Tue Ngoc Hoang v. California State Board of Pharmacy , 230 Cal. App. 4th 448 ( 2014 )

Filed 9/12/14 Certified for publication 10/8/14 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
TUE NGOC HOANG,
Plaintiff and Appellant, G049275
v. (Super. Ct. No. 30-2013-00653422)
CALIFORNIA STATE BOARD OF OPINION
PHARMACY,
Defendant and Respondent.
Appeal from a judgment of the Superior Court of Orange County, Kirk H.
Nakamura, Judge. Affirmed.
The Amin Law Group, Ismail Amin, Saehwa Kang, and Katherine J.
Vescera for Plaintiff and Appellant.
Kamala D. Harris, Attorney General, Alfredo Terrazas, Assistant Attorney
General, Linda K. Schneider and Marichelle S. Tahimic, Deputy Attorneys General, for
Defendant and Respondent.
Plaintiff Tue Ngoc Hoang, a pharmacist doing business as Orange
Pharmacy (Orange), appeals from a judgment denying his petition for a writ of mandate.
The petition sought to overturn a decision by defendant California State Board of
Pharmacy revoking plaintiff’s pharmacy license and Orange’s permit to operate a
pharmacy. Plaintiff argues defendant’s decision was unduly harsh, not supported by the
findings, and denied him due process. We disagree and affirm the judgment.
FACTS AND PROCEDURAL BACKGROUND
Plaintiff held a pharmacy license issued by defendant and was doing
business as Orange under a permit defendant issued to it. As Orange’s pharmacist-in-
charge, plaintiff was responsible for the pharmacy’s compliance with the laws and
regulations concerned with the operation of the business. (Bus. & Prof. Code, § 4113,
subd. (c).)
In November 2007, defendant filed an “Accusation,” seeking to discipline
plaintiff. The Accusation contained five counts. Four related to alleged unlawful and
improperly documented drug transfers with another pharmacy.
A fifth count alleged plaintiff had engaged in dishonest, fraudulent or
deceitful conduct. The Accusation alleged that during 2005 and 2006, Orange was not
authorized to receive payments from CalOptima, an entity administering Medi-Cal
benefits in Orange County, for filling qualified patients’ drug prescriptions. Orange
nonetheless unlawfully received nearly $150,000 in CalOptima payments through a
covert arrangement with another pharmacy named Pacific Pharmacy (Pacific).
An administrative law judge (ALJ) conducted a three-day hearing on the
Accusation. Plaintiff appeared through counsel, but did not personally attend the hearing.
The ALJ issued a proposed decision finding the unlawful drug transfer and
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documentation allegations unsupported by the evidence, but that Orange engaged in
“dishonest conduct” concerning CalOptima payments for which plaintiff was “personally
responsible.”
The ALJ’s decision cited the following evidence in support of the finding
of dishonesty and fraud. Prior to 2005, plaintiff had a contract with the pharmacy
benefits manager (PBM) that processed prescription drug claims for patients covered by
CalOptima. That year CalOptima imposed a new condition, which required each
pharmacy contracting with its PBM to permit on-site reviews of its operations as part of a
fraud prevention program.
Pacific agreed to the new on-site review condition, but plaintiff objected to
it and refused to renew his contract with CalOptima’s PBM. In April, CalOptima notified
plaintiff that it had terminated Orange’s authorization to seek payment for filling its
patients’ drug prescriptions.
To retain the patronage of Orange’s Medi-Cal patients, plaintiff entered into
a surreptitious arrangement with Que Buu, Pacific’s pharmacist in charge, whereby
Orange used Pacific’s billing authority to obtain payment for filling the drug
prescriptions of persons covered by CalOptima. Under the arrangement, Orange created
a set of labels containing its name, address, and phone number for each CalOptima-
qualified patient for whom it filled a prescription. Orange sent Pacific a record of having
filled the prescription and Pacific then created a duplicate set of prescription labels for the
same patients. Using its label, Pacific applied to CalOptima’s PBM for payment, thereby
representing to the PBM that it had filled the prescription. Upon receiving payment from
CalOptima for the drug prescriptions actually filled by Orange, Pacific then funneled the
money to Orange. Both pharmacies maintained records of the prescriptions Orange sent
to Pacific for collection, the reimbursements Pacific received from the PBM, and the
payments Pacific made to Orange. To foster an appearance of legitimacy for this
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arrangement, Orange and Pacific also created documents such as refill pharmacy
contracts, purchased and borrowed logs, returned to stock memoranda, and labels that
incorrectly stated that prescriptions had been transferred.
