NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES.
(The decision of the Court is referenced in the North Western Reporter in a table captioned "Wisconsin Court of Appeals Table of Unpublished Opinions".)
Court of Appeals of Wisconsin.
WALGREEN CO., Petitioner-Respondent,
v.
WISCONSIN PHARMACY EXAMINING BOARD and Wisconsin Department of Regulation and
Licensing, Respondents-Appellants.
No. 97-1513.
Feb. 19, 1998.
APPEAL from an order of the circuit court for Dane County: DANIEL R. MOESER, Judge. Affirmed.
EICH, C.J., and DYKMAN, P.J., and ROGGENSACK, J.
Eich, Chief Judge.
***1 The Wisconsin Pharmacy Examining
Board appeals from an order reversing its ruling that the Walgreen Company, the
owner and operator of several pharmacies in Wisconsin, violated various
regulatory statutes and administrative rules relating to pharmacies when, as
part of a test program, it accepted prescription orders from physicians via
a computer electronic mail system, and provided used computers for some of the
physicians participating in the test.
The board concluded that: (1) the
use of computer-transmitted prescriptions violated § 450.11(1), Stats.,
which requires written prescription orders to be signed by the prescribing
physician; [FN1] and (2) Walgreen's
provision of computers to some of the participating physicians violated Wis.
Adm.Code § Phar 10.03(14), which prohibits pharmacies from participating in
"rebate or fee-splitting arrangements" with physicians. [FN2]
FN1. Section
450.11(1), Stats., provides:
(1)
DISPENSING. No person may dispense any
prescribed drug or device except upon the prescription order of a
[physician]. All prescription orders shall specify the date of issue, the name
and address of the patient, the name and address of the [physician], the name
and quantity of the drug ... prescribed, directions for the use of the drug ...
and, if the order is written by the [physician], the signature of the
[physician]. Any oral prescription order
shall be immediately reduced to writing by the pharmacist and filed ....
(Emphasis added.)
The statute uses the term "practitioner" rather
than "physician," defining the former as "a person licensed in
this state to prescribe and administer drugs." See § 450.01(17), Stats. For simplicity, we use the term
"physician."
FN2. Wisconsin
Adm.Code § Phar 10.03(14) provides:
Phar. 10.03 Unprofessional Conduct.
The following ... are violations of standards of professional conduct
...:
(14) Participating in rebate or fee-splitting arrangements
with ... [physicians] or with health care facilities.
While we pay due deference to the board's
decision, [FN3] we are
satisfied that its interpretation of § 450.11(1), Stats.,
while reasonable, is overcome by a more reasonable interpretation and that its
determination that Walgreen's program
violated the "rebate" rule lacks any reasonable basis in the
record. We therefore reverse the
board's decision and affirm the circuit court's order.
FN3. The board also
determined that because Walgreen's corporate logo appeared on the computerized
prescription form the physicians used, the program violated Wis.
Adm.Code § Phar 10.03(15), which prohibits the use of prescription order blanks
imprinted with the name of a specific pharmacy.
Walgreen has not appealed from that ruling, however, and it is not
before us.
The facts are not in dispute. Walgreen tested a computer system it had
developed whereby ten physicians electronically transmitted prescriptions to a
Walgreen pharmacy. Each electronically
transmitted prescription contained the same information as a written or faxed
prescription but did not include the physician's signature. Walgreen provided the necessary software to
the ten participating physicians and also supplied six of them with used
computers and modems at no cost.
In determining that Walgreen's program
violated § 450.11(1), Stats.,
the board reasoned that, because the statute does not specifically mention
electronic transmissions, but rather defines a "prescription order"
as simply "a written or oral order by a
[physician] for a drug or device for a particular patient," § 450.01(21), Stats.,
an electronic transmission is the equivalent of a written order and thus
subject to the signature requirement of the statute. The board determined that the program also
violated the "rebate" rule because Walgreen received a financial
benefit by providing free computer equipment to several of the participating
physicians--although it never estimated either the value of the equipment or the
nature of the "benefit" to Walgreen.
Having so found, the board assessed a forfeiture of $89,200 against
Walgreen.
Walgreen sought judicial review of the board's
decision and the circuit court reversed, concluding with respect to the § 450.11(1), Stats.,
violation that prescriptions transmitted electronically were more analogous to
prescriptions ordered by telephone, which, under the statute, a physician need
not sign. The court also rejected the
board's determination that Walgreen's program violated the "rebate"
rule because the board failed to determine the extent of any financial benefit
to either Walgreen or the participating physicians.
***2 The board appeals, reasserting the
arguments it raised before the trial court.
I. Standard of Review
The parties differ over the appropriate
standards by which we are to review the board's decision. [FN4] The board argues that its interpretation of
the statute and rule is entitled to great
deference, while Walgreen maintains that we owe no deference at all to the
board's decision.
