Opinion
WD 65990
Opinion filed: November 30, 2006
APPEAL FROM THE CIRCUIT COURT OF COLE COUNTY The Honorable Thomas J. Brown, III, Judge
Before SMITH, P.J., BRECKENRIDGE and SPINDEN, JJ.
TAP Pharmaceutical Products appeals from the disciplinary order of the Board of Pharmacy placing its pharmacy permit on probation for three years as a result of TAP's guilty plea to the felony offense of conspiracy to violate the Prescription Drug Marketing Act, 21 U.S.C. sections 333(b) and 331(t). In its first point on appeal, TAP asserts that the Board erred in disciplining its pharmacy permit because the State and TAP entered into a settlement agreement whereby the State released all claims against TAP based on the conduct underlying its guilty plea. In its second point on appeal, TAP claims that the Board violated TAP's due process rights in failing to hold a hearing to determine whether cause to discipline its pharmacy permit existed. In its second point on appeal, TAP further contends that its due process rights were violated because a fair and impartial tribunal did not hear the Board's complaint. In its final point on appeal, TAP contends that the Board erred in disciplining its pharmacy permit because it is the Administrative Hearing Commission (AHC), and not the Board, that is the proper administrative agency to determine whether cause exists to discipline its permit. Finding no error, the Board's decision placing TAP's pharmacy permit on probation for three years is affirmed.
Factual and Procedural Background
In September 2001, TAP agreed to enter a plea of guilty to the felony offense of conspiracy to violate Title 21 U.S.C. Sections 331(t) and 333(b) by causing the billing of free drug samples. On December 6, 2001, the United States District Court for the District of Massachusetts accepted TAP's guilty plea.
On December 3, 2001, TAP and the State of Missouri, by and through the Director of the Medicaid Fraud Control Unit of the Office of the Attorney General, entered into a Settlement Agreement and Release. Under the terms of the agreement, TAP paid the State a total of $1,827,331.90, with $752,763.09 comprising Missouri's individual amount, and the remaining $1,074,568.81 being the federal settlement amount allocable to Missouri. In consideration for this payment, the State agreed to release any civil claims against TAP relating to TAP's conduct in the underlying guilty plea.
TAP entered into a similar agreement with all fifty states.
On January 7, 2003, the attorney representing the Board filed a felony conviction complaint with the Board, pursuant to section 338.065, RSMo 2000, seeking to impose discipline against TAP's pharmacy permit based on TAP's guilty plea. The Board held a disciplinary hearing on September 9, 2004, at which Charles Summercorn, manager of pharmacy services at TAP, and Mark Graves, assistant ethics and compliance officer at TAP, testified.
All statutory references to section 338.065 are to the Revised Statutes of Missouri 2000.
On February 15, 2005, the Board issued its Findings of Fact, Conclusions of Law and Disciplinary Order placing TAP's pharmacy permit on probation for three years, with an effective date of February 25, 2005. Thereafter, TAP filed a petition for review with the Circuit Court of Cole County. On August 18, 2005, the circuit court entered judgment reversing the Board's disciplinary order and remanding the case to the Board. The circuit court's judgment instructed that if the Board seeks to pursue disciplinary action against TAP's pharmacy permit, it must file a complaint with the AHC for a determination of whether cause for discipline exists. Thereafter, the Board filed this appeal. Because the circuit court reversed the decision of the Board, and this court reviews the decision of the agency rather than the circuit court, under Rule 84.05(e), TAP, as the party aggrieved by the Board's decision, is required to file the appellant's brief and reply brief, and the Board, as the party aggrieved by the circuit court's decision, is required to file the respondent's brief. See Lagud v. Kansas City Bd. of Police Comm'rs , 136 S.W.3d 786, 790-91 (Mo. banc 2004).
Standard of Review
Under section 536.140.2, RSMo Cum. Supp. 2005, this court reviews the decision of the Board and not the decision of the circuit court. Lagud , 136 S.W.3d at 791. Review is limited to a determination of whether the administrative action:
All statutory references to section 536.140 are to the 2005 Cumulative Supplement to the Revised Statutes of Missouri 2000.
(1) Is in violation of constitutional provisions;
(2) Is in excess of the statutory authority or jurisdiction of the agency;
(3) Is unsupported by competent and substantial evidence upon the whole record;
(4) Is, for any other reason, unauthorized by law;
(5) Is made upon unlawful procedure or without a fair trial;
(6) Is arbitrary, capricious or unreasonable;
(7) Involves an abuse of discretion.
Section 536.140.2. In determining whether the Board's decision is supported by competent and substantial evidence, this court reviews the entire record, "not merely [ ] that evidence that supports its decision." Lagud , 136 S.W.3d at 791. Under subsection 3 of section 536.140, when the action of the agency reviewed "involves only the application by the agency of the law to the facts, the court may upon application of any party conduct a de novo review of the agency decision." For ease of discussion, TAP's points on appeal will be addressed out of order.
