U.S. Ex Rel. Mcfarland v. Florida Pharmacy Soln., Case No. 8:15-cv-1708-T-23TGW

• Decision Date: 24 July 2017
• Docket Number: Case No. 8:15-cv-1708-T-23TGW
• Citation: 358 F.Supp.3d 1316
• Parties: UNITED STATES EX REL. Brady MCFARLAND, Plaintiff, v. FLORIDA PHARMACY SOLUTIONS, et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

358 F.Supp.3d 1316

UNITED STATES EX REL. Brady MCFARLAND, Plaintiff,

v.FLORIDA PHARMACY SOLUTIONS, et al., Defendants.

Case No. 8:15-cv-1708-T-23TGW

United States District Court, M.D. Florida, Tampa Division.

Signed July 24, 2017

Craig A. Boneau, Pro Hac Vice, P. Jason Collins, Pro Hac Vice, Ryan M. Goldstein, Pro Hac Vice, Reid Collins & Tsai, LLP, Austin, TX, Joel J. Ewusiak, Ewusiak Law, P.A., Charles T. Harden, III, US Attorney's Office, Tampa, FL, for Plaintiff.

Mark Stephen Thomas, Thomas Health Law Group, PA, Gainesville, FL, for Defendants.

ORDER

STEVEN D. MERRYDAY, UNITED STATES DISTRICT JUDGE

Employed in Arizona as a "regional marketing representative" for Florida Pharmacy Solutions, relator Brady McFarland purportedly uncovered through means not explained in the complaint a nationwide scheme by the seventy defendants to bilk Tricare for hundreds of million of dollars. Florida Pharmacy Solutions and six other defendant pharmacies "compound," or mix, ingredients to fill prescriptions for medicine not manufactured by pharmaceutical companies.

The pharmacies allegedly "employed," "partnered," or "contracted" with marketing companies. Each marketing company allegedly cold-called a Tricare beneficiary; if the beneficiary expressed interest in a pain cream, scar cream, or multi-vitamin, the marketing company "connected" the beneficiary to a physician or nurse practitioner. After speaking briefly on the phone with a beneficiary, the physician or nurse practitioner prescribed a pain cream, scar cream, or multi-vitamin. The complaint includes no explanation how the physician transmitted the prescription to a particular pharmacy, but Florida Pharmacy Solutions and the other pharmacies allegedly filled each prescription. Florida Pharmacy Solutions purportedly requested that a physician submit two types of "blanket authorizations." The first authorization allegedly permitted Florida Pharmacy Solutions to add and substitute ingredients at will, a tactic that enabled Florida Pharmacy Solutions to add several expensive but dubious ingredients. The second authorization permitted Florida Pharmacy Solutions to re-fill a patient's prescription without consulting either the prescribing physician or the patient. Under these authorizations, Florida Pharmacy Solutions allegedly included unnecessary ingredients in a prescription.

In addition to alleging medically unnecessary ingredients, McFarland alleges the submission of "legally false" claims. According to McFarland, the physicians and nurse practitioners, the marketing companies, and the pharmacies violated the Anti-Kickback Statute, which prohibits the "knowing[ ] and willful[ ]" solicitation, receipt, offering, or paying of a "remuneration" in exchange for a referral to a provider who may submit to Tricare (or another federal health care program) a claim for payment. 42 U.S.C. § 1320a-7(b)(1)(A). Also, the Anti-Kickback Statute prohibits a remuneration for "purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering" a good or service for which Tricare might pay. 42 U.S.C. § 1320a-7(b)(1)(B). The pharmacies allegedly paid a kickback to the marketing companies for each prescription filled, and in turn the marketing companies allegedly paid a kickback to the prescribing physicians and nurse practitioners for each prescription. Additionally, McFarland alleges that the pharmacies waived co-pays required by Tricare.

In a fifty-three page complaint, McFarland sues (Doc. 12) seven pharmacies, eleven marketing companies, fifty-one physicians and nurse practitioners, and a "related defendant." The complaint groups together the pharmacies (which the complaint designates the "Compounding Pharmacy Defendants"), groups together the marketing companies (which the complaint designates the "Marketing Defendants"), and groups together the physicians and nurse practitioners (which the complaint designates the "Prescribing Teledoctor Defendants"). Count I alleges that "all defendants" violated 31 U.S.C. § 3729(a)(1)(A), which bars "knowingly present[ing], or caus[ing] to be presented, a false or fraudulent claim for payment or approval." Count II alleges that the "Compounding Pharmacy Defendants" and the "Prescribing Teledoctor Defendants" violated 31 U.S.C. § 3729(a)(1)(B), which bars "knowingly mak[ing], us[ing], or caus[ing] to be made or used, a false record or statement material to a false or fraudulent claim." Count III alleges that "all defendants" violated Section 3729(a)(1)(A) by submitting or causing the submission of a claim tainted by a kickback. Count IV alleges that the "Prescribing Teledoctor Defendants" violated Section 3729(a)(1)(A) by submitting or causing the submission of false or fraudulent claims for the telephonic consultations. Finally, count V alleges a conspiracy by all seventy defendants to violate the False Claims Act.

