Pharmacy Doctors Enters., Inc. v. Drug Enf't Admin.
| Decision Date | 20 September 2019 |
| Docket Number | No. 18-11168,18-11168 |
| Parties | PHARMACY DOCTORS ENTERPRISES, INC., d.b.a. Zion Clinic Pharmacy, Petitioner, v. DRUG ENFORCEMENT ADMINISTRATION, Respondent. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
[DO NOT PUBLISH]
Non-Argument Calendar
Petition for Review of a Decision of the Drug Enforcement Agency
Before MARCUS, ROSENBAUM and JILL PRYOR, Circuit Judges.
Pharmacy Doctors Enterprises, Inc. ("Pharmacy Doctors"), a retail pharmacy, petitions for review of a decision by the Acting Administrator of the U.S. Drug Enforcement Administration (DEA) pursuant to the Controlled Substances Act ("CSA"), to revoke its registration to dispense controlled substances and deny any pending application for renewal of registration.1 21 U.S.C. §§ 823(f), 824(a). The Acting Administrator revoked Pharmacy Doctors' registration after a hearing before an administrative law judge (ALJ) revealed that it had filled prescriptions for controlled substances in violation of federal and state law and that its owner and operator, Veronica Taran, exhibited ignorance of her legal and professional duties as a pharmacist. Pharmacy Doctors argues that the ALJ presiding at the hearing was improperly appointed under the Appointments Clause, the Acting Administrator lacked substantial evidence for his findings, and his revocation of Pharmacy Doctors' registration was arbitrary and capricious. After careful consideration, we deny the petition for review.
The CSA makes it "unlawful for any person knowingly or intentionally . . . to . . . distribute[] or dispense . . . a controlled substance" except "as authorized" by the CSA. Id. § 841(a)(1). One of the CSA's exceptions is for pharmaciesregistered with the Attorney General, id. § 822(a), which may "dispense" or "deliver a controlled substance to an ultimate user . . . pursuant to the lawful order of[] a practitioner," id. § 802(10). By DEA regulation, a lawful order of a practitioner is one that is "issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice." 21 C.F.R. § 1306.04(a). That regulation imposes a responsibility on the prescriber to ensure prescriptions comply with the law and also a "corresponding responsibility" on the "pharmacist who fills the prescription" to ensure that the prescription is valid. Id. A pharmacist who "knowingly fill[s]" a prescription not issued "for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice" is subject to penalties under the CSA. Id.
The Attorney General has delegated to the DEA Administrator the authority to issue, deny, suspend, and revoke pharmacy registrations. 28 C.F.R. § 0.100(b). Registration may be denied or revoked when it is or would be "inconsistent with the public interest." 21 U.S.C. §§ 823(f), 824(a)(4).
Here, the DEA served on Pharmacy Doctors an order to show cause, see id. § 824(c)(1); 21 C.F.R. § 1301.37, alleging that Pharmacy Doctors was dispensing controlled substances in violation of federal and state law and proposing to revoke its registration, 21 U.S.C. § 824(a)(4), and deny any pending application for renewal of its registration, id. § 823(f).
As was its right under the CSA and the Administrative Procedure Act (APA), Pharmacy Doctors requested a hearing, see id. § 824(c)(4); 5 U.S.C. § 554(c)(2); 21 C.F.R. §§ 1301.37(d), 1301.41(a), at which the parties presented documentary evidence and the ALJ heard testimony from the government's expert Tracey Gordon, Pharmacy Doctors' expert Louis Fisher, Taran, and a DEA investigator. We describe the relevant aspects of the evidence and testimony in Part III. After the hearing, the ALJ recommended that the Acting Administrator revoke Pharmacy Doctors' registration and deny any pending applications for renewal because registration would be "inconsistent with the public interest." 21 U.S.C. §§ 823(f), 824(a)(4).
The Acting Administrator agreed with the ALJ and issued an order revoking Pharmacy Doctors' registration and denying any pending applications for renewal. Pharmacy Doctors petitioned for review of the Acting Administrator's decision.2 Id. § 877.
We review de novo questions of law, including the constitutionality of the ALJ's appointment. Sec. & Exch. Comm'n v. Graham, 823 F.3d 1357, 1360 (11th Cir. 2016).
