Jones Total Health Care Pharmacy, LLC v. Drug Enforcement Administration ( 2018 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-17346
Non-Argument Calendar
________________________
Agency No. 15-2
JONES TOTAL HEALTH CARE PHARMACY, LLC,
SND HEALTHCARE, LLC,
Petitioners,
versus
DRUG ENFORCEMENT ADMINISTRATION,
Respondent.
________________________
Petition for Review of a Decision of the
Drug Enforcement Agency
________________________
(January 29, 2018)
Before MARTIN, ROSENBAUM, and ANDERSON, Circuit Judges.
PER CURIAM:
Before this Court is a petition for review of a final order of the United States
Drug Enforcement Administration (“DEA”) revoking Jones Total Health Care
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Pharmacy, LLC’s (“Jones Pharmacy”) certificate of registration under the
Controlled Substances Act (“CSA”) to dispense controlled substances and denying
SND Healthcare, LLC’s (“SND Healthcare”) application for a certificate of
registration to dispense controlled substances. The DEA Acting Administrator
revoked Jones Pharmacy’s registration after determining that it unlawfully
dispensed controlled substances and that Cherese Jones, the pharmacy’s owner and
operator, failed to accept full responsibility for the misconduct. Because Jones
also owned and operated SND Healthcare, the Acting Administrator denied SND
Healthcare’s pending application for the same reasons. Jones Pharmacy and SND
Healthcare (“Petitioners”) then filed this petition for review, arguing that the
DEA’s decision is arbitrary and capricious. We disagree, so we deny the petition
for review.
I.
Jones Pharmacy is a community pharmacy started by Jones in Fort
Lauderdale. Jones graduated from Texas A&M University with a Doctor of
Pharmacy degree in 2000 and worked in clinical and retail pharmacy positions
before opening Jones Pharmacy in February 2010.
Jones Pharmacy was registered with the DEA to dispense substances
controlled by the CSA, 21 U.S.C. § 801, et seq. In 2013, Jones sought to open
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SND Healthcare and submitted an application for registration to dispense
controlled substances through that entity.
The CSA creates “a closed regulatory system making it unlawful to
manufacture, distribute, dispense, or possess any controlled substance except in a
manner authorized by the CSA.” See Gonzales v. Raich, 545 U.S. 1, 13 (2005).
Pharmacies that dispense prescription medications that are controlled substances
are required to obtain proper registration from the Attorney General. See 21
U.S.C. §§ 822(a), 823(f); Gonzales v. Oregon, 546 U.S. 243, 250–51 (2006).
Under the CSA, the responsibility for the proper prescribing and dispensing of
controlled substances, which must be for “a legitimate medical purpose,” is on the
prescribing practitioner, “but a corresponding responsibility rests with the
pharmacist who fills the prescription.” 21 C.F.R. § 1306.04(a). Thus, pharmacists
have a “corresponding responsibility” to refuse to fill prescriptions that are not
issued for a legitimate medical purpose. See id.The Attorney General has the authority to deny, revoke, or suspend
registrations. See 21 U.S.C. §§ 823(f), 824(a). The Attorney General has
delegated this authority to the DEA. See United States v. Lippner, 676 F.2d 456,
460 (11th Cir. 1982) (holding that the functions vested in the Attorney General by
the Comprehensive Drug Abuse Prevention Act were properly delegated to the
DEA). When an existing registration is proposed for revocation, the DEA must
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serve an “order to show cause” on the registrant and give the registrant an
opportunity for a hearing before an Administrative Law Judge (“ALJ”) in order to
contest the proposed action. See 21 U.S.C. § 824(c).
On October 6, 2014, the DEA issued an order to show cause proposing to
revoke Jones Pharmacy’s existing registration and to deny SND Healthcare’s
application for registration. In the order, the DEA alleged that, from February
2010 to July 2012, Jones Pharmacy “repeatedly failed to ensure that it filled only
prescriptions issued for legitimate medical purposes within the usual course of
professional practice.” Jones Pharmacy, according to the order, repeatedly ignored
“obvious and unresolvable red flags of diversion.” The order also alleged record-
keeping violations. According to the order, Jones Pharmacy’s practices warranted
denial of SND Healthcare’s application because Jones was the owner and operator
of both entities and they were one integrated enterprise.
