United States of America et al v. RS Compounding LLC et al

Filing 105

ORDER: Defendants RS Compounding LLC and Renier Gobea's Motion to Dismiss Relator's Second Amended Complaint (Doc. # 97 ) is GRANTED. Defendant Stephen Caddick's Motion to Dismiss Relator's Second Amended Complaint (Doc. # [9 3]) is GRANTED. Plaintiff relator McKenzie Stepe's Second Amended Complaint (Doc. # 91 ) is DISMISSED WITH PREJUDICE. The Clerk is directed to terminate Caddick as a party to this action. Signed by Judge Virginia M. Hernandez Covington on 1/10/2018. (DMD)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
UNITED STATES OF AMERICA, et al.,
ex rel. MCKENZIE STEPE,
Plaintiffs,
v.

Case No. 8:13-cv-3150-T-33AEP

RS COMPOUNDING LLC d/b/a
ZOE SCRIPTS LABORATORY SERVICES,
LLC and d/b/a WESTCHASE
COMPOUNDING PHARMACY,
RENIER GOBEA, STEPHEN M. CADDICK,
Pharm D., and JOHN DOE
CORPORATIONS 1-10, all whose
true names are unknown,
Defendants.
_______________________________/
ORDER
This matter comes before the Court pursuant to Defendant
Stephen

M.

Caddick’s

Motion

to

Dismiss

Relator’s

Second

Amended Complaint (Doc. # 93), filed on December 12, 2017,
and Defendants RS Compounding LLC and Renier Gobea’s Motion
to Dismiss Relator’s Second Amended Complaint (Doc. # 97),
filed on December 21, 2017. Relator McKenzie Stepe responded
on January 4, 2018. (Doc. # 101). For the reasons that follow,
the Motions are granted.

1

I.

Background
A.

Alleged False Claims Act Violations

Defendants Renier Gobea and Stephen Caddick, Pharm. D.,
co-founded Defendant RS Compounding LLC in 2004. (Doc. # 91
at ¶ 34). RS Compounding, which does business as Zoe Scripts
Laboratory Services, LLC, and Westchase Compounding Pharmacy,
is

a

compounding

pharmacy

that

“distribute[s]

massive

quantities of pre-made compounds for both humans and animals
throughout

the

country

in

a

fashion

similar

to

a

large

pharmaceutical manufacturing company.” (Id. at ¶¶ 4, 6).
Defendants market many types of creams and gels, some of which
contain ketamine. (Id. at ¶ 7). “At least 40% and 50% of
Defendants’ sales and revenues are earned from Medicare and
TRICARE reimbursements.” (Id. at ¶ 5).
Caddick is a licensed pharmacist, but Gobea is not. (Id.
at ¶¶ 34, 37). Although Gobea at one point sold his ownership
interest to Caddick, Gobea returned “to serve in a senior
level management position in or around early 2012.” (Id. at
¶

34).

Subsequently,

Gobea

purchased

Caddick’s

ownership

interest in February of 2013. (Id. at ¶ 35). Thus, “Gobea is
the current owner and director of RS Compounding.” (Id. at ¶
36). Nevertheless, after the sale of his ownership interest,
Caddick remained to “serve[] as a senior manager, or sole

2

manager, of [RS Compounding] until approximately early 2015”
and “oversaw all of RS Compounding’s operations, including
the training of RS Compounding’s sales representatives.” (Id.
at ¶ 37). “Beginning in or around January 2013,” Caddick and
Gobea “would meet every Monday and Wednesday morning to
discuss [RS Compounding’s] operations.” (Id.).
Plaintiff relator McKenzie Stepe was “personally hired”
by Caddick in November 2011 to work for RS Compounding as a
sales representative in New York and New Jersey. (Id. at ¶
29). “During her employment, she also had some communications
with [] Gobea.” (Id.). Stepe resigned her position in February
2013. (Id.). Through her work, Stepe alleges she became aware
of

various

schemes

committed

by

Defendants

in

order

to

increase reimbursements from the Government.
The first was a marketing scheme created by “Gobea and/or
[] Caddick,” which they called the “1, 2, 3 strategy.” (Id.
at ¶ 8). This scheme involved pre-printed script pads, listing
RS Compounding’s various creams and gels, along with sales
representatives’ “coaching” physicians to prescribe the most
highly-reimbursed drugs. (Id. at ¶¶ 8, 13). According to
Stepe, “Defendants [] Gobea and/or [] Caddick have instructed
RS

