Hills Pharmacy, LLC; Decision and Order, 49815-49847 [2016-17721]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 81, Number 145 (Thursday, July 28, 2016)]
[Notices]
[Pages 49815-49847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17721]



[[Page 49815]]

Vol. 81

Thursday,

No. 145

July 28, 2016

Part III





Department of Justice





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Drug Enforcement Administration





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 Hills Pharmacy, LLC; Decision and Order; Notices

Federal Register / Vol. 81 , No. 145 / Thursday, July 28, 2016 / 
Notices

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DEPARTMENT OF JUSTICE

Drug Enforcement Administration

[Docket No. 15-4]


Hills Pharmacy, LLC; Decision and Order

    On October 8, 2014, the Deputy Assistant Administrator, Office of 
Diversion Control, Drug Enforcement Administration, issued an Order to 
Show Cause to Hills Pharmacy, LLC (hereinafter, Hills or Respondent), 
which proposed the revocation of its DEA Certificate of Registration 
FH0772257, pursuant to which it is authorized to dispense controlled 
substances in schedules II through V as a retail pharmacy, at the 
registered location of 7730 W. Hillsborough Ave., Tampa, Florida. ALJ 
Ex. 1, at 1. As grounds for the proposed action (which also includes 
the denial of any pending applications), the Show Cause Order alleged 
that Respondent's ``continued registration is inconsistent with the 
public interest, as that term is defined in 21 U.S.C. 823(f).'' Id.; 
see also 21 U.S.C. 824(a)(4).
    More specifically, the Show Cause Order alleged that Respondent's 
``pharmacists repeatedly failed to exercise their corresponding 
responsibility to ensure that controlled substances they dispensed were 
dispensed pursuant to prescriptions issued for legitimate medical 
purposes by practitioners acting within the usual course of their 
professional practice'' and that its ``pharmacists ignored readily 
identifiable red flags that [the] controlled substances prescribed were 
being diverted and dispensed despite unresolved red flags.'' Id. 
(citing 21 CFR 1306.04(a); Holiday CVS, L.L.C., d/b/a CVS Pharmacy Nos. 
219 and 5195, 77 FR 62315, 62319 (2012)). The Show Cause Order further 
alleged that Respondent's ``pharmacists dispensed controlled substances 
when they knew or should have known that the prescriptions were not 
issued in the usual course of professional practice or for a legitimate 
medical purpose, including circumstances where the pharmacist knew or 
should have known that the controlled substances were abused and/or 
diverted by the customer.'' Id. at 2.
    The Show Cause Order listed various red flags which Respondent's 
pharmacists allegedly failed to resolve before dispensing 
prescriptions, including: (1) ``multiple individuals presenting 
prescriptions for the same drugs in the same quantities from the same 
doctor''; (2) ``individuals presenting prescriptions for controlled 
substances known to be highly abused, such as oxycodone and 
hydromorphone''; (3) ``individuals paying high prices . . . for 
controlled substances with cash''; and (4) ``individuals residing long 
distances from the pharmacy.'' Id.
    The Show Cause Order then alleged that between July 28 and August 
4, 2011, Respondent's ``pharmacists dispensed large and substantially 
similar quantities of'' oxycodone 30 mg tablets ``to at least nine 
customers, all of whom received their prescriptions from physicians 
working at the same clinic,'' and that seven of the customers ``resided 
at least [50] miles from'' Respondent and five of the customers 
``resided more than [100] miles from'' it. Id. The Government 
specifically alleged that ``on July 28, 2011, a Hills . . . pharmacist 
dispensed 210'' tablets of oxycodone 30 mg ``to T.V., who resided in 
Pensacola, . . . more than [450] miles from'' Respondent. The Order 
also alleged that ``on August 4, 2011, one or more Hills . . . 
pharmacists dispensed large quantities of oxycodone pursuant to 
prescriptions written by the same physician on the same day to two 
customers with the same last name'' (J.P. and T.P.), both of whom 
``resided in St., Augustine, Florida, more than [180] miles from'' it. 
Id.
    Next, the Show Cause Order alleged that ``[o]n April 21, 2011, one 
or more Hills['] . . . pharmacists dispensed large and substantially 
similar quantities of . . . oxycodone 30 to at least [12] customers, 
three of whom resided more than [50] miles from [it], and two of whom 
resided more than [100] miles away.'' Id. The Show Cause Order then 
alleged that ``[a]ll of these prescriptions were written by physicians 
working at the same clinic and were for amounts ranging from 168 to 240 
tablets.'' Id.
    To similar effect, the Show Cause Order alleged that on January 16, 
2012, Hills' pharmacists dispensed three prescriptions for oxycodone 30 
mg tablets in quantities which ranged from 168 to 224 tablets to three 
persons who ``resided more than [50] miles from Hills,'' which were all 
``issued by physicians working at the same clinic.'' Id. at 3. The Show 
Cause Order then alleged that on January 19, 2012, a Hills' pharmacist 
dispensed 120 oxycodone 30 tablets to a person who resided in Panama 
City, Florida, which is ``located more than [350] miles from'' it. Id.
    The Show Cause Order also alleged that on December 10, 2012, Hills' 
pharmacists engaged in a further instance of dispensing prescriptions 
(for 180 oxycodone 30) to two persons with the same last name on the 
same date ``at or about the same time.'' Id. at 3. With respect to 
these prescriptions, the Government also alleged that ``both customers 
were willing to pay as much as [$7.50] per tablet despite evidence that 
Hills . . . was now charging double for oxycodone than it charged the 
previous year.'' Id. And the Show Cause Order further alleged that on 
December 10, 2011, a Hills' pharmacist dispensed 224 tablets of 
oxycodone 30 to a resident of Bradenton, Florida, ``who willingly paid 
. . . $1232 for the same prescription he purchased just four months 
earlier for . . . $896,'' and that ``[b]oth of these prescriptions were 
also facially invalid inasmuch as they contained no patient address.'' 
Id.
    Finally, the Show Cause Order alleged that in October 2011, Hills' 
pharmacists dispensed prescriptions for 196 and 240 tablets of 
hydromorphone 8 mg to two persons. Id. The Show Cause Order alleged 
that the prescriptions, ``if taken as directed, far exceeded the 
recommended [daily] dosage of'' the drug. Id. The Order also alleged 
that both ``prescriptions were issued by the same physician and one of 
them was facially invalid . . . as it contained no patient address.'' 
Id.
    Next, the Show Cause Order alleged that Respondent ``failed to 
create and maintain accurate records in violation of 21 U.S.C. 
842(a)(5).'' Id. at 4. More specifically, the Order alleged that: (1) 
Respondent ``failed to complete a biennial inventory as required by 21 
CFR 1304.11(c)''; (2) its DEA schedule II order forms did not contain 
the ``receipt date or quantity received in violation of 21 U.S.C. 
827(b) and 21 CFR 1305.13(e)''; (3) it ``failed to retain Copy 3 of'' 
its schedule II order forms ``as required by 21 U.S.C. 827(b) and 21 
CFR 1305.13(a) and 1305.17(a)''; and (4) its schedule II records were 
not ``readily retrievable . . . at its registered location in violation 
of 21 CFR 1304.04(a) and (h)(2).'' Id.
    Finally, the Show Cause Order alleged that a DEA audit of various 
schedule II drugs found both shortages and overages. The Order alleged 
that an audit for the period of July 24, 2012 through February 4, 2013 
found ``a shortage of 4,135'' tablets of hydromorphone 4 mg and ``an 
overage of 8,758'' tablets of hydromorphone 8 mg. Id. The Order also 
alleged that an audit for the period of June 27, 2012 through February 
4, 2013 found an overage of 1,306 tablets of oxycodone 30 mg, and an 
audit for the period of June 9, 2012 through February 4, 2013 found 
overages of 113 tablets of morphine 60 mg and 88 tablets of morphine 30 
mg. Id.
    On October 17, 2014, the Order to Show Cause was served on 
Respondent

[[Page 49817]]

by delivery to an attorney who was representing it in the 
investigation, and who had emailed a Diversion Investigator the day 
before that he would ``accept any service of process in that regard for 
Hills Pharmacy.'' ALJ Ex. 4. On November 14, 2014, Respondent, through 
its counsel, filed a request for a hearing with the Office of 
Administrative Law Judges. ALJ Ex. 2. The matter was then assigned to 
ALJ Gail Randall, who proceeded to conduct pre-hearing proceedings.\1\
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    \1\ Respondent raised no objection to the adequacy of service.
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    On December 2, 2014, the Government filed its Prehearing Statement. 
ALJ EX. 7. Of note, the Government's Prehearing Statement contained no 
additional information beyond that provided by the Show Cause Order as 
to the identities of the patients whose prescriptions were at issue. 
Compare ALJ Ex. 1, at 2-3, with ALJ Ex. 7, at 4-5. Thereafter, 
Respondent moved for an extension, which the Government did not oppose, 
and on December 16, 2014, the ALJ granted its motion.
    On January 9, 2015, Respondent filed its Prehearing Statement. ALJ 
Ex. 14. Respondent proposed to call as witnesses, ``[a]ny and all 
patients whose prescriptions were seized by . . . DEA pursuant to the 
Administrative Inspection Warrant [AIW] executed February 4, 2013 or 
whose prescriptions for controlled substances were dispensed between 
January 1, 2011 and February 4, 2013.'' Id. at 3. Respondent further 
attached to its Prehearing Statement a list of 1,461 persons. Id. at 
Exhibit A. Respondent also proposed to call as witnesses all of the 
physicians who had issued the prescriptions that were seized pursuant 
to the AIW and the controlled substance prescriptions that it dispensed 
between January 1, 2011 and February 4, 2013. Id. at 3. Respondent 
attached to its Prehearing Statement a list of more than 130 doctors. 
Id. at Exhibit B. Respondent further estimated that it would require 45 
to 60 days to present its case, exclusive of cross-examination and 
rebuttal.\2\ Id. at 9.
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    \2\ Respondent also sought to call the physicians who issued 
controlled substance prescriptions to the patients listed in Exhibit 
A after February 4, 2013, as well as the pharmacists who dispensed 
those prescriptions. ALJ Ex. 14, at 3. It also proposed to call as a 
witness,``[e]ach and every . . . Diversion Investigator, Special 
Agent, and/or Task Force Officer who participated in the preparation 
of the application for the'' AIW or the ``the execution of the'' 
AIW, and ``[a]ny and all witnesses identified in the Government's 
Prehearing Statement.'' Id. at 4.
    Respondent also proposed to call a consultant, who was a former 
Supervisory Diversion Investigator, who would testify regarding 
``his knowledge and experience in the investigation, preparation and 
execution of'' AIWs, purported errors in the audits, and 
Respondent's ``procedure for resolving potential `red flag' issues 
and compliance with recordkeeping requirements.'' Id. at 3, 5-6. 
Finally, Respondent proposed to call its own expert who would 
testify as to ``the legal and ethical responsibilities of the 
pharmacists dispensing prescriptions at'' it, the procedures used by 
it to resolve red flags, and his review of ``the prescriptions at 
issue.'' Id. at 6.
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    On January 14, 2015, the ALJ conducted an on-the-record prehearing 
conference. Noting that the Government had referred to the patients by 
their initials, the ALJ ascertained that Government intended to request 
a protective order. Tr. 6 (Jan. 14, 2015). Continuing, the ALJ noted 
``the scope of the Respondent's [counsel's] prehearing statement and 
his inability up to this point to identify the witnesses'' and asked 
the Government if it was ``willing to exchange the prescriptions which 
it intend[ed] to utilize . . . so Respondent can ID the actual patients 
involved?'' Id. at 6-7. Government counsel represented that the 
prescriptions would be sent by Fed Ex that day. Id. at 7. Subsequently, 
the ALJ noted that Respondent's counsel had ``proposed in excess of 
1,500 named witnesses and approximately 13,500 pages of documents'' and 
asked if this was ``still [his] current plan?'' Id. at 10. Respondent's 
counsel replied that if ``the Court limits the scope of the 
Government's case to just those prescriptions that are provided to us, 
I may be able to wean that down slightly.'' Id.
    The ALJ then asked Respondent's counsel to explain the purpose of 
the patients' testimony. Id. Respondent's counsel stated that ``the 
Government ha[d] not listed in their list of witnesses any of the 
patients . . . to whom prescriptions were dispensed and ha[d] not 
identified any of the physicians who issued [the] prescriptions.'' Id. 
at 11. Respondent's counsel then explained that it was his position 
that the Government's Expert's ``testimony should be excluded because 
he hasn't had any contact with any of the patients or prescribers to 
determine whether or not the red flags that he's identified can be 
resolved.'' Id. at 11-12. Respondent's counsel then maintained that if 
the Government's Expert was allowed to testify on these issues, ``it 
would be incumbent upon Respondent to demonstrate by the testimony of 
the patients regarding the inquiry and discussion between the patients 
and the pharmacists to resolve any of those red flags as identified by 
[the Expert], and for those prescribers to testify about their basis 
for issuing the prescriptions for those particular patients.'' Id. at 
12.
    On January 15, the ALJ issued a Preliminary Order Regarding Scope 
Of Proceedings. ALJ Ex. 19. Therein, the ALJ explained that ``any of 
those proposed patient and physician witnesses who are not linked to a 
prescription transaction which the Government asserts created a `red 
flag' present[s] the potential for providing no relevant evidence.'' 
Id. at 3. However, the ALJ also held that ``to the extent warranted by 
the Government's disclosure (and potentially its case-in-chief at the 
hearing), the Respondent may seek leave to present evidence from 
prescribing practitioners and/or patient-customers on the narrow issue 
of rebutting Government evidence that controlled substances were 
dispensed in the face of `red flags' of diversion with no attempts made 
to contact those witnesses to attempt to resolve the `red flag(s).' '' 
Id. The ALJ thus concluded that ``[a]s the proffer stands now . . . an 
insufficient basis has been presented for presenting the testimony of 
all of these 1598 proposed witnesses.'' Id. (citing Respondent's 
Prehearing Statement, at 3 and Exhibits A & B).
    Addressing Respondents' proffers of 13,510 pages of documents, the 
ALJ found ``that many of these documents are not relevant to this 
proceeding.'' Id. at 4. The ALJ thus excluded Respondent from admitting 
any documents ``not linked to inventory practices, the controlled 
substance audit, or prescription transactions specified in the Order to 
Show Cause.'' Id. Finally, the ALJ precluded Respondent's Pharmacy 
Expert from testifying ``regarding applicable legal standards and any 
aspect of the Respondent's legal obligations as a DEA registrant.'' Id. 
at 5. However, the ALJ held that Respondent's Pharmacy Expert would be 
permitted to testify as to other areas in accordance with Respondent's 
proffer. Id. at 4.
    The same day, the ALJ also issued her Prehearing Ruling. In 
addition to setting the date of the evidentiary hearing, the Ruling 
also advised each party that if it chose to amend its witness list to 
include a new witness, it must file a supplement to its Prehearing 
Statement and include a summary of the witness's proposed testimony. 
ALJ Ex. 20, at 3. The Ruling further explained ``that witnesses not 
properly identified and testimony not summarized in prehearing 
statements or supplements thereto will be excluded at the hearing,'' 
and that if either party ``wished to raise any issues of inadequacies 
or ambiguities regarding the proposed witness' testimony . . . [it] may 
do so by motion.'' Id. Finally, the Ruling specified the date by which 
all

[[Page 49818]]

documentary evidence as well as any affidavits were to be provided to 
both the tribunal and the opposing party.\3\ Id.
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    \3\ There were numerous motions filed during the course of the 
pre-hearing procedures. My discussion of the motions and rulings is 
confined to those which limited the scope of the proceeding and the 
evidence that was admissible.
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    Thereafter, both of Respondent's counsels moved to withdraw; the 
ALJ granted the motions. ALJ Exs. 24, 25, 29, 31. Subsequently, new 
counsel entered an appearance and simultaneously moved for a 
continuance. ALJ Ex. 27, 30. The ALJ granted the motion and continued 
the hearing for three weeks, scheduling it for March 10 through March 
13, 2015. ALJ Ex. 40. In the meantime, both parties filed supplemental 
prehearing statements, ALJ Ex. 34 & 37, requests for subpoenas, and 
additional motions.
    On March 10 through 12, 2015, the ALJ conducted an evidentiary 
hearing in Tampa, Florida. See Recommended Decision (hereinafter, cited 
as R.D.), at 5. At the hearing, both parties elicited testimony from 
multiple witnesses and submitted various exhibits. Following the 
hearing, the ALJ left the record open so that the Government could 
submit an affidavit from a Special Agent who was then out of the 
country. Tr. 613. On April 16, 2015, the Government submitted the 
affidavit, and on April 21, 2015, the ALJ admitted the affidavit and 
closed the record. ALJ 52. Thereafter, both parties filed briefs 
containing their proposed findings of fact, conclusions of law, and 
argument.
    On April 29, 2015, the ALJ issued her Recommended Decision. 
Therein, the ALJ found that the Government had ``proved its prima facie 
case for revocation through the failing of Respondent's accountability 
practice and its violation of its corresponding responsibility by 
dispensing controlled substances without first resolving red flags 
raised by the prescriptions.'' R.D. 50 (citing 21 CFR 1306.04(a)). The 
ALJ further held that the testimony of Respondent's pharmacist-in-
charge (PIC) on the issue of acceptance of responsibility ``lack[ed] 
credibility.'' Id. at 52. Noting that while its PIC had stated that he 
had done due diligence in accordance with its protocols prior to 
dispensing the prescriptions at issue, the ALJ drew an adverse 
inference based on Respondent's failure to produce evidence to 
corroborate the PIC's assertion. Id. The ALJ thus ``conclude[d] that 
the Respondent's representatives have not accepted responsibility for 
the full extent of their actions proven by the Government,'' thus 
rendering its evidence of remedial measures irrelevant. Id. The ALJ 
then recommended that Respondent's registration be revoked and that any 
pending applications be denied. Id. at 53.
    Respondent filed Exceptions to the Recommended Decision and the 
Government filed a Response to Respondent's Exceptions. Thereafter, the 
record was forwarded to me for Final Agency Action.
    Having considered the record in its entirety, including 
Respondent's Exceptions (which I discuss throughout this decision), I 
adopt the ALJ's legal conclusions that Respondent violated the 
corresponding responsibility rule of 21 CFR 1306.04(a) with respect to 
many of the prescriptions. I also agree with her legal conclusion that 
Respondent failed to maintain accurate records as required by 21 U.S.C. 
827. And I further agree with her legal conclusion that Respondent has 
failed to accept responsibility for the misconduct which has been 
proven on the record of the proceeding. Accordingly, I agree with the 
ALJ's ultimate conclusion that Respondent has committed acts which 
render its continued registration inconsistent with the public interest 
and will adopt her recommendation that I revoke Respondent's 
registration and deny any pending applications. I make the following

Findings of Fact

    Respondent is the holder of DEA Certificate of Registration 
FH0772257, pursuant to which it is authorized to dispense controlled 
substances in schedules II through V, as a retail pharmacy, at the 
registered location of 7730 W. Hillsborough Ave., Tampa, Florida 33615. 
GX 1. This registration does not expire until October 31, 2016. Id. 
According to Respondent's registration, it is owned by Hills Pharmacy, 
L.L.C.\4\ Id. No evidence was put forward as to Respondent's current 
licensure status with the Florida Department of Health.
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    \4\ Notwithstanding its representation in its opening statement 
that it would ``show that Hills Pharmacy is owned by Hope'' Aladiume 
and ``her brother is Victor Obi Aladiume,'' Tr. 9, the Government 
put forward no evidence establishing Hope Aladiume's relationship to 
Respondent, or whether Victor Obi is her brother. Of note, Victor 
Obi was the owner of two Tampa pharmacies whose registrations I 
recently revoked. Superior Pharmacy I and Superior Pharmacy II, 81 
FR 31310, 31341 (2016). Moreover, Victor Obi served as ``the 
designated representative of the Respondent'' during this 
proceeding. Tr. 4.
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The Investigation of Respondent

    On February 4, 2013, DEA Investigators executed an Administrative 
Inspection Warrant (AIW) at Respondent. Tr. 233. The lead Investigator 
presented the AIW to Respondent's PIC (Mr. George), and obtained 
various records from Respondent including inventory records, receipt 
records, and prescriptions. Id. According to the Investigator, he asked 
for two years' worth of records.\5\ Id. The DI further testified that 
while Respondent provided him with a perpetual inventory of various 
schedule II drugs, the document ``did have physical inventory dates in 
there.'' \6\ Id. at 235. According to the Investigator, ``there was not 
one date [when] every controlled substance was inventoried.'' Id. Thus, 
the beginning dates for the drugs that were audited varied. Id. at 236.
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    \5\ According to the DI, ``not all of the required records were 
onsite.'' Tr. 252. The DI specifically identified the offsite 
records as including prescriptions from February 4, 2011 through 
April 2011, inventories from February 4, 2011 through the end of 
2011, and receiving records from February 4, 2011 through the end of 
2011. Id. at 253. The DI further testified that Respondent's 
attorney had stated that the records were offsite and that the 
office manager had the key and was not available that day. Id.
    Respondent, however, disputed that the records were offsite. Its 
PIC testified that the records were onsite in a locked storage room, 
but that he had left the storeroom key at home that day, and that 
when Respondent's owner arrived with the duplicate key ``two hours 
later,'' ``the officers [had] left'' so he provided the records to 
its lawyer. Id. at 536.
    \6\ According to the transcript, the Government asked the DI: 
``Did you inquire whether Hills had a bi-annual inventory?'' Tr. 
234. After he explained that he was provided with the above-
mentioned perpetual inventory, the Government asked the DI: ``So 
that's how you conclude there was no bi-annual inventory?'' Id. at 
235. The DI answered ``correct.'' Id.
    Federal law requires, however, that a registrant take biennial 
and not biannual inventories. 21 U.S.C. 827(a). Moreover, the 
transcript was not corrected. Thus, I take the transcript as it is.
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    The DI further testified that as part of executing the AIW, a 
closing inventory was taken in which various schedule II drugs were 
physically counted. Id. at 237. According to the DI, the closing counts 
were taken by Mr. George (Respondent's PIC) and were recorded on a 
document.\7\ Id.; GX 7. However, the closing inventory was signed by 
another Diversion Investigator and witnessed by a DEA Special Agent 
rather than Mr. George. GXs 7 & 16; Tr. 312.
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    \7\ However, other testimony was to the effect that the closing 
inventory counts were done by the PIC, another DI, and the Special 
Agent who signed the inventory as a witness. Tr. 287, 312. Moreover, 
Mr. George testified that he did not participate in the counting of 
the drugs on hand. Tr. 535. And he further testified that the 
Investigators did not tell him that they were ``doing the actual 
count.'' Id. Be that as it may, I find no reason to reject the 
closing count.
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    Using the inventories and the records of Respondent's receipts and 
prescriptions, the DI conducted an audit of Hills' handling of seven 
schedule II

[[Page 49819]]

controlled substances. According to the DI, he conducted the audit by 
adding Respondent's purchases to the initial inventory figures to 
calculate the quantity of each drug that Respondent was accountable 
for. Tr. 237. The DI then explained that the ``total accounted for'' 
was calculated by using the closing inventory (i.e., the inventory 
taken on the date of the inspection) and adding the amounts distributed 
or transferred of each drug. Id. According to the DI, the latter was 
``basically . . . what they filled at the pharmacy'' as the 
Investigators did not ``come across'' any ``sales . . . to other 
pharmacies.'' Id. He further testified that in calculating Respondent's 
purchases, ``the only numbers that [he] used was stuff that we actually 
had a physical 222 [form] or [a] CSOS representation'' and that he did 
not count product which was recorded in the perpetual inventory if 
there was no 222 form for it. Id. at 273.
    Comparing the ``total accountable for'' with the ``total accounted 
for'' for the seven drugs, the DI found that Respondent had overages in 
six of the drugs, the most significant being 1,306 dosage units (du) of 
oxycodone 30 mg and 8,758 du of hydromorphone 8 mg.\8\ GX 4. Moreover, 
Respondent had a shortage of 4,135 du of hydromorphone 4 mg. Id.
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    \8\ According to the Government, Respondent had overages of 5 du 
in methadone 10 mg, 82 or 88 du in morphine sulfate 30 mg, 113 du in 
morphine sulfate 60 mg, and 2 du in morphine sulfate 100 mg. GX 4, 
at 1.
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    Respondent disputed the accuracy of the audits. Specifically, its 
PIC testified that there were controlled substances in the will-call 
bins. Tr. 536-37. Respondent's PIC then explained that these drugs 
would be prescriptions that were finished in ``vials with the label'' 
and ``waiting for the patient to come and collect it.'' Id. at 537. 
Moreover, a DI testified that the audit team did not count the 
prescriptions in the will-call bins. Id. at 290. He also did not recall 
if drugs that were quarantined for disposal were counted. Id.
    Respondent, however, put forward no evidence that there were any 
drugs quarantined for disposal on the date that the AIW was executed, 
let alone that any of those drugs were those being audited. 
Subsequently, the DI testified that ``[w]e asked where the controlled 
substances were,'' and counted the drugs in the safe because ``that's 
where we were shown.'' Id. at 291.
    Respondent's PIC also testified that there were some medications 
that were returned to the pharmacy's stock when they were not picked up 
by the customer. Tr. 525. He further identified a document (RX 6, at 3) 
which lists six instances (by date, RX number, patient name, and 
quantity) in which a patient apparently did not pick up a prescription 
for hydromorphone 8 and the drugs were returned to stock. Tr. 525. The 
PIC testified that he did not know if DEA counted the pills that were 
returned to stock if they were still on hand. Id.
    Respondent did, however, introduce into evidence various documents 
for each of the audited drugs, including a list of the prescriptions 
that were dispensed, its perpetual inventory for the drug, the invoices 
and scheduled II order forms for its receipts, and, as explained above, 
in some instances, a document listing ``returns to stock'' from 
patients. As discussed later in this decision, with respect to the 
overages alleged by the Government as to oxycodone 30 mg and 
hydromorphone 8 mg, the records show that Respondent placed additional 
orders that were not counted by the Government and establish that the 
overages in these two drugs were substantially less than the quantities 
alleged by the Government. Respondent's records do not, however, call 
into question the conclusion that it had a large shortage in 
hydromorphone 4 mg and actually support the conclusion that the 
shortage was even larger than that alleged by the Government.
    The same DI also testified as to other alleged violations. More 
specifically, the DI testified that several DEA Order Forms for 
Schedule II drugs (Form 222) were not properly completed, because 
``[w]hen they don't receive a drug, they need to write a zero if they 
didn't receive anything.'' Tr. 255. While the DI did identify an 
instance in which Respondent had notated the receipt of six packages of 
methadone 10 mg, he noted that Respondent had failed to include the 
date that the packages were received. Id.; see also GX 10, at 9. He 
then testified regarding a further order form, on which three of the 
four line items had been filled in with both the quantity received and 
the date received, explaining with respect to an entry that was not 
completed, that the forms ``are missing [the] number of packages 
received, [the] date received.'' Tr. 255. However, when asked by the 
ALJ whether the pharmacist would ``put the date that he entered the 
zero'' for a similar entry which was left blank (GX 10, at 1, line 2), 
the DI testified; ``I'm not sure about that, but we need the number 
zero at least.'' Tr. 256.
    The DI also testified that there were some instances in which 
Respondent provided him with a photocopy of the purchaser's copy of the 
222 form, rather than the original which it is required to maintain for 
a period of two years. Id. at 257 (discussing GX 11, at 2). The DI also 
testified that Respondent did not have any inventory document other 
than the perpetual inventory documents that its PIC provided. Id. at 
270. Re-emphasizing the point, the DI subsequently testified that 
``that's all we had, so we had to use it.'' Id. at 278.

