United States of America v. Pharmerica Corporation

Background

Kaveh Askari, a pharmacist and founder of OncoMed Specialty Pharmacy, Ltd., doing business as Onco360, brought the action on behalf of the United States, sixteen states, and the District of Columbia. The governments declined to take over the case. Askari alleged violations of the federal False Claims Act and similar state laws by PharMerica Corporation, Pharmacy Corporation of America, Onco360, and Gregory Weishar, Paul Jardina, and Robert Thomson.

The amended complaint described three alleged practices beginning in May 2014, after Onco360 terminated Askari and another pharmacist and lost pharmacy licenses in several states. First, under the “Work Around,” Onco360 allegedly accepted, filled, and billed for prescriptions from states where it no longer held a license, then sent the medications to PharMerica pharmacies for review and dispensing. Second, under the “Onco Manage PharMerica Dispense” program, Onco360 allegedly submitted claims using PharMerica’s national provider identifier because PharMerica was the dispensing pharmacy. Third, the alleged overbilling scheme involved PharMerica submitting claims under contracts providing higher long-term-care reimbursement rates for prescriptions served to Onco360’s retail customers.

Legal standard

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which addresses failure to state a legally sufficient claim, and Rule 9(b), which requires fraud allegations to be stated with particular detail. For a False Claims Act claim, the plaintiff generally must allege a claim to the government that was false or fraudulent, that the defendants knew it was false, and that the misrepresentation mattered to the government’s payment decision. Rule 9(b) required Askari to describe the alleged fraudulent scheme and the submission of false claims with particularity.

Court’s analysis

The court held that the amended complaint did not sufficiently allege that any claim was false. Although the complaint discussed Medicare, Medicaid, pharmacy licensing requirements, and the 340B drug-pricing program, it did not identify a specific law, regulation, or contractual requirement that the alleged conduct violated in a way that made the claims false.

For the Work Around and the Onco Manage PharMerica Dispense program, the court found that the complaint did not identify a state law prohibiting an out-of-state pharmacy from using a properly licensed pharmacy to review and dispense prescriptions. The court stated that an email from the New York State Board of Pharmacy appeared to address billing twice for the same prescription, which was not the conduct alleged in the complaint. The court also found that the complaint did not identify a provision in the 340B contracts prohibiting third-party dispensing or allege that the defendants certified compliance with such a provision when seeking payment.

The court separately rejected the overbilling theory. It characterized that theory as asserting that PharMerica billed at a higher long-term-care rate for prescriptions provided to Onco360’s retail customers. But the complaint did not explain what the contracts required, whether the payors knew the claims involved Onco360 prescriptions, or what other facts made the claims false. The court concluded that the allegations were too indefinite and sounded more like a contract dispute than a False Claims Act claim.

The amended complaint also asserted a “reverse false claim,” meaning a claim that the defendants improperly avoided an obligation to repay the government. The court rejected that theory because the complaint did not plausibly allege that the defendants had first submitted false claims. The court did not address the other elements of the False Claims Act claims. Because the federal claims were dismissed, it declined to exercise supplemental jurisdiction—the authority to hear related state-law claims—in this case.

Disposition

Judge George B. Daniels granted the defendants’ motion to dismiss. The court dismissed Askari’s claims in their entirety without prejudice. The court stated that the plaintiffs could submit a letter application proposing an amended complaint if amendment would not be futile, but warned that any amendment would need to identify a law, regulation, or rule specifically prohibiting the defendants’ alleged actions. The opinion contains duplicated conclusion text with different proposed-amendment deadlines; the final version states October 17, 2022.