Compounding’s

physician’s

name,

sales

representatives

National

Provider

3

to

fill

Identifier

in

the

(‘NPI’)

number, and to also write in ‘6’ for the number of refills,
regardless of actual patient need,” on the pre-printed script
pad. (Id. at ¶ 9). And, during Stepe’s first year with RS
Compounding, Defendants “required that their [script pads]
contain

prepopulated

check

marks

for

the

most

expensive

compounds RS Compounding sold, thereby placing the burden on
the prescribing physicians to cross out the check mark and
check off another product.” (Id. at ¶¶ 10, 17).
Stepe alleges that, as a result of these pre-printed
script

pads,

“Defendants

—

of

patients

often

the

automatically
most

expensive

ship

refills

products

if

to
the

physician did not cross out the check mark and check off a
different

compound

—

and

seek

TRICARE

and

Medicare

reimbursements for those refills despite questionable (and
unsupervised by a doctor) medical necessity.” (Id. at ¶ 17).
Stepe allegedly received “complaints from the physicians she
worked with that some of their patients were angered by RS
Compounding’s automatic shipments of the six compounds and
their billing for each compound, even though there was no
medical need for the additional five compounds and the patient
did not want the extra compounds.” (Id. at ¶ 64).

According

to Stepe, “Defendants’ scheme is fraudulent because it causes
TRICARE and Medicare to reimburse Defendants . . . for drugs

4

that uni[n]formed physicians ordered in greater amounts than
necessary along with several automatic refills.” (Id. at ¶
18).
In addition to the pre-printed script pads, “[u]nder the
‘1, 2, 3 strategy,’ Defendants’ sales representatives ‘coach’
physicians

to

number

three

products

on

the

pre-printed

script.” (Id. at ¶ 13). Thus, for pre-printed script pads
that did not include checkmarks by the most expensive drugs,
Stepe alleges “[p]hysicians are coached to choose their top
three preferences for each cream or gel based on the active
ingredients.” (Id. at ¶ 67). Sales representatives coach
physicians to mark the most highly-reimbursed drugs with a
“1,” the second most highly-reimbursed drugs with a “2,” and
the third most highly-reimbursed drugs with a “3.” (Id. at ¶¶
68-70).
The importance of this numbering was emphasized to sales
representatives by RS Compounding’s Vice President of Sales
and Marketing, Jon Taylor. He “instructed [them] to ‘fill out
a sample prescription and highlight how you are suggesting
they fill it out. . . . Repeating your message on this until
it sticks.” (Id. at ¶ 15). “Through this marketing scheme,
Defendants also targeted geographical locations with high
concentrations of military personnel in order to issue large

5

quantities of compounding prescriptions . . . knowing that
TRICARE would reimburse the highly inflated costs.” (Id. at
¶ 71).
According to Stepe, RS Compounding “directed its sales
representatives to work with the IT staff or administrators
handling their physicians’ electronic medical records (EMR)
systems to add the Company’s compounds into the systems so
that

the

compounds

would

be

prepopulated

and

‘readily

available to share with customers.’” (Id. at ¶ 11). “Although
[RS Compounding’s] written materials indicated that only noncontrolled substance compounds were able to be E-scribed and
controlled substance compounds (e.g., ketamine) had to be
faxed or mailed, the Company accepted E-scribed controlled
substance compounds.” (Id.).
Another

scheme

involved

disparate

pricing

of

the

compounds and gels sold by Defendants, in which different
patients

were

charged

different

amounts

for

the

same

substances. According to Stepe, “the Company charged vastly
different prices for individuals who were uninsured, who had
private

insurance,

and

who

were

covered

by

TRICARE

and

Medicare.” (Id. at ¶ 76).
Also, Stepe alleges Defendants “do not train their sales
representatives

regarding

proper

6

and

improper

use,

or

potential contra-indications or warnings.” (Id. at ¶ 92).
“Defendants also do not sufficiently inform patients about
the

proper

use

of

their

compounds

for

these

medical

conditions” and the basic instructions provided to physicians
“do

not

differing

provide

specific

compounds,

and

information
appear

on

about

Defendants’

promotional

materials

rather than in a package insert.” (Id. at ¶¶ 93-95). “Patients
have complained to RS Compounding about adverse reactions to
compounds . . . due to, at least in part, Defendants’ failure
to inform physicians or their patients about the proper use
of the compounds.” (Id. at ¶ 93).
Stepe contends that “Defendants’ failure to sufficiently
inform physicians of the proper uses of RS Compounding’s
medications in some instances would result in the Company’s
processing of claims for medications that would initially be
rejected due to a High Dose Alert.” (Id. at ¶ 98). “However,
Defendants would manually override the alert indicating they
verified the dosage with the physician, despite not having
actually discussed same with the physician. Defendants would
rely simply on the physician’s signature on the pre-printed
script pad.” (Id.). “As a result of this scheme, physicians
would

