Creekbend Community Pharmacy; Decision and Order, 40627-40636 [2021-16000]

Agencies

• Drug Enforcement Administration
• Department of Justice

[Federal Register Volume 86, Number 142 (Wednesday, July 28, 2021)]
[Notices]
[Pages 40627-40636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16000]


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DEPARTMENT OF JUSTICE

Drug Enforcement Administration


Creekbend Community Pharmacy; Decision and Order

    On May 29, 2019, a former Assistant Administrator of the Drug 
Enforcement Administration (hereinafter, DEA or Government) issued an 
Order to Show Cause (hereinafter, OSC) to Creekbend Community Pharmacy 
(hereinafter, Respondent Pharmacy). Government's Request for Final 
Agency Action Exhibit (hereinafter, RFAAX) 2 (OSC), at 1. The OSC 
proposed to revoke Respondent Pharmacy's DEA Certificate of 
Registration Number FL4375730 (hereinafter, registration) and to deny 
any pending applications for renewal or modification of the 
registration, pursuant to 21 U.S.C. 824(a)(4) and 823(f), because 
Respondent Pharmacy's ``continued registration is inconsistent with the 
public interest.'' Id. (citing 21 U.S.C. 824(a)(4) and 823(f)).

I. Procedural History

    The OSC alleged that Respondent Pharmacy committed a number of 
record keeping violations. Id. at 2-4. Specifically, the OSC alleged 
failures in Respondent Pharmacy's inventory documentation in violation 
of 21 CFR 1304.11(a) and (c) and 1304.04(h)(1); failures to properly 
complete and execute DEA Form 222s in violation of 21 CFR 1305.12(a)-
(e); failures to record the receipt date on invoices in violation of 21 
CFR 1304.21(a), (d), and 1304.22(a)(2)(iv) and (c); and failure to 
maintain complete and accurate records of invoices, returns, and 
controlled substance transactions in violation of 1304.21(a). Id. The 
OSC further alleged that Respondent Pharmacy lacked candor by failing 
to be candid and truthful in the DEA investigation. Id. at 4-6. In 
particular, the OSC alleged that Respondent Pharmacy lacked candor with 
regard to its filling of fraudulent prescriptions and its hiding of 
controlled substances. Id.
    The OSC notified Registrant of the right to either request a 
hearing on the allegations or submit a written statement in lieu of 
exercising the right to a hearing, the procedures for electing each 
option, and the consequences for failing to elect either option. OSC, 
at 7 (citing 21 CFR 1301.43). The OSC also notified Registrant of the 
opportunity to submit a corrective action plan. Id. at 8 (citing 21 
U.S.C. 824(c)(2)(C)).
    Following service of the OSC,\1\ Respondent Pharmacy sent a letter 
to the Government which appears to be a written response to the OSC, 
dated June 25, 2019. RFAAX 3. The letter was not signed and the author 
was not explicitly identified; however, it appears to have been written 
by or from the perspective of Respondent Pharmacy's owner, Binta Barry. 
RFAAX 3; RFAAX 1, at 1; RFAAX 47 (Declaration of Diversion 
Investigator), at 1-2. The letter did not state that Respondent 
Pharmacy intended to request an administrative hearing, and the 
Government did not otherwise receive a hearing request. RFAAX 3; RFAAX 
5 (correspondence from the hearing clerk), at 1. The letter was 
accompanied by a document titled ``Corrective Action Plan,'' which the 
Government submitted into the record. RFAAX 4. The Corrective Action 
Plan proposed nine changes and improvements to Respondent's Pharmacy's 
policies and practice.\2\ Then, Respondent Pharmacy's Owner sent a 
signed letter dated July 29, 2019, stating that she would not ``fight 
[her] case with the D.E.A.'' and that she was planning to ``sell [her] 
business.'' \3\ RFAAX 5, at 2 (hereinafter, RFAAX 3 and RFAAX 5, at 2 
are collectively referred to as the ``written response'').
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    \1\ I find that the Government's service of the OSC was 
adequate.
    \2\ Respondent Pharmacy's proposed corrective action plan 
proposed, among other things, that Respondent Pharmacy put into 
place three new policies that would reflect requirements that 
already exist in law, enforce compliance with two existing policies 
that reflect requirements that already exist in law (without 
explaining how those policies would be enforced), and would stop 
working with the Pharmacist-in-charge (hereinafter, PIC) involved in 
this case. RFAAX 4. Additionally, the corrective action plan 
explained that the Respondent Pharmacy was trying to move to a 
``close door pharmacy'' model, and proposed putting in place 
policies saying that it no longer accepted walk-in prescriptions and 
would only accept ``e-scripts'' for controlled substances. Id.
    \3\ I find that Respondent waived her right to a hearing in this 
matter.
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    On September 10, 2019, the Government forwarded a Request for Final 
Agency Action, along with the evidentiary record for this matter, to my 
office. Having considered the record in its entirety, I find that the 
record establishes, by substantial evidence, that Respondent Pharmacy 
committed acts rendering its continued registration inconsistent with 
the public interest. Accordingly, I conclude that the appropriate 
sanction is for Respondent Pharmacy's DEA registration to be revoked.

II. Findings of Fact

A. DEA Registration

    Respondent Pharmacy is registered with the DEA as a retail pharmacy 
authorized to handle controlled substances in schedules II-V under DEA 
Registration number FL4375730 at 8103

[[Page 40628]]

Creekbend Drive, Suite G, Houston, Texas 77071. RFAAX 1, at 6 
(Certificate of Registration). According to the Certificate of 
Registration, the Registration expired on August 31, 2020.\4\ Id.
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    \4\ Pursuant to DEA's online registration database, Respondent 
Pharmacy's registration did expire on August 31, 2020, and DEA 
records show that Respondent Pharmacy is ``out of business.'' Under, 
21 CFR 1301.52, a registration of any entity ``shall terminate, 
without any further action by the Administration, if and when such 
[entity] . . . discontinues business. . . .'' However, the Agency 
has discretion to adjudicate this Order to Show Cause to finality. 
See Jeffrey D. Olsen, M.D., 84 FR 68,474, 68,479 (2019) (declining 
to dismiss an immediate suspension order as moot when the registrant 
allowed the subject registration to expire before final 
adjudication); Steven M. Kotsonis, M.D., 85 FR 85,667, 85,668-69 
(2020) (concluding that termination of a DEA registration under 21 
CFR 1301.52 does not preclude DEA from issuing a final decision on 
an order to show cause against that registration and stated that the 
Agency would assess such matters on a case-by-case basis to 
determine if a final adjudication is warranted or if the matter 
should be dismissed); The Pharmacy Place, 86 FR 21,008, 21,008-09 
(2021) (adjudicating to finality a registration terminated under 21 
CFR 1301.52 in order to create a final record of allegations and 
evidence related to the matter).
     As in The Pharmacy Place, I have evaluated the particular 
circumstances of this matter and determined that the matter should 
be adjudicated to finality. 86 FR at 21,008-09. As my predecessor 
identified in Olsen, ``[b]ecause nothing in the CSA prohibits an 
individual or an entity from applying for a registration even when 
there is . . . a history of having a registration suspended or 
revoked.* . . . having a final, official record of allegations, 
evidence, and the Administrator's decisions regarding those 
allegations and evidence, assists and supports future interactions 
between the Agency and the registrant or applicant.'' 84 FR at 
68,479. Here, absent a final adjudication, there would be no final 
record of the allegations and evidence from this matter. (Contrast 
with Kotsonis in which the plea agreement and judgment from the 
respondent's concurrent criminal case provided a final record on 
which the Agency could rely in any future interactions with the 
respondent. 85 FR at 85,667). Adjudicating this matter to finality 
will create an official record the Agency can use in any future 
interactions with Respondent Pharmacy's owners, employees, or other 
persons who were associated with Respondent. Moreover, as in The 
Pharmacy Place, ``adjudicating this matter to finality will create a 
public record to educate current and prospective registrants about 
the Agency's expectations regarding the responsibilities of 
registrant pharmacies under the CSA and allow stakeholders to 
provide feedback regarding the Agency's enforcement priorities and 
practices.'' 86 FR 21,008-09 (applying Olsen, 84 FR 68,479).
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B. Government's Case