The Allegations of Dispensing Violations

    Following the execution of the warrant, another DI provided a CD 
which contained copies of the schedule II prescriptions \9\ that were 
seized to Robert Parrado, R.Ph., who reviewed them and testified as an 
Expert for the Government. The DI testified that the Investigators did 
not obtain the patient profiles (which apparently could have been 
extracted from the computer which was imaged by the inspection team) 
and thus did not provide them to Mr. Parrado. Tr. 300.
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    \9\ According to the DI, the Investigator did not seize ``any 
noncontrolled prescriptions'' and ``just took [the] [s]chedule [II] 
scrips.'' Tr. 299.
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    Mr. Parrado testified that he obtained his B.S. in Pharmacy in 1970 
from the University of Florida College of Pharmacy and that he has held 
a Florida pharmacist's license since 1971. Tr. 14; GX 2, at 1. Mr. 
Parrado testified that he has practiced as a pharmacist at both 
community pharmacies as well as hospital pharmacies; he also testified 
that he had been the pharmacy department manager at multiple 
pharmacies, including two pharmacies that he owned for approximately 19 
years. Tr. 15-16; GX 2, at 1-2.
    Mr. Parrado was a member of the Florida Board of Pharmacy from 
January 2001 through February 2009, and served as both Vice Chairman 
and Chairman of the Board. Tr. 17; GX 2, at 3. He is a member of the 
Florida Pharmacy Association, having served as both its President and 
then Chairman of the Board. GX 2, at 3. He is also a member of the 
Hillsborough County Alcohol & Drug Abuse Task Force, the National 
Community Pharmacists Association, and the American Society for 
Pharmacy Law. Id. Finally, he has made numerous presentations on the 
dispensing of controlled substances by pharmacists, id. at 3-7, and has 
testified as an expert witness for both the prosecution and defense in 
criminal and administrative matters. Tr. 18.
    On voir dire, Mr. Parrado explained that he reviewed only the front 
and back of the prescriptions in forming his opinions, and that while 
he had also recently been provided with and looked at ``some Respondent 
exhibits [that]

[[Page 49820]]

looked like partial . . . medical records . . . for about 25 
patients,'' he had already formed his opinion before he reviewed those 
documents. Tr. 29-30, 32. Mr. Parrado also testified that he did not 
interview any patients, doctors or pharmacists, and that he was not 
provided with any information regarding interviews conducted by DEA 
personnel of the patients, doctors, or pharmacists. Id. at 39. Mr. 
Parrado testified that he did a limited amount of research on his own, 
which included doing Google map searches to determine how far the 
patients lived from Tampa, looking to see whether the doctors had a 
valid license, looking up the pharmacy on the Board of Pharmacy's Web 
site to determine its ownership and prescription department manager, 
and looking to see whether the pharmacists had valid licenses and a 
disciplinary history. Id. at 40-42. After an extensive voir dire by 
Respondent's counsel, Respondent objected to Mr. Parrado's being 
recognized as an expert in community pharmacy practice. Id. at 50. The 
ALJ properly overruled the objection, finding that Mr. Parrado was 
qualified to testify as an expert in retail pharmacy practice based on 
``his knowledge, skill, experience, training, and education.'' Id. at 
52.
    On resumption of direct examination, the Government asked Mr. 
Parrado if there is ``a specific protocol'' that a pharmacist must 
follow ``before dispensing a controlled substance?'' Id. at 53-54. Mr. 
Parrado explained that a pharmacist ``has to ensure that the 
prescription is valid,'' and that under both the Florida Statutes and 
federal regulations, ``a pharmacist has to ensure the prescription is 
valid by making sure that it was written by a doctor in the course of 
his professional practice and that it was for a legitimate medical 
purpose.'' Id. at 54. Asked what a pharmacist is ``required to look for 
on the actual prescription,'' Mr. Parrado testified:

    Well, there are certain requirements that have to be on a 
prescription. What creates a red flag is anything that causes a 
pharmacist concern about that prescription. . . . [T]here is a thing 
a pharmacist has to do before he fills a prescription that is called 
prospective drug review. He has to go over that prescription. He has 
to evaluate the prescription for appropriateness of therapy, for 
seeing if there is any therapeutic duplications of medications. Are 
there any drug/drug interactions? Are there any drug/disease 
interactions? Is the prescription for--does it show signs of 
clinical abuse or misuse? You know, that's just a basic thing a 
pharmacist does before he fills a prescription.
    And then, knowing all the requirement of a prescription, what 
must be on that prescription as far as the patient name and address, 
the physician's name and address, the DEA number, the name of the 
medication, the strength, the directions, all those things, the 
quantity, have to be on that prescription.

Id. at 54-55.
    Asked by the Government to explain what a ``red flag'' is and to 
give examples, Mr. Parrado testified that ``a red flag . . . is 
anything that would cause a pharmacist concern,'' and that ``[t]here 
are lots of things that lead to red flags'' when a pharmacist is 
``trying to determine'' if a prescription was issued ``for a legitimate 
medical purpose.'' Id. at 55-56. Mr. Parrado then identified multiple 
red flags, including, what he termed the ``first red flag,'' that being 
``the drug itself,'' as there are ``known drugs of abuse'' that are 
being ``commonly'' abused. Id. at 56. Mr. Parrado then identified 
additional red flags to include: the ``the dosing''; ``[a] person 
travelling a long distance to acquire that drug''; ``a person willing 
to pay a lot, a lot of money in cash to obtain that drug''; and ``a 
person getting . . . certain cocktails of drugs.'' Id. As to the 
latter, Mr. Parrado explained that:

    A cocktail is multiple drugs . . . that are known to be abused 
on the street, and the most common . . . has a name, it's called the 
Holy Trinity, which would be oxycodone, which is an opioid, a 
benzodiazepine, which would be a tranquilizer such as Xanax, and a 
muscle relaxer like Soma. Those three together are well known 
combinations or cocktails that are abused on the street.

Id.
    Next, the Government asked whether ``a pharmacist look[s] at the 
actual amounts that are prescribed when determining whether there's a 
red flag on that prescription?'' Id. Mr. Parrado answered that a 
pharmacist is ``required by law . . . to make sure that the dosing is 
not excessive or inappropriate'' and ``[t]hat's one of our things that 
we are trained in.'' Id. at 57. Continuing, Mr. Parrado explained that:

    One of the things that a pharmacist knows or should know is that 
oxycodone . . . that 80 milligrams a day has been listed in the 
literature as a lethal dose for an opioid na[iuml]ve patient. So, 
when being presented with a prescription for a dose that would 
exceed 80 milligrams in one day, that pharmacist would need to stop 
and take a look and verify that the patient is not opioid na[iuml]ve 
and has been on a regiment [sic] that has led him to develop a 
tolerance to that dose.

Id.
    Mr. Parrado further identified as a red flag the simultaneous 
prescribing of two immediate release opioids, which he stated ``would 
be inappropriate therapy.'' Id. at 58. He also identified as a red flag 
``pattern prescribing,'' which he defined as ``when I see the same 
medications, the same groups of medications, same combinations of 
medications in very similar quantities and very similar doses coming 
out of one . . . clinic.'' Id. Continuing, Mr. Parrado testified:

    When I see multiple people presenting with a very similar group 
or combination of prescriptions coming from one particular clinic, 
that is very much a red flag. That's not what happens in the average 
course of a day in a pharmacy. You don't see groups of people coming 
in from the same clinic, all getting the same drugs in large 
quantities and all willing to pay cash.

Id. at 59.
    Mr. Parrado identified a further red flag as ``multiple people 
living in one household all receiving the same medications.'' Id. Mr. 
Parrado then testified: ``[i]s it possible? It could be, but it's just 
not--it doesn't happen on an everyday basis'' and that he ``would have 
to resolve [this red flag] before [he] could fill'' the prescriptions. 
Id.
    Mr. Parrado testified that ``the basic way of resolving a red flag 
is . . . to verify [the prescription] with the prescriber,'' and that 
``you consult with the prescriber'' and not his staff or nurse, ``over 
your concerns.'' Id. at 60. According to Mr. Parrado, the pharmacist 
must then ``use [his/her] professional judgment'' and ask ``[d]id I 
believe what I just heard? . . . [Are] there any red flags in the 
conversation I just had?'' Id. Mr. Parrado added that ``I've had many, 
many instances where after a conversation with the physician I said 
absolutely I'm not going to fill that prescription.'' Id.
    Mr. Parrado further testified that some red flags are unresolvable. 
Id. As an example of unresolvable red flags that would lead him to 
refuse to fill a prescription, he identified ``a group of multiple 
people travelling a long distance, all getting the exact same or very 
similar prescriptions from one physician and all coming in with very, 
very large quantities of cash.'' Id. at 60-61. Mr. Parrado then 
testified that ``if you do see a red flag and you can resolve it, you 
document it on the prescription and then you fill it.'' Id. at 61. Mr. 
Parrado reiterated that the resolution is written ``[o]n the 
prescription itself.'' Id.
    To counter Mr. Parrado's testimony as to the procedures a 
pharmacist must follow in dispensing controlled substances, Respondent 
called Dr. Sam Badawi. Dr. Badawi obtained his Doctor of Pharmacy 
degree from Samford University in 2002, and he is licensed to practice 
pharmacy in both Alabama and Florida, becoming licensed in the latter 
State in 2010. Tr. 346. He also

[[Page 49821]]

holds Juris Doctor degrees from both the Birmingham School of Law 
(2008) and Stetson University (2014), as well as an L.L.M. (2011) from 
Stetson in international intellectual property. Id.
    Mr. Badawi testified that he had worked as a full-time retail 
pharmacist in Alabama until sometime in 2004 or 2005, when he 
``transitioned into clinical pharmacy and IV infusion,'' which involved 
working ``with hospice patients who required intravenous pain 
prescriptions'' and ``morphine pumps.'' Tr. 348. While Mr. Badawi 
asserted that he continued to work on a part-time basis in retail 
pharmacy, he subsequently went to work for Amgen, a biotechnology 
company where his duties involved clinical trial design. Id. at 366.
    On voir dire, Mr. Badawi testified that while he had worked in 
retail pharmacy for about ten years, four of those years were as an 
intern. And while he then asserted that he had worked in retail 
pharmacy ``from 02 all the way up to 08, when [he] moved to Florida,'' 
id. 372, his testimony was that for much of this time he worked only on 
a ``floating'' or ``part-time basis.'' Id. at 374. Mr. Badawi also 
acknowledged that when he worked at Amgen, as well as when he worked as 
a clinical pharmacy director, he did not interact directly with 
patients. Id. at 374-76. He further acknowledged that he had never 
taught pharmacy or published any articles; he also testified that his 
experience managing a pharmacy was limited to doing so on an interim 
basis ``for a couple of months.'' Id. at 376.
    Mr. Badawi further acknowledged that he is not currently practicing 
pharmacy. Id. at 377. As for his experience testifying as an expert 
witness, Mr. Badawi testified that it is limited to a single criminal 
case in which he was listed as a witness but did not testify. Id. at 
381. While the Government objected to Mr. Badawi's being qualified as 
an expert witness on the standard of pharmacy practice as it affects 
the dispensing of controlled substances, the ALJ overruled the 
objection and deemed him qualified ``as an expert in the standard of 
[pharmacy] practice as to the effective dispensing of controlled 
substances.'' Id. at 390.
    On direct examination, Mr. Badawi testified that when a controlled 
substance prescription presents a red flag, ``[a] reasonable, prudent 
pharmacist will follow the DEA [Pharmacist's] Manual,'' which was 
published in 2010 and which at ``page 67'' lists criteria that ``may be 
an indication . . . that [the] prescription was not issued for a 
legitimate medical purpose.'' Id. at 391. Continuing, Mr. Badawi 
testified that ``[a]nd you have six options. And then it tells you what 
to do.'' Id. at 391-92. Mr. Badawi then referenced a Florida Board of 
Pharmacy Rule (Fla. Admin. Code r.64B16-27.831), which states that ``a 
prescription that is not issued for a legitimate medical purpose is not 
a valid prescription,'' and ``gives you five different scenarios'' 
before adding that ``in a retail setting, I would follow first the DEA 
Manual.'' Id. at 392.
    Mr. Badawi then testified as to the prevention techniques listed in 
the Manual, which include ``[k]now[ing] your patient . . . what's the 
story behind that patient,'' ``know[ing] your drug, and know[ing] the 
prescriber and the DEA.'' Id. at 393. Mr. Badawi asserted that this is 
what a reasonably prudent pharmacist would do, ignoring that the Manual 
then states that ``[w]hen there is a question about any aspect of the 
prescription order, the pharmacist should contact the prescriber for 
verification or clarification.'' Pharmacist's Manual, at 67.
    Mr. Badawi then testified that ``[a] red flag is a caution sign for 
the pharmacist,'' but ``on its face alone does not mean the 
prescription is invalid.'' Id. at 394. Continuing, Mr. Badawi testified 
that the Manual says that:

if any of these criterias [sic] are found . . . the prescription may 
not be issued for [a] legitimate medical purpose. So actually it's a 
caution sign. You stop and you look, meaning that you default back 
on your training, your knowledge, state laws, federal laws, common 
sense as a professional, and you exercise that professional 
judgment, meaning a discretion.
    So after you stop with that red flag, and then you proceed with 
caution, and you exercise your discretion. So, if a pharmacist 
chooses to exercise that discretion favorably by resolving the red 
flag, then you dispense it. If not, then you don't dispense it.

Id. at 395.
    Respondent's counsel then questioned Mr. Badawi about the specific 
red flags identified by the Government's Expert and how a pharmacist 
should resolve the red flag. Id. at 395-96. As to how a pharmacist 
should resolve the circumstance where prescriptions are presented 
``from multiple individuals for the same or similar types of drugs 
[narcotics] in similar quantities,'' Mr. Badawi acknowledged that this 
is a red flag. Id. Mr. Badawi then testified that a pharmacist should 
``fall back to the DEA Manual rules'' and ``[k]now the patient. So I 
have two patients with the same address from the same prescriber, so I 
would actually inquire into the circumstance of these two patients.'' 
Id. at 396. Continuing, Mr. Badawi added that ``then you want to know 
the doctor'' and whether he is ``a pain management'' or ``an ortho 
surgeon'' and ``[w]hat's the origination of that prescription?'' Id. 
According to Mr. Badawi, if the pharmacist still had doubts despite 
knowing this:

you pick up the phone and ask to speak to the prescriber to find out 
more of the story because sometimes your patients are not going to 
tell you everything. So I don't want to miss the whole picture. So I 
would call the prescriber and verify. And if I still have doubts, I 
would not dispense that prescription. So that goes all under 
professional judgment, not just looking at the piece of paper and 
making a decision.

Id. at 396-97. Mr. Badawi maintained, however, that this red flag could 
be resolved and the prescription could be dispensed. Id. at 397.
    Respondent's counsel then asked Mr. Badawi whether the fact the 
drug alone was for oxycodone 30 mg was a red flag of the prescription's 
potential illegitimacy. Id. at 397-98. While Mr. Badawi initially 
answered that ``[t]he drug by itself, no,'' he then testified that a 
Board of Pharmacy Regulation ``says that if the patient, all he or she 
is getting [is a] controlled substance, the oxycodone by itself could 
be under Florida law a red flag because it meets that criteria.'' Id. 
at 399. Then asked what a pharmacist should do to meet the standard of 
practice where a patient presents only a prescription for oxycodone 30 
mg, Mr. Badawi answered: ``Know your patient. So I would actually look 
into the patient profile history of that patient'' to see ``if there 
are any notes being documented in the computer from prior pharmacists 
that actually dispense [sic] for this individual.'' Id. Mr. Badawi then 
explained that one of the reasons for reviewing the patient profile is 
that ``there are certain drugs'' that you ``want to steer away from 
opioid-na[iuml]ve patients'' and that a pharmacist ``want[s to] make 
sure that the patient is able to tolerate the drug because it's a CNS-
depressant.'' Id. at 400. Mr. Badawi also explained that the pharmacist 
must review the patient profile to determine whether there are any 
``drug-drug interactions.'' Id. at 401.
    Mr. Badawi acknowledged his agreement with Mr. Parrado's testimony 
that a prescription that calls for the dispensing of a ``very large or 
larger than normal amounts of a narcotic'' raises a red flag which 
requires that the pharmacist make an inquiry. Id. at 402-03. He also 
acknowledged that a narcotic prescription which provides for dosing 
that is ``larger-than-normal,'' or ``larger-than the manufacturer's 
recommended dosage'' also creates a red flag which requires the 
pharmacist to

[[Page 49822]]

look at the patient profile and determine if the patient has developed 
tolerance. Id. at 403-04. Mr. Badawi then explained that the doses of 
patients being treated with narcotics ``typically increase[ ] over time 
to achieve the pharmacological effect and also with respect to 
tolerance,'' and it ``very common'' for a patient to be prescribed both 
an extended release drug and immediate release drug ``for breakthrough 
pain.'' Id. at 404.
    As for the circumstance of a patient presenting prescriptions for 
two short acting narcotics, Mr. Badawi testified that he ``would 
consider it as a red flag, and I would investigate further, and I would 
exercise my professional judgment.'' Id. at 418-19. When later asked on 
cross-examination, what possible explanation there could be for a 
patient to be prescribed two short-acting opiates together, Mr. Badawi 
suggested that a patient with kidney failure who is undergoing dialysis 
three times a week may require a combination because ``the drug is 
being excreted by the kidneys.'' Id. at 435-36.
    Mr. Badawi further testified that it is ``common for physicians to 
issue prescriptions for [schedule II] drugs without the address being 
on the face of the prescription.'' Id. at 406. However, he testified 
that DEA had issued guidance that a pharmacist is to look at his/her 
State's rule'' to determine whether the patient's address could be 
added to the prescription. Id. at 406-07.
    As for how a pharmacist would address the circumstance in which a 
patient lives ``a significant distance . . . from the pharmacy,'' Mr. 
Badawi testified that ``you want to know the patient, the reason why 
they're 100 miles way.'' Id. at 407-08. Mr. Badawi then suggested that 
the patient could be ``on a special assignment to MacDill Air Force 
Base,'' which is located in South Tampa; that the patient could be a 
snowbird and that Florida has ``a lot of snowbirds''; the patient could 
be on a three-month job assignment in Tampa or ``moving in with his 
fiancée.'' Id. at 408. Mr. Badawi then testified that he was 
``not discounting that'' this ``is a red flag,'' and that a pharmacist 
should ``investigate more.'' Id. He then maintained that ``there is a 
professional judgment for the pharmacist to exercise, and based on the 
fact, you act accordingly.'' Id. And he further asserted that the 
proximity of the prescribing doctor to the pharmacy could explain why 
the patient who had travelled a long distance was filling the 
prescription at the pharmacy. Id. at 409.
    Later, in response to a question by the ALJ, Mr. Badawi maintained 
that even if the patient was travelling a long distance, if the patient 
was a regular patron, ``that would actually resolve the distance.'' Id. 
at 437-38. However, after again testifying that the pharmacist should 
know his patient, the prescriber and the medical condition, Mr. Badawi 
explained that the pharmacist ``may want to inquire more about the 
patient [sic] reasons for being in hypothetically Tampa.'' Id. at 438.
    Asked what types of prescriptions a reasonable pharmacist would 
``expect to see'' when ``there is a pain management facility that is 
seeing a large number of patients for chronic pain,'' Mr. Badawi 
testified that a pharmacist would expect the prescriptions to be for 
``primarily opioids.'' Id. at 416. Then asked what a pharmacist should 
do ``to adhere to the standard of practice . . . and address that 
issue,'' Mr. Badawi testified that ``when I was there, most of the 
patients . . . were regulars, and they were getting it actually on set 
intervals.'' Id. at 416. As for ``a new patient, you would go through 
ID verification [and] [y]ou would actually have them fill out more of a 
history, diagnosis.'' Id. at 417. Mr. Badawi then agreed with 
Respondent's counsel's suggestion that knowing that the clinic 
administered random drugs screens would ``assist a reasonable 
pharmacist.'' Id. Asked what other information a pharmacist would want 
to know about the practices of a pain management clinic, Mr. Badawi 
testified that a pharmacist would want know that the practitioners 
``hold a valid DEA license'' and that the clinic has ``an active state 
license to conduct business.'' Id. at 418. Continuing, Mr. Badawi 
explained that ``you utilize the [Prescription Drug Monitoring Program] 
and the patient profile. So it's the totality of the circumstances, not 
just one angle, like a tunnel vision, when you actually want to verify 
these red flags.'' Id.
    Mr. Badawi then testified that standing alone, none of the red 
flags identified by the Government's Expert render a prescription 
invalid. Id. at 419. He then explained that ``[r]ed flags are meant for 
the pharmacist to stop and inquire. So, now, if you have a combination 
thereof, not just one flag, maybe the weight of the inquiry is probably 
more than just one red flag.'' Id. at 419-20. He then testified that 
none of the red flags or combinations thereof identified by the 
Government's Expert required that the pharmacist reject the 
prescription. Id.
    Mr. Badawi then testified that with the exception of a Board rule 
which requires a pharmacist to make a photocopy of a patient's 
identification, or if a copier is not available, to document 
descriptive information on the back of a prescription, there is no 
requirement that a pharmacist document his resolution of a red flag on 
the prescription. Id. at 421. Asked whether it is the standard practice 
for a pharmacist to document how he/she resolved every red flag, Mr. 
Badawi answered:

. . . I don't know if you could document every single thing. I mean, 
you pick your battles. You want to document the major issues, and 
documentation nowadays, especially with these computer systems that 
would make you approve a prescription via a thumbprint scan, you 
don't even have to put a code on the computer anymore. These 
electronic records are kept.
    I would rather, as a reasonable, prudent pharmacist, and to 
benefit my other colleagues who are working after my shift, to have 
access to this documentation is to have it on the computer under the 
patient notes so they can see what I've done versus the paper trail.

Id. at 422. However, when asked on cross-examination if it is ``within 
the standard of practice . . . to not document how a red flag is 
resolved,'' Mr. Badawi answered: ``No, it is not in the standard of 
practice to make a blanket statement and not to document any red flags 
that are being resolved.'' Id. at 436-37.
    Mr. Badawi also testified that he had attended a presentation by 
Mr. Parrado two years earlier on dispensing controlled substances, 
during which Mr. Parrado ``said there is a lot of gray area, it's not 
black or white, and to always use your professional judgment.'' Id. at 
425. According to Mr. Badawi, during the presentation Mr. Parrado did 
not mention that the distance a patient travels is a red flag and that 
Mr. Parrado also told the attendees that ``there is no ceiling on'' the 
quantity of narcotics that a patient can be prescribed. Id. at 426. Mr. 
Badawi also testified that Mr. Parrado did not identify as a red flag 
the circumstance of a prescription missing a patient's address. Id. at 
426-27. He also asserted that Mr. Parrado did not identify as a red 
flag the circumstance of patients residing at the same address. Id. at 
427. While the Government objected to Mr. Badawi's testimony regarding 
the presentation on the ground that it had not been disclosed in 
advance of the hearing, to which Respondent's counsel asserted that 
this testimony was offered to impeach Mr. Parrado, id. at 424-25, 427; 
the ALJ overruled the objection. Id. at 427.
    On cross-examination, Mr. Badawi acknowledged that he had not 
looked at any of the prescriptions. Id. at 430. Nor did he look at any 
of the patient profiles. Id. Asked if ``traveling hundreds of miles to 
see a physician is

[[Page 49823]]

a potential red flag,'' Mr. Badawi testified: ``It's not a potential 
red flag. It is a red flag.'' Id. When then asked if travelling 
hundreds of miles to see a physician whose clinic was affiliated with 
the pharmacy was a red flag, id., Mr. Badawi testified that the 
affiliation raised a separate issue regarding possible ``kickbacks and 
Stark laws,'' but that ``has nothing to do with the controlled 
substance dispensing.'' Id. at 431. However, after again agreeing that 
distance ``is a red flag,'' Mr. Badawi stated that ``[i]f they're 
sending patients in the back door and the pharmacists suspect that's a 
red flag, that's a separate issue on its own.'' Id.
    On questioning by the ALJ, Mr. Badawi acknowledged that there are 
some red flags that are not resolvable such as a prescription for some 
astronomical number of a drug such as morphine. Id. at 439. As an 
example, he testified: ``a 12-year old with [a] high doses of opioids, 
maybe in the hundred, for a broken bone. That seems excessive. So I 
would actually consult with the physician.'' Id. Mr. Badawi did not, 
however, explain what action he would take if the physician asserted 
that the prescription was legitimate.
    As another example of an unresolvable prescription, Mr. Badawi 
offered where ``there is any drug-drug interactions that would deem 
that the prescription is not in the best interests of the patient.'' 
Id. However, in Mr. Badawi's view, this involved a ``medical issue'' 
and ``therapeutic appropriateness'' and ``not necessarily the validity 
of the prescription.'' Id. As an example, he then identified a patient 
being prescribed opioids when she was pregnant because even though the 
prescriptions may have been valid ``medically speaking,'' the fetus 
could be born addicted. Id. at 440. Mr. Badawi did not, however, 
address whether the simultaneous prescribing of drugs such as oxycodone 
30, alprazolam, and carisoprodol also raises an issue of drug-drug 
interactions.
    As between Mr. Parrado's and Mr. Badawi's testimony, there was 
substantial agreement on a number of issues. Where, however, there are 
areas of disagreement, I generally find that Mr. Parrado's testimony 
was more credible based on his years of service on the Florida Board of 
Pharmacy and because his experience in retail pharmacy is far lengthier 
and more current than that of Mr. Badawi.

The Prescription Evidence

    At the hearing, the Government introduced into evidence copies of 
the front and back of 83 prescriptions for schedule II controlled 
substances which it alleged were dispensed by Respondent's pharmacists 
in violation of 21 CFR 1306.04(a) because they presented red flags 
which were not resolved. See GXs 3, 13, 14, and 15. Nearly all of the 
prescriptions were issued by physicians at the 24th Century Medical 
Center,\10\ which was located at 7747 W. Hillsborough Ave. in Tampa, 
id., a short walk from Respondent. According to a DEA Intelligence 
Research Specialist (IRS) who reviewed data that came from Respondent's 
dispensing software, 1,460 patients filled a total of 4,287 schedule II 
prescriptions at Respondent between January 3, 2011 and February 2, 
2013. GX 12, at 2; Tr. 219. The IRS further determined that 3,867 of 
these prescriptions--more than 90 percent--were written by six doctors 
who worked for Victor Obi. Tr. 219, 223; GX 12, at 2. These doctors 
include S. A.-H., P.C., R.R., H.D., V.S., and J.E., who worked at the 
24th Century clinic. According to the online records of the Florida 
Department of Health, 24th Century is a pain management clinic which 
has been owned by Mr. Obi since January 4, 2010.\11\
---------------------------------------------------------------------------

    \10\ Throughout this decision, the 24th Century Medical Center 
is also referred to as the 24th Century clinic and 24th Century.
    \11\ I take official notice of the online records of the Florida 
Department of Health which establish that Victor Obi-Anadiume is the 
owner of 24th Century Medical Center and has been since January 4, 
2010. Under the Administrative Procedure Act (APA), an agency ``may 
take official notice of facts at any stage in a proceeding-even in 
the final decision.'' U.S. Dept. of Justice, Attorney General's 
Manual on the Administrative Procedure Act 80 (1947) (Wm. W. Gaunt & 
Sons, Inc., Reprint 1979). In accordance with the APA and DEA's 
regulation, Respondent is ``entitled on timely request to an 
opportunity to show to the contrary.'' 5 U.S.C. 556(e); see also 21 
CFR 1316.59(e). Respondent may dispute my finding by filing a 
properly supported motion within fifteen calendar days of this Order 
which shall commence on the date this Order is mailed. 
---------------------------------------------------------------------------

    For example, the Government introduced a prescription issued by Dr. 
P.C. of the 24th Century Medical Center on July 28, 2011 to T.V. for 
210 oxycodone 30 mg, which Respondent filled the same day. GX 3, at 1. 
While T.V.'s address was not written on the prescription, the 
prescription bears an address label listing T.V.'s address as being in 
Pensacola, Florida, a distance of 472 miles from Respondent. R.D. at 6.
    Mr. Parrado testified that the prescription presented several red 
flags, including the lack of the patient's address; that it was for 
oxycodone 30 mg, a known drug of abuse; and that it was for a minimum 
of 180 milligrams a day, which is ``well above the 80 milligrams 
threshold'' and ``a very high dose'' and large quantity. Tr. 63. Mr. 
Parrado then noted that the patient's address was in Pensacola, 472 
miles from Respondent. Id. at 64; R.D. at 6.
    Mr. Parrado testified there was no indication on the prescription 
that ``anything was done . . . except that it was filled.'' Id. Asked 
whether it was possible to resolve the various red flags, Mr. Parrado 
replied that it was possible, ``but it would have taken a lot of 
investigation'' and that he ``would have had to have a good reason why 
that patient had to travel all the way to this clinic to get a 
prescription filled.'' Id. at 64-65. Continuing, Mr. Parrado stated 
that he could ``see if a patient is driving that far because they're . 
. . see[ing] a specific physician that has a specialty that's not 
available anywhere else.'' Id. at 65. Mr. Parrado subsequently 
testified that he was not aware that the physician has any specific 
specialty. Id. at 68. After the ALJ properly overruled Respondent's 
counsel's objection that Mr. Parrado was testifying beyond the scope of 
his expertise, the ALJ asked ``what would indicate on a prescription to 
you as a pharmacist of what you're looking for in this physician?'' Id. 
at 69. Mr. Parrado answered:

. . . When I look at a prescription, I look and see where it came 
from. . . . You know a pharmacist has to exert his professional 
judgment on all prescriptions before he fills them. So I would be 
looking to see . . . I'm looking at a high dose of a very strong 
opioid narcotic. Where is that coming from . . . ? Is that coming 
from a cancer center, from an orthopedic office, somebody just had a 
big surgery? . . . I look for things like that, and I didn't see 
anything like that on here or I didn't see anything on this 
prescription that would indicate that a pharmacist had called to 
verify any of those things.

Id. at 69-70.
    Next, on August 4, 2011, Dr. S.A.-H., also of the 24th Century 
Medical Center, issued a prescription to J.P. for 196 oxycodone 30 mg; 
Respondent filled the prescription the same day. GX 3, at 2. Here too, 
J.P.'s address was not written on the prescription; rather a label was 
attached which listed J.P.'s address as being in St. Augustine, 
Florida, a distance of 196 miles from Respondent. Id.; R.D. at 6.
    Asked if the prescription presented any red flags, Mr. Parrado 
identified the lack of the patient's address; that is was written for 
oxycodone 30, ``a known drug of abuse''; that ``it's a very high 
quantity''; that the patient lived ``a rather good distance'' from 
Tampa; that it came from the 24th Century clinic; and that ``[t]he 
patient paid $784 in cash.'' Id. at 70-71. As to the cost of the 
prescription, Mr. Parrado testified that:

    You don't see people paying $784 in cash. You tell a person they 
have a $50 co-pay and

[[Page 49824]]

they go ballistic on you. And for a person to willingly pay $784 and 
not have any documentation as to why they did that and to see that 
over and over every day is a concern to me. . . . That's a red flag 
that I couldn't resolve.

