FARMACY, LLC v. KIRKPATRICK
2017 OK 37
Okla.2017Background
- Farmacy, LLC is an Oklahoma-licensed wholesale distributor of veterinary prescription drugs licensed by the Oklahoma State Board of Pharmacy and registered with the Oklahoma Board of Veterinary Medical Examiners (Vet Board).
- Vet Board sent Farmacy a demand for all business records (Jan 2014), alleging resale to end users prior to Vet Board registration and invoking the Vet Act; Farmacy sought a declaratory ruling and the Pharmacy Board later inspected Farmacy and found compliance.
- Vet Board rule-required inspections must occur during "reasonable business hours." Vet Board attempted one on July 3, 2014; the inspector found the business closed and did not complete an inspection during business hours.
- Vet Board held Farmacy in contempt of its February 21, 2014 order for not timely allowing inspection and fined Farmacy $25,000 (Sept. 2014). Farmacy sued in district court seeking injunctive/declaratory relief claiming Vet Board exceeded its statutory authority.
- The district court enjoined the Vet Board from proceeding; the Supreme Court of Oklahoma affirmed, holding the Vet Board may inspect during regular business hours but lacks authority to investigate or penalize wholesalers regulated by the Pharmacy Board.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Vet Board has authority to investigate and fine a pharmacy-licensed wholesaler for alleged violations related to veterinary drugs | Farmacy: Vet Board lacks statutory authority over wholesalers licensed under the Pharmacy Act; only Pharmacy Board may regulate/investigate/penalize wholesalers | Vet Board: Under Vet Act and rules adopted under 59 O.S. §353.13(G), Vet Board can promulgate inspection/registration rules and compel records to ensure valid VCPRs; may investigate and sanction | Held: Vet Board may inspect wholesalers' records in the ordinary course (during business hours) to verify VCPRs but does not have statutory authority to investigate or penalize Pharmacy Board licensees; Pharmacy Board has sole authority to regulate and discipline wholesalers |
| Whether Farmacy was required to exhaust administrative remedies before seeking judicial relief | Vet Board: Farmacy failed to exhaust administrative remedies and should have pursued agency process | Farmacy: Challenge goes to Vet Board's statutory authority, so judicial review is appropriate without exhaustion | Held: No exhaustion required where plaintiff challenges the agency's power to act at all; district court had jurisdiction and decision affirmed |
| Whether Vet Board complied with its own inspection rule before fining Farmacy | Farmacy: Vet Board never completed an inspection during reasonable business hours; thus fining was improper | Vet Board: Attempts and arrangements were made to inspect; Farmacy obstructed inspection | Held: Vet Board attempted only one during business hours and did not complete inspection; it could have subpoenaed records instead of fining; fine was improper |
| Appropriateness of $25,000 fine for failure to produce records | Farmacy: Fine exceeded Vet Board authority over a Pharmacy Board licensee and was improper | Vet Board: Fine was authorized under Vet Act/rules for failure to cooperate | Held: Fine reversed — Vet Board lacked authority to impose such sanction on a wholesaler regulated by the Pharmacy Board |
Key Cases Cited
- Marley v. Cannon, 618 P.2d 401 (Okla. 1980) (agencies may only exercise powers granted by statute; implied powers limited to those necessary to carry out express powers)
- Waste Connections, Inc. v. Oklahoma Dep’t of Envtl. Quality, 61 P.3d 219 (Okla. 2002) (general rule requiring exhaustion of administrative remedies)
- City of Tulsa v. State ex rel. Public Employees Relations Bd., 967 P.2d 1214 (Okla. 1998) (standard of appellate review for administrative records)
- McNeill v. City of Tulsa, 953 P.2d 329 (Okla. 1998) (statutory provisions construed together to ascertain legislative intent)
- The Pentagon Academy, Inc. v. Indep. Sch. Dist. No. 1 of Tulsa Cnty., 82 P.3d 587 (Okla. 2003) (statutory interpretation guided by plain language and legislative intent)