    The Government attached to the RFAA forty-eight exhibits (over 850 
pages) consisting primarily of records from Respondent Pharmacy 
including, but not limited to, inventory records, DEA Form 222s 
(hereinafter, 222 Form), prescription logs, and invoices; and records 
related to DEA's investigation and inspection including, but not 
limited to, audit records, a Texas Prescription Monitoring Profile 
Report, notices of inspection, and pictures. RFAAX 1-48. The Government 
also included declarations from a DEA Diversion Investigator 
(hereinafter, DI) and a Texas State Board of Pharmacy (hereinafter, 
State Board) Investigator (hereinafter, SI). RFAAX 47-48.
    DI's declaration explained that she entered the DI training school 
in 2017, and that she was employed in the DEA Houston Division Office. 
RFAAX 47, at 1. As a Diversion Investigator, DI stated that her work 
includes investigations of DEA registered pharmacies to ``ensure 
compliance with all applicable DEA regulations.'' Id. DI stated that 
her investigation revealed that Binta Barry was one of Respondent 
Pharmacy's owners, and that Ms. Barry was also employed as one of 
Respondent Pharmacy's pharmacy technicians. Id. at 2. Additionally, DI 
explained that ``[t]he Pharmacist-in-charge [was] Yucabeth Kumenda.'' 
Id.
    On November 1, 2017, DEA conducted its first on-site inspection of 
Respondent Pharmacy. RFAAX 47, at 2; RFAAX 7 (Notice of November 1, 
2017 Inspection). PIC Kumenda signed the notice of inspection and 
participated in the inspection process; Ms. Barry was present and met 
with DEA only briefly during the inspection. RFAAX 47, at 2; RFAAX 7. 
As part of the inspection, DEA conducted a closing inventory of 
Respondent Pharmacy's controlled substances, interviewed responsible 
management, and took custody of original controlled substance records 
including prescriptions and inventories. RFAAX 47, at 2.
    On May 24, 2018, DEA conducted its first on-site follow-up 
inspection of Respondent Pharmacy. RFAAX 47, at 5; RFAAX 33 (Notice of 
May 24, 2018 Inspection). Ms. Barry signed the notice of inspection and 
both Ms. Barry and PIC Kumenda were present for and participated in the 
inspection process. RFAAX 47, at 5; RFAAX 33; RFAAX 48, at 1. The State 
Board investigator, SI, was also present during the follow-up 
investigation. RFAAX 47, at 5; RFAAX 48, at 1. As part of the 
inspection, DEA requested and received updated prescriptions,\5\ 
purchase records, and dispensing logs. RFAAX 47, at 5; RFAAX 35 (DEA-
12, Receipt for Cash or Other Items dated May 24, 2018); RFAAX 48, at 
1.
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    \5\ SI took physical custody of the original prescription 
records and provided scanned copies to DI thereafter. RFAAX 48, at 
1.
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    On April 3, 2019, DEA conducted its second on-site follow-up 
inspection of Respondent Pharmacy. RFAAX 47, at 6; RFAAX 36 (Notice of 
April 3, 2019 Inspection). PIC Kumenda signed the notice of inspection, 
RFAAX 36, and, according to DI, called Ms. Barry to tell her that DEA 
was there to conduct an inspection. RFAAX 47, at 6. According to DI, 
Ms. Barry said ``she was sick'' but came into the pharmacy for the 
inspection. RFAAX 47, at 6; see also RFAAX 3, at 2. DI stated that 
following each of the three inspections, she audited and assessed the 
documents DEA had received to determine Respondent Pharmacy's 
compliance with all applicable DEA regulations. RFAAX 47, at 1, 9-16.
    SI's declaration explained that he had been an investigator with 
the State Board since October 2008. RFAAX 48, at 1. As an investigator, 
SI conducted ``investigations and audits for the [State Board] 
regarding matters that concern diversion or any other violations of the 
Texas pharmacy act.'' Id. SI stated that he was assigned to investigate 
Respondent Pharmacy in April 2018, and he participated in DEA's May 24, 
2018 inspection of Respondent Pharmacy. Id. SI's declaration also 
provided information about the Texas Prescription Monitoring Program 
(Texas PMP), and about prescriptions he obtained from Respondent 
Pharmacy following the May 24, 2018 inspection. Id. at 2.

C. Respondent Pharmacy's Case

    Respondent Pharmacy presented its case through its written response 
consisting of an unsigned, unsworn letter, a second letter signed by 
Ms. Barry, and no supporting documentation or evidence. RFAAX 3; RFAAX 
5, at 2. Some of the factual assertions contained in the written 
response, though lacking in detail, align with the investigatory 
timeline and with DI's declaration and the record as a whole. Compare 
RFAAX 3 and RFAAX 5 with RFAAX 47. For example, the written response 
states that the Respondent Pharmacy's license was renewed in February 
2018, which is consistent with the certificate of registration. RFAAX 
3, at 2; RFAAX 1, at 6. The written response also states that DEA 
conducted inspections on May 24, 2018, and April 3, 2019, and contains 
factual assertions regarding those inspections that are consistent with 
the record as a whole. RFAAX 3, at 2; infra Section, II.D.2. The 
written response contains no facts and no evidence contradicting the 
allegations in the OSC and does not diminish the record evidence 
presented by the Government.
    Instead, the written response questions DEA's motive in 
investigating

[[Page 40629]]

the Respondent Pharmacy.\6\ RFAAX 3; RFAAX 5, at 2. The written 
response states that DEA had ``an intent of closing [Respondent 
Pharmacy] and thus subject [sic] the pharmacy to various harassments 
and false accusations.'' RFAAX 3, at 3. The written response also 
alleged that the DEA investigation was a ``witch hunt . . . by an agent 
who [did not] hesitate to show her hatred and Might [sic] to the 
owner.'' Id. at 2. I cannot find any evidence in the record that 
supports Respondent Pharmacy's allegations of threats and bias. Instead 
the substantial evidence in the record validates each of the 
accusations. Infra Section, II.D.
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    \6\ The evidence on the record provides no indication of any 
sort of improper motive in commencing the investigation, and in 
fact, the evidence demonstrates that such an investigation is 
routine. On August 2017, Respondent Pharmacy submitted an 
application to renew its registration. RFAAX 47, at 2. In the 
application, Respondent Pharmacy answered ``yes'' when asked ``has 
the applicant ever surrendered (for cause) or had a federal 
controlled substance registration revoked, suspended, restricted or 
denied, or is any such action pending?'' Id. This prompted DEA to 
initiate an investigation into Respondent Pharmacy. Id. at 1-2. It 
is routine for DEA to initiate investigations based on affirmative 
answers to the liability questions on the application. See e.g. 
Daniel A. Glick, D.D.S., 80 FR 74,800, 74,802 (2015) (including 
testimony that when a registrant answers yes to a liability question 
the file is assigned for further investigation); Barry H. Brooks, 
M.D., 66 FR 18,305, 18,306 (2001).
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D. The Inspection and Audit of Respondent Pharmacy

1. Respondent Pharmacy's Recordkeeping
a. Inventory Documentation Failures
    As part of the November 1, 2017 inspection, DI obtained copies of 
Respondent Pharmacy's biennial inventory, dated May 25, 2016 (RFAAX 9), 
and of its most recent physical inventory dated October 24, 2017, at 
beginning of business (RFAAX 10). RFAAX 47, at 2. The OSC alleged that 
the biennial inventory failed to identify whether it was conducted at 
the beginning or end of the business day, and alleged that both 
inventories failed to separate Schedule II controlled substances from 
Schedule III through V controlled substances. OSC, at 2. I have 
reviewed the inventories at issue and agree with DI's findings.
    According to DI, Respondent Pharmacy ``failed to record on its 
biennial inventory (May 25, 2016) . . . whether the inventory was 
conducted at the beginning or end of the business day . . . .'' RAAX 
47, at 9. DI stated that Respondent Pharmacy ``failed to separate on 
its biennial inventory . . . and on its October 24, 2016 inventory . . 
. Schedule II controlled substances from Schedule III through V 
controlled substances.'' \7\ Id. On both inventories, DI states, ``a 
Schedule II controlled substance, hydrocodone, [was] listed with 
Schedule III-V controlled substance[s], including alprazolam and 
carisoprodol.'' Id. at 9-10. Respondent Pharmacy offered no evidence to 
contest these facts. See RFAAX 3.
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    \7\ The DI stated that, as relevant to this case, Hydrocodone is 
a Schedule II controlled substance, and Alprazolam and Carisoprodol 
are Schedule III-V controlled substances. RFAAX 47, at 9.
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b. Improperly Completed 222 Forms
    During the inspection, DI collected records related to Respondent 
Pharmacy's purchases of controlled substances, including DEA Form 222s 
and invoices. The OSC alleges that Respondent ``[f]ailed to properly 
complete and execute multiple DEA Form 222 order forms.'' OSC at 2. 
Respondent Pharmacy broadly contests these allegations, stating in its 
response ``[c]ontrary to what [DEA] said, most of our D.E.A. forms are 
filled and signed.'' RFAAX 3, at 2. I have reviewed all of the 222 
Forms and largely agree with DI's findings.
    First, according to DI, Respondent Pharmacy ``failed to properly 
include information to be filled in by [the] purchaser, including the 
number of packages, size of package, and name of item, on four (4) DEA 
Form 222 order forms. . . .'' RFAAX 47, at 10. Specifically, DI 
identified these failures in RFAAX 13 (222 Forms for Supplier Cochran), 
at pages 1, 24, and 56; and in RFAAX 14 (222 Forms for Supplier 
Nationwide), at page 3. I have reviewed these four Form 222s and agree 
with DI that each of the four forms has one or more blanks in the ``No. 
of Packages,'' ``Size of Package,'' and ``Name of Item'' sections on 
lines that have other sections, namely ``No. of Packages Received'' and 
``Date Received,'' completed. RFAAX 13, at 1, 24, 56; RFAAX 14, at 3.
    Second, according to DI, Respondent Pharmacy ``failed to properly 
include the last line on a DEA Form 222 order form, specifically from 
[RFAAX 13, at 3].'' RFAAX 47, at 10. I agree with DI that the section 
``Last Line Completed'' was left blank on the 222 Form at issue. Id. 
Third, DI states that the 222 Form at RFAAX 13, at 1,\8\ ``failed to 
properly include the name and address of a supplier. . . .'' RFAAX 47, 
at 10. I agree with the DI that the ``To: (Name of Supplier),'' and 
corresponding sections for the supplier's address were left blank on 
the 222 Form at issue. RFAAX 13, at 1. Fourth, according to DI, 
Respondent Pharmacy ``failed to properly sign and/or date a DEA Form 
222 order form'' at RFAAX 13, at 4. RFAAX 47, at 10-11. I agree with 
the DI that the ``Signature of Purchaser or Attorney or Agent'' section 
was left blank. RFAAX 13, at 4.
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    \8\ I found this 222 Form, RFAAX 13, at 1, to be deficient in 
the preceding paragraph. Supra. While I find RFAAX 13, at 1, to have 
multiple deficiencies representing multiple regulatory violations, 
infra, I have only included it once in my total count of deficient 
Form 222s.
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    Finally, according to DI, Respondent Pharmacy ``failed to properly 
include the number of packages received and the date received on eleven 
(11)[\9\] DEA Form 222 order forms.'' RFAAX 47, at 11. Specifically, DI 
identified these failures on RFAAX 12 (Invoices and Forms 222 for 
Supplier Apotheca, Inc.), at pages 4, 6, 10, 16, 18, and 20; RFAAX 13, 
at pages 2, 5, 30, and 34; and RFAAX 15 (Forms 222 for Supplier QK 
Healthcare), at page 1. RFAAX 47, at 11. I agree with DI that each of 
these eleven 222 Forms have otherwise completed lines with blanks for 
``No. of Packages Received'' and ``Date Received.'' RFAAX 12, at 4, 6, 
10, 16, 18, 20; RFAAX 13, at 2, 5, 30, 34; RFAAX 15, at 1. DI also 
identified corresponding invoices obtained either from Respondent 
Pharmacy showing that Respondent Pharmacy received the controlled 
substances, or from Respondent Pharmacy's suppliers showing that the 
controlled substances were invoiced and shipped to Respondent Pharmacy 
to establish that the items were received by Respondent Pharmacy. RFAAX 
47, at 11. The Government established Respondent Pharmacy's receipt of 
the controlled substances, and therefore established Respondent 
Pharmacy's obligation to complete the ``No. of Packages Received'' and 
``Date Received'' sections, for ten of the 222 Forms at issue. See 
RFAAX 12, at 3, 5, 9, 15, 17, 19; RFAAX 22, at 5, 6; RFAAX 29 (Invoices 
from Supplier Cochran), at 5, 9, 136, 140-44, 146, 148-53. However, I 
was not able to find invoices or other evidence that Respondent 
Pharmacy actually received the items identified on lines 4-8 of the 
eleventh Form 222,\10\ and accordingly, the Government has not 
demonstrated that the eleventh