    Id. at 71. Mr. Parrado then explained that ``there were multiple 
red flags on here'' and that ``[a]ny attempt to have . . . done 
anything with them to resolve them would have been documented on the 
prescription.'' Id. at 71-72. However, Mr. Parrado ``did not see any 
documentation on this prescription that led me to believe anything was 
done.'' Id.
    Also on August 4, 2011, Dr. P.C. of the 24th Century Medical Center 
issued a prescription to T.P.--who has the same last name as J.P.--for 
224 oxycodone 30 mg; Respondent filled the prescription the same day. 
GX 3, at 3. Here too, T.P.'s address was not written on the 
prescription; rather a label was attached which listed her address as 
also being in St. Augustine, Florida. Id.; R.D. at 6. Moreover, 
Respondent`s dispensing software assigned the number 2037897 to J.P.'s 
prescription and the number 2037898 to T.P.'s prescription. GX 3, at 2-
3.
    Asked if T.P.'s prescription presented any red flags, Mr. Parrado 
testified that ``[h]ere we have two people with the same last name 
traveling from St. Augustine . . . to get very similar prescriptions.'' 
Tr. 72. After noting the quantity of each prescription, Mr. Parrado 
testified that there were ``the same red flags as before. No address, 
the known drug of abuse, the high quantity, traveling the long 
distances'' and that T.P. ``paid $896 in cash.'' Id. According to Mr. 
Parrado, T.P.'s prescription ``was the very next prescription entered'' 
in the dispensing software after J.P.'s. Id. at 74.
    Also on August 4, 2011, Dr. P.C. issued a prescription for 240 
oxycodone 30 to W.J.; Respondent filled the prescription the same day. 
GX 3, at 4-5. Here too, W.J.'s address was not written on the 
prescription and had been added by a label which listed his address as 
being in San Antonio, Florida, a distance of 36 miles from Respondent. 
Id.; R.D. 6.
    Mr. Parrado testified that the prescription presented red flags 
which included the lack of the patient's address; that the drug was for 
oxycodone 30, a known drug abuse; that the quantity was very high; that 
the patient was travelling from a town which is ``40 miles from 
Tampa''; that the patient paid $960; that the prescription was written 
by a doctor from the same clinic; and that the prescription number 
(2037895) preceded the numbers on the prescriptions presented to J.P. 
and T.P. Tr. 75. Mr. Parrado explained that ``[t]hese were all filled 
on the same day, so you have multiple prescriptions coming in from 
people travelling a long way, from the same clinic, for very similar 
drugs, and paying in cash, very large quantities of cash.'' Id. at 75-
76. Mr. Parrado then testified that there was no evidence on the 
prescription that the red flags were resolved. Id. at 76.
    On July 29, 2011, Dr. S.A.-H. issued a prescription for 140 
oxycodone 30 to W.D.; Respondent filled the prescription the same day. 
GX 3, at 6-7. Here again, the prescriber had not written W.D.'s address 
on the prescription and his address was added by label which listed it 
as being in St. Cloud, Florida, a distance of 92 miles from Respondent. 
Id.; see also R.D. at 6. Mr. Parrado testified that the prescription 
presented ``the exact same red flags as . . . the previous 
prescriptions,'' and that there was no documentation that the red flags 
were resolved. Tr. 76-77.
    Mr. Parrado provided testimony to the effect that other 
prescriptions in GX 3 presented the same red flags as he had previously 
identified. These included two prescriptions written on July 29, 2011 
by Dr. P.C. for 168 oxycodone 30 to C.D. and 224 oxycodone 30 to D.M., 
as well as two prescriptions written by Dr. S.A.-H. the same day for 
168 oxycodone 30 to B.P. and 224 oxycodone 30 to C.C. GX 3, at 8-15. 
Respondent dispensed the prescriptions the same day. GX 3, at 8-15. As 
written, none of the prescriptions contained the patient's address. See 
id. at 8, 10, 12, and 14. However, the prescriptions bear labels which 
show that C.D. and B.P. lived in Gainesville, 134 miles from 
Respondent; D.M. lived in Hudson, 36 miles from Respondent; and C.C. 
lived in Spring Hill, 42 miles from Respondent. See id.; see also R.D. 
at 6.
    Mr. Parrado testified that these prescriptions raised an additional 
red flag, in that he was ``starting to see a pattern . . . coming from 
this one clinic of the same prescriptions'' and that ``[t]here is no 
individualization of therapy, which is important.'' Tr. 80. He also 
testified that he did not see any evidence that the red flags were 
resolved. Id. at 82.
    On April 21, 2011, Dr. P.C. issued a prescription for 196 oxycodone 
30 to C.B., which Respondent filled the same day. GX 3, at 16. Again, 
Dr. P.C. did not write C.B.'s address on the prescription. Id. 
According to the address label, C.B. lived in Big Pine Key, which is 
near Key West and a distance of 400 miles from Respondent. Id.; R.D. at 
6. Mr. Parrado testified that he did not see any evidence that the red 
flags were resolved. Id. at 82.
    Also on April 21, 2011, Dr. R.R. issued a prescription for 224 
oxycodone 30 to S.S., which Respondent filled the same day. GX 3, at 
17. Dr. R.R. did not write S.S.'s address on the prescription. See id. 
According to the address label, S.S. lived in Lakeland, a distance of 
44 miles from Respondent. Id.; see also R.D. at 7.
    After testifying that the prescription raised the same red flags as 
the previous prescriptions, Mr. Parrado explained that there was 
documentation on the prescription that the pharmacist had dispensed two 
different brands. Tr. 82-83; see also GX 3, at 17. However, Mr. Parrado 
did not see any evidence that the red flags were resolved. Id. at 83.
    Pages 18 through 25 of Government Exhibit 3 contain copies of eight 
prescriptions which were also written on April 21, 2011 by physicians 
from the 24th Century clinic for oxycodone 30 (in quantities that range 
from 140 to 240 tablets) and filled the same day. As with the previous 
prescriptions, none of the prescribers wrote the patient's address on 
the prescription; instead, the prescriptions bear a label with the 
address. See GX 3, at 18-25. Asked whether these prescriptions 
presented any additional red flags, Mr. Parrado testified that:

    It's just another day of doing the same thing. Yeah, could 
something like this happen once occasionally a person travels a long 
way and pays cash? Of course. Does it happen consistently day after 
day after day? No. That's what would be a nonresolvable red flag.

Tr. 84.
    The Government then asked Mr. Parrado if he knew where Hudson is in 
relation to Tampa.\12\ Tr. 85. Mr. Parrado answered that it is 30 to 40 
miles on the way to New Port Richie (which was the town or residence of 
one of these patients). Id. The Government then asked why it would ``be 
a red flag if it's just 30 miles?'' Id. Mr. Parrado explained:
---------------------------------------------------------------------------

    \12\ None of the patients whose prescriptions are reproduced at 
pages 18 through 25 resided in Hudson. See GX 3, at 18-25. Rather, 
the patients were from Tampa, Wildwood (79 miles), Dunedin (14 
miles), Palm Harbor (14 miles), New Port Richey (25 miles), Port 
Richey (26 miles), Gainesville (134 miles) and Lutz (18 miles). 
R.D., at 6-7.

    It's not so much just the red flag, it's the rapidity of people 
coming from other cities. You know, there's a lot of physicians' 
office, a lot of pharmacies between Hudson and Tampa. Why did they 
choose this pharmacy? That would have been the red flag I would have 
---------------------------------------------------------------------------
wanted resolved.

Id. Mr. Parrado then testified that he did not see any documentation 
that the red

[[Page 49825]]

flags presented by the April 21, 2011 prescriptions had been resolved. 
Id.
    Next, the Government asked Mr. Parrado about the price of a 
prescription written by Dr. H.V.D. (also of 24th Century) on January 
16, 2012 for 224 tablets of oxycodone 30, which Respondent filled the 
same day.\13\ Tr. 86. The price of the prescription was $1,232. Id.; 
see also GX 3, at 28. The Government then asked Mr. Parrado if he had 
``any independent knowledge of what oxycodone normally sold for at that 
time?'' Tr. 86. Respondent objected to the question on the basis that 
there was no foundation as to Mr. Parrado's knowledge. Id. While the 
ALJ sustained the objection she allowed the Government to establish a 
foundation. Id. at 87. The Government then asked Mr. Parrado if, in his 
``view as an experienced pharmacist,'' the price was ``a red flag.'' 
Id. Mr. Parrado answered ``yes,'' and explained:
---------------------------------------------------------------------------

    \13\ Here too, the patient's address was added by a label and 
had not been written by the physician; the label shows that the 
patient lived in Floral City, Florida, 63 miles from Respondent. GX 
3, at 28.

    It's a very high price. I do know that about this time, in this 
timeframe, 2012, average wholesale price of oxycodone ran anywhere 
between $33 100 to maybe, depending on what wholesaler you went to, 
it could run as high as $150, $200 100. But that would still--this 
price would still be far exceeding anything that I would have ever, 
---------------------------------------------------------------------------
ever considered charging.

Id. at 87-88. Mr. Parrado subsequently testified that ``I cannot say in 
my 40 plus years as a pharmacist I have ever sold a prescription for 
$1,232 cash. That's just not something I've ever seen in my practice.'' 
Id. at 89. Mr. Parrado then testified that he was practicing pharmacy 
``[i]n 2012.'' Id. Asked to look at the prescriptions reproduced at 
pages 29 and 30, both of which were written by doctors with 24th 
Century, Mr. Parrado testified that they presented the same red 
flags.\14\ Id.
---------------------------------------------------------------------------

    \14\ The first of these prescriptions was written by Dr. R.R. on 
January 18, 2012 for 224 oxycodone 30. GX 3, at 29. The patient's 
address was added by a label and showed that he lived in Dunnellon, 
Florida, 88 miles from Respondent. Id.; see also R.D. at 7. The 
patient paid $1232 for the prescription. GX 3, at 29.
     The second prescription was written by Dr. P.C. on January 19, 
2012 for 168 oxycodone 30. GX 3, at 30. The patient's address was 
added by a label and showed he lived in Inglis, Florida, 80 miles 
from Respondent. Id.; see also R.D. at 7. The patient paid $966 for 
the prescription. GX 3, at 30.
---------------------------------------------------------------------------

    Next, the Government asked Mr. Parrado about two Dilaudid 
(hydromorphone \15\) prescriptions which were written by Dr. R.R. of 
24th Century on October 10 and 13, 2011, which Respondent filled. GX 3, 
at 31-32. The first prescription authorized the dispensing of 240 
tablets of Dilaudid 8 mg to D.K.; the second authorized the dispensing 
of 196 tablets of Dilaudid 8 mg. to G.C.\16\ See id. The labels for 
both prescriptions included the initials ``KG,'' thus indicating that 
they were dispensed by Kasey George, Respondent's PIC.
---------------------------------------------------------------------------

    \15\ Mr. Parrado testified that ``[h]ydromorphone is the generic 
name of Dilaudid.'' Tr. 92.
    \16\ As before, Dr. R.R. did not write either patient's address 
on the prescription. GX 3, at 31-32. Labels attached to the 
prescriptions show that D.K. lived in Clearwater, a distance of 19 
miles from Respondent, and that G.C. lived in Largo, a distance of 
21 miles from Respondent. See id.; R.D. 7.
---------------------------------------------------------------------------

    Asked whether these prescriptions presented any other red flags, 
Mr. Parrado testified:

    Yeah. For starters, the drug. Dilaudid 8 milligram, extremely, 
extremely potent opioid. From my education, experience, and 
training, the average daily dose of Dilaudid would be probably 
between 12 and 24 milligrams a day. It would be a dose that would be 
a high dose because mostly people don't take Dilaudid 8 milligrams 
unless they're in a terminal stage of cancer. . . . [T]hat's just a 
drug that's very rarely dispensed anymore because of the potency, 
especially in that quantity. And to see a patient come in and get 
200 plus of these tablets would be a . . . concern. To see multiple 
prescriptions for 200 tablets would be almost a nonresolvable red 
flag to me.

Tr. 90. Mr. Parrado further clarified that his opinion regarding the 
quantity applied to both prescriptions. Id. at 91. He then testified 
that he saw no evidence that the red flags had been resolved and added 
that the dose ``is almost double the recommended upper daily dose.'' 
Id.
    On January 19, 2012, Dr. R.R. of 24th Century issued a prescription 
for 120 oxycodone 30 to S.D. GX 3, at 33. According to the address 
label (Dr. R.R. again not having written the patient's address on the 
prescription), S.D. lived in Panama City, Florida. GX 3, at 33. Mr. 
Parrado testified that Panama City is in the western panhandle of 
Florida, and the parties stipulated that it is 331 miles from 
Respondent. Tr. 92; R.D. at 7. Mr. Parrado again found no evidence that 
the red flags had been resolved. Tr. 93.
    Continuing, the Government questioned Mr. Parrado about 
prescription labels found at pages 34 and 35 of its Exhibit 3 which 
showed the prices Respondent was charging for oxycodone 30 in late 
April 2011 and in early December 2011. Specifically, the evidence 
showed that in late April 2011, Respondent was charging $3.75 for a 
tablet of oxycodone 30, but that in early December 2012, it was 
charging $7.50 a tablet. GX 3, at 34-35. Mr. Parrado explained that he 
determined the price per tablet because he knew ``in that time frame 
that the wholesale costs had not doubled.'' Tr. 96. Mr. Parrado then 
testified that the price Respondent charged raised a red flag. Id. at 
96-97. However, after recognizing that ``we don't have the 
prescription,'' the Government did not ask whether there was any 
evidence that the red flags had been resolved. Id.
    The last page of Government Exhibit 3 contains the front and back 
of a prescription (dated April 25, 2011) which was written by a doctor 
from Tampa who was not affiliated with 24th Century. GX 3, at 36. The 
prescription authorized the dispensing of 120 tablets of methadone 10 
mg for pain to B.V. but did not list B.V.'s address. Id. Of note, the 
front of the prescription contains the notation: ``verified by Dave'' 
with the date and time. Id. The back of the prescription contains a 
photo copy of a state-issued identification card and the prescription 
label which list B.V.'s address as Riverside, Florida. Id. According to 
the stipulation, Riverside is 200 miles from Respondent. R.D. at 7.
    After noting that the prescription ``had some documentation that 
somebody verified something,'' Mr. Parrado testified to the effect that 
it was unclear what the pharmacist verified. Tr. 97; see also id. 
(``What does this mean? What did they verify? Who is this somebody? Was 
that the prescriber? You know, what were they verifying?''). Then asked 
what red flags were presented by the prescription, Mr. Parrado 
testified:

    Methadone . . . it is a drug that . . . it's being abused on the 
street. There's a lot of concern. I have a lot of concern about the 
use of . . . methadone because of the pharmacokinetics of the drug 
and the way it acts on patients. And . . . taking two tablets every 
12 hours would probably be okay. I would want to verify with the 
doctor if the patient had developed a tolerance to this. I've seen 
people that have overdosed and died on methadone on the third dose 
of methadone because of the kinetics of that drug.

Id. at 97-98. Subsequently, Mr. Parrado reiterated his testimony that 
he did not know what the pharmacist had verified with respect to the 
prescription and that he did not see any evidence that ``red flag of 
distance'' had been resolved. Id. at 102.
    Thereafter, the Government showed its Exhibit Number 13 to Mr. 
Parrado. This exhibit includes 20 prescriptions for schedule II 
narcotics including oxycodone 30, MS Contin 30 (morphine sulfate 
continuous release), and Dilaudid in both eight and four milligrams per 
dosage unit. See generally GX 13. Each of the prescriptions was issued 
by a physician with 24th Century between April 14 and 20, 2011, and on 
each of the

[[Page 49826]]

prescriptions, the patient's address had not been written on the 
prescription but had been added by a label. Id.
    Also, each prescription presented the issue of the distance 
travelled by the patient, with the closest any patient resided being in 
Tarpon Springs, a distance of 18 miles to Respondent. See GX 13, at 23; 
R.D., at 7. The other patients lived in Brooksville (46 miles), 
Gainesville (134 miles), Newberry (145 miles), Ocala (100 miles), High 
Springs (158 miles), Spring Hill (42 miles), Sarasota (58 miles), Weeki 
Wachee (48 miles), Silver Springs (107 miles), Dunnellon (88 miles), 
and Lecanto (70 miles). See generally GX 13; R.D. at 6-7.
    Asked by the Government whether the GX 13 prescriptions raised the 
same or additional red flags, Mr. Parrado answered: ``[i]t's all the 
same.'' Tr. 105. After noting that one of the prescriptions was for a 
patient from Dunnellon, Mr. Parrado then testified that he did not see 
any indication that the red flags had been resolved. Id. at 105-06.
    Next, the Government asked Mr. Parrado about two prescriptions 
issued on January 8, 2013, by Dr. P.C. to B.W. and filled by Respondent 
the same day. Tr. 107-8; GX 14, at 1-5. The prescriptions were for 100 
Dilaudid 8 mg and 60 methadone 10 mg. GX 14, at 1-4. While Dr. P.C. was 
not affiliated with 24th Century, he also failed to include B.W.'s 
address on the prescriptions; however, both prescriptions bear an 
address label which lists B.W.'s address as Tallevast, Florida, which 
is 54 miles from Respondent. Id., at 2, 4; R.D. 7. The evidence also 
showed that B.W. presented a Florida Identification Card. GX 14, at 5.
    Asked if these prescriptions presented any red flags, Mr. Parrado 
testified that the dosing instruction on the Dilaudid prescription 
called for taking one tablet every four hours, which would result in a 
daily dosage of 48 milligrams, ``double the upper recommended dose.'' 
Tr. 107. Mr. Parrado then noted that the prescriptions raised an 
additional and serious concern because both Dilaudid and methadone were 
being prescribed and both drugs ``are immediate release opioids . . . 
which could contribute to respiratory depression.'' Id. Mr. Parrado 
subsequently testified that B.W.'s address and presentation of an 
identification card raised additional issues that ``a reasonable 
pharmacist [would] want to investigate.'' Id. at 110.
    The record includes prescriptions for 75 Dilaudid 8 mg and 90 
methadone 10 mg issued on January 21, 2013, by Dr. E.G.-R. (who was not 
affiliated with 24th Century) to T.F. of Brooksville; Respondent filled 
the prescriptions the same day. GX 14, at 7-8. While the back of each 
prescription includes a handwritten notation dated ``1/21/13,'' id. at 
8, Mr. Parrado testified that he did not ``know what that is'' and the 
notation ``doesn't tell me anything.'' Tr. 110. After testifying that 
the distance in miles between Brooksville and Tampa is ``maybe 30, 40 
miles,'' Mr. Parrado testified that it is ``not so much the distance'' 
but that ``it's not an easy drive'' as there are ``a lot of stop lights 
and a lot of traffic to get'' to the doctor's clinic, which was located 
``several miles'' from Respondent. Id. at 111. Mr. Parrado then 
explained that he would want to know why the patient had ``come 
there,'' that he ``would have had concern'' as to the methadone dose, 
and that he ``would have wanted to verify'' why the doctor had 
prescribed ``two immediate release medications.'' Id. However, Mr. 
Parrado did not see any evidence that the red flags were resolved. Id.
    Mr. Parrado testified that while a prescription (GX 14, at 11-12), 
which was written by Dr. S.A.-H. of 24th Century, was for ``only 90 
tablets'' of oxycodone 30 mg, the patient's address was in Middleburg, 
Florida, which is ``a good ways from Tampa.'' Tr. 111. According to the 
stipulation, Middleburg is 175 miles from Tampa. R.D. at 7. Mr. Parrado 
also testified that the price of the prescription, ``$675 for just 90 
tablets[,] seems like a very high price.'' Tr. 112.
    Aside from the first four prescriptions in GX 14, each of the 
remaining 16 prescriptions was written by a doctor with the 24th 
Century clinic. See GX 14, at 11-42. Asked if the red flags of ``the 
distance where the patient lived'' and ``the fact that they came from 
the same clinic'' were ``inherent in all'' of the 16 prescriptions, Mr. 
Parrado answered ``yes,'' and that he did not ``see any evidence of any 
kind of documentation'' that the red flags were resolved. Tr. 112-13.
    While the back of each of the prescriptions issued by the 24th 
Century physicians also contains checkmarks or scribble, Mr. Parrado 
testified that ``that just looks like they're verifying the quantity 
and possibly the directions, but . . . not addressing the red flag.'' 
Id. at 113. Mr. Parrado then explained that ``[i]t's common for 
pharmacists when they're verifying a prescription . . . before a 
prescription can be dispensed, the pharmacist has to look at [it] to 
make sure the right drug is being dispensed, the right quantity, 
directions are correct on the label. That looks like that's what was 
being checked off there.'' Id.
    Government Exhibit 15 contains an additional 13 prescriptions. GX 
15. The first two prescriptions were written by Dr. V.S. on January 28, 
2013 to J.A. and were for 56 Adderall 30 mg and 84 Dilaudid 8 mg. Id. 
at 1, 3. While the prescriptions list Dr. V.S.'s affiliation as the MD 
Plus Clinic in Lakeland, Florida, id., Dr. V.S. was also listed as one 
of the prescribers affiliated with 24th Century. GX 3, at 33; GX 13, at 
1. Id. On neither prescription did Dr. V.S. write J.A.'s address; 
according to the labels attached to the back of each prescription, J.A. 
resided in Winter Haven, which is 60 miles from Respondent. GX 15, at 
2, 4; R.D., at 7.
    Mr. Parrado testified that Adderall is a stimulant and that the 
patient was ``getting an upper and downer together.'' Tr. 114. Asked if 
this was a red flag, Mr. Parrado testified that ``I would have wanted 
to know why they were giving an upper and a downer together. Maybe the 
patient was having some kind of narcolepsy . . . from one drug to cause 
him to need a stimulant from the other side, but I would have expected 
to see some documentation on that.'' Id. Mr. Parrado then testified 
that Winter Haven is ``a very long way from Tampa,'' although he 
erroneously stated that the distance was ``a hundred plus miles.'' Id. 
He then testified that he did not see any evidence that the red flags 
were resolved. Id. at 115.
    As for the rest of the prescriptions in GX 15, the patients lived 
in Citra (117 miles from Respondent), Brooksville (46 miles), 
Gainesville (134 miles), Tarpon Springs (18 miles), Ocala (100 miles), 
Nokomis (79 miles), and Newberry (145 miles). GX 15, at 6, 8, 10, 12, 
14, 16, 18, 20, 22, 24, and 26. Mr. Parrado testified that the 
distances travelled by the patients raised red flags and that he did 
not see any evidence on the prescriptions that there was any attempt to 
resolve the red flags. Tr. 116.
    Asked by the Government whether Respondent's pharmacists 
``exercise[d] the appropriate standard of care in the State of 
Florida,'' id. at 119-20, Mr. Parrado testified:

    No. In my opinion, there are multiple things that a pharmacist 
has to do before he dispenses a prescription. He has to establish 
the appropriateness of the therapy. He has to discuss the . . . 
excessive and inappropriate quantities. He has to assess the 
therapeutic duplication of the two immediate release medications, 
all of which are in the laws and rules of the practice of pharmacy.
    * * *
    There are probably four or five other notations in the Florida 
law that things the pharmacist would have had to have done to verify 
the prescription and make sure it was

[[Page 49827]]

appropriate and everything was correct before he dispensed it, and I 
didn't see where any of that was done. Therefore, I didn't think he 
reached the standard of care.

Id. at 120. After a series of objections to the Government's questions 
were sustained by the ALJ, Mr. Parrado subsequently testified that he 
``would not have dispensed these [prescriptions] without having 
resolved any of the red flags.'' Id.
    On cross-examination, Mr. Parrado acknowledged that every red flag 
he had ``talked about . . . could potentially be resolved.'' Id. at 
127. He further acknowledged that there are millions of people who do 
not have insurance and must pay for their prescriptions with cash. Id. 
at 131. However, when asked whether he had ever filled a controlled 
substance prescription for someone who did not have ``insurance to 
cover their [sic] prescription,'' Mr. Parrado answered that he was not 
going to give ``a yes or no answer because . . . a person who . . . 
can't afford insurance . . . is not going to pay 1,200 or 1,300 dollars 
for a prescription.'' Id. at 132. Mr. Parrado further testified that 
whether the prescription was paid for with cash, credit card, or check, 
it's ``all the same to me.'' Id. at 133.
    After Mr. Parrado reiterated his earlier testimony that he ``didn't 
see where anything [as to the resolution of red flags] was 
documented,'' Respondent's counsel asked if it is ``true that Florida 
does not require a pharmacist to document the resolution of red flags 
on the face of the prescription?'' Id. at 134. Mr. Parrado answered: 
``I would never document it on the face, I'd write it on the back.'' 
Id. at 135. Mr. Parrado then acknowledged that ``there's no regulation 
that says you have to, but that's just the standard of practice and has 
been for decades.'' Id. When then asked whether a pharmacist could 
document the resolution of a red flag ``somewhere other than the back 
of the prescriptions,'' Mr. Parrado replied: ``I've never seen it 
documented anywhere other than that.'' Id.
    However, Mr. Parrado subsequently acknowledged that resolution of a 
red flag could be documented other than on the back of a prescription. 
Id. at 136. And he later agreed with Respondent's counsel that if a 
patient had been a regular and long standing patient of the pharmacy, 
it would not be ``necessary to do the full-blown documentation that you 
would do on the first prescription once you've resolved the red flag.'' 
Id. at 177. However, he maintained that some notation should still be 
made on the prescription so that if the prescription was questioned by 
a regulatory agency, there would be some evidence to defend the 
dispensing decision. Id.; see also id. at 190. Mr. Parrado also 
acknowledged that ``some pharmacists document [the] resolution of red 
flags so that it is . . . available to help their colleagues who [are] 
filling in for them.'' Id. at 191.
    Mr. Parrado rejected, however, the suggestion of Respondent's 
counsel that documentation need not be placed on the prescription 
because ``there's no way for the floater pharmacist . . . who takes 
over to actually go through [the prescription file] and know where 
those [notes] are because they're all written on the back of 
prescriptions.'' Id. at 192. As Mr. Parrado explained, the pharmacist 
would see the prescription number when he looked up the patient's 
profile on the computer, and ``it would be very easy to go pull that 
prescription out of the file.'' Id. Then asked how a pharmacist would 
know which prescription to pull if the patient had been filling the 
prescription every month for ten years, Mr. Parrado testified: ``That's 
why you would have documented this as a regular patient. You would have 
done something on that scrip[t].'' Id. at 192. However, he then 
acknowledged that notes generally can be made in the pharmacy's 
dispensing software. Id. at 193.
    Mr. Parrado acknowledged that a patient who has been on opiates for 
a significant time and who has developed tolerance may need to exceed 
the manufacturer's daily recommended dosage. Id. at 137. He 
acknowledged that the dosing depends on ``the specifics'' of the 
patient's condition. Id. He also agreed that having a patient on a 
narcotic contract so that the patient only obtains narcotics from a 
single clinic could be helpful in resolving red flags. Id. at 137-38. 
He further agreed that if the narcotic contract ``called for routine 
urine screens to ensure that the patient was actually taking the 
drug,'' that would ``be helpful'' in ``prevent[ing] diversion.'' Id. at 
138.
    Asked if he had reviewed PMP data to determine the drug history of 
any of the patient, Mr. Parrado said that he had not and that the law 
did not allow him to. Id. While he testified that he looked at 
thousands of prescriptions from Respondent which covered more than two 
years, DEA did not give him noncontrolled prescriptions and he looked 
only at the schedule II prescriptions. Id. Given this, Respondent's 
counsel later asked Mr. Parrado if he had ``no way of knowing what . . 
. adjunct drug therapies . . . any of these patients were taking?'' Id. 
at 160. Mr. Parrado answered:

    Well, only because of what I saw in the Respondent's exhibits 
where there were some partial medical records that did have all the 
drugs the patient was taking on a very few cases, and on those it 
was the same on every one of them, the same group, same combination.

