Golden Drugs Co., Inc. v. Maxwell-JollyGolden Drugs Co., Inc. v. Maxwell-Jolly
Opinion
Golden Drugs Co., Inc., doing business as Golden Drugs Pharmacy (Pharmacy), appeals from a judgment denying its petition for a writ of mandamus (Code Civ. Proc., § 1085), which challenged the termination of Pharmacy’s Medi-Cal provisional provider license by defendant Sandra Shewry, as then director of the State Department of Health Care Services (the Department). (Health & Saf. Code, § 20 [name change from Department of Health Services]; Welf. & Inst. Code, § 14043.65.
1
) Pharmacy
STATUTORY AND REGULATORY FRAMEWORK
The Department administers the Medi-Cal program, by which California participates in the federal Medicaid program (42 U.S.C. § 1396 et seq.) to provide medical services to eligible persons. (§§ 10720 et seq., 14000 et seq.; Cal. Code Regs., tit. 22, § 51000 et seq.;
Marvin Lieblein, Inc. v. Shewry
(2006)
To obtain reimbursement for services provided through Medi-Cal, a medical professional must enroll as a Medi-Cal “provider,” i.e., an entity that “provides services, goods, supplies, or merchandise” to Medi-Cal beneficiaries. (§ 14043.1, subd. (e).) In order to be a Medi-Cal provider, the medical professional must comply with Medi-Cal statutes and regulations, as well as statutes and regulations governing the provider’s profession. (§§ 14043.1, 14043.27. 2 )
The practice of pharmacy is a profession subject to the Pharmacy Law (Bus. & Prof. Code, §§ 400-4226, 4050). Pharmacies must be licensed by the California State Board of Pharmacy (the Board), which has as its “highest priority” the “[protection of the public.” (Bus. & Prof. Code, § 4001.1; see
id.,
§ 4110.) Every pharmacy must have a “pharmacist-in-charge” who is licensed by the Board and “responsible for a pharmacy’s
Business and Professions Code section 4115 states in part:
“(a) A pharmacy technician may perform packaging, manipulative, repetitive, or other nondiscretionary tasks, only while assisting, and while under the direct supervision and control of a pharmacist.
“(b) This section does not authorize the performance of any tasks specified in subdivision (a) by a pharmacy technician without a pharmacist on duty.
“(c) This section does not authorize a pharmacy technician to perform any act requiring the exercise of professional judgment by a pharmacist.
“(d) The board shall adopt regulations to specify tasks pursuant to subdivision (a) that a pharmacy technician may perform under the supervision of a pharmacist.”
The Board adopted a regulation (Cal. Code Regs., tit. 16, § 1793.2 (regulation 1793.2)), stating, “ ‘Nondiscretionary tasks’ as used in Business and Professions Code section 4115, include: [|] (a) removing the drug or drugs from stock; [f] (b) counting, pouring, or mixing pharmaceuticals; [f] (c) placing the product into a container; [j[] (d) affixing the label or labels to the container; [and] [f] (e) packaging and repackaging.” Another regulation states that “[o]nly a pharmacist” (or an intern pharmacist acting under the pharmacist’s supervision) may interpret a prescription; “[supervise the packaging of drugs and check the packaging procedure and product upon completion”; and “[p]erform all functions which require professional judgment.” (Cal. Code Regs., tit. 16, § 1793.1 (regulation 1793.1).)
FACTUAL AND PROCEDURAL BACKGROUND
On February 3, 2006, the Department sent a letter to Pharmacy, located in Los Angeles, stating the Department was terminating Pharmacy’s Medi-Cal provisional provider status, effective on February 21, 2006, in accordance
On February 16, 2006, the Department sent Pharmacy an amended letter correcting the Medi-Cal provider number.
On February 22, 2006, Pharmacy’s attorney responded that there must be some mistake and requested an informal meeting to “obviate the expenditure of resources” on an administrative appeal.