[[Page 40630]]

Form 222 was incomplete. RFAAX 15, at 1.
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    \9\ The OSC alleged that there were thirteen DEA Form 222s 
missing information for the number of packages received and the date 
received. RFAAX 2, at 2. The RFAA only seeks final agency action as 
to eleven of the 222 Forms. RFAA, at 9.
    \10\ The controlled substances identified in lines 1-3 on Form 
222 No. 170706317, RFAAX 15, at 1, are supported by invoices or 
records. RFAAX 25 (Invoices from Supplier QK Healthcare), at 1-3; 
and RFAAX 31 (QK Healthcare Controlled Substance History Report), at 
5. And Respondent Pharmacy properly completed the corresponding 
``No. of Packages Received'' and ``Date Received'' sections for 
those lines. RFAAX 15, at 1.
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    In total, I find the substantial evidence in the record establishes 
that Respondent Pharmacy failed to properly complete and execute 
sixteen Form 222s: RFAAX 12, at 4, 6, 10, 16, 18, 20; RFAAX 13, at 1 
(multiple deficiencies), 2, 3, 4, 5, 24, 30, 34, 56; and RFAAX 14, at 
3.
c. Records of Receipt Date
    As part of the November 1, 2017 inspection, DI obtained copies of 
Respondent Pharmacy's invoices for Schedule III through V controlled 
substances. RFAAX 47, at 3, 12. The OSC alleged that Respondent 
Pharmacy ``failed to record the receipt date on nine (9) invoices for 
Schedule III through V controlled substances.'' OSC, at 2.
    According to DI, Respondent Pharmacy ``failed to properly record 
the receipt date'' on these nine invoices: RFAAX 22 (Respondent 
Pharmacy's Copy of Cochran Invoices), at 89; RFAAX 26 (Respondent 
Pharmacy's Copy of QK Healthcare Invoices), at 78, 79, 81, 86, and 90; 
RFAAX 27 (Respondent Pharmacy's Copy of RXChange Invoices), at 2; RFAAX 
28 (Respondent Pharmacy's Copy of VitaRX Invoices), at 5 and 7. RAAX 
47, at 12. I have reviewed the nine invoices identified by DI and agree 
with DI that they do not contain a receipt date. However, the undated 
VitaRX invoice located at RFAAX 28, at 7, is accompanied by a packing 
slip that is signed and dated with the receipt date and contains the 
same substantive information that the invoice contained. Compare RFAAX 
28, at 7 with at 6. Respondent Pharmacy offered no evidence to contest 
these facts. See RFAAX 3.
    Accordingly, I find that the substantial evidence in the record 
establishes that the Respondent Pharmacy failed to properly record the 
receipt date on eight invoices.
d. Improper Maintenance of Records Including Invoices and Returns
    DI declared that following the November 1, 2017 inspection and the 
April 3, 2019 second follow-up inspection, she ``conducted 
accountability audits that revealed that Creekbend failed to keep 
complete and accurate records of controlled substances maintained.'' 
\11\ RFAAX 47, at 13. DI's audit revealed that Respondent Pharmacy's 
had a surplus of some controlled substances on hand, and a shortfall of 
others.\12\ RFAAX 47, at 14-15. DI also found variances during the 
audit conducted after the April 3, 2019 second follow-up inspection, 
which looked at the records between May 24, 2018, and April 3, 
2019.\13\ RFAAX 47, at 15. According to DI, ``[the] variances 
demonstrate that [Respondent Pharmacy] clearly failed to keep complete 
and accurate records of controlled substances maintained.'' Id. at 16. 
While Respondent Pharmacy, in its response, generally asserted that it 
``would be impossible'' for the audit counts to be off, it provided no 
evidence to support the assertion. RFAAX 3, at 3. I find that the audit 
results and record as a whole clearly identify surpluses and shortfalls 
in Respondent Pharmacy's controlled substances and clearly demonstrate 
that Respondent Pharmacy was not maintaining adequate records.
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    \11\ In conducting the audit, DI stated that she determined the 
number of applicable controlled substances that Respondent Pharmacy 
was accountable for by adding the controlled substances listed in 
Respondent Pharmacy's October 24, 2016 inventory, found in RFAAX 10, 
to the total number of applicable controlled substances received 
from suppliers (according to invoices received from Respondent 
Pharmacy and from its suppliers), found in RFAAX 20-32. RFAAX 47, at 
13. DI then determined the number of applicable controlled 
substances that Respondent Pharmacy had accounted for by adding the 
controlled substances on hand during Respondent Pharmacy's November 
1, 2017 inventory, RFAAX 11, to the sum of the applicable controlled 
substances distributed by Respondent Pharmacy, RFAAX 16-19 
(Respondent Pharmacy's prescription logs). RFAAX 47, at 14. DI then 
subtracted the total controlled substances Respondent Pharmacy was 
accountable for from the total controlled substances accounted for 
to determine the ``Total Difference.'' According to DI, ``[i]f the 
registrant's record keeping is accurate, the results of the ``Total 
Difference'' column for each controlled substance should be zero, as 
that would demonstrate that all accountable controlled substances 
are accounted for in registrant's records and physical inventory.'' 
RFAAX 47, at 14. She further explained that ``[a] positive 
difference indicated that the registrant's records show it has more 
controlled substances on hand and distributed than what its initial 
inventory and invoices show it has received, which means at the very 
least that the registrant's record keeping is not accurate.'' Id. 
``A negative difference indicates the opposite, that the 
registrant's records show it has received more controlled substances 
than it now has on hand or has distributed, which also means that 
the registrant's record keeping is not accurate. Moreover, it likely 
demonstrated that diversion has occurred, as the registrant cannot 
account for all of the controlled substances it has received.'' Id.
    \12\ Based on the record evidence and using on the methodology 
provided by the DI in the affidavit, I was able to confirm the 
presence of variances. RFAAX 47, at 14-15. The extent of the 
variances I calculated differed from the DI's, sometimes 
significantly, and it is unclear to me why the numbers were so 
variable. But what is clear to me, is that there were shortfalls and 
surpluses that clearly demonstrate that Respondent Pharmacy was not 
maintaining adequate records. This finding is further supported by 
the fact that Registrant was missing invoices and did not properly 
complete the DEA Form 222s. See supra, II.D.1.
    \13\ According to DI, the April 3, 2019 audit was conducted in 
the same manner as the November 2, 2017 audit. Id. at 15-16. She 
first determined the number of applicable controlled substances that 
Respondent Pharmacy was accountable for by adding the controlled 
substances listed in Respondent Pharmacy's May 24, 2018 inventory, 
found in RFAAX 34, to the total number of applicable controlled 
substances received from suppliers, which according to Respondent 
Pharmacy's owner and PIC was zero because they ``had not received 
any controlled substances since the May 24, 2018 inspection.'' Id. 
at 15. DI then determined the number of applicable controlled 
substances that Respondent Pharmacy had accounted for by adding the 
controlled substances on hand during Respondent Pharmacy's April 3, 
2019 inventory, RFAAX 40, to the sum of the applicable controlled 
substances distributed by Respondent Pharmacy, RFAAX 42 (Respondent 
Pharmacy's Dispensing Log from May 24, 2018 to April 3, 2019)\13\. 
RFAAX 47, at 15-16. DI then calculated the ``Total Difference,'' see 
RFAAX 46, which again revealed variances. RFAAX 47, at 16.
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    To better understand the variances uncovered during the initial 
audit, DI verified all of the controlled substances transactions 
between Respondent Pharmacy and its suppliers from January 1, 2016, to 
November 1, 2017. RFAAX 47, at 12. To do so, DI ``cross-verified 
records maintained by [Respondent Pharmacy] ([RFAAX] 20-28) with those 
obtained from the various suppliers ([RFAAX] 29-32). Id. As a result of 
DI's efforts, the OSC alleged that Respondent Pharmacy ``failed to 
provide and maintain [certain] invoices and a record of returns.'' OSC, 
at 2.
    Specifically, DI determined that Respondent Pharmacy ``failed to 
properly provide and maintain [eight] invoices.'' RFAAX 47, at 12. The 
invoices at issue are numbers I029975 and I029976 from Nationwide 
Medical, located at RFAAX 30, at 1-2; numbers 3427858 and 3831964 from 
QK Healthcare located at RFAAX 31, at 3, and 5; numbers 0019035-IN, 
0022273-IN, 0025288-IN, and 0025702-IN from Cochran located at RFAAX 
29, at 85, 109, 145, and 150-51. RFAAX 47, at 12-13. I have reviewed 
Respondent Pharmacy's records and agree that its records did not 
contain these eight invoices, which were obtained from Respondent 
Pharmacy's suppliers. However, one of the invoices in question, 
Nationwide Medical Number I029976, reflected only the purchase of 
hydrocodone/acetaminophen, a Schedule II substance. RFAAX 30, at 2; 
supra note 7. In contrast to schedules III-V, pharmacies must record 
the necessary purchase and receipt information regarding schedule II 
substances on either the 222 Form or in the electronic Controlled 
Substances Ordering System, whichever was used to order the drugs. See 
supra Section II.D.1.b; infra Section, III.A.2. I did not see any 
purchase orders or other records containing the information that would 
have otherwise been reflected on the invoices for the remaining seven 
invoices at issue. Respondent Pharmacy

