The Medicine Shoppe; Decision and Order, 59504-59517 [2014-23473]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 79, Number 191 (Thursday, October 2, 2014)]
[Notices]
[Pages 59504-59517]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-23473]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 14-01]


The Medicine Shoppe; Decision and Order

    On March 24, 2014, Administrative Law Judge Gail A. Randall issued 
the attached Recommended Decision. Respondent filed Exceptions to the 
Recommended Decision.
    Having reviewed the entire record including Respondent's 
Exceptions, I have decided to adopt the ALJ's findings of fact, 
conclusions of law, and recommended order. A discussion of Respondent's 
Exceptions follows.

Respondent's Exceptions

    Respondent raises twelve different exceptions to the ALJ's decision 
in no logical order. His contentions can be summarized as follows:
    (1) That the ALJ failed to consider less punitive sanctions than 
revocation;

[[Page 59505]]

    (2) that the ALJ improperly rejected his evidence of remedial 
measures by requiring him to produce corroborating evidence because she 
failed to rule on the Government's motion in limine and never granted 
him permission to introduce such evidence;
    (3) that the ALJ ``imposed an undefined and vague standard of 
proof'' on the issue of his remedial measures because she rejected his 
testimony in the absence of corroborating evidence;
    (4) that the ALJ improperly relied on the testimony of the 
Government's Expert for various reasons and thus made multiple findings 
which are unsupported by substantial evidence (exceptions 4-6, 8);
    (5) that the ALJ's application of the public interest factors is 
unsupported by substantial evidence and is arbitrary and capricious;
    (5) that the ALJ's findings of fact and conclusions of law 
regarding Respondent's employment of a convicted drug felon are 
unsupported by substantial evidence;
    (6) that the ALJ's findings of fact and conclusions of law 
regarding Respondent's recordkeeping deficiencies are unsupported by 
substantial evidence;
    (7) that the ALJ's findings of fact and conclusions of law 
regarding Respondent's audit and inventory deficiencies are unsupported 
by substantial evidence; and
    (8) that his acceptance of responsibility and evidence of remedial 
measures renders his continued registration consistent with the public 
interest.

Resp. Exceptions, at 5-26. Notwithstanding the order in which 
Respondent presents his exceptions, I first address his challenges that 
the ALJ's findings of various violations are unsupported by substantial 
evidence.

Challenges to the Substantiality of the Evidence

    At the hearing, the Government alleged that Respondent (through its 
pharmacists) violated its corresponding responsibility under the 
Controlled Substances Act (CSA) by dispensing prescriptions that lacked 
a legitimate medical purpose, see 21 CFR 1306.04(a), as well as 
prescriptions that did not comply with 21 CFR 1306.05(a) because they 
were missing required information such as addresses and/or were not 
signed by the prescribing practitioner. As support for the allegations, 
the Government introduced several hundred controlled substance 
prescriptions, and elicited the testimony of an Expert witness in 
pharmacy practice.
    Respondent asserts that the Government's Expert was not competent 
to testify as an Expert because, while she teaches a class in pharmacy 
law, ``on cross-examination . . . she could [not] name the federal and 
state statutes that govern the standards she applied when rendering her 
expert opinion.'' Exceptions, at 13. Respondent contends that ``[t]hese 
are of course the Federal Controlled Substances Act and the Texas 
Controlled Substances Act found in the Texas Health & Safety Code'' and 
that ``[i]t defies logic how [she] could be legitimately regarded as an 
expert in the field of pharmacy law and retail pharmacy.'' Id.
    It is true that the Expert stated that ``I can't answer that'' when 
asked what the federal and state statutes were called. However, she 
then testified that ``It's just federal law and Texas law that we use 
to apply. For the exact statute or standard number and heading, I 
cannot recall.'' Tr. 71. And on further questioning, the Expert 
explained that ``we don't teach the numbers. If you ask most 
pharmacists, I don't think that they would be able to tell you the 
statute or the standard number, but they would be able to recite the 
law to you and how it is applied to pharmacy practice.'' Id. Thus, read 
in its entirety, the transcript shows that the Expert interpreted the 
question as asking for the specific section numbers of the relevant 
provisions of the CSA and State law, and not for the name of the 
respective statutes.
    Moreover, Respondent does not identify any testimony on the part of 
the Expert which is inconsistent with the decisional law of either the 
courts or this Agency. I thus reject Respondent's Exception (Number 
Five) that the Government's Expert was not qualified to testify as an 
Expert in pharmacy law and practice.\1\
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    \1\ Respondent also contends that the ALJ overlooked the 
Expert's testimony that: she ``is only a fill-in part-time pharmacy 
at Walgreens and rarely works at the VA so she has no real 
applicable experience to assist the ALJ in understanding whether or 
not Respondent's errors were to such a degree as to support the 
decision that its continued registration is inconsistent with the 
public interest and should therefore be revoked.''
    Exceptions, at 13. Respondent does not, however, cite to where 
in the transcript the quoted testimony occurred, and while the 
Expert acknowledged that she works as a relief pharmacist, at no 
point did she testify that ``she has no real applicable experience 
to assist the ALJ in understanding whether . . . Respondent errors 
were to such a degree as to support'' the ALJ's ultimate conclusion 
of law. I thus reject this contention.
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    Respondent also takes exception to the ALJ's reliance on the 
Expert's testimony when she found that Respondent violated its 
corresponding responsibility when it failed to verify the validity of 
154 prescriptions it dispensed which presented red flags. Exceptions, 
at 11-12. According to Respondent, the ALJ should have rejected the 
Expert's testimony because during cross-examination, it was established 
that she was provided with ``photocopies of one side of the 
prescriptions, instead of both sides which included the data she 
claimed was missing.'' Exceptions, at 12. Moreover, Respondent contends 
that included in the exhibits was a spreadsheet which listed ``the 
prescriptions and a description of what finding its expert was to make 
regarding each prescription.'' Id. Respondent then argues that the 
Expert ``testified she never asked for any other information about the 
prescriptions and simply endorsed the findings provided to her by the 
Government'' while its owner ``testified to the resolution of those 
`red flags' but his testimony was INEXPLICABLY rejected in favor of 
[that of] the Government's expert.'' Id.
    No citations to the record are provided to support Respondent's 
assertions that the Expert was provided with only one side of the 
prescriptions. Indeed, the prescriptions submitted for the record 
include a photocopy of the front of the prescription and the back on 
which the dispensing labels were placed. See Tr. 72-73 (Expert's 
testimony that the second page of the prescription ``was provided with 
all of the prescriptions.''). Thus, Respondent's assertion is a blatant 
mischaracterization of the record.
    Nor is there any evidence to support the contention that the Expert 
``simply endorsed the findings provided to her by the Government'' on a 
spreadsheet. Here again, there is no reference to this in the 
transcript, and even assuming that there was such a spreadsheet, the 
Expert fully explained the basis for her conclusions as to why the 
prescriptions she was asked about raised various red flags. These 
included that: (1) The patient's address was missing on some 169 
prescriptions; (2) 98 prescriptions contained a stamped signature 
rather than the prescriber's actual signature; (3) the prescribers' DEA 
numbers were missing or incorrect on 33 prescriptions; (4) the name of 
the physician on the label was different from the name of the actual 
prescriber on 157 of the prescriptions; (5) several doctors were 
prescribing drug cocktails of narcotic and benzodiazepines; (6) a 
patient was prescribed a narcotic cough syrup in an amount that far 
exceeded the quantity ordinarily prescribed in the course of legitimate 
medical treatment; (7) some patients filled prescriptions for 
duplicative narcotics such as

[[Page 59506]]

hydrocodone tablets and hydrocodone cough syrup; (8) some patients only 
filled narcotic prescriptions and not their prescriptions for non-
controlled drugs; (9) at least 22 times, Respondent returned the 
original prescription to a patient notwithstanding that it had filled 
the controlled substances and typically made no marking as to what it 
had filled on the returned prescription; (10) Respondent disregard 
physician's instructions to either fill all the prescriptions or none 
of them; (11) Respondent filled prescriptions in which the number of 
refills was left blank; and (12) and in five instances, the 
prescriptions had not been signed by the prescriber. R.D. at 10-12.
    The Government's Expert further testified that it is the usual 
custom in pharmacy practice for a pharmacist to document his/her 
attempts to resolve red flags on the face of the prescription. Tr. 33. 
However, the Expert found no evidence that this occurred with respect 
to any of these prescriptions. Id.
    In his sixth exception, Respondent contends that the ALJ's 
recommended sanction of revocation is arbitrary and capricious because 
it is ``unsupported by substantial evidence of egregious and 
intentional diversion.'' Resp. Exceptions, at 13-14. Putting aside for 
the moment whether this is so, Respondent correctly notes that this 
Agency considers the egregiousness and degree of culpability of a 
Registrant's misconduct in making the public interest determination. 
However, this Agency has long held that ``[j]ust because misconduct is 
unintentional, innocent, or devoid of improper motivation, [this] does 
not preclude revocation or denial. Careless or negligent handling of 
controlled substances creates the opportunity for diversion and [can] 
justify revocation or denial.'' Paul J. Caragine, Jr., 63 FR 51592, 
51601 (1998).
    In any event, there is ample evidence of egregious misconduct 
including evidence that supports the inference that Respondent engaged 
in the intentional or knowing diversion of controlled substances. Here, 
the evidence shows that the Government conducted an audit of 
Respondent's handling of controlled substances which revealed massive 
shortages of multiple controlled substances. More specifically, the 
Government's audit, which covered slightly more than a one-year period, 
showed that Respondent had a shortage of 27,334 milliliters (929 
ounces) of promethazine with codeine cough syrup (a schedule V drug); a 
shortage of 3,445 hydrocodone 10mg tablets (a schedule III drug), and 
shortages of 43,359 alprazolam 1mg and 7,769 alprazolam 2mg tablets 
(schedule IV).\2\ Tr. 138-40; GX 13.
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    \2\ The Government's evidence also showed that Respondent had 
overages of 445 tablets of methadone 10mg; 1,508 tablets of 
hydrocodone 5mg; and 18,721 of hydrocodone 7.5mg. Tr. 138-40; GX 13.
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    These shortages are extraordinary and support a finding of massive 
and egregious recordkeeping failures on Respondent's part. This alone 
supports a finding that Respondent violated the Controlled Substances 
Act, which requires the maintenance of ``complete and accurate'' 
inventories, as well as a ``complete and accurate record of each 
substance . . . received, sold, delivered or otherwise disposed of.'' 
21 U.S.C. 827(a). And while later in his Exceptions, Respondent takes 
issue with the ALJ's findings regarding the audit, arguing that ``[t]he 
ALJ presumes these audit results are the correct and final tallies,'' 
Exceptions, at 24; notably, Respondent put forward no evidence that 
calls into question the validity of the audit's findings.
    Moreover, the quantities involved support the inference that 
Respondent was engaged in the intentional diversion of controlled 
substances, given that it has put forward no evidence to provide a 
plausible explanation for the shortages.\3\ And even if the Government 
proved no other violations, ``the audit results alone are sufficient to 
satisfy the Government's prima facie burden of establishing that 
Respondent's registration would be `inconsistent with the public 
interest.''' Fred Samimi, 79 FR 18698, 18712 (2014) (quoting 21 U.S.C. 
823(f)); see also Medicine Shoppe-Jonesborough, 73 FR 364, 386 (2008).
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    \3\ Indeed, Respondent notes that the pharmacy has no ``history 
of break-ins or burglaries.'' Exceptions, at 15 (citing Tr. 157-58). 
Thus, theft is not a plausible explanation for the massive 
shortages.
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    Nor is this the only evidence that supports a finding that 
Respondent engaged in intentional diversion. Rather, the Government 
showed that Respondent filled drug cocktails of narcotics such as 
hydrocodone, benzodiazepines such as alprazolam (Xanax), and Soma 
(carisoprodol).\4\ Indeed, the Government's evidence showed that with 
respect to patient B.B., Respondent filled prescriptions she presented 
on a single day for 90 Norco (hydrocodone/apap) 10/325, 90 Xanax 1mg, 
90 Soma 350mg, and four ounces of promethazine with codeine cough 
syrup.\5\ GX 3, at 19-20. Moreover, the prescription B.B. presented did 
not include her address, a violation of 21 CFR 1306.05(a).\6\ Id. at 
19. B.B. was allowed to take the original prescription, notwithstanding 
that DEA's regulations require that the prescription be filed and 
maintained by the pharmacy. 21 CFR 1306.24(d). Finally, the evidence 
suggests that notwithstanding that B.B. had filled four of the five 
prescriptions on the form, no marking was made on the returned 
prescription to indicate that Respondent had dispensed the Norco, 
Xanax, Soma and promethazine with codeine prescriptions. See Tr. 53-54 
(Expert's testimony that where Respondent returned the original 
prescription after dispensing controlled substances and did not mark 
through the drug or note the dispensing on the prescription, this 
``allows the patient to refill the same two medications again at 
another pharmacy'').
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    \4\ In decisions published before Respondent dispensed the 
prescriptions at issue here, DEA had discussed the abuse of drug 
cocktails which included hydrocodone, alprazolam, and carisoprodol. 
See East Main Street Pharmacy, 75 FR 66149, 66158 (2010) (testimony 
of expert in pharmacy that ``[i]t is well known in the pharmacy 
profession [that] the combination of a benzodiazepine, narcotic pain 
killer, and Soma [is] being used by patient abusing prescription 
drugs''); Paul Volkman, 73 FR 30630, 30637 (2008) (testimony of 
medical expert that ``prescrib[ing] drug cocktails . . . often 
including an opioid, . . . a benzodiazepine and Soma . . . greatly 
increased the chance for drug abuse, diversion, [and]/or 
addiction''). See also George C. Aycock, 74 FR 17529, 17531 n.4 
(2009); Your Druggist Pharmacy, 73 FR 75774, 75775 n.1 (2008).
    \5\ The prescriptions were written on a single form, and also 
included a prescription for Lyrica which B.B. did not fill. GX 3, at 
19-20.
    \6\ The labels for the dispensed prescriptions list B.B.'s 
address as being in Austin, Texas, which is some distance from San 
Antonio. GX 3, at 20.
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    There were also multiple other instances in which patients 
presented prescriptions for a similar drug cocktail of hydrocodone, 
alprazolam, and carisoprodol, and Respondent filled at least some of 
the prescriptions. See GX 3, at 43 (Rx for J.F., with no patient 
address, for 240 Norco 10mg, 60 Xanax 1mg, 120 Soma 350mg); id. at 47 
(Rx to J.G., with no patient address, for 60 Vicodin Extra Strength, 60 
Xanax 1mg, and 60 Soma); id. at 66-67 (Rx to K.J., with no patient 
address, for 90 Norco 10mg, 90 Xanax 1mg; 30 Soma; and 4 ounces of 
Tussionex (hydrocodone) cough syrup).; id. at 76 (Rx to S.J., with no 
patient address, for 240 Norco 10mg, 90 Xanax 1mg; 120 Soma 350mg, and 
120 ml of phenergan with codeine); id. at 78 (Rx to B.M., with no 
patient address, for 60 hydrocodone 10/325mg, 60 alprazolam 1mg, 60 
Soma 350mg, and 4 ounces of promethazine with codeine); id. at 90 (Rx 
to D.R., with no patient address, for 90 Vicodin 10/500, 60 Xanax 2mg, 
60 Soma 350mg, and 4 ounces of Tussionex).
    There were also other prescriptions which Respondent filled,

