I KAMALA D. HARRIS 2 JANICEK. LACHMAN 3 KRISTINA T. JANSEN Attorney General of California Supervising Deputy Attorney General 4 5 6 7 Deputy Attorney General State Bar No. 258229 1300 I Street, Suite 125 P.O. Box 944255 Sacramento, CA 94244-2550 Telephone: (916) 324-5403 Facsimile: (916) 327-8643 Attorneys for Complainant 8 BEFORETHE BOARD OF PHARMACY DEPARTMENT OF CONSUMER AFFAIRS STATE OF CALIFORNIA 9 10 II In the Matter of the Statement oflssues Against: Case No. 5246 PHILIDOR RX SERVICES, LLC MATTHEWS. DAVENPORT, CEO STATEMENT OF ISSUES 13 14 Nonresident Pharmacy Permit Applicant 12 15 Respondent. 16 Complainant alleges: 17 18 PARTIES 1. 19 20 Virginia Herold (Complainant) brings this Statement oflssues solely in her official capacity as the Executive Officer of the Board of Pharmacy, Department of Consumer Affairs. 21 2. On or about August 16,2013, the Board of Pharmacy, Department of Consumer 22 Affairs received an application for a Nonresident Pharmacy Permit from Philidor Rx Services, 23 LLC., MatthewS. Davenport, CEO, (Respondent). On or about August 15,2013, Respondent 24 submitted an application to the Board of Pharmacy which certified under penalty of perjury the 25 truthfulness of all statements, answers, and representations in the application. The Board denied 26 the application on May 16, 2014. 27 Ill 28 Ill STATEMENT OF ISSUES JURISDICTION 2 3. This Statement oflssnes is brought before the Board of Pharmacy (Board), 3 Department of Consumer Affairs, under the authority of the following laws. All section 4 references are to the Business and Professions Code unless otherwise indicated. BUSINESS AND PROFESSIONS CODE 5 Section 480 of the Code states in pertinent part: 6 4. 7 (a) A board may deny a license regulated by this code on the grounds that the applicant has 8 9 10 11 12 one of the following: (2) Done any act involving dishonesty, fraud, or deceit with the intent to substantially benefit himself or herself or another, or substantially injure another. (3) (A) Done any act that if done by a licentiate of the business or profession in question, would be grounds for suspension or revocation of license. 13 (c) A board may deny a license regulated by this code on the ground that the applicant 14 knowingly made a false statement of fact required to be revealed in the application for the license. 15 5. Section 4300 ofthe Code states in pertinent part: 16 (c) The board may refuse a license to any applicant guilty of unprofessional conduct. The 17 board may, in its sole discretion, issue a probationary license to any applicant for a license who is 18 guilty of unprofessional conduct and who has met all other requirements for licensure. 19 6. 20 The board shall take action against any holder of a license who is guilty of unprofessional 21 conduct or whose license has been procured by fraud or misrepresentation or issued by mistake. 22 Unprofessional conduct shall include, but is not limited to, any of the following: 23 24 25 Section 4301 of the Code states in pertinent part: (g) Knowingly making or signing any certificate or other document that falsely represents the existence or nonexistence of a state of facts. (o) Violating or attempting to violate, directly or indirectly, or assisting in or abetting the 26 violation of or conspiring to violate any provision or term of this chapter or of the applicable 27 federal and state laws and regulations governing pharmacy, including regulations established by 28 the board or by any other state or federal regulatory agency. 2 STATEMENT OF ISSUES 7. 2 Section 420 I of the Code states in pertinent part: (a) Each application to conduct a pharmacy, wholesaler, or veterinary food-animal drug 3 retailer, shall be made on a form furnished by the board, and shall state the name, address, usual 4 occupation, and professional qualifications, if any, of the applicant. If the applicant is other than a 5 natural person, the application shall state the information as to each person beneficially interested 6 therein. (b) As used in this section, and subject to subdivision (c), the term "person beneficially 7 8 interested" means and includes: (I) If the applicant is a partnership or other unincorporated association, each partner or 9 10 member. 11 (2) If the applicant is a corporation, each of its officers, directors, and stockholders, 12 provided th3ct no natural person shall be deemed to be beneficially interested in a nonprofit 13 corporation. 14 (3) If the applicant is a limited liability company, each officer, manager, or member. 15 (c) In any case where the applicant is a partnership or other unincorporated association, is a 16 limited liability company, or is a corporation, and where the number of partners, members, or 17 stockholders, as the case may be, exceeds five, the application shall so state, and shall further 18 state the information required by subdivision (a) as to each ofthe five partners, members, or 19 stockholders who own the five largest interests in the applicant entity. Upon request by the 20 executive officer, the applicant shall furnish the board with the information required by 21 subdivision (a) as to partners, members, or stockholders not named in the application, or shall 22 refer the board to an appropriate source of that information. 