Buth v. Walmart Inc

Filing 68

DECISION AND ORDER signed by Magistrate Judge Nancy Joseph. IT IS HEREBY ORDERED that Walmarts Motion to Dismiss Second Amended Complaint 60 is GRANTED. Count Two is DISMISSED WITH PREJUDICE. Counts Three and Four are DISMISSED WITH PREJUDICE except insofar as they relateto Count One. Counts Five through Thirty-Six are DISMISSED WITHOUT PREJUDICE. (cc: all counsel)(rcm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
UNITED STATES OF AMERICA, ex rel.
JENNIFER BUTH, et al.
Plaintiffs,
v.

Case No. 18-CV-840

WALMART INC.,
Defendant.
DECISION AND ORDER ON DEFENDANT’S MOTION TO DISMISS
SECOND AMENDED COMPLAINT
Jennifer Buth brought this qui tam action against Walmart Inc. on behalf of the
United States, thirty-one individual states, the District of Columbia, and the City of
Chicago.1 (Docket # 1, Docket # 17.) Buth alleged that Walmart violated the False Claims
Act (“FCA”), 31 U.S.C. § 3729, and similar state statutes through various pharmacy
practices. (Docket # 1, Docket # 17.) On August 13, 2019, I dismissed without prejudice all
counts in Buth’s First Amended Complaint except Count One, as well as Counts Five and
Six insofar as they related to Count One. (Docket # 56.) Buth filed a Second Amended
Complaint repleading certain dismissed counts. (Docket # 58.) Walmart moved for
dismissal of the repleaded claims. (Docket # 60.) For the reasons below, Walmart’s motion
to dismiss will be granted.

The United States, thirty individual states, and the District of Columbia have elected not to intervene in this
case at this time. (Docket # 48.) The City of Chicago forfeited its right to intervene, and the claim asserted on
behalf of the State of Maryland was dismissed without prejudice. (Id.)

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LEGAL STANDARD
To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a
plaintiff must satisfy Rule 8(a) by providing a “short and plain statement of the claim
showing that the pleader is entitled to relief . . . in order to give the defendant fair notice of
what the . . . claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 545 (2007) (quoting Conley vs. Gibson, 355 U.S. 41, 47 (1957)). Additionally,
the allegations must suggest that the plaintiff is entitled to relief beyond the speculative level.
E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 777 (7th Cir. 2007). I must construe
the complaint “in the light most favorable to the plaintiff, taking as true all well-pleaded
factual allegations and making all possible inferences from those allegations in his or her
favor.” Lee v. City of Chicago, 330 F.3d 456, 459 (7th Cir. 2003). However, in deciding a
motion to dismiss, I am not bound to accept as true legal conclusions couched as facts. Bonte
v. U.S. Bank, N.A., 624 F.3d 461, 465 (7th Cir. 2010).
FCA claims are subject to the heightened pleading requirements of Rule 9(b). United
States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770, 775 (7th Cir. 2016)
(citing United States ex rel. Gross v. AIDS Research All.–Chi., 415 F.3d 601, 604 (7th Cir. 2005)).
Under Rule 9(b), a plaintiff alleging fraud must state with particularity the circumstances
constituting fraud—the “who, what, when, where, and how.” Presser, 836 F.3d at 776
(quoting United States ex rel. Lusby v. Rolls–Royce Corp., 570 F.3d 849, 853 (7th Cir. 2009))
(internal quotation marks omitted). The precise details that must be included may vary
depending on the facts of the case, and courts must “remain sensitive to information
asymmetries that may prevent a plaintiff from offering more detail.” Pirelli Armstrong Tire
Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436, 443 (7th Cir. 2011) (citing In re
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Rockefeller Center Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002)). Nevertheless,
plaintiffs must “use some . . . means of injecting precision and some measure of
substantiation into their allegations of fraud.” Presser, 836 F.3d at 776 (quoting 2 James
Wm. Moore et al., Moore’s Federal Practice § 9.03[1][b], at 9-22 (3d ed. 2015)); see also
Pirelli, 631 F.3d at 442.
BACKGROUND
Buth is a licensed pharmacist who worked as a pharmacy manager at Walmart’s
New Berlin, Wisconsin pharmacy from July 2017 to May 2018. (Second Am. Compl.,
Docket # 58, ¶¶ 29, 167–72.) Walmart is a publicly traded Delaware corporation with its
principal place of business in Arkansas, but does business throughout all the party states, the
District of Columbia, and the City of Chicago. (Id. ¶ 65.)
Medicare is a government healthcare program that pays for reasonable and necessary
healthcare for beneficiaries. (Id. ¶ 71.) Under Medicare Part D, the government pays a
percentage of the cost of covered drugs dispensed with valid prescriptions. (Id. ¶¶ 72(d), 89.)
The U.S. Department of Health and Human Services oversees the Medicare program and
other healthcare programs through the Center for Medicare and Medicaid Services
(“CMS”). (Id. ¶¶ 74–75.) CMS does not pay pharmacies directly; it pays Medicare Part D
“Plan Sponsors,” typically private insurance companies, who pay pharmacies directly or
through intermediaries known as Pharmacy Benefit Managers (“PBMs”). (Id. ¶ 84.) When a
pharmacy dispenses a drug to a Medicare beneficiary, it submits an electronic claim to the
beneficiary’s Part D plan and receives payment from the Part D Plan Sponsor for the price
minus any portion that must be paid by the beneficiary. (Id. ¶ 85.)