[[Page 59507]]

notwithstanding that they provided for duplicative therapy of both 
hydrocodone tablets and narcotic cough syrups, such as Tussionex, which 
contains hydrocodone; Promethazine with codeine; and Cheratussin AC, a 
cough medicine which also contains codeine. Here again, the Expert 
noted that these prescriptions presented red flags which should have 
been resolved before dispensing the drugs because they contain ``the 
same ingredient or drug.'' Tr. 44-45. However, there was no evidence 
that Respondent's pharmacist even attempted to resolve the red flag. 
Id. at 45.\7\ See also GX 3, at 13 (Tussionex and hydrocodone/apap 10/
500); id. at 55 (Tussionex and Vicodin 10/500 along with Xanax); id. at 
57 (Tussionex, Norco 10/325, and Xanax); id. at 60-65 (promethazine 
with codeine, Norco 10/325, and Xanax 2mg); id. at 70 (Tussionex, Norco 
10/325, and Xanax); id. at 97 (Vicodin 10/500, Tussionex, and Xanax); 
id. at 104 (Norco 10/325, Promethazine with codeine, and Xanax 2mg); 
id. at 107 (Norco 10/325, Promethazine w/codeine, and Xanax).
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    \7\ The Expert also explained that ``hydrocodone is a codeine 
derivative.'' Tr. 44.
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    As it did with B.B., in several instances Respondent returned the 
original prescriptions to the patient and did so without making any 
markings or notes indicating that it had dispensed some of the 
controlled substances. See Tr. at 53-54. For example, M.F. presented 
prescriptions (all on the same form) which authorized the dispensing of 
both 90 alprazolam 1mg and 60 Xanax 1mg (these being the same drug) but 
with different dosing instructions, as well as 240 Norco 10mg. GX 3, at 
41. While Respondent returned the original prescription to M.F., there 
is no indication on the copy it retained that it had noted on the 
original that it had dispensed the 90 tablets of alprazolam. Id. at 41-
42. See also id. at 13 (no marking on Rx indicating dispensing of 
hydrocodone and alprazolam); id. at 43 (no marking on Rx indicating 
dispensing of alprazolam); id. at 70 (no marking on RX indicating 
dispensing of Tussionex); id. at 90 (no marking on Rx indicating 
dispensing of Xanax); id. at 104 (no marking on Rx indicating 
dispensing of alprazolam and promethazine w/codeine).\8\
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    \8\ In another instance in which Respondent return the hard copy 
of a prescription to B.M., there are check marks next to 
hydrocodone, alprazolam, and promethazine, each of which was 
dispensed on the date the prescription was issued. GX 3, at 78. As 
the original prescription is not in the record, it is unknown 
whether these checkmarks were placed on it. However, none of the 
three drugs were lined out and there is no other notation advising 
any subsequent pharmacist to whom B.M. might present the 
prescription that the drugs had been dispensed by Respondent. Id.
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    In still another other instance, Respondent dispensed a 
prescription for a 30-day supply of promethazine with codeine cough 
syrup. GX 4, at 218-19. According to the Expert, cough syrups are 
typically dispensed in 10-14 day quantities ``for the length of the 
cough.'' Tr. 47. Moreover, here again, the prescription did not contain 
the patient's address and was facially invalid. Id. at 47; GX 4, at 
218. Yet there was no evidence that Respondent resolved the red flags 
raised by the prescription. Tr. 47; GX 4, at 218-19.\9\
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    \9\ The prescription also authorized one refill. While there is 
no evidence that Respondent refilled the prescription (as there is 
no label corresponding to a refill on the back of the copy of the 
prescription), as noted above, Respondent had a shortage of more 
than 27,000 milliliters of promethazine with codeine.
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    Accordingly, I reject Respondent's assertion that it's ``misconduct 
cannot be characterized as anything more than negligence.'' Exceptions, 
at 15. Between the shortages of tens of thousands of dosage units of 
controlled substances and the numerous dispensing violations, many of 
which establish that Respondent's pharmacists were engaged in knowing 
or intentional diversion, the Government has more than met is burden in 
showing why Respondent's misconduct is egregiousness enough to warrant 
revocation.\10\
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    \10\ So too, I reject Respondent's eighth exception, in which it 
argues that most of the suspicious prescriptions raised resolvable 
red flags and ``unresolvable red flags were not the type that 
predominated with the Respondent.'' Exceptions, at 18. Notably, as 
the Government's Expert testified, while some of the red flags were 
resolvable, there was no evidence that Respondent's pharmacists ever 
attempted to do so. See generally Tr. 30-69, 75, 82-83, 85. As for 
its contention that prescriptions which raised ``unresolvable red 
flags'' did not ``predominate[]'' at Respondent, suffice it to say 
that there were more than enough of them to conclude that Respondent 
knowingly diverted controlled substances.
    In this exception, Respondent also contends that even the 
Government's Expert acknowledged that sometimes patients may have 
been given drug samples and thus may not need to fill all of their 
prescriptions at that time, as well as that some lower income 
``patients do not have the funds to get both non-controlled and 
controlled substances filled at the same time.'' Exceptions, at 18. 
Putting aside that most of the controlled substances at issue here 
are available as generic drugs, the fact that a patient may not have 
sufficient funds to fill all of his/her prescriptions does not 
excuse Respondent's practice of returning the original prescription 
form to the patient and then failing to mark on the form what drugs 
have been dispensed, thus allowing the patient to present the 
prescription to another pharmacy for filling.
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    Respondent further argues that because it was not subject to an 
immediate suspension of its registration and has been permitted to 
continue to operate since the execution of the Administrative 
Inspection Warrant in October 2011, ``[t]hese factors militate against 
revocation.'' Id. They don't. The decision as to whether to commence a 
proceeding by simply issuing an Order to Show Cause or by issuing an 
Immediate Suspension Order is fully within the Government's 
prosecutorial discretion, subject of course, to the requirement 
applicable to the latter that a finding be made that a registrant's 
continued registration poses ``an imminent danger to the public health 
or safety.'' 21 U.S.C. 824(d). Indeed, as the Supreme Court has made 
clear, ``except for [in] extraordinary situations where some valid 
governmental interest is at stake that justified postponing the hearing 
until after the'' initial deprivation, the Due Process Clause requires 
pre-deprivation process when the Government seeks to terminate a 
property interest. Boddie v. Connecticut, 401 U.S. 371, 379 (1971). 
Beyond this, in an ordinary Show Cause Proceeding, the Government is 
not required to prove that a registrant poses ``an imminent danger to 
the public health or safety,'' but rather, only whether the registrant 
``has committed such acts as would render [its] registration . . . 
inconsistent with the public interest.'' 21 U.S.C. 824(a)(4). This 
standard has clearly been met here.\11\
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    \11\ In his seventh exception, Respondent contends that the 
ALJ's analysis was arbitrary and capricious because she failed to 
consider factor one--the recommendation of the state licensing 
board--and factor three--the registrant's conviction record of 
controlled substances offense. Exceptions, at 16. It is true that 
the ALJ made no findings with respect to either factor. See R.D. at 
21-31.
    For purposes of this review, I have assumed that Respondent 
holds an unrestricted state license. There is, however, no 
recommendation from the Texas State Board of Pharmacy in the record. 
Moreover, even assuming that Respondent retains its state license 
(and that its license is not subject to any restrictions on its 
controlled substance dispensing authority), DEA has repeatedly held 
that while a practitioner's possession of state authority 
constitutes an essential condition for maintaining a registration, 
see 21 U.S.C. 802(21) & 823(f), it ```is not dispositive of the 
public interest inquiry.''' George Mathew, 75 FR 66138, 66145 
(2010), pet. for rev. denied Mathew v. DEA, 472 Fed. Appx. 453, 455 
(9th Cir. 2012); see also Patrick W. Stodola, 74 FR 20727, 20730 
n.16 (2009); Robert A. Leslie, 68 FR 15227, 15230 (2003). As the 
Agency has long held, ``the Controlled Substances Act requires that 
the Administrator . . . make an independent determination [from that 
made by state officials] as to whether the granting of controlled 
substance privileges would be in the public interest.'' Mortimer 
Levin, 57 FR 8680, 8681 (1992). Thus, while Respondent satisfies the 
CSA's requirement that it be currently authorized to dispense 
controlled substances under the laws of the State in which it 
practices pharmacy, this factor is not dispositive either for, or 
against, the continuation of Respondent's registration. Paul Weir 
Battershell, 76 FR 44359, 44366 (2011) (citing Edmund Chein, 72 FR 
6580, 6590 (2007), pet. for rev. denied Chein v. DEA, 533 F.3d 828 
(D.C. Cir. 2008)).
    As for factor three, I find that there is no evidence that 
either Respondent, or its principal, has been convicted of an 
offense related to the manufacture, distribution or dispensing of 
controlled substances. There are, however, a number of reasons why a 
person (whether a corporate entity or natural person) may never be 
convicted of an offense falling under this factor, let alone be 
prosecuted for one. Thus, ``the absence of such a conviction is of 
considerably less consequence in the public interest inquiry'' and 
is not dispositive. Dewey C. MacKay, 75 FR 49956, 49973 (2010), pet. 
for rev. denied MacKay v. DEA, 664 F.3d 808 (10th Cir. 2011).
    I therefore reject Respondent's exception.