As alleged in Pharmacy’s writ petition, Pharmacy’s attorney and its pharmacist-in-charge (PIC) Luther Jenkins met in Sacramento on March 22, 2006, with Jan Inglish, chief of the Department’s medical review branch, audits and investigations section, and members of her staff. Jenkins allegedly provided documents and live “testimony” contradicting the Department’s facts, and Inglish allegedly asked inappropriate questions about the ethnic makeup of the community where Pharmacy was located; the national origin of Pharmacy’s owners; and the relative salaries of the owners and pharmacist.
On May 25, 2006, the Department sent an “Amendment to Letter Dated February 16, 2006” to Luther Jenkins, president, chief executive officer and PIC of Golden Drugs Co., Inc. The letter stated the Department “is terminating your Medi-Cal provisional provider status, suspending you from enrollment and participation in the Medi-Cal program, and deactivating your provider number . . . [effective] June 14, 2006, in accordance with . . . [section] 14043.27 [fn. 2, ante].”
In addition to the facts asserted in the prior termination letter, the May 2006 letter said that it conducted an onsite review on November 28, 2005, which revealed (1) Pharmacy changed ownership in May 2003; (2) after the
The May 2006 letter provided further detail regarding the substance of the prior termination letter, stating: “On December 2, 2005, the Department’s reviewers consisting of a Health Program Auditor and Pharmacy Consultant directly observed a pharmacy technician dispensing medication intended for delivery to clients without direct supervision and control of a pharmacist, i.e., the person selected the prescription label; placed them [sic] on the counter; went to the shelves to get the medications; counted out the medications; put them in vials; put caps on the vials; put the medications in bags; returned the medication containers back to the shelves or discarded in the trash empty containers; placed the bags in an office adjacent to the pharmacy; and no pharmacist checked or viewed this person’s work. The observed actions of the pharmacy technician coupled with the lack of direct supervision by a licensed pharmacist represent an immediate threat to harm and danger to both Medi-Cal beneficiaries and the general public. This is because a pharmacy technician does not possess the necessary knowledge and professional judgment to act independently while dispensing medications. Potential errors in dispensing of medication could result in serious or even fatal medication complications to clients of the pharmacy.”
The letter said Pharmacy thus violated Business and Professions Code section 4115 as well as Medi-Cal regulations by submitting claims for services not performed by a pharmacist (Cal. Code Regs., tit. 22, § 51470 [provider shall not submit claims for benefits not provided]), misrepresenting the actual provider (Cal. Code Regs., tit. 22, § 51485 [provider shall not submit false or misleading statement of material fact]), and subjecting customers to the risk of error from inadequate supervision (Cal. Code Regs., tit. 22, § 51481 [provider shall not engage in conduct inimical to the public health, morals, welfare and safety of any Medi-Cal beneficiary]).
The May 2006 letter advised that the Department was terminating Pharmacy’s provisional provider status under section 14043.27 (fn. 2,
ante),
which authorizes termination if (a) the provider has provided material information that was false or misleading at the time it was provided, and (b) the provider commits any violation of a federal or state statute or regulation governing the provider’s profession or occupation and the violation
The May 25 letter also stated:
“Appeal Rights
“If you disagree with this action, you have the right to appeal termination of provisional provider status pursuant to Wei. & Inst. Code § 14043.65. This appeal procedure does include a formal administrative hearing under the Administrative Procedure Act. An appeal will not result in reactivation of any deactivated provider number during the appeal. If you decide to appeal, you must submit pertinent documents and all other relevant written evidence for consideration by the Program within 60 days of the date of this notification to:
“Office of Administrative Hearings and Appeals
“1029 J. Street, Suite 200
“Sacramento, CA 95814
“Upon receipt of all pertinent documents and all other relevant evidence supporting an appeal, the director or the director’s designee shall review all submitted relevant documents and issue a decision within 90 days of the receipt of the evidence.”