23 (e) Upon the approval ofthe application by the board and payment ofthe fee required by 24 this chapter for each pharmacy, wholesaler, or veterinary food-animal drug retailer, the executive 25 officer of the board shall issue a license to conduct a pharmacy, wholesaler, or veterinary food- 26 animal drug retailer, if all of the provisions of this chapter have been complied with. 27 Ill 28 Ill 3 STATEMENT OF ISSUES (f) Notwithstanding any other provision of law, the pharmacy license shall authorize the 2 holder to conduct a pharmacy. The license shall be renewed annually and shall not be 3 transferable. 4 (i) For licenses referred to in subdivisions (f), (g), and (h), any change in the proposed 5 beneficial ownership interest shall be reported to the board within 30 days thereafter upon a form 6 to be furnished by the board. 7 8. 8 (a) Any pharmacy located outside this state that ships, mails, or delivers, in any manner, 9 10 Section 4112 of the Code states: controlled substances, dangerous drugs, or dangerous devices into this state shall be considered a nonresident pharmacy. (b) A person may not act as a nonresident pharmacy unless he or she has obtained a license 11 12 from the board. The board may register a nonresident pharmacy that is organized as a limited 13 liability company in the state in which it is licensed. 14 (c) A nonresident pharmacy shall disclose to the board the location, names, and titles of(!) 15 its agent for service of process in this state, (2) all principal corporate officers, if any, (3) all 16 general partners, if any, and (4) all pharmacists who are dispensing controlled substances, 17 dangerous drugs, or dangerous devices to residents of this state. A report containing this 18 information shall be made on an annual basis and within 30 days after any change of office, 19 corporate officer, partner, or pharmacist. 20 (d) All nonresident pharmacies shall comply with all lawful directions and requests for 21 information from the regulatory or licensing agency of the state in which it is licensed as well as 22 with all requests for information made by the board pursuant to this section. The nonresident 23 vharmacy shall maintain, at all times, a valid unexpired license, permit, or registration to conduct 24 the pharmacy in compliance with the laws of the state in which it is a resident. As a prerequisite 25 to registering with the board, the nonresident pharmacy shall submit a copy of the most recent 26 inspection report resulting from an inspection conducted by the regulatory or licensing agency of 27 the state in which it is located. 28 /// 4 STATEMENT OF ISSUES 1 (e) All nonresident pharmacies shall maintain records of controlled substances, dangerous 2 drugs, or dangerous devices dispensed to patients in this state so that the records are readily 3 retrievable from the records of other drugs dispensed. 4 9. 5 Dangerous drug" or "dangerous device" means any drug or device unsafe for self-use in 6 humans or animals, and includes the following: (a) Any drug that bears the legend: "Caution: federal law prohibits dispensing without 7 8 prescription," "Rx only," or words of similar import. 9 10 Section 4022 of the Code states in pertinent part: (c) Any other drug or device that by federal or state law can be lawfully dispensed only on prescription or furnished pursuant to Section 4006." CALIFORNIA CODE OF REGULATIONS 11 12 13 10. California Code ofRegulations (Cal. Code Regs.), title 16, section 1709, subdivision (a), states: (a) Each permit to operate a pharmacy shall show the name and address of the pharmacy, 14 15 the form of ownership (individual, partnership or corporation) and the pharmacist-in-charge. Each 16 pharmacy shall, in its initial application on the annual renewal form, report the name of the 17 pharmacist-in-charge, the names of all owners and the names of the corporate officers (if a 18 corporation). Any changes in the pharmacist-in-charge, or the owners, or corporate officers shall 19 be reported to the Board within 30 days. 20 II. Cal. Code Regs., title 16, section 1714, states in pertinent part: 21 (d) Each pharmacist while on duty shall be responsible for the security of the prescription 22 department, including provisions for effective control against theft or diversion of dangerous 23 drugs and devices, and records for such drugs and devices. Possession of a key to the pharmacy 24 where dangerous drugs and controlled substances are stored shall be restricted to a pharmacist. 25 (f) The board shall require an applicant for a licensed premise or for renewal of that license 26 to certify that it meets the requirements of this section at the time of licensure or renewal. 