At the hearing, defendant presented evidence that, between July and
December 2005, payments from CalOptima’s PBM to Pacific increased from
approximately $43,000 to over $73,000. One of defendant’s inspectors estimated 38
percent of Pacific’s reimbursements from CalOptima between August 2005 and
November 2006 were for Orange-filled prescriptions. He prepared a tabulation of
invoices Orange had provided to Pacific for billing CalOptima that totaled over $149,000.
During a September 2006 inspection of Pacific, one of defendant’s
inspectors discovered a log for Orange’s prescriptions. Buu acknowledged the existence
and purpose of the arrangement between Orange and Pacific. Subsequently, defendant’s
inspectors visited Orange and spoke with Paul Hoang, plaintiff’s son and the pharmacy’s
business manager.
Hoang testified at the hearing, claiming Orange and Pacific “[w]ere acting
as refill pharmacies” for each other, “including . . . CalOptima patients.” He stated, “We
never believed that what we did was wrong or dishonest.” But Buu contradicted Hoang,
admitting Pacific billed CalOptima for drug prescriptions filled by Orange and denied
Orange acted as a refill pharmacy for Pacific in 2005 and 2006.
In his proposed decision, the ALJ recommended plaintiff’s pharmacy
license and Orange’s permit be revoked, but the revocations be stayed for five years with
both placed on probation with certain conditions. Defendant timely issued an order of
nonadoption of the ALJ’s proposed decision and stated it would decide the matter based
on the record produced during the administrative hearing along with written argument
from the parties.
After receiving briefs from both parties, defendant issued its decision
revoking plaintiff’s license and Orange’s permit. Defendant’s factual findings largely
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repeated the ALJ’s findings. Citing its disciplinary guidelines, defendant found
plaintiff’s conduct constituted a Category III violation, which includes “fraudulent acts
committed in connections with the licensee’s practice.” The minimum level of discipline
for a Category III violation is revocation, stayed, three to five years probation, and 90
days of actual suspension. The maximum discipline is license revocation. Similar levels
of discipline apply to a pharmacy permit.
Defendant gave the following explanation for revoking the license and
permit: “In order to determine the appropriate measure of discipline, it is necessary to
weigh and balance [plaintiff’s] violations of law as well as factors in justification,
aggravation, or mitigation. Protection of the public is the Board’s highest
priority. . . . [¶] [Plaintiff], as the owner and pharmacist-in-charge of Orange Pharmacy,
is responsible for the dishonest and fraudulent acts attributable to both licenses. The
cause for discipline proven is serious and demonstrates [plaintiff’s] willingness to
commit dishonest acts for his own financial gain. In aggravation, these acts were also not
isolated incidents, but rather occurred several times over many months and involved
deliberate acts to deceive a public benefits program. These acts also demonstrate that
[plaintiff] refused to abide by standards set by a county-organized integrated health care
system in deliberate disregard of the public policy set by an agency acting on behalf of
the public. Although [plaintiff and Orange] have, so far, had an unblemished history with
the Board, these violations call into question [plaintiff’s] judgment and trustworthiness.
His failure to acknowledge the violations and submit evidence that he accepts
responsibility is troubling. The Board is also concerned about the lack of any evidence of
remorse or the submission of any evidence that [plaintiff] had undergone any sort of
rehabilitation with respect to his conduct. Without such evidence, the Board cannot offer
assurances that such conduct might not repeat and that [plaintiff and Orange] are safe to
practice with or without restriction.”