Petitioners requested a hearing, which was held before an ALJ in March
2015. At the hearing, the ALJ heard testimony from several persons, including
Domingo Gonzales (a DEA diversion investigator), Mary Crane (a Pharmacy
Inspector for the Florida Department of Health), Dr. Tracy Gordon (the
government’s expert), Donna Horn (Jones Pharmacy’s expert), and Jones.
After the hearing, the ALJ issued her findings of fact, conclusions of law,
and recommendations that the DEA Acting Administrator revoke Jones
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Pharmacy’s registration and deny SND Healthcare’s application for registration.
The ALJ credited the testimony of Gordon, who reviewed over one-hundred
prescriptions filled by Jones Pharmacy between February 2010 and July 2012 and
found that they had one or more “red flags”—indicia that the prescriptions were
not issued for a legitimate medical purpose—and should not have been filled.
According to Gordon, these red flags included the following: (1) individuals
traveling long distances to fill prescriptions; (2) prescriptions for drug “cocktails,”
known for their abuse potential, such as oxycodone and Xanax; (3) individuals
who arrived together with identical or nearly identical prescriptions; (4) purported
pain patients with prescriptions for immediate-release rather than long-acting
narcotics; (5) cash purchases; and (6) doctors prescribing outside the scope of their
usual practice. The ALJ credited Gordon’s testimony that many of these red flags
could not have been resolved by the pharmacists. Accordingly, the ALJ
determined that Jones Pharmacy violated its “corresponding responsibility” by
filling controlled-substances prescriptions with unresolved red flags.
Crediting Gonzales’s testimony and other evidence submitted by the
government, the ALJ also found additional indicators that Jones Pharmacy
dispensed controlled substances unlawfully. The ALJ cited statistics showing that,
from February 2010 to July 2012, Jones Pharmacy’s business was based primarily
on sales of controlled substances. In addition, of the more than 3,000 controlled-
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substance prescriptions filled, 99% were for immediate-release drugs, 89% were
for “cocktail” drugs, and 93% were paid for in cash. The ALJ noted that these
statistics were “unusually high compared to national averages.” For instance,
according to a report from the IMS Institute of Healthcare Informatics, the national
average for cash sales between 2007 and 2011 was 6%. The ALJ also found that
Jones Pharmacy’s high markup on the price per pill—including 415 instances
where the markup on the price per pill was over 1,000%—combined with the high
rate of cash-based customers indicated diversion because “it elucidates a customer
base willing to pay exorbitant prices for a drug the customer could otherwise
purchase at a nearby pharmacy for much less.”
The ALJ rejected Petitioners’ contentions that Jones was unaware of the
concept of “red flags” and that she did not know or have reason to know that the
prescriptions filled by Jones Pharmacy were not written for a legitimate medical
purpose. The ALJ was unpersuaded by testimony offered by Jones Pharmacy’s
expert Horn, who stated that pharmacists were generally unaware of the concept of
red flags during the relevant time period. Instead, the ALJ credited the contrary
testimony of the government’s expert, Gordon, and concluded that “the concept of
red flags has long been recognized as a reflection of the norms of the pharmacy
profession,” so Jones Pharmacy’s purported ignorance was not a credible defense.
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Having found that the government met its burden of establishing a prima
facie case that revocation of Jones Pharmacy’s registration was in the public
interest, the ALJ then addressed whether Jones Pharmacy put forward sufficient
evidence to show that it could be trusted with a registration going forward. The
ALJ explained that a registrant must establish two things to rebut the government’s
prima facie face: (1) full acceptance of responsibility and (2) remedial measures so
that such violations will not happen in the future. Based on Jones’s testimony at
the hearing, the ALJ determined that she had not fully accepted responsibility for
Jones Pharmacy’s unlawful dispensing of controlled substances. Citing agency
precedent holding that acceptance of responsibility is an independent and essential
requirement for rebutting the government’s prima facie case, the ALJ declined to
address Jones Pharmacy’s remedial efforts. See, e.g., Holiday CVS, L.L.C., 77 Fed.
Reg. 62316, 62323, 2012 WL 4832770 (Oct. 12, 2012).