27 /// 28 /// 5 STATEMENT OF ISSUES FIRST CAUSE FOR DENIAL OF APPLICATION (False Statements of Fact) 2 3 12. Respondent's application is subject to denial under section 480, subdivision (a)(2), 4 and subdivision (c), and for unprofessional conduct under section 430 I, subdivision (g), in that 5 Respondent made false statements of fact with the intent to substantially benefit itself or others on 6 its application for licensure. The circumstances are as follows: 7 a. On or about July 24,2013, in Respondent's application for licensure, Matthew 8 Davenport, CEO, made a false statement of fact with the intent to benefit Respondent in that he 9 certified under penalty of perjury that Alan Gubernick is the Bookkeeper/Accountant for 10 Respondent. However, twenty-four (24) days previously, on or about July I, 2013, Matthew II Davenport, in his position as the sole manager of Respondent, appointed Gregory W. 12 Blaszczynski as the Bookkeeper/Accountant of Respondent. 13 b. On or about July 24, 2013, in Respondent's application for licensure, Matthew 14 Davenport made a false statement of fact with the intent to benefit Respondent and failed to 15 disclose all authorized signatories for Respondent's fmancial transactions, in that he certified 16 under penalty of perjury that he is the sole authorized signatory for fmancial transactions on 17 Respondent's behalf. In fact, he is not the sole authorized signatory, as follows: 18 I. On or about July I, 2013, twenty-four (24) days prior to the date of the 19 application for licensure, Matthew Davenport, in his position as the sole manager of Respondent, 20 appointed Gregory W. B laszczynski as the Booldceeper/Accountant of Respondent, and 21 designated him as an additional authorized signatory for Respondent's financial transactions. On 22 .or about February 11, 2014, on a revised application for licensure, Matthew Davenport stated 23 under penalty of perjury that Gregory W. Blaszczynski is an authorized signatory for 24 Respondent's financial transactions. In a letter dated June 13, 2014, Wells Fargo confirmed that 25 Gregory W. Blaszczynski is an authorized signatory for Respondent's fmancial transactions. 26 2. On or about May 21, 2013, Andrew Davenport signed a continuing 27 financial transaction with Kinray, Inc., a drug wholesaler. On July 24,2013, Matthew Davenport 28 certified that he is the only authorized signatory for Respondent's financial transactions. On or 6 STATEMENT OF ISSUES 1 about February II, 2014, on a revised application for licensure, Matthew Davenport stated again 2 under penalty of perjury that Andrew Davenport is not an authorized signatory for Respondent's 3 financial transactions. In a letter dated June 13, 2014, Wells Fargo stated that Andrew Davenport 4 is an authorized signatory for Respondent's fmancial transactions. 5 d. On July 24, 2013, in Respondent's application for licensure, Respondent made 6 a false statement of fact with the intent to benefit Respondent, in that Matthew Davenport 7 certified under penalty of perjury in section "C" of the "Parent Corporation or Limited Liability 8 Company Ownership Information" application form that there were no owners or shareholders of 9 Respondent. In fact, at that time, there were sixteen (16) owners or shareholders of Respondent. 10 e. On July 24,2013, in Respondent's application for licensure, Respondent made II a false statement of fact with the intent to benefit Respondent, in that Matthew Davenport 12 certified under penalty of perjury in section "D" of the "Parent Corporation or Limited Liability 13 Company Ownership Information" application form that there were no persons with a beneficial 14 interest in Respondent. In fact, at that time, there were sixteen ( 16) individuals or entities with a 15 beneficial interest in Respondent. 16 f. On July 24, 2013, in Respondent's application for licensure, Respondent made 17 a false statement of fact with the intent to benefit Respondent, in that Matthew Davenport 18 certified under penalty ofperjury in section "E" of the "Parent Corporation or Limited Liability 19 Company Ownership Information" application form that there were no entities with 10% or more 20 ownership interest in Respondent. In fact, at that time, there was one (1) individual and one (I) 21 corporate entity with more than 10% ownership interest in Respondent. 22 g. On July 24, 2013, in Respondent's application for licensure, Respondent made 23 a false statement of fact with the intent to benefit Respondent, in that Matthew Davenport 24 certified under penalty of perjury that Andrew Davenport is not an owner of Respondent. 25 However, on or about June 18, 2013, Respondent filed an application for licensure as a pharmacy 26 with the Pennsylvania State Board of Pharmacy, certifying that all information provided within 27 the application was true and accurate under penalty of perjury. On the Pennsylvania application 28 for licensure, Andrew Davenport is identified as a 27% owner of Respondent. 