McFarland v. Florida Pharmacy Solutions et alMOTION to Dismiss ComplaintM.D. Fla.October 10, 2017 1 UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION UNITED STATES OF AMERICA, ex rel. BRADY MCFARLAND, Plaintiff v. CASE NO. 8:15-CV-1708-T-23T6W FLORIDA PHARMACY SOLUTIONS, INC., et al. Defendants. DEFENDANT WAYNE WILKERSON’S MOTION TO DISMISS SECOND AMENDED COMPLAINT Defendant Wayne Wilkerson, by and through undersigned counsel, hereby files this Motion to Dismiss the Relator’s Second Amended Complaint, and as grounds therefore states: I. LEGAL STANDARDS FOR A MOTION TO DISMISS 1. A defendant is entitled to dismissal of a complaint or portion thereof where the defendant can demonstrate that the complaint fails to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6), Fed.R.Civ.P. See e.g., U.S. ex rel. Clausen v. Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 1 of 16 PageID 1834 2 Laboratory Corporation of America, Inc., 290 F.3d 1301, 1303 (11th Cir. 2002). 2. Pursuant to review of a motion under Rule 12(b)(6), the Court accepts the facts in the complaint as true and determines the sufficiency of the cause of action as a matter of law. U.S. ex rel. Clausen v. Laboratory Corporation of America, Inc., 290 F.3d 1301, 1303. II. INTRODUCTION 3. The Federal False Claims Act, 31 USC §§ 3729, et seq., penalizes the filing of a “false or fraudulent” claim for payment by the federal government. See 31 USC § 3729(a)(1)(A). 4. The Second Amended Complaint of alleges that the Defendant received kickbacks in exchange for “funneling” patients to Florida Pharmacy Solution, Inc. (“FPS”); and that the Defendant knowingly caused to be presented materially false or fraudulent claims to the Tricare program. 5. In summary response, the Second Amended Complaint fails to plead a cause of action against the Defendant for the knowing and Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 2 of 16 PageID 1835 3 willful filing or cause of filing of a false claim with the Tricare program. 6. The federal anti kickback statute, 42 USC § 1320a-7b(b)(1), provides: (1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind— (A) in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or (B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program, shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both. [emphasis added] 7. Because the Second Amended Complaint fails to plead how or why the Defendant’s marketing and operational assistance to FPS constitutes the “referring of an individual” under 42 USC § 1320a- 7b(b)(1), the complaint fails as a matter of law under Rule 12(b)(6). III. RELEVANT ALLEGATIONS IN THE COMPLAINT Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 3 of 16 PageID 1836 4 8. The Second Amended Complaint alleges that payments made by FPS to the Defendant for the “funneling” of prescriptions to FPS constitute illegal kickbacks. See Second Amended Complaint, ¶¶ 4, 17, 18, 23, 35, 116, 117, 170, 187, and 189. 9. The Second Amended Complaint does not allege that the Defendant actually referred any patient to FPS in exchange for payment (which is the definition of a kickback), but instead alleges that the Defendant “used cold calling, data mining, and other marketing techniques . . . .” (which is not the pleading of a referral). See Second Amended Complaint, ¶¶ 14 and 126. 10. The Second Amended Complaint alleges that the Defendant “put the beneficiaries in contact with doctors who were willing to simply rubber-stamp FPS-branded, compounding pharmacy prescriptions” (which is not the pleading of a referral). See Second Amended Complaint, ¶ 15. 11. The Second Amended Complaint alleges that several physicians who prescribed compounded medications worked at the Defendant’s medical facility (which is not the pleading of a referral). See Second Amended Complaint, ¶¶ 177 and 111. Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 4 of 16 PageID 1837 5 12. There is no allegation in the Second Amended Complaint that Defendant provided any inducement whatsoever to any physician in exchange for the physician’s prescription (so there is no pleading that the Defendant paid for a referral). 13. Therefore, the Second Amended Complaint never makes a simple, plain allegation that the Defendant was paid by FPS for the referral of a patient, and without that, there is no pleading of a kickback under 42 USC § 1320a-7b(b)(1). 