Id.
    Mr. Parrado acknowledged that Florida law (Fla. Stat. Sec.  
893.04(2)(a)) states that a pharmacist may dispense a controlled 
substance in the exercise of his professional judgment when the 
pharmacist or pharmacist's agent has obtained satisfactory patient 
information from the patient or the patients' agent. Tr. 139. After 
Respondent's counsel pointed that this provision does not require that 
the pharmacist alone talk to the physician alone and allows a 
pharmacist to talk to the patient or the patient's agent, Mr. Parrado 
testified that ``it says in [Fla. Admin. Code r.] 64B16-27.831 that 
when you have a concern you shall contact the prescriber.'' Id. at 139-
40.
    Turning to J.A., the patient who had received prescriptions for 
Adderall and Dilaudid, Mr. Parrado conceded that while opiates ``have a 
respiratory depressant effect,'' they are not categorized as 
depressants under the Controlled Substances Act. Id. at 141-42. He also 
acknowledged that when a drug has a shortage and its wholesale price 
rises, the retail price would also rise. Id. When then asked whether it 
is standard practice to input the average wholesale price of a drug 
into a pharmacy's dispensing software and that the software has 
algorithms that actually generate the retail price, Mr. Parrado 
explained that ``[t]here are different ways to fix that algorithm'' and 
that he had sometimes overridden the price set by the software. Id. at 
143. While Mr. Parrado acknowledged that, in 2008 and 2009, two major 
oxycodone manufacturers had recalled their products resulting in 
shortages and that wholesalers would take advantage of this and charge 
higher prices, he disagreed with the suggestion that ``those shortages 
continued and had ripple effects throughout Florida well into 2010 and 
2011.'' Id. at 144. Rather, he testified that the shortages did not 
have ``that much'' of an effect and ``[o]nce it became available again 
the prices were not that far skewed'' \17\ Id.
---------------------------------------------------------------------------

    \17\ By contrast, Mr. George testified that from 2010 through 
2012, the wholesale ``price sometimes went three times to 10 times 
more.'' Tr. 538-39.
---------------------------------------------------------------------------

    While Mr. Parrado acknowledged that he did not go to the pharmacy 
closest to his home because he knows the pharmacist at the pharmacy he 
goes to, he explained that ``[m]ost people go to

[[Page 49828]]

a pharmacy for . . . some sort of a convenience, or a reason, and he 
[the patient] had to have a reason to go to that pharmacy. That's what 
I would want to know. That's what I would want to document.'' Id. at 
146. Asked if he documented on the back of every controlled substance 
prescription the reason a patient had driven 10 or 15 miles on roads 
with stop lights to get to his pharmacy, Mr. Parrado answered: ``No, of 
course not.'' Id. at 148. However, he then adhered to his position that 
``[s]tandard practice is if you have the red flag to document it.'' Id. 
As for whether it would be a red flag if the patient ``lives 20 or 30 
miles away and [has] seen a doctor who's in close proximity to the 
pharmacy'' and ``[t]hat red flag then is resolved?''; Mr. Parrado 
testified that ``I'd still want to know the address. There's going to 
be multiple red flags here.'' Id. at 148-49. On a further question 
regarding ``the red flag of someone driving 10 or 15 miles'' and ``[i]f 
the physician happens to be in close proximity to the pharmacy, that 
resolves the red flag, doesn't it?''; Mr. Parrado testified: ``Not 
necessarily'' and explained that: ``[i]t's not just one thing. It's 
multiple things. That's the combination of red flags.'' Id. at 149.
    Mr. Parrado testified that the drugs themselves (hydromorphone and 
oxycodone 30) raised a red flag as they are known drugs of abuse. Id. 
at 149-50. While Mr. Parrado acknowledged that he had filled 
prescriptions for oxycodone 30, he could not ``remember ever filling a 
prescription for hydromorphone.'' Id. at 150. However, when asked what 
he would document on a prescription when he was practicing and was 
presented with a prescription for oxycodone 30 but there were no other 
red flags, Mr. Parrado testified: ``[n]othing because it wasn't a red 
flag.'' Id. at 151; see also id. at 166.
    Asked the same question with respect to hydromorphone, Mr. Parrado 
answered: ``Well, you know, there again, looking at the dose, I would 
have to look at the patient profile, see if the patient has developed a 
tolerance to that drug, and at that point the red flag--there's nothing 
to write down because there isn't a red flag.'' Id.at 151. Later, on 
cross-examination, Mr. Parrado acknowledged that his review of the 
prescriptions did not include any information that would have allowed 
him to determine whether the patients had been on narcotics for a 
significant period and developed tolerance as he reviewed only what DEA 
gave him. Id. at 161-62. He also acknowledged that neither the 
prescription nor the prescription label ``tells you anything about the 
patient [sic] history.'' Id. at 177.
    Turning to the red flag of pattern prescribing, Mr. Parrado 
acknowledged that if a physician prescribed different narcotics for 
different patients, sometimes wrote for extended release drugs and 
other times immediate release drugs, and varied the strength of the 
drugs, this would not be pattern prescribing. Tr. 153. Mr. Parrado then 
agreed that the same would hold true for the clinic itself. Id. And he 
subsequently acknowledged that pain management is a legitimate medical 
practice, which often times requires the prescribing of opioids in 
significant quantities as patients develop tolerance. Id. at 154.
    As for the red flag of therapeutic duplication, Mr. Parrado agreed 
that extended release drugs ``were expensive'' even though ``[t]here 
were some generics available'' during the time period at issue and that 
a patient who lacked insurance ``would have difficulty paying for an 
extended release oxycodone product.'' Id. at 155-56. Mr. Parrado then 
acknowledged that if a patient required oxycodone 30 for his ``normal 
pain,'' the physician would not be acting illegally if he prescribed a 
lower strength drug for the patient's ``breakthrough pain.'' Id. at 
156.
    Turning to the methadone prescription which Respondent filled for 
B.W. (GX 14, at 3) (on the same day it also filled a Dilaudid 
prescription for him), Mr. Parrado conceded that he did not have any 
evidence that B.W. had overdosed, abused the drug, or sold it on the 
street. Tr. 158-59. Mr. Parrado then acknowledged that he had no 
evidence that any of the prescriptions were abused or sold on the 
street. Id. at 159.
    Asked whether his concern about methadone-related overdoses was a 
general concern or a specific concern related to B.W., Mr. Parrado 
testified:

    That was a concern that I would have wanted to have seen a red 
flag resolved. Why is he on hydromorphone and methadone both, which 
are both immediate release . . . you know, you don't use two 
immediate release opioids for breakthrough pain. You use a long 
acting as a base and then the immediate release for breakthrough.

Id. Later, on cross examination, Mr. Parrado explained that the problem 
with using methadone for pain management ``is that the pain relief you 
get . . . probably peaks at about three to four hours and tapers off 
rather quickly after that, but the respiratory depressant part . . . 
continues to grow even after the pain relief has gone down, so people 
are apt to take another pill,'' thus increasing the respiratory 
depressant effect. Id. at 174. However, Mr. Parrado acknowledged that 
methadone may be appropriate for certain patients. Id.
    Mr. Parrado then agreed with Respondent's counsel that ``it's not 
common, but it's not completely unheard of for individuals who may not 
have insurance or may have allergies or other reasons why certain long-
acting drugs do not work'' \18\ Id. at 159-60. And he also agreed with 
Respondent's counsel that because of genetic differences, some persons 
may metabolize certain opiates in a more effective manner than others. 
Id.
---------------------------------------------------------------------------

    \18\ Mr. Parrado subsequently acknowledged that extended release 
opioids could be problematic for patients who have had bariatric 
surgery. Tr. 175. Also, on questioning by the ALJ, he testified that 
if a patient was allergic to a medication, ``you wouldn't be 
filling'' that prescription. Id. at 213.
---------------------------------------------------------------------------

    Mr. Parrado further acknowledged that the DEA Pharmacist's Manual 
does not use the term red flag and does not specifically tell 
pharmacists how to identify red flags. Id. at 163. However, he then 
testified that the ``[M]anual gives you a lot of information that you 
have to use your professional judgment . . . . It's not going to list 
line by line, but that's why you have pharmacists exercising 
professional judgment.'' Id. Mr. Parrado further testified that a 
pharmacist ``should be able to defend that professional judgment.'' Id.
    After acknowledging that neither the CSA nor DEA regulations use 
the term ``red flags,'' as well as that the CSA and DEA regulations do 
not ``talk about distances from patients,'' Mr. Parrado agreed that 
``there is no bright line that . . . if it's beyond a certain distance, 
it's always wrong.'' Id. at 164. However, Mr. Parrado subsequently 
testified that if patient lived more than 40 miles from the doctor's 
office, that would be ``one of the red flags for diversion.'' Id. at 
208.
    As for whether family members seeing the same doctor ``makes the 
doctor's prescriptions for those family members invalid,'' Mr. Parrado 
testified that ``[i]t raises a question. It may not make it invalid.'' 
Id. at 164. Mr. Parrado then explained that ``I have to validate--I 
have to verify the validity of that script.'' Id. at 165. While Mr. 
Parrado acknowledged that a pharmacist could ``possibly'' resolve the 
red flags created by the circumstances of two people in the same 
household ``need[ing] the exact same drug and pay[ing] those large 
quantities of money,'' he rejected the suggestion of Respondent's 
counsel that this could legitimately occur where ``family members . . . 
live together, didn't have insurance'' and had to ``pay out of 
pocket.'' Id. Mr. Parrado then testified: ``You can buy a lot of 
insurance for $2,700'' and that the costs

[[Page 49829]]

of the prescriptions would be a red flag that he ``could not have 
resolved.'' Id.
    Mr. Parrado further acknowledged that in evaluating whether a 
pharmacist had complied with the standards of practice in dispensing a 
prescription, ``it would be helpful'' to know various information. Id. 
at 177. These include ``what the pharmacist knew'' about: (1) The 
patient, including his/her medical condition, history, diagnosis, cause 
of the pain and drug utilization; (2) the prescribing physician, 
including his/her specialty, board certifications, practice location, 
and reputation; and (3) the drug being prescribed . Id. at 178; see 
also id. at 202-03.
    Asked if he was aware that one of the physicians who issued the 
prescriptions he had testified about ``is a noted anesthesiologist,'' 
Mr. Parrado testified that ``if it doesn't say it on the prescriptions 
itself, I wouldn't know it.'' Id. at 183-84. Then asked by Respondent 
if he knew ``that that particular noted anesthesiologist was a 
physician at a major regional hospital before being involved in the 
practice of pain management care,'' Mr. Parrado answered: ``[n]o, I 
would not have known that.'' Id. at 184. Mr. Parrado also testified to 
the effect that the fact that the physicians (with the exception of one 
who had since died) who practiced at 24th Century have had their 
registrations renewed would not change his opinion. Id. at 186.
    Mr. Parrado further acknowledged that the issue of prescribers not 
placing the patient's address on prescriptions has become ``very 
common,'' but that the pharmacist has to verify the patient's address. 
Id. at 193. He also testified that in 2008, DEA sent a letter to 
pharmacists which stated that the pharmacist ``could add in'' the 
patient's address. Id. at 194. Mr. Parrado then agreed that if the 
prescription was only missing the patient's address, this does not 
raise ``a concern about diversion.'' Id. at 195. Subsequently, the 
Government identified several prescriptions where the patient's address 
had not been placed on the front of the prescription. Id. at 206 
(discussing GX 13, at 3, 5, 21, 27, and 29). However, in each instance, 
the patient's address was on the dispensing label which was affixed to 
the back of the prescription.\19\ See id. at 4, 6, 22, 28, and 30.
---------------------------------------------------------------------------

    \19\ Asked by Respondent's counsel if ``Florida law says there 
shall appear on the face of the prescription or written record 
thereof'' and thus allows for the patient's address to be placed on 
the back, Mr. Parrado testified: ``[t]hat law was changed. At the 
time these prescriptions were written, that law did not say on the 
prescription record thereof. . . . It just said it had to be on the 
face of the prescription.'' Tr. 209. According to the 2011 Florida 
statutes, Section 893.04(c) stated that ``[t]here shall appear on 
the face of the prescription or written record thereof for the 
controlled substance . . . [t]he full name and address of the person 
for whom . . . the controlled substance is prescribed.'' Fla Stat. 
Ann. Sec.  893.04(c) (2011). Contrary to Mr. Parrado's testimony, 
the statute had the same wording throughout the relevant time 
period.
---------------------------------------------------------------------------

    While Mr. Parrado continued practicing through 2012, he could not 
remember the pharmacies he worked at having ever filled prescriptions 
written by a doctor at the 24th Century clinic. Id. at 195-96. While 
Mr. Parrado acknowledged filling prescriptions that came from the 
Kenaday Clinic (see GX 14, at 7-10), he testified that ``[o]n the ones 
I filled, I called and checked them very carefully.'' Tr. 196-97. Asked 
what he did to resolve the red flags, Mr. Parrado testified that there 
was an issue of dosing and whether ``the patient had developed a 
tolerance for that dose,'' and that he called the doctor.\20\ Id. Mr. 
Parrado added that he had spoken to the doctor twice, after which he 
``wouldn't fill anymore.'' Id. at 199.
---------------------------------------------------------------------------

    \20\ At this point the Government objected that the question was 
``beyond the scope of direct examination.'' Tr. 197. Respondent's 
counsel replied that the question went to Mr. Parrado's credibility, 
and the ALJ overruled the objection. Id. at 198.
---------------------------------------------------------------------------

    Asked whether there were other concerns besides the dosing with the 
prescriptions written by the Kenaday doctor, Mr. Parrado testified that 
another prescription presented a distance concern and he did not fill 
the prescription and gave it back to the patient. Id. Subsequently, Mr. 
Parrado then acknowledged that the prescription that presented the 
dosing issue may also have presented another issue, that being that the 
doctor had prescribed ``a combination of hydrocodone, Xanax, [and] 
Soma.'' Id.at 200. Mr. Parrado testified that after talking to the 
physician and believing that the prescriptions had a legitimate medical 
purpose, ``after that I didn't feel comfortable anymore and after 
speaking with the doctor a couple more times I decided I could not take 
his word for the validity and I wouldn't fill them anymore.'' Id. at 
201. As Mr. Parrado further testified, ``[o]nce I saw the pattern of 
prescribing coming from that clinic is when I stopped.'' Id. at 202.
    Finally, Mr. Parrado acknowledged that a doctor can issue a 
prescription for a legitimate medical purpose and the patient may 
nonetheless misuse it or sell it on the street, but that this does not 
make the prescription invalid. Id. at 204. Nor does a patient's misuse 
or selling of the drug to another make a pharmacist's decision to 
dispense the prescription wrong unless the pharmacist knew or should 
have known that the patient was going to misuse or sell the drug. Id. 
at 205.

Respondent's PIC's Testimony

    As noted above, Respondent's Expert Mr. Badawi did not address any 
of the prescriptions which the Government submitted into evidence. 
Kasey George, Respondent's PIC, did offer testimony as to why some of 
the prescriptions were dispensed.
    Mr. George testified that he has been a pharmacist for 21 years, 
that he has 12 to 13 years of experience in retail pharmacy, and that 
he has been Respondent's PIC for seven years. Tr. 445-46. Mr. George 
holds an active pharmacist's license in Florida and holds inactive 
licenses in three other States. Id. at 446. He testified that he does 
not have either a criminal history or a disciplinary history on his 
pharmacy license. Id. at 445. He also testified that he had obtained 
his pharmacy degree from Temple University in 1994, that he had taken 
continuing education classes, and that he had attended a class on 
dispensing controlled substances in 2013 at which Mr. Parrado had 
spoken. Id. at 447-48.
    Mr. George testified that he is the only full-time pharmacist at 
Respondent, which is open six days a week, and that if he has a day 
off, he schedules a temporary pharmacist to work that day. Id. at 448. 
Respondent's counsel then asked what controlled substance dispensing 
protocols were in place at Respondent from 2011 through February 2013, 
when the Administrative Inspection Warrant was served. Id. at 448-49. 
According to Mr. George, the protocol:

involves many things, including first we have check [sic] that the 
doctor's office is located within 20 miles from the pharmacy. Then 
we check the patient's ID, Florida ID, and make sure that the 
patient has a Florida ID. The next step we do is we check the 
prescribing physician's address and their phone number, and we check 
in the publicly listed Web site to see that it matches what's 
printed on the prescription. Then we check that the doctor has a 
valid DEA license active and also an active NPI number.
* * * * *
    . . . And we check the--call the doctor's office and get the 
diagnosis for the condition treated. And also we ask for the 
diagnosis studies they have done and make sure that the studies are 
consistent with the medical condition that is being treated and also 
the prescription. . . . And we ask for all the records to be sent to 
the pharmacy, and we check that they have the narcotic contract with 
the patient. . . . And also we ask for the urine drug test result 
and those records. Then we are not done with that.
    And we have to check the patient's ID, which is present with the 
DMV Web site to

[[Page 49830]]

see that address is correct. Then . . . end of 2011, PDMP came. From 
that day onwards, we check for every new patient, and every time 
they come we have to check the PDMP to see any doctor shopping or 
any early filling and check also . . . the patient's credibility 
because if their [sic] address is available there. And after that, 
all that pharmacist's professional judgment also comes into that 
protocol.

Id. at 449-51.
    Mr. George testified that he reviewed the prescriptions submitted 
by the Government and he acknowledged that he was the dispensing 
pharmacist on ``the vast majority of'' them. Id. at 451. He testified 
that he had used the above protocol in dispensing the prescriptions. 
Id. He then denied that he was required to fill prescriptions that 
originated at certain clinics or that were presented by certain 
patients. Id.
    Mr. George testified that he was ``required to document every 
conversation with a patient or physician if the conversation was about 
concern related to'' a controlled substance prescription. Id. at 451-
52. Asked by Respondent's counsel ``where was that documented?''; Mr. 
George testified: ``[w]e have a two-page pharmacist's due diligence 
checklist separately filed in a binder in an A to Z format according to 
patient's last name, and all the documents pertaining to that patient's 
prescription is [sic] attached to that in the file.'' Id. at 452. Mr. 
George further testified that he had used the due diligence forms for 
the patients whose prescriptions were at issue in this case. Id. Mr. 
George then testified that when DEA executed the AIW, they did not ask 
him to provide the due diligence forms and did not take them. Id. Nor 
did they ask him to provide documentation showing that he had made 
inquiries and resolved red flags. Id. at 452-53.
    Asked by Respondent's counsel where he would ``document the 
resolution of questions about'' a controlled substance prescription, 
Mr. George answered:

    It used to be if it is one or two items you used to document on 
the face of the prescription. Since the information needed to 
prevent the abuse and misuse and diversion, a lot of documents [sic] 
involved, if I decided to go extra step to get all the available 
documents filed in a separate sheet and document a pharmacist's 
checklist so I can do beyond the required, more than the required 
and go and fill in in vast places.

Id. at 455-56. Noting his testimony that he had formerly documented the 
resolution of such questions on the back of the prescription, 
Respondent's counsel asked Mr. George when he changed to using 
checklists and obtaining the records he described. Id. at 456. Mr. 
George testified that it was ``[f]rom 2010 onwards.'' Id. at 457.
    Mr. George then explained that his protocol also included 
interviewing the patients to ``ask them their conditions and why 
they're being [sic] taken [sic] these prescriptions.'' Id. Mr. George 
further asserted that ``in that interview, I can find out what is the 
real need and also if they have any intention to abuse or misuse or any 
diversion involved in that scheme.'' Id. at 458.
    Mr. George testified that ``we verify . . . the credibility of the 
doctors through the paperwork and the documents.'' Id. He further 
stated that ``I visit the doctor's office and the clinic occasionally 
and get to know the doctors,'' and ``I talk personally to the doctors 
and also make sure that they have a protocol in place, which I also 
make sure that that is inconsistent of our protocol.'' Id. Continuing, 
Mr. George testified that ``I make sure that all that paper which I 
mentioned, narcotic contract and opiate contract, all are in place.'' 
Id.
    Mr. George acknowledged that he was familiar with the physicians 
who wrote the prescriptions at issue, and that most of them worked for 
24th Century, which ``is a pain management clinic.'' Id. at 459. Asked 
by Respondent's counsel what he knows about the specialties and 
certifications of 24th Century's doctors, Mr. George answered:

    One doctor, he is no more. He's [sic] passed away three or four 
years ago. He was the director of this clinic, and he was the chief 
anesthesiologist in [sic] Tampa General Hospital. He was a famous 
doctor, and his expertise was a big asset at clinic, and many 
patients liked him.

Id. Subsequently, Mr. George testified that the name of this doctor was 
Cornelius Ruperto. Id. at 466.
    Notably, Dr. Ruperto did not write any of the prescriptions at 
issue in this matter. See generally GXs 3, 13, 14, and 15. Moreover, 
his name is not listed on any of the prescription forms. See generally 
GXs 3, 13, 14, and 15. This is for good reason, as according to Dr. 
Ruperto's online obituary of which I take official notice,\21\ Dr. 
Ruperto died on December 8, 2008, more than two years before the 
earliest prescription in evidence. And of further note, Mr. George 
offered no testimony regarding the specialties or board certifications 
of the doctors who actually wrote the prescriptions at issue in this 
matter.
---------------------------------------------------------------------------

    \21\ See www.legacy.com/obituaries/tbo/obituary.aspx?n=cornelio-aquino-ruperto&pid=121231660. Respondent may dispute my finding by 
filing a properly supported motion no later than 15 calendar days 
from the date this Order is mailed.
---------------------------------------------------------------------------

    Asked by Respondent's counsel how he resolved the red flag of 
multiple patients presenting similar narcotic prescriptions which were 
written by the same doctor, Mr. George acknowledged that ``[i]f I see 
that a doctor is writing a certain medication and the same quantity and 
same way to every patient, then it is a red flag to me.'' Id. at 467. 
Continuing, Mr. George explained: ``[b]ut . . . when I see that doctor 
write the medications, but in different doses and different quantity . 
. . it's different, and they write different medication along with it, 
and their treatment plan is different, then after my due diligence is 
being done, I feel comfortable filling that prescription.'' Id. Mr. 
George subsequently testified that the 24th Century doctors prescribed 
oxycodone in both 15 and 30 mg dosages, methadone in 5 and 10 mg 
dosages, morphine in 30, 60 and 100 mg dosages, hydromorphone in 4 and 
8 mg dosages, and sometimes Opana. Id. at 475-76.
    Next, Respondent's counsel asked Mr. George about the oxycodone 30 
prescriptions whose labels bear sequential RX Numbers and which were 
dispensed on August 4, 2011 to J.P. and T.P., who have the same last 
name and had travelled from Saint Augustine (196 miles). GX 3, at 2-3. 
Mr. George asserted that ``I remember that case in detail'' and that 
J.P. and T.P. were husband and wife and that T.P. had a bulged disc 
from a 1998 accident and ``was our patient from 2009.'' Tr. 468. He 
also asserted that J.P. had ``a motor vehicle accident'' and ``had 
problems with his neck and . . . back.'' Id. at 468-69. Mr. George did 
not explain when J.P.'s accident had occurred or how long he had been 
Respondent's patient. See id. While Mr. George asserted that he filled 
the prescriptions, because ``after doing all the due diligence and 
following the protocols, talking to the doctors, I was comfortable 
within my professional judgment to fill that prescription,'' id., 
Respondent produced no evidence to corroborate his testimony, not even 
the two-page due diligence checklists. Of consequence, the ALJ did not 
find Mr. George's testimony credible as to the actions he took to 
resolve the red flags presented by J.P.'s and T.P.'s prescriptions.\22\ 
R.D. 48.
---------------------------------------------------------------------------

    \22\ Mr. George further testified that in 2012, ``J.P. was 
filling the prescription in the pharmacy, and when I called the 
doctor's office, I found that J.P. had an admission'' to a hospital 
in St. Augustine. Id. at 469-70. According to Mr. George, the doctor 
then requested the records from the hospital in St. Augustine; the 
records showed that J.P. ``was positive for his oxycodone and Valium 
he was on,'' as well as cocaine. Id. at 470. According to Mr. 
George, J.P. was then discharged from the clinic for breaching his 
contract and he decided to stop filling prescriptions for him. Id. 
Mr. George did not explain, however, why J.P. had the prescription 
he was attempting to fill if he had been discharged from 24th 
Century.

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

[[Page 49831]]

    Mr. George also acknowledged that a prescription that exceeds the 
manufacturer's recommended daily dosage presents a red flag. Tr. 470. 
Mr. George testified that the prescription ``does not say the whole 
story'' and when the patient's dose is above the manufacturer's 
recommended dose, the pharmacist ``ha[s] to go and look at the 
patient's profile and profile history to make sure why this patient is 
taking higher doses.'' Id. at 471. Mr. George further testified that 
``everybody know [sic] that tolerance plays a big role in the doses 
prescribed'' and that ``there is no ceiling doses for opiates.'' Id. 
Mr. George then testified that when a prescription is for a higher dose 
than the recommended dose, ``the pharmacist's duty is to call the 
physician and check with them . . . and go through [the] profile and 
see how long [the patient's] been on that medication and . . . learn 
how much the tolerance is.'' Id. Mr. George then maintained that when 
he filled prescriptions that exceeded the maximum recommended dosage, 
he did all of these steps ``and I write my notes on my due diligence 
checklist why I did it.'' Id. at 472.
    Addressing the prescriptions that were missing patient addresses, 
Mr. George testified that the former head of the Office of Diversion 
Control had published a memo which ``says that if the pharmacist has to 
make any changes in C2 prescriptions, they have to follow state laws 
and guidelines.'' Tr. 472. Mr. George then noted that Florida law 
``clearly says that [the address] shall be on the face of the 
prescription or the written record thereof,'' and added that he would 
``verify the patient's address though the DMV Web site[] [a]nd also 
check the PDMP'' and use the prescription label to provide the address. 
Id. at 472-73.
    As for the instances in which patients presented prescriptions for 
two short-acting opiates, Mr. George testified that ``there are many 
reasons'' that ``doctors write two prescriptions,'' including that 
``the patient is allergic to certain medications,'' ``has intolerance 
for the drug,'' may have had ``gastric bypass surgery,'' or be a 
``dialysis patient.'' Id. at 474. However, Mr. George testified that 
``[n]ormally doctors write the long-acting medication along with the 
short-acting.'' Id.
    As for how he resolved the red flag, Mr. George testified that 
``you . . . study the situations [sic] and what is the condition of the 
patient through talking to the doctors and talking to the patients and 
checking their profiles [and] history.'' Id. Asked by Respondent's 
counsel if those are ``actual examples of things that occurred where 
you got information like that from patients who filled prescriptions,'' 
Mr. George answered: ``Yeah. We will get information. That's the 
case.'' Id. at 474-75. Mr. George did not, however, offer any testimony 
identifying the specific conditions of those patients who presented two 
prescriptions for short-acting narcotics which were filled by 
Respondent.
    Mr. George further testified that he obtained medical records from 
the 24th Century clinic. Id. at 477. Respondent's counsel then asked 
Mr. George if he had ``seen Respondent's Exhibit 3 before today?'' Id. 
at 479. Mr. George answered ``yeah,'' and added that ``it is actually 
from one of the copies which I get from the clinic''; he then testified 
that these records ``were maintained at'' Respondent and that the 
records were present when DEA executed the AIW. Id. Mr. George also 
testified that the Exhibit contained an accurate representation of the 
records Respondent maintained on three of its patients, K.D. (pages 1 
through 17); S.D. (pages 18 through 33); and H.C., Jr. (pages 34 
through 51). Tr. 480, 482. Notably, the records contained such items as 
driver's license verifications, radiology reports, progress notes, and 
opioid contracts. See generally RX 3.
    On voir dire, the Government asked Mr. George how he received the 
records from the clinic. Tr. 490-91. Mr. George answered: ``sometimes 
it is in a block of a--I send my technician to get it because patients 
are waiting in my--I go and ask them to get the copy and get it to me 
so I can verify it before filling it.'' Id. at 491. Mr. George 
subsequently testified that Respondent's Exhibit 3 was ``a 
representative sample of the type of record [he] got for hundreds of 
patients [of his] pharmacy.'' Id. at 498.
    Asked by Respondent's counsel ``what, if any information on pages 
20 through 29 . . . was important to [him] at the time'' he was 
deciding to fill controlled substance prescriptions for S.D., Mr. 
George testified that the records told him ``what the diagnosis is, why 
this patient [is] being treated for the medication they [sic] are [sic] 
prescribed.'' Id. at 480-81. He further asserted that he looked at the 
progress notes (RX 3, at 29) to ``see any changes in there,'' as well 
as page 30, which told him that ``the patient has [an] opiate contract 
there.'' Id. at 481.
    Mr. George then testified that he looked at these records as ``an 
extra step to prevent the abuse and misuse of the controlled 
substances.'' Id. Asked whether his training as a pharmacist gives him 
``the ability to understand certain things within the medical record as 
far as the diagnosis and the condition of the patient,'' Mr. George 
testified that ``[t]hrough experience, I learned to look through these 
forms and understand it [sic].'' Id. Mr. George then testified that the 
records included indications of conditions that would cause pain. Id. 
at 481-82.
    Asked whether there was information on page 44 (a December 6, 2012 
Visit Note for H.C., Jr.) that would allow a layperson and pharmacist 
``to determine what condition the patient was being treated for,'' Mr. 
George answered ``yes.'' Id. at 482. Asked if ``the information 
contained in these medical records [is] consistent with the patient 
having pain and needing a controlled substance prescription from a 
pharmacist's perspective?'', Mr. George again answered ``yes.'' Id. at 
482-83.
    Next, Mr. George was asked about the prescription (GX 3, at 1) 
Respondent dispensed on July 28, 2011 to T.V., who lived in Pensacola--
472 miles from Respondent--for 210 tablets of oxycodone 30. Tr. 493. 
Mr. George testified that she had been his patient ``since 2009,'' and 
that in deciding to fill her prescription, he had had done ``all my due 
diligence, checked with the doctors, checked all the medical records 
[he] could'' and ``interviewed the patient.'' Id. at 494. Mr. George 
further testified that ``when this patient came in the counseling and 
when I was talking . . . [the] patient knew that distance is a very 
fact that pharmacist may not fill it.'' Id. According to Mr. George, 
T.V. said she had gone ``through four back surgeries'' and had tried 
``interventional pain injections'' which ``failed.'' Id. Mr. George 
then testified that T.V. ``lifted her shirt and said, look at my back, 
and I looked that there were four scars'' and T.V. ``mentioned that 
there were rods and plates placed here.'' Id. at 495. Mr. George thus 
maintained that ``even though the distance was far, through my 
experience and the need of the patients [sic], it made me come to a 
conclusion that this patient, I will fill the prescriptions.'' Id.
    While on cross-examination, Mr. George testified that another 
pharmacist had filled this specific prescription, id. at 578-79, he 
reiterated his earlier testimony that T.V. had ``been coming from 2009 
onwards.'' Id. at 579. He then added that ``I know this patient very 
well, and I have a very well written record on this patient.'' Id.
    After again stating that he did not fill the prescription, Mr. 
George testified that ``every pharmacist who worked in that Hills 
Pharmacy have [sic] that file. That's the reason the due diligence 
paper is filed separately.'' Id. at 579-80. Mr. George then testified 
that ``[w]hen this patient comes again, that

[[Page 49832]]

pharmacist has the opportunity to go and look at why this patient's 
prescription was filled last month'' and ask ``[i]s there any reason, 
or should I reject this?'' Id. at 580. Continuing, Mr. George 
testified: ``[w]hen they [sic] see other pharmacist, especially my 
notes, saying that all the due diligence were [sic] done and all the 
red flags were resolved, that pharmacist will be comfortable looking 
at. And they will probably call the doctors, I don't know [sic] he 
called or not. But that is his duty to call the doctor and verify.'' 
Id. Mr. George again reiterated that this documentation was written 
down ``[i]n my due diligence sheet'' which is ``in the pharmacy.'' Id.; 
see also id. at 551 (Mr. George's testimony that the due diligence 
forms are in a binder which is ``[s]till in the pharmacy.'').
    Subsequently, the ALJ asked Mr. George if he recalled why T.V. 
``travelled from Pensacola to Hills Pharmacy?'' Id. at 588. After 
answering ``yes,'' Mr. George testified:

    This patient had multiple surgeries done in Tampa General 
Hospital and that time the doctor, the chief anesthesiologist was 
Dr. Cornelio Ruperto, and he become [sic] the director of the clinic 
where this prescription was written. So she used to come and see 
that doctor always. And while I was interviewing that patient she 
said she likes the doctor and she wanted to continue seeing that 
doctor. That's why she was coming from that 450 miles.