"The Acting Administrator's factual findings are conclusive if supported by substantial evidence." Jones Total Health Care Pharmacy, LLC v. Drug Enf't Admin., 881 F.3d 823, 829 (11th Cir. 2018) (citing 21 U.S.C. § 877). Substantial evidence, which is a standard lower than a preponderance of the evidence, is "such relevant evidence as a reasonable person would accept as adequate to support a conclusion." Id. "An administrative agency's finding is supported by substantial evidence even if two inconsistent conclusions could be drawn from the evidence." Id. (alteration adopted) (internal quotation marks omitted).
Under the APA, 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 law," "contrary to [a] constitutional right," or "unsupported by substantial evidence." 5 U.S.C. § 706(2)(A)-(B), (E). "The arbitrary and capricious standard is exceedingly deferential." Jones Total, 881 F.3d at 829 (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." Id. "Nevertheless, we may set aside a decision as arbitrary and capricious when, among other flaws, the agency has relied on factors [that] 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." Id. (alteration adopted) (internal quotation marks omitted).
Pharmacy Doctors raises three grounds for why we should set aside the Acting Administrator's decision: (1) the ALJ who presided over the hearing was invalidly appointed under the Appointments Clause; (2) the Acting Administrator lacked substantial evidence for his factual findings; and (3) the Acting Administrator's decision to revoke Pharmacy Doctors' registration was arbitrary and capricious. We reject each argument and accordingly deny Pharmacy Doctors' petition for review.
The Appointments Clause requires that "Officers of the United States" be appointed by the President, a court of law, or a head of a department. U.S. Const., art. II, § 2, cl. 2. Citing a recent Supreme Court case holding that ALJs of the Securities and Exchange Commission are "Officers of the United States" whose appointments must comply with the Appointments Clause, see Lucia v. S.E.C., 138 S. Ct. 2044, 2049, 2054 (2018), Pharmacy Doctors argues that DEA ALJs are also "Officers of the United States" whose appointments must comply with the Clause. Because the ALJ who presided over the hearing was not appointed by thePresident, a court of law, or a department head, Pharmacy Doctors contends, a remand for a new hearing before a properly appointed ALJ is required.
Pharmacy Doctors concedes, however, that it failed to timely challenge the validity of the ALJ's appointment. "Under ordinary principles of administrative law, a reviewing court will not consider arguments that a party failed to raise in timely fashion before an administrative agency." Mahon v. U.S. Dep't of Agric., 485 F.3d 1247, 1254 (11th Cir. 2007) (internal quotation marks omitted). "[W]here the parties are expected to fully develop the issues during the course of an adversarial administrative proceeding, the rationale for requiring issue exhaustion is at its strongest." Id. at 1255.
"Although there is no express issue exhaustion requirement in the [CSA or DEA] regulations, a review of the [CSA and DEA regulations] reveals that [DEA] proceedings are 'adversarial' in nature." Id. at 1256. Under the supervision of the DEA Administrator, the ALJ may subpoena and compel the attendance and testimony of witnesses, require the production of records relevant to an investigation, administer oaths, and receive evidence. 21 U.S.C. §§ 875(a), 876(a); see also 28 C.F.R. § 0.100(b). Parties may present "[e]xtensive argument" in "opening [and] closing statements[,] . . . memoranda[,] [and] proposed findings of fact and conclusions of law." 21 C.F.R. § 1301.42. The government bears the burden to show that registration violates or would violate the CSA. Id.§ 1301.44(d)-(e). And the DEA Administrator's order denying or revoking a registration must "include the findings of fact and conclusions of law upon which the order is based." Id. § 1301.46; see also Mahon, 485 F.3d at 1249, 1256 ().
Given these features, the DEA's "procedures provide an adversarial system in which parties are given a full and fair opportunity to make their arguments and present evidence, and, as a corollary, to attempt to challenge the arguments and evidence presented by the agency." Id. at 1256. "As such, the adversarial nature of the administrative proceedings counsel against allowing [Pharmacy Doctors] to raise [a] new argument[] that w[as] not raised during the course of [its] administrative appeal" to the Acting Administrator. Id. Because arguments based on the Appointments Clause are nonjurisdictional and therefore subject to the ordinary rules of forfeiture, see Freytag v. Comm'r, 501 U.S. 868, 878-79 (1991); see also id. at 893-94 (Scalia, J., concurring in part and concurring in judgment), we conclude that...
To continue reading
Request your trial