08-005089 Ornid Pharmaceuticals, Inc. vs. Department Of Health Status: Closed Recommended Order on Monday, March 9, 2009.

Summary: Respondent proved that CDR`s permit was revoked because he was an affiliate of former permittee and could not get permit as long as former CDR was to serve as new CDR but failed to prove that former sales manager was an affiliate of a former distributor.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ORNID PHARMACEUTICALS, INC., )

)

Petitioner, )

)

vs. ) Case No. 08-5089

)

DEPARTMENT OF HEALTH, )

)

Respondent. )

________________________________)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in

Miami, Florida, on December 9, 2008.

APPEARANCES

For Petitioner: Alexander Valdes, Qualified Representative

14052 Southwest 80th Street

Miami, Florida 33183

For Respondent: Gary L. Asbell, Esquire

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 32399-1703

STATEMENT OF THE ISSUE

The issue is whether Petitioner is entitled to a permit as a prescription drug wholesale distributor.

PRELIMINARY STATEMENT

On August 30, 2007, Respondent received an application from Petitioner for a permit as a prescription drug wholesaler. By

letter dated September 8, 2008, Respondent advised Petitioner

that it intended to deny the application.

At the hearing, Petitioner called two witnesses and offered

into evidence two exhibits: Petitioner Exhibits 1 and 2.

Respondent called four witnesses and offered into evidence four

exhibits: Respondent Exhibits 1-4. All exhibits were admitted.

The Administrative Law Judge gave both sides leave to file,

post-hearing, three exhibits: Petitioner Exhibits 1 and 2 and

Respondent Exhibit 1. The parties timely filed these exhibits.

The court reporter filed the Transcript on December 22,

2008. Respondent filed its Proposed Recommended Order on

January 5, 2009. Petitioner did not file a proposed recommended

order.

FINDINGS OF FACT

1. On August 29, 2007, Petitioner filed with Respondent an

application for a permit as a prescription drug wholesaler

establishment (Application). Pursuant to a change in the law

effective July 1, 2008, this permit is now for a prescription

drug wholesale distributor.

2. The Application lists Boris Rios as the sole owner of

Petitioner and its president and manager. The Application lists

Alexander Valdes as the next highest-ranking employee with a

title of certified designated representative (CDR).

3. The Application requires Petitioner to list all persons

who meet the following descriptions of affiliates: a) "a

director, officer, trustee, partner, or committee member of a

permittee or applicant or a subsidiary or service corporation of

the permittee or applicant"; b) "a person who, directly or

indirectly, manages, controls, or oversees the operation of a

permittee or applicant, regardless of whether such person is a

partner, shareholder, manager, member, officer, director,

independent contractor, or employee of the permittee or

applicant"; c) "a person who has filed or is required to file a

personal information statement pursuant to s. 499.012(4), F.S.,

or is required to be identified in an application for a permit

or to renew a permit pursuant to s. 499.012(3), F.S."; d) "the

five largest natural shareholders who own at least 5 percent of

the permittee or applicant . . ."; and e) "shareholder[s] owning

5% or more of the applicant."

4. In response to this item, the Application states that

Mr. Rios meets the criteria set forth in paragraphs a) through

e), and Mr. Valdes meets the criteria set forth in paragraph b).

5. Attached to the Application are Personal Information

Statements for Mr. Rios and Mr. Valdes. Mr. Rios's Personal

Information Statement discloses his employment, from July 2003

to July 2007, as a "sales mgr" with Worldwide Medical Supplies

and Pharmaceuticals, Inc. (Worldwide). His statement includes a

resume that states he was a "sales executive" for Worldwide from

July 2003 to February 2004, a "purchasing/deliver[ies] manager"

for Worldwide from February 2004 to May 2005, and a "sales

manager" for Worldwide from May 2005 to July 2007. As sales

manager, Mr. Rios stated that he "[o]ver looked all sales

transactions for all sales reps (7 man sales force). Buy

establishing sales strategies and product promotions to help

increase our sales and profit margins. And keeping sales force

motivated and inspired by creating incentives to reach goals."

