STATE OF MICHIGAN COURT OF APPEALS

Transcription

1 STATE OF MICHIGAN COURT OF APPEALS In re COLLEGE PHARMACY. BUREAU OF HEALTH CARE SERVICES, Petitioner-Appellee, UNPUBLISHED February 7, 2017 v No Department of Licensing and Regulatory Affairs COLLEGE PHARMACY, LC No Respondent-Appellant. Before: BOONSTRA, P.J., and SHAPIRO and GADOLA, JJ. PER CURIAM. Respondent appeals by right the final order of petitioner revoking its license to practice as a pharmacy in the state of Michigan. We affirm. I. PERTINENT FACTS AND PROCEDURAL HISTORY Respondent is a pharmacy and prescription drug outlet whose primary facility is located in Colorado Springs, Colorado, and at the time of the proceedings below was licensed as a pharmacy in 47 states. In 2007, the Food and Drug Administration (FDA) brought charges against respondent for illegally compounding human growth hormone (HGH). Specifically, Thomas Bader, respondent s owner in 2007, was charged with purchasing HGH from a wholesaler who in turn had purchased it from a Chinese manufacturer. The product was not FDA registered or approved. Before any conviction occurred, the Colorado Board of Pharmacy (CBP) acted. A settlement was reached in which Bader agreed to step down from his position with respondent and relinquish all his ownership interest in the company. In addition, respondent paid a fine of $250,000 and was placed on probation for a period of seven years. A condition of respondent s probation was that it submit quarterly affidavits to the CBP attesting that, among other things, respondent was not compounding HGH, although it was allowed to sell HGH purchased from a FDA-approved supplier that was registered as a prescription drug wholesaler in Colorado. Jerry Gillick was appointed respondent s pharmacy manager in 2007 and later became CEO of respondent in

2 In 2008, a routine audit by the CBP revealed that respondent had purchased HGH from a wholesaler that was not licensed as a prescription drug wholesaler in Colorado. Additionally, a veterinarian in Illinois had ordered HGH from respondent, listing herself as both the patient and the prescribing physician, which is not permitted in Colorado. Gillick testified at his deposition that these events occurred before he took on his current role with respondent. Gillick further testified that before he took over, respondent had nothing in place to determine what type of practitioner was ordering what drug, but that he implemented such controls after learning of the results of the 2008 audit. In 2009, the CBP again placed respondent on probation for seven years (essentially extending respondent s probationary period), and ordered that during its probation respondent was directed to discontinue the procurement, purchase, sale, distribution, dispensing, transferring or handling... of HGH. In 2013, the CBP issued a letter of admonishment to respondent after an investigation revealed that respondent had placed a seven month beyond use date on an injectable medication drug that in fact had a one year beyond use date. 1 Respondent reported the letter of admonition to the Michigan Board of Pharmacy and to every other state in which it was licensed. In 2014, petitioner filed an administrative complaint against respondent alleging that under MCL (2)(d) it had the authority to impose sanctions on respondent for having its license limited and being subject to administrative penalties by the CBP in 2007, 2009, and Petitioner further alleged that the adverse actions by the Colorado Board... constitute violations of section 17768(2)(d) of the Public Health Code, MCL et seq. Following a hearing, the hearing referee issued a proposal for decision. The referee found that respondent s conduct surrounding both the 2007 and 2009 incidents occurred under Bader s leadership and that since Gillick took over respondent had complied with all reporting requirements imposed on it. Nevertheless, the referee concluded that because administrative penalties had been imposed against respondent, [p]ursuant to the Public Health Code Section 17768(2)(d), this constitutes grounds for action by the Michigan Board of Pharmacy. Petitioner s disciplinary subcommittee accepted the... Findings of Fact and Conclusions of Law in the Proposal for Decision and revoked respondent s license to practice as a pharmacy in the state of Michigan. 2 This appeal followed. II. STANDARD OF REVIEW Final orders of disciplinary subcommittees rendered pursuant to article 15 of the [Public Health Code, MCL et seq.] are exempt from the standard of review provided in MCL of the Administrative Procedures Act, MCL et seq., which provides for 1 Gillick testified that the term beyond use date refers to a drug s expiration date. 2 On appeal, respondent asks us to consider an affidavit executed by its attorney attesting to certain statements made at the meeting during which the decision to revoke respondent s license was reached. This affidavit is not part of the agency record, so we will not consider it. MCR 7.210(A). -2-

