Pharmacists_discipline of permit holder for pharmacist's
conduct_statutory authority
The trial court erred by reversing the Board of Pharmacy's
decision suspending petitioner's pharmacy permit due to mistakes
in filling prescriptions by petitioner's pharmacist. Although
there is an ambiguity in the statutes concerning the authority of
the Board to discipline a permit holder for the conduct of its
licensed pharmacist, the legislature intended the Board to have
that authority and the Board in this case cited statutes that
place duties on a pharmacy permit holder. However, it was
stressed that a permit holder's responsibility for the conduct of
its licensed pharmacists extends only to the licensed
pharmacist's conduct while engaged in the operation of the permit
holder's pharmacy and that the conduct must result in the breach
of a duty imposed on the permit holder. N.C.G.S. §§ 90-85.30,
90-85.38(a), (b), and 106-134.1.
Yates, McLamb & Weyher, L.L.P., by Michael C. Hurley, for
petitioner-appellee.
Bailey & Dixon, L.L.P., by Carson Carmichael, III, for
respondent-appellant.
CAMPBELL, Judge.
Respondent North Carolina Board of Pharmacy (“the Board”)
appeals from the trial court's order reversing the Board's final
agency decision suspending the pharmacy permit of Sunscript
Pharmacy Corporation (“petitioner”) pursuant to N.C. Gen. Stat. §
90-85.38(b). We disagree with the trial court's interpretation of
the applicable statutes and reverse the order under review. The Board is the occupational licensing agency responsib
le for
licensing pharmacists and issuing pharmacy permits throughout North
Carolina. N.C. Gen. Stat. §§ 90-85.15, -85.21 (1999). The Board
is also responsible for enforcing the laws pertaining to the
distribution and use of drugs. N.C. Gen. Stat. § 90-85.6(a)
(1999). Petitioner is a foreign corporation authorized to do
business in North Carolina and is engaged in operating pharmacies
in this State that are not open to the general public, but rather
provide pharmaceutical services to long-term care facilities owned
and operated by Sun Healthcare. The pharmacy at issue in these
proceedings is petitioner's pharmacy located in Pink Hill, North
Carolina. At all times relevant hereto, petitioner's pharmacy in
Pink Hill was being operated pursuant to a pharmacy permit (Permit
No. 6467) duly issued by the Board, and was subject to the full
regulatory authority of the Board.
On 28 August 1998, the Board received information indicating
that an error had been committed in the dispensing of a
prescription for the drug Dilantin at petitioner's Pink Hill
pharmacy. The Board's investigation revealed that on 27 July 1998
petitioner received a doctor's prescription for a long-term care
facility patient which called for “Dilantin 100 mg capsules BID and
Dilantin 50 mg BID.” Petitioner did not have the Dilantin 50 mg,
so John Conrad Hunt (“Hunt”), a licensed pharmacist and employee of
petitioner, dispensed liquid Dilantin with instructions on the
label that read “10 cc = 50 mg.” However, for the patient to
receive the correct dosage, the label should have read “2 cc = 50
mg.” Although the patient was administered the Dilantin between 29July 1998 and 1 August 1998, and the patient died on 11 August
1998, it could not be determined whether the incorrect dosage of
Dilantin caused or contributed to the patient's death. The Board's
investigation further revealed that Hunt had committed four other
dispensing errors between 21 July 1998 and 4 August 1998, including
dispensing the wrong drug, dispensing the wrong strength of drug,
and using the wrong patient name on a prepared drug order.
On 8 October 1998, the Board issued a “Notice of Hearing” to
petitioner and Hunt regarding the five dispensing errors uncovered
by the Board's investigation. The purpose of the hearing was to
determine whether the alleged dispensing errors committed by
petitioner and Hunt violated the laws governing the practice of
pharmacy and the distribution of drugs, thereby subjecting
petitioner and Hunt to the Board's disciplinary authority under
N.C.G.S. § 90-85.38. Specifically, the Board alleged that the
dispensing errors committed by petitioner and Hunt violated N.C.
Gen. Stat. §§ 90-85.30, 90-85.38(a)(6), 90-85.38(a)(9), 90-
85.38(b) and 106-134.1.