6. Mr. Rios's attached resume shows that he had been a

sales manager for another pharmaceutical manufacturer from

January 2001 to July 2003. Mr. Rios's statement also answers in

the negative a question asking whether he, "or a company for

which you were an owner, officer, director, or manager, has been

fined or disciplined by a regulatory agency in any state

(including Florida) for any offense that would constitute a

violation of Chapter 499, Florida Statutes?" However, his

statement answers in the affirmative a question asking whether

he, "or a company for which you were an owner, officer,

director, or manager, ever held a permit issued under Chapter

499, Florida Statutes, in a different name than [Petitioner's

name]?"

7. However, on a mostly blank page entitled, Additional

Information," Mr. Rios handwrote that he was employed by

Worldwide from July 2003 to July 2007 as the sales manager of

seven salespersons from May 2005 to July 2007, as the purchasing

manager from February 2004 to May 2005, and as a sales

representative from July 2003 to February 2004.

8. Mr. Valdes's Personal Information Statement discloses

his employment with Worldwide from 2003 to present as a "sales

mgr" and "D Rep," meaning certified designated representative.

Inserted in the Application is a letter dated May 30, 2008, from

Mr. Valdes to Rebecca Burnett, an employee of Respondent,

stating that he was "hereby submit[ting] my resignation from

Worldwide . . . effective May 30, 2008 . . .."

9. Mr. Valdes's Personal Information Statement contains a

long typewritten statement that says he was employed at

Worldwide since 2003 in "various positions," starting as a sales

person, then a sales manager, and finally a CDR, following his

preparing for and passing the certification test. At about the

same time, a newer Worldwide employee, Rick Nielsen, also took

the CDR test, passed, and became a CDR for Worldwide, working a

different shift from Mr. Valdes. Mr. Valdes stated that he

often ordered Worldwide not to accept or to return a product due

to product-safety issues, and he helped state inspectors in

their investigations concerning these matters. However, on the

Personal Information Statement itself, Mr. Valdes answered in

the negative a question whether he or any company for which he

had been a manager had been fined or disciplined by a regulatory

agency.

10. By letter dated September 8, 2008 (Denial Letter),

Respondent advised Petitioner of its intent to deny the

application. Among the reasons cited for denial are that

Petitioner listed Mr. Valdes as its CDR. The Denial Letter

states that, in Final Order Number 08-1216, Respondent found

37 violations of the Florida Drug and Cosmetic Act, Chapter 499,

Florida Statutes, and revoked the permit of Worldwide Medical

Supplies and Pharmaceuticals, Inc. (Worldwide), to operate as a

prescription drug wholesale distributor. According to the

Denial Letter, Mr. Valdes was Worldwide's CDR from August 2005

to May 2008 and sales manager from April 2003 to May 2008; he is

also the son of the president and owner of Worldwide, Miriam

Gonzalez. The Denial Letter states that Mr. Valdes was listed

on the Application as a key employee of Worldwide and did not

submit to Respondent his resignation as Worldwide's CDR until

May 30, 2008.

11. The Denial Letter asserts that, on four occasions from

July 18 to November 8, 2005, Mr. Valdes received and

authenticated a pedigree that was not authenticated, so that

Worldwide failed to keep the required records of prescription

drug transactions. The Denial Letter states that, on six

occasions between October 17 and 31, 2005, Mr. Valdes or another

Worldwide employee falsely represented under Mr. Valdes's

signature that a pedigree had been presented to Worldwide and

authenticated by Mr. Valdes, but Worldwide had not received the

complete and accurate pedigrees and had not maintained them.

The Denial Letter states that receipt of the drugs without a

complete or accurate pedigree caused the drugs to be deemed

adulterated.

