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United States v. Bragdon

July 2, 2010


The opinion of the court was delivered by: Oliver W. Wanger United States District Judge



1. Plaintiff, United States of America, and defendants William T. Bragdon, Jr., John Wong and Patterson Family Pharmacy, through their respective representatives, hereby agree to resolve the United States' civil action to recover civil penalties under the Controlled Substances Act, as amended, 21 U.S.C. §§ 801 et seq. (the CSA), and its implementing regulations as set forth below (the Agreement). This action arises from Defendants' dispensing of prescriptions for controlled substances via the internet in violation of 21 U.S.C. §§ 842(a)(1) and 829(b), and 21 C.F.R. § 1306.04(a). The Agreement is based upon the following facts:


2. Defendants William T. Bragdon, Jr. and John Wong are California state licensed pharmacists and the independent owners and operators of defendant Patterson Family Pharmacy (collectively Defendants), a licensed pharmacy located in Stanislaus County, California.

Settlement Agreement and Order

3. Defendants are required to conduct their operations in accordance with the CSA and its implementing regulations.

4. The complaint alleges that during the period December 14, 2006 and June 13, 2007, Defendants wrongfully filled and dispensed 2,424 prescriptions for Schedule III and IV controlled substances via the internet (the Purported Prescriptions). The CSA and its regulations prohibit the distribution or dispensing of controlled substances unless done so pursuant to a lawful prescription. To be lawful, a prescription must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of their medical practice. Pharmacists have a responsibility to ensure that the controlled substances they distribute or dispense are based on a lawful prescription. The United States contends that the Purported Prescriptions were not issued for a legitimate medical purpose. These allegations and contentions compose the "Covered Conduct."

5. The CSA authorizes a civil penalty of up to $25,000 for each violation alleged in the complaint.

6. Defendants admit the allegations contained in the United States' complaint.


7. In consideration of their mutual promises and covenants, the United States and Defendants agree to settle this litigation upon the following terms:

A. Entry of Judgment. Defendants consent, jointly and severally, to entry of judgment in favor of the United States in the amount of $500,000.00, representing penalties and costs authorized pursuant to 21 U.S.C. §§ 801, et seq. Defendants shall satisfy the judgment amount via an initial payment of three-hundred thousand dollars ($300,000.00), payable as set forth below with the remainder financed over five years also as set forth below.

B. The United States may perfect its judgment by filing abstracts of judgment in the counties in which Defendants maintain real property interests, but agrees that it will not otherwise seek to enforce its judgment provided Defendants comply with this Agreement's payment terms. Further, if Defendants pay the remainder amount as set forth below, the remaining two-hundred thousand dollar ($200,000.00) balance shall be reduced to one-hundred seventy-five thousand dollars ($175,000.00). Finally, upon Defendants' compliance with these settlement terms, the United States will file a satisfaction of judgment with the Court.

C. Initial payment to the United States. On or before August 1, 2010, Defendants shall pay to the United States the sum of $300,000.00. Defendants shall make this payment via electronic funds transfer pursuant to written instructions the United States will provide separately.

D. Defendants' payment plan. Beginning on August 1, 2010, Defendants shall pay the United States, in monthly installments, the remaining judgment amount. Interest shall accrue at the rate of five percent (5%), compounded annually. Of the remaining amount, Defendants shall pay the United States fifty thousand dollars ($50,000.00) within payment year one, calculated at $4,262.61 per month for twelve months. Thereafter, based on the reduced judgment amount, Defendants shall pay the one-hundred twenty-five thousand dollar ($125,000.00) balance over payment years two through five in monthly installments of $3,013.18. Appendix "A" hereto sets forth the amortization schedule for the reduced $175,000.00 payment plan, which shall remain in effect provided Defendants do not default under these payment provisions.

E. Defendants' monthly payments are due by the 1st day of each month at the United States Attorney's Office, Attention Financial Litigation Unit, 501 I Street, Suite 10-100, Sacramento, CA 95814. Checks must be payable to the United States Department of Justice.There is no prepayment penalty and Defendants are encouraged to increase their payments as their financial situation allows.

F. The California Board of Pharmacy has cited Defendants for violations of California law similar to the CSA violations alleged by the United States. These are separate proceedings by separate sovereigns. An adverse finding against Defendants, including a license revocation, by the state of California does not alter Defendants' promises, covenants and obligations to the United States under the terms of this Agreement.

G. Default. Defendants shall be in default if they fail to make a timely payment and thereafter fail to cure the default within fifteen (15) days from the date the United States mails written notice of the deficiency to Defendants at the address stated in paragraph 7H, below. If Defendants fail to cure their default, the judgment shall revert to $500,000, plus 5% interest (compounded annually) from the date judgment was entered, less any previous payments received. No further notice is required. Upon Defendants' failure to cure a noticed default, the United States may declare any unpaid balance immediately due and owing and proceed with collection efforts against Defendants.

H. Written Notice. Whenever written notice is required, the notice shall be addressed and mailed to the individuals identified below, unless those individuals or their successors give notice of a change to the other parties in writing.

As to the United States:

Kurt A. Didier

Assistant United States Attorney United States ...

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