On May 30, 2006, Pharmacy sent a notice of appeal to the Office of Administrative Hearings and Appeals (OAHA). As indicated (fn. 1, ante), a section 14043.65 appeal is not a formal administrative hearing but a “paper hearing” in which the Medi-Cal provider (Pharmacy) must submit relevant evidence to support its appeal. Pharmacy’s notice of appeal stated, “Please note that pertinent documentation and other written evidence for consideration by your office will follow.” However, the referenced evidence did not follow.
On June 26, 2006, the Board, which is not a party to this case, sent a letter to Pharmacy stating the Board had investigated the Department’s allegations of unlicensed activity, and “[o]ur analysis of the information and documentation received did not reveal sufficient evidence to determine that a violation of the pharmacy law occurred. As a result, the Board is closing the matter and no action will be taken.” Pharmacy submitted the Board’s letter to the hearing officer.
Consultant Scholastica Tang declared: “While Mr. Nguyen was working with the [PIC] to request additional documents for the review, I toured the pharmacy and observed a person was dispensing medications on the other side of the counter. This person picked up the prescription labels, lined them on the counter, obtains [sic] the medication bottles from the shelves, counts the medications, put them into the vials, put on the labels, and then packs the vials in the bag. She then cleaned up the counter by returning the medication bottles back to the shelves where she originally had them or throwing away the empty medication bottles. She repeated the same process for other clients’ prescriptions. When she had about five or six bags of prescriptions ready, she took them into the office adjacent to the pharmacy dispensing area. After observing her doing that for about 40 minutes, I went to get Mr. Nguyen. With Mr. Nguyen[] present I asked this person where she went to pharmacy school. She responded that she never went to Pharmacy school. . . . [She] was filling prescriptions independently for about 40 minutes. During this time, she
In October 2006, the OAHA hearing officer issued an “APPEAL FINDING,” recommending rejection of Pharmacy’s appeal on the ground of failure of supervision and control by a pharmacist. The hearing officer said Pharmacy had not denied that events occurred as reported by the Department, and the only evidence submitted by Pharmacy was the Board’s letter. “Counsel for [Pharmacy] requests that the determination from the California State Board of Pharmacy be considered. This Office concludes that the standards the Board requires for an action are meant for civil or criminal prosecution when professional licensure is at stake. This Office reviews the merits of the case as to whether the Provider is in compliance with the regulations regarding the service of Medi-Cal clientele. Counsel has not denied any of the contentions presented by [the Department] in the May 25, 2006 letter terminating provisional provider status. The conduct of the Provider in provision of services is noncompliant as demonstrated by [the Department], The appeal to vacate the termination of provisional provider status is denied.”
The Department adopted as its decision the hearing officer’s appeal finding.
On February 2, 2007, Pharmacy filed a petition for traditional mandamus (Code Civ. Proc., § 1085). (Pharmacy concedes the caption’s reference to “administrative” mandamus was a mistake.) Pharmacy alleged the Department ignored “evidence” that no technician dispensed or could have dispensed medication without the pharmacist’s supervision, and the Department based its decision on unreliable evidence. Pharmacy tried to submit declarations which it had not submitted to the OAHA. Pharmacy also filed a motion to allow oral testimony at the hearing on the writ petition and a motion for judgment.
The Department opposed the writ petition and motions, arguing the court should not entertain evidence Pharmacy failed to present at the administrative level. The Department argued Pharmacy could not rely on items presented at the earlier informal meeting with Jan Inglish, which was not part of the appeal procedure. The Department also disputed Pharmacy’s claim that its “evidence” was overwhelming.
On November 28, 2007, the trial court entered a judgment denying the writ petition and stating, “At the administrative level, [Pharmacy] had the burden of presenting to the administrative hearing officer ‘any supporting evidence’ in furtherance of its administrative appeal. The only evidence that [Pharmacy]
The trial court accordingly entered judgment in favor of the Department and against Pharmacy.
DISCUSSION
I. Standard of Review
We said in
Marvin Lieblein, Inc.
v.
