 
10, 2010. GX 55, at Tab C. However, on January 21, JR also filled a 
prescription for another 30 hydrocodone issued by Dr. N, his 
oncologist. Id.
---------------------------------------------------------------------------

    \54\ While the actual prescription was written by Dr. JB, the 
label for the prescription that was dispensed listed Dr. K as the 
prescriber. RX 120B, at 34. On December 18 and 23, as well as 
January 8, 2010, Dr. K wrote additional short term prescriptions for 
hydrocodone10/500. The record does not, however, establish why.
---------------------------------------------------------------------------

    On February 19, 2010, Grider 1 dispensed to JR 60 tablets 
of OxyContin 20mg (a thirty-day supply) based on a prescription issued 
by Dr. K. Id. Yet one week later (Feb. 26), Grider 1 filled 
for JR a prescription for 60 hydrocodone 7.5/500 (also a thirty-day 
supply) issued by Dr. W, and five days later (March 3), Respondent 
dispensed to JR 120

[[Page 44088]]

hydrocodone 10/500 (a thirty-day supply), based on a prescription 
issued by Dr. B. Id.
    Moreover, on March 8 (just five days later), Grider 1 
dispensed to JR another 60 tablets of OxyContin 20mg (a thirty-day 
supply) which was prescribed by Dr. B, and on March 19, it dispensed to 
JR 60 tablets of OxyContin 30mg (a thirty-day supply), as well as 30 
tablets of hydrocodone 10/500, both of which were prescribed by Dr. K. 
Id. Only one week later (on March 26), Grider 1 dispensed to 
JR another 60 OxyContin 20mg (thirty-day supply) and another 30 
hydrocodone 10/500; both prescriptions being issued by Dr. K. Id. On 
April 2, JR filled at Grider 1 a prescription for 120 
hydrocodone 10/500 (thirty-day supply) issued by Dr. B; he also filled, 
albeit at a different pharmacy, a prescription for 60 OxyContin 20mg, 
which was also issued by Dr. B.\55\
---------------------------------------------------------------------------

    \55\ In addition, on ten occasions throughout this period, Dr. W 
prescribed a ten-day supply of Tussionex, a hydrocodone based cough 
syrup, to JR. GX 55, at Tab C.
---------------------------------------------------------------------------

    Ms. Moses filled several of JR's prescriptions at Grider 
1; she also reviewed Grider 1's records and prepared 
notes regarding several of the dispensings. On November 23, 2009, she 
had filled a prescription for twenty tablets of hydrocodone 10mg which 
was issued by Dr. K. Ms. Moses documented on the prescription that JR 
had filled a prescription for Lortab 7.5mg on November 2, to be taken 
one tablet, twice a day. Dr. K's prescription was for one tablet every 
six hours. Ms. Moses justified filling the hydrocodone 10mg 
prescription because JR had seen a surgeon, the strength of the drug 
was higher, and the dosing interval had increased. Tr. 4164-65.
    Ms. Moses became aware of the Lortab 7.5mg prescription from the 
pharmacy technician who had run the Lortab 10mg prescription through 
the computer. Ms. Moses did not call either physician. Id. at 4165-66. 
She asked JR if he had had surgery done, and JR told her that Dr. K had 
put in a port for his chemotherapy. Id. at 4166; but see id. at 4244 
(JR's testimony that he may have had a biopsy done on this date). Ms. 
Moses testified that she collected this information on November 23, 
before she filled the prescription. Id.
    According to Ms. Moses, a similar scenario arose with the 
prescription of December 3, 2009, because she knew JR was a cancer 
patient and had undergone a colon re-section. Id. at 4167-68. Moreover, 
the December 3rd prescription (issued by Dr. JB) was limited to a 
three-day supply of hydrocodone 10mg to help JR control his pain. Id. 
While Ms. Moses was aware that JR had also obtained hydrocodone 7.5mg 
from his primary care physician, she testified that she used her 
professional judgment in deciding to fill the hydrocodone 10mg 
prescription because she knew that hydrocodone 7.5mg twice a day would 
not control his post-surgical pain. Tr. 4167-68; RX 120B. Ms. Moses 
knew that after the 3-day supply was exhausted, JR would return to the 
hydrocodone 7.5mg medication for pain control. Tr. 4168.
    Ms. Moses also testified regarding a January 21, 2010 prescription 
issued to JR by his oncologist Dr. N. Id. According to Ms. Moses, JR 
presented a prescription for the same strength (hydrocodone 10/500) and 
dosing interval (four tablets per day) as provided in a prescription 
Grider 1 had filled one week earlier which was issued by JR's 
primary care doctor. Id. at 4168. Ms. Moses testified that she called 
JR's oncologist to get his approval to fill the prescription and was 
told by a nurse that it was ``okay to fill,'' which she annotated on 
the hard copy of the prescription. Id. The evidence corroborates this. 
See RX 120B, at 46-47.
    Ms. Moses offered a similar explanation as to why Grider 1 
filled a March 8, 2010 prescription for OxyContin 20mg. Tr. 4169. Ms. 
Moses testified that she recognized that JR had received an earlier 
prescription for OxyContin 20mg on February 19, and that she told JR 
that she could not fill the prescription until March 17. Id. JR then 
told Ms. Moses that ``he was completely out of his medicine, because * 
* * the dosing * * * wasn't controlling his pain.'' Id. Ms. Moses 
testified that she agreed to call the ``the surgeon's office'' and that 
the nurse said ``that they were aware that [JR] was out of his 
medicine, and gave me the okay to fill that.'' Id; see also RX 120B, at 
65. Ms. Moses further stated that it was within professional standards 
to fill this prescription. Id.
    Respondents' counsel also asked Ms. Moses about the March 26, 2010 
OxyContin prescription for a thirty-day supply which was filled by Leon 
Grider. Id. This prescription was at issue because the previous 
OxyContin prescription, which was also for a thirty-day supply, had 
been filled only one week earlier. As Ms. Moses testified, the March 26 
prescription bore the notation: ``ok early per MD--last RX stolen pt 
had police report.'' RX 120B, at 71. As noted above, both the March 19 
and 26 prescriptions were issued by Dr. K. GX 54, at Tab C. Ms. Moses 
testified that filling this prescription was within professional 
standards. Tr. 4170.
    Next, Respondents' counsel asked Ms. Moses about the May 5, 2010 
refill request it received from Dr. W, JR's primary physician. This 
form, which was faxed into Grider 1, stated ``needs all meds 
called in (including cough syrup)'' and listed numerous medications; 
however, various controlled drugs including Lortab and OxyContin were 
crossed out and the document also bore the notation ``No controlled 
drugs except Ativan.'' RX 120B, at 80.
    According to Ms. Moses, a staff member at Dr. W's office ``wrote 
down all of [JR's] medications, including OxyContin 20mg, which Dr. W 
does not prescribe for him. Therefore, Dr. W was aware of JR's taking 
this for pain control from another physician.'' Id.; see also Tr. 4170-
71. However, even if this evidence establishes that Dr. W was aware 
that JR was receiving OxyContin from another doctor (and it does not 
establish whether Dr. W was aware that JR was still obtaining 
prescriptions from another doctor on the various dates when he 
prescribed a thirty-day supply of hydrocodone to JR), it does not 
address whether Drs. K and B, who were prescribing OxyContin and 
hydrocodone to JR during the same time period, were aware that they 
were also simultaneously prescribing these drugs.
    JR testified that he told Dr. K and Dr. N about the prescriptions 
he was receiving from Dr. W for his chronic back pain. Tr. 4246, 4256. 
However, during an interview Detective Hammond conducted with Dr. K on 
May 4, 2010, Dr. K stated that ``he had given him [JR] multiple 
prescriptions while treating him but had he known he was getting 
controlled substances from other doctors he would not have prescribed 
him anything other than right after surgery and he wouldn't have 
prescribed him as much.'' GX 55, Tab B, at 1. Dr. K further told the 
Detective that JR ``did not tell him what he was getting from other 
doctors'' and that while ``[h]e assumed Dr. W, his family physician, 
had given him something for pain * * * he did not know it was an 
ongoing situation. Also, he did not know [JR] was going to a pain 
clinic.'' Id.
    On the same date, Detective Hammond interviewed Dr. W, JR's primary 
care physician who had referred him to Dr. K. Id. at 2. Dr. W stated 
that he knew JR ``would get something from Dr. K after his surgery but 
did not know [JR] would be continually getting medications * * * from 
Dr. K.'' Id. Dr. W further stated that he would not have prescribed the 
hydrocodone and Tussionex if he had

[[Page 44089]]

known [that JR] was getting the same and/or similar medication from Dr. 
K because [JR] was getting `too much' with both of them prescribing.'' 
Id. Dr. W also stated that JR ``did not tell him that Dr. K was also 
giving him pain medications on a regular basis.'' Id.\56\
---------------------------------------------------------------------------

    \56\ In their Exceptions, Respondents contend that ``[t]he fact 
that a patient's surgeon over this period was prescribing small 
quantities of the same controlled substance, although in varying 
degrees of strength, that the patient's primary care physician was 
prescribing would not trigger the need to question either of these 
doctors' prescriptions.'' Resp. Exceptions at 19. Respondents do not 
cite any evidence to support this contention, and the statements of 
Drs. K and W indicate that had they known that JR was obtaining 
prescriptions they would have taken steps to reduce the quantities 
that were being prescribed.
---------------------------------------------------------------------------

    Detective Hammond also interviewed Dr. B, who runs a pain 
management clinic at a hospital in Danville, Kentucky. Id. at 3. Dr. B. 
stated that ``he did not know [JR] was getting OxyContin from Dr. K or 
controlled substances from Dr. W.'' Id. Dr. B also stated that 
``patients at his clinic * * * are locked into a pain management 
contract in which they are the only ones that will be treating their 
pain,'' and that if he had known that JR was getting controlled 
substances from other doctors, he would not have treated him.\57\ Id.
---------------------------------------------------------------------------

    \57\ With respect to Dr. K's authorization of a new prescription 
(which was filled on March 26, 2010) based on the theft of JR's 
OxyContin, Detective Hammond noted that the theft had occurred at 
the Russell County Hospital and that the incident was captured by a 
video camera. Id. at 2. Detective Hammond interviewed the police 
officer who responded to this incident and noted that upon reviewing 
the video tape, JR's ``car was not locked and the person who broke 
into the vehicle appeared to know exactly where the pills were 
located'' as she ``was in the vehicle only a short amount of time 
and did not appear to be searching in the vehicle.'' Id. The 
responding officer also stated that JR ``was very persistent * * * 
about the pills being stolen and that she [the officer] may have to 
talk to the doctor so he could get his pain pills. [JR] was also 
very knowledgeable about the fact that the break in should be caught 
on video as he was within range of a security camera, [and] in fact 
he informed [the officer] of this.'' Id.
    In his report, Detective Hammond also noted various notations in 
the patient filed maintained by Dr. W. These included a report that 
on October 29, 2009, JR called and requested a refill of Lortab, 
which Dr. W apparently rejected as he noted in the chart: ``Hell no! 
not due.'' Id. Moreover, on November 19, 2009, a person called Dr. 
W's office to report that JR was ``selling his pain pills and 
Xanax'' to her daughter. Id. Also, a chart note dated November 20, 
2009 stated: ``Patient needs to bring in pill bottles next week for 
pill counts and UDS-any day next week.'' According to the chart, on 
November 23, JR ``brought in his Xanax bottle with 2\1/2\ pills 
left'' and did not have a bottle for the Lortab. Id. at 3. The chart 
further noted: ``Patient stated no Lortab left, no bottle, his 
yorkies get the lids off.'' Id. Notably, Detective Hammond's 
statements regarding both the November 19 phone call and JR's 
November 23 visit are corroborated by other evidence in the record. 
See GXs 75 and 76.
    In his report, Detective Hammond then noted that while he was at 
Dr. B's clinic, he was approached by a nurse (JB), who told him that 
``she had received a call from a Russell Co. phone number, in which 
the caller said [JR] was diverting his pain pills to her grandson in 
exchange for him mowing his yard'' and that ``her grandson is 
addicted to pain pills.'' Id. Also, in his testimony, JR admitted 
that he had ``loaned'' controlled substances to friends on occasion. 
Tr. 4317-18, 4320-21.
    Accordingly, I find that while JR had a serious medical 
condition which warranted the prescribing of controlled substances, 
there is also substantial evidence that he engaged in the diversion 
of controlled substances.
---------------------------------------------------------------------------

    With respect to JR's OxyContin and hydrocodone prescriptions, Dr. 
Sullivan noted that that while ``on rare occasions, cancer patients 
will use a second narcotic like hydrocodone for break-through pain on 
an `as needed basis' for a short-term period[,] [t]he same doctor would 
write prescriptions for both.'' GX 66, at 6. However, Dr. Sullivan then 
noted that JR ``was receiving prescriptions from both Dr. [K] and Dr. 
[B] for both drugs at the same time. He also received Tussionex 
(hydrocodone) prescriptions from Dr. [W] as well during this period.'' 
Id. Dr. Sullivan then explained that ``[t]his is a major red flag that 
the patient was receiving hydrocodone prescriptions from three 
different doctors and OxyContin from two different doctors at the same 
time. Any reasonable and prudent pharmacist would have caught this and 
not filled these prescriptions.'' Id.
    Dr. Sullivan further noted ``[o]f the thirty three controlled 
substance prescriptions filled'' by Grider 1, ``at least 
eleven times the pharmacy filled the medication too early.'' Id. Dr. 
Sullivan opined that ``[t]his is clearly a sign of the pharmacy not 
conducting prospective DUR for abuse/misuse[,]'' and that ``[n]o 
reasonable or prudent pharmacist would have filled this many narcotic 
prescriptions this early.'' Id. Finally, Dr. Sullivan noted that the 
``duplicate therapy with both hydrocodone and oxycodone (OxyContin) 
from more than one prescriber is a clear indication of drug abuse and/
or diversion and any reasonable and prudent pharmacist would have 
detected this.'' Id.

CR

    CR is a male in his late fifties. CR testified that in July of 
1996, he was involved in an incident in which another person beat his 
back with a two-by-four and broke two of his ribs; CR was treated in 
the emergency room and prescribed Lorcet. Tr. 4030-31. Thereafter, Dr. 
P, CR's family doctor, treated his back injury, and prescribed 
controlled substances to him. Id. at 4033. CR also testified that 
sometime in 2007, he again injured his back while he was visiting a 
hospital; however, CR told two different versions of this incident, as 
he initially testified that as he was leaving a bathroom, boxes fell 
off a cart and knocked him back against the wall, but then testified 
that he was run over by a cart that weighed 1200 pounds. Compare id. at 
3985 with id. at 4044. However, CR testified that he was not on pain 
medication at the time of this incident. Id. at 4044.
    CR testified that Dr. P referred him to Dr. C for potential surgery 
and pain management. Id. at 4033-34, 4042-43. CR decided not to have 
the surgery until he changed his mind in January 2010. Id. at 4035. CR 
filled his controlled substance prescriptions at the Respondents. Id. 
at 4040.
    The Government submitted a spreadsheet showing CR's controlled 
substance prescriptions between November 16, 2007 and April 2, 2010. GX 
56, Tab C. The spreadsheet shows that during this period, CR filled 
approximately 170 controlled substance prescriptions,\58\ and of these, 
all but seven were filled at either Grider 1 or Grider 
2. See id. The prescriptions were for such drugs as alprazolam 
(schedule IV), hydrocodone combined with acetaminophen (schedule III), 
Demerol (schedule II), and various narcotic cough medicines including 
Pneumotussin, Z Hist, and Z Tuss Acc.\59\ See id.
---------------------------------------------------------------------------

    \58\ This figure excludes some twenty-six tramadol 
prescriptions.
    \59\ CR filled approximately twenty prescriptions for narcotic 
cough syrups throughout the nearly thirty-month period covered by 
the spreadsheet. See GX 56, Tab C.
---------------------------------------------------------------------------

    Moreover, CR was simultaneously obtaining prescriptions for 
narcotics from both Drs. P and C. Typically, CR would receive a 
prescription for 120 tablets of Vicodin 5 (hydrocodone 5/500mg) for a 
thirty-day supply from Dr. C, each of which he filled at Grider 
1.\60\See id. While by themselves these prescriptions would 
not appear to be suspicious given the quantity and dates of issuance, 
throughout the period, CR also obtained and filled 49 additional 
prescriptions for twenty tablets of hydrocodone 7.5/650mg which were 
issued by Dr. P. See id. While the prescriptions issued by Dr. P were 
generally for only a three or five-day supply, notably, CR filled all 
but two of these prescriptions at Grider 2.\61\See id. Also, 
CR obtained seven prescriptions

[[Page 44090]]

from Dr. P for Demerol, which he also filled at Grider 2. See 
id.
---------------------------------------------------------------------------