Id. (emphasis added).
    Respondent's counsel then asked Mr. George about the back side of 
two prescriptions for 180 oxycodone 30 (GX 3, at 35) which cost $1350 
each and were written for H.C., Sr., and H.C., Jr.; the latter is the 
same person whose records are found at pages 34 through 51 of 
Respondent's Exhibit 3. Tr. 495-96. Asked to explain what inquiry he 
made to learn about him and his condition, Mr. George testified:

     [W]hen I got this prescription, I did all my due diligence and 
followed my protocols. Then I looked--he has a bulging disc, and I 
filled this prescription. He is coming in my pharmacy from 2009 
onwards. And when he came to pharmacy with all these conditions, 
he'd been filling for [sic] insurance--he had insurance coverage 
that time. Then that time he was paying $35, was the copay. So he'd 
been paying that from 2009 `till end . . . of 2010.
    Then he left the pharmacy. Then two years he did not come to the 
pharmacy. Then in 2012, he came back to the pharmacy with a 
prescription, and he did not have insurance, which Hills Pharmacy 
always ask when he was in where is your insurance, and he said he 
lost the insurance. He didn't have any insurance coverage.
    Then he said that I need this medication, I'm on this 
medication. And he brought a profile also where he was. And I don't 
remember that it is a--and he showed me he was taking this 
medication. So he said he's willing to pay whatever the cash price 
at that time. And I filled this prescription for cash.

Id. at 496-97. Mr. George then testified that H.C., Jr.'s drug therapy 
had not changed from when he had insurance. Id. at 497. Mr. George did 
not, however, offer any testimony regarding his decision to also 
dispense oxycodone 30 to H.C., Sr.
    Mr. George subsequently testified that he had no knowledge that any 
of the patients who received the prescriptions at issue abused or 
diverted the drugs he dispensed to them. Id. at 498. Respondent's 
counsel then asked him ``how do you respond to the allegations . . . 
that you filled prescriptions that had red flags on them?'' Id. at 498-
99. Mr. George testified:

    From 2013 onwards, I modified my protocol and changed it to 
print out patients' residence to less than 15 miles, and also in our 
protocol changes that we only fill the doses consistent with the 
manufacturer's recommended doses, and also we will not fill for 
patient for the controlled substances who reside in the same 
addresses. So after making that [sic] changes, if it--today I will--
that red flag will be considered in a different way and say that 
this is not according to my protocol, so I will not be comfortable.
    That doesn't mean that what I did before that was not written 
for legitimate medical purpose, but at this point, because my 
protocol is more stringent and more strong, in my effort to prevent 
the misuse and abuse and diversion, I will check one more time.

Id. at 499-500.\23\ Mr. George then testified that as of February 19, 
2015 (three weeks before the hearing), Respondent ``completely 
stopped'' filling controlled substance prescriptions ``issued from any 
pain management clinic.'' Id. at 500. Asked why he had made this 
change, Mr. George testified that ``I know we all have a part to do to 
prevent the abuse and misuse and diversion of the controlled 
substances. As a professional provider, and the Government--DEA is 
trying to prevent that. And as a professional provider, I also have a 
responsibility for that.'' Id. at 500-01. He then added that part of 
the reason he had changed his policies was because ``always there are 
bad apples everywhere'' and ``I know that I'm less than the perfect.'' 
Id. at 501. Mr. George then testified that he had ``never'' filled a 
controlled substance prescription having ``knowledge that it was not 
issued for a legitimate medical purpose.'' Id. at 502.
---------------------------------------------------------------------------

    \23\ On cross-examination, however, Mr. George was asked if a 
patient's address being 63 miles from Tampa presented a red flag. 
Tr. 570. Mr. George testified:
    Sixty-three miles, this time, yes, I will not fill that 63 
miles, above 50 miles because my protocol has changed after the 
administrative warrant then to less than 50 miles. But at that time 
then when I filled it, it was a red flag, but I did my due diligence 
and followed the protocol, so that time it was okay in that I 
resolved that red flag.
    Id. at 570-71.
---------------------------------------------------------------------------

    Next, Mr. George testified regarding a chart he had created which 
shows from January 1, 2011 through November 30, 2014, the total 
prescriptions dispensed by Respondent during each year (except for 
2014), the total non-controlled and schedule II prescriptions 
dispensed, and the total schedule III through V prescriptions 
dispensed. RX 2, at 1. Notably, the chart does not provide any data for 
the schedule II prescriptions alone, and instead adds them to the non-
controlled prescriptions. See id. The chart also purports to show the 
percentage of Respondent's total dispensings comprised by schedule III 
through V drugs, the ``percentage change from previous year'' and the 
``percentage change from 2011.'' Id. While five of the six entries in 
the latter two columns show percentage reductions, the chart does not 
state whether the percentage change is in the total schedule III 
through Vs dispensings or in the percentage of total dispensings 
comprised by schedule III through V drugs. Moreover, the 2014 figures 
do not include data for the month of December.
    Another chart shows data for Schedule II through V for the years 
2011 through 2013 and for 2014 through November 30. RX 2, at 3. The 
chart reflects a decrease in the total number of controlled substance 
prescriptions dispensed and a decrease in the percentage of total 
dispensings comprised by schedule II through V dispensings. See id.
    Subsequently, Mr. George answered ``yes'' when asked by 
Respondent's counsel: ``[d]o you accept responsibility for the fact 
that you filled prescriptions for controlled substances that had red 
flags on them?'' Tr. 507. However, when then asked if he had ``ever 
knowingly ignored your duties as a pharmacist to exercise your 
professional judgment?'', Mr. George answered: ``No, I never did.'' Id. 
at 507-08. Mr. George further testified that ``even though I did my 
best, our best to control that and prevent the abuse and misuse, that 
is not perfect. It is always less than perfect. Human beings are not 
perfect. I accept that responsibility.'' Id. at 539-40.
    On cross-examination, Mr. George acknowledged that a prescription 
which calls for the dispensing of ``a high quantity'' of a controlled 
substance presents a red flag as do ``patients coming from long 
distance.'' Id. at 552. However, he then maintained that he

[[Page 49833]]

had resolved all the red flags and had documented this on the due 
diligence checklists which were in the binder ``in the pharmacy.'' Id. 
He further testified that he would consult the medical records he 
obtained before dispensing controlled substances. Id. at 553. Asked by 
the Government if he ``understand[s] medical records,'' Mr. George 
testified:

    I don't understand it the way the doctors are trained to 
understand. By experience, I look whether this prescription was 
issued for a legitimate medical reason. This is not my duty as a 
pharmacist. I would do something above and beyond in order to 
support the effort to prevent abuse and misuse. It is not part of my 
duty to read the medical report. I am doing an extra step for myself 
and to serve the community.

Id. at 554-55.
    The Government then asked Mr. George about Respondent's dispensing 
of 240 oxycodone 30 tablets to K.D., on April 21, 2011, pursuant to a 
prescription issued by Dr. S.A.-H. of the 24th Century Clinic (GX 3, at 
20); K.D. is one of the patients whose partial records were submitted 
into evidence. See RX 3, at 1-17. Asked whether he ``consult[ed] the 
medical record that is accompanying this prescription before dispensing 
that prescription,'' Mr. George answered: ``I didn't say that. I said 
my medical records are filed in the pharmacy, not with this 
prescription.'' Tr. 557. Then asked whether he had dispensed the 
prescription, Mr. George testified that he did not dispense ``[t]hat 
particular prescription'' and that ``another pharmacist'' had filled 
the prescription. Id. When asked ``who would that person be,'' Mr. 
George testified that the copy was ``very faint'' and that could not 
see ``the signature on that page, because the copy is faded.'' Id. I 
find, however, that the prescription label is readable and bears Mr. 
George's initials.
    The Government then asked Mr. George if he had dispensed the 
prescription found in the patient file for S.D., who resided in Panama 
City, Florida. Id. at 560. This prescription, which was written on 
January 19, 2012 by Dr. R.R. of 24th Century clinic, authorized the 
dispensing of 120 tablets of oxycodone 30. RX 3, at 33. Mr. George 
acknowledged that he had dispensed the prescription. Tr. 560. He also 
acknowledged that he had reviewed the partial medical file before 
dispensing the prescription. Id. at 560-61. However, when then asked if 
he could ``tell from this medical record what other controlled 
substances were dispensed on that particular day,'' Mr. George 
testified:

    No. I look only for my prescription which is received in my 
hand. That is only my concern on that time. Where other places or 
where the patient got the medication, if I have the PDMP, that will 
support me on that cause. If I get the medical record, I have no way 
of saying and understanding where the patient had a different 
prescription unless I talk to the patient or doctors if he write any 
other prescriptions. I cannot guess where the prescription was 
filled for that patient.
    And . . . I have one more thing to add on that question. This, 
as I said, these documents I am looking at, looking [sic] all these 
documents, above and beyond what the duty required of me because to 
help. It is not my pharmacist job to read, that is doctor's job. DEA 
give [sic] license to the doctors and they are well trained in 
writing these prescriptions, and they have the capacity to look at 
the patient's record and they are the one who is writing this 
prescription. I call them--give me a second. I call them, verify 
them, why they did it, what is the treatment plan, and I look above 
and beyond what are required of pharmacist. I go all the papers and 
I make my professional judgment whether this patient can be--this 
prescription can be dispensed.

Id. at 561-62.
    Asked whether he saw a treatment plan in S.D.'s medical record, Mr. 
George testified:

    In this, all records when you go through the records, there is a 
medical, the copy of the MRIs and the report from the radiologist 
and why they are treating it and the notes from the doctor's office, 
and it say what medication they are writing there, and the doctors 
notes, the visitation notes there.

Id. at 562.
    Then asked whether he looked at S.D.'s MRI, Mr. George testified: 
``I don't look at MRI. I look at what is the diagnosis in that, whether 
patient, if it says that a patient has a bulging disc. A couple of the 
reasons why this medication being prescribed. That's my scope there.'' 
Tr. 563. Mr. George then testified that he did look at the MRI report 
before dispensing the prescription. Id.
    Mr. George then denied that he was familiar with the term drug 
cocktail. Id. at 563-64. Significantly, the note for S.D.'s January 19, 
2012 visit lists multiple drugs that were prescribed by the doctor, 
including 120 oxycodone 30, MS Contin, Soma (carisoprodol), Xanax, and 
also included the note of ``add Dilaudid 8 mg #120.'' RX 3, at 29.
    S.D.'s patient file also includes a visit note dated June 13, 2012. 
RX 3, at 24-27. This note states that ``Pt. has not taken meds in 5 
months'' and lists S.D.'s current medications as including five drugs: 
(1) Carisoprodol 350 mg, one tablet twice daily; (2) Dilaudid 8 mg 
\24\; (3) MS Contin CR 30 mg, one tablet daily; (4) oxycodone 30 mg, 
one tablet ``every 4-6 hours''; and (5) Xanax 1 mg., one tablet ``twice 
daily.'' Id. at 25. According to the visit note, a drug screen was 
conducted and S.D. tested negative for opiates. Id. at 26. Finally, the 
visit note lists the prescriptions issued by the physician at this 
visit; with the exception of Dilaudid, which was discontinued, the 
prescriptions for carisoprodol, MS Contin, oxycodone 30, and Xanax were 
re-issued with the previous dosing instructions. Id. at 27. However, 
none of the prescriptions issued to S.D. at this visit are in the 
record.
---------------------------------------------------------------------------

    \24\ No dosing instruction was listed.
---------------------------------------------------------------------------

    Subsequently, the Government asked Mr. George if he had filled the 
prescription (GX 3, at 16) issued by Dr. P.C. (24th Century) to C.B. of 
Big Pine Key, which authorized the dispensing of 196 oxycodone 30. Tr. 
568-69. Mr. George acknowledged that he had filled the prescription. 
Id. at 569. Asked if he knew where Big Pine Key is, Mr. George stated 
that he knew that it was in Florida. Id. Then asked if he knew how far 
it was from Respondent, Mr. George testified: ``I don't know. It is 
written in my due diligence list.'' Id. When later asked if he recalled 
investigating why C.B. had travelled from Big Pine Key to get the 
prescription, Mr. George answered:

    On this particular patient I don't remember, but I know that 
when it is more than this distance, definitely I did counsel the 
patient and record it in the due diligence sheet why they travel. In 
many cases, I don't remember particularly this patient again. Many 
cases the reasons are their [sic] spouse are [sic] living in Tampa, 
they're [sic] in job assignment, or their [sic] doctor is here and 
they like the doctor. So there are many reasons, but I don't 
particularly remember. This is from 2011.

Id. at 573.\25\
---------------------------------------------------------------------------

    \25\ To similar effect, the Government asked Mr. George if he 
knew where Floral City is. Tr. 569. Mr. George answered: ``Again, I 
don't know where the city [sic] located in, but I know it is in 
Florida.'' Id. After acknowledging that the distance from Floral 
City to Tampa (63 miles) was a red flag, Mr. George maintained that 
``I resolved the red flag looking at all the, doing the due 
diligence and checking with the doctors whether the patient need 
[sic] the medications and now all the treatment.'' Id. at 571. And 
asked whether he ever determined why the patient had travelled 63 
miles to get the prescription, Mr. George stated that ``[o]n most of 
the patients when I talk to them and interview them and counsel them 
why they are traveling, and the reasons I get I will put in my due 
diligence sheet.'' Id. Then asked by the Government ``[s]o you don't 
know the reason right now,'' Mr. George answered: ``right now, 
because if you said yesterday I would have looked at it.'' Id.
     On re-direct, Respondent's counsel, having noted the 
Government's questions ``about remembering specifics about certain 
patients,'' asked Mr. George how many patients he had ``dispensed 
controlled substances for in the last five years?'' Id. at 586. Mr. 
George testified that ``I cannot remember because daily three, four 
patients comes [sic], in five years, how I calculate it, it's not 
possible. And it is very hard to remember that. And I am a human 
being doing other business too, so I cannot remember everything, 
keep everything.'' Id. at 586-87.
     While that may be, Respondent certainly knew what prescriptions 
were at issue well in advance of the hearing, and if it was true 
that Respondent was maintaining the due diligence checklists, Mr. 
George could have reviewed those checklists with respect to the 
patients who filled the prescriptions.

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

[[Page 49834]]

The Government's Rebuttal Case

    Subsequently, the Government recalled Mr. Parrado to question him 
about Mr. George's testimony with respect to the medical records in 
Respondent's Exhibit 3. Tr. 598-99. Mr. Parrado testified that he had 
``never had medical records in any pharmacy I've ever worked in or 
managed.'' Id. at 599.
    With respect to the medical record for S.D., which, as found above, 
showed that he had received prescriptions for oxycodone 30, MS Contin, 
carisoprodol and Xanax, even though he had not been on medications for 
five months and had tested negative for opiates, Mr. Parrado explained 
that ``[t]here were some notations in his chart that caused me 
concern.'' Id. at 601. Mr. Parrado specifically noted the notation that 
SD ``had not taken his medication in five months'' and that his drug 
screen was negative for opiates ``but yet he was prescribed a lethal 
dose of oxycodone that day.'' Id.
    Asked on cross-examination that ``you know that there's no ceiling 
on narcotics, don't you,'' Mr. Parrado answered: ``[W]ell, but there 
is. On an opioid na[iuml]ve patient there is.'' Id. at 601-02. Asked 
``[d]o you know whether S.D. was opioid na[iuml]ve,'' Mr. Parrado 
testified: ``[F]rom seeing the record, yes. He had not taken the 
medication in five months per his own dosing.'' Id. at 602. Mr. Parrado 
then added that the S.D.'s visit note stated that he had tested 
negative for opioids. Id. Asked if he knew from Respondent's Exhibit 
that ``S.D. had been taking opioids for years? \26\'', Mr. Parrado 
answered: ``[y]es, but he had not taken them in five months per his 
own.'' Id. at 603. While Mr. Parrado acknowledged that he had no 
personal knowledge that S.D. had not taken the drugs for five months, 
Mr. Parrado explained: ``[W]hat I'm talking about, if I as a pharmacist 
was looking at that chart and seeing that, I could not have dispensed 
that. My professional judgment would have prevented me from dispensing 
that prescription.'' Id. And after Respondent's counsel asked whether 
he knew if the notation meant ``that the patient didn't get medication 
from the clinic for five months or whether . . . the patient was not 
seen at all anywhere for five months?'', id. at 604, Mr. Parrado 
testified:
---------------------------------------------------------------------------

    \26\ Notwithstanding the question, there is nothing in the 16 
pages of S.D.'s records that establish that he had been taking 
opioids for years. To be sure, there is a 2009 MRI report; a 
document indicating that a driver license check was performed on 
June 24, 2010, and another document indicating that S.D. made visits 
on monthly basis from August 12, 2011 through January 19, 2012, 
before reappearing five months later on June 13, 2012. However, the 
only evidence as to the prescriptions he had received prior to the 
June 2012 visit is the January 19, 2012 Progress Note and the 
prescription of the same date. In any event, Mr. Badawi was ``still 
present in the hearing room'' when Mr. Parrado was called in 
rebuttal and the ALJ explained that ``if there's some expert 
conflict over this testimony, there's an opportunity for counsel to 
explore that.'' Tr. 597. Respondent did not call Mr. Badawi to 
challenge Mr. Parrado's testimony that S.D. was opioid na[iuml]ve at 
the time he presented the June 2012 prescription.

    The notations said, and if I'm going to be looking at a chart as 
a pharmacist to determine if there was something, if this dose is 
appropriate to begin with, the fact the patient said he had not 
taken the medication, I'm seeing in the medical record that the drug 
screen says opiate negative. That's telling me I now have an opioid 
---------------------------------------------------------------------------
na[iuml]ve patient. I have a concern.

Id. at 605.
    On further questioning by Respondent's counsel, Mr. Parrado 
reiterated that the patient's statement that he had not taken 
medication in five months ``was in that chart that I looked at.'' Id. 
However, notwithstanding that Respondent obtained the visit note, which 
lists multiple controlled substance prescriptions that were issued to 
S.D. at his June 13, 2012 visit, the Government did not submit any 
prescriptions (and their labels) showing that Respondent actually 
dispensed any of the prescriptions listed in the visit note.

Discussion

    Under the CSA, ``[a] registration pursuant to section 823 of this 
title to manufacture, distribute, or dispense a controlled substance . 
. . may be suspended or revoked by the Attorney General upon a finding 
that the registrant . . . has committed such acts as would render [its] 
registration under section 823 of this title inconsistent with the 
public interest as determined under such section.'' 21 U.S.C. 
824(a)(4). In the case of a retail pharmacy, which is deemed to be a 
practitioner, see id. Sec.  802(21), Congress directed the Attorney 
General to consider the following factors in making the public interest 
determination:

    (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.

Id.
    ``[T]hese factors are . . . considered in the disjunctive.'' Robert 
A. Leslie, M.D., 68 FR 15227, 15230 (2003). It is well settled that I 
``may rely on any one or a combination of factors, and may give each 
factor the weight [I] deem[] appropriate in determining whether'' to 
suspend or revoke an existing registration. Id.; see also MacKay v. 
DEA, 664 F.3d 808, 816 (10th Cir. 2011); Volkman v. DEA, 567 F.3d 215, 
222 (6th Cir. 2009); Hoxie v. DEA, 419 F.3d 477, 482 (6th Cir. 2005). 
Moreover, while I am required to consider each of the factors, I ``need 
not make explicit findings as to each one.'' MacKay, 664 F.3d at 816 
(quoting Volkman, 567 F.3d at 222); see also Hoxie, 419 F.3d at 
482.\27\
---------------------------------------------------------------------------

    \27\ In short, this is not a contest in which score is kept; the 
Agency is not required to mechanically count up the factors and 
determine how many favor the Government and how many favor the 
registrant. Rather, it is an inquiry which focuses on protecting the 
public interest; what matters is the seriousness of the registrant's 
or applicant's misconduct. Jayam Krishna-Iyer, 74 FR 459,462 (2009). 
Accordingly, as the Tenth Circuit has recognized, findings under a 
single factor can support the revocation of a registration. MacKay, 
664 F.3d at 821. Likewise, findings under a single factor can 
support the denial of an application.
---------------------------------------------------------------------------

    Under the Agency's regulation, ``[a]t any hearing for the 
revocation or suspension of a registration, the Administration shall 
have the burden of proving that the requirements for such revocation or 
suspension pursuant to . . . 21 U.S.C. [Sec.  ]824(a) . . . are 
satisfied.'' 21 CFR 1301.44(e). In this matter, while I have considered 
all of the factors, the Government's evidence in support of its prima 
facie case is confined to factors two and four.\28\ I find

[[Page 49835]]

that the record taken as a whole provides substantial evidence that 
Respondent's pharmacists violated their corresponding responsibility 
when they dispensed many of the prescriptions at issue. I also find 
that the Government has established by substantial evidence that 
Respondent has failed to maintain accurate records, as well as other 
violations. Accordingly, I conclude that the Government has established 
that Respondent has committed numerous acts which render its continued 
``registration inconsistent with the public interest.'' 21 U.S.C. 
824(a)(4). Because I further agree with the ALJ's finding that 
Respondent has not accepted responsibility for its misconduct, I also 
agree with the ALJ that it has not rebutted the Government's prima 
facie showing. Because I find that Respondent's misconduct is 
egregious, I will order that Respondent's registration be revoked and 
that any pending application be denied.
---------------------------------------------------------------------------

    \28\ As to factor one, there is no evidence that the Florida 
Department of Health has either made a recommendation to the Agency 
with respect to Respondent, or taken any disciplinary action against 
Respondent. See 21 U.S.C. 823(f)(1). However, even assuming that 
Respondent currently possesses authority to dispense controlled 
substances under Florida law and thus meets a prerequisite for 
maintaining its registration, this finding is not dispositive of the 
public interest inquiry. See Mortimer Levin, 57 FR 8680, 8681 (1992) 
(``[T]he 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.''). Accordingly, this 
factor is not dispositive either for, or against, the revocation 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 to factor three, I acknowledge that there is no evidence 
that Respondent, its owner, its manager, or any of its pharmacists, 
has been convicted of an offense under either federal or Florida law 
``relating to the manufacture, distribution or dispensing of 
controlled substances.'' 21 U.S.C. 823(f)(3). However, there are a 
number of reasons why even a person who has engaged in criminal 
misconduct may never have been convicted of an offense under this 
factor, let alone prosecuted for one. Dewey C. MacKay, 75 FR 49956, 
49973 (2010), pet. for rev. denied, MacKay v. DEA, 664 F.3d 808 
(10th Cir. 2011). The Agency has therefore held that ``the absence 
of such a conviction is of considerably less consequence in the 
public interest inquiry'' and is therefore not dispositive. Id.
     While the Government did not allege in the Show Cause Order any 
misconduct with respect to factor five, following the hearing, the 
Government argued that Mr. George provided incredible testimony. 
Because I consider his testimony in evaluating the evidence as to 
the dispensing allegations, as well as whether Respondent has 
credibly accepted responsibility for its misconduct, I deem it 
unnecessary to separately address Mr. George's testimony under 
factor five.
---------------------------------------------------------------------------

Factors Two and Four--The Respondent's Experience in Dispensing 
Controlled Substances and Compliance With Applicable Laws Related to 
Controlled Substances

The Dispensing Allegations

    ``Except as authorized by'' the CSA, it is ``unlawful for any 
person [to] knowingly or intentionally . . . manufacture, distribute, 
or dispense, or possess with intent to manufacture, distribute, or 
dispense, a controlled substance.'' 21 U.S.C. 841(a)(1). Under the Act, 
a pharmacy's registration authorizes it ``to dispense,'' id. Sec.  
823(f), which ``means to deliver a controlled substance to an ultimate 
user . . . by, or pursuant to the lawful order of, a practitioner.'' 
Id. Sec.  802(10).
    The CSA's implementing regulations set forth the standard for a 
lawful controlled substance prescription. 21 CFR 1306.04(a). Under the 
regulation, ``[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.'' Id. Continuing, the regulation provides that:

    [T]he 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. An order purporting to be a prescription issued not in 
the usual course of professional treatment . . . is not a 
prescription within the meaning and intent of section 309 of the Act 
(21 U.S.C. 829) and the person knowingly filling such a purported 
prescription . . . shall be subject to the penalties provided for 
violations of the provisions of law relating to controlled 
substances.\29\
---------------------------------------------------------------------------

    \29\ As the Supreme Court has explained, ``the prescription 
requirement . . . ensures patients use controlled substances under 
the supervision of a doctor so as to prevent addiction and 
recreational abuse. As a corollary, the provision also bars doctors 
from peddling to patients who crave the drugs for those prohibited 
uses.'' Gonzales v. Oregon, 546 U.S. 243, 274 (2006) (citing United 
States v. Moore, 423 U.S. 122, 135, 143 (1975)).

---------------------------------------------------------------------------
Id. (emphasis added).

