SUNSCRIPT PHARMACY v. Board of Pharmacy, COA00-1089.

• Citation: 555 S.E.2d 629,147 NC App. 446
• Decision Date: 04 December 2001
• Docket Number: No. COA00-1089.,COA00-1089.
• Court: Court of Appeal of North Carolina (US)
• Parties: SUNSCRIPT PHARMACY CORPORATION, Petitioner, v. NORTH CAROLINA BOARD OF PHARMACY, Respondent.

555 S.E.2d 629

147 NC App. 446

SUNSCRIPT PHARMACY CORPORATION, Petitioner, v. NORTH CAROLINA BOARD OF PHARMACY, Respondent.

No. COA00-1089.

Court of Appeals of North Carolina.

December 4, 2001.

Yates, McLamb & Weyher, L.L.P., by Michael C. Hurley, Raleigh, for petitioner-appellee.

Bailey & Dixon, L.L.P., by Carson Carmichael, III, Raleigh, for respondent-appellant.

CAMPBELL, Judge.

Respondent North Carolina Board of Pharmacy ("the Board") appeals from the trial court's order reversing the Board's final agency decision suspending the pharmacy permit of Sunscript Pharmacy Corporation ("petitioner") pursuant to N.C. Gen.Stat. § 90-85.38(b). We disagree with the trial court's interpretation of the applicable statutes and reverse the order under review.

The Board is the occupational licensing agency responsible for licensing pharmacists and issuing pharmacy permits throughout North Carolina. N.C. Gen.Stat. §§ 90-85.15, -85.21 (1999). The Board is also responsible for enforcing the laws pertaining to the distribution and use of drugs. N.C. Gen. Stat. § 90-85.6(a) (1999). Petitioner is a foreign corporation authorized to do business in North Carolina and is engaged in operating pharmacies in this State that are not open to the general public, but rather provide pharmaceutical services to long-term care facilities owned and operated by Sun Healthcare. The pharmacy at issue in these proceedings is petitioner's pharmacy located in Pink Hill, North Carolina. At all times relevant hereto, petitioner's pharmacy in Pink Hill was being operated pursuant to a pharmacy permit (Permit No. 6467) duly issued by the Board, and was subject to the full regulatory authority of the Board.

On 28 August 1998, the Board received information indicating that an error had been committed in the dispensing of a prescription for the drug Dilantin at petitioner's Pink Hill pharmacy. The Board's investigation revealed that on 27 July 1998 petitioner received a doctor's prescription for a long-term care facility patient which called for "Dilantin 100 mg capsules BID and Dilantin 50 mg BID." Petitioner did not have the Dilantin 50 mg, so John Conrad Hunt ("Hunt"), a licensed pharmacist and employee of petitioner, dispensed liquid Dilantin with instructions on the label that read "10 cc = 50 mg." However, for the patient to receive the correct dosage, the label should have read "2 cc = 50 mg." Although the patient was administered the Dilantin between 29 July 1998 and 1 August 1998, and the patient died on 11 August 1998, it could not be determined whether the incorrect dosage of Dilantin caused or contributed to the patient's death. The Board's investigation further revealed that Hunt had committed four other dispensing errors between 21 July 1998 and 4 August 1998, including dispensing the wrong drug, dispensing the wrong strength of drug, and using the wrong patient name on a prepared drug order.

On 8 October 1998, the Board issued a "Notice of Hearing" to petitioner and Hunt regarding the five dispensing errors uncovered by the Board's investigation. The purpose of the hearing was to determine whether the alleged dispensing errors committed by petitioner and Hunt violated the laws governing the practice of pharmacy and the distribution of drugs, thereby subjecting petitioner and Hunt to the Board's disciplinary authority under N.C.G.S. § 90-85.38. Specifically, the Board alleged that the dispensing errors committed by petitioner and Hunt violated N.C. Gen.Stat. §§ 90-85.30, 90-85.38(a)(6), 90-85.38(a)(9), 90-85.38(b) and 106-134.1.

The hearing was held on 27 October 1998, at the commencement of which petitioner and Hunt stipulated to the allegations concerning the five dispensing errors. The evidence presented at the hearing indicated that all of the errors had been initially committed by pharmacy technicians who worked under the supervision of Hunt. The evidence also indicated that Hunt was terminated from employment by petitioner on 28 August 1998. On 25 January 1999, the Board issued a final agency decision making findings of fact consistent with the parties' stipulations and the evidence presented at the hearing and concluding that the dispensing errors committed by petitioner and Hunt constituted violations of N.C.G.S. §§ 90-85.30, 90-85.38(a)(6), 90-85.38(a)(9) and 106-134.1.