    \60\ In total, CR received thirty such prescriptions from Dr. C; 
however, the last two prescriptions, which were also for a thirty-
day supply, were for only 90 tablets. GX 56, Tab C, at 7.
    \61\ On December 26, 2007, CR also obtained a prescription for 
twenty-eight hydrocodone/apap from NP CR, which he filled at Grider 
2.
---------------------------------------------------------------------------

    Notably, while CR testified that Dr. P knew he was also seeing Dr. 
C, CR testified that he did not tell Dr. P that he was also getting 
controlled substances from Dr. C and Dr. P did not ask him if he was. 
Tr. 4028-29. Moreover, on April 9, 2010, the Detective, who had 
reviewed the medical record maintained by Dr. P on CR, interviewed Dr. 
P and asked him whether he would have prescribed controlled substances 
to CR if he had known that CR was getting the same or similar drugs 
from Dr. P. GX 56, Tab B, at 2. Dr. P answered ``no.'' Id.
    The Detective also interviewed Dr. C, who said that he had asked CR 
if he was obtaining controlled substances from any other doctors and 
that CR said ``he was not.'' GX 56, Tab B, at 1.\62\ The Detective then 
asked Dr. C if he would have prescribed controlled substances to CR if 
he had known that CR was obtaining the same or similar drugs from other 
doctors. Id. Dr. C answered ``absolutely not.'' Id.
---------------------------------------------------------------------------

    \62\ CR testified that he did not recall that the patient 
history forms he completed for Dr. C had asked about what drugs he 
was taking. Tr. 4047. However, CR admitted that he never told Dr. C 
that he was also receiving controlled substances from Dr. P, stating 
that:
    I never had any reason to. I didn't know if he knew or--I mean I 
just figured everybody knowed [sic]. I thought they could pull these 
KASPERS I think they call it and find out anything so I didn't think 
there was anything wrong. I thought you could go from little drug to 
just a tiny bit stronger. Because Lortab 75's ain't enough to--
nothing to even touch what pain I have most days.
    Id. at 4039.
---------------------------------------------------------------------------

    Respondents did not call either Dr. P or Dr. C to testify. Instead, 
they called a Nurse Practitioner C-R,\63\ who worked in an emergency 
room and treated CR after an accident in which he represented that he 
had hurt his elbow. Tr. 4051-52. NP C-R prescribed twenty-eight tablets 
of hydrocodone/apap 7.5/650mg, which CR filled at Grider 2. 
However, six days earlier, CR had filled at Grider 1 a 
prescription issued by Dr. C for 120 tablets of hydrocodone/apap 5/
500mg. Id. at 4006-07, 4052; GX 56, Tab C, at 1.
---------------------------------------------------------------------------

    \63\ NP C-R testified concerning her current practices in 
prescribing controlled substances and reviewing KASPER reports. Tr. 
4340-4434.
---------------------------------------------------------------------------

    NP C-R did not remember CR or any facts surrounding her treatment 
and prescribing to him. Tr. 4360-63, 4367. However, upon being shown 
the evidence that CR had filled the prescription for 120 tablets only 
six days earlier, NP C-R testified that given the close proximity of 
the two prescriptions, she would have expected the pharmacist to call 
her to verify the authenticity of the second prescription. Id. at 4429.
    Ms. Tanya Moses, Respondent's witness, also testified regarding 
these two prescriptions. Similar to the testimony of NP C-R, Ms. Moses 
testified that if NP C-R's prescription had been presented to her, she 
would have called the physician to let him/her know of the overlapping 
prescription. Id. at 4220-21.
    Dr. Sullivan further noted that on multiple occasions, Respondents 
had filled prescriptions for both hydrocodone tablets and narcotic 
cough suppressants, which contain hydrocodone. GX 66, at 7. Most 
significantly, in his report, Dr. Sullivan opined that ``[a] reasonable 
and prudent pharmacist would have not allowed a patient to take these 
medications at the same time and noticed this as a potential indication 
of prescription drug abuse and/or drug diversion.'' Id.
    In addition to the narcotic prescriptions, the evidence shows that 
CR received 64 alprazolam prescriptions and refills that were 
authorized by Dr. P, each of which was for a thirty-day supply, for a 
total of 1,920 days' supply of the drug during a period of thirty 
months. See 56, Tab C. Of these prescriptions, all but seven of them 
were filled at Respondents, and of the seven which were not filled by 
Respondents, CR did not start filling these at another pharmacy until 
late April 2009. See id. Thus, for approximately seventeen months, CR 
filled all of the alprazolam prescriptions at either Grider 1 
or Grider 2. Indeed, the frequency at which CR presented the 
alprazolam prescriptions and sought refills of them provides compelling 
evidence that CR was engaged in self-abuse and/or diversion.
    For example, on November 23, 2007, Grider 2 filled a 
thirty-day supply; it also refilled the prescription on December 18 and 
on January 31, 2008. See id. at 1. Yet on December 29, 2007, Grider 
1 also filled a thirty-day supply based on a different 
prescription; it refilled the prescription on January 26, February 23, 
and March 21, 2008. See id. Moreover, notwithstanding that it had 
dispensed a refill the previous day, on February 1, 2008, Grider 
2 filled a new prescription for thirty-day supply, which it 
refilled on February 29 and March 27, 2008. See id. Moreover, on March 
31, 2008, Grider 1 dispensed a new prescription, even though 
it had refilled the previous prescription only ten days earlier and 
that Grider 2 had refilled a prescription only four days 
earlier. Id.
    The evidence shows numerous other instances in which Respondents 
filled or refilled the alprazolam prescriptions within days of having 
filled or refilled an earlier prescription. For example, on April 24, 
2008, Grider 2 dispensed a refill, and yet, just six days 
later on April 30, it dispensed a new prescription. Id. at 2. Moreover, 
on April 28, Grider 1 dispensed a refill. Id.
    Likewise, on May 24, 2008, Grider 1 dispensed a further 
refill, and yet, on May 27, Grider 2 also dispensed a refill. 
Id. Moreover, on June 20, Grider 1 dispensed another refill, 
and on June 23, Grider 2 dispensed another refill. Id. Grider 
2 also dispensed a new prescription on July 3, refilled a 
previous prescription on July 21 (which was first filled on April 30), 
and then on July 31, it refilled the July 3rd prescription. Id.
    As other examples, Grider 1 filled or refilled thirty-day 
alprazolam prescriptions on December 29, 2008, as well as on January 16 
and 27, February 14 and 23, and March 12, 2009. Id. at 3-4. Grider 
2 also filled or refilled thirty-day prescriptions on January 
5, February 27, and and March 27, 2009.\64\ Id.
---------------------------------------------------------------------------

    \64\ As noted above, CR apparently decided to become somewhat 
less brazen as beginning in late April 2009, he started filling some 
of the alprazolam prescriptions at a Rite Aid. However, even then 
there were numerous instances in which he filled or refilled 
alprazolam prescriptions at Respondents within days of each other. 
For example, on August 21, 2009, Grider 1 filled a new 
prescription, and yet, on August 25, Grider 2 refilled a 
prescription. See GX 56, Tab C, at 5. Also, on October 15, 2009, 
Grider 1 refilled a prescription, and yet on October 22, 
Grider 2, filled a new prescription. Id.
---------------------------------------------------------------------------

    Regarding the alprazolam prescriptions, CR offered two 
explanations, neither of which is credible. First, when questioned 
about the alprazolam prescriptions he filled on January 31, as well as 
on February 1, 2008, CR claimed that he got the extra alprazolam 
because he ``was going out of town for a couple or three weeks.'' Tr. 
4013. Yet earlier in his testimony, CR stated that the earliest he ever 
got a refill was three to four days early; he also testified that he 
did not regularly go out of town. Id. at 3995-96. Moreover, CR had just 
obtained a refill on January 26. Thus, even if CR actually was going 
out of town, he had no need for either the January 31 or February 1, 
2008 refills and I find that this testimony is patently disingenuous.
    Next, when asked about the alprazolam prescriptions he filled on 
March 21, 27, and 31, 2008, CR testified that Dr. P had written him 
another prescription because ``I was going through some bad things,'' 
and that while he was ``not sure,'' Dr. P did so instead of writing a 
prescription for two

[[Page 44091]]

tablets a day or 60 tablets. Id. CR then stated that it was his belief 
that this ``is the way it is done.'' Id.
    Yet the alprazolam prescriptions (including those in which Dr. P 
purportedly doubled his dosing) all gave the same dosing instruction of 
``one tab at bedtime.'' RX 120, Tab C. Moreover, one would expect that 
if a doctor was actually doubling a patient's frequency of dosing, the 
prescription would reflect this as is required by federal regulations. 
See 21 CFR 1306.05(a) (requiring that a prescription list, inter alia, 
a drug's ``strength * * * [the] quantity prescribed, [and the doctor's] 
directions for use''). Thus, if it had been the case that Dr. P had 
determined that CR had a legitimate medical need to double his dose of 
alprazolam, Dr. P should have simply increased the dosing instructions 
on the prescription. And even if CR's condition required that his dose 
be doubled, that still would not explain why he filled or refilled the 
prescription three times within a ten-day period (March 21-31, 2008), 
or did so an additional three times within a six-day period the 
following month (April 24-30, 2008). Here again, CR's testimony was 
patently ludicrous and disingenuous.\65\
---------------------------------------------------------------------------

    \65\ As another example of CR's frequently disingenuous 
testimony, on cross-examination, CR initially denied seeing any 
physician (other then when he went to an emergency-room) in Florida, 
where, at the time of the hearing, he was renting a house in 
Palmetto, Florida with others. Tr. 4103-04, 4109, 4025. However, 
upon being confronted with a prescription he had obtained (on 
November 29, 2010) for oxycodone 30mg from a doctor at the Pain 
Center of Broward, a pain clinic located in Fort Lauderdale, see GX 
73, CR then changed his testimony claiming that he had ``got to 
hurting so bad'' because he had ``been cut off'' by his Kentucky 
doctors in April 2010 (seven months before he got the oxycodone in 
Florida), apparently after they were interviewed by Detective 
Hammond. Tr. 4107. Subsequently, CR claimed that the day before he 
obtain the oxycodone he had hurt his back moving furniture and that 
his pain level following this incident was an ``[e]leven'' on a 
scale of ``one to ten.'' Id. at 4125.
    When asked how he had found out about the Pain Center of 
Broward, CR claimed that he had woken up at about four in the 
morning because he ``couldn't breathe'' and had his roommates take 
him to the emergency room, where he asked the doctor where he could 
get ``a family doctor'' because he ``was having trouble with [his] 
back.'' Id. at 4131-32. CR then made the absurd assertion that 
Broward is ``kind of a suburb[] of Tampa.'' Id. Pursuant to 5 U.S.C. 
556(e) and 21 CFR 1316.59, I take official notice of the map of the 
State of Florida contained in the 1994 Rand McNally Business 
Traveler's Road Atlas, at 22-23. As this shows, Palmetto and Fort 
Lauderdale are located on opposite coasts of the State of Florida 
and are more than 200 miles apart. This begs the further question of 
why, if CR's pain level was so high, he would travel more than 200 
miles to get drugs instead of seeking treatment closer to where he 
lived.
    At another point in his testimony, CR was asked by the 
Government if he ``ever g[a]ve his pills away to anybody else?'' Id. 
at 4098. CR replied: ``I'd rather not say. Is that okay? I mean can 
I get by with that or do I have to answer that?'' Id. CR then added: 
``I've never sold a pill, I'll put it like that.'' Id. at 4099.
    In short, much of CR's testimony was transparently disingenuous.
---------------------------------------------------------------------------

    Eric Grider, the pharmacist in charge at Grider 2, 
recalled that CR was seeing Dr. P for some back problems, but did not 
recall the nature of those back problems. Tr. 3744-45. Moreover, Eric 
Grider admitted that he did not talk to Dr. P about CR, id. at 3786, 
even though Dr. P's office is in the same building as Grider 
2. Id. at 3989-90.
    Eric Grider further asserted that Grider 2 would not have 
known about the controlled-substance prescriptions CR filled at other 
pharmacies (including at Grider 1) because CR was ``a cash-
paying patient.'' Id. at 3619. In addition, Grider stated that he would 
be unaware of the prescriptions CR filled at Grider 1 ``unless 
[he] looked in [the patient's] files,'' and then offered the 
unconvincing explanation that he ``had no reason to'' do so. Id. Grider 
then testified that he did not recall inquiring with Grider Drug 
1 about CR's filling of prescriptions at that location, or 
that Grider 1 had asked Grider 2 about the latter's 
filling of CR's prescriptions. Id. at 3689, 3694. Also, as found above, 
Grider testified that he was not signed up to obtain KASPER reports on 
the pharmacy's patients. Id. at 3621.
    In addition, on direct examination, Eric Grider asserted that the 
prescriptions which CR filled at Grider 2 would not, by 
themselves, raise a red flag or lead him to conclude that CR was a 
problem patient. Id. at 3621-22. He also denied being aware of any 
unauthorized refills which occurred at Grider 2. Id. at 3623. 
Yet when asked on cross-examination about Grider 2's filling 
of alprazolam prescriptions (on February 1, 2008, notwithstanding 
having dispensed a refill of an earlier prescription the day before) 
and refilling (on April 24 and then April 30, 2008), Grider maintained 
that ``the only way'' he would have done so was if he checked with the 
doctor (Dr. P) to ensure it was okay to do so. Id. at 3690-3. However, 
the ALJ found that Grider could not specifically recall if he did so in 
regards to these prescriptions and I find that he did not. ALJ at 43-44 
(citing Tr. 3692-93).
    Eric Grider then conceded that CR appeared to be a doctor-shopper 
who engaged in conduct that fit Grider's definition of a problem 
patient. Id. at 3694, 3696. Moreover, contrary to Grider's claim that 
he had no reason to check the patient profile maintained on CR by 
Grider 1, I find that given the numerous early alprazolam 
prescriptions CR presented, Eric Grider had reason to know that CR was 
engaged in either drug abuse or diversion and thus, Grider had ample 
reason to check with Grider 1 to determine whether CR was also 
filling prescriptions there.\66\
---------------------------------------------------------------------------

    \66\ There was also evidence that CR saw a Dr. C, who surgically 
treated him for a hernia, Tr. 4008-09, as well as other doctors 
because he believed that Dr. P was planning on retiring. These 
included a Dr. L (who he saw twice), a Dr. W (who he saw three or 
four times), and a Dr. B (who he saw two to three times). Id. at 
4010-11, 4056-57, 4065, 4068-69. There was also testimony that CR 
obtained hydrocodone and Valium from Dr. W and both a cough syrup 
containing a controlled substance and several hydrocodone 
prescriptions from Dr. B. Id. at 4056-57, 4061, 4068-69, 4071. While 
the ALJ found that these prescriptions were filled at Respondent and 
that Dr. B's prescriptions overlapped with those of Dr. P (ALJ at 
41, FoF s 162-63), with the exception of the prescriptions 
issued by Dr. C, no further evidence was put forward establishing 
the dates on which these other prescriptions were filled. I thus do 
not adopt the ALJ's findings on the prescriptions.
---------------------------------------------------------------------------

    Dr. Sullivan noted that there were ``multiple instances where'' CR 
filled the alprazolam prescriptions ``early at both pharmacies.'' GX 
66, at 7. Indeed, after listing four instances of dispensings made by 
Respondent which ranged from fifteen to ``twenty-nine days too early,'' 
Dr. Sullivan observed that ``[t]his pattern of filling alprazolam too 
early for this patient occurred on at least ten other occasions.'' Id. 
Dr. Sullivan then explained that a ``reasonable and prudent pharmacist 
would never have filled these alprazolam prescriptions as early as the 
Grider pharmacies did. This shows a pattern of either abuse and/or drug 
diversion.'' Id. I agree with Dr. Sullivan's conclusion.\67\
---------------------------------------------------------------------------

    \67\ As noted above, Leon Grider, the pharmacist in charge at 
Grider 1, did not testify in the proceeding.
---------------------------------------------------------------------------

SR

    SR is a woman in her mid-fifties. GX 57, at Tab A. SR testified 
that she has Type 2 diabetes, that she had neuropathy in her feet, bad 
arthritis in her shoulders, hands, back, and knees, and anxiety; she 
also testified that she had to have a tooth extracted and developed a 
dry socket following this procedure. Tr. 4694-95.
    According to the spreadsheet of her prescriptions, between October 
3, 2009 and April 23, 2010, SR filled twenty-four controlled substance 
prescriptions at Grider 2. GX 57, at Tab C. The prescriptions 
included sixteen for hydrocodone/apap, one for Endocet (oxycodone), and 
seven for clonazepam.\68\ Id. While all of the