FN4. In
administrative appeals, we review the agency's decision, not the circuit
court's. Sterlingworth
Condominium Ass'n v. DNR, 205
Wis.2d 710, 720, 556 N.W.2d 791, 794 (Ct.App.1996).
Generally, the interpretation and application
of statutes is a question of law for the courts to decide. There is, however, an important
countervailing principle that accords varying degrees of deference to decisions
of administrative agencies. At the top
end of the scale, we will pay "great deference" to an agency's
decision where: (1) the legislature has
charged the agency with the administration and enforcement of the statute in
dispute; (2) the agency's interpretation
"is one of long-standing"; (3)
the agency employed its "expertise or specialized knowledge" in
arriving at its interpretation; and (4) the interpretation "will provide
uniformity and consistency in the application of the statue." [FN5] Harnischfeger
Corp. v. LIRC, 196
Wis.2d 650, 660, 539 N.W.2d 98, 102 (1995). Where this standard is applicable, we will
uphold the agency's interpretation and application of the statute as long as it
is reasonable--even though an alternative interpretation may be more
reasonable. Barron
Elec. Coop. v. Public Serv. Comm'n, 212 Wis.2d
752, 761, 569 N.W.2d 726, 731 (Ct.App.1997).
FN5. We will also pay
great deference to an agency's interpretation "if it is intertwined with
value and policy determinations" inherent in the agency's decisionmaking
function. Barron
Elec. Coop. v. Public Serv. Comm'n,
212 Wis.2d 752, 761, 569 N.W.2d 726, 731 (Ct.App.1997) (internal quotation marks and quoted source omitted).
We will pay a slightly lesser degree of
deference where the agency, while possessing some experience in the area in
question, has not developed the expertise that necessarily places it in a
better position to make judgments regarding the interpretation of the statute
than a court. In that situation we will
accord "due-weight deference" to the agency's interpretation. UFE
Inc. v. LIRC, 201
Wis.2d 274, 286, 548 N.W.2d 57, 62 (1996). [FN6] Where the
due-weight deference standard is applicable, we will still sustain the agency's
decision if it is reasonable--even in situations where another interpretation
is equally reasonable--but "[w]e will not do so ... if another
interpretation is more reasonable than the one employed by the
agency." Barron
Elec. Coop.,
212 Wis.2d at 763, 569 N.W.2d at 732 (citation
omitted) (emphasis in original).
FN6. We base our deference in this situation more on the
agency's duty to enforce the statute in question and less on its knowledge or
skill. UFE
Inc. v. LIRC,
201 Wis.2d 274, 286, 548 N.W.2d 57, 62 (1996).
Finally, where "the issue before the
agency is clearly one of first impression, or when [the] agency's position on [the]
issue has been so inconsistent so as to provide no real guidance," we will
owe no deference to the agency's interpretation; we will review it de novo, giving it
"no weight at all." UFE,
201
Wis.2d at 285, 548 N.W.2d at 62 (citations
omitted); Barron
Elec. Coop.,
212 Wis.2d at 763, 569 N.W.2d at 732 (quoting Local
No. 695 v. LIRC,
154 Wis.2d 75, 84, 452 N.W.2d 368, 372 (1990)).
***3 Characterizing this as a
"test case," Walgreen argues that de novo review is
appropriate because the board's determination is one of first impression. Walgreen also asserts that the decision
"has no precedent in agency action" and that the board's
interpretation and application of the statute and rule are not of
long-standing.
While the board's decision addresses a new
technology--electronic transmission of information--the board's experience in
administering the statutes in question is more relevant to our inquiry than its
experience with computers. The legislature has charged the board to regulate
pharmacies--including the making and filling of prescriptions--since at least
1955, and it has promulgated a variety of
rules in its regulatory role. See
§
§ 151.01
and 151.07,
Stats. (1955-56). Although this is the first case before the
board involving computer transmission of prescriptions from physician to
pharmacy, it has applied § 450.11(1), Stats.,
to facsimile prescription transmissions in at least one prior case, apparently
concluding that such transmissions are equivalent to telephone orders. [FN7]
FN7. In its decision,
the trial court referred to a prior case in which the board determined that
"faxed prescriptions are permitted under [§ 450.11, STATS.]."
And the parties stipulated in the proceedings before the board: "Prescriptions ... need not be in
writing; they may be communicated to a
pharmacist orally by telephone, or by fax."