3 setting aside a decision that is [a]rbitrary, capricious or clearly an abuse or unwarranted exercise of discretion. Dep t of Community Health v Risch, 274 Mich App 365, ; 733 NW2d 403 (2007). When a respondent challenges the imposition of a particular sanction, but does not challenge the authority of a disciplinary subcommittee to issue such a sanction, we need only determine whether the subcommittee[ ]s[] decisions to do so are supported by competent, material, and substantial evidence on the whole record. Id. at 372, quoting Const 1963, art 6, 23. When reviewing whether an agency s decision was supported by competent, material, and substantial evidence on the whole record, a court must review the entire record and not just the portions supporting the agency s findings. Risch, 274 Mich App at 372. Substantial evidence is evidence that a reasonable person would accept as sufficient to support a conclusion. While this requires more than a scintilla of evidence, it may be substantially less than a preponderance. Dowerk v Oxford Charter Twp, 233 Mich App 62, 72; 592 NW2d 724 (1998). III. ANALYSIS Respondent argues that petitioner erred by revoking its pharmacy license instead of imposing a lesser sanction, and that the disciplinary subcommittee failed to consider mitigating factors in making its decision. We disagree. states: Petitioner revoked respondent s pharmacy license under MCL (2)(d), which (2) In addition to the grounds set forth in subsection (1), and in a manner consistent with part 161, the board may fine, reprimand, or place on probation a person licensed under this part, may deny, limit, suspend or revoke a license issued under this part, or may order restitution or community service if the board finds that any of the following apply to an applicant; a partner, officer, or member of the board of directors of a pharmacy, manufacturer, or wholesale distributor licensed under this part; a stockholder of a pharmacy, manufacturer, or wholesale distributor that is a privately held corporation licensed under this part; or a facility manager for a wholesale distributor designated under section 17748(2): * * * (d) The applicant or other person described in this subsection has maintained a financial interest in a pharmacy, manufacturer, or wholesale distributor that has been denied a license or federal registration, has had its license or federal registration limited, suspended, or revoked, or has been subject to any other criminal, civil or administrative penalty. The referee concluded that grounds for action against respondent were justified under this statute because respondent had administrative penalties imposed against it by the CBP in 2007, 2009, and Petitioner adopted the referee s conclusions as its own. -3-

4 Respondent does not contest that 17768(2)(d) authorizes petitioner to revoke its license if it has been subject to an administrative penalty in another state. Further, respondent does not argue that the orders of the CBP in 2007 and 2009 were not administrative penalties, although it challenges the classification of the letter of admonishment in 2013 as such a penalty. Rather, it argues that the order revoking its license should be overturned because that order failed to comply with administrative rules regarding the adoption, modification, or rejection of a proposal for decision. Specifically, respondent relies on Mich Admin Code, R , which states in relevant part: (4) After reviewing the findings of fact and conclusions of law, the disciplinary subcommittee, board, or task force may make revisions. In making revisions, the disciplinary subcommittee, board, or task force shall specifically identify those portions of the findings of fact or conclusions of law, or both, that it is modifying or rejecting and identify evidence from the record that supports its revisions. (5) A disciplinary subcommittee, board, or task force, in its final order, may adopt, modify, or reject, in whole or in part, the opinion or proposal for decision of the administrative law judge. If the disciplinary subcommittee, board, or task force modifies or rejects the opinion or proposal for decision, the reason for that action shall be stated in the final order. Respondent argues that petitioner modified or rejected the mitigating circumstances identified by the hearing referee in her PFD without properly stating a reason for the rejection or modification and identifying evidence from the record to support the revisions. Specifically, respondent argues that petitioner failed to consider the findings of fact by the ALJ that stated that Gillick had implemented a system to track wholesaler licensing after the 2007 and 2009 actions, that respondent no longer did bulk distribution, and that no product safety allegations had been filed against respondent since Gillick took over respondent s operation. The PFD also stated, in its Conclusions of Law section, that the Michigan Board of Pharmacy may consider, as mitigation, the above Findings of Fact establishing that the current pharmacy manager of Respondent was specifically approved by the Colorado Board to take over from a previous owner/manager who was in charge when the acts leading to sanctions occurred. However, the PFD did not state that these mitigating circumstances should warrant a lesser sanction or propose a specific sanction. We conclude that the final order issued by petitioner did not modify or reject the PFD. The final order stated that it was accepting both the findings of fact and the conclusions of law of the proposal for decision. By adopting the findings of fact and conclusions of law found in the PFD, petitioner merely adopted the statement that it may consider mitigating factors in determining its sanction. The word may indicates an action that is discretionary, not mandatory. See Detroit Edison Co v Stenman, 311 Mich App 367, 384 n 8; 875 NW2d 767 (2015). Petitioner was thus free, in its discretion, not to consider the mitigating factors identified. Further, the PFD did not indicate that consideration of the mitigating factors it identified should lead to the result hoped for by respondent a lesser sanction. In the end, respondent s argument is that petitioner should have given the mitigating factors identified more weight and therefore imposed a lesser sanction. But when there is sufficient evidence to support -4-