The hearing was held on 27 October 1998, at the commencement
of which petitioner and Hunt stipulated to the allegations
concerning the five dispensing errors. The evidence presented at
the hearing indicated that all of the errors had been initially
committed by pharmacy technicians who worked under the supervision
of Hunt. The evidence also indicated that Hunt was terminated from
employment by petitioner on 28 August 1998. On 25 January 1999,
the Board issued a final agency decision making findings of fact
consistent with the parties' stipulations and the evidencepresented at the hearing and concluding that the dispensing errors
committed by petitioner and Hunt constituted violations of N.C.G.S.
§§ 90-85.30, 90-85.38(a)(6), 90-85.38(a)(9) and 106-134.1.
As a result, the Board suspended Hunt's pharmacist license
(License No. 14427) for seven days, with the suspension stayed for
two years upon Hunt complying with several conditions. Likewise,
the Board suspended petitioner's pharmacy permit (Permit No. 6467)
for seven days, with the suspension also stayed for two years upon
petitioner complying with restrictions on the number of
prescriptions it could fill, more stringent requirements for
reporting future dispensing errors to the Board, and other
conditions.
On 23 February 1999, petitioner filed a petition in Wake
County Superior Court seeking judicial review of the Board's final
agency decision pursuant to N.C. Gen. Stat. § 150B-45.
(See footnote 1)
Petitioner
alleged that the Board's decision prejudiced the substantial rights
of petitioner, in that the decision was “void for want of
jurisdiction, violate[d] provisions of the constitution of this
State and the United States, exceed[ed] the statutory authority and
jurisdiction of the Board, [was] unsupported by substantial
evidence admissible under G.S. 150B-29(a), 150B-30, or 150B-31 in
view of the entire record as submitted, [was] arbitrary and
capricious, and [was] otherwise affected by errors of law.”
Included among petitioner's listed exceptions to the Board's final
agency decision was the following: (h) In excess of Respondent's statutory
authority and jurisdiction and in violation of
the guarantees of due process in the
Fourteenth Amendment of the United States
Constitution and Article I, Section 19 of the
North Carolina Constitution, Respondent has
improperly imputed to Petitioner the findings
of negligence made against another subject of
its investigation.
. . . .
On 26 May 2000, the trial court entered a Memorandum of
Decision reversing the Board's decision to suspend petitioner's
pharmacy permit, reasoning:
[The] Board does not have the authority to
discipline permittee pharmacy for the
negligence of a pharmacist employee who is
also licensed by the Board. Also[,] the techs
[pharmacy technicians] who were negligent were
being supervised by the same pharmacist
licensee. As Petitioner argues[,] [the] Board
has no authority to discipline on a theory of
vicarious liability. If the legislature
intended this then it must expressly say so
and G.S. 90-85.38(b) does not.
On 13 June 2000, the trial court entered an order reversing
respondent's decision. Respondent now appeals the trial court's
ruling.
The dispositive issue on appeal is whether the trial court
erred in its determination that the Board lacks the statutory
authority to discipline a pharmacy permit holder for the negligence
of a licensed pharmacist who is employed by the permit holder. In
so holding, the trial court ruled that the Board's final agency
decision was based on an error of law. Thus, the trial court was
required to exercise de novo review. See Amanini v. N.C. Dept. of
Human Resources, 114 N.C. App. 668, 674, 443 S.E.2d 114, 118 (1994)
(stating that when petitioner argues that an agency's decision wasbased on an error of law, de novo review is required). Our review
of the trial court's Memorandum of Decision and its order indicates
that the trial court appropriately exercised de novo review in
making its determination on this issue. However, we must determine
whether the trial court did so properly. See Eury v. N.C.
Employment Security Comm., 115 N.C. App. 590, 597, 446 S.E.2d 383,
388 (1994) (stating that this Court's reviewing process of a
superior court order regarding an agency decision is twofold: (1)
determining whether the trial court exercised the appropriate scope
of review, and, if appropriate, (2) deciding whether the court did
so properly).
In making this determination, we start by examining the
disciplinary authority of the Board, which is set forth in N.C.G.S.