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Plaintiff filed a petition for a writ of administrative mandamus in the
superior court and obtained a temporary stay of the license and permit revocations. After
a hearing, the trial court, exercising its independent judgment, denied the petition,
terminated the stay imposed on defendant’s license and permit revocation order, and
denied plaintiff’s request for a further stay pending this appeal. Plaintiff sought to extend
the stay by filing a petition for a writ of supersedeas in this court, but we denied relief.
DISCUSSION
Plaintiff notes defendant’s disciplinary guidelines contain a list of 15
factors it must consider in determining the level of discipline to impose. He claims a
review of these factors “shows that revocation . . . was a grossly disproportionate penalty
under the circumstances” and thus defendant’s “decision was not supported by its
findings.” Alternatively, he contends defendant’s decision to reject the ALJ’s proposed
decision and issue its own ruling resulted in a denial of constitutional due process
because he and Orange “were not afforded a final hearing before their license and permit
were subsequently revoked . . . .” Plaintiff’s arguments lack merit.
This appeal involves a writ seeking relief from an adverse administrative
proceeding under Code of Civil Procedure section 1094.5. That statute provides, “The
inquiry in such a case shall extend to the questions whether the respondent has proceeded
without, or in excess of, jurisdiction; whether there was a fair trial; and whether there was
any prejudicial abuse of discretion. Abuse of discretion is established if the respondent
has not proceeded in the manner required by law, the order or decision is not supported
by the findings, or the findings are not supported by the evidence.” (Code Civ. Proc.,
§ 1094.5, subd. (b).) “Where it is claimed that the findings are not supported by the
evidence, in cases in which the court is authorized by law to exercise its independent
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judgment on the evidence, abuse of discretion is established if the court determines that
the findings are not supported by the weight of the evidence.” (Code Civ. Proc.,
§ 1094.5, subd. (c).)
Defendant is authorized to bring formal disciplinary proceedings against
anyone holding a pharmacy license. (Bus. & Prof. Code, § 4300, subds. (b), (e); Gov.
Code, §§ 11500 et seq.) Thus, it had the jurisdiction to consider whether plaintiff’s
actions warranted revocation of his pharmacy license. (Bus. & Prof. Code, § 4300,
subds. (a) [“Every license issued may be suspended or revoked”], (b) [“The board shall
discipline the holder of any license . . . whose case has been heard by the board and found
guilty”].)
Also, the procedure employed in this case was the manner provided by law
for conducting a disciplinary action. Business and Professions Code section 4300,
subdivision (e) declares disciplinary proceedings shall be conducted under the
Administrative Procedures Act (Gov. Code, § 11500 et seq.). Government Code
section 11517, subdivision (c)(1) authorizes “a contested case” to be “originally heard by
an administrative law judge.” After the ALJ issues his or her proposed decision, “[t]he
agency may” take one of five courses of action. One alternative is “Reject the proposed
decision, and decide the case upon the record, including the transcript . . . with or without
taking additional evidence.” (Gov. Code, § 11517, subd. (c)(2)(E); see Kifle-Thompson
v. State Bd. of Chiropractic Examiners (2012) 208 Cal. App. 4th 518, 531 [“the Board was
well within its jurisdiction to reject the ALJ’s proposed decision, and render its own
decision based ‘upon the record, including the transcript . . . with or without taking
additional evidence[]’” and “[o]nce the Board determined not to adopt the proposed
decision, that decision served no ‘identifiable function in the administrative adjudication
process or, for that matter, in connection with the judicial review’ of that process”].)
Plaintiff’s claim the foregoing procedure violated his and Orange’s right to
due process of law and denied them a fair trial is incorrect. In Gore v. Board of Medical
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Quality Assurance (1980) 110 Cal. App. 3d 184, a physician, was charged with having
engaged in gross negligence, but after a hearing, an ALJ exonerated him. The defendant
board rejected this proposed decision, made a finding of gross negligence, and suspended
the plaintiff’s license. On appeal, the plaintiff asserted the very same argument made in
this case. The appellate court rejected it. “There is no merit in petitioner’s claim that the
administrative procedure prescribed by section 11517, subdivision (c) of the Government
Code is unconstitutional because it authorizes respondent board to decide the case for
itself if the proposed decision by the administrative judge is not adopted. [¶] The
requirements of due process of law are fully met where, as here, the licensee was
accorded judicial review of the administrative decision in which the court weighed the
evidence and rendered its independent judgment on the merits. [Citations.]” (Id. at
p. 190.)