12. The Denial Letter states that, on August 16 and

September 23, 2004; and September 25, October 16, and

October 27, 2006, Worldwide purchased a prescription drug from

an unlicensed manufacturer or wholesaler. The letter states

that this activity constituted the purchase of contraband in

commerce and was detrimental to the public health.

13. The Denial Letter asserts that Mr. Rios was an

affiliated party of Worldwide at all material times. The Denial

Letter states that Mr. Rios owns Petitioner and provides

financial support and assistance to Petitioner, so he is an

affiliate of Petitioner.

14. The Denial Letter states that Respondent found that

Petitioner was not entitled to licensure under Section

499.012(4)(d)9, Florida Statutes. The Denial Letter states

that, pursuant to Section 499.012(10)(b), Florida Statutes,

Respondent may deny an application if it finds that the

managers, officers, or directors of the applicant or an

affiliate of the applicant are incompetent or untrustworthy.

15. Based on the facts set forth above, Respondent finds

Mr. Valdes, an affiliate, incompetent or untrustworthy. The

Denial Letter states that, pursuant to Section 499.012(10)(g),

Florida Statutes, Respondent may deny an application if it finds

that the applicant is affiliated, directly or indirectly through

ownership, control or other business relations, with any person

or persons whose business operations are or have been

detrimental to the public health. Based on the facts set forth

above, Respondent finds Mr. Valdes is an affiliate whose prior

business operations are or have been detrimental to the public

health

16. The Denial Letter states that, pursuant to Section

499.012(10)(r), Florida Statutes, Respondent may deny an

application if it finds that the applicant or any affiliate has

failed to comply with the requirements for manufacturing or

distributing prescription drugs under Chapter 499, Florida

Statutes. The Denial Letter asserts that Section 499.003(3),

Florida Statutes, defines an affiliate to be a person who has

filed or is required to file a personal information statement or

a person who, directly or indirectly, manages, controls, or

oversees the operation of a permittee or applicant, regardless

whether such person is a partner, shareholder, manager, member,

officer, director, independent contractor, or employee of the

permittee or applicant.

17. The Denial Letter states that Respondent finds that

Mr. Valdes, while employed at Worldwide, failed to comply with

the laws related to the distribution of prescription drugs while

having a duty to be actively involved in and aware of the actual

daily operation of the company. The Denial Letter states that

Mr. Valdes had a duty to be actively involved in and aware of

the actual daily operations of the company. The Denial Letter

states that, while Mr. Valdes was CDR for Worldwide, the company

purchased prescription drugs from an unauthorized source, in

violation of Section 499.005(16), Florida Statutes; failed to

maintain records of prescription drug distributions as required

by Florida Administrative Code Rule 64F-12.012(6) and (10), in

violation of Section 499.005(18), Florida Statutes; accepted or

maintained incomplete or nonexistent pedigrees and sold drugs to

unlicensed persons, thus violating the adulterated-drug

provisions of Section 499.005(1), (2), and (4), Florida

Statutes.

18. The Denial Letter states that, pursuant to Section

499.012(10)(m), Florida Statutes, Respondent may deny an

application if the applicant or affiliate receives, directly or

indirectly, financial support and assistance from a person who

was an affiliate of a permittee whose permit was subject to

discipline or suspended or revoked. The Denial Letter states

that Petitioner receives financial support and assistance from

Mr. Rios, who was an affiliate of Worldwide and is an affiliate

of Petitioner.

19. The Denial Letter states that, at all material times,

Worldwide engaged in business operations that were detrimental

to the public health by purchasing adulterated prescription

drugs and by adulterating prescription drugs.

20. Worldwide filed a renewal application on May 17, 2007,

for a renewal term from July 1, 2007, to June 30, 2008. The

renewal application lists Ms. Gonzalez as the company's sole

shareholder and manager. The only persons listed among the next

four highest-ranking employees are Mr. Valdes, who is listed as

the CDR and "Longistic [sic] Manager" and Mr. Rios, who is

listed as "Purch/Sales Director." Each man is reported as "a

person who, directly or indirectly, manages, controls, or

oversees the operation of a permittee . . .."