Petitioners filed exceptions in May 2015, which the Acting Administrator
overruled in a 54-page final order issued on October 31, 2016. Addressing and
rejecting many of the arguments we are faced with here, and which we address in
more detail below, the Acting Administrator adopted the ALJ’s recommendations.
This petition for review followed. See 21 U.S.C. § 877.
II.
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We may set aside the Acting Administrator’s final decision if it is “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with the law.” 5
U.S.C. § 706(2)(A). “The arbitrary and capricious standard is exceedingly
deferential.” Defs. of Wildlife v. U.S. Dep’t of Navy, 733 F.3d 1106, 1115 (11th
Cir. 2013) (internal quotation marks omitted). We may not substitute our
judgment for that of the agency so long as its conclusions are rational and based on
the evidence before it. Miccosukee Tribe of Indians of Fla. v. United States, 566
F.3d 1257, 1264 (11th Cir. 2009). Nevertheless, we may set aside a decision as
“arbitrary and capricious when, among other flaws, the agency has relied on
factors which Congress has not intended it to consider, entirely failed to consider
an important aspect of the problem, [or] offered an explanation for its decision that
runs counter to the evidence before the agency.” High Point, LLLP v. Nat’l Park
Serv., 850 F.3d 1185, 1193–94 (11th Cir. 2017) (internal quotation marks omitted).
The Acting Administrator’s factual findings are conclusive if supported by
substantial evidence. 21 U.S.C. § 877. Substantial evidence is less than a
preponderance of the evidence, but rather such relevant evidence as a reasonable
person would accept as adequate to support a conclusion. Consolo v. Fed. Mar.
Comm’n, 383 U.S. 607, 619–90 (1966). An administrative agency’s finding is
supported by substantial evidence even if “two inconsistent conclusions [could be
drawn] from the evidence.” Id.8
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III.
The DEA may revoke registration to dispense controlled substances upon a
finding that the registrant “has committed such acts as would render his
registration . . . inconsistent with the public interest.” 21 U.S.C. § 824(a)(4).
Likewise, the DEA may deny registration to dispense controlled substances if such
registration is “inconsistent with the public interest.” 21 U.S.C. § 823(f).
Section 823 lists five factors that “shall be considered” in determining the
public interest. 21 U.S.C. § 823(f). These factors include “[t]he applicant’s
experience in dispensing, or conducting research with respect to controlled
substances,” as well as “[c]ompliance with applicable State, Federal, or local laws
relating to controlled substances.” Id. § 823(f)(2), (4).1 The Acting
“Administrator must consider each factor, though he need not make explicit
findings as to each one and can give each factor the weight [he] determines is
1
In full, the statute directs that the following five factors shall be considered in
determining the public interest:
(1) The recommendation of the appropriate State licensing board or professional
disciplinary authority.
(2) The applicant’s experience in dispensing, or conducting research with respect
to controlled substances.
(3) The applicant’s conviction record under Federal or State laws relating to the
manufacture, distribution, or dispensing of controlled substances.
(4) Compliance with applicable State, Federal, or local laws relating to controlled
substances.
(5) Such other conduct which may threaten the public health and safety.
21 U.S.C. § 823(f).
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appropriate.” Akhtar-Zaidi v. Drug Enf’t Admin., 841 F.3d 707, 711 (6th Cir.
2016).
The government bears the initial burden of proving that registration is
inconsistent with the public interest. 21 C.F.R. § 1301.44(d), (e). If the
government proves its prima facie case, the burden of proof shifts to the registrant
to show why it can be trusted with a registration. Morall v. Drug Enf’t Admin.,
412 F.3d 165, 174 (D.C. Cir. 2005).
Here, Petitioners do not dispute that the government met its initial burden of
proving that Jones Pharmacy’s registration was inconsistent with the public
interest. The record supports the agency’s determination that Jones Pharmacy
unlawfully filled numerous controlled substance prescriptions that were not issued
for a legitimate medical purpose. See 21 C.F.R. § 1306.04(a). As discussed above,
the evidence showed that Jones Pharmacy from February 2010 through July 2012
filled over one-hundred prescriptions that had at least one red flag that Jones
Pharmacy did not attempt to resolve and that could not have been resolved. The
government also put forward other substantial evidence indicating that the
controlled substances dispensed by Jones Pharmacy were being diverted for
improper use. Accordingly, the agency reasonably determined that revocation of
Jones Pharmacy’s registration was in the public interest because of Jones
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Pharmacy’s failure to comply with federal laws relating to controlled substances.