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Walmart generates “Prescription Drug Event” (“PDE”) records to support its claims
for government payment, which it sends to CMS via PBMs and the Plan Sponsor. (Id. ¶ 92.)
A PDE record must include accurate data including the drug dispensed, the prescription
number, the dispensing fee paid to the pharmacy, the cost of the drug, the quantity
dispensed, and the provider who ordered the medication. (Id. ¶ 93.) That such data be “true,
accurate, and complete” is a condition of payment under the Medicare Part D program. (Id.
¶ 94.) Additionally, contracting with CMS to offer Part D benefits is conditional on having
compliance programs that help Plan Sponsors follow federal regulations and prevent fraud,
waste, and abuse. (Id. ¶ 98.) Such compliance plans must include “effective annual training
and education to prevent fraud, waste, and abuse for network pharmacies.” (Id.) CMS
specifically requires retail pharmacies to train staff on preventing fraud caused by “shorting”
prescriptions and improper billing. (Id. ¶ 102.)
Buth’s Second Amended Complaint alleges that Walmart pharmacies nationwide
defrauded the government through two “schemes”: 1) dispensing less medication than
prescribed but billing for the full amount (“short-filling”); and 2) dispensing and billing for
more medication than necessary for a particular period (“days’ supply”). (Id. ¶¶ 173–349.)
Buth asserts that these alleged schemes resulted in the submission of false claims and
materially false PDE data to CMS and improper retention of money owed to the
government. (Id. ¶¶ 350–71.)
ANALYSIS
The FCA is the primary vehicle used by the government for recouping losses suffered
through fraud. United States v. Sanford-Brown, Ltd., 788 F.3d 696, 700 (7th Cir. 2015),

