Sunscript Pharmacy Corp. v. North Carolina Board of Pharmacy

Citations: 555 S.E.2d 629; 147 N.C. App. 446; 2001 N.C. App. LEXIS 1172; 2001 WL 1529132Docket: COA00-1089

Court: Court of Appeals of North Carolina; December 4, 2001; North Carolina; State Appellate Court

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The North Carolina Court of Appeals reversed a trial court's decision that had overturned the North Carolina Board of Pharmacy's suspension of Sunscript Pharmacy Corporation's permit. The Board, responsible for licensing pharmacists and regulating pharmacy operations in North Carolina, found that Sunscript's pharmacy in Pink Hill committed multiple dispensing errors. Specifically, on July 27, 1998, a prescription for Dilantin was improperly filled, leading to a labeling error that could have affected patient dosing. Although the patient died on August 11, 1998, the cause of death was indeterminate regarding the dispensing error. An investigation revealed additional errors by pharmacist John Conrad Hunt, including incorrect drug dispensing and mislabeling. The Board issued a hearing notice on October 8, 1998, to determine if these errors violated pharmacy laws. During the hearing on October 27, 1998, both Sunscript and Hunt admitted to the errors, which were initially made by pharmacy technicians under Hunt's supervision. The Board concluded on January 25, 1999, that the dispensing errors violated several statutes, justifying the disciplinary action against Sunscript.

The Board suspended Hunt's pharmacist license (License No. 14427) and the petitioner's pharmacy permit (Permit No. 6467) for seven days each, with the suspensions stayed for two years contingent on compliance with specified conditions. On February 23, 1999, the petitioner sought judicial review in Wake County Superior Court, claiming the Board's decision infringed on substantial rights, lacked jurisdiction, violated constitutional provisions, exceeded statutory authority, was unsupported by substantial evidence, arbitrary, capricious, and involved legal errors. A key exception raised was that the Board improperly attributed findings of negligence against another individual to the petitioner, violating due process rights under the Fourteenth Amendment and the North Carolina Constitution.

On May 26, 2000, the trial court reversed the Board's decision regarding the pharmacy permit, ruling that the Board lacked the authority to discipline the permit holder for the negligence of an employee pharmacist. The court stated that the Board could not impose discipline based on vicarious liability without explicit legislative permission, which was not present in G.S. 90-85.38(b). On June 13, 2000, an order was entered reversing the Board's ruling, and the Board subsequently appealed. The central issue on appeal is whether the trial court erred in determining that the Board lacked the statutory power to discipline the pharmacy for the negligence of an employed licensed pharmacist. The trial court's ruling was based on an error of law, necessitating a de novo review, which was appropriately conducted according to precedents indicating a two-step review process for agency decisions.

The Board's disciplinary authority regarding pharmacy practice is outlined in N.C.G.S. 90-85.38, which allows for the discipline of licensees or applicants for various infractions, including making false representations, being convicted of felonies related to pharmacy, substance abuse impairing practice, endangering public safety, physical or mental disabilities affecting competence, noncompliance with pharmacy laws, and negligence in practice. The Board concluded that Hunt and the petitioner were negligent and failed to comply with relevant laws, specifically citing N.C.G.S. 90-85.30 and 106-134.1. However, the trial court reversed the Board's decision, arguing that the Board lacked authority to discipline a pharmacy permit holder for a licensed pharmacist's negligence, suggesting that such authority should be explicitly stated in N.C.G.S. 90-85.38(b). The trial court referenced a Florida case to support its position. The court found this reliance on the case misplaced, asserting that judicial interpretation is necessary only when legislative intent is unclear, and emphasized that when statutory language is clear, it must be enforced as written.

N.C.G.S. 90-85.38(b) grants the Board authority to suspend, revoke, or refuse to renew a permit based on conduct outlined in N.C.G.S. 90-85.38(a). The statute's language is ambiguous regarding whether disciplinary actions can be taken against a permit holder for the conduct of a licensed pharmacist employed by them, necessitating an examination of the act's intent. The North Carolina Pharmacy Practice Act aims to ensure competency standards and protect public health, safety, and welfare, which led to the establishment of the North Carolina Board of Pharmacy responsible for enforcing the Act and regulating pharmacists and pharmacies.

The court concludes that the Legislature intended for the Board to discipline permit holders for the actions of their licensed pharmacists, contrary to the trial court's decision. The trial court's reliance on the Federgo case was deemed misplaced because that case did not categorically prevent discipline against permit holders for their employees' conduct, but rather required that such conduct must breach a duty imposed on the permit holder. The court also referenced the Arenstein case, affirming that a pharmacy permit can be suspended based on the actions of its employees, emphasizing that permit holders are responsible for their employees' conduct in business operations, regardless of their knowledge or authorization of those actions.

A permit holder's liability for the actions of its licensed pharmacists is limited to those actions performed during the pharmacy's operation. For a permit holder to face disciplinary action for a pharmacist's conduct, that conduct must breach a duty assigned to the permit holder. In this case, the Board justified its disciplinary action against the petitioner by referencing violations of N.C.G.S. 90-85.30 and 106-134.1, which define the responsibilities of pharmacy permit holders. Consequently, the Board's decision to discipline the petitioner's permit for Hunt's actions was deemed within its legal authority. The trial court's order is reversed, and the case is remanded for the reinstatement of the Board’s final decision. Judges Greene and Bryant concur. Notes indicate that Hunt withdrew from further proceedings, so his case is not part of the appeal. Potential disciplinary actions can include reprimands, suspensions, or educational requirements as outlined in N.C. Gen. Stat. 90-85.38(a). Pharmacies must register and obtain permits per N.C. Gen. Stat. 90-85.21. The cited violations included failure to provide complete prescription information as required by N.C.G.S. 90-85.30 and failure to comply with dispensing standards under N.C. Gen. Stat. 106-134.1, which can result in drugs being misbranded. The situation highlights the complexities of corporate permit holders acting through licensed employees.