United States ex rel. Mohajer v. Omnicare, Inc.
| Decision Date | 12 March 2021 |
| Docket Number | No. 1:17-cv-4176 (CM),1:17-cv-4176 (CM) |
| Parties | UNITED STATES of America, et al. EX REL. Arash MOHAJER; Christopher Peterson, Plaintiffs and Relators, v. OMNICARE, INC. ; CVS Health Corp., Defendants |
| Court | U.S. District Court — Southern District of New York |
Emily Stabile, Phillips & Cohen LLP, San Francisco, CA, Erika Kelton, David Michael Jochnowitz, Phillips & Cohen LLP, Washington, DC, for Plaintiffs Arash Mohajer, Christopher C. Peterson.
Jill Diane Brenner, State of New York - Office of the Attorney General, New York, NY, for Plaintiff State of New York.
Robert B. Teitelman, State of Connecticut, Hartford, CT, for Plaintiff State of Connecticut.
State of New Mexico, Albuquerque, NM, Pro Se.
State of Montana, Pro Se.
District of Columbia, Pro Se.
State of Vermont, Pro Se.
State of Delaware, Pro Se.
State of Iowa, Pro Se.
State of Washington, Olympia, WA, Pro Se.
State of Florida, Pro Se.
State of Virginia, Pro Se.
State of Texas, Pro Se.
State of California, Pro Se.
State of Tennessee, Pro Se.
State of Colorado, Pro Se.
State of New Jersey, Trenton, NJ, Pro Se.
State of Oklahoma, Pro Se.
State of Nevada, Pro Se.
State of North Carolina, Pro Se.
State of Michigan, Pro Se.
State of Hawaii, Pro Se.
State of Massachusetts, Pro Se.
State of Louisiana, Pro Se.
State of Minnesota, St. Paul, MN, Pro Se.
State of Rhode Island, Pro Se.
State of Indiana, Pro Se.
State of Illinois, Chicago, IL, Pro Se.
Enu A. Mainigi, Benjamin Nicholas Hazelwood, Holly MacKay Conley, Williams & Connolly LLP, Washington, DC, for Defendants.
MEMORANDUM DECISION AND ORDER GRANTING DEFENDANTS’ MOTION TO DISMISSCOLLEEN McMAHON, Chief Judge This is a qui tam action brought under the False Claims Act by relators Arash Mohajer and Chris Peterson against Omnicare, Inc., a long-term pharmacy, and its successor-in-interest, CVS, which purchased Omnicare in August 2015. This case was originally filed on January 10, 2017 in the District of Utah; it was transferred to the Southern District of New York on June 5, 2017.
The allegations contained within Mohajer and Peterson's 2017 complaint are substantially similar to an earlier-filed qui tam complaint commenced by a different relator, Uri Bassan. Mr. Bassan's complaint – originally filed on June 1, 2015 in this district – is currently also pending before this Court. See United States ex rel. Bassan v. Omnicare, Inc. , No. 15-cv-4179 (CM) (S.D.N.Y.).
The United States, as is its right, has intervened in both actions, filing the same intervenor complaint in each case.
At bottom, all the complaints allege that, between 2010 and 2018, Omnicare consistently dispensed prescription drugs to individuals living at long-term residential facilities (i.e., assisted living facilities and the like) that were not supported by valid prescriptions. Omnicare allegedly dispensed drugs based on prescriptions that had expired, run out of refills, or were otherwise invalid. Although the drugs were dispensed illegally (i.e., without a valid prescription), Omnicare nonetheless submitted claims for reimbursement to several federal healthcare programs (Medicare, Medicaid, and TRICARE). These submissions for reimbursement are alleged to have contained false information in violation of the FCA.
Although the allegations in this complaint are serious, Mohajer and Peterson's case runs into an obstacle. Their original complaint was filed while Bassan's qui tam action was pending. As a result, it is barred by the FCA's first-to-file rule, 31 U.S.C. § 3730(b)(5), and the relators’ FCA claim is dismissed. The Court also declines to exercise supplemental jurisdiction over the 25 state and local law claims that relators added to an amended complaint in an effort to keep their case alive.
The Plaintiff in every qui tam action is the United States of America, which filed an intervenor complaint in this case on December 17, 2019. The United States’ complaint is identical to the one that it has filed in Mr. Bassan's action. See United States ex rel. Bassan v. Omnicare, Inc. , No. 15-cv-4179 (CM), ECF 17.
Relator Arash Mohajer is a pharmacist who previously worked as the Pharmacist-in-Charge at an Omnicare pharmacy in Salt Lake City, Utah. Relator Chris Peterson is a licensed pharmacy technician who worked at the same pharmacy. They will be referred to as the "Utah Relators."