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[[Page 59508]]

Exceptions Two and Three--The ALJ's Failure To Rule on the Government's 
Motion in Limine and Rejection of Respondent's Testimony Regarding 
Remedial Measures

    According to Respondent, in its Prehearing Statement and 
Supplemental Prehearing Statement, it provided notice of its intent to 
introduce evidence of its remedial measures. Exceptions, at 5-6. In 
response, the Government filed a Motion in Limine to bar the evidence 
on the ground that because Respondent had provided no notice of its 
intent to accept responsibility for its misconduct, this evidence was 
irrelevant. Id. at 6. Thereafter, Respondent filed a ``Motion for Leave 
to File Second Supplemental Prehearing Statement,'' which included a 
section in which Respondent provided notice to the Government 
``admit[ting] that the Government . . . has met its burden and shown by 
a preponderance of evidence that Respondent has committed acts 
inconsistent with the public interest.'' Response to Gov. Motion in 
Limine and Motion for Leave to File Resp.'s Second Supp. Pre-hearing 
Statement, at 2.\12\
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    \12\ In this pleading, Respondent provided notice that it 
intended to withdraw two witnesses it had previously identified as 
J.A.C. and L.D.A. Resp. to Gov. Mot. in Limine and Motion for Leave 
to File Resp.'s Second Supp. Prehearing Statement, at 5. However, 
Respondent reiterated its earlier notice that it intended to call 
Respondent's owner and pharmacist-in-charge, a second pharmacist-
employee, and a pharmacy technicians, maintaining that ``their 
testimony is relevant and material to show the Respondent will not 
engage in future misconduct.'' Id.
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    According to Respondent, ``the ALJ never ruled on the Government's 
Motion in Limine and never gave [it, i.e., Respondent] permission to 
include in its Prehearing Exhibits any evidence related to the remedial 
measures it had taken since being served with the'' Administrative 
Inspection Warrant. Exceptions, at 6. Respondent maintains that had 
such permission been granted, it would have put forward such evidence 
as its policies and procedures, continuing education certificates, 
evidence of criminal background checks conducted on its employees, and 
its operations manual which includes training of its pharmacists and 
pharmacy technicians in identifying and resolving red flags. Id. at 6-
7. However, it then asserts that because the ALJ ``had not granted [it] 
permission to supplement its [p]rehearing [e]xhibits . . . it was 
consigned to discussing these remedial measure through the sworn 
testimony of'' its owner. Id. Continuing, Respondent asserts that 
because the ALJ ultimately gave little weight to its owner's testimony, 
the ALJ ``put Respondent in an unwinnable situation.'' Id. at 9.
    While it is true that the ALJ did not rule on either the 
Government's motion in limine or Respondent's motion to file a second 
supplemental pre-hearing statement prior to the hearing, I find 
Respondent's argument entirely unpersuasive for several reasons. First, 
Respondent ignores that prior to the ALJ's ruling, it filed a Response 
to the Government's Motion in Limine in which it expressly stated that 
it ``does not intend to introduce any other documentary evidence other 
than that made a part of his'' Supplemental Pre-Hearing Statement. 
Response to Gov't Mot. in Limine, at 5. However, in its Supplemental 
Pre-Hearing Statement, Respondent had proposed to introduce only three 
exhibits: (1) A criminal background check of its employee A.G. from 
2008; (2) a copy of the Texas Board of Pharmacy rule establishing 
disciplinary sanctions on licensees and registrants for various 
criminal offenses (22 Tex. Admin. Code Sec.  281.64); and 3) 
prescription copies (front and back) for nine patients. Resp. 
Supplemental Pre-Hrng. Statement, at 23. While Respondent did introduce 
both the criminal background check on A.G. and the Board of Pharmacy 
rule, neither of these was probative of the issue of whether Respondent 
has undertaken sufficient remedial measures to rebut the Government's 
prima facie case.
    Second, while the ALJ did not rule on either motion prior to the 
hearing, her Order made clear that she would ``decide on the 
admissibility of each piece of evidence as it is offered.'' Order 
Deferring Judgment on Govt. Mot. in Limine and Resp.'s Mot. to File 
Second Supp. Prehearing Statement, at 2. However, at the hearing, 
Respondent did not seek to introduce any documentary evidence other 
than the two exhibits identified above.
    Third, notwithstanding that in its Pre-Hearing Statement, 
Respondent identified two witnesses (A.C., a pharmacist, and R.G., a 
pharmacy tech) in addition to its owner/pharmacist-in-charge, and 
proffered that these witnesses would testify as to various procedures 
being employed by the pharmacy to ensure compliance with federal law, 
see Resp. Pre-Hrng. Statement at 19-21, Respondent did not call either 
person to testify. Notably, in its Response to the Government's Motion 
in Limine, Respondent continued to identify these two witnesses (in 
addition to its owner) as offering ``testimony [that] is relevant and 
material to show the Respondent will not engage in future misconduct.'' 
Resp. to Govt's Motion in Limine, at 5. Thus, even if the ALJ's 
deferral of her ruling created some uncertainty as to whether the 
testimony of these witnesses would be admissible, Respondent's failure 
to call these witnesses constitutes a waiver of the issue.
    Nor do I find merit in Respondent's contention that the ALJ imposed 
on it an undefined and vague standard of proof when she rejected its 
owner's testimony as to several assertions regarding remedial measures 
it had undertaken in the absence of corroborating evidence. Indeed, 
even were I to find some merit to this contention, it would not change 
my ultimate decision, because Respondent ignores that the ALJ also 
questioned the credibility of its owner's testimony regarding his 
acceptance of responsibility. Moreover, my own review of the record 
finds that Respondent's testimony as to his acceptance of 
responsibility is properly described as double talk, because while he 
initially testified that he accepted responsibility for his misconduct, 
on further questioning he denied having ever diverted drugs. So too, 
while the Government put forward Expert testimony that there were 
numerous prescriptions which raised red flags and which should not have 
been filled, either because Respondent never attempted to resolve the 
red flag (if it was resolvable) or the red flags were not resolvable, 
Mr. Lewka nonetheless maintained that there were no prescriptions which 
Respondent should not have filled.
    While the ALJ noted that on direct examination, Mr. Lewka took full 
responsibility for its misconduct, she further found that on cross-
examination, ``he presented testimony inconsistent with other testimony 
in the record.'' R.D. at 29. As support, the ALJ specifically noted Mr. 
Lewka's testimony regarding the hiring of A.G. to work as a driver 
delivering prescriptions, including controlled substance prescriptions. 
Id.; see also Tr. 127. As explained above, this was a violation of DEA 
regulations. See 21 CFR 1301.76(a). According to A.G., he told Mr. 
Lewka that he had a felony conviction for distributing controlled 
substances before he started working for Respondent. Tr. 16. Mr. Lewka 
denied

[[Page 59509]]

this, id. at 200-01, even though the evidence showed that Lewka told 
A.G. to obtain his criminal history and A.G. obtained a letter from the 
San Antonio, Texas Police Department, which while showing that he had 
not been arrested by San Antonio police, explicitly stated that the 
``background check does not include [the] Bexar county Sheriff['s] 
Office, other cities, counties or states.'' RX 1.\13\
---------------------------------------------------------------------------

    \13\ In his ninth exception, Respondent challenges the ALJ's 
finding that it violated DEA regulations because it employed a 
person with a felony drug conviction as its delivery driver. 
Exceptions, at 19-23. While Respondent does not dispute that this 
was a violation of a DEA regulation, it argues that the ALJ acted 
arbitrarily and capriciously because she ``placed great emphasis'' 
on the violation, which it maintains was unintentional. Id. at 19-
20. It further maintains that the former employee ``lied during his 
testimony and stated that he informed [Respondent's owner] at the 
time he was hired as a delivery driver in 2008 that he had a felony 
conviction for a drug offense.'' Id. at 20.
    To the extent the ALJ found credible the former employee's 
testimony that he had told Respondent's owner about his felony drug 
conviction at the time of his employment interview, see R.D. at 29, 
I adopt her finding. Indeed, the evidence showed that following the 
interview, Respondent directed the employee to obtain his criminal 
history. Thus, there was obviously some discussion between the 
employee and Respondent's owner as to the former's criminal history.
    Most significantly, the report which was provided by the San 
Antonio Police Department clearly indicated that it was limited to 
the Police Department's records and did not include the records of 
the ``Bexar County Sheriff,'' as well as others cities, counties or 
states. RX 1. Given this disclaimer, Respondent cannot credibly 
claim that he was duped when the report came back negative for any 
criminal history. See Exceptions at 21 (asserting that Respondent's 
owner ``was duped and did not know that the Bexar County Sheriff's 
Department criminal records check would not contain all of A.G.'s 
criminal history''). Moreover, as the employer, Respondent's owner 
was the person responsible for conducting a proper background check. 
Thus, even if his failure to perform a proper background check does 
not rise to the level of an intentional violation of the regulation, 
it was still properly considered by the ALJ as evidence of his 
compliance with applicable laws related to controlled substances. 
See 21 U.S.C. Sec.  823(f)(4). Notably, the ALJ did not state that 
this violation alone was sufficient to warrant the revocation of 
Respondent's registration. Nor do I. I thus reject this exception. 
---------------------------------------------------------------------------

    Moreover, a DEA Investigator credibly testified that she had told 
Mr. Lewka that A.G. had a felony conviction in July of 2013. R.D. at 14 
(citing Tr. 132). Mr. Lewka continued to employ A.G. until September 
2013, Tr. 14, maintaining that DEA did not tell him that A.G. was a 
convicted felon until September 2013. Id. at 204; see also R.D. at 29.
    As another example of his inconsistent testimony regarding his 
acceptance of responsibility, the ALJ relied on Mr. Lewka's testimony 
regarding Respondent's handling of various prescriptions, which 
contained prescriptions for both controlled and non-controlled drugs 
and which were stamped by the physician's instruction to the pharmacy 
to fill ``all or none'' of the prescriptions. The Government produced 
evidence showing that in several instances, Respondent had dispensed 
only the controlled substances and/or disregarded the physician's 
instruction to fill ``all or none.'' See GX 3, at 15, 17, 55, and 96.
    As for Mr. Lewka's testimony regarding this conduct, the ALJ found 
that he ``seemed to deny that there was any misconduct when the 
prescription contained both controlled substances and non-controlled 
substances,'' or included the physician's instruction to fill ``all or 
none'' of the prescriptions'' and ``was filled by only distributing the 
controlled substances.'' R.D. at 29. As the record shows, the 
Government specifically asked Mr. Lewka regarding a prescription for 
three drugs, including promethazine with codeine cough syrup, issued to 
patient L.B. which was stamped in two places with the instruction ``ALL 
OR NONE.'' Tr. 206; GX 3, at 15. The evidence further showed that 
Respondent dispensed only the promethazine with codeine. See GX 3, at 
16.
    When asked if he had disobeyed the prescribing physician's 
instructions, Mr. Lewka asserted: ``[t]hat's not true'' because he had 
personally called the physician. Tr. 206. When then asked why there was 
no such note on the prescription,\14\ Mr. Lewka asserted that the note 
was ``on the computer'' and that one of the Agency's Investigators 
``was supposed to access what we have in the computer that attached to 
most of these prescriptions.'' Id. at 207. However, when the Government 
pointed out that the Show Cause Order had specifically alleged that 
Respondent's dispensing of this prescription was unlawful, Mr. Lewka 
asserted that he didn't know that he would have to bring his computer 
notes. Id. at 207-08.
---------------------------------------------------------------------------

    \14\ The Government's Expert testified that a red flag is raised 
when a customer presents a prescription for both controlled and non-
controlled drugs but requests that the pharmacy fill only the 
controlled substances. Tr. 32-33. She further testified that the 
resolution of the red flag would be documented ``directly on the 
hard copy prescription and possibly in the patient's profile.'' Id. 
at 33.
---------------------------------------------------------------------------

    When the Government again asked Mr. Lewka whether he was accepting 
responsibility, he asserted that he was ``accepting responsibility, but 
. . . was explaining what I did on the process.'' Id. at 210. However, 
when the Government again asked whether he had disobeyed the doctor's 
``all or none'' instruction, Mr. Lewka again asserted that he had 
talked to L.B.'s doctor. As for what L.B.'s doctor told him, Mr. Lewka 
replied:

    Well, he said one of the problems he having [sic] is he put them 
in to see if they'll get them, but if they don't have insurance, 
than they should get what they want. I told him personally, I said, 
[q]uit having your employee stamp the prescriptions; it's affecting 
the customers. He said, [t]hat's the procedure we do here, and 
they're supposed to fill the prescriptions at that doctor's 
pharmacy, and I don't know why they brought them out. That's what he 
told me. And he make me have some of them come back with the 
prescriptions.

Tr. 210.
    Noting that Respondent failed to produce any evidence to support 
Mr. Lewka's claim that he had called the physician who approved his 
filling only the promethazine, the ALJ concluded that ``[t]his 
inconsistent testimony certainly calls into question [his] genuine 
remorse for the misconduct proved by the Government.'' R.D. at 29. 
Indeed, on this issue, Mr. Lewka testified out of both sides of his 
mouth, and as ultimate factfinder, see 5 U.S.C. Sec.  557(b), I do not 
believe his testimony that a physician who had previously instructed 
the pharmacist to fill ``all or none'' of a prescription, would then 
tell the pharmacist that the patient ``should get what they want.''
    Moreover, while Mr. Lewka offered a generalized acceptance of 
responsibility to the allegations, other portions of his testimony 
demonstrate that he is not sincerely remorseful. When asked by his 
counsel to explain his professed understanding of ``the importance of 
avoiding diversion'' and why this Agency is concerned with diversion, 
Mr. Lewka testified:

    Well, that the cocktail medication that you fill in the pharmacy 
has to be for good legitimate reasons, and diversion is costing the 
country and everybody a lot of problems. There's a lot of drug 
addicts out there, but I never do diversion at Medicine Shoppe. I 
never knew that some of the things they said on the paper was 
diversion. I looked at it. It's not diversion at that point, because 
I've already talked to the doctor. I know the patient, and I also do 
what they want us to do now, making sure that you are also liable 
for what the patient is doing.
    But diversion is when multiple patients . . . bring cocktail 
medication, like controlled substances, Xanax, Soma, hydrocodone, 
all in one prescription, scripts, with the intent to--like in this 
case, if Dr. [L] give me a prescription with all the same patients 
have the same prescriptions, and they brought it to the pharmacy, 
and we were filling it, we made a lot of calls to him, especially 
those that work for him, all they say, That's what the doctor wants, 
and that's how the doctor write his prescriptions.