§ 90-85.38. Pursuant to N.C.G.S. § 90-85.38(a), the Board may
discipline
(See footnote 2)
a licensee or an applicant for a license to practice
pharmacy, if the licensee or applicant has:
(1) Made false representations or withheld
material information in connection with
securing a license or permit;
(2) Been found guilty of or plead guilty or
nolo contendere to any felony in connection
with the practice of pharmacy or the
distribution of drugs;
(3) Indulged in the use of drugs to an extent
that renders him unfit to practice pharmacy;
(4) Made false representations in connection
with the practice of pharmacy that endanger or
are likely to endanger the health or safety ofthe public, or that defraud any person;
(5) A physical or mental disability that
renders him unfit to practice pharmacy with
reasonable skill, competence and safety to the
public;
(6) Failed to comply with the laws governing
the practice of pharmacy and the distribution
of drugs;
(7) Failed to comply with the rules and
regulations of the Board;
(8) Engaged in, or aided and abetted an
individual to engage in, the practice of
pharmacy without a license; or
(9) Was negligent in the practice of pharmacy.
N.C. Gen. Stat. § 90-85.38(a)(1)-(9) (1999). Pursuant to N.C.G.S.
§ 90-85.38(b), the Board is authorized to suspend, revoke, or
refuse to grant or renew any pharmacy permit
(See footnote 3)
for the same conduct
as stated in N.C.G.S. § 90-85.38(a).
In its final agency decision, the Board concluded that the
dispensing errors committed by Hunt and petitioner violated both
N.C.G.S. § 90-85.38(a)(6) (failure to comply with the laws
governing the practice of pharmacy and the distribution of drugs)
and N.C.G.S. § 90-85.38(a)(9) (negligence in the practice of
pharmacy). In support of its determination that petitioner and
Hunt had failed to comply with the laws governing the practice of
pharmacy and distribution of drugs in violation of N.C.G.S. § 90-
85.38(a)(6), respondent cited N.C.G.S. §§ 90-85.30
(See footnote 4)
and 106-134.1.
(See footnote 5)
In reversing the decision of the Board, the trial court simply
stated that the Board did not have the authority to discipline a
pharmacy permit holder for the negligence of one of its pharmacists
who is also licensed by the Board. The trial court further stated
that if the Legislature had intended for the Board to have such
disciplinary authority it would have expressly granted it in
N.C.G.S. § 90-85.38(b). In support of its decision, the trial
court relied on Federgo Discount Center v. Department of
Professional Regulation, Board of Pharmacy, 452 So.2d 1063 (Fla.
App. 1984), in which the Florida Court of Appeals concluded that if
the Legislature wished to hold community pharmacy permit holders
strictly liable for the acts of pharmacists who are separately
licensed by the state, then it should have done so in uncertain
terms. We find the trial court's reliance on Federgo misplaced and
we disagree with the trial court's conclusion on this issue.
It is a well-established rule of statutory construction that
it is the function of the judiciary to construe a statute when the
meaning of a statute is in doubt. In re Declaratory Ruling by N.C.
Comm'r of Ins., 134 N.C. App. 22, 27, 517 S.E.2d 134, 139, disc.
review denied, 351 N.C. 105, 540 S.E.2d 356 (1999).
“In construing the laws creating andempowering administrative agencies, as in any
area of law, the primary function of a court
is to ensure that the purpose of the
Legislature in enacting the law, sometimes
referred to as legislative intent, is
accomplished. The best indicia of that
legislative purpose are 'the language of the
statute, the spirit of the act, and what the
act seeks to accomplish.'”
Id. (quoting Comr. of Insurance v. Rate Bureau, 300 N.C 381, 399,
269 S.E.2d 547, 561 (1980) (citations omitted)). However, “[w]hen
the language of a statute is clear and unambiguous, there is no
room for judicial construction and the courts must give the statute
its plain and definite meaning. . . .” State v. Green, 348 N.C.
588, 596, 502 S.E.2d 819, 824 (1998), superseded by statute on
other grounds as stated in In re J.L.W., 136 N.C. App. 596, 525
S.E.2d 500 (2000).