14. Without alleging the standard who, how, why, when, where or how much that is requisite for the pleading of even a single kickback, the Second Amended Complaint fails under Rule 12(b)(6). IV. RELEVANT LAW 15. Allegations of fraud are subject to heightened scrutiny and must be pleaded with particularity, pursuant to Rule 9(b), Fed.R.Civ.P. United States ex rel. Mastej v. Health Management Associates, Inc., 591 F. Appx. 693, 704 (11th Cir. 2014); U.S. ex rel. Clausen v. Laboratory Corporation of America, Inc., 290 F.3d 1301, 1308-09. 16. The particularity requirement is met if the complaint sets forth the “time, place, and substance of the defendant’s alleged fraud, Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 5 of 16 PageID 1838 6 specifically the details of the defendants’ allegedly fraudulent acts, when they occurred, and who engaged in them.” Hopper v. Solvay Pharmaceuticals, Inc., 588 F.3d 1318, 1324 (11th Cir. 2009); United States ex rel. Mastej v. Health Management Associates, Inc., 591 F. Appx. 693, 705. 17. It is well established that in order to reasonably allege a cause of action for a false claim due to a kickback, the complaint must describe the entire cycle of the alleged kickback for at least one claim. United States ex rel. Mastej v. Health Management Associates, Inc., 591 F. Appx. 693, 704-08 and 710. 18. Not every alleged fraudulent claim need be pleaded with particularity, but “[p]roviding exact billing data – name, date, amount, and services rendered – or attaching a representative sample claim is one way a complaint can establish the necessary indicia of reliability that a false claim was actually submitted.” Hopper v. Solvay Pharmaceuticals, Inc., 588 F.3d 1318, 1326; United States ex rel. Atkins v. McInteer, 470 F.3d 1350, 1358 (11th Cir. 2006). Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 6 of 16 PageID 1839 7 19. The specifics of the submission of the allegedly false claim is paramount and “a relator must identify the particular document and statement alleged to be false, who made or used it, when the statement was made, how the statement was false, and what the defendants obtained as a result.” United States ex rel. Matheny v. Medco Health Solutions Inc., 671 F.3d 1217, 1225 (11th Cir. 2012); U.S. ex rel. Clausen v. Laboratory Corporation of America, Inc., 290 F.3d 1301, 1311. 20. The gravamen of a 42 USC § 1320a-7b(b)(1) kickback allegation under 31 USC § 3729(a)(1)(A) is the explanation of how and why the facts at issue constitute a kickback, and the Second Amended Complaint’s bald conclusion that the “funneling” of prescriptions (whatever that means) constitutes a kickback, is insufficient. See United States ex rel. Keeler v. Eisai, Inc., Case No. 1:09-cv-22302, p. 19 (11th Cir. 2014); Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003); Watts v. Florida International University, 495 F. 3d 1289 (11th Cir. 2007). V. LEGAL ANALYSIS Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 7 of 16 PageID 1840 8 21. The Second Amended Complaint simply fails to explain how or why the payments from FPS to the Defendant in exchange for Defendant’s marketing and operational assistance constitute a kickback. 22. The closest that the Second Amended Complaint comes to making a simple statement as to why the Defendant’s conduct was in violation of 42 USC § 1320a-7b(b)(1) is that the defendants “were independent contractors and were not bona fide employees of FPS, and therefore Defendants’ conduct does not fit within the AKS’s employee-services safe harbor.” See Second Amended Complaint, ¶ 190. 23. While a kickback safe harbor is a general assurance of compliance with 42 USC § 1320a-7b(b)(1), simply being outside a safe harbor does not constitute a kickback. See e.g., Klaczak v. Consolidated Medical Transport, 458 F.Supp. 2d 622, 687 (N.D. Ill. 2006). 24. The federal government has long recognized that many medical sales representatives, to include those that sell goods or services that are paid for by the government, are compensated based upon productivity. See Opinion of the Department of Health and Human Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 8 of 16 PageID 1841 9 Services, Office of the Inspector General, No. 98-10, available at: http://oig.hhs.gov/fraud/docs/advisoryopinions/1998/ao98_10.htm. 25. Because the Defendant’s compensation is based upon productivity, the standard anti-kickback safe harbor for business relationships, the “personal services and management contracts harbor” under 42 CFR § 1001.952(d), is indeed inapplicable. HHS-OIG Advisory Opinion No. 98-10. 