5 an administrative decision, a reviewing court may not substitute its discretion for that of the administrative tribunal even if the court might have reached a different result. Black v Dep t of Social Servs, 212 Mich App 203, 206; 537 NW2d 456 (1995). Here, petitioner was presented with competent, material, and sufficient evidence in support of the imposition of a sanction under MCL (2)(d), and it acted within its authority in revoking respondent s license. 3 Affirmed. /s/ Mark T. Boonstra /s/ Michael F. Gadola 3 We find respondent s citation of two unpublished cases from this Court unpersuasive, as neither is binding, MCR 7.215(C)(1), and both are distinguishable, in that the present case does not involve the issuance of an order that was contrary to the PFD. Nor is the fact that other states chose not to sanction respondent in the same manner relevant to our review of petitioner s decision. -5-

6 STATE OF MICHIGAN COURT OF APPEALS In re COLLEGE PHARMACY. BUREAU OF PROFESSIONAL LICENSING, Petitioner-Appellee, UNPUBLISHED February 7, 2017 v No Department of Licensing and Regulatory Affairs COLLEGE PHARMACY, LC No Respondent-Appellant. Before: BOONSTRA, P.J., and SHAPIRO and GADOLA, JJ. SHAPIRO, J. (dissenting). I respectfully dissent. Respondent appeals from a decision of the Board of Pharmacy Disciplinary Subcommittee of the Bureau of Professional Licensing revoking respondent s license to practice in Michigan. I would conclude, given the record before us, that the Board s imposition of the sanction of license revocation was not supported by competent, material, and substantial evidence. Accordingly, I would vacate the Board s order and remand for further proceedings pursuant to MCL Petitioner issued an administrative complaint against respondent pharmacy on the grounds that it had been subject to administrative penalties in another state, Colorado. MCL (2)(d) provides: [I]n a manner consistent with part 161 [MCL et seq], the board may fine, reprimand, or place on probation, a person licensed under this part, or deny, limit, suspend, or revoke a license issued under this part or may order restitution or community service if the board finds that... [t]he applicant... has had its license or federal registration limited, suspended, or revoked or been subject to any other criminal, civil, or has been subject to any other criminal, civil or administrative penalty. -1-

7 A hearing was conducted by a hearing examiner (ALJ) who issued a Proposal for Decision on April 10, The Proposal for Decision, as will be set forth below, contained extensive findings of fact and law none of which are challenged by either party. The hearing examiner did not recommend a specific penalty as such an action is beyond her authority. MCL a provides: (2) The hearing examiner shall determine if there are grounds for disciplinary action.... The hearings examiner shall prepare recommended findings of fact and conclusions of law for transmittal to the appropriate disciplinary subcommittee. The hearings examiner shall not recommend or impose penalties. [Emphasis added.] The ALJ s conclusions of law read: The above Findings of Fact establish that Respondent College Pharmacy had administrative penalties imposed against it through Final Orders of the Colorado Board of Pharmacy. Pursuant to the Public Health Code Section 17768(2)(d), this constitutes grounds for action by the Michigan Board of Pharmacy. The Michigan Board of Pharmacy may consider, as mitigation, the above Findings of Fact establishing that the current pharmacy manager of Respondent was specifically approved by the Colorado Board to take over from a previous owner/manager who was in charge when the acts leading to sanctions occurred. Further, the new pharmacy manager has instituted policies and procedures to prevent reoccurrence of problems. Respondent filed an exception to the ALJ s proposal for decision arguing that no sanctions of any kind were warranted in this case in light of the mitigating factors noted by the ALJ. The Board of Pharmacy Disciplinary Subcommittee considered the matter at its June 10, 2015 meeting, and its resulting order stated that it accepted the administrative law judge s Findings of Fact and Conclusions of Law in the Proposal for Decision. 1 The substantive portion of the subcommittee s July 24, 2015 order reads in full: The Disciplinary Subcommittee of the Michigan Board of Pharmacy (Disciplinary Subcommittee), having reviewed the administrative record, considered this matter at a regularly scheduled meeting held in Lansing, Michigan on June 10, 2015 and accepted the administrative law judge s Findings of Fact and Conclusions of Law in the Proposal for Decision. Therefore, IT IS ORDERED that for violating section 17768(2)(d) of the Public Health Code, supra, Respondent Pharmacy s license to practice as a 1 The subcommittee s proceedings are not recorded. Minutes are maintained but as to the instant matter state only that a motion to revoke respondent s license was made and adopted. -2-