Tr. 197 (emphasis added). Unexplained by Mr. Lewka is why, if he never 
does

[[Page 59510]]

diversion, he even offered his token acceptance of responsibility. So 
too, in Mr. Lewka's view, only when drug cocktails of Xanax, Soma 
(carisoprodol) and hydrocodone are prescribed to multiple patients are 
the prescriptions being diverted; thus, if a single patient presents 
these prescriptions, it is not diversion and is appropriate to fill the 
prescriptions. And as long as the doctor's staff says that a cocktail 
of these three drugs is ``what the doctor wants, and that's how the 
doctor write his prescriptions,'' it is appropriate to fill the 
prescriptions.
    This view, however, has been squarely rejected by both the federal 
courts and this Agency. See United States v. Hayes, 595 F.2d 258, 261 
(5th Cir. 1979) (``Verification by the issuing practitioner on request 
of the pharmacist is evidence that the pharmacist lacks knowledge that 
the prescription was issued outside the scope of professional practice. 
But it is not an insurance policy against a fact finder's concluding 
that the pharmacist had the requisite knowledge despite a purported but 
false verification.''); United States v. Seelig, 622 F.2d 207, 213 (6th 
Cir. 1980) (upholding jury instruction that knowledge may be inferred 
from evidence that pharmacists ``deliberately close their eyes to what 
would otherwise be obvious to them''); Holiday CVS, L.L.C., d/b/a CVS 
Pharmacy Nos. 219 and 5195, 77 FR 62315, 62322 n.26 (2012) (noting that 
``for more than thirty years (if not longer), it has been settled law 
that a pharmacist can be held liable for violating 21 CFR 1306.04(a) 
even if he calls the prescriber and verifies the prescriptions''); 
Ralph J. Bertolino, 55 FR 4730 (1990).
    Moreover, when asked whether there were ``any specific 
prescriptions'' which the Government's Expert opined should not have 
been filled, which he ``agree[d] should not have been filled,'' Tr. 
219, Respondent again offered testimony inconsistent with his earlier 
statement that he accepted responsibility. He testified that:

    There's no prescription that she said that I shouldn't have 
filled that I looked at it from her point of view. But most of the 
things she said was factual. But not filling the prescriptions--I 
know the prescription; I know the doctors; I know the patients more 
than she does, so she was looking at it from somebody who do relief. 
I don't relieve. I'm a regular pharmacist on this station, so I know 
most of my customers.

Tr. 219-20 (emphasis added).
    However, as explained above, the Expert identified twelve different 
issues with the prescriptions Respondent filled. These include, inter 
alia, that various prescriptions were missing the patient's address; 
some prescriptions bore a stamped signature rather than the 
prescriber's actual signature; some prescriptions were entirely missing 
the prescriber's signature; some prescriptions were missing the 
prescriber's DEA number; some labels bore a different prescriber name 
than that of the actual prescriber; some doctors were prescribing drug 
cocktails of narcotics, benzodiazepines, and carisoprodol; some 
patients were filling prescriptions for duplicative narcotics such as 
hydrocodone tablets and hydrocodone cough syrups; and a prescription 
for a narcotic cough syrup authorized the dispensing of a quantity of 
the drug that far exceeded the quantity ordinarily prescribed in the 
course of legitimate medical treatment. Finally, Respondent filled 
controlled substance prescriptions for multiple patients and then 
returned the original prescriptions to the patients without making any 
marking on the original prescriptions that a controlled substance had 
been dispensed, thus allowing the patients to obtain the same drug at a 
second pharmacy.\15\
---------------------------------------------------------------------------

    \15\ In his tenth exception, Respondent maintains that his 
recordkeeping deficiencies ``were situational and the result of the 
turbulent and catastrophic demise and ultimate death of Mr. Lewka's 
wife.'' Exceptions, at 23. The record is, however, devoid of any 
evidence to support this contention.
     Respondent also argues that his recordkeeping errors are not 
sufficiently egregious to warrant revocation. Id. (citing Terese, 
Inc., d/b/a Peach Orchard Drugs, 76 FR 46483, 46848 (2011)). 
Respondent also cites Howard N. Robinson, 79 FR 19356 (2014) (in his 
eleventh exception), apparently arguing that the audit results 
should be considered along with the evidence as to their underlying 
cause.
     As for the first contention, in Terese, the Government put 
forward no evidence that it had done an audit and found that the 
pharmacy could not account for the controlled substances it handled, 
and the three recordkeeping violations that were proved were 
comparatively minor and corrected as soon as they were brought to 
the attention of the pharmacist. See 76 FR at 46848. So too, while 
in Robinson, the Administrator rejected the Government's contention 
that the audit results warranted the revocation of his registration, 
she noted that the ALJ had found that the physician had put forward 
credible evidence that the shortages were the result of diversion 
which was committed by ``a rogue employee, who happened to be a 
convicted drug smuggler,'' who was hired by the physician's employer 
and not the physician, and had since been terminated. 79 FR at 
19357. Moreover, the Administrator noted that the physician's 
misconduct was merely negligent, that he ``fully accepted 
responsibility and demonstrated that he [wa]s not likely to commit 
similar omissions in the future.'' Id. By contrast, in this matter, 
Respondent has failed to offer any explanation as to the likely 
cause of the massive shortages found during the audit, and while 
Respondent contends that the ALJ ignored evidence that Mr. Lewka had 
hired an independent company to conduct an inventory, Exceptions, at 
24; an inventory and audit are not the same, and in any event, there 
is no evidence in the record establishing that Respondent hired an 
independent firm to conduct either inventories or audits.
---------------------------------------------------------------------------

    Yet Respondent asserted that none of these dispensings was 
improper. Moreover, as the ALJ found, Respondent entirely failed to 
address the shortages found during the DEA audit.
    I thus conclude that Respondent has not accepted responsibility for 
its misconduct. As such there is no need to address whether the 
remedial measures he claims to have instituted are adequate to protect 
the public interest. Medicine Shoppe--Jonesborough, 73 FR 363, 387 
(2008). Indeed, in light of Mr. Lewka's testimony to the effect that it 
is appropriate to fill prescriptions for drug cocktails as long as the 
doctor's staff tells him that is how the doctor writes his 
prescriptions, I would still conclude--even were I to give weight to 
all of Mr. Lewka's testimony as to his remedial measures--that his 
understanding of his obligations as a dispenser of controlled 
substances is so lacking as to preclude a finding that Respondent's 
registration is consistent with the public interest. See 21 U.S.C. 
823(f) and 824(a)(4).
    Finally, in its twelfth exception, Respondent contends that the 
ALJ's recommended order of revocation is arbitrary and capricious 
because:

    [c]urrent DEA precedent sets up a no win scenario for any 
registrant that has in its history one or two violations of DEA 
Regulations. That is, DEA precedent holds that unless the Respondent 
accepted responsibility for its ``misconduct.'' Even if there is no 
intentional diversion by the Respondent. Consequently, the 
Respondent's due process rights have been denied since there is no 
meaningful and fair due process proceeding available.

Exceptions, at 25-26.
    As found above, Respondent is in no position to argue that it has 
been placed in a ``no win'' scenario either because it has committed 
only one or two violations of DEA regulations or has not intentionally 
diverted controlled substances. Rather, the record is replete with 
various violations of the CSA, including violations which support a 
finding that it intentionally diverted drugs. So too, the record 
establishes that it cannot account for tens of thousands of dosage 
units. Thus, to the extent Respondent is in a ``no win scenario,'' this 
is entirely of its own making.
    As for its opaque suggestion that it has been denied a fair hearing 
because the Agency's precedent required it to acknowledge its 
misconduct, this is an argument which, while not framed in 
constitutional terms, has previously been tried and rejected. As the 
Tenth

[[Page 59511]]

Circuit held in rejecting a challenge to the Agency's rule:

    The DEA may properly consider whether a physician admits fault 
in determining if the physician's registration should be revoked. 
When faced with evidence that a doctor has a history of distributing 
controlled substances unlawfully, it is reasonable for the Deputy 
Administrator to consider whether that doctor will change his or her 
behavior in the future. And that consideration is vital to whether 
continued registration is in the public interest.

MacKay v. DEA, 664 F.3d 808, 820 (10th Cir. 2011) (citing Hoxie v. DEA, 
419 F.3d 477, 483 (6th Cir. 2005)); see also Hoxie, 419 F.3d at 483 
(``The DEA properly considers the candor of the physician . . . and 
admitting fault [to be] important factors in determining whether the 
physician's registration should be revoked.''). I therefore also reject 
this exception.

Conclusion

    Finding no merit in any of Respondent's Exceptions, I reject its 
contention that I should either reopen the hearing or impose a lesser 
sanction such as probation with monitoring. Because I find that 
substantial evidence supports the conclusion that Respondent's 
registration is ``inconsistent with the public interest,'' 21 U.S.C. 
824(a)(4), I adopt the ALJ's recommendation that I revoke its 
registration.

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) and 0.104, I order that DEA 
Certificate of Registration BT8599891, issued to The Medicine Shoppe, 
be, and it hereby is, revoked. I further order that any pending 
application of The Medicine Shoppe to renew or modify its registration 
be, and it hereby is, denied. This Order is effective November 3, 2014.

    Dated: September 18, 2014.
Thomas M. Harrigan,
Deputy Administrator.

Frank Mann, Esq., for the Government.
Jeffrey C. Grass, Esq., for the Respondent.

RECOMMENDED FINDINGS OF FACT, CONCLUSIONS OF LAW, AND DECISION OF THE 
ADMINISTRATIVE LAW JUDGE

I. INTRODUCTION

    Gail A. Randall, Administrative Law Judge. This proceeding is an 
adjudication governed by the Administrative Procedure Act, 5 U.S.C. 
Sec. Sec.  551 et. seq., to determine whether a pharmacy's 
registration with the Drug Enforcement Administration (``DEA'') 
should be revoked and any pending applications for renewal of such 
registration be denied under the Controlled Substances Act, 21 
U.S.C. Sec. Sec.  823(f) and 824(a).

I. PROCEDURAL BACKGROUND

    On October 7, 2013, the Deputy Assistant Administrator, Office 
of Diversion Control, Drug Enforcement Administration (DEA), issued 
an Order to Show Cause, proposing to revoke DEA Certificate of 
Registration, Number BT8599891, of the Medicine Shoppe, 
(``Respondent''), as a retail pharmacy, pursuant to 21 U.S.C. Sec.  
824(a), and deny any pending applications for renewal or 
modification of such registration, pursuant to 21 U.S.C.Sec.  
823(f). [Administrative Law Judge Exhibit (``ALJ Exh.'') 1]. On 
October 18, 2013, The Medicine Shoppe, through counsel, filed a 
written request for a hearing. [ALJ Exh. 2].
    A hearing was held in San Antonio, Texas, on January 7, 2014. 
[ALJ Exh. 4]. On February 18, 2014, the Government filed its 
Proposed Findings of Fact and Conclusions of Law (``Government's 
Brief''). Also on February 18, 2014, the Respondent filed its 
Proposed Findings of Fact and Conclusions of Law (``Respondent's 
Brief'').

II. ISSUE

    The issue in this proceeding is whether or not the record as a 
whole establishes by a preponderance of the evidence that the Drug 
Enforcement Administration should revoke the DEA Certificate of 
Registration, Number BT8599891, of The Medicine Shoppe, as a retail 
pharmacy pursuant to 21 USC Sec.  824(a), and deny any pending 
applications for renewal or modification of such registration, 
pursuant to 21 U.S.C. Sec.  823(f), because its continued 
registration would be inconsistent with the public interest, as that 
term is defined in 21 U.S.C. Sec.  823(f). [ALJ Exh. 3; Transcript 
``Tr.'' at 5].

III. FINDINGS OF FACT

    I find, by a preponderance of the evidence, the following facts:

A. Stipulated Facts

    The parties have stipulated to the following fact: Respondent is 
registered with DEA as a retail pharmacy authorized to handle 
controlled substances in Schedules II-V under DEA COR (Certificate 
of Registration) number BT8599891 at 2004 East Houston Street, San 
Antonio, Texas. DEA Certificate of Registration BT8599891 will 
expire by its terms on November 30, 2015. [ALJ Exh. 3; Tr. at 7-8].
    At the hearing, the parties also stipulated to the following 
fact: Respondent, The Medicine Shoppe, employed and paid wages to 
A.G. during the years 2011, 2012, and 2013. [Tr. at 8].