21. Sometime in 2007, Respondent commenced a disciplinary

proceeding against Worldwide. In its Second Amended

Administrative Complaint dated August 24, 2007, Respondent

alleged that Worldwide violated Sections 499.001 through

499.081, Florida Statutes, based on documents that it had

prepared during 2004-06. A formal hearing took place on

February 11 and 12, 2008, and Administrative Law Judge Patricia

M. Hart entered a Recommended Order on May 1, 2008, which was

adopted in its entirety by Final Order entered October 12, 2008

(FO). The Final Order finds Worldwide guilty of 37 violations

of Chapter 499, Florida Statutes, imposes administrative fines

of $185,000, and revokes Worldwide's permit as a Prescription

Drug Wholesaler. The Final Order (FO) was never appealed.

22. The FO finds multiple acts and omissions attributable

to Worldwide in the handling of prescription drugs shipped to it

or, in some cases, purchased by it. Concerning incomplete and

thus fraudulent authentications of pedigree papers, these acts

and omissions ranged from February to April, June to September,

and December 2004; and April to November 2005. Only seven of

these violations occurred in 2004; the rest were in 2005.

Concerning purchases from unlawful persons, of which there were

a dozen, these acts and omissions took place in August 2004,

December 2004, June 2005 (two), April 2006, September 2006 (two

purchases from Kuehne & Nagel) October 2006 (four purchases from

Kuehne & Nagel), and March 2007.

23. Mr. Valdes is named in connection with six of the

unlawful transactions. For October 2005 (except for one

transaction in November 2005, as indicated), the FO found a

pedigree paper bearing a "stamp" showing receipt and

authentication by Mr. Valdes of 35 6GM vials of Carimune was

incomplete and thus "false," a pedigree paper bearing a "stamp"

showing receipt and authentication by Mr. Valdes of seven 10ML

units of Baygam as incomplete and thus "false," a pedigree paper

bearing a "stamp" showing receipt and authentication by

Mr. Valdes of 15 12GM vials of Carimune as incomplete and thus

"false," a pedigree paper bearing a "stamp" showing receipt and

authentication by Mr. Valdes of 100 2ML units of Baygam was

incomplete and thus "false," a pedigree paper bearing a "stamp"

showing receipt and authentication by Mr. Valdes of 100 units of

Gammar P as incomplete and thus "false" (November 2005), and one

pedigree paper bearing a "stamp" showing receipt and

authentication by Mr. Valdes of one 2ML unit of Baygam SDV and

three 10CP units of Tamiflu 75MG was incomplete and thus

"fraudulent."

24. In his responses to requests for admission in this

case, Mr. Valdes admits that he received and authenticated the

pedigree paper, on October 10, 2005, for Carimune; the pedigree

paper, on October 18, 2005, for Baygam; the pedigree paper, on

July 18, 2005, for Baygam; and the pedigree paper, on

November 8, 2005, for Gammar P.

25. Worldwide never employed many employees, perhaps never

more than 8-10. Ms. Gonzalez owned the company, but reduced her

interest to 51 percent from February 2004 to December 31, 2006,

during which period Mr. Nielsen owned 49 percent. However,

Mr. Nielsen terminated his employment with Worldwide on

December 31, 2006, and evidently relinquished his interest in

the company at that time.

26. Upon initial employment, Mr. Nielsen occupied a

position in which he supervised the purchasing manager,

Mr. Rios, who, even though called a manager, supervised no one.

At that time, Mr. Rios was lower-ranking than Ms. Gonzalez,

Mr. Nielsen, Mr. Valdes, and possibly another employee. At some

point, Mr. Nielsen was designated a CDR for Worldwide, and he

remained a CDR for Worldwide until he left employment with the

company. Prior to that, Mr. Gonzalez had served as the CDR for

Worldwide.