[[Page 40631]]

offered no evidence to contest these facts. See RFAAX 3.
    DI also determined that Respondent Pharmacy failed to maintain one 
record of return. RFAAX 47, at 12. According to DI, Respondent Pharmacy 
``maintained an invoice that had a handwritten note that indicated that 
these controlled substances were received on September 5, 2017, as set 
forth in [RFAAX] 26, [at] 2.'' Id. However, QK Healthcare Inc., 
verified that the product was initially lost in transit[, and] [w]hen 
it was finally found and delivered, [Respondent Pharmacy] no longer 
wanted it and it was returned to QK Healthcare Inc.'' Id.; see also 
RFAAX 32 (QK Healthcare Records of Return from Respondent Pharmacy). I 
reviewed the Respondent's records and agree with DI's determination. 
Respondent Pharmacy offered no evidence to contest these facts. See 
RFAAX 3.
    Based on the evidence in the record, I find that Respondent 
Pharmacy generally maintained incomplete and/or inaccurate controlled 
substance records between October 24, 2016, and April 3, 2019, and 
specifically failed to properly maintain seven invoices and one return 
record.
2. Respondent Pharmacy's Candor During the Investigation
    The Government has alleged that Respondent Pharmacy lacked candor 
during the course of DEA's investigation regarding its filling of 
fraudulent prescriptions and regarding various controlled substances 
hidden throughout the pharmacy.
a. Lack of Candor Regarding Filled Fraudulent Prescriptions
    During the November 1, 2017 Inspection, DEA obtained a number of 
prescriptions that had been filled by Respondent Pharmacy and 
determined that they were fraudulent. RFAAX 47, at 5. In making that 
determination, DI interviewed Dr. C.K. regarding fifty-seven 
prescriptions issued in his name that DI obtained from Respondent 
Pharmacy during the inspection. Id. According to DI, ``Dr. [C.K.] 
reviewed the prescriptions and verified that they were not issued by 
him and that all were fraudulent.'' Id. According to DI, the 
``prescriptions contained handwritten notes indicating that they had 
been verified by `Donna Lavender' or `Gloria.' '' Id. Dr. C.K. stated 
that ``he had no idea who Donna Lavender was,'' and that ``a woman 
named `Gloria' worked in this office, . . . [but] she had not verified 
the prescriptions.'' Id. Based on this interview, DI determined that 
Respondent Pharmacy ``was filling fraudulent prescriptions that had 
been issued in Dr. [C.K.'s] name.'' Id.
    During the May 24, 2018, follow-up inspection, DI ``observed a 
customer in the waiting area who was acting suspicious,'' while waiting 
for a prescription purportedly issued by Dr. S.S. to be filled. Id. 
Specifically, DI observed that the customer ``kept coming in and out of 
the pharmacy to ask about the status of her prescription'' and when she 
left the pharmacy, ``she would drive her car to the back of the parking 
lot and talk to someone in a black tinted Lincoln MKX with temporary 
tags.'' Id. at 5-6. DEA asked PIC Kumenda to demonstrate how she 
verified the validity of the customer's prescription. Id. at 6. 
According to DI, PIC Kumenda stated, that ``[s]he called the [phone] 
number on the prescription and talked with a person named `Melissa,' 
who verified the prescription.'' Id. DEA then ``told PIC Kumenda to 
take additional steps to verify the contact information for the doctor, 
such as by looking at the Texas Medical Board . . . Website or doing a 
Google search.'' Id. According to DI, PIC Kumenda found a different 
phone number for Dr. S.S., and the doctor's office ``verified that the 
customer was not a patient and that no one named Melissa worked 
there.'' Id. DI and another diversion investigator then approached the 
customer in the waiting area and reported that the customer ``could not 
provide the exact location where Dr. S.S.'s office was located.'' Id. 
The customer then left the pharmacy and drove off, and ``[a] few 
minutes later, the black Lincoln also drove off.'' Id.
    Also during the May 24, 2018, follow-up inspection, DI ``saw 
prescriptions allegedly issued by Dr. [C.K.].'' Id. Again, PIC Kumenda 
stated to DI, that ``she verified the prescriptions by the phone number 
on the prescription.'' Id. Again, PIC Kumenda did a Google search for 
Dr. C.K. and called the resulting phone number. Id. And, like before, 
Dr. C.K.'s office ``told PIC Kumenda that the prescriptions she had 
were fraudulent.'' Id.
    According to DI, DEA then ``informed PIC Kumenda and Ms. Barry that 
[Respondent Pharmacy] was filling fraudulent prescriptions.'' Id. I 
find, that as of May 24, 2018, Respondent Pharmacy knew that it had 
been presented with and had filled fraudulent prescriptions that 
purported to be issued by Dr. C.K. See RFAAX 47, at 18. I further find 
that as of May 24, 2018, Respondent Pharmacy was aware of the correct 
phone number for Dr. C.K. to verify future prescriptions. See Id.
    According to the Texas Prescription Monitoring Program (Texas PMP), 
Respondent Pharmacy went on to fill eight controlled substances 
prescriptions purportedly issued by Dr. C.K. on May 25, 2018 and May 
26, 2018. Id. at 2-3. However, during the April 4, 2019 second follow-
up inspection, PIC Kumenda informed DI, and Ms. Barry later confirmed, 
that Respondent Pharmacy had not ordered or dispensed controlled 
substances since the DEA inspection on May 24, 2018. RFAAX 47, at 6 and 
8. I find that these statements lacked candor. After these 
representations, DI ``asked Ms. Barry to print out a dispensing log 
from May 24, 2018, to April 3, 2019.'' Id. at 8. According to DI, Ms. 
Barry then printed out a blank dispensing log that began on May 28, 
2018. Id.; see also RFAAX 41. I find that in providing an incomplete 
dispensing log, Respondent Pharmacy lacked candor. DI stated that she 
noticed that the ``dispensing report was not for the complete date 
range'' and again requested and finally received a dispensing log 
starting May 24, 2018. RFAAX 47, at 8. This dispensing log showed that 
Respondent Pharmacy dispensed controlled substances for eight 
fraudulent \14\ prescriptions purportedly issued by Dr. C.K. in the 
hours following DEA's last inspection. Id.; see also RFAAX 42.
---------------------------------------------------------------------------