In this case, the ALJ conducted a three-day evidentiary hearing and then
issued a proposed decision that defendant chose not to adopt. Government Code
section 11517, subdivision (c)(2)(E)(ii) allowed defendant to receive additional briefing
from the parties and redecide the matter and reach a different conclusion even though its
decision is based on the evidence previously introduced during the administrative
hearing. Finally, defendant’s ruling was subject to independent review by the superior
court under Code of Civil Procedure section 1094.5. Plaintiff and Orange were accorded
due process and a fair trial in this case.
Plaintiff argues his right to maintain his existing pharmacy license and
Orange’s right to retain its permit to operate a pharmacy constitute fundamental rights.
We agree. (San Benito Foods v. Veneman (1996) 50 Cal. App. 4th 1889, 1896-1897 [food
processor’s license a fundamental right; “While the administrative agency’s decision had
a purely economic effect on plaintiff . . ., the nature of the right itself was crucial to
plaintiff’s economic viability”].) In this circumstance, “the superior court exercises its
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independent judgment upon the evidence disclosed in a limited trial de novo in which the
court must examine the administrative record for errors of law and exercise its
independent judgment upon the evidence.” (JKH Enterprises, Inc. v. Department of
Industrial Relations (2006) 142 Cal. App. 4th 1046, 1057.) But in doing so, “a trial court
must afford a strong presumption of correctness concerning the administrative findings,
and the party challenging the administrative decision bears the burden of convincing the
court that the administrative findings are contrary to the weight of the evidence.”
(Fukuda v. City of Angels (1999) 20 Cal. 4th 805, 817.)
The trial court expressly stated in its statement of decision that it exercised
its independent judgment in ruling on the petition and found defendant’s decision was
supported by “the weight of the evidence.” On appeal, “[e]ven when . . . the trial court is
required to review an administrative decision under the independent judgment standard of
review, the standard of review on appeal of the trial court’s determination is the
substantial evidence test. [Citations.]” (Fukuda v. City of Angels, supra, 20 Cal.4th at
p. 824.)
The balance of plaintiff’s argument concerns the propriety of defendant’s
decision to revoke his license and Orange’s permit. Although plaintiff repeatedly asserts
he does not believe he did anything wrong, his appellate briefs do not even provide a
summary of the evidence, much less explain why it fails to support defendant’s findings.
As noted, defendant is authorized by statute to determine whether to
suspend or revoke a pharmacist’s license where it finds the licensee has engaged in
unprofessional conduct. (Bus. & Prof. Code, §§ 4300, subd. (a).) Unprofessional
conduct includes “any act involving moral turpitude, dishonesty, fraud, deceit, or
corruption.” (Bus. & Prof. Code, § 4301, subd. (f).) We review a claim an
administrative agency imposed excessive discipline for abuse of discretion. “‘In
reviewing the severity of the discipline imposed, we look to the correctness of the
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agency’s decision rather than that of the trial court.’ [Citation.] ‘“The penalty imposed
by an administrative body will not be disturbed in mandamus proceedings unless an
abuse of discretion is demonstrated. [Citations.] Neither an appellate court nor a trial
court is free to substitute its discretion for that of the administrative agency concerning
the degree of punishment imposed. [Citation.]” [Citation.] [¶] “In reviewing the
exercise of this discretion we bear in mind the principle ‘courts should let administrative
boards and officers work out their problems with as little judicial interference as possible
. . . . Such boards are vested with a high discretion and its abuse must appear very clearly
before the courts will interfere.’”’ [Citation.] ‘The policy consideration underlying such
allocation of authority is the expertise of the administrative agency in determining
penalty questions.’ [Citation.]” (Cassidy v. California Bd. of Accountancy (2013) 220
Cal. App. 4th 620, 633.)