26. And because the Second Amended Complaint alleges that the Defendant is not a W-2 employee of FPS, the “employees” safe harbor of 42 CFR § 1001.952(i) is also inapplicable. See Second Amended Complaint, ¶ 190. 27. But clearly, individuals who do not fall into an anti-kickback safe harbor pursuant to their medical sales compensation model are not per se guilty of the crime of accepting a kickback in exchange for the referral of a patient for medical goods or services financed by the government. HHS-OIG Advisory Opinion No. 98-10. 28. In lieu of simply explaining what the Defendant did to violate 42 USC § 1320a-7b(b)(1) (i.e., explaining how the Defendant made an illegal patient referral to FPS), the Second Amended Complaint Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 9 of 16 PageID 1842 10 simply concludes that because Defendant was paid for services rendered, and was not in a safe harbor, it must be a kickback. 29. From that logic, if a Tricare contractor engages any marketing or operations vendor (e.g., billboard, website, television, direct mail), the parties necessarily violate the anti-kickback law. 30. Surely, there must be a method by which to promote compounding pharmacy services to Tricare patients without committing a crime. 31. Simply stated, because the Second Amended Complaint fails to allege how and why the services provided by the Defendant for FPS equates to the referral of a patient for pharmaceuticals paid for by Tricare, there has not been a legally sufficient pleading of a kickback under 42 USC § 1320a-7b(b)(1). 32. The glaring break in the chain of causation between the Defendant and the knowing and willful submission of a false claim to the Tricare program is the physicians who actually did the prescribing and “referring” of the patients at issue. See Second Amended Complaint, ¶¶ 106, 107, 111 and 117. 33. While a non-physician can indeed “refer” a patient to a medical provider such as FPS in exchange for compensation (which is the Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 10 of 16 PageID 1843 11 definition of a kickback), the Second Amended Complaint alleges that the physicians in Defendant’s facility referred the patients at issue, and by definition that is not the Defendant’s referral. See Second Amended Complaint, ¶¶ 106, 107, 111 and 117. 34. As well, the Second Amended Compliant alleges that FPS was but one of a “Network of Pharmacies,” so there is no allegation that the patients or prescriptions were in any manner required to go to FPS.1 See Second Amended Complaint, ¶ 145. 35. Not only does the intervention of the physicians break the causality that must be shown to plead a kickback against the Defendant, without an allegation that the physicians conspired to file false claims (and there is no such allegation), this sharp attenuation essentially breaks the entire kickback argument. See United States ex rel. Bane v. Breathe Easy Pulmonary Services, Inc., 587 F.Supp.2d 1280, 1291-92 (M.D. FL 2009); United States ex rel. Sikkenga v.Regence Bluecross Blueshield of Utah, 472 F.3d 702, 1 For good reason. It is clear that a pharmacy subject to licensure in Florida, such as FPS, has its primary responsibility to the patient that receives the dispensed medication, to include a request to have a prescription filled at another pharmacy. “The pharmacist, as an integral aspect of dispensing, shall be directly and immediately available to the patient or the patient’s agent for consultation and shall not dispense to a third party.” Rule 64B16-27.1001(4), Fla. Admin. Code. Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 11 of 16 PageID 1844 12 714 (10th Cir. 2006) (False claims act requires a showing that the defendant’s “specific conduct cause[d] the presentment of a false claim.”). 36. Simply stated, without an allegation that the physicians were knowing and willing participants in the kickback scheme, even if the Defendant was receiving kickback money, such receipt wasn’t in exchange for the referral of patients, so there is no “kickback.” 