See 21 U.S.C. § 823(f)(4).
Petitioners instead challenge as arbitrary and capricious the DEA’s
determination that Jones Pharmacy did not prove that it could be trusted with a
registration notwithstanding the prior misconduct. In particular, Petitioners argue
that the agency’s finding that Jones, the owner and operator of Jones Pharmacy,
did not credibly accept full responsibility is fatally flawed for a number of reasons.
The agency, according to Petitioners, misconstrued Jones’s testimony, relied too
heavily on the severity of the misconduct, and unreasonably refused to consider the
remedial measures Jones Pharmacy put in place after the time period at issue.
Petitioners also contend that the agency’s choice of the most severe sanction—
revocation—was inconsistent with prior agency decisions that either suspended or
continued registrations despite more egregious misconduct.
We address Petitioners’ arguments in three parts. First, we conclude that
substantial evidence supports the agency’s determination that Jones did not
credibly accept full responsibility. Second, we hold that the agency’s refusal to
consider Jones Pharmacy’s remedial measures does not render its decision
arbitrary or capricious in the circumstances of this case. Finally, we find that the
chosen sanction was not arbitrary or capricious.
A. Acceptance of Responsibility
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At the outset, we agree with the other circuits that have addressed this issue
that the DEA may properly consider a registrant’s acceptance of responsibility in
determining if registration should be revoked. See MacKay v. Drug Enf’t Admin.,
664 F.3d 808, 820 (10th Cir. 2011) (“The DEA may properly consider whether a
physician admits fault in determining if the physician’s registration should be
revoked.”); Hoxie v. Drug Enf’t Admin., 419 F.3d 477, 483 (6th Cir. 2005) (“The
DEA properly considers the candor of the physician and his forthrightness in
assisting in the investigation and admitting fault important factors in determining
whether the physician’s registration should be revoked.”). If a pharmacy has failed
to comply with its responsibilities in the past, it makes sense for the agency to
consider whether the pharmacy will change its behavior in the future. MacKay,
664 F.3d at 820; Alfa Labs., Inc. v. Drug Enf’t Admin., 54 F.3d 450, 452 (7th Cir.
1995) (“An agency rationally may conclude that past performance is the best
predictor of future performance.”). “[T]hat consideration is vital to whether
continued registration is in the public interest.” MacKay, 664 F.3d at 820.
Turning to the facts at hand, substantial evidence supports the DEA’s
determination that Jones did not fully accept responsibility for Jones Pharmacy’s
unlawful dispensing practices. The ALJ, who heard Jones testify in person and
was therefore in the best position to assess Jones’s credibility, extensively
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reviewed Jones’s testimony and found her admission of fault to be equivocal at
best. In relevant part, the ALJ summarized Jones’s testimony as follows:
Ms. Jones claimed that she was following her corresponding
responsibility [to fill only legitimate prescriptions] as she understood
it from 2010–2012 when over a hundred prescriptions that were
presented with multiple unresolved red flags were dispensed at Jones
Pharmacy. Ms. Jones purported to accept responsibility for Jones
Pharmacy’s dispensing practices by repeatedly asserting that she did
what she knew at the time, but now she knows she could have done
more.
The ALJ found, however, that Jones made other statements that
demonstrated she “does not fully understand her corresponding responsibility even
yet today.” For example, Jones indicated on cross-examination that she did not
understand that the law required her to make sure that prescriptions were issued for
legitimate medical purposes before filling them. And, significantly, she did not
admit that Jones Pharmacy’s past dispensing practices failed to comply with its
legal obligations. Thus, the ALJ concluded that Jones did not accept responsibility
and that her claimed ignorance about her legal responsibilities, particularly her
continued lack of understanding of those responsibilities, was no excuse. The
Acting Administrator agreed with the ALJ’s findings after conducting his own
review of Jones’s testimony.
