United States of America et al v. RS Compounding LLC et al
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
UNITED STATES OF AMERICA, et al.,
ex rel. MCKENZIE STEPE,
Case No. 8:13-cv-3150-T-33AEP
RS COMPOUNDING LLC d/b/a
ZOE SCRIPTS LABORATORY SERVICES,
LLC and d/b/a WESTCHASE
RENIER GOBEA, STEPHEN M. CADDICK,
Pharm D., and JOHN DOE
CORPORATIONS 1-10, all whose
true names are unknown,
This matter comes before the Court pursuant to Defendant
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.
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,
quantities of pre-made compounds for both humans and animals
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
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
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
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
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]
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
physician did not cross out the check mark and check off a
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).
to Stepe, “Defendants’ scheme is fraudulent because it causes
TRICARE and Medicare to reimburse Defendants . . . for drugs
that uni[n]formed physicians ordered in greater amounts than
necessary along with several automatic refills.” (Id. at ¶
In addition to the pre-printed script pads, “[u]nder the
‘1, 2, 3 strategy,’ Defendants’ sales representatives ‘coach’
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 ¶¶
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
quantities of compounding prescriptions . . . knowing that
TRICARE would reimburse the highly inflated costs.” (Id. at
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
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.).
compounds and gels sold by Defendants, in which different
substances. According to Stepe, “the Company charged vastly
different prices for individuals who were uninsured, who had
Medicare.” (Id. at ¶ 76).
Also, Stepe alleges Defendants “do not train their sales
potential contra-indications or warnings.” (Id. at ¶ 92).
“Defendants also do not sufficiently inform patients about
conditions” and the basic instructions provided to physicians
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
medications than what should have been ordered, resulting in
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
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
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
Compounding with oversight of virtually every activity at the
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
Complaint, they would not have paid the claims submitted as
a result of Defendants’ wrongdoing.” (Id.).
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
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).
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.
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,
inferences from the allegations in the complaint. Stephens v.
Dep’t of Health & Human Servs., 901 F.2d 1571, 1573 (11th
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
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
fraud. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301,
1305 (11th Cir. 2002). The complaint must allege “facts as to
time, place, and substance of the defendant’s alleged fraud,
fraudulent acts, when they occurred, and who engaged in them.”
Hopper v. Solvay Pharm., Inc., 588 F.3d 1318, 1324 (11th Cir.
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
pricing of medications are superseded because the Government
has intervened as to those allegations. (Doc. # 76 at 12).
Complaint satisfies the Rule 9(b) and 12(b)(6) standards, the
scheme.” (Id. at 13).
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
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
‘what,’ ‘where,’ ‘when,’ and ‘how’ of fraudulent submissions
to the government.” Id. at 1052 (internal quotation marks
“[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.
“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
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
unavailing — the Government has only intervened as to the
disparate pricing allegations and Stepe has not alleged that
anything besides the alleged disparate pricing.
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
allegations. She states that she received complaints from
physicians about the extra refills and the high costs of those
complaining patient’s initials.
Nor does Stepe identify any specific claims in which the
dosage prescribed for a TRICARE or Medicare patient was
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
for the medical services”); see also United States ex rel.
Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903
medically unnecessary services where the relator “did not
identify any specific physicians who referred patients for
medically unnecessary services or any specific claims for
Similarly, Stepe identifies six physicians by name to
“treated a large number of TRICARE and Medicare patients.”
(Doc. # 91 at ¶ 60). But Stepe never identifies claims
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
payment to Medicare and Medicaid. These allegations fall well
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
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.
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
billing practices is unlikely to have a sufficient basis for
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).
processing claims, thereby falsely “indicating they verified
the dosage with the physician.” (Doc. # 91 at ¶ 98). But this
representative, never explains the basis for her knowledge of
this practice. Did she learn of it from a billing employee?
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)
claims to the Government, Count I is dismissed.
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
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).
“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). “Under this version of the statute, a
relator is not required to allege presentment because the
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
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-
constitute a false statement, given that physicians are free
to mark out the default refill number and fill in another.
“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
“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
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
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.
Count III for Reverse False Claims
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
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
“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
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
licensor-licensee relationship, from a fee-based or similar
retention of any overpayment.’” Id. (quoting 31 U.S.C. §
tendency to influence, or be capable of influencing, the
Defendants argue this claim should be dismissed because
Stepe “failed to remedy any of the multiple defects in Count
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
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
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
obligation.” (Doc. # 93 at 9). The new allegations in the
Second Amended Complaint do not clarify the existence of a
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
about the refill number, she fails to elaborate on how that
was known besides referencing occasional vague complaints
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.
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),
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)(citing United States ex rel. Bane v. Breathe Easy
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,
particularity that a conspiracy existed between Defendants RS
Compounding, Gobea, and Caddick. Stepe emphasizes her new
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
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
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
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).
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,
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
amend, the Court determines that justice does not require a
further opportunity to amend. See Cooper v. Blue Cross & Blue
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
against RS Compounding and Gobea.
Accordingly, it is now
ORDERED, ADJUDGED, and DECREED:
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. # 93) is GRANTED.
Complaint (Doc. # 91) is DISMISSED WITH PREJUDICE.
The Clerk is directed to terminate Caddick as a party to
DONE and ORDERED in Chambers in Tampa, Florida, this
10th day of January, 2018.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?