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reinstated in part, superseded in part by United States v. Sanford-Brown, Ltd., 840 F.3d 445 (7th
Cir. 2016). The FCA imposes liability on one 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; [. . .]
(G) 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 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). “Knowingly” means that a person has actual knowledge of the
falsity of the information or acts with deliberate ignorance or reckless disregard of its falsity,
but not necessarily the specific intent to defraud. Sanford-Brown, 788 F.3d at 701 (citing 31
U.S.C. § 3729(b)(1)); United States ex rel. Sheet Metal Workers Int’l Ass’n v. Horning Invs., LLC,
828 F.3d 587, 593 (7th Cir. 2016); see also United States ex rel. Berkowitz v. Automation Aids,
Inc., 896 F.3d 834, 842 (7th Cir. 2018) (mistake or negligence does not give rise to FCA
claim). Falsity includes express misrepresentations and misrepresentation by omission. See
United States ex rel. Lisitza v. Par Pharm. Cos., Inc., 276 F. Supp. 3d 779, 783 (N.D. Ill. 2017).
A “claim” under the statute “includes direct requests to the Government for payment as
well as reimbursement requests made to the recipients of federal funds under federal benefits
programs.” Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 1996
(2016) (citing 21 U.S.C. § 3729(b)(2)(a)).
To establish civil liability under the FCA, a relator generally must prove: (1) that the
defendant made a statement in order to receive money from the government; (2) that the
statement was false; and (3) that the defendant knew the statement was false. Berkowitz, 896
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F.3d at 840 (citing Gross, 415 F.3d at 604). The FCA also imposes a rigorous materiality
requirement. United States ex rel. Thornton v. Pfizer Inc., No. 16-cv-7142, 2019 WL 1200753, at
*5 (N.D. Ill. Mar. 14, 2019) (citing Escobar, 136 S. Ct. at 2002). “Material” means “having a
natural tendency to influence, or be capable of influencing, the payment or receipt of money
or property.” Id. (citing 31 U.S.C. § 3729(b)(4)).
Walmart argues that the Second Amended Complaint fails to adequately plead
scienter, particularity, and materiality with respect to the days’ supply scheme. (Def.’s Br. at
7–18, Docket # 61.) Walmart also argues that Buth’s state law claims should be dismissed,
either because their pleading requirements are parallel to the FCA claims or because Buth
has failed to plead a nationwide scheme for either short-filling or days’ supply with
particularity. (Id. at 19, 23–24.)
1.

“Short-Filling” Scheme: Count One and Counts Five through Thirty-Five

Buth’s Count One alleges that Walmart violated 31 U.S.C. § 3729(a)(1)(A) by
dispensing less medication than prescribed but billing the government for the full amount.
(Second Am. Compl. ¶¶ 350–55.) Buth alleges that “chronically untrained and timepressured staff” often “short-fill” medication, and Walmart’s standard operating
procedures do not require pharmacy managers to re-count the medication to correct
such errors. (Id. ¶¶ 174, 178–92.) Buth provides six examples of claims for short-filled
medications submitted by Walmart’s New Berlin, Wisconsin pharmacy, including
dates, beneficiary initials, and prescription numbers, and avers that even after
beneficiaries confirmed that their medications were short-filled, Walmart did not
correct the claims. (Id. ¶ 193.) Buth alleges that she found several thousand dollars
weekly in overages caused by such short-filling at the New Berlin, Wisconsin pharmacy.
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(Id. ¶ 189.) Moreover, Buth asserts that both pharmacy managers and beneficiaries
brought these issues to Walmart’s attention, and Walmart’s corporate management was
aware that managers routinely identified such “overages” and false claims. (Id. ¶¶ 190,
196–97.) Buth further alleges that Walmart profited from short-filling by using a
computerized inventory system to replace the electronic inventory count with the actual
on-the-shelf count, which enabled Walmart to re-sell and re-bill for medication that had
already falsely been billed to the government. (Id. ¶¶ 184–87.)
Walmart does not dispute that the Second Amended Complaint—which is
materially identical to the First Amended Complaint on this point—states a claim for
an FCA violation. However, Walmart rightly notes that Buth’s Second Amended
Complaint fails to allege a single instance of short-filling outside her own Wisconsin
store. As I explained in my first decision dismissing these nationwide claims, it is true
that courts typically require only representative examples to be pleaded with a high
level of particularity when the alleged fraud is widespread. (Docket # 56 at 15 (citing
United States ex rel. Morgan v. Champion Fitness, Inc., No. 13-cv-1593, 2018 WL 5114124,
at *3) (collecting cases).) However, there must also be sufficient facts to support a
reasonable inference that the fraud was, in fact, widespread. Id. (citing, inter alia, United
States ex rel. Kroening v. Forest Pharm., Inc., 155 F. Supp. 3d 882, 895–97 (E.D. Wis. 2016)
(assertion that relator had spoken with representatives in fifteen other states was
insufficient to satisfy Rule 9(b))).
Here, not only does Buth fail to make a single allegation of short-filling outside
her own Wisconsin pharmacy, but she offers no coherent narrative about the nature of
this scheme. (Second Am. Compl. ¶ 195.) I struggle to reconcile the allegation that
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technicians are too time-pressured to accurately count medications with the allegation
that they are careful to avoid over-filling. And while I do not doubt that short-filling
occurs nationwide at least occasionally, if not more often, Buth has identified no basis
for assuming that the claims were not modified to correct the errors when discovered.
Furthermore, Buth makes much of the computer system that “reconciles” the on-theshelf inventory with the inventory in the computer, but this is manifestly a prudent
inventory-management measure; accidental short-filling will presumably happen
occasionally even with proper training and attention, and unless a customer complains
about missing medication, Walmart seems to have no way of knowing which customer
was shorted or which claim to correct. The responsibility to ensure that medications are
properly filled and billed appears entirely independent of this inventory system.
None of this is to defend Walmart’s procedures as flawless. Buth has simply not
adequately pleaded that Walmart management was aware of the short-filling problem
and failed to remedy it anywhere other than Wisconsin. See United States ex rel. Schutte v.
Supervalu, Inc., 218 F. Supp. 3d 767, 774 (C.D. Ill. 2016) (allegations included that a
pharmacy chain had official multi-state policy of selling medications at discounts but
reporting un-discounted prices to the government); United States ex rel. Spay v. CVS
Caremark Corp., 913 F. Supp. 2d 125, 173–78 (E.D. Pa. 2012) (plaintiff identified over
49,000 problematic claims in at least three states and Puerto Rico); United States ex rel.
Bibby v. Wells Fargo Bank, N.A., 165 F. Supp. 3d 1340, 1348 (N.D. Ga. 2015) (relators
reliably described violations occurring in seven states, including four of the ten most
populous states in the nation). Therefore, I find that Counts Five through Thirty-Five
do not state a claim as to the short-filling scheme.
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2.