    As the Agency has made clear, to prove a violation of the 
corresponding responsibility, the Government must show that the 
pharmacist acted with the requisite degree of scienter. See JM Pharmacy 
Group, Inc., d/b/a Farmacia Nueva and Best Pharma Corp., 80 FR 28667, 
28669 (2015). Thus, the Government can prove a violation by showing 
either that: (1) The pharmacist filled a prescription notwithstanding 
his/her actual knowledge that the prescription lacked a legitimate 
medical purpose; or (2) the pharmacist was willfully blind (or 
deliberately ignorant) to the fact that the prescription lacked a 
legitimate medical purpose. See id. at 28671-72. As to establishing 
that a pharmacist acted with ``willful blindness, proof is required 
that: `(1) The defendant must subjectively believe that there is a high 
probability that a fact exists and (2) the defendant must take 
deliberate actions to avoid learning of that fact.' '' Id. at 28672 
(quoting Global-Tech Appliances, Inc., v. SEB S.A., 563 U.S. 754, 769 
(2011)).
    Here, the Government makes no claim that any of Respondents' 
pharmacists dispensed the prescriptions having actual knowledge that 
the prescriptions lacked a legitimate medical purpose. Instead, relying 
primarily on Holiday CVS, L.L.C., d/b/a CVS/Pharmacy Nos. 219 and 5195, 
77 FR 62316, 62341 (2012), the Government argues that a pharmacist 
violates the corresponding responsibility rule when he/she dispenses a 
controlled substance 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 . . . takes steps to resolve 
the red flag and ensure that the prescription is valid.'' Gov. Post-
Hrng. Br. 21.
    The Government argues that Respondent's pharmacists violated this 
regulation by filling prescriptions for such drugs such oxycodone, 
hydromorphone, and MS Contin (morphine sulfate) which presented various 
``red flags'' which were never resolved. Gov. Post-Hrng. Br. 22-24. It 
contends that its expert, Mr. Parrado, gave ``unrefuted testimony'' 
that ``Respondent repeatedly distributed controlled substances pursuant 
to prescriptions that contained one or more unresolved red flags for 
diversion.'' Id. at 22. And after listing six different circumstances 
which Mr. Parrado identified as presenting red flags, it argues that he 
``testified that no evidence could be found to show the red flags had 
been resolved prior to dispensing.'' Id. As evidence that the red flags 
were not resolved, it relies on Mr. Parrado's testimony that it is the 
standard of pharmacy practice that the resolution of a red flag is 
documented on the prescription itself and that none of the 
prescriptions entered into evidence contain any such documentation.\30\ 
Id. at 23.
---------------------------------------------------------------------------

    \30\ In fact, the record includes several prescriptions which 
contain notations on the back of the prescriptions suggesting a 
phone call was made to someone about the prescriptions. GX 14, at 7-
10. These prescriptions were issued by a doctor at a clinic other 
than 24th Century. See id. at 7, 9. However, the Government did not 
ask Mr. George to explain the notations even though his initials are 
on the dispensing labels as the dispensing pharmacist.
---------------------------------------------------------------------------

    However, with the exception of a provision of Florida law which 
requires that a pharmacist document that he has checked a patient's 
identification (or made a photocopy of the identification and attached 
it to the prescription), no provision of the CSA, DEA regulations, 
Florida law, or the Board of Pharmacy's rules requires that a 
pharmacist document the resolution of a red flag or flags on the 
prescription itself. While it may be the custom of the pharmacy 
profession to document the resolution of a red flag or flags on the 
prescription, that does not make it improper to document the resolution 
someplace else.
    Recently, I rejected allegations that a registrant's pharmacists 
had failed to resolve red flags when the only evidence the Government 
offered to prove that fact was the absence of

[[Page 49836]]

documentation on the prescriptions themselves. See Superior Pharmacy I 
and II, 81 FR 31310 (2016). In Superior, I noted that ``while evidence 
of a custom certainly has probative value, it is not conclusive 
proof.'' Id. at 31335 n. 55 (citing Sorrels v. NCL (Bahamas) Ltd., 796 
F.3d 1275, 1282 (11th Cir. 2015) (``[E]vidence of custom within a 
particular industry, group, or organization is admissible as bearing on 
the standard of care in determining negligence. Compliance or 
noncompliance with such custom, though not conclusive on the issue of 
negligence is one of the factors the trier of fact may consider in 
applying the standard of care.'') (emphasis added) (quoting Muncie 
Aviation Corp. v. Party Doll Fleet, Inc., 519 F.2d 1178, 1180-81 (5th 
Cir. 1975))). See also II Wigmore, Evidence, Sec.  379, at 403 (Tillers 
rev. ed. 1983) (explaining that with respect to evidence of custom or 
usage of trade, ``the question is not whether the offered instances 
fully prove the custom alleged, but merely whether they are receivable 
as having probative value''). Thus, while the absence of documentation 
on the prescriptions is clearly probative evidence that Respondent's 
pharmacists failed to resolve the strong suspicion presented by many of 
the prescriptions--indeed, Mr. George testified that he previously 
documented the resolution of red flags on the prescriptions until 2010 
when he started using the due diligence checklists, Tr. 455-57,--the 
absence of documentation on the prescriptions is not conclusive proof 
that Respondent's pharmacists failed to do so.
    Moreover, while there is no requirement that a pharmacist document 
the resolution of a red flag on a prescription, a regulation of the 
Florida Board of Pharmacy (then in effect) specifically required that 
``[a] patient record system . . . be maintained by all pharmacies for 
patients to whom new or refill prescriptions are dispensed'' and that 
the ``system shall provide for the immediate retrieval of information 
necessary for the dispensing pharmacist to identify previously 
dispensed drugs at the time a new or refill prescription is presented 
for dispensing.'' Fla. Admin. Code r. 64B-16-27.800. This rule also 
required that the pharmacy maintain ``[a] list of all new and refill 
prescriptions obtained by the patient at the pharmacy . . . during the 
two years immediately preceding the most recent entry'' and include the 
``prescription number, name and strength of the drug, the quantity and 
date received, and the name of the prescriber.\31\'' Id.
---------------------------------------------------------------------------

    \31\ This rule remains in effect today; however, the rule now 
requires that the information be maintained for a period of four 
years preceding the most recent entry.
---------------------------------------------------------------------------

    The rule further required that the record include the 
``[p]harmacist['s] comments relevant to the individual's drug therapy, 
including any other information peculiar to the specific patient or 
drug.'' Id. And the rule also required that the pharmacist make ``a 
reasonable effort . . . to obtain from the patient . . . and record any 
known allergies, drug reactions, idiosyncrasies, and chronic conditions 
or disease states of the patient and the identity of any other drugs . 
. . being used by the patient which may relate to prospective drug 
review.'' Id. Finally, the rule required that ``[t]he pharmacist . . . 
record any related information indicated by a licensed health care 
practitioner.'' Id.
    Of further note, the Board of Pharmacy's rules require that a 
pharmacist ``review the patient record and each new and refill 
prescription presented for dispensing in order to promote therapeutic 
appropriateness.'' Fla Admin Code r. 64B16-27.810. This rule 
specifically requires that a pharmacist identify such issues as: 
``[o]ver-utilization,'' ``[t]herapeutic duplication,'' ``[d]rug-drug 
interactions,'' ``[i]ncorrect drug dosage,'' and ``[c]linical abuse/
misuse.'' Id.
    Notwithstanding that the Board's rule specifically requires that a 
pharmacist document in the patient record his/her comments relevant to 
the patient's drug therapy and ``other information peculiar to the 
patient'' or drug, as well as ``any related information'' provided by 
the patient's physician, and thus, would seem to provide relevant 
evidence in assessing whether a pharmacist resolved the suspicion 
created by the prescriptions, the Government did not introduce any of 
the patient profiles. Nor did it provide any of the patient profiles to 
Mr. Parrado, Tr. 300, even though on cross-examination, he acknowledged 
that a pharmacist would generally need to see the patient profile to 
determine whether a patient had developed tolerance.\32\ Id. at 151.
---------------------------------------------------------------------------

    \32\ It is not that the patient profiles were unobtainable, as 
the evidence shows that Respondent's computer was digitally imaged 
by the AIW team, Tr. 217, 301; and thus, the profiles could have 
been extracted.
---------------------------------------------------------------------------

    In Superior Pharmacy I and II, I found the Government's evidence, 
which was limited to the prescriptions (which contained no 
documentation that the red flags were resolved) and its Expert's 
testimony, insufficient to establish that the pharmacists violated 
their corresponding responsibility. Here, however, there is additional 
evidence, which establishes by a preponderance of the evidence, that 
Respondent's pharmacists acted knowingly or with willful blindness when 
they dispensed at least some of the prescriptions, which lacked a 
legitimate medical purpose. More specifically, both Mr. George's 
testimony and the partial medical records support this finding with 
respect to some of the prescriptions.
    At the outset, the evidence shows that more than 90 percent of the 
schedule II prescriptions Respondent filled between January 3, 2011 and 
February 4, 2013 were written by doctors employed by Victor Obi, the 
brother of Respondent's owner. GX 12, at 2. See also, e.g., United 
States v. Leal, 75 F.3d 219, 223 (6th Cir. 1996) (holding that where 
``more than 90% of the prescriptions'' a pharmacist filled were written 
by one doctor was probative evidence that pharmacist knew of 
illegitimate prescribing practice). Mr. George clearly knew that the 
overwhelming majority of the schedule II prescriptions Respondent 
filled were issued by Mr. Obi's employees.
    As found above, on July 28, 2011, Respondent dispensed 210 tablets 
of oxycodone 30 to T.V., who had travelled 472 miles from Pensacola to 
obtain a prescription from Dr. P.C., one of the doctors at 24th 
Century. GX 3, at 1. I find that the distance T.V. travelled to obtain 
the prescription, as well as the drug--a known drug of abuse--and 
dosing, were sufficient to establish a subjective belief on the part of 
the pharmacist who filled the prescription that there was a high 
probability that the prescription lacked a legitimate medical 
purpose.\33\ Indeed, Mr. George

[[Page 49837]]

acknowledged that the distance T.V. was travelling was a red flag. Tr. 
494.
---------------------------------------------------------------------------

    \33\ Respondent argues that the Government cannot establish that 
a pharmacist has violated his corresponding responsibility unless it 
first establishes that the prescription lacked a legitimate medical 
purpose and that the issuing physician acted outside of the usual 
course of professional practice. Resp.'s Exceptions, at 9. It argues 
that ``neither the fact of this corresponding responsibility nor the 
pharmacist's performance of his corresponding responsibility affects 
whether the prescription was, in the first place, issued to the 
patient for a legitimate medical purpose by an individual 
practitioner acting in the usual course of his professional 
practice.'' Id. And it further argues that ``the test for the proper 
dispensing of a controlled substances remains at its foundation a 
medical question'' and that ``the Government provided not one 
scintilla of evidence to prove that the prescriptions at issue were 
issued for other than a legitimate medical purpose.'' Id. at 9-10.
    Respondent is mistaken. While it is true that a pharmacist 
cannot violate his corresponding responsibility if a prescription 
was nonetheless issued for a legitimate medical purpose, Respondent 
ignores that the invalidity of a prescription can be proved by 
circumstantial evidence. See, e.g., United States v. Leal, 75 F.3d 
219, 223 (6th Cir. 1996); United States v. Veal, 23 F.3d 985, 988 
(6th Cir. 1994) (per curiam); United States v. Hayes, 595 F.2d 258, 
261 (5th Cir. 1979). I find that to be the case here. For similar 
reason, I reject Respondent's contention that the Government failed 
to meet its burden because Mr. Parrado is a pharmacist with ``no 
medical training or experience that would have allowed him to 
evaluate the legitimacy of a physician's prescribing.'' Resp. 
Exceptions, at 20.
    In its Exceptions, Respondent also argues that ``[i]n Holiday 
CVS, there was evidence that two prescribers lacked a valid DEA 
registration'' and that ``[t]here was also evidence that the red 
flags were irresolvable.'' Exceptions, at 10. Respondent then argues 
that the decision's ``three-factor test is therefore founded upon 
evidence that prescriptions were, in fact, issued outside the usual 
course of professional practice (e.g., by a prescriber without a 
valid DEA registration)[,]'' and that [h]aving established the 
threshold question, the three-factor test was applied to determine 
if all of the red flags that a reasonably prudent pharmacist would 
have identified were conclusively resolved prior to dispensing.'' 
Id.
    Here too, Respondent is mistaken. To be sure, in Holiday CVS, 
the Agency relied in part on the prescriptions the two pharmacies 
filled that had been written by two physicians who were no longer 
registered (one had allowed his registration to expire, the other's 
registration had been revoked). 77 FR at 62316. With respect to 
these prescriptions, the Agency did so because the evidence showed 
that the pharmacies subscribed to a database which compiles 
information as to physicians' registration status, and thus, the 
pharmacists should have known that the physicians were no longer 
registered; the order also noted that in the case of the doctor 
whose registration had been revoked, that order was published in the 
Federal Register and yet one the pharmacies was still filling his 
prescriptions more than six months later. Id. These prescriptions 
were not merely suspicious, they were flat out illegal, and as such, 
there was nothing for the pharmacists to resolve, as under no 
circumstance could they be lawfully filled. See 21 CFR 1306.03(a).
    This, however, was only one part--and a small part--of the case, 
and the three-part test was discussed in the context of the 
pharmacies' decisions to dispense prescriptions for oxycodone 30 and 
alprazolam 2, which were written by doctors in South Florida for 
patients, many of whom had travelled from out-of-state (e.g., 
Kentucky and Tennessee) to the pharmacies which were located in 
Sanford, Florida, 200 miles or more from the physicians. Id. at 
62318. Of further note, in Holiday CVS, while the Government 
sponsored the testimony of an expert in pharmacy practice, it did 
not offer any testimony from a physician as to the medical propriety 
of the prescriptions. See generally id. at 62325-34 (recommended 
decision's discussion of Government' evidence). Here too, the 
Government relied on the circumstantial evidence that the 
prescriptions lacked a legitimate medical purpose. Accordingly, I 
reject Respondent's contention that ``the Government provided not 
one scintilla of evidence to prove that the prescriptions . . . were 
issued for other than a legitimate medical purpose.'' Resp. 
Exceptions, at 10.
---------------------------------------------------------------------------

    Regarding T.V., Mr. George testified that she had been a patient 
since 2009, that she had shown him scars from back surgeries, and that 
``even though the distance was far,'' his experience and ``the need of 
the patients'' [sic] led him to fill the prescription. Id. at 494-95. 
Mr. George further justified dispensing T.V.'s prescriptions,\34\ 
explaining that she had multiple surgeries at Tampa General Hospital 
when Dr. Ruperto was its Chief Anesthesiologist, and that he had become 
the director of the 24th Century clinic. Id. at 588. Mr. George then 
explained T.V. ``used to come and see that doctor always. And while I 
was interviewing that patient she said she likes the doctor and she 
wanted to continue seeing that doctor. That's why she was coming from 
that 450 miles.'' Id. (emphasis added).
---------------------------------------------------------------------------

    \34\ While there is only one prescription for T.V. in the 
record, Mr. George's testimony suggests that there were other 
prescriptions that Respondent had filled for her.
---------------------------------------------------------------------------

    Dr. Ruperto did not, however, issue the July 28, 2011 prescription. 
Indeed, his name does not appear among the lists of physicians on any 
of the 24th Century prescriptions. And while Mr. George testified that 
T.V. saw Dr. Ruperto ``always'' because she liked the doctor and that 
she had been coming to Respondent ``from 2009 onwards,'' Dr. Ruperto 
had died in December 2008, before T.V. had even started patronizing 
Respondent. I thus find that Mr. George's testimony as to why 
Respondent filled the prescription disingenuous. And I further conclude 
that Respondent's pharmacist knowingly filled an unlawful prescription.
    On January 19, 2012, Respondent dispensed 120 tablets of oxycodone 
30 to S.D., who had travelled 331 miles from Panama City to obtain the 
prescription from Dr. R.R. of the 24th Century Clinic. GX 3, at 33. In 
addition to the strong suspicion created by the distance S.D. had 
travelled, the partial medical records--which Mr. George testified he 
would obtain and review before dispensing--show that Dr. R.R. 
prescribed five different controlled substances to S.D. at this visit 
including oxycodone, MS Contin, Soma (carisoprodol), Xanax and 
Dilaudid, the latter being added at this visit. RX 3, at 29; see also 
id. at 27.
    Thus, S.D.'s partial medical record created additional strong 
grounds for Mr. George (whose initials are on the prescription label as 
the dispensing pharmacist) to subjectively believe that there was a 
high probability that the prescriptions lacked a legitimate medical 
purpose. First, the record showed that Dr. R.R. had prescribed a drug 
cocktail of CNS depressants of opiates (oxycodone), benzodiazepines, 
and carisoprodol, which as Mr. Parrado explained, is known as the Holy 
Trinity and to be highly abused on the street. Notably, Mr. Badawi 
offered no testimony refuting Mr. Parrado on this issue. And while Mr. 
George denied being familiar with drug cocktails, Tr. 563-64, DEA had 
identified this combination of drugs in several final decisions as 
being highly abused prior to the events at issue here. See Paul 
Volkman, 73 FR 30630, 30637 (2008); see also East Main Street Pharmacy, 
75 FR 66149, 66157-58 (2010).
    Mr. Parrado also testified that the maximum recommended dose of 
Dilaudid (hydromorphone) was 24 mg per day and that patients usually do 
not take the eight milligram dosage unless they have terminal cancer; 
he also testified that prescribing two short acting opiates is 
inappropriate therapy and raises a red flag. Id. at 57-58. As to Mr. 
Parrado's testimony regarding the maximum recommended dosing of 
Dilaudid, Mr. Badawi offered no testimony in refutation and he also 
agreed that prescribing a quantity ``larger than the manufacturer's 
recommended dosage'' creates a red flag. Id. at 402-03. Nor did Mr. 
Badawi offer any testimony refuting Mr. Parrado's testimony that the 
eight milligram dose was not usually prescribed unless the patient had 
terminal cancer. See generally id. at 402-40. Of note, neither of the 
progress notes in S.D.'s partial medical file indicates that he had 
been diagnosed with cancer of any stage, let alone terminal. RX 3, at 
28-29 (Jan. 19, 2012 visit); id. at 26 (June 13, 2012).
    Mr. Badawi also agreed with Mr. Parrado that the prescribing of two 
short-acting opiates together is a red flag that would require further 
investigation. Tr. 419. He then testified that a patient with kidney 
failure who undergoes dialysis could legitimately require two short-
acting opiates. There is, however, no documentation on either progress 
note that S.D. had kidney failure. RX 3, at 25-29. And while Mr. 
Parrado acknowledged that prescribing an extended release drug would be 
problematic for a patient who had undergone bariatric surgery, S.D. was 
prescribed MS Contin, which is an extended-release drug.\35\
---------------------------------------------------------------------------

    \35\ While Mr. George asserted that a patient could have 
allergies and thus need to be prescribed two short-acting 
medications, here too, there is no evidence in either progress note 
that S.D. had such an allergy.
---------------------------------------------------------------------------

    Of further note, Mr. George testified that he had reviewed S.D.'s 
partial file before dispensing the prescription. Tr. 560-61. However, 
Mr. George offered no testimony other than his generalized assertion 
that he always did his due diligence, which neither the ALJ nor I find 
credible, to explain how he resolved the suspicion created by S.D.'s 
prescriptions. Thus, given the sum total

[[Page 49838]]

of the information Mr. George had available to him when he dispensed 
oxycodone to S.D., I find that Mr. George was willfully blind to the 
fact that the prescription he dispensed lacked a legitimate medical 
purpose.
    Likewise, the partial medical record for H.C., Jr., shows that on 
December 6, 2012, he, too, received the cocktail known as the Holy 
Trinity from Dr. R.R. of the 24th Century Clinic. RX 3, at 47. More 
specifically, he received a prescription for 180 oxycodone 30 mg, along 
with prescriptions for 112 tablets of OxyContin 40 mg, 84 tablets of 
carisoprodol 350 mg, and 84 tablets of Xanax (alprazolam) 1 mg. Id. The 
evidence further showed that he paid $1350 just to fill the oxycodone 
30 prescription. GX 3, at 35.
    Mr. George offered a lengthy explanation as to why he had filled 
H.C., Jr.'s, prescription. More specifically, Mr. George explained that 
H.C., Jr., had been a patient who previously had insurance, that for 
two years he did not come to the pharmacy, and that when he returned he 
had lost his insurance but said he needed the medication and brought 
Mr. George a profile showing he had been on the medication and was 
``willing to pay whatever the cash price at that time.'' Tr. 496-97. 
While Mr. George asserted that when he got the oxycodone 30 
prescription, he did his due diligence and followed his protocols and 
determined that H.C., Jr. had a bulging disc, id.at 496, he offered no 
testimony specifically explaining what steps he took to resolve the 
high degree of suspicion which arose from H.C., Jr.'s being prescribed 
this highly abused combination of drugs by Dr. R.R. or any other 
physician who had previously prescribed this combination of drugs to 
H.C., Jr. I thus find that Mr. George subjectively believed that there 
was a high probability that the prescription lacked a legitimate 
medical purpose and that he deliberately avoided learning of this fact. 
And Mr. George offered no testimony as to why he also filled an 
oxycodone 30 prescription of the same quantity for H.C., Sr.
    The evidence also shows that on the same day, J.P. and T.P. who, 
according to Mr. George, were husband and wife, travelled 196 miles 
from St. Augustine to 24th Century, where they obtained prescriptions 
for 196 and 224 tablets respectively of oxycodone 30. GX 3, at 2-3. The 
sequential prescription numbers also support the inference that J.P. 
and T.P. presented their prescriptions to Mr. George one after the 
other, which he then filled.\36\ GX 3, at 2-3.
---------------------------------------------------------------------------

    \36\ Both prescription labels include the initials ``KG.'' GX 3, 
at 2-3.
---------------------------------------------------------------------------

    Mr. George asserted that he remembered the case of J.P. and T.P. 
``in detail.'' Tr. 468. He asserted that T.P. had a bulged disc from an 
accident in 1998 and ``was our patient from 2009'' and that J.P. had a 
``motor vehicle accident'' and ``had problems with his neck and . . . 
back''; however, he offered no evidence as to when J.P.'s accident had 
occurred and how long he had been a patient. Id.
    Here, notwithstanding Mr. George's statement that he remembered the 
case ``in detail,'' he offered no testimony as to why T.P. and J.P. 
needed to travel 196 miles each way to obtain medication for their 
purported conditions when there were likely a number of other clinics 
where they could have obtained treatment that are located far closer to 
St. Augustine then the 24th Century clinic. And while Mr. George 
asserted that he filled the prescriptions because he ``was comfortable 
within [his] professional judgment'' ``after doing all the due 
diligence and following the protocols, talking to the doctors,'' id.at 
573, Respondent produced no evidence to corroborate his testimony, not 
even the two-page due diligence checklists for T.P. and J.P.
    Notably, the ALJ did not find Mr. George's testimony credible,\37\ 
nor do I. Indeed, I conclude that the exact opposite of what Mr. George 
testified to is true. See, e.g., NLRB v. Walton Manufacturing Co., 369 
U.S. 404, 408 (1962) (quoting Dyer v. McDougall, 201 F.2d 265, 269 (2d 
Cir. 1952) (``the demeanor of a witness . . . `may satisfy the 
tribunal, not only that the witness' testimony is not true, but that 
the truth is the opposite of his story; for the denial of one who has a 
motive to deny, may be uttered with such hesitation, discomfort, 
arrogance or defiance, as to give assurance that he is fabricating, and 
that, if he is, there is no alternative but to assume the truth of what 
he denies' '')).\38\ I therefore conclude that Mr. George either knew 
that the prescriptions T.P. and J.P. presented lacked a legitimate 
medical purpose or subjectively believed that there was a high 
probability that the oxycodone prescriptions he filled for T.P. and 
J.P. on August 4, 2011 lacked a legitimate medical purpose and that Mr. 
George deliberately avoided learning of this fact.
---------------------------------------------------------------------------

    \37\ There are numerous examples that support the ALJ's finding 
that Mr. George's testimony was incredible. One such example is his 
story of how, in 2012, he discovered that J.P. had been discharged 
from 24th Century clinic after the clinic determined that J.P. had 
tested positive for cocaine during an admission to a hospital in St. 
Augustine. According to Mr. George, this occurred when J.P. 
attempted to fill a prescription. Mr. George did not explain why 
J.P. would even have a prescription if he had been discharged by the 
clinic.
    \38\ I thus reject Respondent's contention (Resp. Exceptions, at 
11-13) that the ALJ improperly drew the adverse inference that Mr. 
George's testimony was not credible when he testified that he 
``always'' conducted his due diligence. Respondent also argues that 
the ALJ's credibility finding is not supported by substantial 
evidence because ``the record lacks any evidence that Mr. George 
failed to utilize a system for resolving the red flags presented by 
the prescriptions at issue'' and that his testimony was unrefuted. 
See also id. at 38-39. Contrary to Respondent's understanding, the 
ALJ, who observed Mr. George testify, could reasonably find that 
``the opposite of his story'' is true based solely on her 
observation of him. Walton Manufacturing, 369 U.S. at 408 (quoting 
Dyer, 201 F.2d at 269).
---------------------------------------------------------------------------

    On April 21, 2011, Mr. George dispensed a prescription for 196 
oxycodone 30 to C.B., which was written by Dr. P.C. of the 24th Century 
clinic. Tr. 569; GX 3, at 16. C.B. lived in Big Pine Key, which is near 
Key West and a distance of 400 miles from Respondent. GX 3, at 16; R.D. 
at 6.
    Asked if he knew where Big Pine Key is, Mr. George answered that he 
knew it was in Florida. Asked if he recalled investigating why C.B. had 
travelled from Big Pine Key to Tampa to get the prescription, Mr. 
George asserted that he didn't ``remember particularly this patient 
again.'' Tr. 569. He then offered a generalized explanation as to why 
patients had addresses indicating that they lived a considerable 
distance from Tampa, such as ``their [sic] spouse are [sic] living in 
Tampa, they're [sic] in job assignment, or their [sic] doctor is here 
and they like the doctor,'' before acknowledging that ``I don't 
particularly remember'' the patient. Id. Here again, he asserted that 
``definitely I did counsel the patient and record it in the due 
diligence sheet why they travel.'' Id. at 573. However, Respondent 
failed to produce the due diligence sheets to corroborate Mr. George's 
testimony.
    Here again, I conclude that the exact opposite of what Mr. George 
testified to is true--that he did not determine why C.B. had travelled 
from Big Pine Key to fill the prescription. Walton Manufacturing Co., 
369 U.S. at 408 (quoting Dyer v. McDougall, 201 F.2d at 269). And I 
further conclude that Mr. George either knew that the prescription 
lacked a legitimate medical purpose or subjectively believed that there 
was a high probability that the prescription C.B. presented lacked a 
legitimate medical purpose and that he deliberately avoided learning of 
that fact.
    Mr. George did not otherwise address how he resolved the various 
red flags presented by any other specific

[[Page 49839]]

prescription. As for the remaining prescriptions, he testified that he 
had used the protocol he described in dispensing the prescriptions, Tr. 
451, that he resolved all of the red flags, and that he documented his 
resolution of all of the red flags on the due diligence checklists 
which were in the binder in the pharmacy. Id. at 552-53. The ALJ 
specifically found that Mr. George did not ``credibly assert[ ] that he 
took this action for each of the prescriptions entered into this 
record.'' R.D. 48. And she further found that he did not provide any 
other ``evidence that he utilized this system in regards to the 85 
prescriptions in this record that contain red flags.'' Id.
    Relying on International Union (UAW) v. NLRB, 459 F.2d 1329, 1336 
(D.C. Cir. 1972), the ALJ concluded that ``an adverse inference'' was 
warranted as ``[e]ither the due diligence files do not exist, or the 
files present evidence that is adverse to the Respondent's case.'' R.D. 
49. The ALJ thus concluded that ``[t]he Government has . . . proved 
that the Respondent filled prescriptions that presented red flags, and 
the red flags were not otherwise resolved prior to the pharmacy 
dispensing such prescriptions. Respondent's inaction in failing to 
resolve these red flags violates the pharmacy's corresponding 
responsibility.'' Id. (citing 21 CFR 1306.04(a); Holiday CVS, LLC, d/b/
a CVS Pharmacy Nos. 219 and 5195, 77 FR 62316 (2012)).
    I agree with the ALJ that an adverse inference is warranted based 
on Respondent's failure to produce the due diligence checklists and her 
assessment of Mr. George's credibility on the issue of whether he 
resolved all of the red flags. I nonetheless do not adopt her 
conclusion that Respondent's pharmacists violated their corresponding 
responsibility with respect to each of the 85 prescriptions in the 
record.
    In Superior, I noted that Holiday CVS defines the term ``red flag'' 
to mean ``a circumstance that does or should raise a reasonable 
suspicion as to the validity of a prescription.'' 81 FR at 31335. I 
further explained that ``[a]ll red flags do not have the same hue'' and 
that ``proof that a pharmacist dispensed a controlled substance 
prescription without resolving a red flag which only created a 
`reasonable suspicion' that the prescription lacked a legitimate 
medical purpose, is not enough to establish that a pharmacist acted 
with the requisite scienter'' of willful blindness, and thus violated 
21 CFR 1306.04(a). Id. at n.54; see also Global-Tech, 563 U.S. at 769. 
However, I also noted that even ``where there are multiple red flags, 
none of which alone would establish the requisite scienter, the 
combination of red flags may well create a subjective belief that there 
is a high probability that a prescription lacks a legitimate medical 
purpose.'' 81 FR at 31335 n.54.
    As explained above, establishing the requisite scienter for a 
violation requires more than simply showing that a prescription 
presented a red flag. The ALJ, however, simply concluded that because 
each of the prescriptions presented a red flag or flags, without any 
assessment of the level of suspicion created by the red flag or flags, 
a violation was established because she found Mr. George not credible 
when he testified that he resolved all of the red flags. This approach 
is too untethered to the text of 21 CFR 1306.04(a) to support findings 
that Respondent's pharmacists either acted knowingly or with willful 
blindness when they dispensed each of the prescriptions.
    To demonstrate, the record contains multiple prescriptions for MS 
Contin. The record is, however, devoid of any evidence as to why the 
quantities prescribed were suspicious, and certainly the prices paid 
for the prescriptions are not so outlandish as to support the 
conclusion that only a person who was abusing the drugs or selling them 
to others would be willing pay the amount charged by Respondent for the 
drug.\39\ Nor, despite its placement in Schedule II of the CSA, is 
there any evidence that MS Contin was known to be highly sought after 
by drug abusers. Thus, the only red flag presented are the distances 
travelled by the patients. Even then, however, a number of the persons 
filling the prescriptions lived in towns, such as Tarpon Springs and 
Spring Hill, which are within commuting range of Tampa. As to these 
prescriptions, it is unclear why the distance travelled by the patient 
was enough to establish that the pharmacist (whether Mr. George or 
others) subjectively believed that there was a high probability that 
the prescription lacked a legitimate medical purpose.\40\ This is so 
even when coupled with Mr. George's knowledge that 90 percent of the 
prescriptions were being issued by Mr. Obi's employees.
---------------------------------------------------------------------------

    \39\ The most expensive prescription was for 84 tablets of MS 
Contin 100 mg and cost $218.40. GX 14, at 23-24. Yet other 
prescriptions cost as little as $25.20. GX 13, at 5-6.
    \40\ It is acknowledged that some of the patients who filled the 
MS Contin prescriptions came from such places as Ocala, Gainesville 
and St. Augustine (196 miles). However, I deem it unnecessary to 
decide whether each of these prescriptions was unlawfully dispensed.
---------------------------------------------------------------------------

