United States v. Marlin Med. Solutions LLC

• Decision Date: 12 January 2022
• Docket Number: CIVIL NO. SA-21-CV-00160-OLG
• Citation: 579 F.Supp.3d 876
• Parties: UNITED STATES of America, Plaintiff, v. MARLIN MEDICAL SOLUTIONS LLC, Shapa Inc., VC Pharmacy, Medscript Pharmacy LLC, David Marlin Edwards, Dr. Richard Niemeyer, Dr. Alex De Jesus, Dr. LaTisha Rowe, Syed Zulfiqar, Medico Marketing, Inc., Defendants.
• Court: U.S. District Court — Western District of Texas

579 F.Supp.3d 876

UNITED STATES of America, Plaintiff,

v.MARLIN MEDICAL SOLUTIONS LLC, Shapa Inc., VC Pharmacy, Medscript Pharmacy LLC, David Marlin Edwards, Dr. Richard Niemeyer, Dr. Alex De Jesus, Dr. LaTisha Rowe, Syed Zulfiqar, Medico Marketing, Inc., Defendants.

CIVIL NO. SA-21-CV-00160-OLG

United States District Court, W.D. Texas, San Antonio Division.

Signed January 12, 2022

Samuel M. Shapiro, Erin M. Van De Walle, Assistant United States Attorney, U.S. Attorney's Office, San Antonio, TX, for Plaintiff.

Jason Davis, Harry Jay Hulings, Stephanie L. Dodge, Davis & Santos, P.C., San Antonio, TX, for Defendants David Marlin Edwards, Marlin Medical Solutions LLC.

Erica Benites Giese, Josue Joel Galvan, Jackson Walker, L.L.P., San Antonio, TX, for Defendant Syed Zulfiqar.

Erica Benites Giese, Josue Joel Galvan, Jackson Walker, L.L.P., San Antonio, TX, Robert L. Seibert, David & David, PC, Austin, TX, for Defendants Shapa Inc., VC Pharmacy.

Martin Merritt, Pro Hac Vice, Martin Merritt, PLLC, Dallas, TX, for Defendant Medico Marketing, Inc.

Bradley W. Howard, Brown & Fortunato, P.C., Amarillo, TX, for Defendant Medscript Pharmacy LLC.

James Byron Hicks, R. Chad Geisler, Ryan C. Bueche, Germer Beaman and Brown PLLC, Austin, TX, for Defendant Dr. Richard Niemeyer.

Mark J. Barrera, The Barrera Firm, Robert J. Barrera, Robert J. Barrera P.C., San Antonio, TX, for Defendant Dr. Alex De Jesus.

Dennis L. Roossien, Jr., Frederick W. Addison, III, Munsch Hardt Kopf & Harr, PC, Dallas, TX, Casey O. Minnes, Munsch Hardy Kopf Harr P.C., Houston, TX, for Defendant Dr. Latisha Rowe.

ORDER

ORLANDO L. GARCIA, Chief United States District Judge On this day, the Court considered Defendant Richard Niemeyer, M.D.’s ("Niemeyer") Motion to Dismiss Plaintiff's First Amended Complaint (Dkt. No. 48, the "Niemeyer Motion") and Defendant LaTisha Rowe, M.D.’s ("Rowe") Motion to Dismiss Plaintiff's First Amended Complaint (Dkt. No. 46, the "Rowe Motion"). After a review of the parties’ briefing and applicable law, the Court finds that the Niemeyer Motion should be GRANTED IN PART AND DENIED IN PART and the Rowe Motion should be GRANTED IN PART AND DENIED IN PART .

BACKGROUND¹

I. Factual Background

This case arises from an alleged kickback scheme orchestrated by Defendants Marlin Medical Solutions, LLC, and its owner and operator, David Marlin Edwards (together, "Marlin Medical"), that targeted beneficiaries of the TRICARE program, a federally funded health insurance program for members of the United States military and their dependents. First Am. Compl. ¶ 1 (Dkt. No. 29, the "Complaint"). With the other defendants, including Defendants Richard Neimeyer and LaTisha Rowe, Marlin Medical billed TRICARE for millions in reimbursements for compounded pain creams, scar creams, and wellness capsules through a referral scheme built around a series of kickback arrangements. Id.

Neimeyer and Rowe participated in events hosted by Marlin Medical in San Antonio, Texas, between November 2014 and February 2015. Id. ¶ 3. During those events, Neimeyer and Rowe briefly met with TRICARE beneficiaries, wrote them prescriptions for compounded drugs, and sent the prescriptions for fulfillment to Marlin Medical's pharmacy of choice. Id. ¶¶ 3, 5. The pharmacies then submitted the prescriptions to TRICARE for reimbursement and provided Marlin Medical with kickbacks based on a percentage of the reimbursement. Id. ¶ 6.

Dr. Richard Neimeyer. Niemeyer attended a three-day event in San Antonio from December 18 through December 20, 2014. Id. ¶ 66. He understood that at the event, he would be meeting with TRICARE beneficiaries who were interested in obtaining prescriptions for compounded pain and scar creams. Id. ¶ 67. In return for his participation in the events, Marlin Medical paid for Neimeyer's travel, meals, and accommodations at a luxury hotel, paid to Niemeyer $2,500 through a donation to his charity, and provided him with premium tickets to a San Antonio Spurs basketball game, with the opportunity to interact with some of the players. Id. ¶ 68. Niemeyer also requested an additional $5,000 from Marlin Medical, which it concealed as a second donation to Niemeyer's charity. Id.