“Days’ Supply” Scheme: Count Two and Counts Five through Thirty-Five

Buth’s Count Two alleges that Walmart violated 31 U.S.C. § 3729(a)(1)(A) by billing
medication to the government as a patient’s days’ supply of medication, when the amount
billed was far more than the patient’s actual days’ supply. (Second Am. Compl. ¶¶ 198–211,
359.) Buth asserts that Walmart engaged in this days’ supply scheme with respect to both
insulin pens and triamcinolone acetonide cream. (Id. ¶¶ 198, 272.) I will consider the
allegations regarding insulin pens and triamcinolone acetonide cream separately.
2.1

Insulin Pens

In the Second Amended Complaint, Buth explains that Medicare billing
requirements direct pharmacists to calculate the amount of insulin a patient requires for
a certain number of days (usually thirty) based on the prescription and determine how
many insulin injection pens are needed to provide that days’ supply, then round down
to the nearest full injection pen. (Id. ¶ 206.) Buth alleges that Walmart staff routinely
skip the calculation and instead dispense entire boxes of insulin injection pens, which
they then bill as 30-days’ supplies, even when a patient requires less than a full box of
pens for thirty days. (Id. ¶¶ 4, 202–08.) For example, a patient who requires only three
insulin injection pens in order to use insulin as prescribed for thirty days would be given
a full box of five pens, and Walmart would bill for the full box as a “30-days’ supply.”
(Id. ¶¶ 147, 200, 208, 210.) Buth offers two examples of purported false submissions that
took place in January 2018 at Walmart’s New Berlin, Wisconsin pharmacy, where Buth
worked. (Id. ¶ 266.)

