United States of America vs. Wal-Mart Stores East, LP
Filing
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OPINION and ORDER Denying Plaintiff-Relator's 70 Motion for Reconsideration. Signed by District Judge Linda V. Parker. (RLou)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
UNITED STATES OF AMERICA and
the STATE OF MICHIGAN, ex rel.,
ASHWANI SHEORAN, RPh,
Plaintiff-Relator,
Civil Case No. 13-10568
Hon. Linda V. Parker
v.
WAL-MART STORES EAST, LP, d/b/a
WALMART, a foreign corporation,
TOI WALKER, DOUG HENGER,
ALFRED RODRIGUEZ,
RICHARD LOCKARD, M.D.,
NAVEED MAHFOOZ, M.D., and
TAREK EZZEDDINE, M.D.,
Defendants.
_____________________________________/
OPINION AND ORDER DENYING PLAINTIFF-RELATOR’S MOTION
FOR RECONSIDERATION (ECF NO. 70)
Plaintiff-Relator Ashwani Sheoran, RPh (“Relator”), on behalf of himself,
the United States and the State of Michigan, initiated this lawsuit on February 11,
2013, by filing a qui tam complaint under seal against Defendants Walmart, Toi
Walker, Doug Henger, and Alfred Rodriguez (collectively “Walmart Defendants”),
as well as Defendants Richard Lockard, M.D., Naveed Mahfooz, M.D., and Tarek
Ezzeddine, M.D. (ECF No. 1.) On December 7, 2018, Relator filed his Second
Amended Complaint (“SAC”), alleging (i) presentation of false claims in violation
of the False Claims Act (“FCA”) (31 U.S.C. § 3729(a)(1)(A)), Fraud Enforcement
Recovery Act of 2009 (“FERA”), and Michigan Medicaid False Claims Act
(“MMFCA”); (ii) a false record or statement material to a false claim in violation
of the FCA (31 U.S.C. § 3729(a)(1)(B)), FERA, and MMFCA; (iii) conspiracy to
defraud in violation of the FCA (31 U.S.C. § 3729(a)(1)(C)); and (iv) retaliation in
violation of the FCA (31 U.S.C. § 3730(h)). (ECF No. 57.) The first three claims
are against the Walmart Defendants, while the fourth claim is against Walmart
only. (Id. at Pg. ID 589-92.) On March 8, 2018, the Court unsealed the complaints
after the United States and the State of Michigan declined to intervene. (ECF Nos.
24, 25.) Dr. Lockard and the Walmart Defendants subsequently filed motions to
dismiss. (ECF Nos. 58, 61.) In an Opinion and Order entered on August 20, 2019,
the Court granted both motions. (ECF No. 68.)
Presently before the Court is Relator’s Motion for Reconsideration, in which
Relator contends the Court committed palpable error when analyzing his
§ 3729(a)(1) claims. (ECF No. 70.) The motion has been briefed. (ECF Nos. 72,
73.) For the reasons that follow, the Court denies the motion.
LEGAL STANDARD
Local Rule 7.1 provides the following standard of review for motions for
reconsideration:
Generally, and without restricting the court’s discretion,
the court will not grant motions for rehearing or
reconsideration that merely present the same issues ruled
upon by the court, either expressly or by reasonable
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implication. The movant must not only demonstrate a
palpable defect by which the court and the parties and
other persons entitled to be heard on the motion have been
misled but also show that correcting the defect will result
in a different disposition of the case.
E.D. Mich. LR 7.1(h)(3). Palpable defects are those which are “obvious, clear,
unmistakable, manifest or plain.” Mich. Dep’t of Treasury v. Michalec, 181 F.
Supp. 2d 731, 734 (E.D. Mich. 2002). “It is an exception to the norm for the Court
to grant a motion for reconsideration.” Maiberger v. City of Livonia, 724 F. Supp.
2d 759, 780 (E.D. Mich. 2010). “[A] motion for reconsideration is not properly
used as a vehicle to re-hash old arguments or to advance positions that could have
been argued earlier but were not.” Smith ex rel. Smith v. Mount Pleasant Pub.
Sch., 298 F. Supp. 2d 636, 637 (E.D. Mich. 2003) (citing Sault Ste. Marie Tribe of
Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998)).
ANALYSIS
In his SAC, Relator alleges three causes of action pursuant to 31 U.S.C.