Board Has Authority to Conduct Disciplinary Hearing
In its third point on appeal, TAP asserts that the Board erred in disciplining its pharmacy permit because the Board's "only" option in attempting to discipline its permit was to file a complaint with the AHC. In essence, TAP argues that because the Board did not file a complaint with the AHC, and the AHC never made a determination that cause existed to discipline its pharmacy permit, the Board's action in disciplining its permit was in excess of the Board's statutory authority and jurisdiction.
In support of its argument that the Board's only option in attempting to discipline its pharmacy permit was to file a compliant with the AHC, TAP relies on section 338.285, RSMo Cum. Supp. 2005, subsection 1 of section 621.045, RSMo 2000, and Bodenhausen v. Missouri Board of Registration for the Healing Arts , 900 S.W.2d 621 (Mo. banc 1995). Under section 338.285, RSMo Cum. Supp. 2005, the Board has the authority to file a complaint with the AHC "when examination or inspection of a pharmacy shall disclose to the [B]oard that the pharmacy is not being operated or conducted according to such legal rules and regulations and the laws of Missouri." Under subsection 1 of section 621.045, the procedures to be followed by the AHC in conducting a hearing involving the discipline of a professional license are set forth. In relevant part, section 621.045.1 provides, "[t]he administrative hearing commission shall conduct hearings and make findings of fact and conclusions of law in those cases when, under the law, a license issued by any of the following agencies may be revoked or suspended or when the licensee may be placed on probation[.]" The Board of Pharmacy is included in the list of agencies included in section 621.045.1.
All statutory references to section 621.045 are to the Revised Statutes of Missouri 2000.
Section 338.285, RSMo Cum. Supp. 2005, provides:
The board is hereby authorized and empowered, when examination or inspection of a pharmacy shall disclose to the board that the pharmacy is not being operated or conducted according to such legal rules and regulations and the laws of Missouri with respect thereto, to cause a complaint to be filed before the administrative hearing commission pursuant to chapter 621, RSMo, charging the holder of a permit to operate a pharmacy with conduct constituting grounds for discipline in accordance with section 338.055.
Finally, in Bodenhausen , a licensed physician signed an agreement with the Board of Registration for the Healing Arts stipulating that he had violated sections 334.100.2(4)(h) and (13), RSMo Cum. Supp. 1989. 900 S.W.2d at 621. While the administrative agency did not file a compliant with the AHC, the agency and the physician entered into a disciplinary agreement, where the physician agreed to three years probation, "'in lieu of proceedings before the Administrative Hearing Commission.'" Id. at 621-22. The physician never challenged this disciplinary action. Id. at 622. Then, after the physician violated the terms of his probation, the Attorney General asked the administrative agency to further discipline the physician. Id. The administrative agency, finding that the physician did breach the original agreement, imposed additional discipline, again without filing a complaint with the AHC. Id. The physician then sought judicial review of the administrative agency's action. Id. The circuit court concluded that because the administrative agency did not obtain an independent evidentiary finding of cause from the AHC, the agency was without jurisdiction to impose additional discipline. Id. The circuit court also declared the original disciplinary agreement void ab initio. Id.
All statutory references to section 334.100 are to the 1989 Cumulative Supplement to the Revised Statutes of Missouri 1986.
On appeal to the Supreme Court, the administrative agency argued that it could discipline the physician without filing a complaint with the AHC. Id. Specifically, the administrative agency argued that section 536.060, RSMo Cum. Supp. 1989, which authorizes "'informal disposition of contested cases by stipulation, consent order, or . . . by agreed settlement,'" and recognizes "'waiver by the parties . . . of procedural requirements,'" permitted "disciplinary agreements that dispense with contested case proceedings." Id. The Supreme Court, however, disagreed holding that "a specific type of contested case is a precondition to professional discipline: The [administrative agency] may discipline a physician only if the Administrative Hearing Commission first finds cause for discipline." Id. Moreover, the Court stated, "[t]he Commission may find cause for discipline only after the [administrative agency] files a complaint with the Commission." Id. at 623. Thus, the Court found that because the AHC never made findings of fact and conclusions of law, the administrative agency could not impose additional discipline on the physician. Id. Regarding the initial disciplinary agreement, the Court held that because it also was entered into without findings of fact and conclusions of law being made by the AHC, the agreement was voidable. Id. Nevertheless, the Court held that because the physician did not challenge the order within thirty days, as required by section 536.110.1, RSMo 1986, he was bound by the original order. Id. TAP contends that each of these authorities support its claim that the Board exceeded its jurisdiction in placing its pharmacy permit on probation without first obtaining findings of fact and conclusions of law establishing cause to discipline its pharmacy permit from the AHC.