27. Mr. Valdes also served as a CDR for Worldwide. Based

on his responses to requests for admission, Mr. Valdes started

as CDR for Worldwide in August 2005, so he and Mr. Nielsen were

both CDRs for Worldwide at the same time. Mr. Valdes served

until the end of July or early August 2006, when, dissatisfied

with his employment situation, he terminated his employment.

Mr. Valdes did not return until early January 2007 when his

mother needed him to serve as CDR again because Mr. Nielsen had

left, and no one remaining with Worldwide could pass the test to

become a CDR.

28. Mr. Valdes produced testimonials from various persons,

such as a former drug agent supervisor of Respondent and current

investigators of Medicaid fraud, who commend him for assisting

in combating fraud in the wholesale pharmaceutical industry.

29. However, at the hearing, Mr. Valdes never explained

how he was not at fault or responsible for the violations in

which the paperwork bore his stamp or other violations taking

place, particularly while he was CDR. Mr. Valdes was sales

manager during the 2004 violations and a CDR during all of the

bad-pedigree transactions from August to December 2005, as well

as one bad-purchase transaction in April 2006. He had sizable

responsibilities during a timeframe that many violations were

taking place at Worldwide, and, despite the three commendations

and candid demeanor at the hearing, does not appear to have done

a good job discharging these important duties.

30. As confirmed by Ms. Gonzalez, Mr. Rios was the sales

manager from May 2005 to July 2007, and he had supervisory

authority over a sales staff that, at most, numbered seven

persons. Mr. Rios could hire and fire salespersons, but he had

no contact with the prescription drugs. From February 2004 to

May 2005, Mr. Rios was purchasing manager, but worked under the

supervision of Mr. Nielsen and lacked any managerial duties.

CONCLUSIONS OF LAW

31. The Division of Administrative Hearings has

Fla. Stat. (2008).

32. Petitioner bears the burden of proving entitlement to

the permit. Department of Transportation v. J. W. C. Company,

Inc. , 396 So. 2d 778 (Fla. 1st DCA 1981).

33. Section 499.01(d), Florida Statutes, requires a permit

before an entity operates as a "prescription drug wholesale

distributor."

34. Section 499.012(10), Florida Statutes, provides, in

relevant part:

The department may deny an application for a

permit or refuse to renew a permit for a

prescription drug wholesale distributor or

an out-of-state prescription drug wholesale

distributor if:

* * *

(b) The management, officers, or directors

of the applicant or any affiliated party are

found by the department to be incompetent or

untrustworthy.

* * *

(g) The applicant is affiliated directly or

indirectly through ownership, control, or

other business relations, with any person or

persons whose business operations are or

have been detrimental to the public health.

* * *

(m) The applicant or any affiliated party

receives, directly or indirectly, financial

support and assistance from a person who was

an affiliated party of a permittee whose

permit was subject to discipline or was

suspended or revoked, other than through the

ownership of stock in a publicly traded

company or a mutual fund.

* * *

(r) The applicant or any affiliated party

has failed to comply with the requirements

for manufacturing or distributing

prescription drugs under this part, similar

federal laws, similar laws in other states,

or the rules adopted under such laws.

35. Section 499.003(3), Florida Statutes, provides, in

relevant part:

"Affiliated party" means:

(a) A director, officer, trustee, partner,

or committee member of a permittee or

applicant or a subsidiary or service

corporation of the permittee or applicant;

(b) A person who, directly or indirectly,

manages, controls, or oversees the operation

of a permittee or applicant, regardless of

whether such person is a partner,

shareholder, manager, member, officer,

director, independent contractor, or

employee of the permittee or applicant;

(c) A person who has filed or is required

to file a personal information statement

pursuant to s. 499.012(9) or is required to

be identified in an application for a permit

or to renew a permit pursuant to

s. 499.012(8); or

(d) The five largest natural shareholders

that own at least 5 percent of the permittee

or applicant.