§ 3729(a)(1) et seq. The applicable provisions impose liability on any person who:
(A) knowingly presents, or causes to be presented, a false
or fraudulent claim for payment or approval;
(B) knowingly makes, uses, or causes to be made or used,
a false record or statement material to a false or fraudulent
claim; [or]
(C) conspires to commit a violation of subparagraph (A)
[or] (B) . . . .
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31 U.S.C. § 3729(a)(1).1
(i) Did Defendants Violate §§ 3729(a)(1)(A) or (B)?
In his SAC, Relator appears to allege that the Walmart Defendants and Dr.
Lockard are liable under §§ 3729(a)(1)(A) or (B) for four reasons: the relevant
claims involved (i) “out-of-the-area prescriptions for controlled substances” that
were not properly verified; (ii) unauthorized entry of non-pharmacy [Walmart]
employees in the Pharmacy; (iii) faxed prescriptions bearing a physician’s
unverified electronic signature, which the law prohibits as it concerns controlled
substances found on Schedules III-V; and (iv) prescriptions that contained a
“excessively high” quantity of controlled substances, which “if actually taken
would kill the person” and “indicat[ed] illegal diversion activities.” (ECF No. 57
at Pg. ID 574, 577, 582, 590.)
Regarding the first two allegations, even assuming they are true, Plaintiff
does not allege that the conduct led to the submission of requests for anticipated
payment to the government. See 31 U.S.C. § 3729(a)(1)(A)-(B) (requiring a “false
or fraudulent claim”); see also U.S. ex rel. Marlar v. BWXT Y-12, L.L.C., 525 F.3d
439, 447 (6th Cir. 2008) (“While [Relator] is correct that we have previously held
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In 2009, Congress passed the FERA, which amended and renumbered the liability
provisions of the FCA. Because Relator’s claims in this case involve conduct that
occurred after the 2009 amendments, the post-2009 version of the FCA (quoted
above) applies.
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that proof of ‘presentment’ is not required for actions under subsections [(a)(1)(B)]
and [(a)(1)(C)], . . . we have repeatedly held that proof of a false claim is
required.”) For this reason, the conduct outlined in the first two allegations do not
make out claims under §§ 3729(a)(1)(A) or (B) as to the Walmart Defendants or
Dr. Lockard.
Regarding the third allegation, the Court accepts as true that, in an email
from Rodriguez to Henger, Rodriguez conceded “that the investigation into
Relator’s concerns about ‘the validity of prescriptions that appeared to not have an
original signature’ was validated” and that Walmart “did find that the defined
practice of filling prescriptions that are received via fax or e-scribe were not being
completed properly.”2 (ECF No. 57 at Pg. ID 587.) Still, Relator does not allege
that the conduct led to claims for payment that were actually submitted to the
government and Relator has not identified a characteristic example of such a claim
submitted to the government.3 See 31 U.S.C. § 3729 (a)(1)(A)-(B) (requiring a
2
Plaintiff relies on a theory of FCA liability commonly referred to as “implied
false certification.” (See ECF No. 57 at Pg. ID 591.) Under this theory, “when a
defendant submits a claim, it impliedly certifies compliance with all conditions of
payment. But if that claim fails to disclose the defendant’s violation of a material
statutory, regulatory, or contractual requirement, . . . the defendant has made a
misrepresentation that renders the claim ‘false or fraudulent.’” Universal Health
Servs., Inc. v. United States, 136 S. Ct. 1989, 1995 (2016).
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According to the SAC, Exhibit A “contains a list of filled prescriptions for one
person over the course of five (5) years that if actually taken would kill the
person.” (ECF No. 57 at Pg. ID 577.) Notably, Relator does not allege that
(Cont’d . . .)
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“false or fraudulent claim”); see also Chesbrough v. VPA, P.C., 655 F.3d 461, 470
(6th Cir. 2011) (“Where a relator alleges a ‘complex and far-reaching fraudulent
scheme,’ in violation of § 3729(a)(1), it is insufficient to simply plead the scheme;
he must also identify a representative false claim that was actually submitted.”).