    The record does, however, establish that Respondent filled multiple 
prescriptions for Dilaudid (hydromorphone) which authorized the 
dispensing of high quantities and called for daily dosing well above 
the 12-24 milligrams average daily dose. Specifically, Mr. George 
dispensed 240 tablets of Dilaudid 8 mg to D.K., which would provide a 
daily dose of 64 mg, and 196 tablets of Dilaudid 8 mg to G.C., which 
would provide a daily dose of approximately 52 mg.
    As noted previously, Mr. Parrado provided unrefuted testimony that 
Dilaudid 8 mg is an ``extremely, extremely potent opioid,'' that the 
dose was ``almost double the recommended upper daily dose'' (it was 
actually more), and that the prescription provided ``a high dose 
because mostly people don't take Dilaudid 8 [mg] unless they're in a 
terminal stage of cancer.'' Tr. 90. Mr. Parrado then testified that 
``[t]o see multiple prescriptions for 200 tablets would be almost a 
non-resolvable red flag to me.'' Id. I conclude that Mr. Parrado's 
unrefuted testimony on this issue provides substantial evidence that 
Mr. George subjectively believed that there was a high probability that 
these prescriptions were not issued for a legitimate medical purpose.
    As for whether Mr. George resolved the high probability that the 
prescriptions were illegitimate raised by their dosing and quantity, 
Mr. George did not specifically address these two prescriptions. To be 
sure, Mr. George testified as a general matter that he resolved the 
suspicion presented when a prescription authorizes the dispensing of a 
controlled substance in quantities and dosing which exceed the maximum 
recommended dose in opioid na[iuml]ve patients by looking at the 
patient profiles to see if the patient had developed tolerance. 
However, while looking at a patient profile to determine how large a 
quantity a patient had previously been prescribed might well resolve 
whether a patient has developed tolerance, it does not conclusively 
resolve the issue of whether a prescription was issued for a legitimate 
medical purpose. See T.J. McNichol, 77 FR 57133, 57148 (2012). Indeed, 
just as legitimate patients may, over time, require larger 
prescriptions to obtain the same level of analgesia, so too, addicted 
persons require larger doses to obtain the same high. Also, a patient 
who seeks prescription narcotics for the purpose of reselling them has 
an economic incentive to seek large quantities.
    Moreover, Mr. George testified that while he always documented how 
he resolved the suspicion presented by a prescription, and, consistent 
with Mr. Parrado's testimony as to the standard of

[[Page 49840]]

practice, that he had formerly done so on the prescriptions themselves, 
Mr. George then maintained that from 2010 onwards he started doing so 
on the due diligence checklists. Yet, even though Respondent knew what 
prescriptions were at issue, it failed to produce the due diligence 
checklists for the patients who received these prescriptions. And while 
Respondent chose to put Mr. George on the stand, Mr. George did not 
address how he resolved the suspicious circumstances presented by these 
two prescriptions.\41\
---------------------------------------------------------------------------

    \41\ While I rejected similar allegations in Superior I and II 
because the evidence that the pharmacists had failed to resolve the 
suspicious circumstances was limited to the absence of such 
documentation on the prescriptions and faulted the Government for 
failing to produce the patient profiles, in that matter, neither 
party called any of the pharmacists who dispensed the prescriptions.
    I also note that after the Government rested, Respondent sought 
partial summary disposition on the dispensing allegations arguing 
that the Government did not ``meet its burden of proof to show that 
the red flags were not resolved'' and that all that ``the Government 
has proven is that the resolution of the red flags was not present 
on the back of the prescriptions.'' Tr. 336. The ALJ denied the 
motion, ruling that ``Respondent has not provided any legal 
authority that supports [its] position that I can grant summary 
disposition of an issue in the course of this hearing,'' and that 
she only had authority to recommend that I grant summary 
disposition. Id. at 340.
    Even if the ALJ committed error when she denied Respondent's 
motion, Respondent had the option of not putting forward evidence on 
the dispensing allegations. Respondent nonetheless chose to present 
Mr. George's testimony and submit the partial medical records. Cf. 
United States v. Sherod, 960 F.2d 1075, 1076 (1992) (``It is the 
universal rule in the federal circuits that `a criminal defendant 
who, after denial of a motion for judgment of acquittal at the close 
of the government's case-in-chief, proceeds to the presentation of 
his own case, waives his objection to the denial.' '') (quoting 
United States v. Foster, 783 F.2d 1082, 1085 (D.C. Cir. 1986) (en 
banc)). Thus, I am not required to ignore this evidence in 
adjudicating the dispensing allegations.
---------------------------------------------------------------------------

    Thus, I find that Mr. George either knew that the Dilaudid 
prescriptions issued to D.K. and G.C. lacked a legitimate medical 
purpose or subjectively believed that there was a high probability that 
the prescriptions lacked a legitimate medical purpose. I further find 
that an adverse inference is warranted that Respondent did not 
conclusively resolve the high probability that the Dilaudid 
prescriptions issued to D.K. and G.C. lacked a legitimate medical 
purpose. I therefore conclude that substantial evidence supports a 
finding that Mr. George violated 21 CFR 1306.04(a) when he dispensed 
these two prescriptions.\42\
---------------------------------------------------------------------------

    \42\ The record also contains a number other Dilaudid 8 mg 
prescriptions which were for quantities and dosages that exceeded 
the upper recommended dosage by nearly two fold or more. See GX 13, 
at 23 (168 du); 27 (240 du); and at 35 (196 du); GX 14, at 29 (168 
du); 31(180 du); 33 (180 du); 35 (168 du); 37 (180 du); and 41 (180 
du); GX 15, at 13 (180 du); 15 (168 du); 17 (180 du); 19 (168 du); 
21 (168 du); 23 (168 du); and 25 (180 du). For the same reasons set 
forth in my discussion of the Dilaudid prescriptions filled by D.K. 
and G.C., I conclude that Respondent's pharmacists violated their 
corresponding responsibility when they filled these prescriptions. 
As for the remaining Dilaudid prescriptions, with the exception of 
the prescriptions dispensed to B.W. and T.F., I decline to address 
whether Respondent's pharmacists violated 21 CFR 1306.04(a) when 
they dispensed them.
---------------------------------------------------------------------------

    Mr. Parrado also identified as suspicious two instances in which 
patients (B.W. and T.F.) presented prescriptions for both Dilaudid 8 
and methadone 10 which were issued on the same day. Tr. 107-11. Mr. 
George filled B.W.'s prescriptions, which were for 100 Dilaudid 8 mg 
and 60 methadone 10 mg, notwithstanding that: (1) B.W. had travelled 
from Tallevast (54 miles from Respondent); (2) the dosing instruction 
for the Dilaudid was to take one tablet every four hours for pain, thus 
resulting in a daily doses of 48 mg, double the upper recommended dose; 
and (3) that Dilaudid and methadone ``are immediate release opioids, 
both of which could contribute to respiratory depression, which could 
be a serious concern,''; and (4) while methadone's analgesic effect 
peaks at ``three to four hours and tapers off rather quickly,'' the 
respiratory depression effects continue to grow. Tr. 107, 174.
    Notably, even Mr. Badawi agreed that the simultaneous prescribing 
of two immediate release narcotics presents a red flag which requires 
further investigation. Id. at 418-19. And while the record includes 
evidence that there may be instances in which it is appropriate to 
prescribe two short-acting narcotics due to kidney failure (and perhaps 
an allergy), Mr. George offered no explanation as to how he resolved 
the high probability that the prescriptions lacked a legitimate medical 
purpose and decided to dispense the prescriptions.\43\
---------------------------------------------------------------------------

    \43\ With respect to the Dilaudid 8 mg and methadone 10 mg 
prescriptions which Mr. George filled for T.F., Mr. Parrado 
identified, inter alia, the simultaneous prescribing of these two-
short acting medications together and the dosing of the methadone (2 
tablets in the morning, one at bedtime) as raising concerns over the 
legitimacy of the prescriptions. Of note, on the back of each 
prescription, there are notations dated ``1/21/13'' (the same day 
the prescription was filled), as well what appears to be ``ILKA,'' 
and ``Director--Operation.'' Mr. George did not, however, explain 
the meaning of the notations.
---------------------------------------------------------------------------

    In addition to the oxycodone 30 prescriptions Respondent dispensed 
to T.V., J.P., T.P., H.C., Jr., and C.B., the record contains an 
additional 29 oxycodone prescriptions which provided for the dispensing 
of quantities and dosing in excess of the 80 mg daily limit. Notably, 
25 of the prescriptions provided for the dispensing of 168 du or more, 
and 13 of the prescriptions provided for the dispensing of 224 du or 
more. See generally GX 3; GX 13. Moreover, most of the prescriptions 
for 168 du provided a dosing instruction of one tablet every four 
hours, for a total of 180 mg per day, and the prescriptions for 224 du 
typically provided a dosing instruction of one tablet every three to 
four hours, for up to 240 mg per day. See GX 3, at 8-9, 12-13, 19, 23, 
30; GX 13, at 39 (prescriptions for 168 du); see also GX 3, at 3, 4-
5,10-11, 14-15, 17, 20, 24, 26, 28, 29; GX 13, at 1-2, 3-4, 37-38 
(prescriptions for 224 du or more).\44\
---------------------------------------------------------------------------

    \44\ There were also prescriptions for quantities ranging from 
180 du to 210 du. See generally GX 3.
---------------------------------------------------------------------------

    As Mr. Parrado testified, ``[o]ne of the things that a pharmacist 
knows or should know is that oxycodone . . . 80 milligrams a day has 
been listed in the literature as a lethal dose for or an opioid 
na[iuml]ve patient. So, when being presented with a prescription for a 
dose that would exceed 80 milligrams in one day, that pharmacist would 
need to stop and take a look and verify that the patient[ ] is not 
opioid na[iuml]ve and has been on a regimen[ ] that has led him to 
develop a tolerance to that dose.'' Tr. 57. Mr. Badawi did not refute 
Mr. Parrado's testimony as to the maximum recommended dose for an 
opioid na[iuml]ve patient and he agreed that when a prescription calls 
for the dispensing of a ``very large or larger than normal amounts of a 
narcotic,'' or an amount ``larger than the manufacturer's recommended 
dosage,'' a pharmacist must make an inquiry. Id. at 402-03. While Mr. 
Badawi then testified that looking at the patient profile would show 
whether the patient has developed tolerance, as explained previously, 
even if the profile shows that the patient has previously received 
large doses, this does not conclusively resolve the issue of whether 
the prescription was issued for a legitimate medical purpose.
    Here, the Government produced numerous prescriptions which provided 
quantities and dosing instructions that were two to three times the 80 
milligram level. Moreover, Mr. George acknowledged that a prescription 
that exceeds the manufacturer's recommended daily dosage presents a red 
flag, and I conclude that when a narcotic prescription exceeds that 
dosage by the amounts present here, that red flag establishes that 
there was a high probability that the prescription lacks a legitimate 
medical purpose and that Mr. George subjectively believed as much.

[[Page 49841]]

    As for the issue of whether Mr. George conclusively resolved that 
the prescriptions were issued for a legitimate medical purpose, as 
previously explained, Mr. George offered only his generalized and not 
credible testimony that he always checked the patient profiles and did 
his due diligence and failed to specifically address how he resolved 
any of these other prescriptions. That, plus Respondent's failure to 
produce the purported due diligence checklists to corroborate his 
testimony, support the adverse inference that he failed to do so. I 
therefore find that Respondent's pharmacists violated 21 CFR 1306.04(a) 
when they dispensed numerous other oxycodone prescriptions.\45\
---------------------------------------------------------------------------

    \45\ I do not adopt a categorical rule as to the distance a 
patient must have travelled to render a controlled substance 
prescription suspicious. Distance is just one of the factors that a 
pharmacist must evaluate, and while a patient's willingness to 
travel a long distance to obtain a prescription is highly 
suspicious, a patient who seeks drugs for other than legitimate 
medical purposes may live in the same city as the prescriber and/or 
pharmacy. Indeed, several of the patients who lived in Tampa 
presented prescriptions for such quantities of oxycodone 30 as 168 
du, 180 du, 210 du, and 224 du. See GX 3, at 18, 19, 26, and 35.
---------------------------------------------------------------------------

    While I conclude that the quantities and dosing of these 
prescriptions alone support a finding that there was a high probability 
that the oxycodone prescriptions lacked a legitimate medical purpose, 
Mr. Parrado also identified another red flag--the high prices 
Respondent charged for the oxycodone prescriptions and the fact that 
patients were paying for them in cash or cash equivalents. Tr. 71-72, 
75-76, 87-89, 112, 132-33, 165. As the evidence shows, the price 
Respondent charged for a 180 du prescription ranged from $675 in April 
2011 to $1350 in in December 2012, and many of the prescriptions costs 
$800 or more. GX 3, at 1, 3, 5,11,15,17, 20, 24, 26, 28, 29, 30, 34, 
35. As Mr. Parrado explained with respect to a prescription for 196 du 
which, at that time, cost $784:

    You don't see people paying $784 in cash. You tell a person they 
have a $50 co-pay and they go ballistic on you. And for a person to 
willingly pay $784 and not have any documentation as to why they did 
that and to see that over and over every day is a concern to me. . . 
. That's a red flag I couldn't resolve.

Tr. 71. And when asked on cross-examination if he had ever filled a 
prescription for someone who did not have insurance, Mr. Parrado 
answered that he was not going to give ``a yes or no answer because . . 
. a person who . . . can't afford insurance . . . is not going to pay 
1,200 or 1,300 for a prescription.'' Id. at 132.
    Notably, Mr. Badawi offered no testimony refuting Mr. Parrado's 
testimony that the cost of the prescriptions was also a red flag. 
Indeed, were these patients legitimate chronic pain patients, they 
would presumably require oxycodone on a monthly basis and would have 
spent $7,000 to $10,000 a year for this medication in 2011 (when 
Respondent's prices were lowest) and thousands more the following 
year.\46\ This evidence further supports the conclusion that 
Respondent's pharmacists either knew that the prescriptions lacked a 
legitimate medical purpose or subjectively believed that there was a 
high probability that the prescriptions were illegitimate and 
deliberately failed to investigate further.
---------------------------------------------------------------------------

    \46\ I do not adopt the Government's contention that the 
prescriptions also presented the red flag of pattern prescribing. At 
most, the Government identified 10 prescriptions for oxycodone 30 
that were written by physicians from 24th Century and filled by 
Respondent on the same day--April 21, 2011. GX 3, at 16-25. Notably, 
the prescriptions ranged in dosage from 140 to 240 tablets. See id. 
Moreover, another Government Exhibit refutes this contention as it 
includes twenty prescriptions written by doctors from the 24th 
Century clinic and filled by Respondent from April 14 through April 
20, 2011. See generally GX 13. Notably, the exhibit includes four 
prescriptions for oxycodone 30, nine prescriptions for Dilaudid 
(some in the 4 mg tablet, others in the 8 mg), and 7 prescriptions 
for MS Contin (some in 30 mg tablet, others in 60 mg). See id.
    As the evidence shows, when the Government obtained Respondent's 
records, it took only the schedule II prescriptions and provided 
only these prescriptions to Mr. Parrado. Notably, during the period 
of 2011 through early 2013, combination hydrocodone drugs, which are 
among the most highly prescribed drugs overall and are prescribed 
for pain, were in schedule III of the CSA, and any such 
prescriptions were not provided to Mr. Parrado. So too, Mr. Parrado 
was not provided with the prescriptions, if any, written by the 24th 
Century doctors for other drugs they may have prescribed for pain 
such as Tylenol with codeine (also in schedule III), pregabalin 
(Lyrica, schedule V), as well as non-controlled medications such as 
ibuprofen and naproxen. Thus, there is no basis to conclude that the 
24th Century doctors were engaged in pattern prescribing.
---------------------------------------------------------------------------

    Against this evidence, Respondent points to the changes it made in 
its due diligence procedures after the AIW was served, the data it 
submitted showing that it has substantially decreased its dispensing of 
controlled substance prescriptions, and its decision--made three weeks 
before the hearing--to stop dispensing controlled substance 
prescriptions issued from pain management clinics. While Mr. George 
explained that he made these changes because ``[a]s a professional 
provider,'' he had ``a part to do to prevent the abuse and misuse and 
diversion of . . . controlled substances,'' even were I to accept his 
testimony as true, it does not outweigh the substantial evidence that 
he and Respondent's other pharmacists violated their corresponding 
responsibility and knowingly diverted controlled substances. 21 CFR 
1306.04(a).

Other Allegations

    The Government also alleged that Respondent violated various 
recordkeeping provisions of the CSA and DEA regulations. The 
allegations included that Respondent: (1) Had failed to complete a 
biennial inventory, (2) did not notate on its schedule II order forms 
the date and quantity it received of schedule II drugs, (3) failed to 
retain Copy 3 of its order forms, and (4) its records were not readily 
retrievable. The Government further points to the results of an audit 
it conducted which found multiple overages and a shortage of schedule 
II drugs.

The Availability of Respondent's Records

    The Government alleged that Respondent ``failed to maintain records 
of [s]chedule II prescriptions, inventory records, and receiving 
records . . . in a readily retrievable form at its registered location 
in violation of 21 CFR 1304.04(a) and (h)(2).'' ALJ Ex. 1, at 4 As 
found above, a DI testified that Respondent was not able to provide all 
of the records when the AIW was executed, specifically the 
prescriptions from February 4, 2011 through April 2011, the inventories 
from February 4, 2011 through the end of 2011, and the receiving 
records from February 4, 2011 through the end of 2011. Tr. 252. 
According to the DI, he personally witnessed an attorney for Respondent 
state that the records were offsite and that the office manager had the 
key but was not available that day. Id. at 253.
    Reasoning that the attorney's statement was hearsay, the ALJ 
specifically found credible Mr. George's testimony that the records 
were locked in a storage room at the back of the pharmacy but that he 
did not have the key to the room on the date that the AIW was executed. 
R.D. at 45 n.30. While Mr. George testified that Respondent's owner 
showed up with the key within a couple of hours but after the 
Investigators had left, the Government put forward no evidence as to 
how long the Investigators were on the premises.
    Under generally applicable regulations, except as otherwise 
provided, ``every inventory and other records required to be kept under 
[21 CFR 1304] must be kept by the registrant and be available, for at 
least 2 years from the date of such inventory or records, for 
inspection and copying by

[[Page 49842]]

authorized employees of the Administration.'' 21 CFR 1304.04(a). Under 
the regulation applicable to a pharmacy, ``[i]nventories and records of 
all controlled substances in Schedule . . . II shall be maintained 
separately from all other records of the pharmacy.'' 21 CFR 
1304.04(h)(1).
    As to the schedule II order forms, ``[t]he purchaser must retain 
Copy 3 of each executed DEA Form 222'' and the forms ``must be 
maintained separately from all other records of the registrant'' and 
``be kept available for inspection for a period of two years'' at the 
registered location. Id. Sec.  1305.17(a) & (c). Moreover, ``[p]aper 
prescriptions for Schedule II controlled substances shall be maintained 
at the registered location in a separate prescription file.'' 21 CFR 
1304.04(h)(2).\47\ Unlike the provision applicable to prescriptions in 
schedules III though V, this provision does not authorize the 
maintenance of schedule II prescriptions ``in such form that they are 
readily retrievable from other prescription records of the pharmacy.'' 
21 CFR 1304.04(h)(4). Indeed, none of the above regulations allows for 
these records to be kept with other records of the pharmacy as long as 
they are ``readily retrievable from [those] other'' records.
---------------------------------------------------------------------------

    \47\ While invoices (but not schedule II order forms) ``may be 
kept at a central location, rather than the registered location,'' 
to do so, a registrant must notify the Special Agent in Charge in 
writing ``of [its] intention to keep central records.'' 21 CFR 
1304.04(a)(1). While the DI subsequently identified GX 10 (which 
contain only schedule II order forms as containing receiving 
records, it is otherwise unclear whether the DI's reference to 
receiving records also included the invoices. See, e.g., GX 11. As 
to the invoices, there is no evidence in the record as to whether 
Respondent ever notified the Agency of its intent to keep records at 
other than its registered location.
---------------------------------------------------------------------------

    In the Order to Show Cause, the Government nonetheless alleged that 
Respondent ``failed to maintain records . . . in a readily retrievable 
form at its registered location.'' ALJ Ex. 1, at 4. I find the 
violation proved. As explained above, the ALJ reasoned that the 
attorney's statement was hearsay and therefore gave it less weight than 
Mr. George's testimony. However, contrary to the ALJ's understanding, 
the attorney's statement was not hearsay because it was an admission of 
a party-opponent. Cf. Fed. R. Evid. R. 801(d)(2). Attorneys typically 
do not make admissions on behalf of clients to Government investigators 
without a factual basis for doing so.\48\ Moreover, the attorney's 
statement was made contemporaneously with the inspection, unlike Mr. 
George's testimony which was offered well after fact and during a 
proceeding in which he had ample motive to misstate the facts. 
Accordingly, I find that various records including some of the schedule 
II prescriptions and schedule II order forms were not kept on the 
premises of Respondent's registered location as required by federal 
regulations.
---------------------------------------------------------------------------

    \48\ According to the DI, some of the Investigators attempted to 
interview Mr. George, but shortly into the interview, the attorney 
arrived and did not allow the Investigators to speak with Mr. George 
or any another employees and ``[a]ll questions were to be directed 
through [the attorney] at that point.'' Tr. 283. Thus, the attorney 
clearly acted as Respondent's authorized representative and made the 
statement that the missing records were offsite within the scope of 
his relationship with Respondent.
---------------------------------------------------------------------------

The Allegations That Respondent Failed To Complete a Biennial Inventory

    According to the DI, during the inspection, Respondent produced a 
document for the audited drugs on which it kept a perpetual inventory, 
i.e, a running total of the balance on hand listed by the date of 
various transactions. Specifically, the log listed: (1) The results of 
inventories which were actual ``physical count[s] of what was on 
hand,'' Tr. 270; (2) dispensings by prescription number and the 
quantity dispensed; (3) the quantities received by each order form 
number and invoice numbers; and (4) returns by patients. GX 5. 
According to the DI, the inventories did not comply with federal law 
because ``there was not one date [when] every controlled substance was 
inventoried.'' Tr. 235.
    More specifically, the records showed that methadone 10 was 
inventoried on January 2, 2012. GX 5, at 1. While morphine sulfate 30 
mg immediate release and morphine sulfate 100 m extended release were 
inventoried on January 2, 2012, morphine sulfate 60 mg extended release 
was inventoried on January 3, 2012, and morphine sulfate 30 mg extended 
release was not inventoried until June 9, 2012. GX 5, at 2-5. As for 
hydromorphone 8 mg, the only inventory listed is one taken on July 24, 
2012, and while an inventory of Dilaudid 4 mg was taken on January 2, 
2012, the sheet for generic hydromorphone 4 mg lists an inventory date 
of June 6, 2012 and the quantity on hand as ``-4'' while also including 
the undated notation of ``60'' in the header for the ``balance'' 
column. See id. at 6-8. Finally, the sheet for oxycodone 30 lists the 
inventory date as June 27, 2012, yet there is also an undated entry in 
the header for the ``balance'' column with the notation of ``1030''; 
the sheet also lists multiple prescriptions, a receipt from a 
distributor and what appears to be a return from a patient. Id. at 9.
    Against this evidence, Respondent introduced an exhibit which 
purports to be an ``Annual Inventory'' of its schedule II controlled 
substances which was taken on January 2, 2012 and which lists Mr. 
George as its pharmacist. See RX 4. Asked on cross-examination whether 
he had seen this document before, the DI answered ``no,'' and testified 
that the document was not provided to the Government during the 
execution of the AIW. Tr. 276. Respondent, however, points to a Florida 
Department of Health Inspection Report which states that during a 
September 14, 2012 inspection, the State Investigator found that 
Respondent had taken a controlled substance inventory on a biennial 
basis and that the inventory was available for inspection; the report 
also noted that ``[t]he most recent Biennial Inventory is dated 01-02-
12.'' RX 4, at 6.
    The ALJ surmised that at the time of the AIW, either the DI did not 
request the biennial inventory or that Respondent's personnel did not 
understand the request. R.D. at 8-9 n.3. Nor does the record establish 
why this document was not turned over pursuant to the AIW (the AIW not 
being in the record either) with the documents that were subsequently 
turned over by Respondent's attorney. In any event, I find the evidence 
insufficient to support the allegation that Respondent failed to 
complete a biennial inventory as required by 21 CFR 1304.11(c). ALJ Ex. 
1, at 4.

Allegations Related to Respondent's Maintenance of Its Schedule II 
Order Forms

    The Government also alleged that Respondent's manner of keeping its 
schedule II order forms violated DEA regulations in two respects. 
First, it alleges that Respondent failed to document on the forms the 
``receipt date or quantity received.'' Id. (citing 21 U.S.C. 827(b); 21 
CFR 1305.13(e)). Second, it alleges that Respondent failed to retain 
Copy 3 of the order form. Id. (citing 21 U.S.C. 827(b); 21 CFR 
1305.13(a) and 1305.17(a)).
    As support for the allegations, the Government submitted copies of 
11 ``purchaser's Copy 3'' of order forms Respondent submitted to 
various distributors. Under DEA's regulation, ``[t]he purchaser must 
record on Copy 3 . . . the number of commercial or bulk containers 
furnished on each item and the dates on which the containers are 
received by the purchaser.'' 21 CFR 1305.13(e). However, under another 
DEA regulation, an order form is not valid ``more than 60 days after 
its

[[Page 49843]]

execution by the purchaser.'' Id. Sec.  1305.13(b).
    With respect to the 11 order forms, each of the forms includes 
notations indicating one or more items was filled by the supplier, with 
a handwritten notation as to the number of packages received, the date 
of receipt, and initials. See generally GX 10. Two of the order forms 
contain a notation that a number of packages were received but no entry 
for the date the package was received. Id. at 9 (entry for methadone 
10); id. at 11 (line no. 1--indicating 12 packages of hydromorphone 8 
were received but leaving blank the date received). Respondent thus 
violated 21 CFR 1305.13(e) by failing to notate the date these two 
packages were received.
    The order forms also included line items that were not filled in 
any part by the supplier, and the forms were left blank in the columns 
for ``No. of Packages Received'' and ``Date Received.'' See generally 
GX 10. According to the DI, when Respondent did not ``receive a drug,'' 
it was required ``to write a zero'' in the column for the number of 
packages received. Tr. 255. The DI was, however, unsure if Respondent 
was required to also include a date. Id. at 256.
    As to this contention, DEA regulations do not require a purchaser 
to notate on the order form that no portion of a particular item was 
received and a date. See 21 CFR 1305.13(e). Accordingly, to the extent 
this allegation relies on Respondent's failure to notate and date the 
non-receipt of items it ordered, the allegation is rejected.\49\
---------------------------------------------------------------------------

    \49\ The Government put forward no evidence with respect to any 
of the order forms that Respondent had actually received any of the 
drugs listed in the line items which were left blank.
---------------------------------------------------------------------------

    As for the allegations that Respondent ``failed to retain Copy 3 of 
the'' order forms, the Government proof was comprised of a single 222 
form which, according to the DI, was a xerox and not the original Copy 
3. GX 11, at 2. This is a violation, as under 21 CFR 1305.17(a), 
``[t]he purchaser must retain Copy 3 of each executed DEA Form 222.'' 
However, this violation, as well as the two other violations based on 
Respondent's failure to notate the date on which the packages were 
received, are of minor consequence.\50\
---------------------------------------------------------------------------

    \50\ Invoking a DEA regulation which grants the ALJ ``all power 
necessary'' to conduct a fair hearing, Respondent apparently argues 
that I should give no weight to the Government's documentary 
evidence, because following the execution of the AIW, the 
Investigators ``illegally retain[ed] the documents for 611 days'' 
and ``never provided a meaningful accounting of the documents 
seized.'' Resp. Exceptions, at 16. As Respondent further argues:
    ``To give any weight to the DEA's documentary evidence would be 
tantamount to sanctioning the unlawful conduct of the investigators 
and would work a great procedural and substantive injustice on 
Respondent. The only fair action (thus, a ``necessary action'') is 
to give no weight to the DEA's documentary evidence and to give no 
weight to the testimony about those documents.''
    Id. at 18.
    In its Exceptions, Respondent does not identify a single 
allegation that it has been unable to respond to because of the 
Government's delay in returning the documents or its failure to 
provide a meaningful accounting of the documents. Because Respondent 
has failed to establish prejudice, I reject its claim. See Air 
Canada v. Department of Trans., 148 F.3d 1142, 1156 (D.C. Cir. 1998) 
(``As incorporated into the APA, the harmless error rule requires 
the party asserting error to demonstrate prejudice from the 
error.'') (citing 5 U.S.C. 706).
---------------------------------------------------------------------------