The plain language of N.C.G.S. 90-85.38(b) provides that the
Board “may suspend, revoke, or refuse to grant or renew any permit
[i.e., discipline the permit holder] for the same conduct as stated
in [N.C.G.S. 90-85.38(a) (setting out the conduct for which a
licensed pharmacist may be disciplined)].” N.C. Gen. Stat. § 90-
85.38(b) (1999). However, the statute does not make it clear
whether N.C.G.S. § 90-85.38(b) is limited in its application to
conduct actually committed by a permit holder, or whether a permit
holder can be disciplined for conduct falling within N.C.G.S. § 90-
85.38(a) that is committed by a licensed pharmacist employed by the
permit holder. This ambiguity requires this Court to examine the
spirit of the act and what the act seeks to accomplish to determinethe meaning of N.C.G.S. § 90-85.38(b).
(See footnote 6)
N.C. Gen Stat. § 90-85.2 sets forth the purpose of the North
Carolina Pharmacy Practice Act (“the Act”) to “insure minimum
standards of competency and to protect the public from those who
might otherwise present a danger to the public health, safety and
welfare.” N.C. Gen. Stat. § 90-85.2 (1999). In order to fulfill
this purpose, the Legislature created the North Carolina Board of
Pharmacy and charged it with responsibility for enforcing the
provisions of the Act and the laws pertaining to the distribution
and use of drugs. N.C. Gen. Stat. § 90-85.6 (1999). The Board was
also granted responsibility over the licensing of all pharmacists
throughout the State, and the permitting of all pharmacies seeking
to operate in the State. In order to enforce its regulations and
protect the public health, safety and welfare, the Board was
granted disciplinary authority over licensees and permit holders by
N.C.G.S. § 90-85.38. In light of the purpose of the Act to insure
minimum standards of competency and to protect the public health,
safety and welfare, we conclude, contrary to the decision of the
trial court, that the Legislature did intend for the Board to have
authority to discipline a permit holder for the conduct of one of
its licensed pharmacists.
Further, we find the trial court's reliance on Federgo to be
misplaced because the court in Federgo did not hold that a permitholder can never be disciplined for the conduct of a licensed
pharmacist employed by it. Rather, the court held that in order
for a permit holder to be disciplined for the conduct of one of its
licensed pharmacists, that conduct must result in a breach of duty
imposed on the permit holder. In fact, the court in Federgo
specifically stated that “[h]ad the licensed pharmacist failed to
adequately maintain records, or had he otherwise compromised the
security of the drugs in the prescription department [duties which
the statutes expressly imposed on the permit holder], a different
result could be indicated . . . .” Federgo, 452 So.2d at 1066.
For this reason, we find Federgo to be consistent with our holding.
We further find the reasoning of the California Court of
Appeals in Arenstein v. California State Board of Pharmacy, 265
Cal. App. 2d 179, 71 Cal. Rptr. 357 (1968) to be consistent with
our holding. There the court affirmed the suspension of a pharmacy
permit based upon the conduct of its pharmacist employees in
refilling prescriptions without authorization. In so affirming,
the court stated:
If a licensee elects to operate his business
through employees, he must be responsible to
the Licensing Authority for their conduct and
the exercise of his license and he is
responsible for the acts of his agents or his
employees done in the course of his business
in the operation of the license. One
permitted to maintain and conduct the pharmacy
may be disciplined by the Pharmacy Board for
the unlawful acts of his employees while
engaged in the conduct and operation of the
pharmacy, although the permitee does not
authorize the unlawful acts and did not have
actual knowledge of the activities. This
would be particularly true of a corporatepermitee which could act only through its
officers, agents, or employees.
Id. at 192-93, 71 Cal. Rptr. at 365-66 (citations omitted)
(emphasis added). We stress that a permit holder's responsibility
for the conduct of its licensed pharmacists only extends to the
licensed pharmacists' conduct while engaged in the conduct and
operation of the permit holder's pharmacy. Furthermore, in order
for the conduct of a licensed pharmacist to subject a permit holder
to discipline, that conduct must result in the breach of a duty
that is imposed on the permit holder.
In the instant case, the Board supported its discipline of
petitioner's permit by citing violations of N.C.G.S. §§ 90-85.30
and 106-134.1, which place duties on a pharmacy permit holder.
Therefore, we hold that the Board's discipline of petitioner's
permit for the conduct of Hunt was within the Board's statutory
authority.
For the foregoing reasons, the trial court's order is reversed
and this cause is remanded to the trial court for entry of an order
reinstating respondent's final agency decision.
Reversed and remanded.
Judges GREENE and BRYANT concur.
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