B. The Investigation

    Diversion Investigator (``DI'') Ramirez has been a Diversion 
Investigator for DEA for approximately four-and-one-half years. [Tr. 
102]. She began her investigation of the Respondent after she 
learned that patients of a specific doctor accused of issuing 
illegitimate prescriptions were filling those prescriptions at the 
Respondent pharmacy. [Tr. 103]. The investigation was not started in 
response to any complaints about the Respondent's dispensing 
practices. [Tr. 157].
    On November 9, 2011, an administrative inspection warrant was 
executed at the Respondent's location. [Tr. 159]. DEA inspected and 
copied Respondent's records, to include original prescriptions, 
copies of prescriptions, records showing the receipt of controlled 
substances, and computer data \16\. [Tr. 108]. From that date until 
the present, the pharmacy continued to operate. [Tr. 161]. The 
record shows that Mr. Lekwa, owner and pharmacist in charge, was 
cooperative with the DEA. [Tr. 164].
---------------------------------------------------------------------------

    \16\ DEA had difficulties downloading data from the Respondent's 
computer. DI Ramirez testified that this was why information from 
the computer was not utilized or made part of the record in this 
proceeding. [Tr. 166].
---------------------------------------------------------------------------

    The record contains no evidence that the Respondent pharmacy, 
any pharmacist or pharmacy technician who has worked for the 
Respondent has ever been charged with any crime by a state or 
federal law enforcement agency.\17\ [Tr. 183]. Further, the 
Respondent has not had any suspicious reports regarding break-ins or 
burglaries. [Tr. 157-58].
---------------------------------------------------------------------------

    \17\ However, the Respondent hired and fired a delivery driver 
with a felony conviction related to the handling of controlled 
substances. This will be discussed infra.
---------------------------------------------------------------------------

C. Red Flags

    Dr. Amy Poore Witte works at the University of the Incarnate 
Word, San Antonio, Texas. Since July of 2006, Dr. Witte has served 
as an associate professor with tenured status in the Department of 
Pharmacy Practice. [Tr. 26-27]. In May of 2004, Dr. Witte was 
awarded her doctorate of pharmacy degree. [Tr. 27-28]. Dr. Witte 
worked as a licensed pharmacist for Walgreens from 2004 to 2010, and 
she currently has a clinical pharmacist position at the VA Hospital 
in San Antonio, Texas. [Tr. 28]. As a licensed pharmacist, Dr. Witte 
has experience in dispensing controlled substances. [Tr. 29; 
Government Exhibit (``Gov't Exh.'') 2].
    As a professor, Dr. Witte taught a class in pharmacy law, and 
she is familiar with the requirements for dispensing controlled 
substances under both Texas and federal law. [Tr. 29-30]. Dr. Witte 
was the Government's witness and was recognized as an expert witness 
in the field of retail pharmacy. [Tr. 35].
    Dr. Witte explained the method a pharmacist would use to 
dispense a controlled substance. First, the pharmacist would look at 
the prescription to determine if it is facially valid. Specifically, 
the pharmacist would ensure the prescription contains the patient's 
name and address. Next, she would look at the bottom of the 
prescription to verify that a physician has manually signed the 
prescription, and has entered the date of the prescription and a DEA 
number. Lastly, she would look at the body of the prescription for 
the drug name, the strength or dose of the drug, the quantity to 
dispense, and the directions for use. [Tr. 30].
    Dr. Witte confirmed that a pharmacist has a corresponding 
responsibility to ensure that a prescription for a controlled 
substance is issued for a legitimate medical purpose. [Tr. 31]. To 
determine this purpose, the

[[Page 59512]]

pharmacist talks to the patient and reviews the patient's 
prescription profile. [Tr. 31]. The pharmacist looks to determine if 
the patient has used the controlled substance in the past, whether 
the patient is obtaining the drug from multiple physicians, and 
whether the prescription is tailored to the patient's needs. [Tr. 
31-32].
    The pharmacist may encounter ``red flags'' when presented with 
the prescription. Dr. Witte defined a ``red flag'' as something 
``brought to your attention when looking at the prescription which 
could lead you to think there may be signs of drug diversion.'' [Tr. 
32]. Examples of ``red flags'' would be a prescription for an 
unusually large quantity of the controlled substance, irregular 
dosing instructions, and a patient opting to fill only controlled 
substances on a prescription that also contains a noncontrolled 
substance. [Tr. 32-33]. It is accepted practice for a pharmacist to 
investigate the ``red flag'' and to note on the hard copy of the 
prescription the results of that investigation. [Tr. 33]. Such 
investigation takes place before the drug is dispensed. [Tr. 33].
    Dr. Witte reviewed several hundred prescriptions dispensed at 
the Respondent. [Tr. 36; Govt Exhs. 3, 4, 8, 9]. These prescriptions 
were for both controlled and noncontrolled substances. [Tr. 36]. In 
general, Dr. Witte noticed that there were issues with the 
prescriptions, to include 1) missing patients' addresses, 2) missing 
DEA numbers, 3) the wrong physician's name on the dispensing label, 
4) stamped signatures instead of manual signatures, and 5) 
prescribing patterns by specific physicians. [Tr. 37]. It is not 
acceptable pharmacy practice to dispense a prescription without an 
address, with a stamped signature, or with a missing DEA number. 
[Tr. 37-38].
    Dr. Witte also explained that a ``drug cocktail'' is usually two 
or more controlled substances on a prescription that are usually 
highly abused drugs sought by drug-seeking individuals. [Tr. 39]. A 
prescription containing a ``drug cocktail'' would be a potential 
``red flag'' for diversion. [Tr. 39]. In one instance, customer C.H. 
received a ``drug cocktail'' of Tussionex, hydrocodone, and 
alprazolam. The prescription also contained non-controlled 
substances, which the customer declined to get filled. The non-
controlled substances were ``maintenance meds'' which are ``used to 
treat chronic health conditions'' and would be needed ``right 
away.'' [Tr. 60; Gov't Exh. 3 at 57-58]. Dr. Witte noted that the 
resolution of this ``red flag'' was not annotated on the 
prescription, and accordingly, these prescriptions should not have 
been filled.
    ``Pattern prescribing'' occurs when a physician prescribes the 
same drug and the same dosage to every patient the physician sees. 
This is another ``red flag,'' for the prescription should be 
tailored to each patient's individual needs based on their chronic 
conditions. [Tr. 39-40]. In reviewing prescriptions from the 
Respondent, Dr. Witte recalled seeing prescriptions that were 
indicative of pattern prescribing by a Dr. Edwards. [Tr. 40]. Prior 
to September of 2011, Dr. Edwards prescribed Xanax and hydrocodone 
to all of his patients \18\. [Tr. 40]. Dr. Witte reviewed a specific 
prescription of Dr. Edwards' that fit this pattern. [Tr. 41; Gov't 
Exh. 9 at 66]. She also noted that the prescription contained a 
stamped signature. [Tr. 41; Gov't Exh. 9 at 66]. The dosing 
instructions were also unusual. All of these examples would be ``red 
flags'' for potential diversion. [Tr. 42; see also Gov't Exh. 9 at 
68]. The prescription contains no evidence that these ``red flags'' 
were investigated prior to the dispensing of these drugs. [Tr. 42]. 
In Dr. Witte's opinion, these drugs should not have been dispensed 
without resolving these ``red flags.'' [Tr. 42].
---------------------------------------------------------------------------

    \18\ Such prescriptions would be for a ``drug cocktail.'' [Tr. 
40-41; Gov't Exh. 9 at 66].
---------------------------------------------------------------------------

    Another of Dr. Edwards' prescriptions contained two drugs that 
were codeine based. [Gov't Exh. 8 at 7]. Dr. Witte explained that 
such prescribing would be a ``red flag'' and she would not have 
dispensed this prescription without first talking to the physician 
to suggest he change one of the codeine derivative drugs. [Tr. 44-
45]. The prescription did not contain any evidence that this ``red 
flag'' was resolved prior to dispensing the drugs. [Tr. 45].
    Dr. Edwards also prescribed two medications to patient D.K., 
hydrocodone, a Schedule III controlled substance, and Skelaxin, a 
non-controlled drug. Both of these drugs are designed to treat the 
same condition in the same manner. [Tr. 45-46; Gov't Exh. 8 at 16]. 
Dr. Witte found that this would be a ``red flag,'' and the 
prescription fails to contain an annotation of the actions taken to 
resolve this ``red flag'' prior to dispensing the drugs. [Tr. 46].
    Reviewing another prescription, Dr. Witte noticed that a cough 
syrup containing codeine, promethazine with codeine, was dispensed 
in a thirty-day amount. [Tr. 47; Gov't Exh. 4 at 218]. Dr. Witte 
explained that cough syrup is usually not dispensed in such an 
amount. Rather, a cough syrup is dispensed for the length of the 
illness, usually ten to fourteen days. [Tr. 47]. Also, the address 
is missing on this prescription. [Tr. 47; Gov't Exh. 4 at 218]. 
These would be two ``red flags'' for this prescription. The 
prescription contains no evidence that these ``red flags'' were 
resolved prior to dispensing the medication. [Tr. 47-48].
    Reviewing another prescription, Dr. Witte noted that a 
prescription was presented with the refill portion of the 
prescription left blank. [Tr. 48; Gov't Exh. 4 at 98]. That would be 
a ``red flag,'' for the prescription was for a controlled substance, 
and anyone could have filled in the refill number prior to 
presenting the prescription for dispensing. [Tr. 48]. The second 
prescription on the page was for a controlled substance and also had 
a blank refill portion of the prescription. Both prescriptions 
lacked a patient address. [Tr. 48-49; Gov't Exh. 4 at 98]. There was 
no evidence that these ``red flags'' were resolved prior to 
dispensing the drug. [Tr. 49]. Dr. Witte opined that these two 
prescriptions should not have been dispensed, given the unresolved 
``red flags.'' [Tr. 49].
    In her review of prescriptions, Dr. Witte noted that on several 
occasions a controlled substance was dispensed, and the patient was 
given back the hard copy of the prescription. [Tr. 51-55, 165; Gov't 
Exh. 3 at 13-14, 19-20]. Such a practice is not acceptable in the 
field of pharmacy and creates a risk of diversion \19\. [Tr. 52, 54-
55].\20\
---------------------------------------------------------------------------

    \19\ However, on cross-examination, DI Ramirez credibly 
testified that she had not investigated whether or not these 
prescriptions resulted in duplicate filling of controlled 
substances. [Tr. 165].
    \20\ Dr. Witte also credibly testified that on one prescription 
an annotation stating ``Pt took hard copy back'' meant that the 
patient took back the hard copy of the prescription. [Gov't Exh. 3 
at 70]. However, since the comment was not initialed, Dr. Witte did 
not know who had written the comment. [Tr. 99-100]. I find that it 
is a reasonable assumption, based on the totality of the 
prescriptions presented and the lack of any challenge from the 
Respondent concerning this notation, that the annotation was made by 
an employee of the Respondent. [Tr. 109-111].
---------------------------------------------------------------------------

    On a prescription dated December 2, 2010, the physician had 
stamped ``All or None.'' The prescription was for three drugs, and 
the only drug dispensed was the controlled substance. [Tr. 56-57; 
Gov't Exh. 3 at 15-16]. Also, the physician's DEA number was missing 
on the prescription, and the patient's address was missing. [Tr. 
56]. Such a prescription would have been a ``red flag'' which should 
have been resolved prior to dispensing the medication. Per Dr. 
Witte, no resolution was annotated on the prescription. [Tr. 57]. 
She opined that this prescription should not have been dispensed in 
the manner utilized by the Respondent's pharmacist. [Tr. 57; see 
also Gov't Exh. 3 at 17-18 and Tr. 57-59].
    Dr. Witte reviewed another prescription dated December 15, 2010, 
which contained a total of five drugs. The patient only requested 
that the controlled substances be dispensed. [Tr. 59-60; Gov't Exh. 
3 at 57-58]. Such conduct would be a ``red flag'' and should have 
been resolved prior to dispensing the medication. Dr. Witte saw no 
evidence that the problems were resolved prior to dispensing the 
medication, and she opined that these controlled substances should 
not have been dispensed prior to resolving these ``red flags.'' [Tr. 
60]. Likewise, two patients sharing the same address presented 
prescriptions with multiple medications, and the pharmacist only 
filled the controlled substance. [Tr. 61-63; Gov't Exh. 4 at 235-
36]. Again, such conduct would be a ``red flag,'' and the 
prescription fails to indicate any action taken to resolve the ``red 
flag'' prior to dispensing the controlled substance. [Tr. 62].
    Dr. Witte also reviewed two prescriptions written for the same 
patient. One was dated November 23, 2010, and the second 
prescription was dated December 9, 2010, and both prescriptions 
contained controlled substances. [Tr. 65; Gov't Exh. 3 at 70, 76]. 
The prescriptions were written by different practitioners. After 
filling the controlled substance on the November 23, 2010 
prescription, the pharmacist handed back the prescription to the 
patient. Such conduct would allow the patient to fill the November 
23 prescription at another pharmacy, and then fill the December 9 
prescription at yet another pharmacy. Although the controlled 
substance was dispensed from the November

[[Page 59513]]

23 prescription, the prescription did not contain a notation of the 
dispensing that would alert any other pharmacist that that drug had 
already been dispensed. [Tr. 65-66]. Such prescriptions, as handled 
by the Respondent's pharmacist, presented ``red flags,'' and the 
prescriptions had no notations demonstrating that the ``red flags'' 
were resolved prior to the dispensing of the controlled substances. 
[Tr. 67]. The prescription on December 9, 2010, should not have been 
dispensed. [Tr. 67].
    Lastly, Dr. Witte reviewed three prescriptions containing 
controlled substances written for the same patient, who was also an 
employee of the Respondent. The patient had a prior conviction for 
drug distribution, and such prescriptions would raise ``red flags.'' 
[Tr. 67-68; Gov't Exh. 4 at 84-89, Gov't Exh. 10]. The fact that the 
prescriptions contained multiple medications, and that the patient 
only filled some of the controlled substances, Dr. Witte found these 
``red flags'' should have been resolved prior to dispensing the 
controlled substances. The patient's criminal conviction for drug 
distribution would add another ``red flag'' for these prescriptions. 
[Tr. 68]. The prescriptions did not contain any annotation that the 
pharmacist resolved the ``red flags'' prior to dispensing the 
controlled substances. In Dr. Witte's view, these controlled 
substances should not have been dispensed in this manner. [Tr. 68-
69].
    Overall, Dr. Witte opined that the Respondent did not exercise 
its corresponding responsibility to ensure that prescriptions for 
controlled substances were issued for a legitimate medical purpose. 
[Tr. 69].