There was no abuse of discretion here. The guidelines state “[n]o single
one or combination of the . . . factors is required to justify the minimum and/or maximum
penalty in a given case,” and that the recommended discipline for the categories of
violations “assume a single violation of each listed statute or regulation.” Thus where, as
here, there are “multiple violations, the appropriate penalty shall increase accordingly.”
With the assistance of another pharmacy, plaintiff, as Orange’s pharmacist-in-charge,
intentionally created an elaborate scheme that allowed Orange to repeatedly skirt
CalOptima’s requirement that it participate in the agency’s fraud prevention program in
order to be authorized to seek payment for filling the drug prescriptions of qualified
patients. The evidence supports a finding that not only did Pacific use its prescription
labels to obtain payment for prescriptions filled by Orange, the two pharmacies also
created false documents to assist in covering up their scheme.
Plaintiff argues he did not financially benefit from the scheme. We
disagree. The fraudulent use of Pacific’s billing authority to receive payments from
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CalOptima allowed plaintiff and Orange to retain the patronage of Medi-Cal patients who
otherwise would have likely filled prescriptions through another pharmacy.
He also claims license revocation “is reserved only for dangerous conduct
that threatens the safety of the public.” But plaintiff cites no authority for this proposition
and, in fact, the law is to the contrary. In upholding a board’s decision to revoke an
architect’s license for fraud, deceit, and willful misconduct, Hughes v. Board of
Architectural Examiners (1998) 68 Cal. App. 4th 685 declared: “We are unwilling to
hold, as plaintiff’s arguments would require, that the Board is precluded from revoking a
person’s license . . . absent a showing of actual harm to a client,” in part because it
“would be contrary to the commonsense notion that one with a demonstrated history of
professional dishonesty in the past may well act in accordance with that history in his
professional dealings in the future. There is nothing in the law or in logic that requires
the existence of a victim . . . before the Board may order a license revoked as part of its
effort to protect the people of California from unscrupulous conduct” (id. at p. 693).
In addition, plaintiff never presented any evidence reflecting he was
remorseful for his behavior or that he had made efforts to obtain counseling. In fact, he
continues to insist, contrary to the findings of both the ALJ and defendant, the scheme of
falsely representing to CalOptima’s PBM that Pacific had filled prescriptions actually
filled by Orange, was not wrong. Defendant found plaintiff’s “failure to acknowledge the
violations and submit evidence that he accepts responsibility [to be] troubling,” and
expressed “concern[] about the lack of any evidence of remorse or the submission of any
evidence that [plaintiff] had undergone any sort of rehabilitation with respect to his
conduct.” Contrary to plaintiff’s argument, the consideration of his lack of remorse or
proof of rehabilitation was appropriate. (Hanna v. Dental Bd. of California (2012) 212
Cal. App. 4th 759, 767 [no abuse of discretion where board revoked license in part finding
licensee’s “unwillingness to admit any wrongful acts, and her failure to establish that she
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had undergone any rehabilitation demonstrated that the public could not be adequately
protected unless appellant’s license was revoked”].)
Given these factors, we conclude defendant properly exercised its
discretion in revoking plaintiff’s pharmacy license and Orange’s permit.
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
RYLAARSDAM, ACTING P. J.
WE CONCUR:
BEDSWORTH, J.
FYBEL, J.
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Filed 10/08/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
TUE NGOC HOANG,
Plaintiff and Appellant, G049275
v. (Super. Ct. No. 30-2013-00653422)
CALIFORNIA STATE BOARD OF ORDER CERTIFYING OPINION
PHARMACY, FOR PUBLICATION
Defendant and Respondent.
Defendant and Respondent California State Board of Pharmacy requested
that our opinion filed on September 12, 2014, be certified for publication. It appears that
our opinion meets the standards set forth in California Rules of Court, rule 8.1105(c).
The request is GRANTED. The opinion is ordered published in the Official Reports.
RYLAARSDAM, ACTING P. J.
WE CONCUR:
BEDSWORTH, J.
FYBEL, J.