Thirty-two defendants move severally to dismiss the complaint or the action.¹ Four defendants cite the False Claims Act's public-disclosure bar and move to dismiss the action under either Rules 12(b)(1) or (6), Federal Rules of Civil Procedure ; three move under Rule 12(b)(2) to dismiss the action for lack of personal jurisdiction; and twenty-nine move under Rule 12(b)(6) to dismiss the complaint for violating Rules 8(a) and 9(b).² Without leave, more than a dozen defendants attempt to "join" or "adopt" the motion of another defendant. Several defendants purport to adopt a motion under Rule 10(c), which permits a motion to adopt a "statement in a pleading." Because a motion is not a "pleading," the unauthorized attempts to adopt the argument in another motion lack effect.³

DISCUSSION

1. Motions to dismiss for lack of subject-matter jurisdiction

Prashanth Ramakrishna Rao, M.D., and 1st Care M.D. move (Docs. 204 and 291 at 11 n.3) under Rule 12(b)(1) to dismiss the action and argue that the False Claims Act's public-disclosure bar divests subject-matter jurisdiction. Two defendants move (Doc. 248) under Rule 12(b)(6) to dismiss the action and cite the public-disclosure bar.⁴

Whether under Rule 12(b)(1) or Rule 12(b)(6), the motions to dismiss warrant denial because no public disclosure permits identifying a particular defendant in this action.⁵ In Cooper v. Blue Cross and Blue Shield of Florida, Inc. , 19 F.3d 562 (11th Cir. 1994), the relator alleged that BCBS of Florida knowingly submitted to Medicare several claims that a "Medicare Secondary Payor" law required BCBS of Florida to pay. Two years before the relator sued, a General Accountability Office report described "widespread MSP fraud" and named "other insurance companies," but the GAO report never mentioned BCBS of Florida. Cooper holds that a public disclosure which exposes widespread fraud but which fails to specifically identify the defendant cannot trigger the public-disclosure bar. 19 F.3d at 566–67. Although the disclosures in this record describe similar schemes, none of the disclosures mention or permit identifying specifically a defendant in this action.

Rao questions whether the 2010 amendment vitiates Cooper 's holding. (Doc. 204 at 10–12) Even if the public disclosure of widespread fraud that might include a particular defendant constitutes "substantially the same allegation" as the unambiguous identification of a particular defendant's fraud, Cooper 's reasoning compels the conclusion that McFarland qualifies as an original source under the amended public-disclosure bar.⁶ Under Section 3730(e)(4)(B)(2), an "original source" means a person with knowledge "that is independent of and materially adds to the publicly disclosed allegations." Rao argues that the news media and the government reports exposed the ubiquity of the pharmacies' fraud scheme and that the government could "readily identify ... additional [d]efendants" by mining Tricare records. (Doc. 204 at 12) According to Rao and 1st Care, McFarland's identification of the particular doctors and pharmacies that purportedly violated the False Claims Act fails to "materially add to the public disclosures." (Doc. 204 at 12 and Doc. 291 at 13) But the identification of a particular "wrongdoer[ ] is precisely where the government needs the help of [a relator]." Cooper , 19 F.3d at 566. The government "often knows on a general level that fraud is taking place ... [b]ut it has difficulty identifying all of the individual actors." Cooper , 19 F.3d at 566. The identification of a person who allegedly defrauded a program as large as Tricare, which lacks the time and resources to investigate each claim, adds materially to the public disclosure of widespread but not universal fraud against the program. Cf. United States ex rel. Fine v. Sandia Corp. , 70 F.3d 568 (10th Cir. 1995) (Seymour, J.) (holding that the disclosure of pervasive fraud in the nuclear-waste industry constitutes a public disclosure and distinguishing Cooper by observing that "little similarity exists between combing through the private insurance industry in search of fraud and examining the operating procedures of nine[ ] easily identifiable, DOE-controlled, and government-owned laboratories.").

Also, to qualify as an original source under Section 3730(e)(4)(B)(2) the relator must voluntarily provide the information to the government before suing. McFarland states that he voluntarily informed the government about the fraud allegations before suing, and none of the defendants rebuts McFarland's argument.

2. Motions to dismiss for lack of personal jurisdiction

1st Care, Ankle and Foot Centers of Georgia, and De Novo Investing move (Docs. 243 and 291) to dismiss under Rule 12(b)(2) and argue that neither Florida's long-arm statute nor the U.S. Constitution permits the exercise of personal jurisdiction by the U.S. District Court for the Middle District of Florida.

Under Rule 4(k)(1)(C), the service of a summons "authorized by a federal statute" establishes personal jurisdiction over a defendant. Section 3732(a) of the False Claims Act...