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2.1.1 Scienter
In my first decision, I found that Buth’s allegations regarding scienter were
insufficient. I noted that there was no indication in the First Amended Complaint that any
employee submitted a claim that the employee knew or should have known over-stated the
amount required for a patient’s days’ supply or that Walmart was aware of such overdispensing. (Docket # 56 at 10.) Additionally, I noted the lack of alleged scienter on the part
of Walmart management, as Buth did not allege that over-dispensing insulin was Walmart’s
official policy, or that Walmart management was aware of even one instance of overdispensing. (Id.) Walmart argues that the Second Amended Complaint does not include
allegations that meet the requisite scienter under the FCA for the days’ supply insulin
scheme. (Def.’s Br. at 7.)
Buth attempts to remedy the deficiencies previously found in her complaint by
detailing Walmart’s processes for filling prescriptions and submitting claims for payment.
(Pl.’s Br. at 6–7, Docket # 64.) She argues that these new allegations answer the Court’s
previous question of whether the employee who allegedly over-filled the prescription also
submitted the claim—explaining that the same Input Tech who calculates days’ supply and
inputs prescriptions is also responsible for submitting claims for those prescriptions to
government health programs for payment. (Id. at 7 (citing Second Am. Comp. ¶ 207.). Buth
further alleges that the Input Tech then directs the Fill Tech to falsely over-fill the
customer’s prescription accordingly. (Id. (citing Second Am. Compl. ¶ 255.).
Buth also argues that her second amended complaint provides affirmative answers to
the Court’s previous questions regarding Walmart’s corporate scienter. (Pl.’s Br. at 8.)
Buth’s primary allegation is that Walmart had a corporate policy prohibiting its pharmacy
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staff from “breaking the box” of insulin pens. Buth alleges a “corporate-wide scheme for
[Walmart’s] pharmacies to routinely submit claims for entire 1,500-unit boxes of insulin
injection pens, and falsely bill and justify those claims as being for a days’ supply far less
than the days’ supply of insulin actually provided to the beneficiary.” (Second Am. Compl.
¶ 271.) Understandably, Buth seeks to liken Walmart’s alleged actions to that of Walgreens,
who entered into a $209.2 million settlement with the government over its alleged
falsification of insulin days’ supply. (Id. ¶¶ 15–17.) In the Walgreens case, the relator alleged
that Walgreens configured its pharmacy management program to designate a full box of
insulin pens as the “minimum quantity,” making it so pharmacy staff could not dispense
individual insulin pens. (Docket # 54-1 at 135, ¶ 50.) The relator further alleged that
Walgreens configured its computer system to record and automatically reuse the days of
supply reported for the initial fill for subsequent refills, thus resulting in premature refills for
the remainder of the prescription. (Id. at 136–37, ¶¶ 53, 55–61.)
Buth alleges that “some years ago,” Walmart, like Walgreens, maintained a “hard
halt” on splitting boxes, “meaning that the Walmart software system would not allow staff
to break the box of insulin pens.” (Id. ¶ 277.) Buth further alleges, however, that while the
“hard halt” had technically been removed by the time she worked for Walmart, in reality the
“don’t break the box” policy continued. (Id. ¶ 278.) Buth alleges that this allegation is
supported “by substantial new detail.” (Pl.’s Br. at 10.) Specifically, Buth states the
following in support of this alleged corporate policy: (1) none of Walmart’s formal standard
operating procedures address government limitations on days’ supply or whether, when, or
how to break insulin boxes and dispense individual pens (id. (citing Second Am. Compl. ¶¶
219, 224, 231, 236, 259); (2) Walmart has an incentive bonus plan that motivates
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pharmacists and PICs to maximize pharmacy sales, and the “rapid-fire, speed-based
culture” (id. (citing Second Am. Compl. ¶¶ 260–63, 7–8, 129–133, 207); (3) Walmart
engaged in manipulations of pharmacy software making it difficult for pharmacy employees
to input and dispense less-than-full-box prescriptions by creating a default setting in its
software to a full-box quantity of insulin pens (id. at 11 (citing Second Am. Compl. ¶¶ 221–
22, 279); and Walmart trained staff not to “break the box” (id. at 12 (citing Second Am.
Compl. ¶¶ 208, 257, 276, 321, 332, 335, 338, 341, 343).) Buth further alleges that Walmart
management was fully aware of the unwritten “don’t break the box” policy because
Walmart regularly conducted “cycle counts” and audits of its inventory and compliance
function, during which the absence of broken boxes of insulin pens was clearly evident. (Id.
at 14–15 (citing Second Am. Compl. ¶¶ 281–89, 306–07.).
Buth’s allegations are a far cry from the allegations in the Walgreens case, and even
more so, continue to fall short of alleging the requisite scienter by Walmart. Despite
Walmart allegedly having an unwritten “don’t break the box” policy, Buth alleges that in
April 2018, Walmart specifically provided guidance to its employees suggesting that
pharmacy staff could “break the box” of insulin. (Id. at 12 (citing Second Am. Compl. ¶¶
298, 291–92.) She also alleges that certain Walmart pharmacists, herself included, “would
from time to time ignore the improper practice and insist on breaking the box when
appropriate, and in recent years, certain Walmart stores, responding to insurer audits, began
to do so more generally, but these pharmacists and these stores were the exception to the
general rule.” (Second Am. Compl. ¶ 279.) Buth does not allege, however, that these
pharmacies faced discipline from Walmart for allegedly breaking the corporate policy, or
were otherwise discouraged from doing what they were doing. Thus, Buth not only alleges
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that Walmart had “technical ‘guidelines’ allowing box breaking,” but that there were
Walmart pharmacies that “broke the box” on a regular basis (Id. ¶¶ 279, 311.)
Buth’s “substantial new detail” does not allege scienter. A lack of a formal policy
addressing breaking insulin boxes does not mean that Walmart had a policy against breaking
insulin boxes, nor does the “speed-based” culture show an official policy against box
breaking. Even Buth’s allegations that Walmart’s software made it more difficult to dispense
less than full boxes of insulin does not mean that Walmart required its pharmacy staff to not
break apart insulin boxes.
As such, Buth’s allegations do not give rise to a plausible inference that Walmart
acted with at least reckless disregard to the possibility that it was causing the false
submission of claims to the government in violation of the FCA. The Seventh Circuit has
recognized that, in the FCA context, “a person acts with reckless disregard ‘when the actor
knows or has reason to know of facts that would lead a reasonable person to realize’ that
harm is the likely result of the relevant act.” United States v. King-Vassel, 728 F.3d 707, 713
(7th Cir. 2013) (quoting Black’s Law Dictionary 540–41 (9th ed. 2009)). Therefore, to show
reckless disregard, Buth must only allege that Walmart “had reason to know of facts that
would lead a reasonable person to realize that [Walmart] was causing the submission of a
false claim . . . or that [Walmart] failed to make a reasonable and prudent inquiry into that
possibility.” Id. Taking Buth’s allegations as true, none of the alleged conduct of Walmart or
its employees supports a plausible inference that Walmart had reason to know that
employees were submitting false claims or failed to make a reasonable and prudent inquiry
into the possibility.