Shewry, supra,
“ ‘Where a statute leaves room for discretion, a challenger must show the official acted arbitrarily, beyond the bounds of reason or in derogation of the applicable legal standards. [Citation.] Where only one choice can be a reasonable exercise of discretion, a court may compel an official to make that choice. [Citation.]’ . . .
“ ‘The trial court’s review of the respondent’s action is limited to determining whether the actions were arbitrary, capricious, entirely lacking in evidentiary support or contrary to required legal procedures. [Citations.]’ ” (Marvin Lieblein, Inc. v. Shewry, supra, 137 Cal.App.4th at pp. 713-714.)
Where, as here, the trial court made no new factual findings, our review is the same as that of the trial court.
(Shapell Industries, Inc. v. Governing Board
Although plaintiff invokes the substantial evidence test, the question whether agency action is “entirely lacking in evidentiary support” is not the same as a substantial evidence test.
(American Board of Cosmetic Surgery v. Medical Board of California
(2008)
In
American Board of Cosmetic Surgery, supra,
Shapell, supra,
Shapell’s reasoning is sound and has been followed in other cases. (E.g.,
McGill
v.
Regents of University of California
(1996)
It seems appropriate to apply Shapell here, because even if the administrative action is characterized as informal, the Legislature has given the Department discretion to terminate Medi-Cal provider status if a pharmacy violates regulations in a way that threatens public welfare. (§ 14043.27; fn. 2, ante.) The fact question is not merely whether the pharmacist had his eyes fixed on the technician while she filled prescriptions, but whether the pharmacist exercised adequate supervision and control to protect public welfare. This is a question within the Department’s expertise.
II. Extra-record Evidence
Pharmacy argues we should consider extra-record evidence (apparently the declarations of Jenkins and the pharmacy technician that are in the record on
We preliminarily address Pharmacy’s suggestion that the extra-record evidence includes the Board’s letter declining to take action on the charge of unlicensed activity. We observe, as did the trial court, that the hearing officer
did
consider the Board’s letter indicating insufficient evidence of unlicensed activity. The hearing officer said, “This Office concludes that the standards the Board requires for an action are meant for civil or criminal prosecution when professional licensure is at stake. This Office reviews the merits of the case as to whether the Provider is in compliance with the regulations regarding the service of Medi-Cal clientele.” Pharmacy makes no argument and presents no legal analysis demonstrating reversible error on this point, and therefore the matter is forfeited.
(Badie
v.
Bank of America
(1998)
As to the other evidence, Pharmacy cites without discussion two cases for the proposition that extra-record evidence is admissible in traditional mandamus cases.
Friends of the Old Trees v. Department of Forestry & Fire Protection
(1997)
Pharmacy fails to explain how either
Friends
or
Garrick
supports admission of extra-record evidence in this case. We are not required to entertain contentions lacking adequate legal analysis.
(In re Marriage of Nichols
(1994)
Pharmacy offers no analysis of these different types of traditional mandamus cases, and this case does not fall neatly within those categories. The administrative action was not ministerial but rather involved a discretionary decision whether the provider violated regulations in a way that threatened the public welfare. (§ 14043.27; fn. 2,
ante.)
This was not a quasi-legislative decision, since it did not involve formulation of a rule for widespread application.
(Shapell, supra,
Here, the Department came to an adjudicatory decision dependent on facts of the particular case, and Pharmacy fails to show any reason why it should have been allowed to add extra-record evidence in the trial court.
Section 14043.65 (fn. 1,
ante)
expressly required Pharmacy to “submit the written appeal along with all pertinent documents and all other relevant evidence to the [Department’s] director or to the director’s designee . . . .” Pharmacy notes the statute does not say anything about submitting evidence to the OAHA hearing officer. However, the OAHA was the Department’s “designee” under section 14043.65, as stated in the Department’s letter of May 25, 2006, which advised Pharmacy of its right to an administrative appeal under section 14043.65 and further advised, “If you decide to appeal, you must submit pertinent documents and all other relevant written evidence for consideration by the Program within 60 days of the date of this notification to: [f] Office of Administrative Hearings and Appeals [address].”