It was argued in Barron that because
the Wisconsin Public Service Commission had not applied the statute under
consideration "to facts that are wholly analogous, or nearly so, to the
particular facts of [the instant] case," the administrative decision was
one "of first impression" subject to de novo review. Barron
Elec. Coop.,
212 Wis.2d at 764, 569 N.W.2d at 732. We rejected the argument, noting:
The test is not ... whether the commission has ruled on the
precise--or even substantially similar--facts in prior cases. If it were, given the myriad factual situations to which the provisions of
[the statutes administered by the commission] may apply, deference would indeed
be a rarity. Rather, the cases tell us
that the key in determining what, if any, deference courts are to pay to an
administrative agency's interpretation of a statute is the agency's experience
in administering the particular statutory scheme--and that experience must
necessarily derive from consideration of a variety of factual situations and
circumstances. Indeed, we have
recognized in a series of cases that an agency's experience and expertise need
not have been exercised on the precise--or even substantially similar--facts in
order for its decisions to be entitled to judicial deference.
In
Zignego Co. v. DOR,
211 Wis.2d 817, 824, 565 N.W.2d 590, 593
(Ct.App.1997), we concluded that where the
legislature had charged the Wisconsin Tax Appeals Commission with enforcement
of the statute under consideration, and the commission had "at least one
opportunity to analyze that statute and formulate a position," we would
accord due deference to its interpretation.
In this case, the board has had years of
experience in interpreting and applying § 450.11, Stats.,
and Wis.
Adm.Code § Phar 10.03, and while it has not addressed the precise question
before us, it had at least one opportunity to apply these authorities to a
particularly analogous situation: the facsimile transmission of prescription
orders. We conclude, therefore, that the board's interpretation and application
of the statute and rule in this case are entitled to due-weight deference and
should be affirmed if reasonable--but only if no other interpretation is more
reasonable.
II. The Statutory Violation
***4 Emphasizing that § 450.11(1), Stats.,
on its face, deals with only written and "oral" prescriptions, the
board maintains that a computer electronic mail system is more analogous to a
written prescription order than an oral one because "the communication
between the doctor and the pharmacist is textual," involving the use of
letters and numbers typed at one computer and read on another computer. Thus, according to the board, because a computer
transmission lacks the prescribing physician's signature, Walgreen's system
violates § 450.11(1).
It is in the nature of things that statutes
must at times be applied to situations unforeseen at the time of their
enactment. When this occurs, the
statute can and should be considered in terms of its manifest intent to see, in
Professor Hurst's words, whether the "pictures actually drawn by the
statutory text ... [are] sufficient to cover the new type of situation that the
course of events ha[s] produced."
James W. Hurst, Dealing with Statutes 35 (1982). According to Hurst, if
the legislature has supplied "sufficient specifications to provide a
discernible frame of reference within which the situation now presented quite
clearly fits, even though it represents in some degree a new condition of affairs unknown to the
lawmakers," the statute may be interpreted accordingly. Id.
The circuit court, disagreeing with the
board's conclusion that a computer-transmitted prescription was so analogous to
a written prescription that it must be treated as such under the statute, ruled
that it was more closely akin to a prescription transmitted orally--by
telephone--which the legislature, in the concluding lines of § 450.11(1), Stats.,
expressly stated may be filled without being signed. That is, to us, a more reasonable
interpretation than the board's in light of the simple facts of computer
transmission: The prescription is put
into a computer as text and the message is then electronically transmitted to
the pharmacy's terminal, much as a telephone call--or a facsimile--would be. [FN8]
FN8. Indeed, computer
transmission presents an advantage over an oral prescription order--where the
listener must record the order on paper--by greatly reducing the risk of
misunderstanding because the prescription appears in written form on the
pharmacy's terminal.
The board asserts that "security considerations"
should bar us from considering a computer transmission as analogous to a
telephone order. The board suggests in
its brief that pharmacists can recognize the caller's voice over the telephone,
and thus verify his or her identity, while "[a] computer, on the other hand, is more
anonymous," creating a danger that the prescription information "will
fall into the wrong hands." And,
it maintains that we should defer to such concerns. The board failed to expressed such concerns,
however, and we have not been pointed to any evidence in the record, or any
findings or determinations made by the board, that touch on this point. The board's attorneys raise this unsupported
argument for the first time on appeal.
We owe the assertion no deference and we are not persuaded by the
argument. We agree with Walgreen that
the unsubstantiated statement that the pharmacists' ability to recognize
prescribing physicians' voices--especially pharmacies in large metropolitan
areas such as Milwaukee or Madison--will ensure that prescriptions are not
pirated pales when contrasted with the benefits Walgreen's system has over
written, faxed or telephone orders. As
the trial court noted, and as the parties agreed in their stipulation of facts,
such benefits include savings in time for both physician and pharmacist,
elimination of the need to interpret physicians' handwriting, and removing the
opportunity for patients to alter prescriptions.
Finally, we note that the circuit court's
interpretation appears to be consistent with the board's own rule allowing
electronic transmission of renewal prescription orders on a one-time basis
between two pharmacies. See Wis.