D. Prescription Issues

    After reviewing the prescriptions found in Government Exhibit 3, 
DI Ramirez credibly testified that she found six instances when the 
controlled substances were filled and the non-controlled substances 
were not filled. [Tr. 111]. Mr. Lekwa stated that for one of those 
prescriptions, he had called the doctor concerning the prescription. 
He had placed his notes from the call in the computer, not on the 
back of the prescription. [Tr. 205-08; Gov't Exh. 3 at 16].
    Further, DI Ramirez found five examples in Government Exhibit 3 
of prescriptions that did not contain a signature from the 
prescribing practitioner. [Tr. 114]. DI Ramirez also found 
approximately 44 prescriptions in Government Exhibit 3 that failed 
to contain a patient address. [Tr. 115-16]. She also found 
approximately 11 prescriptions in Government Exhibit 3 that had a 
missing or incorrect DEA number. [Tr. 116]. DI Ramirez also found 4 
prescriptions where the name on the front of the prescription for 
controlled substances did not match the name on the dispensing 
label. [Tr. 117-19; see also Tr. 121-22, Gov't Exh. 4 at 192-93].
    After reviewing Government Exhibit 4, DI Ramirez found 
approximately 125 prescriptions for controlled substances without a 
patient address. [Tr. 124]. This exhibit also contained 
approximately 157 prescription labels for controlled substances that 
identified the wrong prescribing practitioner. [Tr. 116-17, 124-25; 
Gov't Exhs. 3, 4]. There were also 22 prescriptions for controlled 
substances that either had a missing or incorrect prescriber DEA 
number. [Tr. 125].
    DI Ramirez also credibly testified that 98 prescriptions 
purportedly from a Dr. Leo Edwards had a signature stamp rather than 
a manual signature. [Tr. 141-44; Gov't Exh. 8, 9]. When asked by DI 
Ramirez, Dr. Edwards confirmed that he had used a signature stamp on 
his prescriptions. [Tr. 144; Gov't Exh. 8, 9].
    On at least 22 occasions, the Respondent's personnel filled 
controlled substance prescriptions and then returned the original 
paper prescriptions to the customer. [Tr. 109-10; Gov't Exh. 3 at 5, 
11, 13, 19, 28, 35, 37, 39, 41, 43, 45, 47, 53, 70, 75, 76, 78, 82, 
84, 90, 92, and 104].
    DI Ramirez found several instances in which controlled 
substances were provided to customers without any valid prescription 
whatsoever for that individual. For example, Respondent's personnel 
distributed alprazolam to customer T.J., but the only record 
attached to the prescription label was a prescription for 
hydrocodone issued to customer R.S. [Tr. 117; Gov't Exh. 3 at 99-
100; see also Tr. 118-19, 121-22; Gov't Exh. 3 at 103, 111; Tr. 121-
22; Gov't Exh. 4 at 192-93].
    DI Ramirez did not discover any evidence of any outright forged 
or fraudulent prescriptions. [Tr. 168]. She also did not identify 
any clientele that were coming from out of state. [Tr. 168].

E. The Audit

    On the date that the Administrative Inspection Warrant was 
served, November 9, 2011, DI Ramirez conducted an audit of different 
dosages of controlled substances. [Tr. 136, 159; Gov't Exh. 13]. The 
starting point for the audit was the Respondent's inventory of 
October 30, 2010 \21\, and the ending date of the audit was November 
8, 2011. [Gov't Exh. 13]. DI Ramirez took a count of seven different 
strengths of controlled substances that were on-hand at the pharmacy 
on the date of the audit. She also added the receipts of each dosage 
for the audit timeframe to get a ``total accounted for'' amount. 
[Tr. 137; Gov't Exh. 13]. Next, DI Ramirez obtained sales and 
distribution records for the dosages of controlled substances sold 
and added that figure to the total on-hand on the day of the audit 
to show what the pharmacy could account for in their records. As a 
result of this audit, the Respondent had an overage of 445 Methodone 
10 mg. tablets, a shortage of 27,344 ml. of Promethazone with 
codeine (or 929 ounces), an overage of 1,508 Hydrocodone 5 mg. 
tablets, an overage of 18,721 Hydrocodone 7.5 mg. tablets, a 
shortage of 3,445 Hydrocodone 10 mg. tablets, a shortage of 43,359 
Alprazalam 1 mg. tablets, and a shortage of 7,769 Alprazalam 2 mg. 
tablets. [Tr. 138-140; Gov't Exh. 13]. DI Ramirez did not discuss 
these results with Mr. Lekwa, Respondent's owner. [Tr. 139]. At the 
hearing, Mr. Lekwa gave no explanation for these discrepancies.
---------------------------------------------------------------------------

    \21\ DI Ramirez confirmed that an annual inventory was conducted 
at the Respondent pharmacy. When DI Ramirez executed the 
Administrative Inspection Warrant, Mr. Lekwa, owner of the 
Respondent, was in the process of conducting his annual inventory. 
[Tr. 161].
---------------------------------------------------------------------------

F. Recordkeeping Deficiencies

    When DI Ramirez reviewed the Respondent's receiving invoices, 
she noted that the dates of the receipt of the controlled substances 
and verification of the quantities received were missing. [Tr. 146; 
Gov't Exh. 5]. Of these eight invoices, there were 19 entries for 
controlled substances, and the required annotations were lacking. 
[Tr. 146; Gov't Exh. 5]. This pattern was repeated for other 
invoices. [Tr. 148-51; Gov't Exh. 6, 7]. Also, in looking at the DEA 
222 forms, which are used to record the receipt of Schedules I and 
II controlled substances, DI Ramirez also noted that the forms lack 
what was received, the quantity received, and the date that the 
controlled substances were received by the pharmacy. [Tr. 152; Gov't 
Exh. 12].

G. Hiring of a Prior Felon

    A.G. worked for the Respondent from 2008 to September of 2013. 
[Tr. 14; Gov't Exh. 11, 14]. He worked as a delivery driver, and he 
delivered controlled substances as part of his work 
responsibilities. [Tr. 15, 127-28].
    In 1989, A.G. was convicted of distribution of crack cocaine. 
[Tr. 15-16]. This was a felony conviction. [Tr. 16, 1321-33; Gov't 
Exh. 10].
    Mr. Lekwa asked A.G. to retrieve a document showing his criminal 
conviction, and A.G. went to the Texas Department of Public Safety 
and obtained a document that he subsequently provided to Mr. Lekwa. 
[Tr. 16, 20; Resp't Exh. 1]. The document related that ``The 
criminal history record file of the San Antonio Police Department 
did not reveal at this time any arrest information on the above-
named individual.'' [Resp't Exh. 1]. However, A.G.'s conviction 
occurred in Waco, Texas. [Tr. 24].
    At the hearing, Mr. Lekwa admitted that he had not contacted the 
City of San Antonio Police Department or any county in the state of 
Texas to get a criminal background check on A.G. [Tr. 202].
    In July of 2013, DI Ramirez told Mr. Lekwa about A.G.'s 
conviction, but Mr. Lekwa continued to employ A.G. until September 
of 2013. [Tr. 132].

H. Mr. Lekwa

    Mr. Lekwa, the pharmacist in charge and the owner of the 
Respondent, graduated from Texas Southern University in 1993. [Tr. 
181]. English is a second language for him. [Resp't Br. at 18]. He 
is licensed in Texas as a pharmacist. [Tr. 182]. He worked for 
Walgreens for ten years, first as a pharmacist and then as a 
pharmacy manager. [Tr. 181]. He opened the Respondent in 2003. [Tr. 
186]. The Respondent is a franchise, and the franchise agreement 
provided that the company would do the site layout, would provide 
financing at a low interest rate, would assist in marketing the 
Respondent, and would provide training. The company also has 
consultants for the Respondent to consult. [Tr. 187-88].
    Mr. Lekwa hired a permanent pharmacist, rather than using relief 
pharmacists like in the past. [Tr. 189]. He also trains the pharmacy 
technicians to ensure they follow

[[Page 59514]]

the DEA requirements. [Tr. 189]. Specifically, he requires the 
technicians to put the address and phone number on the front of a 
prescription prior to filling it. [Tr. 190]. As for prescriptions 
for ``drug cocktails,'' Mr. Lekwa stated that his new procedure is 
to confirm the prescription with the prescribing practitioner, to 
annotate that confirmation on the prescription, and to ask the 
practitioner to fax the diagnosis to the pharmacy. [Tr. 190-91].
    Mr. Lekwa also trained his personnel who sign for the receipt of 
controlled substances to fill out the paperwork completely at the 
time the controlled substances are actually received, rather than to 
wait until the end of the month to reconcile the receipts. [Tr. 
190].
    Mr. Lekwa has served many of his customers for the past ten-plus 
years. [Tr. 193]. Most of Mr. Lekwa's clients are elderly and use 
Medicaid or Medicare for their prescriptions. [Tr. 192]. Some of his 
customers do not have insurance. [Tr. 192]. Because of money 
constraints, some of his customers request to fill part of their 
prescription on one day and to return another day to purchase the 
rest of the medication. [Tr. 192]. Now Mr. Lekwa advises such 
customers that the patient has to have the means to purchase all of 
their prescribed medication at one time. [Tr. 192].
    Also, Mr. Lekwa acknowledged that he returned the original 
prescriptions in some cases to the customer. [Tr. 193-94]. He 
credibly testified that he was not doing this practice now. [Tr. 
194-95].
    Mr. Lekwa has never been the subject of an investigation or 
disciplinary action by any state board. [Tr. 182].
    Mr. Lekwa acknowledged that mistakes were made at the Respondent 
pharmacy. [Tr. 184, 220, 223]. Specifically, after he understood the 
true nature of A.G.'s criminal record, he fired him. [Tr. 185-86]. 
He also instructed his personnel to make sure the patient's address 
and phone number are on the front of the prescription. [Tr. 220]. 
Mr. Lekwa also testified that he did not send DEA any kind of 
correspondence indicating that he accepted responsibility for any 
kind of misconduct. [Tr. 200]. Mr. Lekwa testified that he 
instituted new policies and procedures. Specifically he reviews the 
Medicine Shoppe manual with each of his employees. He also keeps the 
manual updated.\22\ [Tr. 214-15].
---------------------------------------------------------------------------

    \22\ The Government made the point that Mr. Lekwa did not bring 
the manual to the hearing or place it into the record. [Tr. 216].
---------------------------------------------------------------------------

IV. CONCLUSIONS OF LAW AND DISCUSSION

A. Position of the Parties

1. The Government's Position

    The Government seeks revocation of the Respondent's Certificate 
of Registration because to continue its registration would be 
against the public interest. [Gov't Br. at 30]. Specifically, the 
Government argues that DEA is bound by agency precedent to revoke 
Respondent's DEA registration. Citing to DEA final orders, the 
Government asserts that the Respondent violated state and Federal 
law by failing to exercise its corresponding responsibility to 
ensure that prescriptions for controlled substances are issued for a 
legitimate medical purpose, as required by the Controlled Substances 
Act and the implemented regulations. [Gov't Br. at 13]. The 
Government further argued that the Respondent repeatedly filled 
facially invalid prescriptions, failed to maintain adequate records, 
and failed to keep an accurate inventory of the controlled 
substances it purchased. [Gov't Br. at 13-14]. Lastly, the 
Respondent violated Federal law by employing a convicted drug felon 
in a position where the felon had access to controlled substances. 
[Gov't Br. at 14].
    Next, the Government asserts that the Respondent dispensed 
controlled substances despite the unresolved red flags. [Gov't Br. 
at 14]. Specifically, the Government argues that the Respondent's 
personnel distributed controlled substances pursuant to 
prescriptions that contained one or more unresolved ``red flags.'' 
Dr. Witte's testimony establishes this fact. [Gov't Br. at 14-16].
    Additionally, the Government argues that the Respondent's 
failure to keep accurate records violated Federal statutory and 
regulatory provisions that require an accurate inventory of 
controlled substances. [Gov't Br. at 16]. The inadequacy of the 
Respondent's system is evidenced by the audit conducted by the DEA 
resulting in large shortages and overages. [Gov't Br. at 17]. The 
Respondent's records were also deficient because Mr. Lekwa failed 
correctly to record complete invoices of controlled substances 
received. [Gov't Br. at 17-18]. Lastly, the Respondent, by 
permitting customers to retain their original prescriptions, 
violated Federal regulations that require the Respondent to maintain 
the paper prescription for Schedules III, IV, and V controlled 
substances at the registered location. [Gov't Br. at 18].
    The Government also argues that the Respondent violated DEA 
regulations by hiring A.G., a felon convicted of a drug-related 
crime, and by failing to do a proper and thorough background check. 
[Gov't Br. at 19]. Also, the Respondent failed to prove that it 
accepted responsibility for its actions or to demonstrate that it 
will not engage in future misconduct. Further, a Respondent's lack 
of candor and inconsistent explanations may serve as a basis for 
denial of a registration. [Gov't Br. at 20-24].
    The Government asserts that the Respondent's practices 
significantly increased the risk of diversion. [Gov't Br. at 24]. 
Further, the Respondent has provided insufficient evidence of facts 
that demonstrate mitigating circumstances. [Gov't Br. at 25].
    Lastly, the Government argues that Mr. Lekwa's testimony was not 
credible and should be given no weight. [Gov't Br. at 28]. The 
Government states that ``[n]otwithstanding the confusing and 
contradictory nature of his testimony, Mr. Lekwa's wholesale failure 
to produce a single written document to support his position 
militates in favor of finding him to be an incredible witness. . . . 
Mr. Lekwa has also testified in a manner that was non-responsive, 
evasive, and internally inconsistent.'' [Gov't Br. at 29].
    In light of all of the above, the Government requests that I 
recommend that the Respondent's Certificate of Registration should 
be revoked. [Gov't Br. at 30].