[[Page 44092]]

clonazepam prescriptions were issued by Dr. Z, SR received five of the 
hydrocodone prescriptions and the Endocet prescription from Dr. H; of 
the hydrocodone prescriptions, eight were issued by Dr. S, and one 
prescription each was issued by Dr. M, Dr. W, and Nurse Practitioner H. 
Id.
---------------------------------------------------------------------------

    \68\ The spreadsheet also lists a prescription for Fioricet, but 
it is unclear whether this formulation is controlled.
---------------------------------------------------------------------------

    SR denied that she was a doctor shopper, stating that Dr. Z was her 
psychiatrist and treating her for anxiety. Tr. 4697, 4711. She also 
stated that Dr. H was an orthopedic surgeon who had performed surgery 
on her shoulder in March 2010, id. at 4697, 4720; that Dr. S and NP H 
were in the same practice and that Dr. W had replaced Dr. S and was her 
family practitioner who was treating her for arthritis; \69\ that Dr. 
JS was her foot doctor; and that Dr. M was a dentist who was in an 
office which had several dentists. Id. at 47087, 4711.
---------------------------------------------------------------------------

    \69\ SR also referred to Dr. W by her married name of Dr. D. Tr. 
4708.
---------------------------------------------------------------------------

    The evidence shows that on October 5, 2009, SR received 42 
hydrocodone 5/500, a fourteen-day supply, from Dr. S (her then family 
practitioner); that on October 13, 2009, SR received twelve hydrocodone 
7.5/650 (this being a three-day supply), from Dr. M, a dentist;\70\ and 
that on October 21, 2009, SR received 42 hydrocodone 5/500 from NP H. 
All three prescriptions were filled at Grider 2. Tr. 3592-94, 
3710, 3714-15, 4710-11; GX 57, Tab C & Tab D, at 2.
---------------------------------------------------------------------------

    \70\ SR's dental record contains a chart note which indicates 
that her tooth was extracted on October 8, 2009 and that she was 
prescribed the twelve hydrocodone on that date. GX 77, at 2.
---------------------------------------------------------------------------

    However, SR's dental records include a list of medications she was 
taking as of October 8, 2009, the date on which she had a tooth 
extracted; this list is also repeated on the first page of the chart 
which is an undated form which includes the type of information which a 
patient would typically complete on the initial visit (such as 
Identifying Information, Dental Insurance, Medical History, 
Acknowledgement of Receipt of Notice of Privacy Practices, and 
Consent). See GX 77. Notably, hydrocodone is not on either list even 
though SR had been prescribed this drug just three days earlier. See 
id. at 1, 3; GX 57, at Tab C & Tab D, at 2.
    RS initially testified that she had just forgotten to list 
hydrocodone because she has ``trouble with [her] memory.'' Tr. 4716. 
However, she later denied having written the list of drugs which 
appears on the first page of the form, id. at 4727, and did not recall 
when she had written out the list on page 3 of the form which is dated 
``10/8/09.'' Id. at 4726.
    In addition, the evidence shows that on March 8, 2010, Dr. S (her 
family doctor) prescribed 90 tablets of hydrocodone 5/500 (a thirty-day 
supply) and that after this, Dr. H (her orthopedic surgeon) prescribed 
her thirty tablets of hydrocodone 7.5/500 on March 10, 18, 24, and 
April 1; most of the prescriptions had dosing instructions of one 
tablet every six hours, thus providing a week's supply. GX 57, Tab C. 
In addition, on April 8, Dr. W (who replaced Dr. S as her family doctor 
but was in the same office) prescribed her 90 more hydrocodone 5/500 
(also a thirty-day supply) and on April 23, Dr. H issued her a 
prescription for another 30 tablets of hydrocodone 7.5/500. Id. In 
total, between October 5, 2009 and April 23, 2010, SR received sixteen 
prescriptions for hydrocodone representing a 247-day supply. RX 
120A.\71\
---------------------------------------------------------------------------

    \71\ RX 120A is a computation chart showing these sixteen 
prescriptions and the Respondent's computation of the number of days 
each prescription should last if the medication is taken as 
prescribed.
---------------------------------------------------------------------------

    On May 7, 2010, Detective Hammond interviewed Dr. H, who 
acknowledged that he was treating SR for a shoulder injury. GX 57, Tab 
B, at 1. Dr. H stated that he may have given SR the Endocet 
prescription ``after surgery or told her to double up on the 
hydrocodone if he had known she was still receiving them from Dr. S.'' 
Id. at Tab C, at 1. However, Dr. H stated that ``he would not have 
prescribed * * * hydrocodone [to SR] if he was aware [that] she was 
receiving it from Dr. S.'' Id. Thereafter, Detective Hammond reviewed 
Dr. H's chart on SR and noted that he ``was aware that she was taking 
hydrocodone.'' Id. Detective Hammond conducted a further interview in 
which he asked Dr. H about this; Dr. H stated that ``the medication 
list shown in her records is generated automatically by computer from 
SR's past visits and that she had been a patient since 2003.'' Id. Dr. 
H further stated ``that at the time in question he did not know [SR] 
was receiving hydrocodone from Dr. S or he would not have given it to'' 
her. Id. Dr. H also stated that ``he would have contacted Dr. S and 
they would have decided who would be treating [SR] for pain to avoid an 
overlap in [her] prescriptions.'' Id.
    Detective Hammond also interviewed Dr. M, who had performed the 
extraction. Id. at 2. Dr. M stated that if SR had ``disclosed [that] 
she was receiving hydrocodone from another doctor he would not have 
prescribed it to her.'' Id.
    Detective Hammond interviewed Dr. S, her former family physician. 
Dr. S stated that SR had entered into a contract under which she was 
not permitted to receive controlled substances from another physician 
without his prior authorization. Id. Dr. S also stated that ``[h]e did 
not know that that [SR] was receiving pain medication from other 
doctors,'' and that if he had known, ``he would not have prescribed her 
anything.'' Id. While Dr. S was aware that SR ``was going to have 
surgery and would potentially receive a controlled substance right 
after surgery[,] * * * he was not aware that she was receiving 
controlled substances from the surgeon beyond the initial surgery.'' 
Id.
    Finally, on May 19, 2010, Detective Hammond met with Dr. W. Id. Dr. 
W, who had seen SR on April 8, 2010 and had prescribed 90 tablets of 
hydrocodone to her, stated that she was unaware that SR was receiving 
controlled substances from Dr. H; she also stated that SR was subject 
to a controlled-substances contract pursuant to which she could not 
obtain controlled substances from ``other doctors without notifying'' 
her practice. Id. Dr. W further stated that she would not have 
prescribed hydrocodone if she had known that SR was getting the drug 
from ``somewhere else.'' Id.
    As noted above, all of SR's prescriptions were filled at Grider 
2, where Eric Grider was the pharmacist charge. In her 
decision, the ALJ made the following finding: ``Mr. Eric Grider 
believes, for it is his practice, that he would have told SR not to 
take the hydrocodone prescribed to her by Dr. S while she takes the 
stronger hydrocodone prescribed to her by Dr. M. However, he could not 
specifically recall doing so in this instance, and he does not make 
notes regarding such counseling because he usually does not have 
time.'' ALJ at 44 (citing Tr. 3717-18, 3734-38). However, SR testified 
that no one at Grider Drugs counseled her about her prescriptions. Tr. 
4701-02, 4719. SR also testified that she was never questioned by a 
pharmacist at Grider Drug 2 about the prescriptions she 
received from Drs. S, M, or any other practitioners. Id. at 4719. She 
was also unaware of anyone from that pharmacy contacting her 
prescribers. Id. at 4724.
    Eric Grider acknowledged that he had an obligation to counsel the 
patient, given the therapeutic duplication noted in these 
prescriptions. Id. at 3724. He also stated that he possibly would call 
the prescribing practitioners, but he could not recall whether he 
called Dr. H, and that he did not call Dr. M.\72\ Id.

[[Page 44093]]

at 3725-26. Likewise, he did not recall whether Dr. W had been 
contacted regarding the therapeutic duplication involved in SR's 
prescriptions. Id. at 3729. Grider denied that he had an obligation to 
contact the prescribing practitioner, explaining that he views such 
contact as a courtesy. Id. at 3727-28. Grider also testified that he 
did not believe he had an obligation to call these physicians if he had 
counseled the patient concerning the appropriate manner in which to 
consume these duplicative drugs. Tr. 3730.
---------------------------------------------------------------------------

    \72\ Eric Grider testified that he was aware that SR was seeing 
Dr. H for a shoulder injury, and he believed SR had told him that 
information. Tr. 3708. However, he did not contact Dr. H regarding 
this surgery. Tr. 3789.
---------------------------------------------------------------------------

    Grider also testified that he did not find the quantity of 
hydrocodone he dispensed to SR to be unusual, given the limited number 
of days' dosage represented by each prescription. Id. at 3597-98, 3716. 
However, as found above, SR received 247 days of hydrocodone during a 
period of a little more than six and one-half months' duration.
    Dr. Sullivan observed that sixteen of SR's prescriptions were for 
hydrocodone, and ten of these were filled too early because the patient 
should still have had medication left from a previous prescription. GX 
66, at 7.

Summary of Dr. Sullivan's Testimony

    With respect to the six patients discussed above, Dr. Sullivan 
concluded that ``the evidence presented * * * is overwhelming and shows 
a pattern of dispensing controlled substances significantly early to 
patients who [were] either abusing controlled substances themselves or 
[were] diverting prescription drugs for illegal purposes. There are 
dozens of instances of this occurring in these six patients.'' GX 66, 
at 8. The pharmacist should have caught this during the process of 
conducting prospective [drug utilization reviews] before filling these 
prescriptions.'' Id. at 2. Dr. Sullivan explained that it was 
``extremely obvious'' that these patients were ``either abusing 
controlled substances, obtaining them for the purpose of diversion, or 
a combination of the two.'' Id. at 3. In addition, Dr. Sullivan noted 
that while a pharmacist may ``on an extremely rare occasion fill a 
prescription for a controlled substances early,'' he then observed that 
``[t]here are dozens of instances'' of Respondents providing early 
refills to these patients. Id. at 8.
    Dr. Sullivan thus concluded that any ``reasonable and prudent 
pharmacist would have * * * refused to dispense controlled substances 
to all six of these individuals.'' Id. Noting that these persons were 
``textbook examples'' of persons engaged in ``drug abuse and/or drug 
diversion,'' Dr. Sullivan explained that ``[a]ny reasonable and prudent 
pharmacist would quickly recognize this based on their education, 
training, and experience.'' Id. Dr. Sullivan concluded that the 
Respondents' dispensings to these patients violated the accepted 
standards of practice observed by pharmacies and pharmacists in the 
Commonwealth of Kentucky.\73\ Tr. 3426. I agree with Dr. Sullivan's 
conclusions.
---------------------------------------------------------------------------