    \14\ DI contacted Dr. C.K. who stated that, with regard to the 
eight prescriptions purporting to have been issued by Dr. C.K. and 
presented to Respondent Pharmacy on May 25 and 26, 2018, none of the 
individuals were patients of his. See RFAAX 47, at 18; RFAAX 44. I 
agree with DI's determination that these eight prescriptions were 
fraudulent. See RFAAX 47, at 18. Respondent Pharmacy has not been 
charged with any violations related to dispensing these fraudulent 
prescriptions; however, the fact that the substantial evidence in 
the record shows these prescriptions were fraudulent, as Respondent 
Pharmacy no doubt knew or was willfully blind to, is relevant to my 
determination that Respondent Pharmacy lacked candor and impeded the 
investigation in a way that threatened public health and safety.
---------------------------------------------------------------------------

    However, contrary to the information contained in the Texas PMP and 
Respondent Pharmacy's own dispensing log, Ms. Barry informed DI that 
``[SI] had returned to the pharmacy after the May 24, 2018 inspection 
and had taken the prescriptions[;] . . . the prescriptions were logged 
into the system, but were never filled.'' \15\ RFAAX 47, at 8. I find 
that this statement lacked candor.
---------------------------------------------------------------------------

    \15\ Respondent Pharmacy repeated this assertion in its written 
response. RFAAX 3, at 2.
---------------------------------------------------------------------------

    According to SI, his actions did not in any way interfere with 
Respondent Pharmacy's ability to fill the eight controlled substance 
prescriptions that Respondent Pharmacy reported to the Texas PMP that 
it filled. RFAAX 48, at

[[Page 40632]]

1-2. He also stated that shortly after the May 24, 2018 follow-up 
inspection, he was contacted by PIC Kumenda who asked him to ``pick up 
a handful of prescriptions that had been filled after the inspection.'' 
Id. at 2. SI retrieved prescriptions \16\ from Respondent Pharmacy on 
May 31, 2018. Id. at 2. SI reported that on August 13, 2018, he 
returned to Respondent Pharmacy and, while there, obtained a dispensing 
record from Respondent Pharmacy, which reflected that the eight 
prescriptions purportedly issued by Dr. C.K. as discussed above ``had 
been filled.'' Id. at 2, 5.
---------------------------------------------------------------------------

    \16\ SI states that he has ``looked for and verified that [his] 
office does not currently have the eight (8) prescriptions'' 
identified in the Texas PMP, and he ``cannot confirm whether or not 
[those] prescriptions [were] among the ones [he] obtained on May 31, 
2018.'' RFAAX 48, at 2.
---------------------------------------------------------------------------

    I find that substantial evidence in the record establishes that 
Respondent Pharmacy lacked candor during DEA's investigation with 
regard to its filling of fraudulent prescriptions on May 25-26, 2018. 
Specifically, I find Respondent Pharmacy lacked candor first when it 
stated that it had not dispensed any controlled substances since May 
24, 2018, then when it printed out a dispensing log that did not 
include the controlled substances dispensed from May 24 to May 26, 2018 
(the exact dates on which the controlled substances at issue were 
dispensed), and finally when it represented that it did not fill the 
prescriptions logged in the dispensing log between May 24 and May 26, 
2018.
b. Lack of Candor Regarding Hidden Controlled Substances
    During the April 3, 2019 second follow-up inspection, DI requested 
that PIC Kumenda show the investigators all of the controlled 
substances at the pharmacy. Id. According to DI, PIC Kumenda took them 
to the back room where DI saw ``two hydrocodone 10/325 bottles on a 
black garbage bag that was spread out on the floor.'' Id. PIC Kumenda 
told DI that ``she had taken the hydrocodone bottles out because she 
was going to take an inventory.'' Id. DEA asked PIC Kumenda if those 
two bottles of hydrocodone ``were the only controlled substances on the 
premises, and she answered yes.'' Id. at 6-7. PIC Kumenda also showed 
DI two safes; DI ``looked in and confirmed that there were no drugs in 
the smaller of the two safes.'' Id. at 7. PIC Kumenda, unable to open 
the larger one, ``represented there were no drugs inside.'' Id. 
Everyone returned to the front of the pharmacy where DEA instructed 
Respondent Pharmacy to conduct a closing inventory of all controlled 
substances. Id. According to DI, PIC Kumenda then walked to the back of 
the pharmacy again.
    When DI returned to the back room, she observed ``there now were 
three bottles of carisoprodol placed on the floor next to the 
hydrocodone.'' Id. DEA asked ``from where the carisoprodol bottles had 
come, [and] PIC Kumenda would not answer.'' Id. DEA asked PIC Kumenda 
``if these were the only controlled substances at the pharmacy, and she 
affirmed that they were.'' \17\ Id. Ms. Barry and Respondent Pharmacy's 
attorney arrived during the count. Id.
---------------------------------------------------------------------------

    \17\ I note that PIC Kumenda made similar representations during 
the May 28, 2018 follow-up inspection. At that time DEA asked 
Respondent Pharmacy to show it all of the controlled substances it 
had in stock. RFAAX 47, at 5. According to DI, ``PIC Kumenda showed 
[DI] patient-ready bottles of controlled substances and stated those 
were all the controlled substances that the pharmacy had on hand.'' 
Id. Later, DI ``saw a box next to PIC Kumenda that contained 
additional controlled substances[, and] PIC Kumenda apologized for 
missing the box.'' Id.
---------------------------------------------------------------------------

    When PIC Kumenda finished counting, DEA compared her counts to the 
closing inventory from the prior inspection on May 24, 2018. Id. 
According to DI, ``[s]ince PIC Kumenda had confirmed to us that 
[Respondent Pharmacy] had not filled any controlled substances since 
that inspection, the counts should have matched up. They did not.'' Id. 
According to DI, ``Ms. Barry then informed [the DIs] that PIC Kumenda 
hides drugs in the pharmacy to avoid thefts, and instructed her to go 
back and find more drugs.'' \18\ Id. PIC Kumenda returned with plastic 
sandwich bags containing alprazolam 2mg. Id. Thereafter, ``PIC Kumenda 
again affirmed'' that those ``were the only drugs on the premise.'' Id.
---------------------------------------------------------------------------

    \18\ This factual assertion is repeated in Respondent Pharmacy's 
written statement. RFAAX 3, at 3.
---------------------------------------------------------------------------

    According to DI, the inventory was still short, so Ms. Barry 
``again told PIC Kumenda to go and search for drugs in the back of the 
pharmacy.'' Id.\19\ DI states that she ``witnessed PIC Kumenda pulling 
plastic sandwich bags containing drugs from various hiding places, 
including taped underneath the sink and inside of plastic bins mixed 
under papers/records.'' \20\ Id. DI reports that PIC Kumenda ``went to 
the back of the pharmacy about four times, and each time came back out 
with additional drugs that she had hidden.'' Id. Eventually, PIC 
Kumenda completed the closing inventory. Id.; RFAAX 40 (Closing 
Inventory dated April 3, 2019).
---------------------------------------------------------------------------

    \19\ See also Respondent's written response, stating ``I turned 
to the pharmacist-in-charge and told her to go back and looked 
[sic.] for the medications because she hides controls like 
hydrocodone, Soma, Alprazolam in different places and ways. . . . 
[T]he agent again informed me that the hydrocodone is [short] as to 
the original count. . . . Again I instructed the pharmacist-in-
charge to go and check in her hiding places she went and came back 
with the hydrocodone. . . .'' RFAAX 3, at 3.
    \20\ DEA took pictures of some of the drugs which are part of 
the record, including pictures of ``tablets of hydrocodone in 
plastic sandwich bags [or] wrapped up in a ball inside of a sheet of 
paper.'' Id.; RFAAX 37-39 (Pictures from April 3, 2019).
---------------------------------------------------------------------------

    I find that substantial evidence in the record establishes that 
Respondent Pharmacy lacked candor during DEA's investigation with 
regard to identifying the location of and quantity of the controlled 
substances it had on hand.

III. Discussion

    The Government alleged that Respondent Pharmacy's registration 
should be revoked because Respondent Pharmacy committed acts, as 
detailed above, that would render its registration inconsistent with 
the public interest as defined in 21 U.S.C. 823(f). OSC, at 1. The 
gravamen of the Government's allegations and evidence in this case 
focuses on whether Respondent Pharmacy violated federal laws relating 
to controlled substances when it failed to properly complete and 
maintain certain records. Id. at 2-4. The Government also alleged that 
Respondent Pharmacy's representations to the DEA investigators during 
the investigation lacked candor in a way that impeded the investigation 
and threatened public safety. Id. at 4-7.
    Section 304(a) of the Controlled Substances Act (hereinafter, CSA) 
provides that ``[a] registration . . . to . . . dispense a controlled 
substance . . . may be suspended or revoked by the Attorney General 
upon a finding that the registrant . . . has committed such acts as 
would render [its] registration under section 823 of this title 
inconsistent with the public interest as determined under such 
section.'' 21 U.S.C. 824(a). In the case of a practitioner, which 
includes a pharmacy, the CSA requires the Agency consider the following 
factors in determining whether Respondent Pharmacy's registration would 
be inconsistent with the public interest:

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

[[Page 40633]]

    (5) Such other conduct which may threaten the public health and 
safety.