Petitioners maintain that the agency’s assessment of whether Jones accepted
responsibility is fatally flawed for a number of reasons. They insist that Jones
accepted responsibility by acknowledging and correcting her mistakes, and that the
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ALJ’s interpretation of her testimony was strained and unreasonable. The ALJ,
according to Petitioners, failed to properly consider Jones’s explanation that her
misunderstanding of her responsibilities was based in part on what she learned
while working at other pharmacies earlier in her career. Petitioners also contend
that the ALJ, by drawing a negative inference from Jones’s attempt to explain why
she failed to comply with her corresponding responsibility in the past, imposed a
test for acceptance of responsibility “that can only be met by the most blatant
offenders” who knowingly violate their responsibilities.
Petitioners’ arguments are unpersuasive. To begin with, both the ALJ and
the Acting Administrator considered Jones’s explanation of her conduct and
reasonably concluded that her purported confusion or ignorance was not a valid
excuse. Jones believed that it was the prescribing physician’s responsibility to
issue medically legitimate prescriptions. That may be true, but as a pharmacist
registered with the DEA, Jones had a “corresponding responsibility” not to fill
prescriptions that were not issued for a medically legitimate purpose. 21 C.F.R.
§ 1306.04(a). The “corresponding responsibility” rule is not new, see United
States v. Hayes, 595 F.2d 258, 261 & n.6 (5th Cir. 1979) (holding that pharmacists
have an obligation “not to fill an order that purports to be a prescription but is not a
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prescription within the meaning of the statute”),2 nor is it unreasonable for the
DEA to expect a pharmacist entrusted with dispensing highly regulated, addictive,
and potentially destructive substances to fully understand her obligations under the
law, regardless of prior work experience.
Moreover, the ALJ credited the government’s evidence that a pharmacist
who exercised her corresponding responsibility would not have filled the
prescriptions that Jones Pharmacy did from February 2010 to July 2012. The
government’s evidence reflected that Jones Pharmacy from February 2010 to July
2012 filled at least one-hundred prescriptions with one or more unresolved red
flags. In addition, Jones Pharmacy’s business during that time was based
substantially on immediate-release “cocktail” pain medications purchased with
cash at a high markup on the price per pill.
As the Acting Administrator stated, however, “notwithstanding the obvious
and compelling evidence that the prescriptions lacked a legitimate medical
purpose, [Jones] continued to deny that the prescriptions were unlawfully
dispensed.” To be sure, Jones indicated in her testimony that she was naïve, made
mistakes, and could and should have done “more digging” to verify prescriptions.
But Petitioners have not identified any clear admission by Jones—regardless of
whether she acted knowingly or not—that she understood Jones Pharmacy violated
2
This Court adopted as binding precedent all Fifth Circuit decisions prior to October 1,
1981. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc).
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its obligations under the CSA. Instead, Jones reiterated her belief that Jones
Pharmacy was fulfilling its responsibilities as she understood them at the time.
Jones’s refusal to admit that Jones Pharmacy’s dispensing practices violated
its obligations under federal law reflects that she did not “recognize[] the extent of
[the] misconduct.” MacKay, 664 F.3d at 820. It also supports the factual finding,
critical to both the ALJ’s and the Acting Administrator’s decisions, that Jones did
not fully understand her legal obligations as a pharmacist.
Nor was the finding that Jones did not fully understand her obligations under
21 C.F.R. § 1306.04(a) based on some strained interpretation of her testimony.
Jones’s statements at the hearing show that she continued to struggle with the idea
that pharmacists have an independent duty, apart from the prescribing physician, to
ensure that prescriptions are issued for medically legitimate purposes before filling
them. For instance, when asked on cross-examination whether she knew “one way
or another” if she had a corresponding responsibility, Jones answered, “I did not
know that the law said that I had to make sure that prescriptions said it was
legitimate, medically legitimate[,]” even “sitting here today.” And despite Jones’s
assertions to the contrary, pharmacists do not need to practice medicine or
independently examine a patient in order to determine in certain cases that a
prescription was not issued for a legitimate medical purpose. See Hayes, 595 F.2d
at 261 & n.6 (“[A] pharmacist can know that prescriptions are issued for no
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legitimate medical purpose without his needing to know anything about medical
science.”).