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For these reasons, I find that the Second Amended Complaint does not allege the
requisite scienter for an FCA claim. Accordingly, I need not address whether the Second
Amended Complaint sufficiently alleges the remaining requisite elements of particularity
and materiality. Therefore, I will dismiss the days’ supply scheme as it relates to insulin
pens.
2.2

Triamcinolone Acetonide Cream

Walmart argues that the Second Amended Complaint does not bolster Buth’s
allegations regarding the days’ supply scheme for triamcinolone acetonide cream. (Def.’s Br.
at 18.) The Second Amended Complaint devotes three paragraphs exclusively to
triamcinolone acetonide cream, alleging that “[i]n the same exact way” as with insulin pens,
Walmart pharmacies submit claims for entire tubes or containers of triamcinolone acetonide
cream falsely billed as a patient’s days’ supply. (Second Am. Compl. ¶ 272.) Buth does not
offer even one example of a claim that was allegedly falsely submitted with respect to
triamcinolone acetonide cream. Nor does she include facts sufficient to demonstrate the
requisite scienter. Therefore, I will dismiss the days’ supply scheme claim as it relates to
triamcinolone acetonide cream.
2.3

Nationwide Days’ Supply Insulin Scheme

Buth alleges that Walmart’s days’ supply insulin scheme extended to its pharmacies
nationwide. Buth avers that, based on her conversations with current or former Walmart
pharmacy employees, stores located in Arizona, Arkansas, Florida, Georgia, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, North
Carolina, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas,
Washington, and West Virginia either do not calculate days’ supply of insulin properly or
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have only recently begun to break open boxes of insulin pens. (Id. ¶ 316–45.) Buth’s
examples of conversations with former and current Walmart pharmacy employees do not
support an inference of a nationwide fraud scheme. Assuming the allegations are true, there
is still no factual support to suggest that Walmart knew that employees nationwide were
incorrectly calculating the days’ supply. Therefore, I find that Counts Five through ThirtyFive do not state a claim as to the days’ supply scheme.
3.