On the other hand, the Board claims that it has statutory authority to conduct a disciplinary hearing, without first filing a complaint with the AHC. The Board contends that it has such authority, under section 338.065.1, when a permittee, such as TAP, is guilty of a felony offense, an essential element of which is fraud. Section 338.065.1 provides:
After August 28, 1990, at such time as the final trial proceedings are concluded whereby a licensee or registrant has been adjudicated and found guilty, or has entered a plea of guilty or nolo contendere, in a felony prosecution pursuant to the laws of the state of Missouri, the laws of any other state, territory or the laws of the United States of America for any offense reasonably related to the qualifications, functions or duties of a licensee or registrant pursuant to this chapter or any felony offense, an essential element of which is fraud, dishonesty or an act of violence, or for any felony offense involving moral turpitude, whether or not sentence is imposed, the board of pharmacy may hold a disciplinary hearing to singly or in combination censure or place the licensee or registrant named in the complaint on probation on such terms and conditions as the board deems appropriate for a period not to exceed five years, or may suspend, for a period not to exceed three years, or revoke the license, certificate, registration or permit.
(Emphasis added.) The Board argues that its authority under section 338.065 is separate and independent from the AHC's general authority under sections 338.055 and 621.045 to conduct hearings and find cause for seeking discipline against a licensee, registrant, or permittee. The essence of the Board's argument is that section 338.065, authorizing discipline when the permittee is guilty of a felony involving fraud, is an exception to the general rule, as set forth in Bodenhausen , that a complaint must be filed with the AHC, and the AHC must find cause to discipline, before seeking disciplinary action.
"When interpreting a statute, courts are to 'ascertain the intent of the legislature from the language used and give effect to that intent, if possible, and to consider the words used in their plain and ordinary meaning.'" EBG Health Care III, Inc. v. Mo. Health Facilities Review Comm. , 12 S.W.3d 354, 358 (Mo.App.W.D. 2000) (citation omitted). In Bodenhausen , the physician stipulated that he violated sections 334.100.2(4)(h) and (13). 900 S.W.2d at 621. Section 334.100.2 begins:
The board may cause a complaint to be filed with the administrative hearing commission as provided by Chapter 621, RSMo, against any holder of any certificate of registration or authority, permit or license required by this chapter or any person who has failed to renew or has surrendered his certificate of registration or authority, permit or license for any one or any combination of the following causes: . . .
(Emphasis added.) Section 334.100.2 then proceeds to list twenty-four separate causes upon which a complaint may be filed with the AHC. In Bodenhausen , the Supreme Court's decision interpreted section 334.100.2 as mandatory in holding that before an administrative agency could impose discipline on a licensee or permittee for violation of any one of the twenty-five listed violations, the administrative agency must first file a complaint with the AHC, who must then determine whether cause to discipline exists. 900 S.W.2d at 623.
Section 334.100 has been amended several times since 1989. The current version of section 334.100 lists twenty-five causes upon which a complaint may be filed with the AHC. The above quoted portion of section 334.100.2 has not been substantially changed since 1989.
Subsection 2 of section 338.055, RSMo Cum. Supp. 2002, which is applicable to pharmacists and pharmacies, is similar to section 334.100.2, which governs health care providers. For example, subsection 2 of section 338.055 begins:
All statutory references to section 338.055 are to the 2002 Cumulative Supplement to the Revised Statutes of Missouri 2000.
The board may cause a complaint to be filed with the administrative hearing commission as provided by chapter 621, RSMo, against any holder of any certificate of registration or authority, permit or license required by this chapter or any person who has failed to renew or has surrendered his certificate of registration or authority, permit or license for any one or any combination of the following causes:. . . .
(Emphasis added.) Section 338.055.2 then proceeds to list seventeen separate grounds for which a complaint may be filed with the AHC. One such ground is if:
The person has been finally adjudicated and found guilty, or entered a plea of guilty or nolo contendere, in a criminal prosecution under the laws of any state or of the United States, for any offense reasonably related to the qualifications, functions or duties of any profession licensed or regulated under this chapter, for any offense an essential element of which is fraud, dishonesty or an act of violence, or for any offense involving moral turpitude, whether or not sentence is imposed[.]
Section 338.055.2(2). Moreover, under subsection 3 of section 338.055, after filing a complaint with the AHC, and upon a finding by the AHC that cause to discipline exists, "the board may, singly or in combination, censure or place the person named in the complaint on probation on such terms and conditions as the board deems appropriate for a period not to exceed five years, or may suspend, for a period not to exceed three years, or revoke the license, certificate, or permit." Thus, by analogy to the Court's decision in Bodenhausen , which interpreted section 334.100.2, if the Board had sought to discipline TAP's pharmacy permit based on section 338.055.2(2), or any of the other seventeen enumerated causes found in subsection 2, the Board would have been required to first file a complaint with the AHC, which would then have to determine that cause to discipline TAP's pharmacy permit existed before the Board could actually seek to discipline TAP's permit.