21 U.S.C. 823(f).

    The DEA considers these public interest factors in the disjunctive. 
Robert A. Leslie, M.D., 68 FR 15,227, 15,230 (2003). Each factor is 
weighed on a case-by-case basis. Morall v. Drug Enf't Admin., 412 F.3d 
165, 173-74 (DC Cir. 2005). Any one factor, or combination of factors, 
may be decisive. David H. Gillis, M.D., 58 FR 37,507, 37,508 (1993). 
Thus, there is no need to enter findings on each of the factors. Hoxie 
v. Drug Enf't Admin., 419 F.3d 477, 482 (6th Cir. 2005). Furthermore, 
there is no requirement to consider a factor in any given level of 
detail. Trawick v. Drug Enf't Admin., 861 F.2d 72, 76-77 (4th Cir. 
1988). The balancing of the public interest factors ``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. . . .'' Jayam Krishna-Iyer, M.D., 74 
FR 459, 462 (2009). When deciding whether registration is in the public 
interest, the DEA must consider the totality of the circumstances. See 
generally Joseph Gaudio, M.D., 74 FR 10,083, 10,094-95 (2009) (basing 
sanction on all evidence on record).
    The Government has the burden of proving that the requirements for 
revocation of a DEA registration in 21 U.S.C. 824(a) are satisfied. 21 
CFR 1301.44(e). When the Government has met its prima facie case, the 
burden then shifts to the Respondent to show that revoking registration 
would not be appropriate, given the totality of the facts and 
circumstances on the record. Med. Shoppe-Jonesborough, 73 FR 364, 387 
(2008).
    While I have considered all of the public interest factors,\21\ the 
Government's case invoking the public interest factors of 21 U.S.C. 
823(f) seeks revocation of Respondent Pharmacy's registration based 
solely under Public Interest Factors Two, Four, and Five. I find that 
the Government's evidence with respect to Factors Two, Four and Five 
satisfies its prima facie burden of showing that Respondent Pharmacy's 
continued registration would be ``inconsistent with the public 
interest.'' 21 U.S.C. 823(f). I further find that Respondent Pharmacy 
failed to provide sufficient evidence to rebut the Government's prima 
facie case. Specifically, as to Factors Two and Four, I find that the 
record contains substantial evidence that Respondent Pharmacy violated 
multiple federal recordkeeping requirements, and as to Factor Five, I 
find the record contains substantial evidence that Respondent 
Pharmacy's owner and PIC lacked candor during the course of the DEA 
investigation into Respondent Pharmacy.
---------------------------------------------------------------------------

    \21\ As to Factor One, there is no evidence in the record to 
suggest that Respondent Pharmacy did not have a Texas license, see 
RFAAX 1, at 3, and there is no evidence in the record of any 
recommendation from Respondent's state licensing board or 
professional disciplinary authority. 21 U.S.C. 823(f)(1). State 
authority to practice medicine is ``a necessary, but not a 
sufficient condition for registration. . . .'' Robert A. Leslie, 
M.D., 68 FR at 15,230. Therefore, ``[t]he fact that the record 
contains no evidence of a recommendation by a state licensing board 
does not weigh for or against a determination as to whether 
continuation of Respondent's DEA certification is consistent with 
the public interest.'' Roni Dreszer, M.D., 76 FR 19,434, 19,444 
(2011).
     As to Factor Three, there is no evidence in the record that 
Respondent Pharmacy's owner or any of its employees have been 
convicted of an offense under either federal or state law ``relating 
to the manufacture, distribution, or dispensing of controlled 
substances.'' 21 U.S.C. 823(f)(3). However, as Agency cases have 
noted, there are a number of reasons why 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, 
M.D., 75 FR 49,956, 49,973 (2010). Agency cases have 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.
---------------------------------------------------------------------------

A. Factors Two and Four

    As already discussed, pursuant to section 304 of the CSA, in 
conjunction with section 303 of the CSA, I am to consider evidence of 
Respondent Pharmacy's compliance (or non-compliance) with laws related 
to controlled substances and experience dispensing controlled 
substances in determining whether Respondent Pharmacy's continued 
registration is ``consistent with the public interest.'' 21 U.S.C. 
824(a)(4). ``[A] registrant's `ignorance of the law is no excuse' for 
actions that are inconsistent with responsibilities attendant upon a 
registration.'' Daniel A. Glick, D.D.S., 80 FR 74,800, 74,809 (2015) 
(quoting Sigrid Sanchez, M.D., 78 FR 39,331, 39,336 (2013)). Instead, 
``[a]ll registrants are charged with knowledge of the CSA, its 
implementing regulations, as well as applicable state laws and rules.'' 
Id. at 74,809 (internal citations omitted). Further, the Agency has 
consistently concluded that a pharmacy's registration is subject to 
revocation due to the unlawful activity of the pharmacy's owners, 
majority shareholders, officers, managing pharmacist, or other key 
employees. EZRX, LLC, 69 FR 63,178, 63,181 (2004); Plaza Pharmacy, 53 
FR 36,910, 36,911 (1988).
    In this matter, the Government alleged and presented evidence that 
Respondent Pharmacy committed several recordkeeping violations. The CSA 
recognizes that controlled substances are fungible and that a truly 
closed system requires that certain records and inventories be kept by 
all registrants who either generate or take custody of controlled 
substances in any phase of the distribution chain until they reach the 
ultimate user. Satinder Dang, M.D., 76 FR 51,424, 51,429 (2011) 
(``Recordkeeping is one of the central features of the CSA's closed 
system of distribution.'') (internal citations omitted); Paul H. 
Volkman, 73 FR 30,630, 30,644 (2008), pet. for rev. denied 567 F.3d 
215, 224 (6th Cir. 2009) (``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.''). The OSC alleged that Respondent Pharmacy 
violated multiple federal laws related to the proper completion and 
maintenance of records. Specifically, the government alleged and 
established that Respondent Pharmacy did not properly document its 
inventories, did not properly complete multiple 222 Forms, failed to 
record the receipt date of Schedule III through V controlled 
substances, and failed to properly maintain invoices, records of 
returns, and other records. Supra Section II.D.1.
1. Inventory Documentation Failures
    With regard to Respondent Pharmacy's May 25, 2016 biennial 
inventory, the Government alleged that Respondent Pharmacy failed to 
record whether the inventory was conducted at the beginning or end of 
the business day, in violation of 21 CFR 1304.11(a) and (c). 21 CFR 
1304.11(c) requires respondents to ``take a new inventory of all stocks 
of controlled substances on hand at least every two years,'' and Sec.  
1304.11(a) provides that each biennial inventory ``be taken either as 
of opening of business or as of the close of business on the inventory 
date and it shall be indicated on the inventory.'' It is uncontroverted 
that Respondent Pharmacy failed to record on the May 25, 2016 biennial 
inventory, whether the inventory was conducted at the opening or 
closing of the business day. Supra Section II.D.1.a.
    Regarding both the May 25, 2016 biennial inventory and Respondent 
Pharmacy's October 24, 2017 inventory, the Government alleged that 
Respondent Pharmacy failed to separate

[[Page 40634]]