Pharmacy argues Inglish should have forwarded to the hearing officer the information presented in the informal March meeting. However, Pharmacy cites no authority supporting its position and no evidence that it expected Inglish to forward any such information to the hearing officer, or that any such expectation would have been reasonable, or that Inglish knew or should have known Pharmacy expected it. To the contrary, when it filed its OAHA appeal, Pharmacy said its evidence would follow and wrote a letter to Inglish complaining it appeared the Department “completely tossed” the information submitted by Pharmacy at the March meeting.
Pharmacy argues it “substantially complied” with section 14043.65 (fn. 1,
ante)
by giving information to Inglish at the March 2006 meeting, months before Pharmacy filed its notice of administrative appeal in May 2006. Pharmacy cites cases such as
Jamison v. State of California
(1973)
Pharmacy had the burden to present its evidence at the administrative appeal, and it fails to show an excuse for its failure to do so.
We conclude Pharmacy fails to show a basis for consideration of extra-record evidence.
As indicated, we will uphold the agency’s decision unless it is devoid of evidentiary support. This test calls upon us to ensure that the administrative agency has adequately considered all relevant factors, and has demonstrated a rational connection between those factors, the choices made, and the purposes of the enabling statute.
(California Hotel & Motel Assn. v. Industrial Welfare Com., supra,
The agency considered all evidence presented as part of the administrative appeal. The purpose of the statute allowing termination of Medi-Cal provider status is “to ensure the proper and efficient administration of the Medi-Cal program” (§ 14043) and to ensure that providers not violate governing statutes and regulations in a manner which “represents a threat of immediate jeopardy or significant harm to any Medi-Cal beneficiary or to the public welfare.” (§ 14043.27, subd. (c)(9).) Clearly, there is a rational connection between a threat to public welfare and an unauthorized, unsupervised person distributing drugs into containers for delivery to customers’ homes.
Abundant evidentiary support for the decision is found in the declarations of auditor Thomas Nguyen and consultant Scholastica Tang, which were submitted to the hearing officer and which are described at length in the factual and procedural background, above.
Pharmacy suggests the trial court mistakenly believed that Pharmacy had the burden of presenting to the administrative hearing officer any supporting evidence in furtherance of its administrative appeal. We have already rejected Pharmacy’s position on this point.
Pharmacy argues the trial court erred when it found that the only evidence Pharmacy offered in its administrative appeal was the letter from the Board. Pharmacy says it also presented live “testimony” from Jenkins, photographs, and written statements. However, Pharmacy is referring to material it presented in the informal meeting with Inglish before the appeal. We have explained these items do not count because they were not presented to the hearing officer.
Pharmacy argues there was insufficient evidence, because the inspectors merely saw the technician
filling
prescriptions, not
dispensing
them, i.e., not handing them over to customers. However, the inspectors’ declarations
Even if we were to consider the technician’s statement that she placed the medications there for the pharmacist to check them before he dispensed them, the technician did not dispute that the drugs were delivered to people in their homes.
Pharmacy considers it suspicious that the inspectors’ declarations were dated December 9, 2005—before the Department took any action (in Feb. 2006) to terminate Medi-Cal provider status. We have no problem with inspectors preparing written statements, even in the form of declarations, while the events are still fresh in their minds. We reject Pharmacy’s unsupported accusation that the timing of the declarations and the fact they were created reflects dishonesty.
We conclude the agency decision was not devoid of evidentiary support.
IV. Arbitrary/Capricious and Due Process
Pharmacy argues the Department’s actions were arbitrary and capricious and violated the due process clause of the federal and state Constitutions.
Pharmacy’s due process argument is forfeited for failure to provide an adequate legal and factual analysis.