    \73\ It is acknowledged that Dr. Sullivan is licensed in Ohio 
but not Kentucky. Because of this, the ALJ explained that she did 
not recognize Dr. Sullivan as an expert in the obligations of a 
pharmacy specifically under Kentucky law, Tr. 3401-02, and that she 
gave less weight to his testimony only as it relates to the unique 
standards imposed by the Commonwealth of Kentucky. ALJ at 47 n.15. 
The ALJ did not provide any further explanation as to what testimony 
of Dr. Sullivan she gave less weight to.
     In any event, even after Gonzalez v. Oregon, 546 U.S. 243 
(2006), several courts of appeals ``have applied a general-practice 
standard when determining whether the practitioner acted in the 
`usual course of professional practice.' '' See United States v. 
Smith, 573 F.3d 639, 647-48 (8th Cir. 2009); see also id. at 648 
(discussing Moore; ``Thus informed by the Supreme Court and other 
controlling and persuasive precedent, we believe that it was not 
improper to measure the `usual course of professional practice' 
under Sec.  841(a)(1) and [21 CFR] 1306.04 with reference to 
generally recognized and accepted medical practices * * *.''); see 
also United States v. Merrill, 513 F.3d 1293, 1306 (11th Cir. 2008) 
(quoting Moore, 423 U.S. at 139) (``The appropriate focus is not on 
the subjective intent of the doctor, but rather it rests upon 
whether the physician prescribes medicine `in accordance with a 
standard of medical practice generally recognized and accepted in 
the United States.' ''); United States v. Feingold, 454 F.3d 1001, 
1009 (9th Cir. 2006) (``[B]oth the Supreme Court and this Circuit 
have previously approved jury instructions that refer to a national 
standard of care.'').
     Nor is Volkman v. DEA, 567 F.3d 215 (6th Cir. 2009), to the 
contrary. As the Sixth Circuit observed, in Gonzales, the Supreme 
Court invalidated the Attorney General's interpretive rule that 
``[a]ssisting suicide is not a `legitimate medical purpose' within 
the meaning of 21 CFR 1306.04'' and a violation of the CSA which 
would subject a practitioner's registration to revocation under 21 
U.S.C. 824(a)(4), without regard to whether state law authorized a 
physician to engage in such conduct. Id. at 222 (other citation 
omitted). The Sixth Circuit further explained that the Supreme Court 
held in Gonzales that ``the Controlled Substances Act does not give 
the Attorney General the authority to `define general standards of 
medical practice.' '' Id. at 223. Thus, the Supreme Court 
invalidated the interpretive rule ``because it was not based on the 
`public interest' factors described in 21 U.S.C. Sec.  823(f) but 
was instead the Attorney General's own judgment on a controversial 
practice without regard to state law.'' Id. However, as the Sixth 
Circuit further recognized, the Supreme Court affirmed that the CSA 
```regulates medical practice insofar as it bars doctors from using 
their prescription-writing powers as a means to engage in illicit 
drug-dealing and trafficking.' '' Id. Thus, in Volkman, the Sixth 
Circuit rejected a physician's challenge to the denial of his 
application based on Gonzales, noting that the Agency's ``assessment 
of Volkman's prescribing and record-keeping practices was tethered 
securely to state law,'' and that the Agency's action was consistent 
with the CSA's ```recognition of state regulation of the medical 
profession.' '' Id. (quoting 546 U.S. at 272).
    It is further noted that although Dr. Sullivan's testimony and 
report were largely based on generally accepted standards of 
pharmacy practice, he did review the Kentucky Board of Pharmacy's 
rule on Drug Utilization Review. Tr. 3410-14; GX 66, at 2. With the 
possible exception of the issue of whether under Kentucky law, a 
pharmacy technician (rather than a licensed pharmacist or pharmacy 
intern) can lawfully contact a prescribing physician to question the 
legitimacy of a prescription, regarding which Dr. Sullivan testified 
that ``[t]echnicians should not be making those phone calls, 
judgment or discussions with physicians, even if it's not that way 
in Kentucky law,'' Tr. 3463-64, no other evidence was put forward 
showing that the duties of a pharmacist to which he testified would 
prohibit conduct permitted under state law. Thus, I find that his 
testimony regarding a pharmacist's obligations to be generally 
reliable and probative of whether Respondents (and their 
pharmacists) violated their corresponding responsibility under 
federal law.
---------------------------------------------------------------------------

Allegation Fifteen--Respondents Violated Kentucky Law by Failing To 
Provide Complete and Accurate Information to KASPER

    The Government also alleged that Respondents violated Kentucky law 
by failing to file KASPER reports. Gov. Post-Hrng Br. at 12, 88. In 
support of this allegation, the Government introduced into evidence a 
letter (dated May 13, 2005) from Dave Sallengs, a Registered Pharmacist 
and Pharmacist Investigator who is the manager of the Drug Enforcement 
Professional Practices Branch of the Kentucky Cabinet for Health and 
Family Services Office of the Inspector General, to Grider 2. 
GX 28; Tr. 2302-03. Therein, Mr. Sallengs noted that the KASPER records 
show that Grider 2 had not reported any prescriptions for the 
periods of February 18 through 27, 2003; July 4 through August 4, 2003; 
and February 1, 2005 to the date of the letter. GX 28. In addition, the 
Government noted that the KASPER data reported by Respondents contained 
numerous inaccuracies (such as the double reporting of prescriptions) 
or the misreporting (or non-reporting) of various prescriber's DEA 
registration numbers.
    Mr. Sallengs, who was called as a witness by Respondents, 
equivocated as to whether this letter established a serious breach of 
state law by Grider 2. Tr. 2394-95. More specifically, Mr. 
Sallengs testified that while ``it's serious from the standpoint that 
state law says you have to report, and it has to be within certain 
days, but in our dealings with it, we understand that a lot of times * 
* * the pharmacy might not even be aware of this until they get this 
letter.'' Id. at 2394. Mr. Sallengs then explained that if his office 
did not get a response from a pharmacy to such a letter (which they 
send out to approximately fifteen to twenty pharmacies a week), it 
would send out a follow-up letter and copy the letter to

[[Page 44094]]

the state pharmacy board, which would determine whether to cite the 
pharmacy for a violation. Id. at 2395. Mr. Sallengs further explained 
that the letter would not cause him to believe that a pharmacy was 
being improperly operated because usually a pharmacy's failure to 
report is due to either changing a computer system or a maintenance 
problem with a computer system. Id. at 2396-97. With respect to the 
letter sent to Grider 2, Mr. Sallengs did not know if his 
office had sent out a second letter to it. Id. at 2398.
    Moreover, Mr. Sallengs expressed the view that where multiple 
entries under the same prescription number were reported within a few 
days of each other, it was likely a result ``of a glitch or a technical 
error, [an] insurance billing issue, or something like that.'' Id. at 
2391. Indeed, Mr. Sallengs testified that some pharmacy software 
systems would report under a single prescription number, both when a 
patient presented a prescription to a pharmacy but could not pay for it 
that day, as well as the subsequent dispensing of the prescription. Id. 
at 2338. Mr. Sallengs further noted that there were several innocent 
explanations for the misreporting of various prescribers' DEA 
registration numbers, including errors in using the database provided 
by pharmacy software (which typically use a dropdown menu listing all 
prescribers in the country and which may include both a practitioner's 
current and expired registration numbers). Id. at 2323-25. Mr. Sallengs 
also explained that from the inception of KASPER until two months 
before his testimony, once a pharmacy reported information to the 
database, it was not able to correct any errors in the data. Id. at 
2446.
    On cross-examination, Mr. Sallengs acknowledged that the May 13 
letter set forth violations of state law which are a Class A 
misdemeanor under Kentucky law. Id. at 2418. However, Mr. Sallengs 
further testified that Kentucky law proscribed only the knowing or 
intentional failure to transmit the information. Id. at 2485. Moreover, 
Mr. Sallengs testified that while he would ``love for everything to be 
exactly right'' in the KASPER reports, his office does not consider 
every error to constitute a violation of the statute.

Allegation Sixteen--Respondents Committed Medicaid Fraud

    While not alleged in the Order to Show Cause, the Government 
provided notice in its initial and supplemental pre-hearing statements 
that it intended to elicit the testimony of an Agent of the Medicaid 
Fraud Division of the Kentucky Attorney General's Office. More 
specifically, the Government provided notice that the Agent ``will 
speak of the recent indictment of Eric Grider, the son of Leon Grider, 
on six counts related to devising schemes to defraud the Kentucky 
Medical Assistance Program (KMAP).'' Gov. Supplemental Pre-Hearing 
Statement at 5-6.
    At the hearing, there ensued nearly three days of testimony by the 
Agent regarding her investigation of Respondents' billing practices, 
the execution of a search warrant and the seizure of Respondents' 
records by state officials, and the subsequent indictment of Eric 
Grider on six state counts of having submitted fraudulent claims to the 
KMAP ``for prescriptions not dispensed as billed,'' GX 43. See Tr. 842-
1372. Regarding the alleged fraud, the Agent testified that ``the 
patient got what was prescribed'' but that ``Medicaid was billed for 
something different'' Tr. 1092, if the drug was not in the Medicaid 
formulary. Id. at 1108; see also id. at 860 (Agent's testimony that 
``if a patient came in with a prescription, that patient would receive 
what the doctor ordered.''). Throughout the Agent's testimony, there 
was but a single vague comment relating the allegations of misconduct 
to Respondents' handling of controlled substances, which occurred when 
the Agent was asked by Respondent's counsel whether the types of drugs 
being billed for and the types of drugs being dispensed were controlled 
or non-controlled drugs, and answered: ``They were across-the-board.'' 
Id. at 1116. Ultimately, the indictment against Eric Grider was 
dismissed by the state court, after it declared a mistrial. RX 128. No 
further evidence has been offered establishing that the indictment was 
reinstated and that Eric Grider (or Respondent) has been convicted of 
an offense which subjects Respondents to mandatory exclusion from 
participation in federal health care programs under 42 U.S.C. 1320a-
7(a).\74\
---------------------------------------------------------------------------

    \74\ Of course, once the Government was allowed to pursue this 
allegation, understandably, Respondents did not simply rely on their 
counsel's cross-examination of the Agent but also put on the 
testimony of their own witnesses regarding the allegations.
---------------------------------------------------------------------------

Discussion

    Section 304(a) of the Controlled Substances Act provides that ``[a] 
registration * * * to * * * dispense a controlled substance * * * may 
be suspended or revoked by the Attorney General upon a finding that the 
registrant * * * has committed such acts as would render [its] 
registration under section 823 of this title inconsistent with the 
public interest as determined under such section.'' 21 U.S.C. 
824(a)(4).\75\ In the case of a practitioner, which includes a 
pharmacy,\76\ the CSA requires that the Agency consider the following 
factors in making the public interest determination:
---------------------------------------------------------------------------

    \75\ DEA is also authorized to suspend or revoke a registration 
upon a finding that a registrant ``has been excluded (or directed to 
be excluded) from participation in a program pursuant to section 
1320a-7(a) of Title 42.'' 21 U.S.C. 824(a)(5). However, the 
Government did not cite this provision as a basis for the 
proceeding.
    \76\ See 21 U.S.C. 802(21).
---------------------------------------------------------------------------

    (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. Sec.  823(f).
    ``[T]hese 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 a registrant has committed acts 
which render its registration inconsistent with the public interest. 
Id. Moreover, although I ``must consider each of these factors,'' I am 
not required to make ``explicit findings as to each'' factor. MacKay v. 
DEA, 664 F.3d 808, 816 (10th Cir. 2011); see also Volkman v. DEA, 567 
F.3d 215, 222 (6th Cir. 2009) (quoting Hoxie v. DEA, 419 F.3d 477, 482 
(6th Cir. 2005)); see also Morall v. DEA, 412 F.3d 165, 173-74 (D.C 
Cir. 2005).
    The Government has the burden of proving by a preponderance of the 
evidence that a Respondent has committed acts which render its 
registration inconsistent with the public interest. 21 CFR 1301.44(d) & 
(e). However, where the Government has made out a prima facie case, the 
burden shifts to the Respondent to either refute the Government's case 
or to ```present [] sufficient mitigating evidence' '' to show why, 
notwithstanding that it has committed acts which render its 
registration inconsistent with the public interest, it can be entrusted 
with a new registration. Medicine Shoppe-Jonesborough, 73 FR 364, 387 
(2008) (quoting Samuel S. Jackson, 72 FR 23848, 23853 (2007) (quoting 
Leo R.

[[Page 44095]]

Miller, 53 FR 21931, 21932 (1988))), pet. for rev. denied, Medicine 
Shoppe-Jonesborough v. DEA, 300 Fed. Appdx. 409 (6th Cir. 2008). See 
also MacKay, 664 F.3d at 817.
    ``Moreover, because `past performance is the best predictor of 
future performance,' ALRA Labs, Inc. v. DEA, 54 F.3d 450, 452 (7th 
Cir.1995), [DEA] has repeatedly held that where a registrant has 
committed acts inconsistent with the public interest, the registrant 
must accept responsibility for its actions and demonstrate that it will 
not engage in future misconduct.'' Medicine Shoppe, 73 FR at 387; see 
also Jackson, 72 FR at 23853; John H. Kennedy, 71 FR 35705, 35709 
(2006); Cuong Trong Tran, 63 FR 64280, 64283 (1998); Prince George 
Daniels, 60 FR 62884, 62887 (1995).
    Having considered all of the factors, I conclude that the evidence 
pertinent to factors two and four makes out a prima facie showing that 
each Respondent ``has committed such acts as would render [its] 
registration * * * inconsistent with the public interest.'' \77\ 21 
U.S.C. 824(a)(4). I further conclude that Respondents have not rebutted 
the Government's prima facie case.
---------------------------------------------------------------------------

    \77\ As to factor one, the Kentucky Board of Pharmacy has not 
made a recommendation in this matter. See 21 U.S.C. 823(f)(1). 
Moreover, while there is no evidence that the State Board has 
revoked either Respondent's pharmacy license or the pharmacist's 
license of either Leon or Eric Grider, DEA has held repeatedly that 
a registrant's possession of a valid state license is not 
dispositive of the public interest inquiry. See Patrick W. Stodola, 
74 FR 20727, 20730 n.16 (2009); Robert A. Leslie, 68 FR at 15230. As 
DEA has long held, ``the Controlled Substances Act requires that the 
Administrator * * * make an independent determination as to whether 
the granting of controlled substances privileges would be in the 
public interest.'' Mortimer Levin, 57 FR 8680, 8681 (1992).
     It is likewise noted that there is no evidence in the record 
that either Leon or Eric Grider (or either of the Respondents) has 
been convicted of any offenses under Federal or state laws related 
to the distribution or dispensing of controlled substances. 21 
U.S.C. 823(f)(3). However, there are multiple reasons why even 
serious misconduct may not be the subject of a criminal prosecution 
and thus, ``the absence of such a conviction is of considerably less 
consequence in the public interest inquiry.'' MacKay, 664 F.3d at 
818. DEA has therefore recognized that the lack of any criminal 
convictions related to controlled substances is not dispositive. See 
Edmund Chein, 72 FR 6580, 6593 n.22 (2007).
    Accordingly, that both Respondents may still hold Kentucky 
pharmacy licenses and Leon and Eric Grider may still hold their 
pharmacist licenses is not dispositive. So too, that neither the 
Respondents, nor either Leon or Eric Grider, have been convicted of 
an offense related to controlled substances, is not dispositive.
---------------------------------------------------------------------------

Factors Two and Four--Respondents' Experience in Dispensing Controlled 
Substances and Record of Compliance With Applicable Laws Related to 
Controlled Substances

    While many of the allegations are not proved by substantial 
evidence because the Government relied on inadmissible KASPER reports 
and data (or failed to put forward anything other than conclusory 
evidence), the record nonetheless establishes numerous violations on 
the part of each Respondent. More specifically, substantial evidence 
supports a finding that Leon Grider violated the CSA by distributing 
controlled substances to several persons who did not have prescriptions 
for the drugs and that both Respondents (and their pharmacists) 
violated their corresponding responsibility under 21 CFR 1306.04(a) by 
dispensing controlled substances to several individuals who were 
clearly engaged in drug-seeking behavior. In addition, the record shows 
that Respondents could not account for massive quantities of various 
controlled substances they handled and thus violated their obligations 
under 21 U.S.C. 827(a) to maintain complete and accurate records of the 
controlled substances they purchased, distributed, or dispensed. 
Finally, there is also substantial evidence establishing that 
Respondents dispensed controlled substances but could not produce 
either the original prescription or documentation that a prescription 
was called in, that it filled (or refilled) prescriptions which were 
not authorized by the prescriber, and that it failed to report several 
theft incidents to DEA.

Leon Grider's Distributions to PL, LW, and BL

    Under the CSA, ``[p]ersons registered by the Attorney General * * * 
to manufacture, distribute or dispense controlled substances * * * are 
authorized to possess, manufacture, distribute, or dispense such 
substances * * * to the extent authorized by their registration and in 
conformity with the other provisions of this subchapter.'' 21 U.S.C. 
822(b) (emphasis added). Under 21 U.S.C. 823(f), a pharmacy 
registration authorizes its holder to dispense controlled substances, 
i.e., ``to deliver a controlled substance to an ultimate user * * * by, 
or pursuant to the lawful order of, a practitioner.'' Id. Sec.  
802(10).
    The CSA further provides that ``[e]xcept when dispensed directly by 
a practitioner, other than a pharmacist, to an ultimate user, no 
controlled substance in schedule III or IV, which is a prescription 
drug as determined under the Federal Food, Drug, and Cosmetic Act, may 
be dispensed without a written or oral prescription in conformity with 
* * * 21 U.S.C. 353(b).'' 21 U.S.C. 829(b); see also 21 CFR 1306.21 
(``A pharmacist may dispense directly a controlled substance listed in 
schedule III, IV, or V which is a prescription drug * * * only pursuant 
to either a written prescription signed by a practitioner or a 
facsimile of a written, signed prescription transmitted by the 
practitioner or [her] agent to the pharmacy or pursuant to an oral 
prescription made by an individual practitioner and promptly reduced to 
writing by the pharmacist.'').\78\ The CSA thus makes it ``unlawful for 
any person * * * who is subject to the requirements of part C [the 