2. The Respondent's Position

    The Respondent asserts that its Certificate of Registration 
should not be revoked and any pending applications for renewal 
should be granted. [Resp't Br. at 23]. First, Respondent asserts 
that it holds a valid license in the State of Texas, and the State 
has not made a recommendation in this matter. Thus, factor one of 
the statutory provision is not an impediment to the Respondent's 
keeping his registration. [Resp't Br. at 6].
    As for factor three, the Respondent states that the record does 
not contain evidence that the Respondent, its owner, or any 
pharmacist or key employee of the pharmacy has been convicted of a 
crime related to the manufacture, distribution, or dispensing of 
controlled substances. [Resp't Br. at 7].
    As for factor two, the Respondent asserts that neither the 
Respondent, Mr. Lekwa nor any other pharmacist or pharmacy 
technician employed by Respondent has ever been investigated, 
disciplined or charged with any violation of state or federal 
administrative, regulatory, or criminal law. [Resp't Br. at 7].
    As for factor four, the Respondent admitted that the Government 
has met its burden of proof and has shown by a preponderance of the 
evidence that the Respondent has committed acts inconsistent with 
the public interest. [Resp't Br. at 8]. Mr. Lekwa testified that the 
Respondent accepted responsibility for its misconduct. Then he 
asserted that a qualitative assessment of the Respondent's current 
practices should occur to determine whether or not sufficient 
corrective action has been taken to prevent similar occurrences of 
future misconduct. [Resp't Br. at 8-9].
    The Respondent then analyzes the difference between resolvable 
and unresolvable red flags. As for resolvable red flags, the 
Respondent asserts that such indicators may be resolved through 
discussions with patients and prescribers, as well as through the 
pharmacist's own knowledge of the patient's past history as a 
customer. [Resp't Br. at 10]. Unresolvable red flags are situations 
in which ``no amount of information gathered or verification made by 
the pharmacist could foresee any explanation that would satisfy a 
Pharmacist's corresponding responsibility under federal law not to 
fill the scripts.'' [Resp't Br. at 10]. He concludes that 
``[r]esolvable red flags, if resolved, are lawful prescriptions. 
Unresolvable red flags are illegal and substantial evidence of drug 
diversion.'' [Resp't Br. at 11]. The ``type of red flags that 
support a finding that Respondent's pharmacists repeatedly and 
intentionally dispensed prescriptions are those where they had 
reason to know that the prescriptions lacked a legitimate medical 
purpose and were issued outside of the usual course of professional 
practice.'' [Resp't Br. at 12].
    The Respondent asserts that now there are policies and 
procedures in place at Respondent to correct missing or incomplete 
data on prescriptions. [Resp't Br. at 12]. For example, the 
Respondent has hired another

[[Page 59515]]

pharmacist to supervise employees in Mr. Lekwa's absence, and has 
obtained an independent audit of all records relating to the 
inventory, to include purchasing, storing, dispensing and 
recordkeeping practices of the Respondent. [Resp't Br. at 14]. Mr. 
Lekwa has instituted additional training regimen, has conducted FBI 
criminal background checks on all of his employees, and has 
implemented a policy whereby all of the prescribed drugs or none of 
the prescribed drugs will be dispensed per prescription. [Resp't Br. 
at 14].
    Yet, Mr. Lekwa admits that he dispensed drugs for prescriptions 
that were suspicious and not resolvable. The Respondent affirms that 
calling the physician does not immunize the Respondent from its duty 
to ensure the prescriptions are for a legitimate medical purpose. 
[Resp't Br. at 13].
    The Respondent cites DEA precedent for the proposition that the 
DEA ``has declined to revoke a registration where non-egregious 
recordkeeping errors were acknowledged by the pharmacy PIC and 
remedied promptly.'' Terese, Inc., d/b/a Peach Orchard Drugs, 76 
Fed. Reg. 46,843, 46,848 (DEA 2011).\23\ He then asserted that the 
flaws in the biannual inventory were non-egregious flaws. Further, 
the error of receipts and invoices lacking necessary date, 
acknowledged by the Respondent, was non-egregious. [Resp't Br. at 
17].
---------------------------------------------------------------------------

    \23\ The Respondent asserts that Mr. Lekwa has hired a private 
company to conduct an annual inventory. This fact, however, is not 
part of the record and the Respondent did not cite any record source 
for this fact.
---------------------------------------------------------------------------

    Next, the Respondent argues that its ``acceptance of 
responsibility was . . . significant and deserving of great weight 
and consideration since it occurred before the hearing and 
presentation of the evidence.'' [Resp't Br. at 17]. It has presented 
sufficient mitigating evidence to assure the Administrator that it 
can be entrusted with the responsibility of a continued 
registration, the Respondent asserts. [Resp't Br. at 17-18]. 
According to Respondent, ``[t]he evidence shows that the 
Respondent's continued registration would not threaten the public 
safety.'' [Resp't Br. at 20].\24\ In conclusion, the Respondent 
asserts that although the Government has met its burden of proof, 
``the evidence further shows that Respondent will not commit future 
acts of misconduct making its continued registration consistent with 
the public interest.'' [Resp't Br. at 23].
---------------------------------------------------------------------------

    \24\ The Respondent rebuts the Government's expert witness by 
asserting that her professional opinion was based upon incomplete 
information. [Resp't Br. at 20].
---------------------------------------------------------------------------

B. Statement of Law and Discussion

    Pursuant to 21 U.S.C. Sec.  824(a)(4), the Deputy Administrator 
\25\ may revoke a registration, and deny a pending application for 
renewal or modification, if he determines that the continuation or 
issuance of such registration would be ``inconsistent with the 
public interest'' as determined pursuant to 21 U.S.C. Sec.  823(f). 
Section 823(f) requires that the following factors be considered:
---------------------------------------------------------------------------

    \25\ The Deputy Administrator has the authority to make such 
determinations pursuant to 28 C.F.R. Sec. Sec.  0.100(b) and 0.104 
(2009).
---------------------------------------------------------------------------

    (1) The recommendation of the appropriate State licensing board 
or professional disciplinary authority.
    (2) The applicant's experience in dispensing, or conducting 
research with respect to 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.

21 U.S.C. Sec.  823(f); see also Alexander Drug Co., 66 Fed. Reg. 
18,302 (DEA 2001); Nicholas A. Sychak, d/b/a Medicap Pharmacy, 65 
Fed. Reg. 75,959, 75,967 (DEA 2000). These factors may be considered 
in the disjunctive: The Deputy Administrator may properly rely on 
any one or a combination of these factors, and may give each factor 
the weight he deems appropriate, in determining whether a 
registration should be revoked or an application for registration 
denied. Liddy's Pharmacy, L.L.C., 76 Fed. Reg.48,887, 48,893 (DEA 
2011) (citing Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005); 
Morall v. DEA, 412 F.3d 165, 173-74 (D.C. Cir. 2005)); Robert A. 
Leslie, M.D., 68 Fed. Reg. 15,227, 15,230 (DEA 2003).
    Factors two and four are relevant.
    Further, in an action to revoke a registrant's certificate, the 
DEA has the burden of proving that the requirements for revocation 
are satisfied. 21 C.F.R. Sec.  1301.44(e). The burden of proof then 
shifts to the Respondent once the Government has made its prima 
facie case. Arthur Sklar, R.Ph., d/b/a King Pharmacy, 54 Fed. Reg. 
34,623, 34,627 (DEA 1989). Specifically, after the Government ``has 
proved that a registrant has committed acts inconsistent with the 
public interest, a registrant must `present sufficient mitigating 
evidence to assure the Administrator that [the Respondent] can be 
entrusted with the responsibility carried by such a registration.''' 
Medicine Shoppe, 73 Fed. Reg. at 387 (quoting Samuel S. Jackson, 72 
Fed. Reg. 23,848, 23,853 (DEA 2007) (quoting Leo R. Miller, 53 Fed. 
Reg. 21,931, 21,932 (DEA 1988)). ``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 Fed. Reg. at 387; see also 
Jackson, 72 Fed. Reg. at 23,853; John H. Kennedy, 71 Fed. Reg. 
35,705, 35,709 (DEA 2006); Prince George Daniels, 60 Fed. Reg. 
62,884, 62,887 (DEA 1995); See also Hoxie v. DEA, 419 F.3d 477, 483 
(6th Cir. 2005) (``admitting fault'' is ``properly consider[ed]'' by 
DEA to be an ``important factor'' in the public interest 
determination)].

1. Prescriptions

    Pursuant to the Controlled Substances Act and its implementing 
regulations, a pharmacy, a prescription-dispensing registrant, has a 
corresponding responsibility, along with the physician, a 
prescription-issuing registrant, to ensure the prescription is 
valid. 21 C.F.R. Sec.  1306.04(a). When considering whether a 
pharmacy has violated its corresponding responsibility, the Agency 
considers whether the entity, not the pharmacist, can be charged 
with the requisite knowledge. Holiday CVS, L.L.C., d/b/a CVS 
Pharmacy Nos. 219 and 5195, 77 Fed. Reg. 62316 (DEA 2012) 
[hereinafter CVS]; see also United Prescription Services, 72 Fed. 
Reg. at 50,407; Pharmboy Ventures Unlimited, Inc., 77 Fed. Reg. 
33,770, 33,772 n.2 (DEA 2012) (``DEA has long held that it can look 
behind a pharmacy's ownership structure `to determine who makes 
decisions concerning the controlled substance business of a 
pharmacy.'''); S&S Pharmacy, Inc., 46 Fed. Reg. 13051, 13052 (DEA 
1981) (``the corporate pharmacy acts through the agency of its 
pharmacist in charge''). Knowledge obtained by the pharmacists and 
other employees acting within the scope of their employment may be 
imputed to the pharmacy itself. See U.S. v. One Parcel of Land, 965 
F.2d 311, 316 (7th Cir. 1992) (``Only knowledge obtained by 
corporate employees acting within the scope of their employment is 
imputed to the corporation.'').
    The applicable regulations state that the test for the proper 
prescribing and dispensing of controlled substances is as follows:
    A prescription for a controlled substance to be effective must 
be issued for a legitimate medical purpose by an individual 
practitioner acting in the usual course of his professional 
practice. The responsibility for the proper prescribing and 
dispensing of controlled substances is upon the prescribing 
practitioner, but a corresponding responsibility rests with the 
pharmacist who fills the prescription.

21 C.F.R. Sec.  1306.04(a). Thus, for a prescription to be lawful, 
it needs to be written for a legitimate medical purpose in the 
practitioner's usual course of professional practice. Id. The 
pharmacist has a corresponding responsibility to verify the validity 
of a prescription, and if a prescription seems suspect, the 
pharmacist has a duty to investigate the prescription to determine 
its legitimacy. See CVS, 77 Fed. Reg. at 62,340-41. The 
corresponding responsibility to ensure the dispensing of valid 
prescriptions extends to the pharmacy itself. Medicine Shoppe-
Jonesborough, 73 Fed. Reg. at 384 (finding that a respondent 
pharmacy was properly charged with violating corresponding 
responsibility); United Prescription Services, Inc., 72 Fed. Reg. 
50397, 50407-08 (2007) (same). EZRX, LLC, 69 Fed. Reg. 63,178, 
63,181 (DEA 2004) (``DEA has issued orders to show cause and 
subsequently revoked the DEA registrations of pharmacies which 
failed to fulfill their corresponding responsibility in Internet 
prescribing operations . . . .'')
    DEA has consistently interpreted the prescription 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.'' Medic-Aid Pharmacy, 55 Fed. Reg.

