Board’s Licensure Revocations Are Upheld on Appeal

Issue of the Case

A state board of pharmacy revoked the pharmacy license and the permit of its pharmacist in charge based on their actions in relation to workers’ compensation claims. Will the state court of appeals affirm the revocation?

Facts of the Case

A state board of pharmacy received word from the state’s department of insurance that it was investigating workers’ compensation claims for medication expenses that had been submitted by a community pharmacy.

The department had received reports that representatives of the pharmacy were “cold-calling...recipients of workers’ compensation benefits, taking their information, contacting their doctors, filling prescriptions for them, and then billing the workers’ compensation insurance carrier thousands of dollars for what was later deemed medically unnecessary medication.”

The insurance department sent the board of pharmacy findings from
3 administrative reviews of the conduct in question involving 3 different patients. All 3 had received an identical compounded topical cream, billed at $900, even though each had suffered different work-related injuries.

After collecting the patient’s information while leading them to believe that the pharmacy was affiliated with their workers’ compensation insur- ance carrier, the staff prepared “patient request” forms that included this wording: “Your patient is requesting a prescription for a topical pain cream. Please have the doctor sign, date, and add the ICD-10 code. Please fax back to our pharmacy.”

There was also a notation stating “Medical necessity: Avoid potential addiction to oral pain meds. Cannot perform [activities of daily living] on oral pain meds. Combining multiple active ingredients into 1 dose.” One of the forms also bore a statement, “Attn: Patient really wants cream for pain. Patient will call today.”

The workers’ compensation insurance carrier consulted a program at the state’s college of pharmacy that had been created by the state to analyze clinical data to facilitate selection of best-quality drugs for the state’s Medicaid patients.

After receiving the program’s assessment, the carrier informed the pharmacy that the cream was excluded from coverage because it was not reasonable or necessary for any of the patients’ work injuries. Despite have received this notification, the pharmacy continued to send cream refills to the patients and to bill the insurers.

The board of pharmacy followed up on the referral from the department of insurance by conducting a hearing whose conclusion was that the pharmacy and the pharmacist “had committed (1) fraud, deceit, or misrepresentation in the practice of pharmacy and (2) unprofessional or dishonorable conduct in violation” of several provisions in state statutes.

With respect to the administrative regulations, the board concluded that they had violated 2 provisions that offer “additional guidance on unprofessional or dishonorable conduct as it relates to the practice of pharmacy.”

The board further concluded that the pharmacy was guilty of “not conducting its operations according to law and in a way that endangers the public’s health and safety.”

The pharmacist’s license to practice and the pharmacy’s permit to operate were revoked. They filed an appeal with a state circuit court but were unsuccessful in overturning the board’s decisions and sanctions.

The pharmacist and pharmacy then appealed to the state court of appeals, arguing that the findings of the board were not supported by substantial evidence.

The Ruling

Concluding that there was indeed substantial evidence to support the board’s decision, the court of appeals ruled by a 4-2 vote that the board’s action to revoke the license and permit was not erroneous.

The Court's Reasoning

The appellate court began by pointing out that in an appeal of this nature—reviewing the decision of an administrative agency—the focus was on the decision of the agency, not the decision of the trial court. Courts extend “great deference to an agency’s expertise and give the evidence its strongest proba- tive force in favor of the agency’s findings,” it said. This is because “administrative agencies are better equipped by specialization, insight through experience, and more flexible procedures than courts to determine and analyze legal issues affecting their agencies.” The court’s review considers the entire record to determine whether any substantial evidence supports the agency’s decision.

The appellant challenging an agency’s decision, must “demonstrate that fair-minded people could not, on the evidence submitted, reach the conclusion arrived at by the agency. The question is not whether the evidence would support any other finding, but instead whether the evidence supports the finding that was made.”

The conclusion of the majority of judges on the court was that substantial evidence did exist to support the decision.

Two judges dissented, with a statement that summed up their disagreement: “This business practice appears to be shady and distasteful. However, shady and distasteful are not the standards of review this court is required to apply in this case.”

About The Author

Joseph L. Fink III, JD, DSc (hon), BSPharm, FAPhA, is a professor of pharmacy law and policy and the Kentucky Pharmacists Association Professor of Leadership at the University of Kentucky College of Pharmacy in Lexington.