registration provisions] to distribute or dispense a controlled 
substance in violation of section 829.'' 21 U.S.C. 842(a)(1). See also 
21 U.S.C. 841(a)(1).
---------------------------------------------------------------------------

    \78\ See also 21 CFR 1306.11(d) (except in emergency, ``[a] 
pharmacist may dispense directly a controlled substance listed in 
schedule II, which is a prescription drug * * * only pursuant to a 
written prescription signed by the practitioner'').
---------------------------------------------------------------------------

    As found above, on October 21, 2003, PL, who was cooperating with 
law enforcement, went to Grider 1 and presented a methadone 
prescription to Leon Grider; PL also told Grider that she needed some 
Zs, a street term for Xanax. Tr. 1420-21. However, PL did not have a 
prescription for Xanax. Id. at 1422. After leaving the pharmacy to have 
a smoke, PL re-entered the pharmacy and then emerged with a white bag, 
which she turned over to Detective Hammond. Id. at 1421. Upon 
inspecting the bag, Hammond found a pill bottle holding methadone, as 
well as thirty orange oval-shape pills, which were loose in the bottom 
of the bag. Id. Hammond took custody of the orange pills and submitted 
them for testing; the pills tested as Xanax. Id. at 1421-22. 
Substantial evidence thus supports the conclusion that Leon Grider 
violated the CSA in distributing Xanax to PL. 21 U.S.C. 829, 841(a)(1) 
& 842(a)(1).
    The evidence further shows that Leon Grider unlawfully distributed 
controlled substances to LW on multiple occasions. On February 24, 
2004, Leon Grider gave LW forty tablets of both hydrocodone and 
alprazolam when LW, accompanied by her boyfriend, went to Grider 
1 and told Leon Grider that they were going to court but were 
short on their pills and were concerned that they would be subjected to 
a pill count. Tr. 1495-96. LW did not have a prescription for the 
drugs. Id. at 1497. Substantial evidence thus supports the conclusion 
that Leon Grider violated the CSA in distributing

[[Page 44096]]

both hydrocodone and alprazolam to LW. 21 U.S.C. 829, 841(a)(1) & 
842(a)(1).
    On June 4, 2004, LW obtained drugs from Leon Grider without a 
prescription on two occasions. First, in the morning, LW went to Grider 
1 and obtained both Lortab (hydrocodone) and Xanax. As LW 
testified, she just went in and asked Leon Grider for some pills which 
he gave her loose in a brown bag. Tr. 6033. Given that placing loose 
pills in a bag is not how a prescription is dispensed in the usual 
course of professional pharmacy practice, see 21 CFR 1306.24, and that 
Leon Grider did not testify in the proceeding, I conclude that he 
distributed Lortab and Xanax to LW without a prescription.
    Later that day, LW called Leon Grider asked him to bring her some 
methadone. Tr. 1500. Grider agreed to do so and delivered both 
methadone, which was in a sealed distributor's bottle and another 60 
alprazolam (Xanax), which were in an envelope, to LW at her residence. 
Id. at 1500-01. LW did not have a prescription for either drug. Id. 
Substantial evidence thus supports the conclusion that on June 4, 2004, 
Leon Grider unlawfully distributed Lortab, methadone, and alprazolam to 
LW. See 21 U.S.C. Sec. Sec.  829, 841(a)(1), 842(a)(1).
    On April 24, 2005, LW participated in a further undercover 
operation. On this occasion, LW (accompanied by PG) met with Leon 
Grider at a graveyard and asked him for some Duragesic patches. Tr. 
1507-08; GX 27. Leon Grider agreed, and later that day, he met PG at a 
local supermarket, where he gave PG nineteen or twenty Duragesic 
patches and 88 Xanax pills. Id. at 1508-09; GX 27. Neither LW nor PG 
had a prescription for the drugs. GX 27, at 2. Moreover, LW testified 
that she told Leon Grider that she was going to sell the patches 
because she needed money. Tr. 6092. Once again, substantial evidence 
supports the conclusion that on April 24, 2005, Leon Grider violated 
the CSA by unlawfully distributing Duragesic (fentanyl, a schedule II 
drug) and alprazolam, to LW and PG. See 21 U.S.C. Sec. Sec.  829, 
841(a)(1) & 842(a)(1).
    In addition to the three undercover operations in which she 
participated, LW credibly testified regarding other instances in which 
she obtained controlled substances from Leon Grider. More specifically, 
LW testified that when she was initially confronted by Detective 
Hammond, Leon Grider gave her $1,000 and three 500-count bottles of 
hydrocodone and told her that she ``needed to leave town'' to let the 
authorities ``slack off of [her] for a while.'' Tr. 5396, 5941-42. It 
does not matter whether this conduct constituted bribing a witness 
under Kentucky law. Rather, what matters is that this is another 
example of Leon Grider's distributing controlled substances to LW when 
she did not have a prescription authorizing the dispensing. Thus, 
substantial evidence supports the conclusion that Leon Grider 
unlawfully distributed 1,500 hydrocodone tablets to LW. See 21 U.S.C. 
Sec. Sec.  829, 841(a)(1) & 842(a)(1).
    LW also testified regarding an incident in which Leon Grider had 
given her a 500-count bottle at the Key Village store only to have his 
wife (Anna Mae) walk in on the deal. Tr. 5930-32. While Anna Mae 
testified in the hearing that she took the bottle from LW and that the 
pills were actually pinto beans, id. at 4803, as found above, in a 
deposition she had previously given, Mrs. Grider testified that the 
bottle (which was a white bottle and not a prescription vial) contained 
hydrocodone. GX 68, at 212-15. Moreover, LW testified that the next 
day, she called Leon Grider, who agreed to meet her at Grider 
1, and that upon meeting, Grider gave her two 500-count 
bottles. Tr. 5932-33. Once again, substantial evidence supports the 
conclusion that on this occasion, Leon Grider unlawfully distributed 
1,000 hydrocodone tablets to LW. See 21 U.S.C. Sec. Sec.  829, 
841(a)(1) & 842(a)(1).
    LW further testified that she had also received 98 OxyContin 
tablets as well some Suboxone, also without a prescription, and that 
Leon Grider would create false prescription labels to provide cover for 
LW if she was caught by the police. Tr. 5946, 6095-96, 6125. Thus, 
substantial evidence supports the conclusion that Leon Grider 
distributed both OxyContin and Suboxone to LW in violation of the CSA. 
See 21 U.S.C. Sec. Sec.  829, 841(a)(1) & 842(a)(1).
    In addition, substantial evidence supports the conclusion that Leon 
Grider unlawfully distributed Suboxone to BL when she did not have a 
prescription for the drug. With respect to this allegation, the 
evidence included a contemporaneous recording of a phone conversation 
between BL and Chief Irvin in which BL acknowledged that Leon Grider 
had given her the Suboxone when she was in the hospital and did not 
have a prescription for the drug, photos of the vials (and their 
labels) which Leon Grider used to distribute the drug that was 
delivered, and the testimony of BL's daughter. In addition, while 
Respondent produced a copy of a sales report listing BL's 
prescriptions, and this report shows drugs that had previously been 
prescribed to her, no refills were authorized under the previous 
prescription and Respondents did not produce a copy of any prescription 
corresponding to the prescription listed on the vials. I therefore hold 
that substantial evidence supports the conclusion that Leon Grider 
distributed Suboxone to BL in violation of the CSA. See 21 U.S.C. 
Sec. Sec.  829, 841(a)(1) & 842(a)(1).
    I further hold that Leon Grider's conduct in unlawfully 
distributing controlled substances to PL, LW, and BL, is egregious, and 
is sufficient, by itself, to support the conclusion that Respondents 
have committed acts which render their registrations ``inconsistent 
with the public interest.'' 21 U.S.C. 824(a)(4). Thus, this conduct 
provides reason alone to revoke each Respondent's registration and to 
deny their applications to renew their registrations.

Respondents' Violations of 21 CFR 1306.04(a)

    Under a longstanding DEA regulation, a prescription for a 
controlled substance is unlawful unless it 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). This 
regulation further provides that while ``[t]he responsibility for the 
proper prescribing and dispensing of controlled substances is upon the 
prescribing practitioner, * * * a corresponding responsibility rests 
with the pharmacist who fills the prescription.'' Id. (emphasis added). 
Continuing, the regulation states that ``the person knowingly filling 
such a purported prescription, as well as the person issuing it, [is] 
subject to the penalties provided for violations of the provisions of 
law relating to controlled substances.'' \79\ Id.
---------------------------------------------------------------------------

    \79\ As the Supreme Court has explained, ``the prescription 
requirement * * * ensures patients use controlled substances under 
the supervision of a doctor so as to prevent addiction and 
recreational abuse. As a corollary, [it] also bars doctors from 
peddling to patients who crave the drugs for those prohibited 
uses.'' Gonzales v. Oregon, 546 U.S. 243, 274 (2006) (citing United 
States v. Moore, 423 U.S. 122, 135 (1975)).
---------------------------------------------------------------------------

    DEA has consistently interpreted this provision ``as prohibiting a 
pharmacist from filling a prescription for a controlled substance when 
he either `knows or has reason to know that the prescription was not 
written for a legitimate medical purpose.' '' East Main St. Pharmacy, 
75 FR 66149, 66163 (2010) (quoting Medicine Shoppe-Jonesborough, 73 FR 
at 381 (quoting Medic-Aid Pharmacy, 55 FR 30043, 30044 (1990))); see 
also Frank's Corner Pharmacy, 60 FR 17574, 17576 (1995); Ralph J. 
Bertolino, 55 FR 4729, 4730

[[Page 44097]]

(1990); United States v. Seelig, 622 F.2d 207, 213 (6th Cir. 1980). 
This Agency has further held that ``[w]hen prescriptions are clearly 
not issued for legitimate medical purposes, a pharmacist may not 
intentionally close his eyes and thereby avoid [actual] knowledge of 
the real purpose of the prescription.'' Bertolino, 55 FR at 4730 
(citations omitted).
    As the Government's Expert explained, pharmacists are required 
under Kentucky law to perform a prospective drug utilization review 
(DUR) prior to dispensing every prescription. See 201 Ky. Admin. Regs. 
2:210; Sec.  4. The Kentucky regulation requires that the DUR ``shall 
include an assessment of a patient's drug therapy and the prescription 
order.'' Id. In addition, the DUR ``shall include a review by the 
pharmacist of the'' following:
    (a) Known allergies;
    (b) Rationale for use;
    (c) Proper dose, route of administration, and directions;
    (d) Synergism with currently employed modalities;
    (e) Interaction or adverse reaction with applicable:
    1. Drugs;
    2. Foods; or
    3. Known disease states
    (f) Proper utilization for optimum therapeutic outcomes; and
    (g) Clinical misuse or abuse.
Id.

    The Government's Expert further identified various ``red flags'' 
that pharmacists are trained to be aware of to identify suspicious and 
unlawful prescriptions. These include: (1) When a patient is obtaining 
controlled substances from multiple doctors, (2) when patients are 
being prescribed duplicate controlled substance medications that treat 
the same indications, (3) when patients seek early refills, (4) when 
patients are obtaining prescriptions for large quantities and large 
doses, and (5) when patients travel long distances from where they live 
to either the prescriber or the pharmacy. Id. at 3404.
    While Dr. Sullivan explained that when confronted with a red flag, 
there are several steps a pharmacist can take including talking to the 
patient, calling the physician, or refusing to fill the prescription, 
he further opined that each of the six patients whose prescription 
profiles were entered into the record were ``textbook examples'' of 
persons engaged in ``drug abuse and/or drug diversion.'' GX 66, at 8. 
According to Dr. Sullivan, each patient ``exhibited multiple instances 
of'' such red flags as obtaining controlled substances from multiple 
doctors, obtaining duplicate controlled substances to treat the same 
indication, and seeking early refills, i.e., filling a prescription or 
seeking a refill when the patient should still have medication left 
from a prior dispensing. Id. at 3. Dr. Sullivan thus concluded that 
``any reasonable and prudent pharmacist would have caught this behavior 
and refused to dispense controlled substances to'' the six patients. 
Id.
    For example, TA, who filled all but three of her prescriptions at 
either Grider 1 or Grider 2, obtained prescriptions 
from twelve different prescribers including dentists, oral surgeons, 
pain clinic doctors, a psychiatrist, and a nurse practitioner. The 
record is replete with instances in which even though TA had recently 
received controlled substances (and more specifically schedule II 
(fentanyl and Endocet) and III narcotics (hydrocodone), which provided 
lengthy supplies (25 to 30 day supplies), TA obtained more 
prescriptions for the same or a similar drug which Respondents filled 
notwithstanding that she should have had ample medication left from her 
previous prescription. This pattern occurred over and over. See GX 66, 
at 4 (Expert noting that it occurred eleven times in a ten-month 
period). Moreover, even if TA had legitimate dental problems which 
caused pain, Dr. G, a dentist who treated TA (who was called by 
Respondent), testified that he would not have prescribed hydrocodone 
even on a short-term basis if he had known that TA had recently 
obtained narcotics from pain doctors. Tr. 4467, 4478-80, 4520. Dr. G 
also testified that he was never called by Grider 1 regarding 
any of the prescriptions TA was receiving from other practitioners.\80\ 
Id. at 4520.
---------------------------------------------------------------------------

    \80\ TA herself admitted she did not tell the various dentists 
she saw about the controlled substance prescriptions she was 
obtaining from her pain management doctor. Tr. 3915-16.
---------------------------------------------------------------------------

    Tonya Moses, a pharmacist and former employee of Respondents who 
also testified on their behalf, acknowledged that Grider 1 had 
filled hydrocodone prescriptions from a dentist which overlapped with 
even stronger hydrocodone prescriptions TA received from a pain 
management doctor. Ms. Moses further admitted that these prescriptions 
were not justified and involved therapeutic duplication and that it was 
``incumbent upon a pharmacist to verify with the doctor if he sees 
multiple physicians prescribing, basically, the same medication.'' Id. 
at 4214. And upon being shown TA's prescription profile, Dr. M, another 
of Respondents' witnesses, acknowledged that TA's pattern of drug use 
and seeing different doctors ``would be a matter of major concern'' and 
``probably'' was ``a doctor-shopping situation.'' Id. at 5364-65. Yet 
Grider 1's pharmacists did not even call the prescribers.
    Dr. Sullivan further noted that in addition to such narcotics as 
hydrocodone and Endocet, TA was also obtaining alprazolam and 
carisoprodol, ``which are known to be heavily abused.'' GX 66, at 4. 
Accordingly, I agree with Dr. Sullivan's conclusion that ``any 
reasonable and prudent pharmacist would have determined that [TA] was 
either abusing and/or diverting these controlled substances.'' Id. I 
further conclude that substantial evidence supports a finding that 
Respondents violated their corresponding responsibility in dispensing 
controlled substances to TA.\81\ 21 CFR 1306.04(a).
---------------------------------------------------------------------------

    \81\ Respondents took exception to the ALJ's conclusion that any 
evidence as to TA's medical conditions is ``irrelevant'' because 
there is no evidence that any pharmacist at Grider 1 was 
aware of her conditions at the time the prescriptions were filled. 
Resp. Exceptions, at 10 and 22 (citing ALJ at 31 n.12). However, 
even if Leon Grider was aware of TA's medical condition, there is 
unrefuted evidence that even where a patient may have a medical 
condition warranting the prescription of controlled substances, a 
pharmacist has a duty to determine whether filling a prescription 
will result in therapeutic duplication and to take appropriate 
action. Notably, Respondent's witness Ms. Moses testified that she 
had reviewed the prescriptions of the various patients whose 
prescriptions were the subject of the Immediate Suspension Order, 
and while Ms. Moses offered testimony as to why various 
prescriptions were filled for some of the patients, she offered no 
testimony regarding any notations on TA's prescriptions establishing 
that Leon Grider (or other any other pharmacist) notified the 
prescribing physician that TA was receiving controlled substances 
from other prescribers. In addition, while Respondents entered into 
evidence TA's prescriptions, none of them contain a notation that 
the pharmacist (whether Leon Grider or someone else) had called TA's 
prescriber. See RX 120D. Moreover, Ms. Moses admitted that Grider 
1 had filled prescriptions for TA that were unjustified. 
Tr. 4202-03. I therefore reject this exception.
---------------------------------------------------------------------------

    With respect to RB, the evidence shows that in a twenty-eight month 
period, she filled 172 controlled substance prescriptions at 
Respondents, with all but seven being filled at Grider 1. RB's 
prescriptions were written by two doctors, and were for hydrocodone 
tablets, alprazolam, and various narcotic cough syrups.
    Regarding the latter medications, the Government's Expert gave 
unrefuted testimony that these drugs are intended for short-term relief 
of cough and that clinical guidelines were changed in 2006 (before any 
of the prescriptions at issue were dispensed) to ``strongly discourage 
the use of any type of cough

[[Page 44098]]

suppressant in treating any type of cough.'' Tr. 3419. Yet RB filled 
approximately 100 such prescriptions (for a total of 15,000 ml of the 
drugs) at Respondents during the period and was obtaining the 
prescriptions from two doctors. Tr. 3419-21; GX 66, at 4; GX 53, at Tab 
C. Moreover, in addition to receiving the narcotic cough syrups, RB 
also filled at Respondents prescriptions for hydrocodone tablets, which 
she also was obtaining from the two doctors.
    In other instances, Respondent filled prescriptions for hydrocodone 
tablets issued by one doctor, even though RB should still have had a 
large amount of hydrocodone tablets from a thirty-day prescription she 
had recently filled which was issued by another doctor. Finally, the 
evidence also shows that RB obtained early fills or refills of 
prescriptions for hydrocodone tablets, narcotic cough syrups, and 
alprazolam, even when the prescriptions had been written (or authorized 
pursuant to an earlier prescription issued) by a single doctor. Indeed, 
many of the dispensings were more than five days early, and some were 
as much as nine to twelve days early.
    RB testified that no one at Grider Drugs had ever talked to her 
about her medications or questioned her about her prescriptions. Tr. 
4676, 4688-89. Moreover, while Eric Grider, the pharmacist in charge at 
Grider 2, where RB filled most of her prescriptions, testified 
that narcotic cough syrups could be prescribed on a long-term basis for 
COPD or chronic coronary disease with a cough, he subsequently admitted 
that he did not know whether RB had either condition and had never 
asked her doctors if she had either condition. Id. at 3673. As for Eric 
Grider's self-serving testimony that even though RB was obtaining 
medications from two doctors, he did not see any potential for abuse or 
misuse of them by her;2 Grider eventually conceded that he should have 
contacted her doctors to ensure that each was aware that the other was 
also prescribing to her.\82\