In this case, however, the Board did not seek to discipline TAP as a result of a violation of subsection 2 of section 338.055. Rather, the Board sought to discipline TAP's pharmacy permit under section 338.065, which sets forth grounds for discipline based on the same conduct as grounds for filing a complaint with the AHC under section 338.055.2(2), with the exception that under section 338.065, the underlying criminal conduct must rise to the level of a felony. In enacting section 338.065, rather than merely having the conduct subsumed within subsection 2 of section 338.055, which covers criminal conduct in general, the legislature enacted a special exception to the general procedures set forth in section 338.055 for conduct rising to the level of a felony.
Unlike section 338.055, however, section 338.065 is not prefixed with the requirement that the Board "may cause a complaint to be filed with the administrative hearing commission as provided by chapter 621," which the Court in Bodenhausen interpreted to require that an administrative agency file a complaint with the AHC and the AHC find cause to discipline before an administrative agency may seek disciplinary action. By enacting an exception for felony conduct from the other seventeen grounds for seeking discipline against a licensee, registrant, or permittee in section 338.065, and failing to include the language regarding filing a complaint with the AHC found in section 338.055, the legislature intended to create a different process whereby discipline could be sought against a pharmacy guilty of a felony without the prerequisite of filing a complaint with the AHC. In other words, section 338.065, in effect, substitutes an adjudication of guilt in a felony criminal proceeding for a finding of cause to discipline by the AHC. If the legislature had intended to require the Board to file a complaint with the AHC before seeking discipline in those instances involving the commission of a felony, it would have been unnecessary to enact a separate statutory section because such conduct would have already been covered by section 338.055.2(2), which provides a basis for filing a complaint with the AHC on the grounds of criminal conduct in general. This court presumes that the legislature does not enact meaningless provisions. Wilson v. Traders Ins. Co. , 98 S.W.3d 608, 618 (Mo.App. S.D. 2003). Section 338.065 would serve no purpose if it were to be interpreted to require a complaint to be filed with the AHC before the Board could seek disciplinary action when the licensee or permittee is guilty of a felony. Thus, this court finds that in enacting section 338.065, the legislature created an exception to the general rule that the Board must file a complaint with the AHC before seeking disciplinary action. Consequently, under section 338.065, the Board had authority to proceed with a disciplinary hearing against TAP's pharmacy permit without first filing a complaint with the AHC based on TAP's guilty plea to a felony of which an essential element is fraud. See also Vossman v. State Bd. of Pharmacy of Mo., 37 S.W.3d 812 (Mo.App.W.D. 2000) (Section 338.065 provides Board authority to hold disciplinary hearing and suspend or revoke pharmacist license when pharmacist convicted of felony in which fraud was an element).
Nevertheless, while acknowledging that section 338.065 provides the Board with authority to hold a disciplinary hearing, TAP argues that section 338.065 conflicts with section 621.045, which requires the Board to first file a complaint with the AHC before seeking disciplinary action. TAP argues that section 621.045 is a specific statute while section 338.065 is a general statute and, therefore, section 621.045 should prevail. While TAP correctly asserts that when statutes are in conflict, the more specific statute should prevail, this court disagrees with TAP's classification of the relevant statutes.
"As a general rule, a 'chronologically later statute, which functions in a particular way will prevail over an earlier statute of a more general nature, and the latter statute will be regarded as an exception to or qualification of the earlier general statute.'" Moats v. Pulaski County Sewer Dist. No. I. , 23 S.W.3d 868, 872 (Mo.App.S.D. 2000) (citations omitted). "Furthermore, '[w]here one statute deals with a particular subject in a general way, and a second statute treats a part of the same subject in a more detailed way, the more general should give way to the more specific.'" Id. (citation omitted).
The legislature first enacted section 621.045 in 1965 and section 338.065 in 1990. Thus, section 338.065 is the later statute. In addition, section 338.065 specifically provides that the Board of Pharmacy may hold a disciplinary hearing when a pharmacist or pharmacy has been found guilty or pled guilty to a particular type of felony. Section 621.045, on the other hand, is a general statute covering when the AHC is to conduct hearings based on the complaint of any one of seventeen different administrative agencies, including the Board of Pharmacy. Moreover, under section 621.045, the conduct at issue for which the AHC is to conduct a hearing is of a general nature covering "those cases when, under the law, a license issued . . . may be revoked or suspended or when the licensee may be placed on probation." Section 621.045 is also applicable "when an agency refuses to permit an applicant to be examined upon his qualifications or refuses to issue or renew a license of an applicant who has passed an examination for licensure or who possesses the qualifications for licensure without examination[.]" Thus, section 338.065, which is only applicable to conduct rising to the level of a felony and to decisions of the Board of Pharmacy, is more specific as compared to section 621.045, which is applicable under any set of circumstances when a license may be revoked, suspended or placed on probation by any one of seventeen different administrative agencies. Therefore, under the general rules of statutory construction, section 338.065, as the more specific statute enacted at a later point in time, should prevail over section 621.045, as the earlier statute of a more general nature. Moats , 23 S.W.3d at 872.
Section 161.272 was renumbered as section 621.045 in 1984.