Neimeyer attended his first event on Thursday, December 18, 2014 at the house of J.G., a sports agent and member of the Marlin Medical marketing team (the "Thursday Event"). Id. ¶ 69. During that event, Niemeyer met with S.E. and K.B., two TRICARE beneficiaries for whom he wrote prescriptions for compounded drugs. Id. ¶¶ 70–71. The event on Friday, December 19, 2014 (the "Friday Event") proceeded in a similar manner, during which Niemeyer spent five to seven minutes with individual attendees to gauge their interest in compounded products. Id. ¶ 74. The event planned for Saturday, December 20, 2014 (the "Omni Seminar") was moved to a conference room at the Omni Colonnade Hotel. Id. ¶ 75. Again, Neimeyer met with attendees individually, but did not perform physical examinations or write down notes on at least two of them. Id. ¶¶ 78–79.

When Niemeyer returned to Pennsylvania, he received documents from the three-day event, with prescription pads and beneficiary information. Id. ¶ 81. He then issued compounded prescriptions for the TRICARE beneficiaries he met with in Texas and faxed them to Defendant Medscript Pharmacy, LLC ("Medscript") for fulfillment. Id. ¶ 82. Between December 18, 2014, and January 22, 2015, Neimeyer wrote 189 compounded prescriptions for ninety TRICARE beneficiaries, which resulted in the billing of 505 prescriptions, including refills, for government reimbursement. Id. ¶ 85.

Dr. LaTisha Rowe. On February 7, 2015, Rowe attended an event hosted by Marlin Medical at the DoubleTree Hilton Hotel in San Antonio (the "Rowe Seminar"). Id. ¶ 124. She understood that she was attending the Rowe Seminar to meet with and issue prescriptions for TRICARE beneficiaries in attendance. Id. ¶ 123. In exchange, Rowe received travel and hotel expenses, a check for $1,500, and the expectation that Marlin Medical would make an investment in her business, Rowe Alliance LLC ("Rowe Alliance"). Id. At the event, Rowe presented on compound pain and scar creams, then met with individual attendees. Id. ¶ 124.

Rowe did not immediately issue compounded prescriptions for the attendees she met with. Id. ¶ 125. Rather, she offered Edwards and J.L. an "investment opportunity" to buy a percentage of ownership in Rowe Alliance. Id. After Marlin Medical invested $25,000 in her company on February 24, 2015, Rowe received compound prescription forms prepared by Marlin Medical's then-preferred pharmacy, Defendant VC Pharmacy, Inc. d/b/a/ Rite Care Pharmacy IV ("Rite Care"). Id. On March 4, 2015, twenty-six days after the Rowe Seminar, Rowe completed and signed compounded prescription requests and sent them to Rite Care for fulfillment and billing. Id. ¶ 126. In total, Rowe submitted to forty prescriptions to Rite Care for compounded drug products for twenty TRICARE beneficiaries, which were then submitted as sixty-nine claims for TRICARE reimbursement. Id. ¶¶ 126–27, 129.

II. Procedural History

The Government filed its original complaint on February 22, 2021, see Dkt. No. 1, and its First Amended Complaint (at issue here) on July 9, 2021, see Dkt. No. 29. On August 27, 2021, Niemeyer and Rowe each timely moved to dismiss the claims asserted against them. See generally Dkt. Nos. 46, 48. That same day, the Government filed a Stipulation of Dismissal of Count III, which alleged violations of the Anti-Kickback Statute, as to all Defendants. See Dkt. No. 47. The Court's August 30, 2021 Order dismissed Count III as to all Defendants, see Dkt. No. 49, so it is not at issue in either the Neimeyer or Rowe Motion.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a complaint may be dismissed if it "fails to state a claim upon which relief can be granted." Dismissal is appropriate if, assuming the truth of all well-pleaded facts in the complaint, it fails to state a "claim to relief that is plausible on its face." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A well-pleaded complaint must include allegations "respecting all the material elements necessary to sustain recovery under some viable legal theory." Twombly , 550 U.S. at 562, 127 S.Ct. 1955 (quoting Car Carriers, Inc. v. Ford Motor Co. , 745 F.2d 1101, 1106 (7th Cir. 1984) ). Throughout the Court's Rule 12(b)(6) analysis, "[t]he complaint must be liberally construed, with all reasonable inferences drawn in the light most favorable to the plaintiff." Morgan v. Swanson , 659 F.3d 359, 370 n.17 (5th Cir. 2011) (en banc) (quoting Woodard v. Andrus , 419 F.3d 348, 351 (5th Cir. 2005) ). The Court need not accept as true, however, mere "labels and conclusions," "a formulaic recitation of the elements of a cause of action," or legal conclusions couched as factual allegations. Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ).

Because the Government's claims sound in fraud, the Complaint must meet Rule 9(b)’s heightened pleading standards. The Government must "state with particularity the circumstances constituting fraud or mistake," Fed. R. Civ. P. 9(b), which generally includes "the time, place, and contents of the false representation and the identity of the person making the representation." United States v. Bollinger Shipyards, Inc. , 775 F.3d 255, 260 (5th Cir. 2014). In the FCA context, however, " Rule 9(b) is ‘context specific and flexible,’ " and may be met "without including all the details of any single court-articulated standard." United States ex rel. Nunnally v. W. Calcasieu Cameron Hosp. , 519 F. App'x 890, 892–93 (5th Cir. 2013) (quoting United States ex rel. Grubbs v. Kanneganti , 565 F.3d 180, 189–90 (5th Cir. 2009) ). Importantly, "[m]alice, intent, knowledge, and other conditions of a...