unknowingly

order

a

greater

number

or

dosage

of

medications than what should have been ordered, resulting in

7

unnecessary claims being submitted to TRICARE and Medicare
for reimbursement.” (Id.).
Stepe alleges “[t]his increase in unnecessary claims
being submitted for reimbursement was exacerbated by the
automatic refills on the pre-printed script pads that those
physicians

relied

on

in

prescribing

RS

Compounding’s

medications to their patients.” (Id. at ¶ 99). “Defendants
were aware that physicians were mistaken as to the proper
amount of certain medications they could order but failed to
make the correction.” (Id. at ¶ 101). “Instead, Defendants
processed the claims and automatic refills, and disregarded
their obligation to return ill-gotten gains to the Government
after being reimbursed by Government payors for unnecessary
medications.” (Id.).
According to Stepe, who identifies six physicians with
whom she frequently visited, “the physicians she worked with
and sold compounds to often had numerous TRICARE and/or
Medicare patients.” (Id. at ¶¶ 60, 85). Stepe “knows that RS
Compounding’s central billing department in Tampa, Florida,
submitted claims in connection with compounds that [Stepe]
sold to her physicians and which the Government reimbursed
[RS Compounding] for because, otherwise, she would not have
received commission checks.” (Id. at ¶ 86). She alleges that

8

Gobea

and

Caddick,

“as

the

two

managing

officers

of

RS

Compounding with oversight of virtually every activity at the
Company,

including

sales

policies,

knowingly

caused

RS

Compounding representatives to present the above false claims
to Government health care programs,” as well to “make false
records and statements material to such claims by devising
the fraudulent practices and instructing their employees to
put them into effect.” (Id. at ¶ 103).
Stepe concludes: “Under the FCA, claims for Defendants’
creams and gels have been and continue to be fraudulent
because the claims submitted for reimbursement are based upon
illegal marketing.” (Id. at ¶ 104). “If government-funded
programs
prescribed

had
as

been
a

aware

result

of

that
the

Defendants’
conduct

drugs

alleged

in

were
this

Complaint, they would not have paid the claims submitted as
a result of Defendants’ wrongdoing.” (Id.).
B.

Procedural History

On December 16, 2013, Stepe filed her Complaint against
RS Compounding and John Doe Corporations 1-10 under seal,
alleging violations of the False Claims Act (FCA), 31 U.S.C.
§ 3729(a), and Florida’s state equivalent of the FCA. (Doc.
# 1). On April 28, 2017, the Government elected to intervene
in part as to the fraudulent pricing allegations, but not as

9

to the “remaining allegations (including [Stepe’s] fraudulent
marketing and promotional allegations).” (Doc. # 33). The
Government filed its Complaint in Partial Intervention on
June 30, 2017, and subsequently filed its Amended Complaint
in Partial Intervention on September 9, 2017, against RS
Compounding and Gobea. (Doc. ## 36, 42).
Stepe filed her Amended Complaint on July 12, 2017, again
alleging violations of the FCA and various States’ equivalent
statutes against RS Compounding, Gobea, Caddick, and John Doe
Corporations 1-10. (Doc. # 39). RS Compounding, Gobea, and
Caddick filed motions to dismiss. (Doc. ## 48, 70). The Court
granted those motions and dismissed the Amended Complaint
with leave to amend on November 8, 2017. (Doc. # 76).
Stepe
December

then
7,

filed

2017,

her

Second

Amended

FCA

violations

alleging

Complaint

on

against

RS

Compounding, Gobea, Caddick, and John Doe Corporations 1-10.
(Doc. # 91). Now, RS Compounding, Gobea, and Caddick have
moved to dismiss the Second Amended Complaint, arguing that
Stepe’s allegations still fail to satisfy Rule 9(b). (Doc. ##
93, 97). Stepe has responded, (Doc. # 101), and the Motions
are ripe for review.

10

II.

Legal Standard
On a motion to dismiss, this Court accepts as true all

the allegations in the complaint and construes them in the
light most favorable to the plaintiff. Jackson v. Bellsouth
Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004). Further,
this

Court

favors

the

plaintiff

with

all

reasonable

inferences from the allegations in the complaint. Stephens v.
Dep’t of Health & Human Servs., 901 F.2d 1571, 1573 (11th
Cir. 1990).
But, the Supreme Court explains that:
While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
level.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(internal
citations omitted). Courts are not “bound to accept as true
a legal conclusion couched as a factual allegation.” Papasan
v. Allain, 478 U.S. 265, 286 (1986).
Rule 9(b) of the Federal Rules of Civil Procedure imposes
more

stringent

pleading

requirements

on

claims

alleging

fraud. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301,
1305 (11th Cir. 2002). The complaint must allege “facts as to