As a result, the Board suspended Hunt's pharmacist license (License No. 14427) for seven days, with the suspension stayed for two years upon Hunt complying with several conditions. Likewise, the Board suspended petitioner's pharmacy permit (Permit No. 6467) for seven days, with the suspension also stayed for two years upon petitioner complying with restrictions on the number of prescriptions it could fill, more stringent requirements for reporting future dispensing errors to the Board, and other conditions.

On 23 February 1999, petitioner filed a petition in Wake County Superior Court seeking judicial review of the Board's final agency decision pursuant to N.C. Gen.Stat. § 150B-45.¹ Petitioner alleged that the Board's decision prejudiced the substantial rights of petitioner, in that the decision was "void for want of jurisdiction, violate[d] provisions of the constitution of this State and the United States, exceed[ed] the statutory authority and jurisdiction of the Board, [was] unsupported by substantial evidence admissible under G.S. 150B-29(a), 150B-30, or 150B-31 in view of the entire record as submitted, [was] arbitrary and capricious, and [was] otherwise affected by errors of law." Included among petitioner's listed exceptions to the Board's final agency decision was the following:

(h) In excess of Respondent's statutory authority and jurisdiction and in violation of the guarantees of due process in the Fourteenth Amendment of the United States Constitution and Article I, Section 19 of the North Carolina Constitution, Respondent has improperly imputed to Petitioner the findings of negligence made against another subject of its investigation.

....

On 26 May 2000, the trial court entered a Memorandum of Decision reversing the Board's decision to suspend petitioner's pharmacy permit, reasoning:

[The] Board does not have the authority to discipline permittee pharmacy for the negligence of a pharmacist employee who is also licensed by the Board. Also[,] the techs [pharmacy technicians] who were negligent were being supervised by the same pharmacist licensee. As Petitioner argues[,][the] Board has no authority to discipline on a theory of vicarious liability. If the legislature intended this then it must expressly say so and G.S. 90-85.38(b) does not.

On 13 June 2000, the trial court entered an order reversing respondent's decision. Respondent now appeals the trial court's ruling.

The dispositive issue on appeal is whether the trial court erred in its determination that the Board lacks the statutory authority to discipline a pharmacy permit holder for the negligence of a licensed pharmacist who is employed by the permit holder. In so holding, the trial court ruled that the Board's final agency decision was based on an error of law. Thus, the trial court was required to exercise de novo review. See Amanini v. N.C. Dept. of Human Resources, 114 N.C.App. 668, 674, 443 S.E.2d 114, 118 (1994)

(stating that when petitioner argues that an agency's decision was based on an error of law, de novo review is required). Our review of the trial court's Memorandum of Decision and its order indicates that the trial court appropriately exercised de novo review in making its determination on this issue. However, we must determine whether the trial court did so properly. See Eury v. N.C. Employment Security Comm., 115 N.C.App. 590, 597, 446 S.E.2d 383, 388 (1994) (stating that this Court's reviewing process of a superior court order regarding an agency decision is twofold: (1) determining whether the trial court exercised the appropriate scope of review, and, if appropriate, (2) deciding whether the court did so properly).

In making this determination, we start by examining the disciplinary authority of the Board, which is set forth in N.C.G.S. § 90-85.38. Pursuant to N.C.G.S. § 90-85.38(a), the Board may discipline² a licensee or an applicant for a license to practice pharmacy, if the licensee or applicant has:

(1) Made false representations or withheld material information in connection with securing a license or permit;

(2) Been found guilty of or plead guilty or nolo contendere to any felony in connection with the practice of pharmacy or the distribution of drugs;

(3) Indulged in the use of drugs to an extent that renders him unfit to practice pharmacy;

(4) Made false representations in connection with the practice of pharmacy that endanger or are likely to endanger the health or safety of the public, or that defraud any person;

(5) A physical or mental disability that renders him unfit to practice pharmacy with reasonable skill, competence and safety to the public;

(6) Failed to comply with the laws governing the practice of pharmacy and the distribution of drugs;

(7) Failed to comply with the rules and regulations of the Board;

(8) Engaged in, or aided and abetted an individual to engage in, the practice of pharmacy without a license; or

(9) Was negligent in the practice of pharmacy.

N.C. Gen.Stat. § 90-85.38(a)(1)-(9) (1999). Pursuant to N.C.G.S. § 90-85.38(b), the Board is authorized to suspend, revoke, or refuse to grant or renew any pharmacy permit³ for the same conduct as stated in N.C.G.S. § 90-85.38(a).

In its final agency decision, the Board concluded that the dispensing errors committed by Hunt and petitioner violated both N.C.G.S. § 90-85.38(a)(6) (failure to comply with the laws governing the practice of pharmacy and the distribution of drugs) and N.C.G.S. § 90-85.38(a)(9) (negligence in the practice of pharmacy). In support of its determination that petitioner and Hunt had failed to comply with the laws governing the practice of pharmacy and...