Schedule II controlled substances from Schedule III through V 
controlled substances in violation of 21 CFR 1304.04(h)(1). 21 CFR 
1304.04(h)(1) states that registered pharmacies must maintain 
``[i]nventories and records of all controlled substances listed in 
Schedule I and II . . . separately from all other records of the 
pharmacy.'' Here, it is uncontested that Respondent Pharmacy's May 25, 
2016 biennial inventory and its October 24, 2017 inventory both 
comingled Schedule II controlled substances such as hydrocodone with 
Schedule III-V controlled substances such as alprazolam and 
carisoprodol. Supra Section II.D.1.a.
    I find, therefore, that there is substantial record evidence that 
Respondent Pharmacy failed to properly prepare its inventory records 
and, therefore, violated 21 CFR 1304.04(h)(1) and 1304.11(a)&(c).
2. Improperly Completed 222 Forms
    Next, the Government alleges and I find that Respondent Pharmacy, 
as a purchaser of controlled substances, failed to properly complete 
and execute multiple 222 Forms. First, 21 CFR 1305.12(a) requires 
purchasers to prepare and execute 222 Forms. As I have already found, 
four of Respondent Pharmacy's 222 Forms did not include required 
information, such as the number of packages, size of package, and name 
of item. Supra Section II.D.1.b. Second, 21 CFR 1305.12(b) required 
Respondent Pharmacy to note at the bottom of the Form 222 ``[t]he 
number of lines completed.'' I have already found that the ``Last Line 
Completed'' section was left blank on one of the 222 Forms at issue. 
Supra Section II.D.1.b. Third, under 21 CFR 1305.12(c), Respondent 
Pharmacy was required to include the ``name and address of the supplier 
from whom the controlled substances are being ordered'' on the 222 
Forms, and I have found that information missing from one of the 222 
Forms at issue. 21 CFR 1305.12(c); supra Section II.D.1.b. Fourth, 21 
CFR 1305.12(d) provides that ``[e]ach DEA Form 222 must be signed and 
dated[,]'' and I have found that one of the 222 Forms at issue was not 
signed. Supra Section II.D.1.b.
    The Government also alleged, and I find, that Respondent Pharmacy 
violated 21 CFR 1305.13(e). Under 21 CFR 1305.13(e), Respondent 
Pharmacy was required to ``record on Copy 3 of the DEA Form 222 the 
number of commercial or bulk containers furnished on each item and the 
dates on which the containers are received by the purchaser.'' I have 
found that Respondent Pharmacy received controlled substances but 
failed to record the ``No. of Packages Received'' and ``Date Received'' 
sections corresponding to those controlled substances, on ten of the 
222 Forms at issue. Supra Section II.D.1.b.
    I find, therefore, that there is substantial record evidence that 
Respondent Pharmacy failed to properly complete and execute multiple 
222 Forms in violation of 21 CFR 1305.12 and 1305.13(e).
3. Failure To Maintain Record of Receipt Date
    The Government also alleged that Respondent Pharmacy violated 21 
CFR 1304.21(a) and (d) and 1304.22(a)(2)(iv) and (c) when it failed to 
record the date it received controlled substance shipments. Under 21 
CFR 1304.21(a), Respondent Pharmacy was required to maintain ``a 
complete and accurate record of each substance . . . received [or] 
sold, . . . and [of] returned mail-back package[s.]'' Under 21 CFR 
1304.21(d), Respondent Pharmacy was required to maintain a record of 
the date each controlled substance was received, sold, or returned. For 
the purposes of controlled substances on Schedules III-V, the received 
date is generally recorded on invoices or packing slips. See 21 CFR 
1304.21(d); see also Rene Casanova, M.D., 77 FR 58,150, 58,153 and 
58,161 (2012). 21 CFR 1304.22(c), which incorporates Sec.  
1304.22(a)(2)(iv) also requires that Respondent Pharmacy record the 
``date of and number of units and/or commercial containers in each 
acquisition to inventory.'' 21 CFR 1304.22(a)(2)(iv).
    I have already found that Respondent Pharmacy failed to record the 
receipt date for eight shipments of controlled substances on the 
accompanying shipment invoices or packing slips. Supra Section 
II.D.1.c. Respondent Pharmacy thus failed to comply with its obligation 
to maintain an accurate record of each controlled substance it received 
in violation of 21 CFR 1304.21(a) and (d) and 1304.22(a)(2)(iv) and 
(c).
4. Improper Maintenance of Records Including Invoices and Returns
    Also relevant to Factors Two and Four, Respondent Pharmacy is 
required to ``maintain, on a current basis, a complete and accurate 
record of each substance . . . received, sold, delivered, . . . or 
otherwise disposed of by [it], and each . . . unused and returned mail-
back package, except that no registrant shall be required to maintain a 
perpetual inventory.'' 21 CFR 1304.21(a). As previously discussed, 
Respondent Pharmacy's records related to the receipt of Schedule III-V 
controlled substances were generally recorded on invoices or packing 
slips which were maintained by the pharmacy. RFAAX 20-22, 24, 26-28; 21 
CFR 1304.21(d). Respondent Pharmacy kept records of controlled 
substances it sold or distributed in both electronic and handwritten 
prescription logs. RFAAX 16-19; 21 CFR 1304.22(c). DI declared that 
using Respondent Pharmacy's records, she ``conducted accountability 
audits that revealed that [Respondent Pharmacy] failed to keep complete 
and accurate records of controlled substances maintained.'' RFAAX 47, 
at 13; supra Section II.D.1.d. More specifically, the audit revealed 
that Respondent Pharmacy had surpluses and shortfalls of various 
controlled substances and demonstrated that not all ``controlled 
substances [were] accounted for in [Respondent Pharmacy's] records and 
physical inventory.'' RFAAX 47, at 14; supra Section II.D.1.d.
    In evaluating shortages under Factor Four, the Agency has held 
that, ``[w]hether the shortages are attributable to outright diversion 
by either pharmacy or store employees, theft, or the failure to 
maintain accurate records, does not matter.'' Ideal Pharmacy Care, 76 
FR at 51,416. As the Agency has explained, the ``inability to account 
for [a] significant number of dosage units creates a grave risk of 
diversion.'' Fred Samimi, 79 FR 18,698, 18,712 (2014). The Agency has 
also made it clear that it is not only concerned with shortages, but 
that overages are equally indicative that a pharmacy registrant has 
``failed to maintain complete and accurate records as required by the 
CSA.'' Superior Pharmacy, 81 FR at 31,341; see also Hills Pharmacy, 81 
FR at 49,843-45 (considering allegations of overages and shortages). In 
short, what matters to the public interest inquiry is the fact that 
Respondent could not account for a significant number of controlled 
substances by adequate documentation. Ideal Pharmacy Care, Inc., d/b/a 
Esplanade Pharmacy, 76 FR 51,415, 51,416 (2011).
    Here, the Government took the additional step of identifying in 
evidence some of the specific documentation that Respondent Pharmacy 
was not able to produce. DI ``cross-verified records maintained by 
[Respondent Pharmacy] ([RFAAX] 20-28) with those obtained from the 
various suppliers ([RFAAX] 29-32).'' Id. This effort established, as I 
found above, that Respondent Pharmacy failed to maintain invoices or 
perchance orders documenting the receipt of seven

[[Page 40635]]

Schedule III-V \22\ controlled substance orders. Supra Section 
II.D.1.d. I further found that Respondent Pharmacy failed to maintain a 
record of return. Id.
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    \22\ 21 CFR 1305.13(e) explicitly requires that the receipt date 
for Schedule II controlled substances be recorded on the Form 222 
order form. I do not see a requirement that an invoice containing 
only Schedule II controlled substances has to be maintained. Morning 
Star Pharmacy and Medical Supply 1, 85 FR 51,045, 51,049 (2020) 
(``In contrast to schedules III-V, pharmacies must record the date 
they receive schedule II substances on either the 222 Form or in 
CSOS, whichever was used to order the drugs--pharmacies are not 
required to also record the date of receipt for schedule II 
substances on the invoice.'').
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    In short, through both the audit which generally established that 
Respondent Pharmacy was missing records and through specifically 
identified missing records, I find that Respondent Pharmacy failed to 
comply with its obligation to maintain complete and accurate records in 
violation of 21 CFR 1304.21(a).