11

time, place, and substance of the defendant’s alleged fraud,
specifically

the

details

of

the

defendant[’s]

allegedly

fraudulent acts, when they occurred, and who engaged in them.”
Hopper v. Solvay Pharm., Inc., 588 F.3d 1318, 1324 (11th Cir.
2009).
III. Analysis
Defendants argue that Stepe has not stated claims under
any subsection of the FCA because her allegations fail to
meet either the Rule 12(b)(6) or Rule 9(b) standards, as well
as failing to establish the allegations were material to the
Government’s decision to pay claims. (Doc. ## 93, 97). The
Court will address each count in turn.
And, as a preliminary matter, the Court reminds the
parties

that

Stepe’s

allegations

regarding

the

disparate

pricing of medications are superseded because the Government
has intervened as to those allegations. (Doc. # 76 at 12).
Thus,

“in

determining

whether

Stepe’s

[Second]

Amended

Complaint satisfies the Rule 9(b) and 12(b)(6) standards, the
Court

will

not

consider

the

alleged

disparate

pricing

scheme.” (Id. at 13).
A.

Count I for Presentment of False Claims

In Count I, Stepe alleges “Defendants have knowingly
presented or caused to be presented false or fraudulent claims

12

for

payment

or

approval

in

violation

of

31

U.S.C.

§

3729(a)(1)(A).” (Doc. # 91 at ¶ 106). “As a result, the
Government has suffered damages in the form of millions of
dollars in unearned TRICARE and Medicare payments made to
Defendants.” (Id. at ¶ 107).
Section 3729(a)(1)(A) imposes liability on any person
who “knowingly presents, or causes to be presented, a false
or fraudulent claim for payment or approval.” 31 U.S.C. §
3729(a)(1)(A). The key issue under § 3729(a)(1)(A) is whether
the defendant “presented or caused to be presented” a false
claim. Urquilla–Diaz v. Kaplan Univ., 780 F.3d 1039, 1052
(11th Cir. 2015)(quoting Hopper, 588 F.3d at 1325–26). Stepe
“must allege the actual presentment of a claim . . . with
particularity,

meaning

particular

facts

about

the

‘who,’

‘what,’ ‘where,’ ‘when,’ and ‘how’ of fraudulent submissions
to the government.” Id. at 1052 (internal quotation marks
omitted).
As

the

Court

explained

in

its

previous

Order,

“[p]roviding exact billing data — name, date, amount, and
services rendered — or attaching a representative sample
claim is one way a complaint can establish” presentment of a
false claim. United States ex rel. Mastej v. Health Mgmt.
Assocs.,

Inc.,

591

F.

App’x

13

693,

704

(11th

Cir.

2014).

“However, there is no per se rule that an FCA complaint must
provide exact billing data or attach a representative sample
claim.” Id. (citing Clausen, 290 F.3d at 1312 & n.21). Rather,
a complaint must contain “some indicia of reliability” that
a false claim was actually submitted. Clausen, 290 F.3d at
1311. “For instance, a relator with first-hand knowledge of
the defendant’s billing practices may possess a sufficient
basis

for

alleging

that

the

defendant

submitted

false

claims.” United States ex rel Patel v. GE Healthcare, Inc.,
No. 8:14-cv-120-T-33TGW, 2017 WL 4310263, at *6 (M.D. Fla.
Sept. 28, 2017)(citing Mastej, 591 F. App’x at 704).
Defendants argue the Second Amended Complaint fails to
plead fraud with particularity as to any false claims being
submitted to the Government. (Doc. # 93 at 7-8; Doc. # 97 at
4). Again, they are correct that Stepe cannot rely on any
disparate pricing allegations to support her claims because
those allegations have been superseded. (Doc. # 97 at 8).
Thus, Stepe’s reference to the Government’s analysis of false
claims

submitted

to

TRICARE,

(Doc.

#

91

at

¶

102),

is

unavailing — the Government has only intervened as to the
disparate pricing allegations and Stepe has not alleged that
the

Government’s

calculations

of

false

claims

anything besides the alleged disparate pricing.

14

relate

to

All

of

Stepe’s

allegations

of

false

claims

being

submitted and her factual support for that contention are
overly vague, such as alleging she knows false claims were
submitted to the Government because she received commission
checks from RS Compounding. (Id. at ¶ 86). Stepe does not
allege a single specific false claim, let alone a single false
claim

unrelated

to

the

superseded

disparate

pricing

allegations. She states that she received complaints from
physicians about the extra refills and the high costs of those
refills.
physician

(Id.
who

at

¶

64).

informed

But

her

of

she

does

such

not

identify

complaints,

nor

the
the

complaining patient’s initials.
Nor does Stepe identify any specific claims in which the
dosage prescribed for a TRICARE or Medicare patient was
unnecessarily

high

or

the

number

of

refills

medically

unnecessary. See Mastej, 591 F. App’x at 708 (noting that, in
cases involving reimbursement “for medical services that were
unnecessary” or “for improper prescriptions,” “representative
claims with particularized medical and billing content matter
more, because the falsity of the claim depends largely on the
details contained within the claim form — such as the type of
medical services rendered, the billing code or codes used on
the claim form, and what amount was charged on the claim form

15

for the medical services”); see also United States ex rel.
Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903
(5th

Cir.

