Judge: Third Try Won’t be the Charm for Whistleblower

WhistleblowerA U.S. District Court Judge earlier this month tossed a whistleblower lawsuit filed against a Florida compounding pharmacy finding that the former sales representative who filed the initial lawsuit in 2013 failed to make sufficient pleadings.

However, defendant RS Compounding LLC in Tampa is not completely off the hook.

The government intervened in, and the case is moving forward, on one of the initial claims. It alleges that pharmacy owner Renier Gobea of Tampa and his company billed TriCare excessive prices for compounded prescriptions.

The suit in which the government intervened alleges that between Jan. 1, 2012, and Jan. 31. 2014, Gobea and RS Compounding charged TriCare at least 2,000 percent more for drugs than it charged cash-paying customers, in violation of the False Claims Act.

Whistleblower McKenzie Stepe’s case is just one in a series relating to compounding pharmacies accused of defrauding the federal government.

Between 2011 and 2013, Stepe worked as a sales rep for RS Compounding. During that time, she alleged the company, and some of its management, engaged in questionable marketing and promotional schemes that resulted in fraudulent submissions to Medicare and TriCare.

Specifically, Stepe alleged that prescription pads were filled out for physicians with the pharmacy’s most expensive compounds pre-checked on the pads and six refills listed. Stepe also alleged that sales representatives “coached” physicians to number three different products on the prescription pads, giving priority to those containing ketamine because they had a higher reimbursement rate.

In dismissing the various counts, Judge Virginia M. Hernandez Covington of the Middle District of Florida in Tampa noted the following as to Stepe’s allegation of false claims:

  • All of Stepe’s allegations of false claims being submitted and her factual support for that contention are overly vague.
  • Stepe does not allege a single specific false claim, let alone a single false claim unrelated to the superseded disparate pricing allegations.
  • Stepe failed to 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.

In dismissing allegations that the defendants made or used, or caused to be made or used, false records and statements that were material to false or fraudulent claims, the judge noted:

  • The court previously warned Stepe that it was important to specifically identify the false statements and certifications upon which each claim relies. Stepe has not done so.
  • Stepe has not sufficiently pled how the pre-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.

As to allegations of reverse false claims, which requires a Relator to 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, the judge noted: “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.” Rule 9(b) typically requires plaintiffs to plead specific allegations regarding the alleged fraud, tying alleged misconduct to the submission of false claims to a government payer.

With regard to Stepe’s allegations that Gobea and another employee engaged in a conspiracy to make or present false or fraudulent claims, the judge noted that their twice weekly marketing meetings to discuss operations, and the fact the two had oversight of virtually every activity at the company, fell short of proving they engaged in any conspiracy.

The judge dismissed the case with prejudice saying that when she dismissed Stepe’s first amended complaint she advised that it would be her “one – and very likely only one – opportunity to amend.”

“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,” the judge wrote.

The Health Law Offices of Anthony C. Vitale is known for its representation of whistleblowers, as well as our ability to defend those who are the target of a whistleblower action. If you have any questions, feel free to contact our office at 305-358-4500 or send an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.