B. Factor Five

    Under Factor Five, the Administrator is authorized to consider 
``[s]uch other conduct which may threaten the public health and 
safety.'' 5 U.S.C. 823(f)(5). Although Factor Five is broad, DEA 
decisions have qualified its breadth by limiting the considerations 
made under that factor to those where there is ``a substantial 
relationship between the conduct and the CSA's purpose of preventing 
drug abuse and diversion.'' Zvi H. Perper, M.D., 77 FR 64,131, 64,141 
(2012) (citing Tony T. Bui, 75 FR 49,979, 49,988 (2010)). ``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 physician's registration is consistent with the 
public interest.'' Jerri Hassman, M.D., 75 FR 8194, 8236 (2010) 
(internal citations and quotations omitted); see also David A. Hoxie, 
M.D., v. Drug Enf't Admin., 419 F.3d 477, 483 (6th Cir. 2005). It is 
appropriate to consider lack of candor allegations under Factor Five 
when the alleged conduct raises a probable or possible threat to public 
safety. See e.g. Annicol Marrocco, M.D., 80 FR 28,695, 28,705 (2015) 
(analyzing under Factor Five the allegation that respondent's testimony 
regarding prescriptions issued to a particular individual, including 
prescriptions issued following a claim that the individual's pet monkey 
opened the bottle and threw the pills in the pool, lacked candor); Ajay 
S. Ahuja, M.D., 84 FR 5479, 5494-95 (2019) (analyzing under Factor Five 
allegations of an attempt to mislead DEA investigators, but declining 
to analyze a simple statement of opinion made by the respondent under 
factor five); Island Wholesale, Inc., 68 FR 17,406, 17,407 (2003) 
(analyzing under Factor Five the allegation that respondent provided a 
false customer list to DEA investigators). The Government alleged that 
Respondent Pharmacy's lack of candor is ``inconsistent with the public 
interest'' and constitutes ``other such conduct which may threaten the 
public health and safety.'' RFAA at 15 (citing 21 U.S.C. 823(f)(5)). I 
agree and find that Respondent's alleged lack of candor impeded a DEA 
investigation.
    The Respondent Pharmacy lacked candor with regard to the fraudulent 
prescriptions filled between May 25, 2018, and May 26, 2018. As I found 
above, Respondent Pharmacy took multiple steps to conceal its filling 
of prescriptions that it clearly knew or should have known were 
fraudulent. Supra Section II.D.2. Respondent Pharmacy initially 
provided a distribution log, omitting material portions of the 
requested timeframe, that supported the Pharmacy's narrative that it 
had not filled any prescriptions since DEA's prior inspection. Id. And 
then when the pharmacy's own records showed that prescriptions it 
should have known to be fraudulent were filled, Respondent Pharmacy 
attempted to contradict its records by saying that SI had taken the 
prescriptions and they were not filled. Id. There can be no question 
here that Respondent Pharmacy lacked candor.\23\ Further, lack of 
candor during a DEA investigation about filling fraudulent 
prescriptions constitutes a threat to the public health and safety.
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    \23\ I have found that the substantial evidence in the record 
shows that the Respondent Pharmacy's owner lacked candor when she 
told DI that the fraudulent prescriptions had not been filled (in 
effect finding that Respondent Pharmacy's records saying the 
prescriptions were filled were more reliable than the owner's 
representations). Supra, II.D.2. However, if arguendo Respondent 
Pharmacy did not actually fill the fraudulent prescriptions, then 
Respondent Pharmacy made a misrepresentation to the Texas PMP in 
reporting them as filled. Either way, Respondent Pharmacy lacked 
candor with regard to the filling (or not) of these fraudulent 
prescriptions.
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    Additionally, the OSC alleged that during the May 24, 2018 
inspection, Respondent Pharmacy falsely stated that all controlled 
substances had been identified when controlled substances were actually 
still hidden throughout the pharmacy. As I have found, PIC Kumenda 
informed DEA that she had counted all of the controlled substances in 
Respondent Pharmacy's inventory. Supra Section II.D.2. But when DEA 
identified discrepancies in the May 24, 2018 inventory, Ms. Barry 
stated that ``PIC Kumenda hides drugs in the pharmacy to avoid thefts, 
and instructed her to go back and find more drugs.'' Id. On multiple 
occasions thereafter, PIC Kumenda located more controlled substances 
throughout the pharmacy in sandwiches bags or wrapped up in wadded 
paper, represented to DEA that she had now identified all of Respondent 
Pharmacy's controlled substances. Id. However, she was still able to 
find more upon discovering that discrepancies remained. Id.
    ``[A] DEA registrant is obligated at all times to act in the public 
interest.'' Peter F. Kelly, D.P.M., 82 FR 28,676, 28,688 (2017). 
Respondent Pharmacy's layered efforts to conceal its filling of known 
fraudulent prescriptions and to physically hide controlled substances 
that were not immediately locatable for DEA's investigation actively 
impeded DEA's investigation. I find that Respondent Pharmacy impeded 
DEA's investigation and in doing so, threatened public health and 
safety.

C. Summary of the Public Interest Factors

    As found above, Respondent Pharmacy violated numerous federal 
record keeping requirements related to controlled substances and lacked 
candor. Thus, I conclude that Respondent Pharmacy has engaged in 
misconduct which supports the revocation of its registration. I 
therefore hold that the Government has established a prima facie case 
that Respondent Pharmacy's continued registration ``would be 
inconsistent with the public interest.'' 21 U.S.C. 823(f).

IV. Sanction

    Where, as here, the Government has met its prima facie burden of 
showing that the respondent's continued registration is inconsistent 
with the public interest, the burden shifts to the respondent to show 
why it can be entrusted with the responsibility carried by its 
registration. Garret Howard Smith, M.D., 83 FR 18,882, 18,910 (2018) 
(citing Samuel S. Jackson, 72 FR 23,848, 23,853 (2007)). DEA cases have 
repeatedly found that when a registrant has committed acts inconsistent 
with the public interest, ``the Respondent is required not only to 
accept responsibility for [the established] misconduct, but also to 
demonstrate what corrective measures [have been] undertaken to prevent 
the reoccurrence of similar acts.'' Holiday CVS, 77 FR at 62,339 
(internal quotations omitted). See, also, Hoxie v. Drug Enf't Admin., 
419 F.3d 477, 483 (6th Cir. 2005); Ronald Lynch, M.D., 75 FR 78,745, 
78,749, 78,754 (2010) (holding that

[[Page 40636]]

respondent's attempts to minimize misconduct undermined acceptance of 
responsibility); Medicine Shoppe-Jonesborough, 73 FR 364, 387 (2008) 
(noting that the respondent did not acknowledge recordkeeping problems, 
let alone more serious violations of federal law, and concluding that 
revocation was warranted).
    The issue of trust is necessarily a fact-dependent determination 
based on the circumstances presented by the individual respondent; 
therefore, the Agency looks at factors, such as the acceptance of 
responsibility and the credibility of that acceptance as it relates to 
the probability of repeat violations. Jeffrey Stein, M.D., 84 FR 
46,968, 46,972 (2019). A registrant's candor during the investigation 
and hearing is an important factor in determining acceptance of 
responsibility and the appropriate sanction, Garret Howard Smith, M.D., 
83 FR at 18,910 (collecting cases); as is whether the registrant's 
acceptance of responsibility is unequivocal, Lon F. Alexander, M.D., 82 
FR 49,704, 49,728 (2017) (collecting cases). In determining whether and 
to what extent a sanction is appropriate, consideration must be given 
to both the egregiousness of the offense established by the 
Government's evidence and the Agency's interest in both specific and 
general deterrence. Wesley Pope, 82 FR 14,944, 14,985 (2017) (citing 
Joseph Gaudio, 74 FR 10,083, 10,095 (2009)); David A. Ruben, M.D., 78 
FR 38,363, 38,364 (2013). Cf. McCarthy v. SEC, 406 F.3d 179, 188-89 (2d 
Cir. 2005) (upholding SEC's express adoption of ``deterrence, both 
specific and general as a component in analyzing the remedial efficacy 
of sanctions.'').
    Here, Respondent Pharmacy has presented no evidence on the record 
that I could consider as accepting responsibility. I have considered 
the written response, which denies any misconduct, stating multiple 
times that it ``would be impossible'' for ``the medications [to be] 
short of the original count[s],'' and asserting that ``we were far from 
deceit when we talked to [DEA].'' RFAAX 3, at 2-3. The written response 
further seems to pass blame for the findings of violations against 
Respondent Pharmacy onto the DEA--claiming that DEA ``raided the 
pharmacy,'' on a ``witch hunt waged against [Respondent] Pharmacy'' 
arising from ``hatred toward the owner.'' Id. at 2. It is clear from 
the written response that Respondent Pharmacy has not accepted 
responsibility for its actions.
    I have also considered the proposed Corrective Action Plan that the 
Government submitted into the record. RFAAX 4. The proposed Corrective 
Action Plan does not include any acceptance of responsibility; rather 
it proposes policies that essentially mirror the requirements already 
existing in law. Id. Even if I were to consider remedial measures, in 
spite of Respondent Pharmacy's complete lack of acceptance of 
responsibility, these proposed remedial measures are insufficient to 
convince me to entrust Respondent Pharmacy with a registration. 21 
U.S.C. 824(c)(3); see also Melanie Baker, N.P., 86 FR 23,998, 24,011 
(2021) (citing Jones Total Health Care Pharmacy, L.L.C., 81 FR 79,188, 
79,202-03 2016).
    Moreover, Respondent Pharmacy's found lack of candor during the 
investigation demonstrates an unwillingness to cooperate with this 
agency in future compliance inspections. Truthful cooperation with 
agency requests for information ensures that agency officials can 
easily monitor and ensure compliance with the CSA and help to correct 
violations. See Jeffrey Stein, M.D., 84 FR 46,968, 46,973 (2019) 
(finding that a registrant's honesty during law enforcement regulations 
is ``crucial to the Agency's ability to complete its mission of 
preventing diversion within such a large regulated population''). In 
order to entrust Respondent Pharmacy with a registration, I need to 
know that its personnel will not repeat their dishonest behavior, and 
in this case, Respondent Pharmacy has given me no reason to believe 
that I can trust it with a registration.
    In sanction determinations, the Agency has historically considered 
its interest in deterring similar acts, both with respect to the 
respondent in a particular case and the community of registrants. See 
Joseph Gaudio, M.D., 74 FR 10,083, 10,095 (2009); Singh, 81 FR at 8248. 
I find that considerations of both specific and general deterrence 
weigh in favor of revocation in this case. There is simply no evidence 
that Respondent Pharmacy's egregious behavior is not likely to recur in 
the future such that I can entrust it with a CSA registration; in other 
words, the factors weigh in favor of revocation as a sanction. 
Accordingly, I shall order the sanctions the Government requested, as 
contained in the Order below.
Order
    Pursuant to 28 CFR 0.100(b) and the authority vested in me by 21 
U.S.C. 824(a), I hereby revoke DEA Certificate of Registration 
FL4375730 issued to Creekbend Community Pharmacy. Further, pursuant to 
28 CFR 0.100(b) and the authority vested in me by 21 U.S.C. 823(f), I 
hereby deny any pending application of Creekbend Community Pharmacy to 
renew or modify this registration. This order is effective August 27, 
2021.

Anne Milgram,
Administrator.
[FR Doc. 2021-16000 Filed 7-27-21; 8:45 am]
BILLING CODE 4410-09-P