1997)(affirming

dismissal

of

claim

based

on

medically unnecessary services where the relator “did not
identify any specific physicians who referred patients for
medically unnecessary services or any specific claims for
medically

unnecessary

services

that

were

submitted

by

defendants”).
Similarly, Stepe identifies six physicians by name to
whom

she

sold

compounds

and

states

that

each

physician

“treated a large number of TRICARE and Medicare patients.”
(Doc. # 91 at ¶ 60). But Stepe never identifies claims
submitted

based

on

these

physicians’

prescriptions

for

Medicare or TRICARE patients. The Court will not make the
assumption that false claims were submitted to TRICARE or
Medicare merely because certain physicians had a high number
of TRICARE or Medicare patients. See Patel, 2017 WL 4310263,
at *6 (“Because Dr. Eligetti and Dr. Elchahal purchased
Myoview for patients, and because a substantial number of
their patients were Medicare or Medicaid beneficiaries, Patel
argues

that

false

claims

were

necessarily

presented

for

payment to Medicare and Medicaid. These allegations fall well
short

of

alleging

‘exact

billing

16

data.’”).

That

the

Government

found

that

Defendants

submitted

claims

for

prescriptions written by these physicians is of no import.
The Government’s analysis relates to claims that are false
because the medications were disparately priced. There is no
particular

allegations

that

the

claims

regarding

the

identified physicians related to any other scheme or theory
of falsity pled by Stepe.
And Stepe does not provide other sufficient indicia of
reliability that false claims were actually submitted to the
Government. “Although Stepe focuses on her status as an
insider of RS Compounding, that status, without more, does
not provide sufficient indicia of reliability to satisfy Rule
9(b).” (Doc. # 76 at 17)(citing Hopper, 588 F.3d at 1325;
Corsello v. Lincare, Inc., 428 F.3d 1008, 1014 (11th Cir.
2005)).

Stepe

worked

as

a

sales

representative

for

RS

Compounding, rather than as a billing department employee.
The Second Amended Complaint still does not allege that Stepe
had firsthand knowledge of RS Compounding’s billing practices
— she does not state that she personally billed any false
claims or that she witnessed other employees bill false
claims. See Mastej, 591 F. App’x at 704 (“[A] plaintiffrelator

without

firsthand

knowledge

of

the

defendants’

billing practices is unlikely to have a sufficient basis for

17

such an allegation.”); see also United States ex rel. Walker
v. R & F Props. of Lake City, Inc., 433 F.3d 1349, 1360 (11th
Cir. 2005)(holding that Relator Walker, a nurse practitioner,
had alleged sufficient firsthand knowledge of her employer’s
billing practices because she was instructed to bill, and had
billed, her services under improper billing codes).
For
Defendants

example,

Stepe’s

manually

new

overrided

allegations
High

Dose

include

that

Alerts

when

processing claims, thereby falsely “indicating they verified
the dosage with the physician.” (Doc. # 91 at ¶ 98). But this
allegation

still

falls

short

because

Stepe,

a

sales

representative, never explains the basis for her knowledge of
this practice. Did she learn of it from a billing employee?
Nor

does

Stepe

provide

a

sample

false

claim

in

which

Defendants falsely stated they had verified dosage with a
physician. Without more, this allegation does not provide
sufficient indicia of reliability.
As the Court explained in its previous Order, “[c]ourts
cannot draw inferences in favor of relators concerning the
submission of fraudulent claims because doing so would strip
‘all meaning from Rule 9(b)’s requirements of specificity.’”
(Doc. # 76 at 18)(quoting Corsello, 428 F.3d at 1013). Because
the Second Amended Complaint fails to satisfy Rule 9(b)

18

regarding

the

allegation

that

Defendants

submitted

false

claims to the Government, Count I is dismissed.
B.