Adm.Code § Phar 7.05(3) and (5). [FN9]
FN9. Wisconsin
Adm.Code § Phar 7.05(1) requires that records of filled prescriptions be
maintained by the pharmacy for five years. Section
7.05(3)(a) permits "the transfer of original
prescription order information for the purpose of renewal dispensing ...
between 2 pharmacies on a one-time basis," as long as certain requirements
are met. Section
7.05(5) allows "[p]harmacies having access
to a common central processing unit" to exchange renewal prescription
orders on an unlimited basis. And § 7.05(6) states
that "[a] computerized system may be used for maintaining a record ... of
prescription dispensing and transfers of original prescription order
information for the purposes of renewal dispensing," if the system meets
certain standards.
The board minimizes the similarity with electronic
transmission of renewal prescription orders, noting that under Wis.
Adm.Code § Phar 7.05(3) at least a written original prescription order would
exist, and that, under the rule, pharmacists are required to communicate
directly with each other before sending the electronic mail. But a signature may not appear on the
"original" order if it was a telephone order. See § 450.11(1), Stats.
We are
thus satisfied that the circuit court properly reversed the board's conclusion
that Walgreen's test program violated § 450.11(1), Stats.
III. The Rule Violation
The board also challenges the circuit court's
reversal of its determination that Walgreen gave an illegal rebate to six
physicians by providing them with computers and modems. The board's position that Walgreen's test
program violates Wis.
Adm.Code § Phar 10.03(14)--which, as indicated above, prohibits pharmacies from
participating in "rebate or fee-splitting arrangements" with
physicians--is based on its determination that Walgreen received
"financial benefits," such as time and money savings, through the use
of computer-transmitted prescriptions.
The board maintains that, by providing the physicians with free computer
equipment Walgreen "gave or rebated" the equivalent of the
then-current market value of the equipment to them. According to the board,
Walgreen also received a "financial gain" in the form of time
savings, "which translated into more profits."
***5 Here, too, we agree with the
circuit court. Wisconsin
Adm.Code § Phar 10.03 does not define either "fee-splitting" or
"rebate." In the absence of a
statutory definition, we look to recognized dictionaries to ascertain the
common and approved meaning of nontechnical terms. Luetzow
Indus. v. DOR, 197
Wis.2d 916, 925, 541 N.W.2d 810, 814 (Ct.App.1995). The board, relying on the dictionary
definition of "rebate" as "[a] deduction from an amount to be paid or a return of part of an amount given in
payment," American Heritage Dictionary 1031 (2d college ed.1982), argues
that Walgreen achieved that precise effect by providing computers to six
physicians.
The evidence is undisputed, however, that the
computers were provided to the six physicians solely to allow them to
participate in the test program. No
evidence suggests that the physicians used the computers for other purposes, or
that any fees or payments were split by anyone. Indeed, the record is devoid of any
information relating to either the purported value of the computers to the
physicians or the benefits accruing to Walgreen as a result of their use in the
test. As the circuit court noted, "[T]he
[physician]s' agreement to participate in the [test program] may well have had
more value to Walgreen than the market price of the outmoded equipment, as the
testing would allow Walgreen to assess the feasibility of implementing the
system on a larger scale." We
believe the circuit court is correct: in
the absence of any evidence establishing the value of the computers--or the
value of any benefits to Walgreen from the physicians' use of them--the board's
conclusion is arbitrary and unreasonable and cannot stand.
IV. Forfeiture
The board also appeals the circuit court's
determination that the $89,200 forfeiture must be "significant[ly]
adjust[ed]" because the court reversed two of the violations against
Walgreen. The board argues that the
penalty--which was well below the $500,000
sought by the prosecuting attorney--constituted an appropriate exercise of
discretion.
It is true, as the board points out, that we
will generally defer to an administrative agency's exercise of discretion. We will not do so, however, and will
reverse, when the agency either has failed to exercise its discretion or has
exercised its discretion in violation of the law, agency policy, or
practice. Galang
v. Medical Examining Bd., 168
Wis.2d 695, 699-700, 484 N.W.2d 375, 377 (Ct.App.1992). Stated another
way, if the agency's determination is "[not] one a reasonable tribunal
could reach" on the facts of the case, or is "[in]consistent with
applicable law," we may reverse. Id.
at 700, 484 N.W.2d at 377.
We think this is such a case. The board based the forfeiture on its
conclusion that Walgreen was guilty of three separate violations of the
applicable statutes and rules. We have
reversed two of those rulings, and in light of those reversals, we think it
entirely appropriate to remand the case to the board for reconsideration of the
forfeiture.
***6 By the Court.-Order
affirmed.
Recommended for publication in the official
reports.
217 Wis.2d 290, 577 N.W.2d 387 (Table), 1998
WL 65551 (Wis.App.) Unpublished Disposition
END OF
DOCUMENT