Defendant Omnicare is a Delaware corporation that has its principal place of business in Ohio. Omnicare is the nation's largest provider of pharmacy services to long-term care facilities – facilities like nursing homes and assisted-living facilities. Omnicare employs around 13,000 employees and operates approximately 160 pharmacies across 47 states. It dispenses tens of millions of prescription drugs to residents of long-term care facilities each year. During the relevant period (2010–2018), Omnicare submitted over 35 million claims seeking payment for drugs dispensed to Medicare beneficiaries residing in assisted-living facilities, alone.
Defendant CVS Health Corporation owns thousands of retail pharmacies throughout the United States. CVS purchased Omnicare for approximately $12.7 billion in mid-2015 and began overseeing its operations shortly thereafter.
The original complaint in this action alleged two claims on behalf of the United States arising under the FCA. After the United States intervened in their case, the parties sent a letter setting a date for the Utah Relators to file an amended complaint, which, per that schedule, was filed on March 12, 2020.
The amended complaint alleges just one federal claim arising under the FCA, but it contained over one hundred pages of newly pleaded factual allegations against Omnicare and propounded several theories of FCA liability that were not mentioned in the Utah Relators’ first complaint.
The amended complaint also added 25 claims on behalf of 24 states and the District of Columbia; those claims arise under state analogues to the FCA. Unlike the United States, the states and the District have all declined to intervene in this action.
The False Claims Act ("FCA") permits private citizens to file qui tam actions as "relators" to recover damages for fraud on behalf of the United States. Relators are entitled to recover a portion of the damages owed to the United States if their actions are successful. 31 U.S.C. § 3730(b).
Enacted in 1863, the FCA "was originally aimed principally at stopping the massive frauds perpetrated by large contractors during the Civil War." Universal Health Servs., Inc. v. United States , ––– U.S. ––––, 136 S. Ct. 1989, 1996, 195 L.Ed.2d 348 (2016) (quoting United States v. Bornstein , 423 U.S. 303, 309, 96 S.Ct. 523, 46 L.Ed.2d 514 (1976) ). And although the Act has since been amended several times, "its focus remains on those who present or directly induce the submission of false or fraudulent claims" to the government. Ibid.
"[W]hile the False Claims Act permits relators to control the False Claims Act litigation, the claim itself belongs to the United States," meaning that the federal government can intervene in any qui tam action filed on its behalf. United States ex rel. Bilotta v. Novartis Pharms. Corp. , 50 F. Supp. 3d 497, 508 (S.D.N.Y. 2014) (quoting United States ex rel. Mergent Servs. v. Flaherty , 540 F. 3d 89, 93 (2d Cir. 2008) ). If the government declines to intervene and a relator ultimately succeeds in litigating the claim, the relator is entitled to between 25 to 30 percent of any recovery. 21 U.S.C. § 3730(d)(2). If the government chooses to intervene and takes over from the relator in prosecuting the case, the relator can still receive between 15 and 25 percent of any recovery. Id. at § 3730(d)(1).
The FCA provides that, if the government decides to intervene in a qui tam action, then it "shall have the primary responsibility for prosecuting the action, and shall not be bound by an act of the person bringing the action." 31 U.S.C. § 3730(c)(1). Courts have interpreted this to mean that "by automatic operation of the statute, the Government's complaint in intervention becomes the operative complaint as to all claims in which the government has intervened." Bilotta, 50 F. Supp. 3d at 511–12 (quoting United States ex rel. Sansbury v. LB & B Associates, Inc. , 58 F. Supp. 3d 37, 47 (D.D.C. 2014) ). This is because the government is the true victim of the alleged fraud. Only the government has Article III standing to sue; the statute "effectively assigns the government's claims to qui tam plaintiffs." United States ex rel. Kelly v. Boeing Co. , 9 F. 3d 743, 748 (9th Cir. 1993). The relator – rather than suing because he or she has personally suffered – "invokes the standing of the government resulting from the fraud injury," and "stands in the shoes of the government, which is the real party in interest." United States ex rel. Kreindler & Kreindler v. United Techs. Corp. , 985 F.2d 1148, 1154 (2d Cir. 1993). But once the United States decides to intervene, it effectively "tak[es] over from the relator" in prosecuting the case. United States ex rel. Wood v. Allergan, Inc. , 899 F.3d 163, 166 (2d Cir. 2018).
Here, the government has intervened in Mohajer and Peterson's case for the purpose of prosecuting any FCA claim relating to the facts in suit. The relators do not dispute that the government's complaint is now the operative complaint as to those claims. As a result, the only operative claims in the relators’ complaint are the claims brought on behalf of the 24 states and the District of Columbia, alleging violations of state FCA statutes.
As the government's complaint is the operative complaint for purposes of the federal FCA claims in both this action and in the earlier-filed Bassan action, this overview of the allegations against Omnicare and CVS come from the government's complaint.
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