Count II for False Statements

In Count II, Stepe alleges Defendants made or used, or
caused to be made or used, false records and statements that
were material to false or fraudulent claims in violation of
31 U.S.C. § 3729(a)(1)(B). (Doc. # 91 at ¶ 109). These false
records

or

statements

were

“false

certifications

and

representations made or caused to be made by RS Compounding.”
(Id.). “As a result, the Government has suffered damages in
the form of millions of dollars in unearned TRICARE and
Medicare payments made to Defendants.” (Id. at ¶ 110).
Section 3729(a)(1)(B) creates liability for any person
who “knowingly makes, uses, or causes to be made or used, a
false record or statement material to a false or fraudulent
claim.” 31 U.S.C. § 3729(a)(1)(B). Thus, “[t]o prove a claim
under § 3729(a)(1)(B), a relator must show that: (1) the
defendant made (or caused to be made) a false statement, (2)
the defendant knew it to be false, and (3) the statement was
material to a false claim.” United States ex rel. Phalp v.
Lincare Holdings, Inc., 857 F.3d 1148, 1154 (11th Cir. 2017).
For

this

provision,

the

FCA

defines

“material”

as

“having a natural tendency to influence, or be capable of

19

influencing, the payment or receipt of money or property.” 31
U.S.C. § 3729(b)(4). “Under this version of the statute, a
relator is not required to allege presentment because the
statutory

language

includes

no

express

presentment

requirement.” Patel, 2017 WL 4310263, at *8 (citing Hopper,
588 F.3d at 1328).
Defendants argue that Stepe fails to identify the false
records and statements made or caused to be made by Defendants
that relate to the non-superseded allegations. (Doc. # 93 at
8; Doc. # 97 at 10). The Court agrees. The Court previously
warned Stepe that it was important to specifically identify
the false statements and certifications upon which each claim
relies. (Doc. # 76 at 21-22). Stepe has not done so. Thus,
the Court and Defendants are left to sift through the copious
factual

allegations

to

identify

what

statements

and

certifications Stepe alleges were false. The Court must guess
which false statements mentioned in the factual allegations
form the basis of Count II versus Count III, or if the same
statements are relied upon in both.
To the extent the Court can divine what false records or
statements Stepe intended to reference in this count, the
Court finds those statements insufficiently pled under Rule
9(b). Stepe still has not sufficiently pled how the pre-

20

printed

script

pads

specifying

a

high

refill

number

constitute a false statement, given that physicians are free
to mark out the default refill number and fill in another.
Stepe

also

has

not

explained

how

sales

representatives’

“coaching” physicians to prescribe more expensive medications
is false, given that physicians possess independent medical
knowledge and choice of which prescriptions to issue. And,
although she has elaborated on the alleged consequences of
the sales representatives’ poor training and drug warnings,
Stepe has not alleged an actual false statement or record
made by Defendants.
The closest Stepe comes to alleging a false statement is
her allegation that Defendants would manually override High
Dose

Alerts

when

processing

claims,

thereby

falsely

“indicating they verified the dosage with the physician”
without actually doing so. (Doc. # 91 at ¶ 98). But, again,
no specific examples of when Defendants falsely overrode a
High

Dose

Alert

are

pled.

Nor

does

Stepe,

a

sales

representative, allege that she participated in or witnessed
the overriding of High Dose Alerts. Thus, this allegation of
false statements does not meet the Rule 9(b) particularity
standard.

21

As no false records or statements to support this claim
have been pled with particularity, the Court need not also
address whether the vaguely identified false statements were
material to a false claim. Count II is dismissed.
C.

Count III for Reverse False Claims

Regarding

Count

III

for

violation

of

31

U.S.C.

§

3729(a)(1)(G), Stepe alleges
Defendants have knowingly made, used, or caused to
be made or used, false records or false statements
(i.e., the false certification made or caused to be
made by Defendants) material to an obligation to
pay or transmit money to the Government or
knowingly concealed or knowingly and improperly
avoided or decreased an obligation to pay or
transmit money or property to the [G]overnment.
(Doc. # 91 at ¶ 112). “As a result, the Government has
suffered

damages

in

the

form

of

millions

of

dollars

in

unearned TRICARE and Medicare payments made to Defendants.”
(Id. at ¶ 113).
Section 3729(a)(1)(G) creates liability for a person who
“knowingly makes, uses, or causes to be made or used, a false
record or statement material to an obligation to pay or
transmit

money

or

property

to

the

Government,”

or

who

“knowingly conceals or knowingly and improperly avoids or
decreases an obligation to pay or transmit money or property
to the Government.” 31 U.S.C. § 3729(a)(1)(G). “This is known

22

as the ‘reverse false claim’ provision of the FCA because
liability results from avoiding the payment of money due to
the government, as opposed to submitting to the government a
false claim.” United States ex rel. Matheny v. Medco Health
Sols., Inc., 671 F.3d 1217, 1222 (11th Cir. 2012).
“Importantly, to establish a reverse false claim cause
of action, a relator must show that the defendant owed a
definite and clear ‘obligation to pay money to the United
States at the time of the allegedly false statements.’” United
States v. Space Coast Med. Assocs., L.L.P., 94 F. Supp. 3d
1250, 1263 (M.D. Fla. 2015)(quoting Matheny, 671 F.3d at
1223)). “Congress has defined a False Claims Act ‘obligation’
as ‘an established duty, whether or not fixed, arising from
an

express

or

implied

contractual,

grantor-grantee,

or

licensor-licensee relationship, from a fee-based or similar
relationship,

from

statute

or

regulation,

or

from

the

retention of any overpayment.’” Id. (quoting 31 U.S.C. §
3729(b)(3)).

