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Middlesex Integrative Medicine, Inc. v. Massachusetts Department of Public Health

Superior Court of Massachusetts, Suffolk, Business Litigation Session

December 19, 2016

Middlesex Integrative Medicine, Inc.
v.
Massachusetts Department of Public Health No. 135846

          MEMORANDUM OF DECISION AND ORDER ON PARTIES' CROSS MOTIONS FOR JUDGMENT ON THE PLEADINGS

          Edward P. Leibensperger, Justice

         The plaintiff, Middlesex Integrative Medicine, Inc. (MIM), filed this action in the nature of certiorari under G.L.c. 249, § 4 against the defendant, the Massachusetts Department of Public Health (Department), after the Department denied each of MIM's three applications to operate Registered Marijuana Dispensaries (RMDs) in Massachusetts. MIM and the Department have each moved for judgment on the pleadings pursuant to Mass.R.Civ.P. 12(c). On November 21, 2016, this court held a hearing on the motions. For the reasons stated below, MIM's motion for judgment on the pleadings is DENIED and the Department's motion for judgment on the pleadings is ALLOWED .

         BACKGROUND

         In November 2012, Massachusetts voters approved a ballot initiative allowing for the medical use of marijuana for qualifying patients. Thereafter, the Legislature enacted Chapter 369 of the Acts of 2012, known as " An Act for the Humanitarian Medical Use of Marijuana" (Act). St. 2012, c. 369. The Act authorized the Department to register at least one, and up to five, RMDs in each Massachusetts county, up to a total of 35 statewide, during the first year after the law's effective date (January 1, 2013). G.L.c. 94C, App. § 1-9.

         Pursuant to the Act, the Department promulgated regulations (105 Code Mass.Regs. § 725.001 et seq.) which established, among other things, a two-phase application process. In Phase 1, the applicant paid a non-refundable fee and submitted basic information that was reviewed by the Department. See 105 Code Mass.Regs. § 725.100(B)(1). If the applicant submitted all of the required information in a timely fashion, the applicant was notified that it could proceed to Phase 2. See id. at § 725.100(B)(2). In this phase, the applicant paid a non-refundable $30, 000 fee and submitted an application containing much more detailed information about its proposed dispensary, after which the Department evaluated and scored the application. See id. at § 725.100(B)(3)-(5).

         MIM sought to operate three RMDs--one in Middlesex County (Everett), one in Norfolk County (Norwood), and one in Worcester County (Shrewsbury). In August 2013, MIM filed a Phase 1 application for each location and, along with other applicants, MIM was invited by the Department to submit Phase 2 applications. On November 21, 2013, MIM paid the Department $90, 000 and filed three Phase 2 applications. Out of a possible 163 points, MIM received scores of 118, 127, and 118 on its three applications.

         On January 31, 2014, the Department announced the selection of 20 applicants to receive a Provisional Certificate of Registration. On the same day, the Department notified MIM by letter that its Phase 2 applications had been denied and it was therefore not one of the selected applicants.

         On March 7, 2014, MIM participated in an informational briefing with the Department to discuss the scoring of its applications and the reasons why the applications did not sufficiently satisfy the Department's criteria for an award of a Provisional Registration Certificate. During the meeting, MIM asked to and was allowed to submit additional materials which sought to address the alleged deficiencies in its applications. Several months later, by letters dated June 27, 2014, the Department informed MIM that its " status has not changed and you have not been selected for a [dispensary] registration."

         The Department's regulations specify that an applicant receiving a notice of non-selection may seek judicial review in the Superior Court under G.L.c. 249, § 4, the certiorari statute. 105 Code Mass.Regs. § 725.500(D). MIM invoked this procedure and filed this suit in August 2014. MIM maintains that the Department's denials of its 2013 Phase 2 applications were arbitrary and capricious because: the Department improperly delegated its authority to approve or deny the Phase 2 applications to a contractor; scored its applications unfairly; and failed to consider the additional materials it submitted at the March 2014 informal briefing.

         In June 2015, the Department began accepting additional applications for RMDs using a new application process. Applications are now reviewed on a rolling basis as they are received. The applications are no longer scored. Instead, they are reviewed for compliance with the Act and the applicants are notified of necessary updates or clarifications.[1]

         Under the revised application process, the applicant first submits an " Application of Intent" along with an application fee. After reviewing the application, the Department invites successful applicants to move on and submit the more comprehensive " Management and Operations Profile" (MOP) along with another fee. After submission of the MOP, the Department reviews the information and contacts the applicant if clarifications/updates to the submitted application materials are needed. When the Department is satisfied with what it has received, the applicant is invited by the Department to submit a Siting Profile. Once submitted, the Department reviews the information in the Siting Profile and, as with the MOP, contacts the applicant if clarifications/updates to the submitted materials are needed. After this process is complete, the Department notifies the applicant whether it has met the standards necessary to receive a Provisional Certificate of Registration.

         In June 2015, as this lawsuit remained pending, MIM decided to participate in this new process and filed Applications of Intent for three dispensaries. It paid a $1, 500 fee for each Application. In September 2015, the Department invited MIM to submit a MOP for all three Applications. MIM, however, only elected to submit a MOP for one proposed facility. In connection with this MOP, MIM paid an application fee of $30, 000. MIM's application remains pending. It will be expected to pay a $50, 000 fee if awarded a Provisional Certificate of Registration and to pay an annual $50, 000 registration fee if finally approved to operate a RMD.

         DISCUSSION

         In moving for judgment on the pleadings, MIM asserts that " [t]here is little point to remanding the consideration of MIM's 2013 Applications for further review or rescoring by [the Department]" given that " [the Department] has already changed its application process" and " MIM has also moved on . . . [and] is now focused on different opportunities and locations." Pl. Brief at 26. Accordingly, MIM now seeks only monetary relief rather than reversal or remand to the Department for further proceedings.[2] Specifically, MIM seeks an order that the Department must credit the $90, 000 it paid in connection with its ...


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