7 STATEMENT OF ISSUES I SECOND CAUSE FOR DENIAL OF APPLICATION 2 (Failure to Comply with Pharmacy Laws) 3 13. Respondent's application is subject to denial for unprofessional conduct under section 4 4300, section 480, subdivision (a)(3)(A), and section 4301, subdivision (o), for violating section 5 420 I, in that Respondent failed to comply with Pharmacy Laws and failed to provide complete 6 information on its application for licensure. The circumstances are as stated in Paragraph 12 and 7 its subparagraphs, and as follows: 8 9 10 II a. Respondent failed to submit Individual Financial Affidavits for four (4) of the five (5) partners, members, or stockholders who hold the largest interests in the applicant entity as required by section 4201, subdivision (c). b. On or about July 24,2013, in Respondent's application for licensure, Matthew 12 Davenport signed an Individual Financial Affidavit under penalty of perjury stating that he made 13 a financial contribution to Respondent in the amount of $100.00. Matthew Davenport failed to 14 disclose the source of his financial contribution required by section 420 I, subdivision (a). 15 c. On or about July 24, 2013, in Respondent's application for licensure, Fabien 16 Forrester-Charles signed an Individual Financial Affidavit under penalty of perjury stating that he 17 made a financial contribution to Respondent in the amount of$100.00. Fabien Forrester-Charles 18 failed to disclose the source of his financial contribution required by section 4201, subdivision (a). 19 d. Respondent stated on the "Financial Affidavit in Support of Application" that 20 Kinray, Inc., is the primary wholesaler from which Respondent will purchase controlled 21 substances, dangerous drugs, and dangerous devices. Respondent failed to submit a valid 22 wholesaler credit application. The wholesaler credit application submitted by Respondent, 23 including an authorization of electronic funds transfer form, is signed and authorized by Andrew 24 Davenport on May 21, 2013. On or about July 24, 2013, in Respondent's application for 25 licensure, Matthew Davenport certified under penalty of perjury that he is the only individual 26 authorized to make financial transactions for Respondent. On or about February II, 2014, on a 27 revised application for licensure, Matthew Davenport certified under penalty of perjury that 28 Andrew Davenport was not authorized to make financial transactions for Respondent. 8 STATEMENT OF ISSUES e. 1 Respondent failed to submit a valid lease agreement as defined by Cal. Code 2 Regs., title 16, section 1714, subdivision (d), as further described in paragraph 14, below, and 3 incorporated as though fully set forth herein. f 4 Respondent failed to submit information regarding how it intends to separate 5 and maintain the records of controlled substances, dangerous drugs, or dangerous devices 6 dispensed to consumers within the State of California as required by section 4112, subdivision 7 (e), as further described in paragraph 15, below, and incorporated as though fully set forth herein. 8 THIRD CAUSE FOR DENIAL OF APPLICATION 9 (Failure to Prohibit Non-Licensees from Accessing Premises) 10 14. Respondent's application is subject to denial for unprofessional conduct under section 11 4300, section 480, subdivision (a)(3)(A), and section 4301, subdivision (o), in that Respondent's 12 lease agreement for the premises of the pharmacy fails to prohibit non-licensees from accessing 13 the Pharmacy. Respondent's lease agreement states that the landlord, who is not a licensed 14 pharmacist, will maintain possession of a key to the facility wherein controlled substances, 15 dangerous drugs, or dangerous devices are stored or dispensed, in violation of Cal. Code of 16 Regs., title 16, section 1714, subdivision (d),. 17 FOURTH CAUSE FOR DENIAL OF APPLICATION 18 (Failure to Provide Adequate Record-Keeping) 19 15. Respondent's application is subject to denial for unprofessional conduct under section 20 4300 and section 4301, subdivision (o), for failing to provide or submit information regarding the 21 intended method for maintaining the records of controlled substances, dangerous drugs, or 22 dangerous devices dispensed to consumers within the State of California separate from the 23 records of controlled substances, dangerous drugs, or dangerous devices dispensed to consumers 24 outside of the State of California as required by section 4112, subdivision (e). 25 Ill 26 Ill 27 Ill 28 Ill 9 STATEMENT OF ISSUES PRAYER 2 3 4 5 6 WHEREFORE, Complainant requests that a hearing be held on the matters herein alleged, and that following the hearing, the Board of Pharmacy issue a decision: I. Denying the application ofPhilidor Rx Services, LLC, MatthewS. Davenport, CEO, (Respondent) for a Nonresident Pharmacy; 2. Taking such other and further action as deemed necessary and proper. 7 8 9 DATED: -----f.-'/2~1t"4Cfku_'l,t__r./ __ I 10 I Executi e fficer Board of Pharmacy Department of Consumer Affairs State of California Complainant II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SA2014117128 11484676.docx 10 STATEMENT OF ISSUES