Again,

“material”

means

“having

a

natural

tendency to influence, or be capable of influencing, the
payment

or

receipt

of

money

or

property.”

31

U.S.C.

§

3729(b)(4).
Defendants argue this claim should be dismissed because
Stepe “failed to remedy any of the[] multiple defects in Count

23

III identified by the Court” in its previous Order. (Doc. #
97 at 10). In the previous Order, the Court explained the
deficiencies with Stepe’s reverse false claims count: “No
false

certifications

related

to

the

non-superseded

allegations . . . are identified in the Amended Complaint,”
“the Court is unsure what obligation Defendants had to pay
the Government, as Stepe also fails to identify this,” and
“the Court cannot determine whether the false certification
was ‘material’ to the obligation.”

(Doc. # 76 at 24-26).

True, the Second Amended Complaint does more clearly
identify the alleged obligation: Defendants’ “obligation to
return

ill-gotten

gains

to

the

Government

after

being

reimbursed by Government payors for unnecessary medications.”
(Doc. # 91 at ¶ 101). As the Court explained in its Order
denying dismissal of the Government’s Amended Complaint in
Partial Intervention, the duty to remit known overpayments is
a clear obligation under the FCA. (Doc. # 90 at 25-26).
Nevertheless, as Caddick correctly notes, Stepe still
“has not identified the false certifications that were made
or

caused

to

certifications

be
“were

made

by

indeed

[D]efendants”
material

to

or

the

how

the

identified

obligation.” (Doc. # 93 at 9). The new allegations in the
Second Amended Complaint do not clarify the existence of a

24

false certification. The allegation regarding the overridden
High Dose Alerts lacks particularity because Stepe does not
provide examples of incidents in which a High Dose Alert was
issued and overridden or allege that she participated in or
witnessed the overriding of such alerts.
Regarding the refill allegations, it remains unclear how
pre-printing a refill number on a script pad, which physicians
were free to mark out, qualifies as false. Although Stepe
alleges

Defendants

“were

aware”

physicians

were

mistaken

about the refill number, she fails to elaborate on how that
was known besides referencing occasional vague complaints
from

patients

about

excessive

refills.

Even

though

she

alleges unnamed physicians informed her of these complaints,
Stepe never alleges the physicians acknowledged they had
mistakenly ordered a high number of refills because of the
pre-printed script pads.
Furthermore, as the Court explained in its previous
Order, the false certification regarding disparate pricing
cannot form the basis of this claim because the disparate
pricing allegations have been superseded.
Because no false statements or certifications to support
this claim have been pled with particularity, Count III fails
to satisfy Rule 9(b) and is dismissed.

25

D.

Count IV

for Conspiracy

In Count IV, Stepe alleges Defendants violated 31 U.S.C.
§ 3729(a)(1)(C), which creates liability for any person who
“conspires to commit a violation of subparagraph (A), (B),
(D),

(E),

(F),

or

(G).”

According

to

Stepe,

Defendants

violated this section by “conspir[ing] to make or present
false or fraudulent claims and perform[ing] one or more acts
to effect payment of false or fraudulent claims.” (Doc. # 91
at ¶ 115). Defendants argue the Second Amended Complaint fails
to allege the existence of a conspiracy with the particularity
required under Rule 9(b). (Doc. # 93 at 10; Doc. # 97 at 11).
Complaints alleging a conspiracy to violate the FCA are
also subject to Rule 9(b)’s heightened pleading standard. See
Corsello, 428 F.3d at 1014 (“The district court correctly
dismissed [the relator’s] [conspiracy count] for failure to
comply with Rule 9(b).”). A relator must establish “(1) that
the defendant conspired with at least one person to get a
false or fraudulent claim paid by the Government; and (2)
that at least one of the conspirators performed an overt act
to get a false or fraudulent claim paid.” United States ex
rel. Chase v. LifePath Hospice, Inc., No. 8:10-cv-1061-T30TGW,

2016

WL

5239863,

at

*8

(M.D.

Fla.

Sept.