In sum, because the conduct giving rise to the discipline of TAP's pharmacy permit was a felony, an essential element of which was fraud, the Board had authority, under section 338.065, to hold a disciplinary hearing without first filing a complaint with the AHC and the AHC finding that cause to discipline TAP's pharmacy permit existed. Accordingly, in holding a disciplinary hearing for the purpose of disciplining TAP's pharmacy permit without filing a complaint with the AHC, the Board did not act outside its statutory authority. Point denied.
The question whether the conduct giving rise to discipline of a permit was a felony under the criteria of section 338.065 is based on the language of the statute for the underlying felony offense and not on the conduct of the person committing the felony. In this case, the parties do not dispute that the underlying felony conduct, i.e., Medicaid fraud, meets the criteria of section 338.065.
Board Hearing Satisfied Due Process
In its second point on appeal, TAP asserts that the Board erred in disciplining its pharmacy permit on two bases. First, TAP contends that the Board erred in disciplining its permit without holding a hearing to determine whether cause to discipline existed. Specifically, TAP claims that its due process rights were violated because the Board made a determination that cause existed to discipline its permit without providing TAP with notice and an effective opportunity to defend itself. TAP argues that the September 9, 2004 hearing held by the Board was for the sole purpose of determining the appropriate discipline and that cause to discipline was not before the Board at the hearing, an issue that TAP claims had already been predetermined. TAP claims that a determination that it was "convicted of a felony that is allegedly reasonably related to the practice of pharmacy was made in TAP's absence and without regard to TAP's due process rights."
In support of its argument that its due process rights were violated, TAP relies on the United States Supreme Court's decision in Cleveland Board of Education v. Loudermill , 470 U.S. 532, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985). Specifically, TAP argues that Loudermill held that before the government can deprive a party of a protected property interest, there must be a pre-termination hearing, which serves as "an initial check against mistaken decisions — essentially, a determination of whether there are reasonable grounds to believe that the charges against the [party] are true and support the proposed action." 470 U.S. at 545-46. Thus, the essence of TAP's argument is that its due process rights were violated because it was denied the opportunity for such a "pre-termination" hearing.
"The fundamental requirement of the Due Process Clause is to provide notice and an opportunity for a hearing to a person subjected to a denial of a protected interest." Clark v. Bd. of Dir. of Sch. Dist. of Kansas City , 915 S.W.2d 766, 771 (Mo.App.W.D. 1996). Moreover, "to satisfy the requirements of due process, a party must be granted an opportunity to be heard at a time when the deprivation can still be prevented. " Laubinger v. Laubinger , 5 S.W.3d 166, 176 (Mo.App.W.D. 1999) (emphasis added). "The opportunity to 'present reasons, either in person or in writing, why [a] proposed action should not be taken' is sufficient to satisfy due process." Id. (quoting Loudermill , 470 U.S. at 546).
TAP's argument that the Board violated its due process rights because it did not hold a "pre-termination" hearing, however, is incorrect. TAP concedes that it received two hearing notices that the Board was holding a hearing to determine if discipline of TAP's pharmacy permit should be imposed based on TAP's felony guilty plea. TAP received each of these notices before any deprivation of its property rights and at a time when the deprivation could have still been prevented. Id.
Moreover, on September 9, 2004, the Board held a hearing on disciplining TAP's pharmacy permit, before taking any action to deprive TAP of its property interest. At the hearing, TAP was given an opportunity to present its "side of the story." McCormack v. Maplewood-Richmond Heights Sch. Dist. Bd. of Ed. , 935 S.W.2d 703, 708 (Mo.App.E.D. 1996). And, while TAP claims that it was denied a "meaningful opportunity to be heard, to confront and cross-examine witnesses, to present evidence rebutting that testimony, or to raise the Agreement as an affirmative defense," this court disagrees.
At the hearing, TAP presented its "side of the story" before the Board deprived TAP of any property interest. For example, Mr. Summercorn testified that TAP's felony guilty plea "had nothing to do with" the "conduct of the pharmacy" and the federal government did not investigate anyone at TAP's pharmacy. Moreover, Mr. Summercorn testified that TAP does not distribute drug samples and that TAP has never been disciplined by any government agency since TAP started in 1996. In its closing statement, counsel for TAP reiterated that TAP had "absolutely nothing to do with the conduct involved here in the plea of guilty. They were never investigated. They didn't even engage in sampling conduct, which was the conduct that was investigated in the first place." In addition, TAP raised the issue of whether the Settlement Agreement barred any administrative action by the Board. Thus, clearly, TAP had an opportunity to present its side of the story before the Board took any action to discipline its permit. In addition, at the hearing, Mr. Graves, assistant ethics and compliance officer at TAP, testified about TAP's extraordinary efforts since the felony guilty plea to be a leader in ethical issues. Such testimony was not only offered for the Board's consideration before the Board imposed any discipline on TAP's pharmacy permit, but was clearly offered as mitigating evidence as to why TAP's permit should not be disciplined. The notice and hearing received by TAP, both afforded TAP before the Board took any action to deprive TAP of its property rights, satisfied due process. McCormack , 935 S.W.2d at 708.