(Badie v. Bank of America, supra, 61
Cal.App.4th at pp. 784—785.) Pharmacy’s legal analysis is that due process “prohibits state agencies from following arbitrary procedures respecting entitlement benefits. C.C.P. § 1085;
Goldberg v. Kelly
(1970)
Pharmacy then launches into an attack claiming that (1) the Department ignored “compelling evidence”—the pharmacist’s declaration that unsupervised dispensing of medicine was impossible and that he contacted the
Pharmacy offers no legal analysis whatsoever as to how any of these assertions violate due process. Most of the assertions have nothing to do with the ground upon which Pharmacy’s Medi-Cal provider status was ultimately terminated—the dispensing of drugs by a technician unsupervised by the pharmacist. The supposedly “compelling evidence” regarding supervision was ignored because Pharmacy failed to present it to the hearing officer. Moreover, the evidence was not that compelling. Even assuming we were to credit the pharmacist’s recitation of hearsay about the inspector’s alleged failure of recollection, such a failure of recollection months after the inspection is inconsequential and does not create a contradiction with the inspector’s declaration prepared a mere week after the inspection. As to the declaration of Jenkins, who is no longer the PIC, he attested the “physical lay-out of Golden Drugs makes it impossible for a pharmacy technician to work without being observed by the pharmacist.” This statement is obviously and facially incorrect. A person can be inches from another, yet unobserved where, for example, the other person has his eyes closed or his back turned. Moreover, the close quarters of the pharmacy area is not dispositive, given that the technician moved the drugs out of the pharmacy area.
We conclude Pharmacy has forfeited its due process argument. We therefore need not address the Department’s argument that a medical provider has no due process right to continued participation in the Medi-Cal program—a position which arguably conflicts with our statement in
Marvin Lieblein, Inc.
v.
Shewry, supra,
We conclude Pharmacy fails to show grounds for reversal.
The judgment is affirmed. The Department shall recover its costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1)—(2).)
Blease, Acting P. J., and Robie, J., concurred.
Notes
Undesignated statutory references are to the Welfare and Institutions Code.
Section 14043.65, subdivision (a), provides: “Notwithstanding any other provision of law, . . . any provider . . . whose provisional provider status . . . has been terminated pursuant to this article . . . may appeal this action by submitting a written appeal, including any supporting evidence, to the director or the director’s designee. . . . The appeal procedure shall not include a formal administrative hearing under the Administrative Procedure Act and shall not result in reactivation of any deactivated provider numbers during appeal. A[] . . .
Section 14043.27 provides in part: “(c) The following circumstances are grounds for termination of provisional provider status .... [B ... H] (3) The provider has provided material information that was false or misleading at the time it was provided. [B • • [B (9) The provider commits any violation of a federal or state statute or regulation governing the Medi-Cal program or of a statute or regulation governing the provider’s profession or occupation and the violation represents a threat of immediate jeopardy or significant harm to any Medi-Cal beneficiary or to the public welfare.” (Italics added.)
It appears the letter quoted a prior version of the statute. (Stats. 2004, ch. 695, § 35.) The wording that the technician be “within the pharmacist’s view” does not appear in the current version of Business and Professions Code section 4115, enacted in 2005 (Stats. 2005, ch. 621, § 53), which provides: “(a) A pharmacy technician may perform packaging, manipulative, repetitive, or other nondiscretionary tasks, only while assisting, and while under the direct supervision and control of a pharmacist." Pharmacy does not raise any issue concerning the amendment.
Section 14043.65, subdivision (a) provides as pertinent: “The decision of the director or the director’s designee shall be final. Any further appeal shall be required to be filed in accordance with Section 1085 of the Code of Civil Procedure.”
Pharmacy invokes the substantial evidence test, which measures the quantum of proof adduced and assesses whether the matters at issue have been established by a solid, reasonable and credible showing.
(Dept. of Parks & Recreation v. State Personnel Board
(1991)