The Audit Allegations

    The Government also put forth evidence that it conducted an audit 
of Respondent's handling of seven controlled substances and found that 
it had overages in six drugs and a shortage in one drug. With respect 
to the latter, the audit found that Respondent was short 4,135 du of 
hydromorphone 4 mg. With respect to the overages, as alleged by the 
Government, the most significant were those of 8,758 du of 
hydromorphone 8 mg and 1,306 du of oxycodone 30 mg.
    ``Recordkeeping is one of the CSA's central features; 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 FR 30630, 30644 (2008); see also Fred 
Samimi, 79 FR 18698, 18712 (2014) (finding, where physician ``had 
shortages totaling more than 40,000 dosage units'' of various drugs, 
that his ``inability to account for this significant number of dosage 
units creates a grave risk of diversion,'' and that ``even were there 
no other proven violations, the audit results alone are sufficient to . 
. . establish[ ] that [physician's] registration[ ] `would be 
inconsistent with the public interest' '') (citations omitted).
    Respondent raises a variety of challenges to the audit results. 
First, it asserts that the audits were flawed because they used figures 
from Respondent's perpetual inventory for the initial inventory rather 
than the inventory they produced at the hearing but had not provided to 
the Government previously. Resp. Exceptions, at 4. It further asserts 
that ``[h]ad DEA started with the record that the Agency actually 
requires registrant to keep . . . . (the biennial inventory), DEA would 
have had to use all of Respondent's records of receipt and dispensing 
during 2012, and DEA would not have found the alleged overages and 
shortages that its investigators claimed to find.'' Id.
    Yet the Investigator testified repeatedly that the so-called 
perpetual inventory is all that Respondent provided to him. Most 
significantly, the Investigator testified that Mr. George ``stated that 
every line marked inventory was a physical count of what was on hand.'' 
Tr. 270. I therefore find no basis to reject the audit result because 
the Government used the physical counts listed on the perpetual 
inventory.
    As for the Government's audit of the hydromorphone 4 mg, Respondent 
produced a listing by date, prescription number, and the quantity 
dispensed for the period of July 30, 2012 through February 4, 2013. See 
RX 5, at 2-3. Notably, each of the dispensings corresponds with the 
dispensings listed in the perpetual inventory and both documents show 
that Respondent dispensed a total of 4,659 du during the audit period, 
a figure which is 120 dosage units less than that determined (4,779) by 
the Government.\51\ See GX 4. The effect, however, is that Respondent's 
shortage was even larger than that found by the Government. As for the 
closing inventory figures, while Respondent argues that I should reject 
the Government's figures because Mr. George did not attest to the 
accuracy of the figures (see Resp. Exceptions at 8-9, Resp. Post-Hrng 
Br. at 53), the difference between the Government's count (202) and 
Respondent's (200) was two (2) tablets, a difference of inconsequence.
---------------------------------------------------------------------------

    \51\ Respondent's perpetual inventory shows that an inventory 
was taken on July 24, 2012 of its stock of hydromorphone 4 mg, and 
that 1096 tablets were on hand; it also shows that Respondent did 
not dispense a prescription for the drug until July 30, 2012. RX 5, 
at 4. The evidence also shows that Respondent maintained a separate 
perpetual inventory log for Dilaudid (branded hydromorphone) 4 mg. 
GX 5, at 8. The log has only three entries; the entries provide 
inventory figures for January 2, 2012, June 9, 2012, and December 
31, 2012. See id. On each date, Respondent had 120 tablets in stock. 
This figure, when added to the July 24, 2012 inventory for 
hydromorphone of 1096, equals 1216, the same figure which the 
Government used as its initial inventory.
---------------------------------------------------------------------------

    By contrast, there is a substantial difference between the figures 
the Government and Respondent calculated for Respondent's receipts 
during the audit period. According to the Government, Respondent 
acquired 7,900 tablets during the period; according to Respondent, it 
acquired only 3,900 tablets. Compare GX 4 with RX 5, at 1.
    This disparity is explained, however, by the Government's 
identification of an additional transaction on January 28, 2013, when 
Respondent acquired 4,000 du from Nucare Pharmaceuticals. GX 6, at 8. 
Notably, this transaction does not appear on Respondent's list of its 
acquisitions. Compare id. with RX 5, at 1. Significantly, Respondent 
put

[[Page 49844]]

forward no evidence refuting the Government's finding that the 
transaction occurred or that Respondent had received the drugs as of 
the date of the AIW. Thus, not only do I find no reason to reject the 
Government's finding with respect to Respondent's handling of 
hydromorphone 4 mg, I find that the shortage was even larger than 
alleged by the Government.\52\
---------------------------------------------------------------------------

    \52\ Respondent also challenges the audit results, arguing that 
the Investigator ``did not account for any controlled substances in 
the pharmacy's will-call bin, returns to stock, or those drugs 
quarantined for disposal.'' Resp. Post-Hrng. Br. 52; see also Resp. 
Exceptions at 5-6. It further argues that under the Agency's 
regulation, ``when conducting an inventory, the pharmacy must 
account for all controlled substances on hand at the pharmacy at the 
time of the inventory.'' Id. (citing 21 CFR 1304.11(a)).
    As for Respondent's contention that the Agency was required to 
count the drugs in the ``will-call bin,'' by implication the 
regulation does not require counting these drugs. See 21 CFR 
1301.11(a) (``Controlled substances shall be deemed `on hand' if 
they are . . . ordered by a customer but not yet invoiced[.]''). 
Notably, those drugs in the ``will-call bin'' have a dispensing 
label attached and are otherwise accounted for as having been 
dispensed, even if the customer has yet to pick up the prescription.
    As for Respondent's contention that the Government did not 
include those drugs that were returned to stock, where Respondent 
produced such documentation, I have considered the returns. Finally, 
Respondent produced no evidence that at the time the Investigators 
took the closing inventory, it had in its possession any dosage 
units of the drugs being audited that were quarantined for disposal.
    Finally, Respondent argues that the DI ``willfully chose to 
ignore'' evidence in its ARCOS database regarding its purchases of 
schedule II drugs, apparently because he did not obtain Respondent's 
complete ARCOS data and compare it with his calculations. Resp. 
Exceptions, at 18. There is, however, no requirement that the 
Government obtain ARCOS data, which is not submitted by pharmacies 
but rather distributors and is thus dependent upon the accuracy of 
their submissions, and indeed, one of the purposes of doing an audit 
is to determine whether the registrant being audited is maintaining 
complete and accurate records. In any event, as I have carefully 
reviewed Respondent's invoices and credited Respondent for those 
receipts which were supported by its records but were omitted by the 
Government, this argument is moot.
---------------------------------------------------------------------------

    As for the overage in hydromorphone 8 mg, Respondent disputed the 
Government's figure for the amounts received, the quantities 
distributed or dispensed, and the closing inventory. With respect to 
the amounts received, both the Government and Respondent provided a 
list of the shipments by date, order number, distributor's name, and 
quantity. Notably, Respondent's list includes four shipments which are 
not on the Government's list.
    The first of these is an order purportedly filled by Harvard Drug 
on November 11, 2012 for 400 du pursuant to Order Form #121140458. RX 
6, at 1. The order is, however, unsupported by an invoice, and notably, 
while Respondent submitted a copy of Order Form #121140458, that form 
was used to place an order with a different distributor, Red Parrot 
Distribution. See id. at 1; see also id. at 78, 80, 84 (invoices for 
the shipments received from Red Parrot on 11/17, 11/15, and 11/21/12); 
id. at 85 (DEA Form 222 #12114058). I thus find that Respondent did not 
receive 400 du from Harvard on November 11, 2012.
    Respondent's list of receipts also includes shipments received from 
Attain Med on December 19 and 24, 2012, each of which was for 2,400 du, 
pursuant to Order Form #12x00003. RX 6, at 1. Respondent provided a 
copy of the order form and the invoices for each shipment. Id. at 92 
(Order Form #12xx00003); id. at 91 (invoice for 24 packages shipped on 
12/18/12 under same Order Form Number); id. at 90 (invoice for 24 
packages shipped on 12/24/12 under same Order Form Number). The 
Government's list includes, however, only the first shipment for 2,400 
du. GX 6, at 6. I therefore find that Respondent received both 
shipments and that the second shipment should have been credited by the 
Government.
    Respondent's list also included two receipts of 2,500 du totaling 
5,000 du from Nucare Pharmaceuticals pursuant to Order From #121140485. 
RX 6, at 1. According to the Government's list, Respondent received 
only one of these shipments. GX 6, at 6. Respondent, however, produced 
both a Form 222 (dated 12/17/12) which is annotated to reflect both 
shipments by date and quantity, as well as two invoices documenting its 
receipt of 5,000 du from Nucare pursuant to Order Form #121140485. See 
RX 6, at 97 (Form 222); id. at 96 (01/15/13 invoice for second shipment 
of 2500 du under Order #121140485); id. at 118 (12/26/12 invoice for 
first shipment of 2500 du under Order #121140485). I therefore find 
that Respondent received an additional 2,500 du pursuant to this order 
than was credited by the Government.
    Respondent also listed a receipt of 2,400 du from Attain Med on 
January 19, 2013, pursuant to Order Form #13XX00001, RX 6, at 2; this 
shipment is not included on the Government's list. See GX 6, at 6-7. 
While Respondent did not produce the Order Form, it did produce an 
invoice showing that 2,400 du were shipped to it on January 19, 2013 
pursuant to the aforesaid Order Form number and should have been 
credited by the Government. RX 6, at 102.
    Finally, while the Government's list includes an order for 4,000 du 
which was filled by Nucare and received by Respondent on January 28, 
2013 pursuant to Order Form #121140486,\53\ Respondent's list also 
includes a shipment for 1,000 du pursuant to the same order form which 
it received on January 29, 2012. RX 6, at 2. While Respondent did not 
produce the order form, it did produce invoices for both shipments. RX 
6, at 105-06. Thus, the additional 1,000 du should have been credited 
by the Government.
---------------------------------------------------------------------------

    \53\ While the Government lists the Order Number as 121140497, 
GX 6, at 6; Respondent listed it as 121140486, which corresponds 
with the invoices. RX 6, at 2, 105-06.
---------------------------------------------------------------------------

    However, the Government also credited Respondent as having received 
two orders for 800 du each from Red Parrot on February 1, 2012 pursuant 
to Order Form #121140488. GX 6, at 7. Notably, while the DEA Form 222 
shows that on January 29, 2013, Respondent ordered a total of 4,800 du, 
on the Order Form (as well as in his Perpetual Inventory), Respondent 
documented the receipt of only 800 du on February 1, 2013, an amount 
consistent with the invoice. See RX 6, at 108 (Form 222); id. at 107; 
id. at 37. According to Respondent's perpetual inventory, it did not 
receive an additional shipment from Red Parrot for hydromorphone 8 mg 
until February 6, 2013, after the closing date of the audit. See id. at 
38. Thus, I have excluded this amount in calculating Respondent's 
receipts.
    I therefore find that Respondent actually received an additional 
7,500 du from its distributors than the amount calculated by the 
Government.\54\ Moreover, the Government did not include the 433 du 
which were returned by the patients. Thus, Respondent was accountable 
for a total of 75,333 du.
---------------------------------------------------------------------------

    \54\ While this may have been caused by Respondent's failure to 
provide the records pursuant to the AIW, it may also have been 
caused by mistakes made by the Investigator who prepared the audit. 
The record does not, however, allow me to make a determination 
either way.
---------------------------------------------------------------------------

    As for the dispensings, the Government calculated the total at 
71,759 du, Respondent at 72,195. Respondent's figure, however, includes 
six prescriptions totaling 858 du which were dispensed on February 4, 
2013, the date of the AIW. RX 6, at 16-17. The Government's evidence 
shows, however, that the closing inventory was taken at the beginning 
of business, and thus these prescriptions are not properly included in 
the audit period. GX 7; Tr. 237. Thus, according to Respondent's data, 
its total dispensings during the audit period were 71,337 du, a 
difference of 422 du from the Government's figure.
    The disparity is explained by five prescriptions, four of which are 
listed

[[Page 49845]]

on the Government's list (GX 8, at 8-18) but not on Respondent's list 
(RX 6, at 4-17), as well as one prescription which is listed on 
Respondent's list but not the Government. More specifically, the 
Government's list includes: (1) RX #2039300 for 140 du (compare GX 8, 
at 8, with RX 6, at 5); (2) RX #2039764 for 150 du (compare GX 8, at 
13, with RX 6, at 11); (3) RX #2039782 for 84 du (compare GX 8, at 13, 
with RX 6, at 11); and (4) RX#2039952 for 168 du (compare GX 8, at 16, 
with RX 6, at 14); Respondent's list includes RX#2039243 for 120 du 
(compare RX 6, at 4, with GX 8, at 8).\55\ The four prescriptions on 
the Government's lists (which total 542 du) and the prescription on 
Respondent's list (120 du) thus account for the 422 du disparity in the 
dispensings (after subtracting out Respondent's post-audit 
dispensings).
---------------------------------------------------------------------------

    \55\ Respondent's Perpetual Inventory included entries for 
RX#2039300 and RX#2039782. RX 6, at 20, 29. As for RX#2039300, the 
Perpetual Inventory included the notation ``wrong'' with a line 
drawn through the prescription number, the date, the quantity, and 
Mr. George's initials. RX 6, at 20. Respondent did not, however, add 
back in the quantity to the balance. Id. As for RX#2039782, the 
entry states ``voided'' to the left of the prescription number. Id. 
at 29. The record contains no further evidence establishing whether 
these prescriptions, or the other two prescriptions which were on 
the Government's list but not Respondent's, were actually dispensed.
---------------------------------------------------------------------------

    As for the closing inventory figures, the Government put forward 
evidence that Respondent had 5,114 du on hand at the beginning of 
business, which included 48 full 100 count bottles and 314 other du. GX 
7. Respondent asserted that it had on hand 4,086 du; however, this 
figure appears to have been determined after Respondent dispensed six 
prescriptions totaling 858 du on February 4, 2013. RX 6, at 17. Adding 
back in the 858 units Respondent represents that it dispensed on that 
date, yields a total of 4,944 du. And adding the 71,337 du Respondent 
represented that it had dispensed to its closing inventory figure of 
4,944 du yields a total of 76,281 dosage units, this being the total 
Respondent accounted for. This compares with the total of Respondent's 
opening inventory, its receipts (including both its purchases and the 
dosage units returned by patients) of 75,333.
    Thus, even using Respondent's figures for its receipts, 
dispensings, and closing inventory, it still had an overage of 948 
dosage units. While this is substantially less that the figure 
calculated by the Government, it is still material and supports a 
finding that Respondent did not maintain complete and accurate records 
as required by 21 U.S.C. 827(a).
    As for the audit's finding that Respondent had an overage of 1,306 
du of oxycodone 30, GX 4, Respondent disputed the Government's finding 
that it received 17,200 du during the audit period. Instead, it put 
forward evidence that it received 18,300 du from distributors during 
the period and a comparison of the orders compiled by the Government 
with the orders compiled by Respondent shows that it placed two orders 
which totaled 1,100 du that were not included in the Government's 
count. More specifically, the Government's count did not include an 
order filled by PD-RX for 500 du on September 12, 2012 (Order Form 
Number 12X000019), and an order for 600 du filled by Attain Med on 
December 5, 2012. Compare GX 6, at 9, with RX 7, at 1. Moreover, 
Respondent provided the invoices to support its receipt of each order. 
See RX 7, at 40-41; id. at 87. Including the 12 dosage units that were 
returned by a customer, Respondent received a total of 18,312 dosage 
units during the audit period.
    Notably, Respondent's Narcotic Control Sheet (RX 7, at 1) lists the 
same beginning count as the Government used (39 du), and the parties 
agreed that Respondent dispensed 18,322 du during the audit period. 
Including the orders that the Government did not include, Respondent 
was accountable for 18,351 du during the audit period and subtracting 
out the dispensings, should have had on hand 29 tablets at the time of 
the closing inventory. While Respondent's Narcotic Control Sheet lists 
the results of a physical inventory which was purportedly conducted on 
February 4, 2013 as 35 du (the same figure listed on Respondent's 
Perpetual Inventory as of February 4, 2013), this figure cannot 
possibly be accurate because on January 30, Respondent received an 
order of 300 du and its records show that it had only dispensed a 
single prescription for 140 du prior to the execution of the AIW and 
thus should have had at least 160 tablets on hand when the closing 
inventory was taken.\56\ Thus, I find that the Government's closing 
inventory figure of 223 du is accurate and that Respondent had an 
overage of 194 du. While this overage is substantially smaller than 
that alleged by the Government, Respondent offered no explanation for 
the overage.
---------------------------------------------------------------------------

    \56\ Given the impossibility that Respondent's closing inventory 
figure is accurate, and the Government's evidence that two 
investigators counted the oxycodone 30, I find the Government's 
inventory figure to be accurate.
    However, Respondent argues that because Mr. George did not 
participate in counting the drugs for the closing inventory, ``the 
Government violated its own credibility safeguards.'' Resp. 
Exceptions at 6; see also id. at 4 (noting that this approach ``was 
contrary to the agency's internal guidance and customary practice'') 
(citation omitted). Even so, two Agency employees counted the drugs 
and vouched for the accuracy of the counts. Thus, while I do not 
condone the Investigators' failure to have Mr. George participate--
at least in the absence of evidence that Mr. George was unwilling to 
do so--I nonetheless find no reason to conclude that the closing 
inventory figures found by the Government were unreliable.
---------------------------------------------------------------------------

Sanction

    Where, as here, ``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 it can be entrusted with the responsibility carried by such a 
registration.''''' Medicine Shoppe-Jonesborough, 73 FR 364, 387 (2008) 
(quoting Samuel S. Jackson, 72 FR 23848, 23853 (2007) (quoting Leo R. 
Miller, 53 FR 21931, 21932 (1988))). ``Moreover, because `past 
performance is the best predictor of future performance,' ALRA Labs, 
Inc. v. DEA, 54 F.3d 450, 452 (7th Cir.1995), [DEA] has repeatedly held 
that where a registrant has committed acts inconsistent with the public 
interest, the registrant must accept responsibility for its actions and 
demonstrate that it will not engage in future misconduct.'' Medicine 
Shoppe, 73 FR at 387; see also Jackson, 72 FR at 23853; John H. 
Kennedy, 71 FR 35705, 35709 (2006); Prince George Daniels, 60 FR 62884, 
62887 (1995). See also Hoxie v. DEA, 419 F.3d at 483 (``admitting 
fault'' is ``properly consider[ed]'' by DEA to be an ``important 
factor[]'' in the public interest determination).
    The Agency has also repeatedly held that the level of candor 
exhibited by a registrant's principals during ``the hearing itself is 
an important factor to be considered in determining both whether [it] 
has accepted responsibility as well as for the appropriate sanction.'' 
Michael S. Moore, 76 FR 45867, 45868 (2011); see also Robert F. Hunt, 
75 FR 49995, 50004 (2010); Jeri Hassman, 75 FR 8194, 8236 (2010); 
Hoxie, 419 F.3d at 483 (``Candor during DEA investigations, regardless 
of the severity of the violations alleged, is considered by the DEA to 
be an important factor when assessing whether a . . . registration is 
consistent with the public interest.'').
    Nor are these the only factors that are relevant in determining the 
appropriate sanction. See, e.g., Joseph Gaudio, 74 FR 10083, 10094 
(2009); Southwood Pharmaceuticals, Inc., 72 FR 36487, 36504 (2007). 
Obviously, the egregiousness and extent of a

[[Page 49846]]

registrant's misconduct are significant factors in determining the 
appropriate sanction. See Jacobo Dreszer, 76 FR 19386, 19387-88 (2011) 
(explaining that a respondent can ``argue that even though the 
Government has made out a prima facie case, his conduct was not so 
egregious as to warrant revocation''); Paul H. Volkman, 73 FR 30630, 
30644 (2008); see also Paul Weir Battershell, 76 FR 44359, 44369 (2011) 
(imposing six-month suspension, noting that the evidence was not 
limited to security and recordkeeping violations found at first 
inspection and ``manifested a disturbing pattern of indifference on the 
part of [r]espondent to his obligations as a registrant''); Gregory D. 
Owens, 74 FR 36751, 36757 n.22 (2009).
    The Agency has also held that ```[n]either Jackson, nor any other 
agency decision, holds . . . that the Agency cannot consider the 
deterrent value of a sanction in deciding whether a registration should 
be [suspended or] revoked.''' Gaudio, 74 FR at 10094 (quoting 
Southwood, 72 FR at 36504); see also Robert Raymond Reppy, 76 FR 61154, 
61158 (2011); Moore, 76 FR at 45868. This is so, both with respect to 
the respondent in a particular case and the community of registrants. 
See Gaudio, 74 FR at 10095 (quoting Southwood, 71 FR at 36503). Cf. 
McCarthy v. SEC, 406 F.3d 179, 188-89 (2d Cir. 2005) (upholding SEC's 
express adoptions of ``deterrence, both specific and general, as a 
component in analyzing the remedial efficacy of sanctions'').
    Here, the ALJ found that Mr. George did not credibly accept 
responsibility for Respondent's misconduct. R.D. at 52. The ALJ 
specifically noted Mr. George's testimony that ``[a]s the pharmacist in 
charge . . . I accept the responsibility of conduct of the pharmacy. 
Again while I did all my due diligence and protocol, as I said before, 
still I'm less than perfect.'' Id. (citing Tr. 507). See also Tr. at 
539-40 (``even though I did my best, our best to control that and 
prevent the abuse and misuse, that is not perfect. It is always less 
than perfect. Human beings are not perfect. I accept that 
responsibility.''). Asking whether this was a sufficient acceptance of 
responsibility, the ALJ concluded that Mr. George was ``still asserting 
that he had done all of his due diligence and had followed the 
Respondent's protocol'' and that his ``statement lacks credibility.'' 
R.D., at 52. And she also found that Mr. George's testimony that he had 
``always'' done his due diligence lacked credibility.
    I agree with the ALJ that Mr. George's testimony was not credible 
and that Respondent has not accepted responsibility. Indeed, much of 
Mr. George's testimony was contrived and other portions were plainly 
disingenuous.
    Of particular note is Mr. George's testimony regarding the reason 
that Respondent filled the prescription (for 210 oxycodone 30) for 
T.V., who had traveled 472 miles from Pensacola. According to Mr. 
George, T.V. had been coming to Respondent since 2009 and the reason 
she was travelling this distance was because ``she used to come and see 
that doctor [Dr. Ruperto] always. And while I was interviewing that 
patient she said she likes the doctor and she wanted to continue seeing 
that doctor.'' Tr. 588 (emphasis added). Yet the prescription which the 
Government submitted into evidence was written by Dr. P.C., and was 
written more than two and a half years after Dr. Ruperto's death. 
Indeed, while Mr. George testified that T.V. had been coming to his 
pharmacy since 2009, Tr. 494, 579; Dr. Ruperto died in December 2008, 
before T.V. even began filling her prescriptions at Respondent. Yet Mr. 
George maintained that he had done all of his due diligence with 
respect to T.V.'s prescription.
    So too, with respect to H.C., Jr., Mr. George testified that 
notwithstanding that he no longer had insurance and had not filled a 
prescription at Respondent for two years, he was ``willing to pay 
whatever the cash price at that time'' was for his oxycodone 30 
prescription--$1350--because he ``need[ed] this medication.'' Tr. 496-
97. Mr. George thus stated that he ``filled this prescription for 
cash.'' Id. at 497. Yet based on the progress note Mr. George obtained, 
he knew that at the same visit, H.C., Jr. had also been prescribed 
three other controlled substances, including 112 OxyContin 40 mg, 84 
Xanax 1 mg, and 84 carisoprodol. While Mr. George denied knowing 
anything about drug cocktails, as Mr. Parrado testified, the 
combination of an opioid, benzodiazepine and carisoprodol was widely 
known for its abuse potential. RX 3, at 47. Also unexplained by Mr. 
George is how a patient, who had lost his insurance, would be able to 
pay $1350 a month, each month, for this one prescription alone, as 
would be expected if the patient was a legitimate chronic pain patient. 
Here too, I do not believe his testimony.
    In still other instances, Mr. George gave inconsistent testimony. 
For example, Mr. George testified that he looked at the partial medical 
records as ``an extra step to prevent the abuse and misuse of the 
controlled substances'' and that ``through experience, [he] learned to 
look through these forms and understand'' them. Tr. 481. However, when 
asked with regard to patient S.D. whether he had reviewed the medical 
record before filling an oxycodone 30 prescription and if he could tell 
from the record what other controlled substances were dispensed that 
day, Mr. George testified that he ``look[ed] only for my prescription 
which is received in my hand. That is only my concern.'' Tr. 561. He 
then added that ``[i]f I get the medical record, I have no way of 
saying and understanding where the patient had a different prescription 
unless I talk to the patient or doctors if he write any other 
prescriptions. I cannot guess where the prescription was filled for 
that patient.'' \57\ Id. Yet the progress note in S.D.'s file clearly 
showed that the physician had also prescribed four other controlled 
substances to S.D. at this visit, including MS Contin, Soma, Xanax, and 
Dilaudid. RX 3, at 29.
---------------------------------------------------------------------------

    \57\ Mr. George, however, had also previously testified that 
under the protocol that was in place when he filled this 
prescription, ``we check that they have narcotic contract with the 
patient.'' Tr. 450. See also id. at 458. Notably, one of the terms 
of S.D.'s narcotic contract was that ``I will have prescriptions 
filled at only one pharmacy,'' and the contract then listed Superior 
(and not Respondent) as the only pharmacy. RX 3, at 30-31. 
Certainly, Mr. George knew from the progress note what other 
prescriptions were written on that date and whether they were being 
presented at Respondent for filling. Apparently, it was not a 
concern that S.D. was filling the prescription at his pharmacy, 
rather than the pharmacy listed on his narcotic contract.
    At another point, Mr. George testified that ``[f]rom 2013 
onwards,'' he had ``modified [his] protocol and changed it to print 
out patient's residence to less than 15 miles,'' Tr. 499, thus 
suggesting (although there is an argument that his answer was 
incoherent) that he would no longer fill the prescriptions if the 
patient lived more than 15 miles away. Yet he later testified that 
after DEA executed the AIW (on Feb. 4, 2013), he changed the 
protocol to fill only for patients who lived within 50 miles. Id. at 
570-71.
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    Mr. George then testified that in ``looking [at] all these 
documents,'' he was ``going above and beyond what the duty'' of a 
pharmacist requires of him, and that ``it is not [a] pharmacist's job 
to read, that is doctor's job.'' Tr. 561-62. To be sure, as Mr. Parrado 
explained, pharmacists usually do not obtain medical records in the 
course of dispensing. Tr. 599. Nonetheless, registrants (and their 
principals such as Mr. George) are not excused from ignoring the 
information they do obtain and one does not need a degree in medicine 
to read S.D.'s progress note and recognize that S.D. had been 
prescribed five different controlled substances at the same visit, 
including not only duplicative therapy in the form of two short-acting 
narcotics (oxycodone 30 and Dilaudid 8 mg), see Fla. Admin Code 
r.64B16-27.810, but also a drug cocktail well known to be abused on the 
street.

[[Page 49847]]

    I thus agree with the ALJ that Mr. George, as Respondent's 
principal, has not adequately accepted responsibility for its 
misconduct. This finding provides reason alone to conclude that 
Respondent has not rebutted the Government's prima facie showing that 
it has committed acts which render its continued registration 
``inconsistent with the public interest.'' 21 U.S.C. 824(a)(4). And 
having found that Mr. George and Respondent knowingly diverted 
controlled substances, there is no need to consider Respondent's 
remedial efforts as they are rendered irrelevant by its failure to 
acknowledge its misconduct. See The Medicine Shoppe, 79 FR 59504, 59510 
(2014), pet. for rev. denied 626 Fed. Appx. 2 (Mem.) (D.C. Cir. 2015); 
Jayam Krishna-Iyer, 74 FR 459, 464 (2009) (``Because of the grave and 
increasing harm to public health and safety caused by the diversion of 
prescription controlled substances, even where the Agency's proof 
establishes that a practitioner has committed only a few acts of 
diversion, this Agency will not grant or continue the practitioner's 
registration unless he accepts responsibility for his misconduct.''). 
As the Tenth Circuit has recognized in the context of physician 
practitioners:

    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 [DEA] 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 at 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 further find that the misconduct proven on this record is 
egregious and supports the revocation of Respondent's registration. 
More specifically, my finding that Respondent's pharmacists dispensed 
multiple prescriptions in violation of their corresponding 
responsibility and thereby knowingly diverted controlled substances is, 
by itself, sufficient to support the revocation of its registration. 
Revocation is also warranted by my finding that Respondent was short 
more than 4,000 du of hydromorphone 4 mg. And I also find that 
revocation is supported by Mr. George's lack of candor during his 
testimony.
    I further find that the Agency's interest in deterring future 
misconduct both on the part of Respondent (and Mr. George) as well as 
the community of pharmacy registrants supports revocation. As for the 
issue of specific deterrence, the revocation of Respondent's 
registration is not a permanent bar, and as to Mr. George, because 
pharmacists are not required to be registered under the CSA, revocation 
is warranted to deter Mr. George from engaging in future misconduct in 
the event he procures employment elsewhere. As for the issue of general 
deterrence, those members of the regulated community who contemplate 
using their registrations to divert controlled substances need to know 
that there will be serious consequences if they choose to do so.
    I therefore conclude that the revocation of Respondent's 
registration is necessary to protect the public interest. And I will 
further order that any application of Respondent to renew or modify its 
registration be denied.

Order

    Pursuant to the authority vested in me by 21 U.S.C. 823(f) and 
824(a), as well as 28 CFR 0.100(b), I order that DEA Certificate of 
Registration FH0772257 issued to Hills Pharmacy, LLC, be, and it hereby 
is, revoked. I further order that any application of Hills Pharmacy, 
LLC, to renew or modify its registration, be, and it hereby is, denied. 
This order is effective August 29, 2016.

    Dated: July 19, 2016.
Chuck Rosenberg,
Acting Administrator.
[FR Doc. 2016-17721 Filed 7-27-16; 8:45 am]
BILLING CODE 4410-09-P