UNITED STATES OF AMERICA, Ex rel. Jeffrey Webb, Plaintiff
MILLER FAMILY ENTERPRISE, et al., Defendants
Plaintiff JEFFREY WEBB ex rel USA represented by ARTHUR J. GREIF GILBERT & GREIF, P.A. JULIE D. FARR GILBERT & GREIF, P.A. 82 COLUMBIA STREET ATTORNEY TO BE NOTICED
Defendant MILLER FAMILY ENTERPRISE represented by ADRIA YVONNE LAROSE EATON PEABODY BERNARD J. KUBETZ EATON PEABODY ATTORNEY TO BE NOTICED
Defendant M DRUG LLC represented by STEPHEN G. SOZIO JONES DAY NORTH POINT ADRIA YVONNE LAROSE BERNARD J. KUBETZ EDWARD W. GOULD GROSS, MINSKY & MOGUL, P.A. ATTORNEY TO BE NOTICED
Interested Party EX REL USA represented by MICHELLE GIARD DRAEGER U.S. ATTORNEY'S OFFICE DISTRICT OF MAINE EVAN J. ROTH U.S. ATTORNEY'S OFFICE DISTRICT OF MAINE ATTORNEY TO BE NOTICED
RECOMMENDED DECISION ON MOTION TO DISMISS AND MOTION FOR LEAVE TO AMEND
John C. Nivison U.S. Magistrate Judge
Plaintiff/Relator Jeffrey Webb (Relator) commenced this action against Defendants Miller Family Enterprise and M Drug, LLC under the qui tam provisions of the federal False Claims Act. The matter is before the Court on Defendants’ Motion to Dismiss the Relator’s Amended Complaint (ECF No. 37), and Plaintiff’s Motion for Leave to File Amended Complaint to Revise Paragraph 30 (ECF No. 43). Upon review of the pleadings, and after consideration of the parties’ arguments, the recommendation is that the Court deny Relator’s motion to amend and grant Defendants’ motion to dismiss.
Relator filed the complaint in this matter on May 7, 2013. On July 1, 2013, the United States declined to exercise its right to intervene, and Relator subsequently served the complaint on Defendants. In response to the complaint, Defendants filed a motion to dismiss. Without objection, the Court granted Relator’s request to amend the complaint. As a result, the Court declared Defendants’ first motion to dismiss to be moot.
Relator filed the amended complaint on December 23, 2013 (ECF No. 35). In response to the amended complaint, Defendants filed the pending motion to dismiss (ECF No. 37). In his opposition to the motion (ECF No. 42), Relator requested leave to amend a paragraph of the amended complaint, which request the Clerk docketed as Relator’s Motion for Leave to File Amended Complaint to Revise Paragraph 30 (ECF No. 43). On May 14, 2014, the parties presented oral argument on the pending motions.
The facts set forth herein are derived from Relator’s Complaint, which facts are deemed true when evaluating the motion to dismiss. Beddall v. State St. Bank & Trust Co., 137 F.3d 12, 16 (1st Cir. 1998). In addition, the Court can also consider documents the authenticity of which are not disputed by the parties, public records, documents central to Relator’s claim, and documents sufficiently referred to in the complaint. Alternative Energy, Inc. v. St. Paul Fire and Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001).
On behalf of the United States, Relator seeks to recover funds allegedly obtained by Defendants in violation of the False Claims Act, 31 U.S.C. §§ 3729 et seq. According to Relator’s amended complaint, Defendants sold pharmaceutical drugs to various care facilities and received payment through certain United States government programs. Some of the purchasers of the drugs occasionally returned unused and sealed drugs in their original containers. Defendants lawfully dispensed the returned drugs to others, without providing a refund or credit to the government program for its initial purchase. Relator also alleges that Defendants failed to maintain required documents related to returned and re-dispensed drugs.
Relator worked for Defendants from September 2004 to April 2012, including as Defendants’ long term care operations manager. (Am. Compl. ¶ 7, ECF No 35.) Defendants are related Maine corporations with a principal place of business in Bangor, Maine. At the time of the alleged conduct, Defendants did business as Miller Drug and Miller Drug LTC. (Id. ¶ 8.) In this capacity, Defendants operated as pharmacies and provided prescription drugs to patients residing at various care facilities. (Id. ¶ 11.)
Defendants regularly filled prescription drug orders issued by area care facilities, including Bangor Nursing and Rehab, Birchwood Living Center, Collier’s Nursing Home, Colonial Healthcare, Cummings Healthcare, Eastside Rehab, Eastside Rehab and Living Center, Katahdin Nursing Home, Maine Veterans’ Home in Bangor, Opportunity Housing (a/k/a OHI), Orono Commons, Penobscot Job Corps, Penobscot Nursing Home, Siesta Haven, Stillwater Healthcare, Wellspring Men, Wellspring Women, Westgate Manor, Woodlands of Brewer, and Winterberry Heights. (Id. ¶¶ 11, 18, 28.)
When Defendants filled the prescriptions, they billed the facilities, which billed Medicare, MaineCare (Medicaid), Tri-Care, and FEHB programs for the cost of those drugs. (Id. ¶ 11.) Regularly, facilities returned to Defendants sealed, unused portions of patients’ medications. (Id.) Defendants accepted the returns and later (lawfully) resold the drugs. (Id.) Relator asserts that Defendants routinely did not issue a refund or credit to the federally-funded payors in connection with the returns. As a consequence, Medicare, MaineCare, Tri-Care, and the FEHB programs did not receive reimbursement for the returned drugs. (Id.) Relator contends that Defendants “would later resell” the returned drugs. (Id.)
On a monthly basis, Defendants provided the facilities that they serviced with Medication Administration Record (MAR) forms. The facilities would return the completed MAR forms with new orders, new patients to whom the medications would be administered, and changes in directions and hours of administration. Before and after the Affiliated merger, Defendants entered only a portion of that information into Defendants’ computers. The forms were subsequently destroyed. (Id. ¶ 12.)
MaineCare return forms
In some instances, Defendants submitted claims for payment directly to MaineCare (Medicaid) for drugs provided to some of the patients at the facilities. Not infrequently, the facilities returned some of the drugs, for which MaineCare requires a return form in triplicate (one for the pharmacy, one for the facility, and one for the State). Relator alleges that Defendants often received from facilities all three copies of the form, returned to the facilities their copy, and retained or destroyed the state copy. According to Relator, the withholding of the state copy prevented “triggering a refund to be paid to MaineCare.” (Id. ¶ 13.)
Certain uninvolved program payments
For the facilities-based claims, the only patients for whom the provision of drugs did not result in an increase in reimbursement from various federally-funded insurers were those skilled nursing patients eligible for limited Medicare Part A or B services. The prescription drug costs for those individuals were covered by a flat per diem fee. (Id. ¶¶ 16, 25.) Citing information that he derived from his work for Defendants, including as a purchaser, senior pharmacy coordinator, and technician, Relator believes that the Medicare Part A or B reimbursement method applied to ten percent or fewer of all prescription drug claims. ...