Finally, we reject Petitioners’ argument that the ALJ impermissibly required
Jones to admit to knowing misconduct in order to accept responsibility. For
starters, the record supports an inference of knowing misconduct, even though
Jones maintained that the misconduct was not intentional.3 More significantly,
however, Jones could have maintained that the misconduct was not intentional
while, at the same time, recognizing at the hearing that it nonetheless violated the
pharmacy’s obligations under the CSA. We do not know whether the agency
would have credited that testimony, of course, but it was reasonable for the agency
to conclude that her failure to clearly acknowledge even unintentional misconduct
demonstrated a lack of understanding of her legal obligations.
Because the record supports the Acting Administrator’s findings that Jones
did not acknowledge the prior misconduct and still did not understand the scope of
her responsibilities under the CSA, we conclude that the determination that Jones
did not fully accept responsibility for Jones Pharmacy’s misconduct was rational
and supported by substantial evidence. See Miccosukee Tribe, 566 F.3d at 1264;
Consolo, 383 U.S. at 619–90.
3
Indeed, the Acting Administrator determined that Jones Pharmacy’s “pharmacists
either knew or were willfully blind to the fact that the prescriptions were issued in violation of 21
C.F.R. § 1306.04(a).”
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B. Remedial Measures
We acknowledge that Jones Pharmacy appears to have implemented policies
to address the misconduct at issue here. According to Petitioners, these remedial
efforts are evidence that they can be trusted with registrations going forward, so it
was unreasonable for the DEA to ignore that evidence even if Jones did not
unequivocally admit fault.
Of course, corrective measures undertaken by a pharmacy are certainly
relevant to whether it can be trusted with a registration to dispense controlled
substances. At the same time, though, the DEA must have confidence that, if the
registration is continued, the pharmacy will faithfully comply with its obligations
under the CSA. See 21 U.S.C. § 823(f)(4); Holiday CVS, 77 Fed. Reg. at 62345–
46. If a pharmacy shows that it does not understand the extent of the past
misconduct or its current responsibilities under the law, the DEA rationally could
doubt that the pharmacy would faithfully comply in the future with its obligations
under the CSA.
Here, the DEA’s refusal to consider Jones Pharmacy’s remedial measures
does not render the decision to revoke its registration arbitrary and capricious. The
Acting Administrator explained that, based on the scope and duration of
misconduct, Jones’s failure to acknowledge that misconduct, and her testimony
that she still does not understand the scope of a pharmacist’s obligations under the
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CSA, he had no confidence that either entity owned or operated by Jones (Jones
Pharmacy and SND Healthcare) would faithfully comply with the CSA. 4 We
conclude that the Acting Administrator’s determination was rational and supported
by substantial evidence in the record. See Miccosukee Tribe, 566 F.3d at 1264.
Accordingly, the Acting Administrator’s decision to revoke Jones Pharmacy’s
registration as inconsistent with the public interest was not arbitrary, capricious, or
an abuse of discretion.
C. Choice of Sanction
Petitioners contend that the Acting Administrator unreasonably
recommended the severe sanction of revocation when the DEA has imposed lesser
sanctions under equal or more egregious circumstances. We disagree.
Under the APA, the agency’s “choice of sanction is entitled to substantial
deference.” MacKay, 664 F.3d at 820. It is not to be overturned unless it is
“unwarranted in law or without justification in fact.” Butz v. Glover Livestock
Comm’n Co., Inc., 411 U.S. 182, 186 (1973) (internal quotation marks omitted);
MacKay, 664 F.3d at 820; Morall, 412 F.3d at 181. Where, as here, Congress
intended to grant the agency significant discretion, “mere unevenness in the
application of the sanction does not render its application in a particular case
4
We also note that the Acting Administrator found that, even if Jones had credibly
accepted full responsibility, he still would have revoked Jones Pharmacy’s registration because
the “proven misconduct [was] so extensive and egregious.”
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‘unwarranted in law.’” Butz, 411 U.S. at 186; see 21 U.S.C. § 823(f) (directing the
DEA to make registration decisions based on the “public interest”). The agency’s
sanction may be set aside, however, if it represents a “flagrant departure” from
agency policy and practice. See Chein v. Drug Enf’t. Admin., 533 F.3d 828, 835
(D.C. Cir. 2008).