36. Section 499.012(8), Florida Statutes, describes who is

required to file a personal information statement:

An application for a permit or to renew a

permit for a prescription drug wholesale

distributor or an out-of-state prescription

drug wholesale distributor submitted to the

department must include:

* * *

(k) The name of the manager of the

establishment that is applying for the

permit or to renew the permit, the next four

highest ranking employees responsible for

prescription drug wholesale operations for

the establishment, and the name of all

affiliated parties for the establishment,

together with the personal information

statement and fingerprints required pursuant

to subsection (9) for each of such persons.

(l) The name of each of the applicant's

designated representatives as required by

subsection (16), together with the personal

information statement and fingerprints

required pursuant to subsection (9) for each

such person.

(m) For an applicant that is a secondary

wholesale distributor, each of the

following:

1. A personal background information

statement containing the background

information and fingerprints required

pursuant to subsection (9) for each person

named in the applicant's response to

paragraphs (k) and (l) and for each

affiliated party of the applicant.

* * *

37. Mr. Valdes and Mr. Rios do not contest that they are

affiliates of Petitioner. Mr. Rios is the owner and president,

and Mr. Valdes is the CDR. As such, they meet multiple elements

of the definition of affiliates.

38. The question in this case is whether they are also

affiliates of Worldwide, such that the wrongful acts and

omissions of that company will be attributed to them.

39. For Mr. Valdes, the answer is straightforward. He was

a CDR when many of the improper-pedigree transactions took

place, not just the ones involving him directly. The evidence

is clear that Mr. Valdes is an affiliate.

40. Section 499.012(16), Florida Statutes, describes the

role of a CDR. Section 499.012(16)(b)5, Florida Statutes,

requires that a CDR: "[p]rovide the department with a personal

information statement and fingerprints pursuant to subsection

(9)." Section 499.012(16)(d), Florida Statutes, requires of a

CDR that he:

1. Must be actively involved in and aware

of the actual daily operation of the

wholesale distributor.

2. Must be employed full time in a

managerial position by the wholesale

distributor.

3. Must be physically present at the

establishment during normal business hours,

except for time periods when absent due to

illness, family illness or death, scheduled

vacation, or other authorized absence.

4. May serve as a designated representative

for only one wholesale distributor at any

one time.

41. Section 499.012(16)(d), Florida Statutes, leaves no

doubt that a CDR is a manager, who must be actively involved and

aware of the actual daily operation and must be physically

present during normal business hours. Mr. Valdes was thus an

affiliate of Worldwide under Section 499.012(8)(k), Florida

Statutes, at all times that he was a CDR of Worldwide. Although

Respondent has discretion in its licensing decision, it is too

soon to allow Mr. Valdes to resume CDR responsibilities without

first demonstrating that he has acquired a greater understanding

of these responsibilities and a greater commitment to

discharging them in a timely and effective fashion.

42. Clearly, no evidence establishes that Mr. Rios was

incompetent or untrustworthy in his service to Worldwide or that

he poses a public health risk. The question is closer, though,

as to whether he was nonetheless an affiliate of Worldwide, at

least while the violations were taking place.

43. At this point, it is important to note that, although

Petitioner has the ultimate burden of proof, Respondent has the

burden of proving the reasons for denial. See , e.g. , Department

of Banking and Finance v. Osborne Stern and Company , 670 So. 2d

932, 934 (Fla. 1996); M.H. v. Department of Children and Family

Services , 977 So. 2d 755, 762-63 (Fla. 2d DCA 2008). While

Respondent has met this burden as to Mr. Valdes, it has not as

to Mr. Rios, even as to the closer question about whether he is

an affiliate of Worldwide.

44. During the violations, Mr. Rios did not have any

management authority as a purchasing manager, as he had no one

to manage and was directly supervised by Mr. Nielsen, a co-owner

of Worldwide. While Mr. Rios was purchasing manager, only two

unlawful purchases took place, so it is not like he was watching

idly as Mr. Nielsen engaged in a pattern of wrongful purchases.

