FARMACY, LLC v. KIRKPATRICK
2017 OK 37
Okla.2017Background
- Farmacy, LLC is a licensed wholesale distributor of veterinary prescription drugs under the Oklahoma Pharmacy Act; it timely registered with the Oklahoma Board of Veterinary Medical Examiners (Vet Board).
- The Vet Board opened an investigation alleging Farmacy sold prescription drugs without proper registration and demanded production/inspection of Farmacy’s records; Farmacy responded that it was regulated by the Pharmacy Board.
- The Pharmacy Board inspected Farmacy and found compliance; the Vet Board nonetheless sought inspection and later filed an administrative complaint accusing Farmacy of refusing to cooperate and assessed a $25,000 fine.
- Farmacy filed suit in district court seeking declaratory and injunctive relief, arguing the Vet Board lacked authority to investigate and sanction a Pharmacy Board–licensed wholesaler; the trial court enjoined the Vet Board and set aside the administrative order.
- The Oklahoma Supreme Court reviewed de novo whether the Vet Board had statutory authority to investigate, compel records, and fine a wholesaler regulated by the Pharmacy Board, and whether Farmacy had to exhaust administrative remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Vet Board may investigate and fine a wholesaler licensed by the Pharmacy Board | Vet Board lacks authority over wholesalers; only Pharmacy Board may investigate/discipline them | Vet Board may promulgate rules (Inspection/Registration) under Pharmacy Act §353.13(G) and thus can inspect and enforce | Vet Board can inspect records during regular business hours but lacks statutory authority to investigate/penalize wholesalers; Pharmacy Board has sole authority to discipline its licensees |
| Validity/applicability of Vet Board Inspection and Registration rules to Farmacy | Rules exceed Vet Board’s statutory authority when used to investigate/penalize wholesaler | Rules were promulgated under statutory authorization to ensure VCPR compliance and are applicable | Rules permit inspection in the ordinary course, but do not confer authority to sanction wholesalers under the Vet Act |
| Whether Farmacy failed to allow inspection (and thus was properly fined) | Farmacy offered opportunities; Board’s investigator arrived when business was closed; Board never inspected during reasonable business hours | Board alleges Farmacy refused or delayed production and offered to deliver documents on other occasions | Vet Board never completed a lawful on-site inspection during Farmacy’s reasonable business hours; fine therefore improperly imposed |
| Whether Farmacy had to exhaust administrative remedies before suing | No—challenge goes to the agency’s power to act at all, so exhaustion not required | Board contends ordinary exhaustion rules apply | Court: exhaustion not required where plaintiff challenges agency’s statutory authority to act; trial court had jurisdiction |
Key Cases Cited
- World Publishing Co. v. Miller, 32 P.3d 829 (Okla. 2001) (statutory construction principles)
- Waste Connections, Inc. v. Oklahoma Dep’t of Environmental Quality, 61 P.3d 219 (Okla. 2002) (administrative exhaustion rule)
- Marley v. Cannon, 618 P.2d 401 (Okla. 1980) (limits on agency powers; implied vs. statutory authority)
- McNeill v. City of Tulsa, 953 P.2d 329 (Okla. 1998) (reconciliation of statute parts to determine legislative intent)
- State ex rel. Dep’t of Transportation v. Little, 100 P.3d 707 (Okla. 2004) (de novo review of statutory interpretation)