Here, Petitioners have not shown that the agency’s choice of sanction was
unwarranted in law or without justification in fact. The DEA decisions Petitioners
rely on are distinguishable because, in each of the decisions, the agency found that
the registrant had rebutted the government’s case by, among other things,
admitting fault or expressing remorse. The general pattern of the cited decisions is
that a physician engaged in misconduct attributable in part to alcoholism or drug
abuse, sought treatment, did not engage in other misconduct since obtaining
treatment, and expressed remorse or otherwise accepted responsibility for the
misconduct. See Karen A. Kruger, M.D., 69 Fed. Reg. 7016, 7017–18, 2004 WL
250335 (Feb. 12, 2004); Theodore Neujahr, D.V.M., 65 Fed. Reg. 5680, 5682,
2000 WL 126521 (Feb. 4, 2000); Jimmy H. Conway, Jr., M.D., 64 Fed. Reg.
32271, 32274, 1999 WL 389996 (June 16, 1999); Robert G. Hallermeier, M.D., 62
Fed. Reg. 26818, 26821, 1997 WL 249912 (May 15, 1997).
Petitioners focus on the past misconduct in these cases, but they do not cite
any decision in which the DEA has continued a registration despite finding that the
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registrant did not fully accept responsibility. Because substantial evidence
supports the DEA’s finding that Jones did not accept responsibility for the
misconduct in this case, Petitioners have not shown that the agency’s choice of
sanction represented a flagrant departure from prior practice. See Chein, 533 F.3d
at 835. Therefore, the agency’s decision to revoke Jones Pharmacy’s registration
was not arbitrary or capricious.
IV.
Finally, Petitioners argue that the ALJ violated their due-process rights by
denying discovery of a report prepared by the government’s expert, Tracy Gordon.
Petitioners contend that, without the report, they were unable to challenge the
expert’s credibility and the basis of her opinions.
As a general matter, a party’s entitlement to discovery in an administrative
proceeding is governed by the agency’s own rules. See, e.g., McClelland v.
Andrus, 606 F.2d 1278, 1285 (D.C. Cir. 1979). Nevertheless, the agency is bound
to ensure that its procedures meet basic due process requirements. Id. at 1285–86.
“Therefore, discovery must be granted if in the particular situation a refusal to do
so would so prejudice a party as to deny him due process.” Id. at 1286.
The Acting Administrator found that Petitioners were not prejudiced because
they were “fully apprised of the Government’s theory of the case and the evidence
it intended to rely on and [they] had ample opportunity to prepare a defense.” The
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Acting Administrator further noted that the report was not offered as evidence and
that Petitioners were able to fully cross-examine the expert about her testimony
and the basis of her opinions at the hearing. Finding Petitioners’ claim of prejudice
purely speculative, the Acting Administrator concluded that the ALJ properly
denied discovery of the expert’s report.
Here, we agree with the Acting Administrator that Petitioners have not
shown prejudice flowing from the denial of discovery of the expert report.
Petitioners claim that they needed the report because it “formed the basis of the
DEA’s case,” but as the Acting Administrator found, Petitioners were fully
informed of the government’s theory of the case and the evidence that it intended
to rely on. Any suggestion that they were unable to dispute the government
expert’s findings or her credibility is purely speculative. Accordingly, the agency
did not violate Petitioners’ due-process rights by denying discovery of the expert’s
report.
V.
For the reasons stated, the DEA Acting Administrator’s decision to revoke
Jones Pharmacy’s registration to dispense controlled substance was not “arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with the law.”
See 5 U.S.C. § 706(2)(A). The factual findings underlying that decision were
supported by substantial evidence, and Petitioners have demonstrated no fatal flaw
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Case: 16-17346 Date Filed: 01/29/2018 Page: 23 of 23
in the proceedings or reasoning leading to the revocation decision. See High Point,
850 F.3d at 1193–94. Finally, Petitioners do not challenge the DEA’s
determination that Jones Pharmacy’s practices are an appropriate basis to deny
SND Healthcare’s application for registration. Accordingly, we deny Petitioners’
petition for review.
PETITION DENIED.
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