22,

2016)(citing United States ex rel. Bane v. Breathe Easy

26

Pulmonary Servs., Inc., 597 F. Supp. 2d 1280, 1289 (M.D. Fla.
2009)). “‘Conspire’ in this context requires a meeting of the
minds ‘to defraud the Government.’” Chase, 2016 WL 5239863,
at *8.
The

Court

finds

that

Stepe

has

not

pled

with

particularity that a conspiracy existed between Defendants RS
Compounding, Gobea, and Caddick. Stepe emphasizes her new
allegation

that

Gobea

and

Caddick

met

every

Monday

and

Wednesday morning to discuss RS Compounding’s operations.
(Doc. # 91 at ¶ 37). This falls short of pleading an agreement
between Gobea and Caddick to engage in fraud. Similarly, the
allegation

that

Gobea

and

Caddick

“as

the

two

managing

officers of RS Compounding” had “oversight of virtually every
activity at the Company” is insufficient to allege Caddick
and Gobea were aware of and agreed to perpetrate the alleged
fraud on the Government. (Id. at ¶ 103).
The allegations regarding Gobea and Caddick’s crafting
the “1, 2, 3” marketing strategy, directing that script pads
be pre-printed with high refill numbers, and their “urging”
sales representatives to promote RS Compounding’s products
despite insufficient training and warnings are conclusory.
(Id. at ¶¶ 63, 65, 96). Despite the Court’s prior warning
(Doc. # 76 at 31), the Second Amended Complaint continues to

27

lump Caddick and Gobea together — i.e., “Gobea and/or []
Caddick created RS Compounding’s marketing scheme.” (Doc. #
91 at ¶ 8). Nor does the Second Amended Complaint contain
specific allegations of an overt act taken by either Caddick
or Gobea. The allegation that comes closest to supporting
Stepe’s conspiracy claim is that Stepe was informed the
disparate prices were set “at the top of the Company,” meaning
by Caddick and Gobea. (Id. at ¶ 80). But, again, this goes to
the superseded allegations regarding disparate pricing, which
cannot support Stepe’s non-superseded claims.
In short, the Second Amended Complaint’s allegations are
conclusory

and

insufficient

to

support

that

Defendants

entered a specific agreement to submit fraudulent claims to
the Government or that they took any overt act to fulfill
that agreement. See Corsello, 428 F.3d at 1014 (affirming
dismissal where relator “alleged that ‘Lincare and Varraux
conspired to defraud the Government,’ but this bare legal
conclusion was unsupported by specific allegations of any
agreement or overt act”). Count IV is dismissed for failure
to comply with Rule 9(b).

28

IV.

Conclusion
Stepe’s Second Amended Complaint fails to state a claim

under the FCA. In her response, Stepe requests leave to file
a third amended complaint. (Doc. # 101 at 29).
First, the Court notes that such request is procedurally
improper. See Rosenberg v. Gould, 554 F.3d 962, 967 (11th
Cir. 2009)(“Where a request for leave to file an amended
complaint simply is imbedded within an opposition memorandum,
the issue has not been raised properly. [Plaintiffs] also
failed to comply with Federal Rule of Civil Procedure 7(b)
when they failed to attach a copy of their proposed amendment
or to describe the substance of their proposed amendment.”
(citations omitted)). Additionally, in its previous Order
dismissing Stepe’s Amended Complaint with leave to amend, the
Court explained: “In light of the liberal policy favoring
amendment, and because this Court has not previously issued
any substantive ruling in this action, the Court will grant
[Stepe] one — and very likely only one — opportunity to
amend.” (Doc. # 76 at 32-33)(quoting Patel, 2017 WL 4310263,
at *8).
Because Stepe already had the benefit of a detailed Order
addressing the substantive issues with her claims and was
warned that she would likely receive only one opportunity to

29

amend, the Court determines that justice does not require a
further opportunity to amend. See Cooper v. Blue Cross & Blue
Shield

of

Fla.,

Inc.,

19

F.3d

562,

568–69

(11th

Cir.

1994)(stating that relator “is entitled to one chance to amend
the complaint and bring it into compliance with [Rule 9(b)]”).
Stepe’s Second Amended Complaint is dismissed with prejudice
and Caddick is terminated as a party to this action.
The case remains pending as to the United States’ Amended
Complaint

in

Partial

Intervention,

which

asserts

claims

against RS Compounding and Gobea.
Accordingly, it is now
ORDERED, ADJUDGED, and DECREED:
(1)

Defendants RS Compounding LLC and Renier Gobea’s Motion
to Dismiss Relator’s Second Amended Complaint (Doc. #
97) is GRANTED.

(2)

Defendant Stephen Caddick’s Motion to Dismiss Relator’s
Second Amended Complaint (Doc. # 93) is GRANTED.

(3)

Plaintiff

relator

McKenzie

Stepe’s

Second

Amended

Complaint (Doc. # 91) is DISMISSED WITH PREJUDICE.
(4)

The Clerk is directed to terminate Caddick as a party to
this action.

30

DONE and ORDERED in Chambers in Tampa, Florida, this
10th day of January, 2018.

31