---------------------------------------------------------------------------

    \82\ Grider also asserted that he had no way of knowing whether 
RB was a doctor shopper because Respondents did not have an account 
with KASPER. I note that Dr. Sullivan offered no testimony as to 
whether the standards of pharmacy practice in either Kentucky (or 
nationally) require that a pharmacist use an available prescription 
monitoring database where one is available. Thus, I place no weight 
on Leon or Eric Grider's failure to run KASPER reports on any of the 
six patients.
    While Grider also asserted that because RB did not have 
insurance, he had no way of knowing whether she was filling 
prescriptions at other non-Grider stores, Tr. 3602, I note that 
Grider did not even check to see what prescriptions RB filled at the 
other Grider stores.
---------------------------------------------------------------------------

    Dr. Sullivan concluded that RB's behavior clearly indicated that 
she was either abusing and/or diverting controlled substances and that 
this ``should definitely have been caught by the pharmacist.'' GX 66, 
at 4. He further noted that RB was obtaining duplicate therapy \83\ (in 
that she was obtaining both narcotic cough suppressants and hydrocodone 
tablets), and with respect to the Xanax, he concluded that ``[n]o 
reasonable and prudent pharmacist would fill Xanax prescriptions this 
early on so many occasions.'' Id. at 5. I agree with Dr. Sullivan's 
conclusions and I further conclude that substantial evidence supports a 
finding that Respondents violated their corresponding responsibility in 
dispensing controlled substances to RB. 21 CFR 1306.04(a).
---------------------------------------------------------------------------

    \83\ As explained in footnote 52, while Dr. P provided an 
unsworn statement that RB had ``a legitimate reason to take pain 
medicine,'' he offered no explanation as to why she needed to obtain 
narcotics from another doctor. Nor did he explain what condition RB 
had that warranted the long-term prescribing of narcotic cough 
syrups or alprazolam. Indeed, Dr. P corroborated Detective Hammond's 
statement that he did not know RB was seeing another physician until 
April 2010.
---------------------------------------------------------------------------

    As to JB, the evidence shows that during an eight-month period, 
Grider 2 repeatedly filled prescriptions for alprazolam and 
diazepam, which are both benzodiazepines, which she obtained from two 
doctors. The evidence further shows that Grider 2 frequently 
did this within days of having filled a previous prescription, and that 
it even filled (or refilled) prescriptions JB presented for both drugs 
on the same day. Moreover, during the eight-month period covered by 
JB's prescription profile, Grider 2 dispensed eight alprazolam 
prescriptions, each for a thirty-day supply, as well as nine diazepam 
prescriptions, each being for a twenty-day supply, and thus provided 
420-days' supply of these drugs during the period.
    Regarding JB, Eric Grider offered the self-serving testimony that 
JB's prescriptions did not raise a red flag and that they were not a 
large number given the number of days' supply they provided. Tr. 3613, 
3615. However, Grider offered no further explanation as to why it was 
appropriate to dispense 420-days' worth of alprazolam and diazepam 
during the eight-month period when these drugs are prescribed for the 
same indication.
    Moreover, Dr. Sullivan observed he could not ``think of any 
clinical reason why a patient would be using these two drugs at the 
same time for a period of seven months'' and that ``[a]ny reasonable 
and prudent pharmacy would not have filled prescriptions for these two 
medications to be taken at the same time.'' GX 66, at 5. Dr. Sullivan 
further explained that ``[t]his is an obvious sign of either 
prescription drug abuse and/or diversion.'' Id. I agree with Dr. 
Sullivan's conclusions and hold that substantial evidence supports a 
finding that Respondents violated their corresponding responsibility in 
dispensing controlled substances to JB. 21 CFR 1306.04(a).
    As for JR, it is undisputed that JR had been taking painkillers for 
a back injury for a lengthy period of time and that he had been 
recently diagnosed with colon cancer and had undergone various 
procedures, including a colon re-section, and was undergoing 
chemotherapy. However, while these were undoubtedly serious medical 
conditions which could cause pain and warrant the prescribing of 
controlled substances, Respondent Grider 1 filled 
prescriptions JR was simultaneously obtaining from multiple doctors for 
narcotics including OxyContin and hydrocodone.
    It is acknowledged that Ms. Moses offered credible evidence 
explaining why several of the short-term prescriptions were filled, as 
well as why two of the OxyContin prescriptions had been filled early. 
Moreover, even assuming (as Ms. Moses testified) that the refill 
request form which Dr. W's office faxed into Grider 1 
establishes that Dr. W was aware that JR was taking OxyContin for pain 
control, it does not explain why Respondents also filled prescriptions 
for both OxyContin and hydrocodone which JR was obtaining from Drs. K 
(his surgeon) and B (a pain management specialist) at the same time he 
was also obtaining hydrocodone from Dr. W.
    With respect to JR's OxyContin and hydrocodone prescriptions, Dr. 
Sullivan noted that while ``on rare occasions, cancer patients will use 
a second narcotic like hydrocodone for break-through pain on an `as 
needed basis' for a short-term period[,] [t]he same doctor would write 
prescriptions for both.'' GX 66, at 6. As Dr. Sullivan then explained, 
``[t]his is a major red flag that the patient was receiving hydrocodone 
prescriptions from three different doctors and OxyContin from two 
different doctors at the same time. Any reasonable and prudent 
pharmacist would have caught this and not filled these prescriptions.'' 
Id. In addition, Dr. Sullivan noted that ``[o]f the thirty-three 
controlled substance prescriptions filled'' by Grider 1, ``at 
least eleven times the pharmacy filled the medication too early.'' Id.

[[Page 44099]]

    Dr. Sullivan thus concluded that the ``duplicate therapy with both 
hydrocodone and oxycodone (OxyContin) from more than one prescriber is 
a clear indication of drug abuse and/or diversion and any reasonable 
and prudent pharmacist would have detected this.'' \84\ Id. 
Accordingly, while JR had a serious medical condition for which the 
prescribing of controlled substances was warranted, I conclude that 
substantial evidence supports a finding that Grider 1 violated 
its corresponding responsibility in dispensing multiple prescriptions 
for these drugs to him. 21 CFR 1306.04(a).
---------------------------------------------------------------------------

    \84\ As Detective Hammond found in reviewing JR's patient file, 
there is other reliable evidence establishing that JR engaged in 
drug abuse and/or diversion. See supra n.60. Moreover, as found 
above, JR admitted to sharing his medications with others. While a 
pharmacist would not have this information, Respondent did have 
evidence that JR was obtaining prescriptions for the same drugs from 
multiple doctors and yet chose to fill the prescriptions anyway.
---------------------------------------------------------------------------

    The evidence with respect to CR shows that between November 2007 
and early April 2010, he filled at Respondents approximately 163 
prescriptions for such drugs as Demerol, hydrocodone/apap tablets, 
various narcotic cough syrups, and alprazolam. While CR asserted that 
he had a back injury, the evidence shows, throughout the period, that 
while he received prescriptions from Dr. C for 120 tablets of Vicodin 
5/500mg (a thirty-day supply), which he filled at Grider 1, he 
also filled an additional 49 prescriptions for twenty tablets of 
hydrocodone 7.5/650, which he obtained from Dr. P. Notably, CR filled 
all but two of Dr. P's hydrocodone prescriptions at Grider 2. 
In addition, on multiple occasions, CR filled prescriptions for both 
hydrocodone tablets and narcotic cough suppressants.
    In addition, CR obtained 64 alprazolam prescriptions and refills, 
each being authorized by Dr. P and providing a thirty-day supply. All 
but seven of these were filled at Respondents, and while CR eventually 
started filling some of the alprazolam prescriptions at another 
pharmacy, he did not do so until late April 2009. The evidence further 
shows that on numerous occasions, Respondents filled or refilled an 
alprazolam prescription within days of having filled or refilled a 
prescription for the drug. As found above, CR obtained a total of 1,920 
days' supply of alprazolam in a period lasting approximately 900 days.
    CR admitted that he did not tell Dr. P that he was also getting 
controlled substances from Dr. C, and claimed that Dr. P did not ask 
him. Tr. 4029. Moreover, CR admitted that he never told Dr. C that he 
was also receiving controlled substances from Dr. P. Id. at 4039.
    Eric Grider admitted that he did not talk to Dr. P about CR. 
Moreover, he then offered the self-serving testimony that because CR 
was a cash-paying patient, he was unaware that CR was filling 
prescriptions at other pharmacies; indeed, Grider raised the ostrich 
defense, claiming that he ``had no reason to'' even check to see if CR 
was filling prescriptions at Grider 1. Id. at 3619.
    Most remarkably, Grider offered the patently disingenuous testimony 
that he was unaware of unauthorized refills which occurred at Grider 
2, notwithstanding that on February 1, 2008, it filled a new 
alprazolam prescription even though it had refilled a prescription for 
the drug the day before. GX 56, Tab C, at 2. Moreover, on April 30, 
2008, Grider 2 dispensed a new alprazolam prescription even 
though it had dispensed a refill of a previous alprazolam prescription 
six days earlier, and on April 28, Grider 1 also filled an 
alprazolam prescription for CR. Id. Thus, early on in the period 
covered by the spreadsheet, Eric Grider had reason to know that CR was 
engaged in either drug abuse or diversion. Yet Eric Grider failed to 
question CR's doctors to determine if they knew that other doctors were 
also prescribing to him and could not even be bothered to check to see 
whether CR was filling prescriptions at Grider 1.
    As Dr. Sullivan noted, ``in multiple instances,'' CR filled 
alprazolam prescriptions ``early at both pharmacies,'' and did so 
approximately fourteen times, with some of the refills occurring as 
much as ``twenty-nine days too early.'' GX 66, at 7. As Dr. Sullivan 
further explained, ``a reasonable and prudent pharmacist would never 
have filled these alprazolam prescriptions as early as the Grider 
pharmacies did. This shows a pattern of either abuse and/or drug 
diversion.'' Id. I agree with Dr. Sullivan's conclusions and hold that 
substantial evidence supports a finding that Respondents violated their 
corresponding responsibility in dispensing controlled substances to 
CR.\85\ 21 CFR 1306.04(a).
---------------------------------------------------------------------------

    \85\ Upon being shown the evidence that CR had filled a 
prescription for twenty-eight tablets of hydrocodone only six days 
after filling a prescription for 120 hydrocodone tablets, Ms. Moses, 
who testified on behalf of Respondent, stated that she would have 
called the physician to let her know of the overlapping 
prescription. Tr. 4429.
---------------------------------------------------------------------------

    With respect to SR, the evidence shows that during a period of less 
than seven months, she filled twenty-four controlled substance 
prescriptions at Grider 2 for hydrocodone, oxycodone, and 
clonazepam. Five of the hydrocodone prescriptions and one oxycodone 
prescription were issued by Dr. H, an orthopedic surgeon; eight were 
issued by Dr. S, a family practitioner; one by NP H, who was in the 
same practice as Dr. S, and one by Dr. M, who was a dentist. More 
specifically, on October 5, SR filled a prescription issued by Dr. S 
for 42 hydrocodone 5/500, this being a fourteen-day supply; on October 
13, she filled a prescription from Dr. M for twelve hydrocodone 7.5/
650, this being a three-day supply; and on October 21, she filled a 
prescription issued by NP H for another 42 hydrocodone, also a 
fourteen-day supply.
    Other evidence shows that on October 8, 2009, SR had a tooth 
extracted and that she was prescribed the hydrocodone for post-
operative pain. However, SR's dental records contained no indication 
that she had reported her use of hydrocodone to Dr. M.
    SR's prescriptions in March and April 2010 provide more convincing 
evidence that she was engaged in doctor-shopping. Specifically, on 
March 8, 2010, Dr. S (her family doctor) prescribed 90 tablets of 
hydrocodone 5/500, a thirty-day supply, and on April 8, Dr. W (who 
replaced Dr. S as her family doctor but was in the same office) 
prescribed her another 90 tablets. Moreover, on March 10, 18, and 27, 
as well as April 1 and 23, SR filled prescriptions issued by Dr. H, 
each being for thirty tablets of hydrocodone 7.5/500.
    Detective Hammond interviewed Drs. H, M, S, and W, each of whom 
told Hammond that they would not have prescribed controlled substances 
to SR if he/she had been aware that SR was obtaining controlled 
substances from another physician. Drs. S and W further told Hammond 
that SR was subject to a pain management contract pursuant to which SR 
could not obtain controlled substances from another physician without 
prior authorization. In addition, Dr. H stated that if he had known 
that SR was receiving controlled substances from Dr. S, he would have 
contacted Dr. S to ensure that they were not issuing overlapping 
prescriptions.
    By contrast, SR, who testified that she had undergone surgeries on 
both her elbow and shoulder, testified that she told the admitting 
nurse prior to a surgery performed by Dr. H that she was taking 
hydrocodone fives, thus suggesting that Dr. H knew that she was 
obtaining controlled substances from

[[Page 44100]]

her family doctor.\86\ Tr. 4721. However, in her decision, the ALJ did 
not address whether she found SR's testimony, which was vague as to the 
date of the incident, credible.
---------------------------------------------------------------------------

    \86\ SR also testified that she did not tell her family 
practitioner about the prescription she had obtained from her 
dentist ``because it was in between visits when I got the ones 
from'' the dentist. Tr. 4722. The Government also asked SR whether 
she told Dr. W that she was receiving controlled substances from Dr. 
S; SR, who was apparently confused by the question, testified that 
she told Dr. W that she had gotten pain medicine after her surgery. 
Id. at 4723. However, as noted above, Drs. S and W were both family 
practitioners who worked at the same office.
---------------------------------------------------------------------------

    In any event, I conclude that it is not necessary to resolve this 
dispute because Eric Grider acknowledged that SR's prescriptions 
involved therapeutic duplication and he did not recall having called 
either Dr. H or Dr. W. Indeed, Grider denied having any obligation to 
call SR's prescribers, asserting that such contact was ``a courtesy'' 
and that he fulfilled his obligation if he counseled a patient as to 
the appropriate manner in which to take the drugs. However, SR 
testified that she was neither questioned by anyone at Grider 
2 about her prescriptions nor counseled as to how to take the 
medications.
    As Dr. Sullivan testified, when confronted with evidence of red 
flags, there are several things a pharmacist can do, including having 
an extensive conversation with the patient, calling the physician, or 
refusing to fill the prescription. Id. at 3448-49. However, with 
respect to SR, Eric Grider did none of the above. Indeed, as Dr. 
Sullivan testified, it is clear that Respondents did not do prospective 
DUR with respect to any of the six patients even though this is 
required by the Kentucky Board of Pharmacy's rules. Id. at 3453-54. I 
therefore conclude that substantial evidence supports a finding that 
Grider 2 dispensed controlled substances to SR in violation of 
21 CFR 1306.04(a).
    I further hold that Respondents' dispensing violations are 
egregious and provide further support for the conclusion that each has 
committed acts which render its registration ``inconsistent with the 
public interest'' and thus support the revocation of its 
registration.\87\ 21 U.S.C. 824(a)(4).
---------------------------------------------------------------------------

    \87\ Respondents further contend that the Government was ``only 
able to identify these six instances of what [it] alleges to be 
`doctor shopping.' '' Respondent Exceptions, at 21. Suffice it to 
say that the Government's evidence is more than enough to sustain 
the allegations, given that several of the patients demonstrated a 
sustained pattern of obtaining prescriptions for similar drugs 
issued by different prescribers or presenting numerous early 
refills.
     Respondents also contend that because Dr. Sullivan based his 
conclusions ``by looking only at the prescription patterns'' of the 
patients and testified that he was generally unaware of their 
medical conditions, this does not constitute substantial evidence of 
doctor-shopping. Id. at 21-22 & n.3. However, with respect to 
several of the patients, several of Respondent's witnesses 
acknowledged that the prescription patterns were indicative of 
doctor-shopping. Indeed, even Eric Grider conceded (albeit, 
grudgingly) that CR was a doctor shopper; he also acknowledged that 
he should have called RB's and SR's prescribers.
---------------------------------------------------------------------------

The Audits

    As found above, DEA Investigators performed two audits of 
Respondents' handling of controlled substances. However, the Government 
conceded that the first audit was flawed because it included both 
purchases and distributions which occurred outside of the audit period. 
While the supervisory DI performed a second audit on a limited number 
of controlled substances, this audit was also flawed because it relied 
on KASPER data (notwithstanding that Kentucky does not guarantee the 
accuracy of the data, Tr. 2335, and KASPER reports contain this caveat, 
id. at 2337), rather than the dispensing records which Respondents are 
legally required to maintain under the CSA and DEA regulations to 
determine the quantities of drugs which they dispensed.
    Recordkeeping is one of the CSA's principal tools for preventing 
the diversion of controlled substances. Paul H. Volkman, 73 FR 30630, 
30644 (2008). Under the Act, ``every registrant * * * dispensing a 
controlled substance or substances shall maintain, on a current basis, 
a complete and accurate record of each such substance * * * received, 
sold, delivered, or otherwise disposed of by him.'' 21 U.S.C. 827(a) 
(emphasis added). I have further explained that ``a registrant's 
accurate and diligent adherence to [its recordkeeping] obligations is 
absolutely essential to protect against the diversion of controlled 
substances.'' Volkman, 73 FR at 30644.
    One of the purposes of performing an audit is to assess a 
registrant's level of compliance with the CSA's recordkeeping 
requirements. Thus, using data from a non-CSA required record rather 
than CSA required records, cannot, by definition, provide an accurate 
picture as to the adequacy of a registrant's compliance with section 
827.\88\ That error is compounded where, as here, the source of the 
data expressly disclaims any guarantee that its data is accurate and it 
is unclear to what degree the reports are accurate. Indeed, the DI 
acknowledged that he had ``no idea how accurate'' the KASPER data was. 
Tr. 622. Thus, this audit was also flawed.
---------------------------------------------------------------------------