[[Page 59516]]

30,043, 30,044 (DEA 1990). See also Frank's Corner Pharmacy, 60 Fed. 
Reg. 17,574, 17,576 (DEA 1995); Ralph J. Bertolino, d/b/a Ralph J. 
Bertolino Pharmacy, 55 Fed. Reg. 4,729, 4,730 (DEA 1990) 
[hereinafter Bertolino]; 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 Fed. Reg. at 4,730 (citations 
omitted); see also Sun & Lake Pharmacy, Inc., 76 Fed. Reg. 24,523, 
24,530 (DEA 2011); Liddy's Pharmacy, L.L.C., 76 Fed. Reg. at 48,893; 
East Main Street Pharmacy, 75 Fed. Reg. 66,149, 66,163 (DEA 2010); 
Lincoln Pharmacy, 75 Fed. Reg. 65,667, 65,668 (DEA 2010); Bob's 
Pharmacy, 74 Fed. Reg. 19,599, 19,601 (DEA 2009). However, the DEA 
does not require omniscience. Carlos Gonzalez, 76 Fed. Reg. 63,118, 
63,142 (DEA 2011) (citing Holloway Distrib., 72 Fed. Reg. 42,118, 
42,124 (DEA 2007)).
    Yet, when an attempted transaction would give rise to suspicion 
in a ``reasonable professional,'' there is a duty to ``question the 
prescription[].''Bertolino, 55 Fed. Reg. at 4730. The ``reasonable 
professional'' has been further developed into the ``reasonable 
pharmacist'' standard. East Main Street Pharmacy, 75 Fed.Reg. at 
66165; see also Winn's Pharmacy, 56 Fed.Reg. 52559, 52561 (DEA 
1991). Accordingly, a pharmacist or pharmacy may not dispense a 
prescription in the face of a red flag (i.e., a circumstance that 
does or should raise a reasonable suspicion as to the validity of a 
prescription) unless he or it takes steps to resolve the red flag 
and ensure that the prescription is valid. East Main Street 
Pharmacy, 75 Fed. Reg. at 66,165. Because Agency precedent limits 
the corresponding responsibility to circumstances which are known or 
should have been known, Sun & Lake Pharmacy, Inc., 76 Fed. Reg. at 
24,530, it follows that, to show a violation of a corresponding 
responsibility, the Government must establish that: ``(1) The 
Respondent dispensed a controlled substance; (2) a red flag was or 
should have been recognized at or before the time the controlled 
substance was dispensed; and (3) the question created by the red 
flag was not resolved conclusively prior to the dispensing of the 
controlled substance.'' CVS, 77 Fed. Reg. at 62316; see also Sun & 
Lake Pharmacy, 76 Fed. Reg. at 24,532 (finding that pharmacy 
violated corresponding responsibility when it took no steps to 
resolve red flags prior to dispensing controlled substances.). The 
steps necessary to resolve the red flag conclusively is dependent 
upon the nature of the specific red flag. CVS, 77 Fed. Reg. at 
62,341.
    In support of its allegation that the Respondent has violated 
its corresponding responsibilities, the Government has introduced 
evidence that the Respondent pharmacy: (1) dispensed controlled 
substances without a prescription; (2) dispensed controlled 
substances when the prescription was ``signed'' using a signature 
stamp; (3) allowed customers to retain the original controlled 
substances prescriptions; (4) dispensed controlled substances when 
the prescription contained irregular dosing instructions; (5) 
dispensed controlled substances when the prescriptions revealed 
``pattern prescribing'' by the physician; (6) dispensed controlled 
substances when the prescription lacked a patient's address and the 
physician's DEA registration number; (7) placed a prescription label 
on the back of the prescription with a physician's name that is not 
consistent with the name on the front of the prescription; (8) 
accepted prescriptions where the refill line was blank; and (9) 
allowed patients with prescriptions containing both controlled and 
non-controlled substances to fill only the controlled substances' 
portion of the prescription.
    Further, the Respondent also violated state law, which prohibits 
dispensing controlled substances pursuant to prescriptions that lack 
a correct DEA registration number, patient address, or prescriber's 
signature. See Tex. Health & Safety Code Ann. Sec.  481.074; Tex. 
Admin. Code Sec.  13.75.\26\
---------------------------------------------------------------------------

    \26\ These statutory and regulatory requirements provide in 
relevant part that a prescription for a controlled substance must 
show the quantity of the substance prescribed, the date of the 
issue, the name, address, and date of birth or age of the patient, 
the name and strength of the controlled substance prescribed, the 
directions for use, the name, address, DEA number, and telephone 
number of the practitioner at the practitioner's usual place of 
business, and, if the prescription is handwritten, the signature of 
the prescribing practitioner. Tex. Health & Safety Code Ann. Sec.  
481.074.
---------------------------------------------------------------------------

    The record contains no evidence that these ``red flags'' were 
resolved prior to the dispensing of the controlled substances. A 
preponderance of the evidence proves that the Respondent violated 
its corresponding responsibility in the way it dispensed controlled 
substances pursuant to these defective prescriptions.

2. Recordkeeping Deficiencies

    Further, ``[r]ecordkeeping is one of the CSA's central 
features,'' and ``a registrant's accurate and diligent adherence to 
this obligation is absolutely essential to protect against the 
diversion of controlled substances.'' Paul H. Volkman, 73 Fed. Reg. 
30,630, 30,644 (DEA 2008), aff'd 567 F.3d 215, 224 (6th Cir. 2009). 
The statute provides that ``it shall be unlawful . . . to refuse or 
negligently fail to make, keep, or furnish any record, notification, 
declaration, order or order form, statement, invoice or information 
required.'' 21 U.S.C. 842(a)(5). The implementing regulations 
require that a dispensing registrant must maintain accurate records 
that include ``the number of units or volume of such finished form 
dispensed, including the name and address of the person to whom it 
was dispensed, the date of dispensing, the number of units or volume 
dispensed, and the written or typewritten name or initials of the 
individual who dispensed'' the controlled substance. 21 C.F.R. Sec.  
1304.22(c).
    Here, the Respondent's recordkeeping was deficient. The 
Government presented evidence that the Respondent's invoices were 
incomplete, and the DEA 222 forms lacked a notation of what was 
received, the quantity of the controlled substance received, and the 
date the controlled substance was received by the pharmacy. 21 
C.F.R. Sec.  1305.13.\27\ Without such records, the pharmacy would 
be unable to produce an accurate inventory or audit.
---------------------------------------------------------------------------

    \27\ This regulation provides in relevant part that the 
pharmacy, as the purchaser, must record on the DEA Form 222 the 
number of commercial containers furnished on each item, and the 
dates on which the containers were received.
---------------------------------------------------------------------------

    DEA, however, attempted to conduct an audit of the Respondent. 
The results were telling, for the Respondent was unable to 
accurately account for 27,344 ml. of Promethazone with codeine (or 
929 ounces), 1,508 Hydrocodone 5 mg. tablets, 18,721 Hydrocodone 7.5 
mg. tablets, 3,445 Hydrocodone 10 mg. tablets, 43,359 Alprazalam 1 
mg. tablets, and 7,769 Alprazalam 2 mg. tablets. This inability to 
account for this significant number of dosage units creates a grave 
risk of diversion. Medicine Shoppe, 73 Fed. Reg. at 367 (finding any 
amount over 50 dosage units a significant amount); see also Paul H. 
Volkman, 73 Fed. Reg. 30630, 30644 (DEA 2008), pet. for rev. denied 
567 F.3d 215, 224 (6th Cir. 2009) (finding that ``a registrant's 
accurate and diligent adherence to this obligation is absolutely 
essential to protect against the diversion of controlled 
substances''). The DEA has also held that it need not find that 
diversion was the cause of the unaccounted dosage units, to conclude 
that the Respondent does not maintain effective controls against 
diversion. Jack A. Danton, D.O., 76 Fed. Reg. 60,900, 60,919 (DEA 
2011) (citations omitted). Because the records provided to the DEA 
failed to correctly record what was accurately received and 
dispensed, such recordkeeping errors contributed ``to the inability 
of the Respondent and subsequently the DEA to conduct an 
accountability audit with accurate results,'' and, thus, violated 
Federal law. Jack A. Danton 76 Fed. Reg. at 60,919.

3. Hiring of a Convicted Felon

    DEA regulations provide that a registrant ``shall not employ, as 
an agent or employee who has access to controlled substances, any 
person who has been convicted of a felony offense relating to 
controlled substances.'' 21 C.F.R. Sec.  1301.76(a). Further, the 
Respondent had a duty to conduct an inquiry concerning any 
convictions its employees may have on their record. 21 C.F.R. Sec.  
1301.90.
    Here, the Respondent hired an individual who had a felony 
conviction for distributing crack cocaine to deliver prescribed 
drugs, to include controlled substances. Prior to employing this 
individual, Mr. Lekwa told him to obtain documentation of his 
criminal record, and A.G. opted to get a criminal background report 
from the City of San Antonio. This was an insufficient background 
check, for the applicant had a felony conviction in Waco, Texas, not 
San Antonio.\28\ Indeed, the report itself states that

[[Page 59517]]

it does not include A.G.'s criminal history in any other 
jurisdiction. [Resp't Exh. 1]. Again, the Government has proved by a 
preponderance of the evidence that the Respondent violated DEA 
regulations.
---------------------------------------------------------------------------

    \28\ There was testimony challenging whether the applicant told 
Mr. Lekwa about his conviction prior to his being hired. I find this 
irrelevant. The legal point is that Mr. Lekwa did not perform an 
adequate background check prior to hiring this individual.
---------------------------------------------------------------------------

    Thus, the burden of production now shifts to the Respondent to 
demonstrate that it takes full responsibility for its unlawful 
conduct and that it has put in place remedial measures so that such 
violations will not happen in the future. Medicine Shoppe, 73 Fed. 
Reg. at 387 (quoting Samuel S. Jackson, 72 FR 23,848, 23,853 (DEA 
2007)) (holding that a registrant must ``present sufficient 
mitigating evidence to assure the Administrator that [it] can be 
entrusted with the responsibility carried by such a registration''); 
Leo R. Miller, 53 Fed. Reg. 21,931, 21,932 (DEA 1988).
    On direct examination, Mr. Lekwa took full responsibility for 
any misconduct attributable to the Respondent. However, on cross 
examination, Mr. Lekwa presented testimony inconsistent with other 
testimony in the record. First, he denied that A.G., at the time of 
his employment interview, told him about his felony conviction for 
distribution of crack cocaine. A.G. testified to the contrary. 
Further, DI Ramirez testified that, in July of 2013, she had told 
Mr. Lekwa about A.G.'s felony conviction, yet Mr. Lekwa denied 
having this conversation with DI Ramirez. Rather, Mr. Lekwa 
testified that he had a conversation in September 2013 with DI 
Ramirez's supervisor. That was when he first learned of the felony 
conviction, he asserted.
    Next, Mr. Lekwa seemed to deny that there was any misconduct 
when the prescription containing both controlled substance and non-
controlled substance entries, as well as a notation of ``all or 
none,'' was filled by only distributing the controlled substance. 
Rather, Mr. Lekwa testified that he had contacted the doctor and 
received permission to fill the prescription in that manner. Yet the 
record contains no evidence of this verification action. This 
inconsistent testimony certainly calls into question Mr. Lekwa's 
genuine remorse for the misconduct proved by the Government.
    As for remedial measures, the record contains unrefuted evidence 
that Mr. Lekwa fired A.G. in September of 2013. Also, Mr. Lekwa 
testified that he now trains each employee on the procedures to 
follow in filling a controlled substance prescription. He announced 
that there was a training manual to help with this training. 
However, on cross examination Mr. Lekwa stated that the manual was 
the one the franchise company provided. Although he kept the manual 
current, there is no evidence that he altered procedures to come 
into compliance with legal requirements. Rather, Mr. Lekwa testified 
that the manual was not deficient, but the implementation of the 
manual provisions was lacking prior to the Order to Show Cause being 
served. Arguably, this new training would be a meaningful remedial 
measure. But the record contains no excerpts from the manual to 
bolster the adequacy of this training.
    Next, Mr. Lekwa testified that when he receives a prescription 
containing a ``drug cocktail,'' he now requires the physician to fax 
to him confirmation of the diagnosis that resulted in this kind of 
prescribing. Unfortunately, the record contains no evidence that 
this procedure has been successfully implemented.

V. CONCLUSION AND RECOMMENDATION

    Given the extent of the misconduct and the unreliability of the 
testimony concerning the acceptance of responsibility, I conclude 
that the Respondent's registration should be revoked. Accordingly, 
that is my recommendation based on this record.
    Dated: March 24, 2014
    Gail A. Randall
    Administrative Law Judge
[FR Doc. 2014-23473 Filed 10-1-14; 8:45 am]
BILLING CODE 4410-09-P