8 pharmacy in the state of effective date of this Order. Michigan is REVOKED, commencing on the Respondent argues that the decision to impose license revocation as opposed to any of the other available sanctions 2 should be reversed. We review final orders of disciplinary subcommittees to determine whether they are authorized by law and are supported by competent, material, and substantial evidence on the whole record. Dep t of Community Health v Risch, 274 Mich App 365, ; 733 NW2d 403 (2007), and Const 1963, art Respondent suggests that the subcommittee s decision should be reviewed under an abuse of discretion standard. However, in Risch, we considered this issue and concluded that judicial review of the disciplinary subcommittee s orders is limited to that set forth in Const. 1963, Art. 6 Sec 28, which provides in relevant part: All final decisions, findings, rulings and orders of any administrative officer or agency existing under the constitution or by law, which are judicial or quasijudicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions, findings, rulings and orders are authorized by law; and, in cases in which a hearing is required, whether the same are supported by competent, material and substantial evidence on the whole record. [274 Mich App at 371, quoting Const. 1963, Art. 6 Sec 28.] The relevant standard of review thus consists of two different determinations. First, was the decision authorized by law and second was it supported by competent, material, and substantial evidence on the whole record. The first of these is straightforward; the decision is authorized by law. As to the second, it is necessary to review the ALJ s findings of fact, which as noted above, neither party takes exception to: FINDINGS OF FACT 1. Jerry Gillick R.Ph., has been licensed as a pharmacist in the United States since In 2005 he moved to Colorado and began working for College Pharmacy. College Pharmacy is licensed in 47 states. In 2009, Mr. Gillick became President and CEO of College Pharmacy[.] 2. On December 18, 2007, Colorado s Board of Pharmacy issued a Stipulation and Final Order. The charges leading to the Final Order involved Board allegations that College Pharmacy had introduced or delivered into interstate commerce a human growth hormone (i.e. somatropin ) that was not approved by the FDA, and offered it for sale through interstate commerce for uses and conditions other than those approved by the FDA for authorized human growth hormones. The 2 These include: probation, fine, reprimand, limitation or suspension of license, restitution or community service. MCL (2)(d). -3-

9 Colorado Board also alleged inaccurate or inappropriate reprocessing and repackaging of the somatropin. At the time Thomas Bader was owner of College Pharmacy. The Colorado charging document asserts that Mr. Bader, as the pharmacist manager, was responsible for all operations violations charged against College Pharmacy. As a result of the Final Order, Mr. Bader was directed to transfer all of his shares to an employee stock ownership plan. College Pharmacy was required to submit quarterly reports assuring that any dispensing of human growth hormone was only for FDA approved uses and that dispensing was based on patient-specific orders. The Order also required that the Board approve any pharmacy manager appointed to run College Pharmacy for seven years from the date of the Final Order. (Exhibit 1) 3. Mr. Gillick became the pharmacist in charge (i.e. pharmacy manager) after Mr. Bader relinquished ownership of College Pharmacy. Mr. Gillick has assured compliance with all reporting requirements imposed on College Pharmacy as a result of the 2007 Final Order. 4. Prior to Mr. Gillick taking over as pharmacy manager, a routine audit in May 2008 found that College Pharmacy had purchased and received human growth hormone from a wholesaler that was not registered in Colorado. Further the audit found that an Illinois veterinarian had ordered the human growth hormone listing herself as both the prescribing practitioner and the patient. These two acts were found to be violations of Colorado pharmacy regulations and a violation of the 2007 Stipulation and Final Order that prohibited any further violations of state or federal regulations. (Exhibit 2) 5. When Mr. Gillick took over pharmacy manager responsibilities in 2009, he was not aware that Mr. Bader had entered an agreement to purchase human growth hormone from an unlicensed wholesaler and filled a prescription indicating that a veterinarian was self- prescribing [sic] human growth hormone, because prior to Mr. Gillick assuming managerial responsibilities, there was no system in place to track whether wholesalers were registered in Colorado. Although Mr. Gillick was not involved in the violations found in the May 2008 audit, he assumed responsibility for correcting the College Pharmacy violations, and complying with all conditions of the Colorado Board s disciplinary Orders, when he took over as manager. 6. As a result of the 2008 audit findings, the Colorado Board issued a second Stipulation and Final Order dated April 10, 2009, placing College Pharmacy s registration as a prescription drug outlet in Colorado on probation for seven years, prohibiting the purchase, sale and dispensing of any human growth hormone during probation and requiring more quarterly reports to the Board. (Exhibit 2) -4-