Finally, at the September 4, 2004 hearing, TAP had an opportunity to contest the fact that it did not pled guilty to a felony reasonably related to the practice of pharmacy or of which an essential element is fraud. Instead, TAP conceded that it pled guilty to a felony, an essential element of which is fraud. Under section 338.065.1, such conduct is sufficient for the Board to hold a disciplinary hearing. The "'root requirement' of the Due Process Clause is 'that an individual be given an opportunity for a hearing before he is deprived of any significant property interest.'" Div. of Family Servs. v. Cade , 939 S.W.2d 546, 552 (Mo.App.W.D. 1997) (quoting Loudermill , 470 U.S. at 542). Before its pharmacy permit was disciplined, TAP received notice of why the Board believed that its permit was subject to discipline and was afforded an opportunity to tell its side of the story and argue why its permit should not be disciplined. The Board's actions satisfied TAP's constitutional right to due process.
Nevertheless, TAP essentially argues that in addition to the Board's September 4, 2004 "pre-termination" hearing, it also had a right to a "pre-causal" hearing prior to a "pre-termination" hearing. In support of its argument, TAP cites ARO Systems, Inc. v. Supervisor of Liquor Control , 684 S.W.2d 504 (Mo.App.E.D. 1984). In particular, TAP claims that ARO Systems supports its claim that "both at the time when the [B]oard determines whether there are facts constituting a violation of professional licensing laws and also when the [B]oard determines the appropriate discipline to be imposed" due process is required. ARO Systems , however, does not support TAP's position. In ARO Systems , after discovering that ARO Liquors had sold alcohol to a minor without asking for identification, the Supervisor of Liquor Control imposed a two-day suspension on ARO's liquor license. 684 S.W.2d at 505. While the Supervisor of Liquor Control provided notice to ARO of the violation charged, the notice also imposed the two-day penalty. Id. at 506. Thus, ARO was not provided a "pre-termination hearing" before the penalty was imposed and, therefore, was never afforded a meaningful opportunity to tell its side of the story or why it should not be disciplined at a time when the deprivation could still have been prevented. Id. In this case, as discussed above, TAP had a meaningful opportunity to tell its side of the story and offer evidence as to why a penalty should not be imposed before the Board placed TAP's pharmacy permit on probation. Thus, ARO Systems does not support TAP's claim.
TAP also relies on State Board of Registration for the Healing Arts v. Finch , 514 S.W.2d 608 (Mo.App. 1974), to support its position that it is entitled to a "causal" hearing before a disciplinary hearing. In Finch , after an informal hearing, the board made a determination to deprive the applicant of the right to take the licensing examination based on the physician's prior first degree murder conviction. 514 S.W.2d at 611. Based on the board's decision, the physician was entitled to file a complaint with the AHC, under section 161.302, which the physician did. Id. at 611-12. Following a hearing before the AHC, the AHC issued an order requiring the board to permit Dr. Finch to take the examination. Id. at 612. The board then sought judicial review of the AHC's order claiming that the AHC's decision was "an unauthorized invasion of a discretion granted by statute [i.e., section 334.100] to the [b]oard." Id.
Section 161.302 was renumbered as section 621.120 in 1984.
While acknowledging the discretion granted the board under section 334.100 to refuse to permit an applicant to take a licensing examination, the court nevertheless found that such discretion was removed by the enactment of section 161.302. Id. at 612-13. Under section 161.302, "[u]pon refusal by any agency . . . to permit an applicant to be examined upon his qualifications for licensure . . . such applicant may file . . . a complaint with the [AHC]" and if "at the hearing the applicant shall show that under the law he is entitled to examination for licensure or licensure or renewal, the [AHC] shall issue an appropriate order to accomplish such examination or licensure or renewal, as the case may be." Thus, the court held that under the new statutory scheme found in section 161.302, the licensing agency "lost all statutory authority to conduct evidentiary hearings into the qualifications of applicants for licensure" and "'if the board determines to deny the application, the hearing on qualification is to be held by the [AHC], on complaint of the applicant.'" Finch , 514 S.W.2d at 613 (citation omitted). Thus, in Finch , section 161.302 specifically set forth the procedures for filing a complaint with the AHC in the event an applicant was denied an opportunity to take an examination for obtaining a license. More importantly, section 161.302 provides that if an applicant files a complaint with the AHC, the decision of the AHC on the matter shall be determinative.
Section 161.302, however, is not applicable in this situation because TAP was never denied an opportunity to be examined for licensure or denied the issuance or renewal of a license. Hence, this court finds Finch inapplicable in this case. As stated above, TAP received notice of why the Board believed its permit was subject to discipline and was afforded an opportunity to tell its side of the story at a time " when the deprivation [could have] still be[en] prevented. " Laubinger , 5 S.W.3d 176. Consequently, the Board's action did not violate TAP's constitutional right to due process.