    \88\ This is not to say that using other data sources would be 
inappropriate in all cases. For example, if sizeable portions of a 
registrant's dispensing records are missing, use of data or records 
from a non-CSA source would be justified to determine whether 
diversion is occurring. Of course, in such a case, it would already 
be clear that the registrant had failed to comply with its 
recordkeeping obligations. However, in this case, there is no 
evidence that either of the Respondents was missing any dispensing 
records.
---------------------------------------------------------------------------

    Nonetheless, I agree with the ALJ's conclusion that the results of 
the ``consultation examination'' performed by Stivers and Associates 
provide substantial evidence that Respondents cannot account for 
significant quantities of various controlled substances and thus have 
violated section 827. ALJ at 85-87. Indeed, the shortages and overages 
that Stivers found at each of the Grider stores are stunning and 
establish that Respondents have committed egregious recordkeeping 
violations and likely diverted thousands of dosage units (d.u.) of 
controlled substances.
    As found above, Grider 1 had shortages of the following 
benzodiazepines: 2,316 d.u. of alprazolam, 6,372 diazepam, and 2,191 
lorazepam. With respect to the narcotics it handled, Grider 1 
had shortages of 28,097 d.u. of hydrocodone, 462 Duragesic (fentanyl) 
patches, 500 Lorcet, 375 Lortab, 214 Endocet, and 200 Vicodin. Grider 
1 also had overages of 7,568 clonazepam, 3,025 methadone, 
1,751 phentermine, 1,335 oxycodone, 514 Stagesic, and 262 OxyContin.
    Grider 2 had shortages of 17,875 d.u. of OxyContin, 8,135 
hydrocodone, 3,207 methadone, 3,203 phentermine, 2,013 Stagesic, 1,253 
lorazepam, 428 Ambien, and 290 Duragesic. It also had overages of 8,615 
clonazepam, 2,787 diazepam, 662 Valium, 619 Lorcet, 425 Endocet, 342 
Lortab, and 109 Vicodin.
    Moreover, even after combining the shortages and overages for all 
three stores, Respondents had shortages of 1,496 alprazolam, 7,329 
diazepam, 4,928 lorazepam, 605 Duragesic (fentanyl) patches, 35,418 
hydrocodone, 16,998 OxyContin, and 2,791 phentermine. Respondents also 
had overages of 31,951 clonazepam, 15,747 methadone, 1,051 Lorcet, 900 
oxycodone, 889 Lortab, 871 Endocet, and 872 Valium.\89\ As explained in 
my findings of fact, under the CSA, Respondents are required to 
maintain accurate and complete records for each registered location and 
for each finished form of a drug.
---------------------------------------------------------------------------

    \89\ To make clear, under section 827, each registrant is 
required to maintain complete and accurate records. While I discuss 
the combined figures for all three stores, as found above, each of 
the Grider stores could not account for massive quantities of 
controlled substances.
---------------------------------------------------------------------------

    In their Exceptions, Respondents contend that its audit ``was not 
presented as a final and accurate audit

[[Page 44101]]

of the period in question'' but ``was presented to demonstrate that the 
DEA audit was not reliable.'' Exceptions at 5. Mr. Hicks, however, 
testified at length as to the procedures his firm employed in 
performing its examination and it is clear that those procedures 
provided an accurate result. For example, while Respondents argue that 
Mr. Hicks ``did not review some prescriptions when he performed the 
audit,'' his report stated that he tabulated the quantities of the 
dispensings from the Respondents' pc V computer software system 
Narcotic and Controlled Substances Drug Sales Report, a record which 
constitutes a dispensing record for purposes of the CSA. See RX 101, at 
63.
    Because Registrants are required to maintain the dispensing records 
under federal law and Agency regulations, and those records are 
required to be ``complete and accurate,'' 21 U.S.C. Sec.  827, an audit 
is not rendered invalid because the hard copy prescriptions were not 
reviewed. Indeed, in performing audits, DEA personnel typically review 
only the dispensing log to determine the respective quantities of the 
various controlled substances which have been distributed.
    Equally unpersuasive is Respondents' claim that the Stivers' 
results were skewed by ``an inaccurate beginning inventory.'' 
Exceptions, at 5. As Mr. Hicks explained in his report, his firm ``used 
the same beginning inventory [May 31, 2003] as the DEA did.'' RX 101, 
at 62. However, the evidence shows that the beginning inventories which 
DEA used were actually inventories which Respondents had themselves 
performed. Thus, if the beginning inventories used by Mr. Hicks's firm 
were inaccurate, it is because Respondents themselves did not take 
accurate inventories. Moreover, Mr. Hicks was adamant that the ending 
inventories were reliable, Tr. 2095, and that he had relied on ``source 
documentation,'' i.e., records provided by the companies that sold 
controlled substances to Respondents to determine their purchases. Id. 
at 2102.
    Thus, it is patently disingenuous for Respondents to now assert 
that their own audit is not reliable. And as explained above, each DEA 
registrant is required to maintain complete and accurate records for 
each controlled substance it handles. Thus, the testimony of Mr. Hicks 
that when all the controlled substances are added up across all three 
stores, the audit shows an overage of 644 pills, which in his view is 
immaterial, is utter nonsense. Rather, the audit reflects an abject 
failure on Respondents' part to comply with the CSA's record keeping 
requirements and gives substantial credence to the Government's 
contention that Respondents were engaged in massive diversion. This 
provides further reason to conclude that Respondents have committed 
acts which render their registrations ``inconsistent with the public 
interest.'' 21 U.S.C. 824(a)(4).

Other Violations

    As explained above, a principal component of the Government's 
evidence in support of many of the remaining allegations was data or 
reports obtained from KASPER. However, because the Government did not 
obtain a court order, it cannot rely on that evidence in this 
proceeding. Nonetheless, a few of the allegations were proved by 
substantial evidence.
    For example, in several instances, the Government produced copies 
of labels for various prescriptions which were dispensed and yet they 
could not find either the original signed prescriptions or a called-in 
prescription which authorized the dispensing. These included 
prescriptions for hydrocodone (see GX 15, at 4; Tr. 422) and Xanax (GX 
16, at 6; Tr. 442). As explained previously, under 21 U.S.C Sec.  829 
and 21 CFR 1306.21(a), a pharmacist may dispense controlled substances 
(in schedules III through V) ``only pursuant to either a written 
prescription signed by a practitioner or a facsimile of a written, 
signed prescription transmitted by the practitioner or the 
practitioner's agent to the pharmacy or pursuant to an oral 
prescription made by an individual practitioner and promptly reduced to 
writing by the pharmacist.'' 21 CFR 1306.21(a). Moreover, a pharmacy is 
required to maintain the prescription for a period of two years.\90\ 21 
U.S.C. 827(b); 21 CFR 1304.04 (a) & (h).
---------------------------------------------------------------------------

    \90\ Respondents also take exception to the ALJ's finding that 
they dispensed controlled substances without retaining a hard copy 
of the prescriptions ``because the only basis for the alleged 
violations are[sic] the failure of Agent Otero to find the hard 
copies of the prescriptions in the records he seized'' on August 19, 
2004. Resp. Exceptions at 24. Respondents further noted that on 
November 21, 2005, the State Pharmacy Board seized its prescriptions 
pursuant to three administrative subpoenas, and that they have been 
unable to obtain copies of the documents seized by the Pharmacy 
Board. Id.
     Respondents thus argue that ``the substantial evidence that the 
Respondents did not have hard copies of some prescriptions for 
schedule II drugs was Otero's inability to find those hard copies in 
the record the DEA seized. There was no evidence presented by the 
Government that Otero had searched the records seized by the 
Kentucky Pharmacy Board to determine whether the missing hard copies 
of the prescriptions in question were there.'' Id. at 25.
     DI Otero testified, however, that during the search, the 
Investigators could not find some of the prescriptions, even though 
under Federal law, Respondents were required to maintain them at the 
respective registered location. Tr. 213; 671-72. This testimony is 
more than enough to provide substantial evidence that Respondent 
could not provide hard copies of various prescriptions. Contrary to 
Respondents' understanding, the Investigators were not required to 
conduct a subsequent search to establish this violation, let alone a 
review of the records seized by another agency more than a year 
later.
     Respondents also contend that because of the ongoing state 
criminal proceedings against both Leon and Eric Grider, the ALJ 
``should not [have] allow[ed] the inability of the Respondents to 
rebut these alleged violations by providing the requisite hard 
copies of the prescriptions and call-in scripts carry the day * * * 
when it is a matter of record that the Respondents have been 
deprived of their records throughout these proceedings.'' Resp. 
Exceptions, at 26.
     To make clear, DEA did not deprive Respondents of any of their 
records, but rather allowed them to make copies of the records 
seized by the Agency. Tr. 214-16. Beyond this, the argument is to no 
avail because under Federal law and DEA regulations, Respondents 
were required to have the prescriptions at issue on hand and 
available on the date of the DEA search. See 21 U.S.C. 827(b) 
(``Every inventory or other record required under this section * * * 
shall be kept and be available, for at least two years, for 
inspection and copying by officers or employees of the United States 
authorized by the Attorney General.''); see also 21 CFR 1304.04(a).
---------------------------------------------------------------------------

    In addition, the record contains substantial evidence (apart from 
KASPER data) that Leon Grider provided an unauthorized refill of a 
Lortab (hydrocodone) prescription to BW. See GX 30; GX 70; Tr. 3040, 
3050-52, 3054-55. Dr. CS, BW's physician, testified that BW wanted to 
get off of Lortab and that she was tapering BW off of the drug and had 
authorized no refills. Nonetheless, Leon Grider provided refills to BW, 
thus interfering with the clinical judgment of Dr. CS. It is manifest 
that Grider's action is outrageous and threatened the safety of BW.
    The Government further established that a number of the 
prescription labels Respondent prepared contained the name of a 
physician other than the one who had actually prescribed the drug. See 
GX 26, at 1-2; 7-8; 9-10. This is a violation of 21 CFR 1306.24(a) 
(``The pharmacist filling a prescription for a controlled substance 
listed in schedule III, IV, or V shall affix to the package a label 
showing the pharmacy name and address, the serial number and date of 
initial filling, the name of the patient, [and] the name of the 
practitioner issuing the prescription * * *.'') (emphasis added). In 
addition, other evidence shows that Respondent put false prescription 
labels on bottles. See Tr. 5946, 6095-96, 6126 (testimony by LW) and 
Tr. 3201, GX 71 (Chief Irvin's testimony and evidence of duplicate pill 
bottles for BL).
    Finally, the Government also established that on several occasions,

[[Page 44102]]

Respondents failed to report thefts of controlled substances to DEA. 
This is a violation of 21 CFR 1301.76(b), which requires that a 
registrant ``notify the Field Division Office of the Administration in 
his area, in writing, of the theft and significant loss of any 
controlled substances within one business day of the discovery of such 
loss or theft'' and to complete and submit a written report of the 
incident on DEA Form 106. However, these violations are relatively 
minor when compared to the other misconduct proved in this matter.
    The Government also contends that Respondents violated Kentucky law 
by failing to provide complete and accurate information to KASPER. See 
Gov. Post-Hearing Br., at 100-101. However, under Kentucky law, only 
the knowing or intentional failure to transmit such information is a 
violation and there is no evidence that the State has undertaken 
enforcement action against Respondents, let alone held them to be in 
violation. Indeed, much to the Government's dismay, Mr. Sallengs, the 
director of KASPER, did not seem particularly troubled by Respondents' 
various reporting errors and omissions. In light of this, I dismiss 
this allegation.

Factor Five

    In its post-hearing brief, the Government also contends that the 
findings of an investigation of the Kentucky Medicaid Fraud Division 
establish that Grider 2 engaged in the billing fraud when it 
billed Medicaid for drugs that were not actually dispensed including 
controlled substances. Gov. Post-Hrng. Br., at 92. However, in support 
of its contention, the Government offered nothing more that the 
conclusory assertion that ``[f]actor five is also relevant to findings 
of the investigation of the Kentucky Medicaid Fraud Division that * * * 
Grider Drug 2 unlawfully billed Medicaid (including 
transactions involving prescriptions for controlled substances) where 
prior authorization was not provided.'' Id. The Government did not cite 
any authority for its position.
    The ALJ agreed with the Government, reasoning that this conduct 
constitutes ``[s]uch other conduct which may threaten public health and 
safety'' because ``[w]hen a registrant clearly engages in conduct 
involving controlled substances that is untruthful, that registrant 
creates yet another risk of diversion.'' ALJ at 93-94 (citing Alexander 
Drug Company, Inc., 66 FR 18299, 18304 (2001); Nicholas A. Sychak, d/b/
a Medicap Pharmacy, 65 FR 75959,75968 (2000); Arthur Sklar, d/b/a King 
Pharmacy, 54 FR 34623, 34627 (1989)). Based on her finding that Eric 
Grider and another pharmacist ``reported to Medicaid one medication 
when they actually dispensed another'' and that ``[t]hese medications 
included controlled substances,'' the ALJ further explained that ``the 
prescription check and balance such Medicaid reporting creates was 
circumvented by this false method of reporting'' and that ``[w]ithout 
such trust and truthfulness, the system of monitoring the transit of 
controlled substances falls apart.'' Id. at 94.
    However, while two of the three cases cited by the ALJ arguably 
support the proposition that billing fraud constitutes conduct which is 
actionable under factor five, in both cases the creation of a 
fraudulent record was clearly part of a scheme to divert controlled 
substances. For example, in Alexander Drug, a pharmacist had dispensed 
lorazepam to himself ``without a prescription issued by a practitioner 
in the usual course of professional practice'' and then created a false 
prescription in his wife's name because her insurance did not require a 
co-payment. 66 FR at 18301. Likewise, in Sychak, there were findings 
which support the conclusion that the billing fraud was engaged in as 
part of a scheme to divert drugs. Id. at 75965 (noting interview of 
pharmacy employee that when she reviewed her prescription profile, she 
``discovered numerous prescriptions listed as billed to her insurance 
carrier that were allegedly issued to her by various physicians she had 
never seen for drugs she had never received'' and that when the 
employee confronted the pharmacist, he replied: ``How do you think I 
pay for your health insurance?'').\91\
---------------------------------------------------------------------------

    \91\ As for Sklar, that case contains no discussion of billing 
fraud and whether it is actionable conduct under factor five.
---------------------------------------------------------------------------

    Most significantly, more than seven weeks before the ALJ issued her 
decision in this matter, I issued my Decision in Terese, Inc., D/B/A 
Peach Orchard Drugs, 76 FR 46843 (2011). Yet the ALJ failed to even 
acknowledge Terese, let alone explain why it is not controlling.
    In Terese, the Agency sought, pursuant to its public interest 
authority, to revoke a pharmacy registration issued to the spouse of a 
pharmacist, who had opened up a new pharmacy, after her spouse and his 
pharmacy had been convicted of health care billing fraud. Id. Therein, 
the Government alleged four reasons for doing so: (1) The pharmacy 
owner's spouse had been convicted of health care fraud and mandatorily 
excluded from participation in federal health care programs pursuant to 
42 U.S.C. 1320a-7(a); (2) that the pharmacy had materially falsified 
its state Medicaid application; (3) that the pharmacy had failed to 
provided information that was requested by the state Medicaid program; 
and (4) that the convicted pharmacist had unlawfully dispensed Medicaid 
controlled substance prescriptions. Id. There was, however, no evidence 
substantiating the allegation that the convicted pharmacist (and his 
pharmacy) had committed violations of the CSA. Id. at 46846.
    In rejecting the Government's contentions, I noted that the CSA, as 
originally enacted, authorized the revocation of a registration only on 
the following three grounds: (1) Where a registrant has materially 
falsified an application for registration; (2) where a registrant has 
been convicted of a felony related to controlled substances; and (3) 
where a registrant is no longer authorized by state law to handle 
controlled substances. See 21 U.S.C. 824(a)(1)-(3). I further noted 
that it was not until 1984 that Congress, having concluded that the 
existing grounds had proved ```overly limited''' and had ```a severe 
adverse impact on Federal anti-diversion efforts,''' amended the CSA to 
add the public interest authority. 76 FR at 46847-48 (quoting H.R. Rep. 
No. 98-1030, at 266 (1984)).\92\ However, in Terese, I also noted that 
Congress did not amend section 824 to grant the Agency authority to 
revoke the registration of an individual or entity subject to mandatory 
exclusion by the Secretary of HHS from Medicare or Medicaid until three 
years after it enacted public interest provisions. Id. at 46848 
(discussing history of 21 U.S.C. 824(a)(5)).
---------------------------------------------------------------------------

    \92\ The House Report was reprinted in 1984 U.S.C.C.A.N. 3182, 
3448.
---------------------------------------------------------------------------

    Moreover, as I explained in Terese, under 42 U.S.C. 1320a-7(a), the 
Secretary's mandatory exclusion is triggered only when an individual or 
entity has been convicted of one of four categories of offenses such as 
for ``program-related crimes,'' which includes, in part, ``a criminal 
offense related to the delivery of an item or service under * * * 42 
U.S.C. Sec. Sec.  1395 et seq. * * * or under any State health care 
program,'' or ``a conviction `under Federal or State law, in connection 
with the delivery of a health care item or service or with respect to 
any act or omission in a health program * * * operated by or financed 
by any Federal, State, or local government agency, of a criminal 
offense consisting of a felony relating to fraud, theft, embezzlement

[[Page 44103]]

* * * or other financial misconduct.''' 42 U.S.C. 1320a-7(a) (emphasis 
added). Accordingly, a person or entity's DEA registration is not 
subject to revocation under section 824(a)(5) unless he/it has been 
convicted of an offense falling within one of the four enumerated 
categories. Notably, section 824(a)(5) does not give the Agency 
authority to revoke the registration of a person or entity which is 