10 7. In or around December 2012, College Pharmacy entered into an agreement to compound an injectable used in cosmetic procedures called Tozzi Solution. [sic] The inventor of the solution filed a complaint against College Pharmacy with the Colorado Board. The Board s investigation found that a trial batch of the solution compounded by College Pharmacy was dispensed with a 7-months beyond use expiration date instead of 365 days beyond-use date the manufacturer s formula called for. Stability testing by College Pharmacy indicated that the solution had a minimum 2 year stability. The mistaken expiration date assigned to the trial batch did not affect the safety of the batch, rather the expiration period was shorter than it needed to be. Although the Board did not find that College Pharmacy had violated a specific statutory provision or rule, it issued a letter of admonition on July 22, 2013, and noted it as a disciplinary action in College Pharmacy s permanent record. (Exhibit 3) The July 2013 Colorado letter of admonishment was reported to each of the 47 states where College Pharmacy is licensed, and there has been no disciplinary action in states other than Michigan as a result of the admonishment. 8. After taking over College Pharmacy, and with knowledge of the 2007 and 2009 Colorado Board actions, Mr. Gillick instituted a system to document whether a wholesaler involved in a purchase is licensed in a specific state. In addition there is now a system to track the type of practitioner ordering or prescribing controlled substances. College Pharmacy only fills patient specific prescriptions and no bulk distribution occurs. There have been no product safety allegations filed against College Pharmacy. Given the statutory limitations on its authority, the ALJ did not make a recommendation as to the proper sanction other than to note that given the violation the Board had grounds for action against respondent and that in imposing any sanction, the Board may consider as mitigation, the above Findings of Fact establishing that the current pharmacy manager of Respondent was specifically approved by the Colorado Board to take over from the previous owner/manager who was in charge when the acts leading to sanctions occurred. Further, the new pharmacy manager has instituted policies and procedures to prevent reoccurrence of problems. In light of these Conclusions of Law, I find no grounds in the ALJ s report to impose the ultimate penalty of license revocation. Given that the Board adopted and relied upon that report, the Board did not have substantial evidence to support the sanction imposed. The serious violations of 2006 and 2008 occurred while respondent was under different ownership and management. The new management was specifically approved by the Colorado Board of Pharmacy, and respondent was placed on probation for a period of seven years. The only violation that occurred thereafter was the 2012 error, which, as found by the ALJ, did not affect the safety of the [medicine], rather the expiration period was shorter than it needed to be. The Colorado Board of Pharmacy admonished respondent for this violation but took no other action. Respondent reported this discipline to the other 47 states in which it is licensed, and none, other than Michigan, took disciplinary action. -5-

11 When asked at oral argument why substantial evidence supported the sanction, counsel for the Board took the position that the Board is not required to offer any justification for selecting one sanction over any other and that its sanction decisions are unreviewable except for whether the sanction may be imposed at all. I recognize that the Board has broad discretion and it is not our role to second-guess its choice of sanction where any of several are supported by the evidence. Nevertheless, while the standard of review is very deferential, the Board s actions are, and to comply with due process must be, reviewable by this Court, and, I would not conclude that because the sanction is authorized by law that it is necessarily supported by substantial evidence. Given the Board s position that its choice of sanctions is unreviewable, it has not made an argument why the facts of this case, as found by the ALJ and accepted by the Board, justify the most severe sanction available. Moreover, having accepted the ALJ s findings, it must consider the mitigating factors set forth therein. See Marrs v Board of Medicine, 422 Mich 688, 694; 375 NW2d 321 (1985). Given the record before us I would conclude that the Board did not consider the mitigating circumstances in determining the appropriate sanction. I would vacate the disciplinary subcommittee s final order and remand to that body for further consideration pursuant to MCL (2). 3 /s/ Douglas B. Shapiro 3 Respondent s counsel filed an affidavit with this Court attesting that at the Disciplinary Subcommittee meeting there was no discussion regarding the specific facts of this case and that one of the subcommittee s members commented that Michigan does not need any additional out-of-state compounding pharmacies. This affidavit is not part of the administrative record, and I do not rely upon it. I reference it however, to suggest that where the most severe sanction is being imposed despite significant mitigating evidence, it would facilitate our review if the Board provided some of its reasoning in its order. -6-