In its second point on appeal, TAP further claims that the Board violated its due process rights in disciplining its pharmacy permit because a fair and impartial tribunal did not hear the Board's complaint. TAP's argument is a familiar one, that being that the Board violated its due process rights when it disciplined its permit because the Board essentially played "the roles of accuser, prosecutor, and administrative trier all at the same time, without the usual benefit, [to the pharmacy permittee], of subsequent neutral and independent review by the AHC." Lacey v. State Bd. of Registration for the Healing Arts , 131 S.W.3d 831, 846 n. 4 (Mo.App.W.D. 2004). Nevertheless, the Supreme Court has routinely rejected TAP's argument noting that while "a neutral decisionmaker is preferable, the mere fact that the Board both initiates a charge and then tries it, does not, by itself, violate due process." Artman v. State Bd. of Registration for the Healing Arts , 918 S.W.2d 247, 250 (Mo. banc 1996). To satisfy due process before imposing discipline, what is required is "a meaningful hearing with notice and an effective opportunity to defend." Id. at 251. In addition, due process is not violated "so long as the administrative hearing is subject to judicial review." Mendelsohn v. State Bd. of Registration for the Healing Arts , 3 S.W.3d 783, 786 (Mo. banc 1999).
Here, TAP received notice that a disciplinary hearing was to be held before the Board. On September 9, 2004, the Board held a hearing, at which TAP was represented by counsel. At the hearing, TAP had the opportunity to present witnesses and offer exhibits. Counsel for the Board did not present any witnesses and, therefore, confrontation of adverse witnesses was not necessary. In addition, at the hearing, TAP raised the affirmative defense of the settlement agreement. Finally, the Board's decision was subject to judicial review as TAP appealed the decision to the circuit court. Thus, TAP was provided notice, had an opportunity to defend, and was afforded judicial review. Accordingly, in imposing discipline on TAP's pharmacy permit, the Board did not violate TAP's due process rights. Point denied.
Settlement Agreement Did Not Bar Disciplinary Action
In its first point on appeal, TAP asserts that the Board erred in disciplining its pharmacy permit because the settlement agreement entered into between TAP and the State released all claims by the State against TAP for conduct underlying its guilty plea and, therefore, the Board was barred from bringing any disciplinary action against its pharmacy permit. Specifically, TAP contends that the language of the settlement agreement "establishes that the intent of the parties was to resolve any and all claims that the [S]tate of Missouri had against TAP for the so called 'Covered Conduct,' which includes the very same conduct upon which [the Board] disciplined TAP's permit."
In December 2001, TAP and the State of Missouri entered into a settlement agreement based on TAP's felony guilty plea to the offense of conspiracy to violate the Prescription Drug Marketing Act, 21 U.S.C. sections 333(b) and 331(t). "'Missouri courts generally treat settlement agreements as contracts'" and, therefore, "'the same principles applicable to [the interpretation of] any other contractual agreement'" is applicable in this case. Lacey , 131 S.W.3d at 838 (citation omitted). "'The cardinal principle for contract interpretation is to ascertain the intention of the parties and to give effect to that intent.'" Id. (citation omitted). This court reviews the terms of the contract as a whole rather than in isolation to determine the intent of the contracting parties. Id. The interpretation of a contract is a question of law. Id.
TAP points to three provisions in the settlement agreement to support its argument that the agreement barred the Board from bringing a disciplinary action against its pharmacy permit. The first provision TAP relies on is paragraph 2, which provides, in relevant part:
In consideration of this Agreement and payment set forth herein and subject to the exceptions from release set forth in Paragraph 3 below, the state of Missouri on behalf of itself, its officers, agents, agencies and departments shall release and forever discharge TAP . . . from any civil or administrative claims for damages or penalties that the state of Missouri has or may have relating to the Covered Conduct as defined in Preamble Paragraph F. The payment of the Settlement Amount fully discharges TAP from any obligation to pay Medicaid-related restitution, damages, and/or any fine or penalty to the State for the Covered Conduct.
(Emphasis added.) Preamble Paragraph F, details the Covered Conduct, which in general describes TAP's illegal conduct as dispensing free samples of the drug Lupron to certain health care providers and then illegally billing the Medicaid program for the free samples.
TAP's reliance on paragraph 2 does not support its argument. First, paragraph 2 expressly excludes from release those exceptions set forth in paragraph 3. In paragraph 3, the State expressly did not release TAP from "any administrative liability," except for such administrative liability as "explicitly stated in [the] Agreement." (Emphasis added.) The only administrative liability the State agreed to release TAP from expressly found in the agreement is for "administrative claims for damages or penalties" found in paragraph 2. "[D]amages and penalties" when used in the context of administrative claims, however, suggests liability of a punitive nature. Disciplinary actions such as the Board brought in this case, which sought to sanction TAP's pharmacy permit, however, "are intended to protect the public and not to punish." In re Caranchini , 956 S.W.2d 910, 914 (Mo. banc 1997). "[T]he overriding principle of disciplinary action is to 'protect society and maintain the integrity of the [ ] profession'" and, therefore, "are primarily remedial in nature." Id. Thus, when paragraph 2 is read in combination with paragraph 3, this court finds that it was the intent of the parties that the only administrative claims that the State intended to release TAP from were those that were penal in nature and the State did not intend to release TAP from administrative claims that were remedial in nature, such as a disciplinary sanction. In addition, when paragraph 2 is read in combination with Preamble Paragraph F, this court finds that the State only intended to release claims regarding Medicaid fraud.