subject only to the Secretary's permissive exclusion authority, even 
though the Medicare/Medicaid exclusion statute contains some sixteen 
separate grounds for permissive exclusion, many of which involve acts 
of misconduct which reflect adversely on the truthfulness of the person 
subject to the exclusion. See 42 U.S.C. 1320A-7(b).
    In Terese, I further explained that under the Government's 
interpretation of the scope of its authority under the CSA's public 
interest provisions, there was no need for Congress to enact section 
824(a)(5) and that its interpretation would render this provision, and 
the limitation it imposes, meaningless. 76 FR at 46848. However, as I 
noted, statutes ``are not to be construed in a manner that renders 
their texts superfluous.'' Id. (citing Bloate v. United States, 130 
S.Ct. 1345 1355 (2010) (quoting Duncan v. Walker, 533 U.S. 167, 174 
(2001) (``[A] statute ought, upon, the whole, to be so construed that, 
if it can be prevented, no clause, sentence or word shall be 
superfluous, void, or insignificant.''))). In short, were an allegation 
that a Registrant has committed Medicaid fraud actionable under factor 
five of the public interest standard as ``such other conduct which may 
threaten public health and safety,'' then Congress did not need to 
amend section 824 by adding subsection (a)(5). Yet not only did 
Congress amend the statute, it then limited the Agency's revocation 
authority to those instances in which a registrant has been convicted 
of a felony enumerated in 42 U.S.C. 1320A-7(a).
    In Terese, I also explained that where an allegation both 
implicates a public interest factor (or another of the Agency' 
revocation authorities), as well as falls within the Secretary's 
permissive exclusion authority, DEA retains authority to revoke under 
the applicable authority of section 824. However, as Terese makes 
clear, the Agency cannot disregard clear statutory text and the CSA's 
history. Thus, even though it is indisputable that committing billing 
fraud is egregious misconduct, simply overcharging the Government 
without more does not necessarily threaten ``threaten public health and 
safety.'' 21 U.S.C. 824(a)(5).
    As explained above, the ALJ concluded that Respondent's alleged 
Medicaid billing falls within factor five because ``the prescription 
check and balance such Medicaid reporting creates was circumvented by 
this false method of reporting'' and that ``[w]ithout such trust and 
truthfulness, the system of monitoring of controlled substances falls 
apart.'' ALJ at 94.
    However, there is no evidence in this proceeding that Medicaid 
billing records are used to monitor the disposition of controlled 
substances and whether they are being diverted, and as explained above, 
the CSA creates its own scheme of recordkeeping to monitor the 
disposition of controlled substances. Second, to the extent the 
Government's evidence even constitutes substantial evidence of billing 
fraud--an issue which need not be decided--there is no evidence that 
Grider 2's pharmacists engaged in the fraud as part of a 
scheme to divert controlled substances.
    As the KBI agent testified, the fraud involved billing for a drug 
in the Medicaid formulary when a patient brought in a prescription for 
a drug which was not covered by the formulary and would require pre-
authorization. However, the KBI Agent testified that the patient 
received the drug that the doctor prescribed. Indeed, while in response 
to the question of whether the drugs involved controlled or non-
controlled substances, the KBI Agent testified that ``[t]hey were 
across-the-board,'' Tr. 1116, neither the Agent in her testimony, nor 
any of the Interview Summaries of Respondents' employees, provide any 
basis for concluding that Respondents engaged in the scheme to 
facilitate the diversion of controlled substances.
    In short, the Government's evidence simply establishes run-of-the-
mill billing fraud, without any further proof as to how the fraud 
threatened public health or safety as required under factor five. 
Moreover, no evidence was offered that either Eric Grider or Grider 
2 has been convicted of health care fraud and is subject to 
mandatory exclusion from participation in federal health care programs 
pursuant to 42 U.S.C. 1320a7(a).
    This is not to deny the ALJ's well-placed concern that the 
commission of health care fraud raises a serious question as to the 
trustworthiness of a registrant. However, with respect to allegations 
that a registrant has engaged in health care fraud, because the CSA 
limits the Agency's revocation authority to those instances in which a 
registrant has been convicted of an offense which subjects it to 
mandatory exclusion, absent evidence that the fraud was engaged in as 
part of scheme to divert controlled substances, the CSA clearly 
contemplates that these allegations are to be litigated in the first 
instance in federal and state criminal courts, and not in DEA 
registration proceedings.\93\ The allegation is thus not properly 
considered in this proceeding.
---------------------------------------------------------------------------

    \93\ Even where there is evidence that billing fraud was engaged 
in as a part of a scheme to divert controlled substances, the fraud 
is, at most, secondary to the diversion and adds little to the 
Government's case. In this matter, the Government's decision to 
litigate the issue resulted in at least five days of additional 
testimony (if not more) and prompted an interlocutory appeal, thus 
further delaying the resolution of the serious charges raised in 
this matter. Notwithstanding the importance of the issue to its case 
(at least as presented at the hearing), the Government's discussion 
of the allegation produced but a single sentence in its brief.
---------------------------------------------------------------------------

Summary of the Government's Case

    As found above, under factors two and four, the Government has 
proved with substantial evidence numerous violations of the CSA. These 
include: (1) Leon Grider's distribution of controlled substances either 
without a prescription or by providing refills which were not 
authorized by the prescribing physician; (2) Respondents' repeated 
dispensing of controlled substances to persons who were obviously 
either engaged in drug abuse or diversion; (3) Respondents' clear 
inability to account for substantial amounts of the controlled 
substances they handle; (4) their inability to provide prescriptions 
for various dispensings; and (5) the creation of false prescription 
labels. In sum, Respondents (and their principals, Leon and Eric 
Grider) have committed egregious misconduct which supports the further 
finding that they have ``committed such acts as would render [their] 
registration[s] * * * inconsistent with the public interest'' and which 
supports the revocation of their registrations. 21 U.S.C. 824(a)(4). I 
further conclude that the allegations underlying the Immediate 
Suspension Order have been proved by substantial evidence.

Sanction

    Where, as here, the Government has made out a prima facie case, the 
burden shifts to the Respondents to `` `present[ ] sufficient 
mitigating evidence' '' to show why, notwithstanding that it has 
committed acts which render its registration inconsistent with the 
public interest, it can be entrusted with a new registration. Medicine 
Shoppe-Jonesborough, 73 FR 364, 387 (2008) (quoting Samuel S Jackson, 
72 FR 23848, 23853 (2007) (quoting Leo R. Miller, 53 FR 21931, 21932 
(1988))), pet.

[[Page 44104]]

for rev. denied, Medicine Shoppe-Jonesborough v. DEA, 300 Fed. Appdx. 
409 (6th Cir. 2008). See also MacKay, 664 F.3d at 817.
    ``Moreover, because `past performance is the best predictor of 
future performance,' ALRA Labs, Inc. v. DEA, 54 F.3d 450, 452 (7th 
Cir.1995), [DEA] has repeatedly held that where a registrant has 
committed acts inconsistent with the public interest, the registrant 
must accept responsibility for its actions and demonstrate that it will 
not engage in future misconduct.'' Medicine Shoppe, 73 FR at 387; see 
also Jackson, 72 FR at 23853; John H. Kennedy, 71 FR 35705, 35709 
(2006); Cuong Trong Tran, 63 FR 64280, 64283 (1998); Prince George 
Daniels, 60 FR 62884, 62887 (1995).
    Respondents have utterly failed to rebut the Government's prima 
facie case. With respect to Grider 1, as the ALJ noted, Leon 
Grider, the pharmacist in charge at Grider 1, and the 
principal owner of both pharmacies, did not testify in the 
proceeding.\94\ Moreover, Grider 1 produced no evidence as to 
corrective measures it has undertaken to prevent a re-occurrence of the 
misconduct it has committed. Thus, Respondent has produced no evidence 
that it (as well as its owner and pharmacist in charge) accept 
responsibility for their misconduct and that they will not engage in 
future misconduct.\95\ Cf. Baxter v. Palmigiano, 425 U.S 308, 319 
(1976) (``[T]he Fifth Amendment does not forbid adverse inferences 
against parties to civil actions when they refuse to testify in 
response to probative evidence offered against them.'').
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    \94\ The Government did not call Leon Grider to testify; nor did 
he testify on Respondents' behalf.
    \95\ Other evidence, while not essential to reach this 
conclusion, supports this finding. Specifically, the evidence shows 
that even though Leon Grider was aware that he was under 
investigation, he continued to unlawfully distribute controlled 
substances to persons such as LW and BL.
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    While Eric Grider testified regarding the violations committed by 
Grider 2, he acknowledged that only one of the patients (CR) 
to whom Grider 2 had unlawfully dispensed controlled 
substances was engaged in doctor-shopping, and even then, did so 
grudgingly. Moreover, when taken as a whole, Eric Grider's testimony 
manifests that he neither accepts responsibility for his misconduct nor 
has implemented corrective measures to prevent diversion in the future. 
For example, when confronted with evidence of a patient obtaining 
prescriptions from multiple doctors, Grider testified that he 
nonetheless considers calling the prescriber to be a courtesy. As a 
further example, Grider testified that he would not even check to see 
if a patient was obtaining controlled substances from his father's 
store. Finally, Grider offered no evidence as to any remedial measures 
which have been undertaken at Grider 2. Thus, I conclude that 
Eric Grider remains utterly indifferent as to the scope of his and 
Grider 2's obligations under both Kentucky and Federal law to 
prevent the abuse and diversion of controlled substances. Accordingly, 
I conclude that Respondents have failed to rebut the Government's case.
    Respondents nonetheless argue that I should reject the ALJ's 
conclusions that because Leon Grider did not testify, there is no 
evidence that he is remorseful or has implemented any corrective 
measures. Resp. Exceptions at 6. Noting that they made ``repeated 
efforts to stay this proceeding,'' Respondents argue that because Leon 
Grider was under two state court indictments at the time of this 
hearing, the ALJ should have stayed this proceeding until the 
conclusion of the two state criminal cases so as not to `` `undermine 
the party's Fifth Amendment privilege against self-incrimination.' '' 
Id. at 8-9 (quoting SEC v. Dresser Industries, Inc., 628 F.2d1368, 
1375-76 (D.C Cir. 1980)).\96\
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    \96\ On June 4, 2008, Respondent filed a motion ``to stay the 
proceedings until after October 10, 2008, the date Leon Grider's 
Kentucky State Court Trial is presently scheduled to conclude.'' 
Therein, Respondents ``stipulated and agreed that any continuance of 
the Russell Circuit Court trial beyond October 10, 2008 will not be 
a basis to extend the stay of proceedings, should the Administrative 
Judge grant this motion and order the requested stay of 
proceedings.'' Motion for Stay, at 3. Having made this 
representation, Respondents cannot now complain that the ALJ 
eventually lifted the stay.
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    Respondents acknowledge that `` `as a general matter, due process 
is not infringed merely because an accused person is subjected, without 
his consent, to an administrative hearing concerning matters involved 
in a pending criminal proceedings.' '' Id. at 9 (quoting 628 F.2d at 
1376 n.21). However, Respondents point to Dresser Industries' further 
dictum that ``an administrative proceeding can in some circumstances 
prejudice the rights of a citizen or the government,'' and that `` 
`[i]n such cases the agencies and courts may have a duty to take 
appropriate correction action.' '' Id. Thus, they argue that Leon 
Grider's decision ``not to testify in this proceeding should not be 
used against the Respondents in any way in these proceedings,'' and 
that ``having declined to continue these proceedings despite Leon 
Grider facing two pending state criminal indictments, this tribunal 
cannot in turn penalize Leon Grider for declining to testify in this 
hearing.'' Id.
    Respondents' argument gives no reason to reject the ALJ's 
conclusions.\97\ The Fifth Amendment protects a witness only from being 
compelled to testify against himself. Notably, the Government did not 
call Leon Grider as a witness, and in any event, the Fifth Amendment 
privilege is not ``a sword whereby a claimant asserting the privilege 
[is] freed from adducing proof in support of a burden which would 
otherwise have been his.'' United States v. Rylander, 460 U.S 752, 758 
(1983). See also MacKay, 664 F.3d at 820 (quoting Keating v. Office of 
Thrift Supervision, 45 F.3d 322, 326 (9th Cir. 1995)).
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    \97\ As Dresser Industries notes, ``[t]he civil and regulatory 
laws of the United States frequently overlap with the criminal laws 
creating the possibility of parallel [administrative] and criminal 
proceedings, either successive or simultaneous'' and that ``[i]n the 
absence of substantial prejudice to the rights of the parties 
involved, such parallel proceedings are unobjectionable.'' 628 F.2d 
at 1374. As the D.C. Circuit observed: ``[t]he Constitution * * * 
does not ordinarily require a stay of civil proceedings pending the 
outcome of criminal proceedings.'' Id. at 1375.
     While the D.C. Circuit further explained that ``the strongest 
case for deferring civil proceedings is where a party under 
indictment for a serious offense is required to defend a civil or 
administrative action involving the same matter,'' the potential 
harm to a party's Fifth Amendment privilege is just one of four 
reasons which may justify staying the noncriminal proceeding. Id. at 
1375-76. Continuing, the court explained that ``[i]f delay of the 
noncriminal proceedings would not seriously injure the public 
interest, a court may be justified in deferring it.'' Id. (emphasis 
added).
     It is, of course, commonplace that matters involving DEA 
registrants will lead to both a revocation proceeding and a criminal 
investigation and subsequent charges at either the federal or state 
level. Moreover, the very purpose of a proceeding brought under 21 
U.S.C. 823(f) and 824(a)(4) is to protect the public interest.
     Here, it is noted that the ALJ did stay the proceeding for 
approximately nine months (between June 2008 and March 2009). 
Moreover, even after the stay was lifted, the actual hearing did not 
commence until August 11, 2009, five months later, and Respondents 
did not start putting on their case until December 2009. At that 
point, the two criminal cases against Leon Grider had been pending 
since August 2005, and thus for more than four years.
     It is further noted that during the period of the stay, 
Respondents continued diverting controlled substances. Thus, the 
delay of this proceeding did cause serious injury to the public 
interest. As this case demonstrates, under Dresser, a stay of a DEA 
revocation proceeding brought under section 824(a)(4) is unlikely to 
ever be justified.
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    As explained above, it is settled that where the Government has 
established a prima facie case, ``the burden shifts to the [registrant] 
to show why [its] continued registration would be consistent with the 
public interest.'' MacKay, 664 F.3d 817 (citing cases). Because 
Respondents have failed to rebut the Government's prima facie case, I 
will revoke the existing

[[Page 44105]]

registration of Grider Drug 1 and deny the pending application 
of both Grider Drug 1 and Grider Drug 2.\98\
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    \98\ Respondents further contend that an email from the 
supervisory DI to the DI he initially assigned to conduct the 
investigation, evidences ``bad faith or malicious government 
tactics'' and that the tribunal therefore has ``a duty to take 
appropriate corrective actions'' to ensure that Leon Grider's 
decision not to testify, because of the two state criminal cases, is 
not used against Respondents ``in any way.'' Resp. Exceptions at 10 
(citing RX 103) (emphasis added).
     In support of their contention, Respondents quote the following 
paragraph from an email the supervisory DI wrote to his subordinate, 
who had expressed concern as to whether she could handle the matter:
    All we need to do with [Leon Grider] is document how many 
scripts are bad for possible criminal sanctions, how many civil 
violations he has for nonconformance and a fine, and what we intend 
to do when we have the full picture (revocation/suspension/etc.). It 
will just take a while, that's all. He got off the hook before. We 
will not give him the opportunity this time. We cannot cut corners 
with him. We will drown him in violations. The more concrete the 
violation, the better.
    Id. (quoting RX 103).
     This email does not even remotely establish bad faith or 
malicious intent on the part of the supervisory DI. Indeed, in a 
subsequent portion of the email, the supervisory DI told his 
subordinate to ``look[] for bogus scripts, unauthorized refills, and 
failure to comply with prescriptions requirements, such as refilling 
schedule II's,'' each of which constitutes a violation of the CSA. 
RX 103. He then instructed her ``to be methodical. Pick a doctor 
with lots of scripts and question them. Record the bad ones and 
write a report. Look at whether any of these were filled early per 
KASPER, per early refill book, that would confirm fraudulent 
reporting.'' Id.
     Notably, nowhere did the supervisory DI instruct his 
subordinate to find violations even in the absence of probable cause 
or to violate Leon Grider's constitutional rights. And ultimately, 
Respondents were allowed to test the Government's evidence with 
respect to every violation of the CSA which it alleged. Likewise, 
each of the two state criminal proceedings was initiated by 
indictment, which requires a finding of probable cause.
     I therefore reject Respondent's contention that it was improper 
for the ALJ to rely on Leon Grider's silence in concluding that 
Respondents had not rebutted the Government's prima facie case.
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Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 
824(a)(4), as well as 28 CFR 0.100(b), I order that DEA Certificate of 
Registration AG3498347, issued to Grider Drug 1, be, and it 
hereby is revoked. I further order that any pending applications of 
Grider Drug 1 and Grider Drug 2, be, and they hereby 
are, denied. This Order is effective immediately.\99\
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    \99\ Based on the extensive and egregious acts of diversion 
proved on this record, I concluded that the public interest 
necessitates that this Order be effective immediately. See 21 CFR 
1316.67.

    Dated: July 13, 2012.
Michele M. Leonhart,
Administrator.
[FR Doc. 2012-17973 Filed 7-25-12; 8:45 am]
BILLING CODE 4410-09-P