Regarding the fourth allegation, Relator argues in his Motion for
Reconsideration that the Court overlooked his allegation that the claims associated
with the prescriptions detailed in Exhibit A were “false” because the prescriptions
contained an “excessively high” quantity of controlled substances, which “if
actually taken would kill the person.” (ECF No. 70 at Pg. ID 821; see also ECF
No. 56 at Pg. ID 577.) Even assuming that this allegation is true, Relator’s claim
fails because he has not plead with particularity a “key fact”: “[t]he actual
submission of a specific request for anticipated payment to the government.”
United States ex rel. Prather v. Brookdale Senior Living Communities, Inc., 838
F.3d 750, 768-69 (6th Cir. 2016) (emphasis added). Relator argues that Exhibit A
contains a list of filled prescriptions, for which the patient paid only $1 to $2.
(ECF No. 70 at Pg. ID 823.) Relator contends that an affidavit attached to his
Motion for Reconsideration shows that the $1 to $2 charges “mean that Medicare
or Medicaid was used.” (Id.) The affidavit of Amrinder Thind, a pharmacist,
Exhibit A lists prescriptions for which Walmart received faxed prescriptions with
unverified electronic signatures.
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states that “[t]he reason [he] know[s] that Medicare or Medicaid was used is
because the prices being charged to the allege patients were around $1-$2” and
“[he is] not aware of any other reason for a patient’s co-pay to be around $1-$2
except for Medicare or Medicaid usage.” (Id. at Pg. ID 827.)
Even if the Court were to consider the Thind Affidavit, while the fact that
the patient associated with Exhibit A paid $1 to $2 dollars for each filled
prescription may suggest that the prescriptions were subsidized, it does not suggest
that Medicare or Medicaid—as opposed to, for example, a private insurance
company—did the subsidizing. In addition, though Relator may have “observed a
log book kept by Walmart that contained over 5,000 records of people who were
overprescribed by Dr. Lockard,” (id. at Pg. ID 821), Relator again fails to allege
that any of these 5,000 records are related to submissions of specific requests for
anticipated payment to the government.
The Sixth Circuit has hypothesized that “the requirement that a relator
identify an actual false claim may be relaxed when, even though the relator is
unable to produce an actual billing or invoice, he or she has pled facts which
support a strong inference that a claim was submitted.” Chesbrough, 655 F.3d at
471 (citations omitted). As the Sixth Circuit has further explained:
These cases have suggested that the exception could be
applied when a relator alleges specific personal knowledge
that relates directly to billing practices. See Chesbrough,
655 F.3d at 471. This could include “personal knowledge
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that the claims were submitted by Defendants . . . for
payment” or other “personal knowledge of billing
practices or contracts with the government,” id. at 471–72
(internal quotation marks omitted), as well as “‘personal
knowledge’ that was based either on working in the
defendants’ billing departments, or on discussions with
employees directly responsible for submitting claims to
the government,” United States ex rel. Sheldon v.
Kettering Health Network, 816 F.3d 399, 413 (6th Cir.
2016).
Prather, 838 F.3d at 769. Relator does not allege to have personal knowledge of
Walmart’s billing practices. Thus, Relator’s allegations do not meet the
requirements of this exception and his claims under §§ 3729(a)(1)(A) and (B) as to
Walmart Defendants and Dr. Lockard fail.
(ii) Did Defendants Violate § 3729(a)(1)(C)?
To establish a conspiracy under § 3729(a)(1)(C), the plaintiff must show that
the defendant “conspi Amrinder Thind re[d] to commit a violation of subparagraph
(A) [or] (B).” Because Relator failed to make out claims under subsections (A) or
(B), Relator has failed to plead a conspiracy in violation of § 3729(a)(1)(C) as to
Dr. Lockard and the Walmart Defendants. United States ex rel. Crockett v.
Complete Fitness Rehab., Inc., 721 F. App’x 451, 459 (6th Cir. 2018) (explaining
that the plaintiff’s “inability to show that false claims were actually submitted to
the government means that her . . . false-claims-conspiracy counts are likewise
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subject to dismissal, because the existence of such false claims is a precondition to
[this] theory”).
CONCLUSION
Because Relator fails to demonstrate palpable defects the correction of
which would result in a different disposition of the case, the Court denies the
Motion for Reconsideration.
Accordingly,
IT IS ORDERED that Plaintiff-Relator’s Motion for Reconsideration (ECF
No. 70) is DENIED.
IT IS SO ORDERED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: September 28, 2020
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