45. While Mr. Rios was sales manager, a large number of

the improper-pedigree transactions took place, as did a large

number of the unlawful-purchase transactions. On the one hand,

Mr. Rios's name was never stamped as the person falsely

authenticating a pedigree, but, on the other hand, there were

few employees in the company. Although the mid-2007 renewal

application of Worldwide suggests that Mr. Rios had significant

managerial authority at that time, this was over one year after

the last proved violation.

46. Respondent did not introduce the renewal application

for 2005-06 or 2006-07. Nearly all of the violations took place

from mid-2005 to the end of 2006 when Mr. Nielsen left the

company. During this timeframe, Mr. Rios was not a person

required to file a personal information statement because he was

neither a CDR nor an overall manager.

47. Nor has Respondent proved that Mr. Rios was one of the

four highest-ranking employees. It appears that he was not.

When Mr. Valdes joined Worldwide, Veronica Boyette, who later

may have married Mr. Nielsen, was the supervisor of the sales

force. Nothing suggests that she ever lost the managerial

authority that went with her seniority. And she remained with

the company until after Mr. Nielsen left, as Ms. Boyette was

among those who tried, and failed, to pass the CDR test before

Mr. Valdes returned in early 2007. Ms. Boyette, not Mr. Rios,

was the fourth highest-ranking employee of Worldwide during the

violations of 2004-06. Although Mr. Rios later became one of

the four highest-ranking employees of Worldwide, it was not

while Worldwide was engaged in violations of the law.

48. The ultimate question as to Mr. Rios is whether,

during 2004-06, while the violations were taking place,

Respondent has proved that he "directly or indirectly,

manage[d], control[ed], or overs[aw] the operation" of

Worldwide. Again, after Mr. Nielsen's departure, Mr. Rios

became such a person, but the violations ended at the time of

Mr. Nielsen's departure, a couple of months after he had

prescription drugs shipped directly to his home.

49. The improper-pedigree transactions, which were the

majority of the violations, nearly all took place after Mr. Rios

had become a sales manager, although they bore the stamps of

three employees, of whom Mr. Rios was not one. In fact,

Mr. Rios's name never appears in the FO. In the final analysis,

while Mr. Rios had some supervisory authority in sales during

the period of the violations, Respondent has failed to prove

that he had any authority over the operation of Worldwide.

Because the violations did not involve the sales staff, the

statutory definition of affiliate contained in Section

499.003(3)(b), Florida Statutes, cannot be extended to Mr. Rios.

RECOMMENDATION

It is

RECOMMENDED that the Department of Health enter a final

order denying the application for a permit as a prescription

drug wholesale distributor until Mr. Rios substitutes a

qualified CDR for Mr. Valdes--a condition that the Department of

Health should allow Mr. Valdes a reasonable time to satisfy. If

Mr. Rios cannot submit the name of a qualified CDR within such

time, the final order should provide for the denial of the

application without prejudice to refiling at a later date with a

qualified CDR.

DONE AND ENTERED this 9th day of March, 2009, in

Tallahassee, Leon County, Florida.

___________________________________

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 9th day of March, 2009.

COPIES FURNISHED:

Alexander Valdes, Qualified Representative

14052 Southwest 80th Street

Miami, Florida 33183

Gary L. Asbell, Esquire

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 32399-1703

Rebecca Poston, R.Ph., Executive Director

Drugs, Devices, and Cosmetics Program

Department of Health

4052 Bald Cypress Way, BIN C04

Tallahassee, Florida 32399-1701

R. S. Power, Agency Clerk

Department of Health

4052 Bald Cypress Way, BIN A02

Tallahassee, Florida 32399-1701

Josefina M. Tamayo, General Counsel

Department of Health

4052 Bald Cypress Way, BIN A02

Tallahassee, Florida 32399-1701

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.