37. Perhaps the closest precedent regarding the facts at issue is the line of cases led by United States v. Vernon, 723 F.3d 1234 (11th Cir. 2013). 38. Vernon stands for the proposition that if a non-physician defendant is conclusively shown to be in control of a patient referral stream, to include control of the physicians who are actually “referring” the patients, then such non-physicians can be guilty under 42 USC § 1320a-7b(b)(1). United States v. Vernon, 723 F.3d 1234, 1255- 56; United States v. Starks, 157 F.3d 833 (11th Cir. 1998) (Two non-physicians convicted for directly and personally brokering substance abuse patients); United States v. Miles, 360 F.3d 472, 480 (5th Cir. 2004) (No non-physician kickbacks found because Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 12 of 16 PageID 1845 13 “[t]he payments from APRO were not made to the relevant decisionmaker as an inducement or kickback for sending patients to APRO.”); United States v. Iqbal, Case No. 16-3065, p.10 (8th Cir. 2017). 39. Simply put, the Second Amended Complaint fails because it does not plead the required language: “knowingly and willfully made a payment or offer of payment as an inducement to the payee to refer an individual to another for the furnishing of an item or service that could be paid for by a federal healthcare program.” United States ex rel. Pogue v. Diabetes Treatment Centers of America, 565 F.Supp.25 153, 160 (D.D.C. 2008), citing United States v. Miles, 360 F.3d 472, 479-80. 40. Instead, the Second Amended Complaint alleges over-aggressive and non-compliant marketing and operations techniques, which is at best a “Condition of Participation” administrative violation of Tricare regulations, and not a “Condition of Payment” violation that is subject to a false claim action. See e.g., Second Amended Complaint, ¶¶ 110 and 112 (“each of Wilkerson’s prescribers had signed a BLOA authorizing FPS to substitute ingredients and to Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 13 of 16 PageID 1846 14 change formulas in order to maximize TRICARE reimbursements”); U.S. ex rel. Landers v. Baptist Memorial Health, 525 F.Supp.2d 972, 979 (W.D. Tenn. 2007); U.S. v. Vista Hospice Care, Inc., 778 F.Supp.2d 709, 720-21 (N.D. Tex. 2011). WHEREFORE, Defendant hereby moves the Court to dismiss the Second Amended Complaint of the Relator. RESPECTFULLY SUBMITTED this 10th day of October, 2017. /Mark S. Thomas/_____ Mark S. Thomas Florida Bar No. 0001716 THOMAS HEALTH LAW GROUP, P.A. 5200 SW 91st Terrace, Suite 101-B Gainesville, FL 32608 (352) 372-9990 (office) (855) 629-7101 (fax) mark@thomashlg.com Counsel for Defendant Wayne Wilkerson CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the forgoing has been furnished by Federal Court electronic filing this __10th__ day of October, 2017 to: Joel Ewusiak EWUSIAK LAW, P.A. 66001 Memorial Highway, Suite 311 Tampa, FL 33615 727-286-3559 (telephone) 727-286-3219 (facsimile) joel@ewusiaklaw.com Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 14 of 16 PageID 1847 15 P. Jason Collins Craig A. Boneau Ryan M. Goldstein REID COLLINS & TSAI LLP 1301 S. Capital of Texas Highway Building C, Suite 300 Austin, TX 78746 512-647-6100 (telephone) 512-647-6129 (facsimile) jcollins@rctlegal.com cboneau@rctlegal.com rgoldstein@rctlegal.com COPY NOT FURNISHED TO OTHER COUNSEL: A. Lee Bentley, III Benjamin C. Mizer Charles T. Harden, III United States Attorney 400 North Tampa Street, Suite 3200 Tampa, FL 33602 813-301-3075 (telephone) 813-274-6200 (facsimile) Michael D. Granston Jamie A. Yavelberg Nathan P. Green US Department of Justice Civil Litigation Branch P.O. Box 261, Ben Franklin Station Washington, DC 20044 202-305-3669 (telephone) 202-305-2073 (facsimile) Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 15 of 16 PageID 1848 16 Faith E. Gay QUINN EMANUEL URQUHART & SULLIVAN, LLP 51 Madison Avenue, 22nd Floor New York, NY 10010 212-849-7000 (telephone) 212-849-7100 (facsimile) Sam S. Sheldon QUINN EMANUEL URQUHART & SULLIVAN, LLP 777 6th Street, NW, 11th Floor Washington, DC 20001 202-538-8000 (telephone) 202-538-8100 (facsimile) Valerie S. Roddy QUINN EMANUEL URQUHART & SULLIVAN, LLP 865 South Figueroa Street, 10th Floor Los Angeles, CA 90017 213-443-3000 (telephone) 213-443-3100 (facsimile) /Mark S. Thomas/_____ Mark S. Thomas Case 8:15-cv-01708-SDM-TGW Document 347 Filed 10/10/17 Page 16 of 16 PageID 1849