Alleged Falsifying PDE Data: Count Three

Count Three alleges that Walmart violated 31 U.S.C § 3729(a)(1)(B) by falsifying
prescription drug event (PDE) data in support of false claims for prescription medications.
(Second Am. Compl. ¶¶ 362–66.) This count is dismissed insofar as it concerns the alleged
“days’ supply” scheme, which fails to state a claim upon which relief may be granted.
4.

Alleged Concealing Obligation to Pay the Government: Count Four

Count Four alleges that Walmart violated 31 U.S.C. § 3729(a)(1)(G), which imposes
liability on one 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 knowingly conceals or knowingly and improperly avoids or decreases an
obligation to pay or transmit money or property to the Government.” (Second Am. Compl.
¶¶ 367–71.) This count is dismissed insofar as it relates to the alleged “days’ supply”
scheme, for reasons already discussed.
5.

Wisconsin False Claims for Medical Assistance Act: Count Thirty-Six

In her First Amended Complaint, Buth alleged that Walmart violated the Wisconsin
False Claims for Medical Assistance Act, Wis. Stat. § 20.931, which was repealed in its
entirety on July 12, 2015. See 2015 Wis. Act 55, § 945n. In my first order, I found that while
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Walmart could be liable for fraudulent activities committed before the repeal date pursuant
to Wis. Stat. § 990.04, Buth did not plead sufficient facts to support a reasonable inference
that Walmart engaged in any fraud prior to July 12, 2015. (Docket # 56 at 16.) Buth has
repleaded her Wisconsin False Claims for Medical Assistance Act claim. Yet, the Second
Amended Complaint does not contain facts to support a reasonable inference that Walmart
engaged in any fraud prior to July 12, 2015. Therefore, Count Thirty-Six fails to state a
claim upon which relief could be granted and will be dismissed.
6.

Leave to Amend

Walmart argues for dismissal with prejudice because it believes any attempt to save
the claims related to the days’ supply scheme would be futile. (Def.’s Br. at 24.) Buth admits
that she has been given “adequate opportunity” to replead the scienter allegations with
respect to the days’ supply scheme, but contends that she should not be precluded from
addressing any other basis for dismissing the days’ supply scheme allegations “that the
Court might identify for the first time as to the [Second Amended Complaint.]” (Pl.’s Br. at
25.)
The Seventh Circuit has stated that a “plaintiff whose original complaint has been
dismissed under Rule 12(b)(6) should be given at least one opportunity to try to amend her
complaint before the entire action is dismissed” and that when “a district court denies a
plaintiff such an opportunity, its decision will be reviewed rigorously on appeal.” Runnion ex
rel. Runnion v. Girl Scouts of Greater Chicago & Nw. Indiana, 786 F.3d 510, 519 (7th Cir. 2015).
The Second Amended Complaint is Buth’s second attempt to correct the deficiencies noted
by Walmart in its first motion to dismiss. The Second Amended Complaint fails, however,
to cure the deficiencies as to the days’ supply scheme. The Runnion court stated that when
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“it is clear that the defect cannot be corrected so that amendment is futile,” there is no harm
denying leave to amend and entering final judgment. Id. at 520. This is such a case where
further amendment would be futile. As such, Walmart’s motion to dismiss is granted and
Count Two is dismissed with prejudice. Counts Three and Four are also dismissed with
prejudice, insofar as they relate to Count Two.
CONCLUSION
Counts Two and Five through Thirty-Six of Buth’s Second Amended Complaint fail
to a claim upon which relief can be granted. Therefore, dismissal of these counts is
appropriate. Counts Three and Four also fail to state a claim except insofar as they relate to
Count One.
ORDER
NOW, THEREFORE, IT IS HEREBY ORDERED that Walmart’s Motion to
Dismiss (Docket # 60) is GRANTED. Count Two is DISMISSED WITH PREJUDICE.
Counts Three and Four are DISMISSED WITH PREJUDICE except insofar as they relate
to Count One. Counts Five through Thirty-Six are DISMISSED WITHOUT
PREJUDICE.

Dated at Milwaukee, Wisconsin this 8th day of February, 2021.
BY THE COURT

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NANCY JOSEPH
JOSEPH
O E
United States Magistrate Judge

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