TAP next relies on paragraph 4, wherein the State agreed to "release and refrain from instituting, directing or maintaining any administrative claim" against TAP. TAP, however, reads paragraph 4 out of context. Paragraph 4, read in context provides:
In consideration of the obligations of TAP set forth in this Agreement, conditioned upon TAP's payment in full of the Settlement Amount and except as reserved in paragraph 3 above, the state of Missouri agrees to release and refrain from instituting, directing or maintaining any administrative claim or any action seeking exclusions from the state of Missouri's Medicaid program against TAP . . . for the covered Conduct or for TAP's conviction in the Criminal Action.
(Emphasis added.) Thus, any administrative claims released by the State under paragraph 4 concern only claims "seeking exclusions from the state of Missouri's Medicaid program." The Board's disciplinary action against TAP in this case did not involve exclusions from Missouri's Medicaid program and, therefore, paragraph 4 also does not support TAP's argument.
Finally, TAP relies on paragraph 5 of the Settlement Agreement to support its argument that the agreement bars the Board from bringing a disciplinary action against its pharmacy permit. Paragraph 5 provides that, "the state of Missouri agrees that it shall not investigate, prosecute, or refer for prosecution or investigation to any agency, TAP . . . for the Covered Conduct." Thus, under this provision, the State has agreed not to investigate or prosecute TAP for the Covered Conduct and not to refer the matter for prosecution or investigation to any agency, which would include an administrative agency such as the Board. Rather than expressly agreeing not to refer the matter to any agency for any reason, as TAP suggests, however, paragraph 5 simply limits those instances wherein the State agreed not to refer the matter to an administrative agency to only those matters concerning the Covered Conduct, i.e., Medicaid fraud.
Moreover, in determining the intent of the parties, each provision in the contract is to be construed in harmony with the others to give each provision a reasonable meaning and avoid an interpretation that renders some provisions useless or redundant. Wildflower Cmty. Ass'n v. Rinderknecht , 25 S.W.3d 530, 534 (Mo.App.W.D. 2000). Had the State actually intended to agree to release TAP from all administrative claims, as TAP suggests, it would have been unnecessary to include a provision in the agreement whereby the State agreed not to refer the matter to any agency. Indeed, such a provision would be rendered meaningless under TAP's interpretation. Moreover, as discussed above, in paragraph 3, the agreement specifically provides that the State only agrees to release TAP from administrative liability that was expressly stated in the agreement.
Similarly, paragraph 4 provides that, "[t]he Medicaid Fraud Control Unit for the state of Missouri further agrees to refrain from recommending, causing or attempting to cause any administrative action or sanction, including debarment, by any other government agency of the state of Missouri for the Covered Conduct or for the conviction in the Criminal Action." Again, had the State intended to agree to release all administrative claims against TAP, it would have been unnecessary to include such a provision in the Agreement whereby the Medicaid Fraud Control Unit agreed to refrain from "attempting to cause any administrative action or sanction."
Moreover, under paragraph 7, TAP agreed to waive certain defenses that it may have to any criminal prosecution or administrative action relating to the Covered Conduct. In particular, under paragraph 7, TAP agreed to waive the defense that the "Settlement Agreement bars a remedy sought in . . . [an] administrative action," the actual defense TAP is now attempting to raise. Had TAP intended that the agreement barred all administrative action, such a provision waiving the defense of the settlement agreement as a bar to a remedy would have been unnecessary.
In sum, when read in isolation, several of the provisions TAP relies on in support of its claim arguable support its argument that the State is barred from bringing a disciplinary action against its pharmacy permit based on the settlement agreement. However, when viewing the settlement agreement as a whole, to interpret the agreement in the manner suggested by TAP would render several provisions of the Settlement Agreement meaningless. As discussed above, in determining the intent of the parties, the entire settlement agreement must be read as a whole and each provision in the contract must be construed in harmony with the others. Rinderknecht , 25 S.W.3d at 534. Accordingly, considering the entire settlement agreement, this court finds that the parties did not intend to release TAP from all administrative claims, including disciplinary actions. Consequently, the Board did not err in refusing to find that the settlement agreement barred disciplinary action against TAP's pharmacy permit. Point denied.
Accordingly, the Board's Disciplinary Order placing TAP's pharmacy permit on probation for three years is affirmed.
All concur.