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United States v. Assad

United States District Court, E.D. Tennessee, Greeneville

July 22, 2019

UNITED STATES OF AMERICA
v.
ANDREW ASSAD, et al.

          MEMORANDUM OPINION AND ORDER

          J. RONNIE GREER UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on defendants', Larry Everett Smith (“Smith”), Tanith Enterprises, LLC d/b/a Medvest Management Services (“Tanith”), and ULD Wholesale Group, LLC (“ULD”), Alpha-Omega Pharmacy, LLC (“Alpha-Omega”), Germaine Pharmacy, Inc. (“Germaine”), and ERX Consultants, LLC d/b/a Zoetic Pharmacy (“Zoetic”), (collectively the “Smith Defendants”), Joint Motion for Severance, [Doc. 128], the United States' Response, [Doc. 146], and the defendants' Joint Reply, [Doc. 150].

         Defendants, Andrew Assad (“Assad”), Peter Bolos (“Bolos”), Michael Palso (“Palso”), Synergy Pharmacy Services, Inc. (“Synergy”), and Precision Pharmacy Management, LLC (“Precision”), (collectively the “Synergy Defendants”), move for leave to join and adopt the Smith Defendants' Joint Motion for Severance. [Docs. 129, 151].

         I. Background

         The following synopsis summarizes the relevant allegations in the indictment that the government eventually must prove beyond a reasonable doubt.

         Defendants are either pharmacists, pharmacies, wholesalers, owners, or managers who operated pharmacies. The indictment alleges that beginning around June 2015 and continuing through on or about April 2018, defendants knowingly and willfully engaged in a scheme to fraudulently bill Medicare, Medicaid, TRICARE, FECA, FEHBP, and private insurance carriers for in exchange for kickbacks and bribes. [Doc. 1 at ¶¶ 32, 33]. According to the indictment, defendants executed the conspiracy by scheming with the telemedicine company, Healthright[1], to deceive doctors to prescribe to patients certain medications that the defendant pharmacies found to be the most profitable. [Id. at ¶¶ 32, 34-38]. The telemedicine company orchestrated the fraud by allegedly selling these prescriptions with profitable drugs to the defendant pharmacies. [Id. at ¶¶ 34-38]. Afterwards, in submitting a claim of reimbursement to the patients' insurance carriers through pharmacy benefit managers (“PBM”), the defendant pharmacies allegedly misrepresented their purchase price of the medications, suggesting it was close to the average whole price (“AWP”), when in reality, the purchase price was much lower. [Id. at ¶¶ 39-44]. Defendants profited from the misrepresentation and split the proceeds with the telemedicine company. [Id. at ¶¶ 45-66]. Overall, the indictment alleges defendants obtained approximately $172, 202, 105 as payment for health care benefits, items, or services as a result of approximately $931, 356, 936 in fraudulent claims for payment. [Id. at ¶¶ 1].

         On October 9, 2018, defendants were charged by way of indictment with 32 separate counts: one count of conspiracy to commit health care fraud in violation of 18 U.S.C. § 1349, 29 counts of mail fraud in violation of 18 U.S.C. § 1341, and two counts of misbranding drugs in interstate commerce with intent to defraud and mislead, in violation of 21 U.S.C. §§ 331(a), 353(b)(1), and 333(a)(2). [Id.].

         II. Analysis

         Defendants argue that the Court should grant a severance of the Smith Defendants from their co-defendants, the Synergy Defendants, allowing the two groups to proceed to trial separately. [Doc. 128]. In seeking severance, defendants contend that Count One, conspiracy to commit health care fraud in violation of 18 U.S.C. § 1349, is duplicitous because it charges two separate conspiracies. [Id. at 3-8]. Defendants also assert that pursuant to Federal Rule of Criminal Procedure 8(b), the two factions would face substantial prejudice if tried collectively. [Id. at 8-11]. Finally, the Smith Defendants argue improper joinder with the Synergy Defendants under Federal Rule of Criminal Procedure 14(a). [Id. at 11-19]. The Court will address each argument in turn.

         A. Duplicity of Count One

         “An indictment is duplicitous if it sets forth separate and distinct crimes in one count.” United States v. Gandy, __ F.3d__, 2019 WL 2400983, at *26 (6th Cir. 2019) (quoting United States v. Kakos, 483 F.3d 441, 443 (6th Cir. 2007)). The primary concern with a duplicitous indictment is that a defendant may be deprived of his or her right to a unanimous jury verdict. United States v. Campbell, 279 F.3d. 392, 398 (6th Cir. 2002). “Whether an indictment is duplicitous is a legal question.” United States v. Maricle, No. 6:09-16-KKC, 2013 U.S. Dist. LEXIS 151237, at *9 (E.D. Ky. Oct. 22, 2013) (citing Id.).

         “When the crime charged is a conspiracy, the general rule is that ‘[a] single agreement to commit several crimes constitutes one conspiracy.'” United States v. Campbell, 761 Fed. App'x 476, 482-83 (6th Cir. 2019) (alteration in original) (citation omitted). “An indictment does not charge multiple conspiracies if there is one overall agreement among the various parties to perform different functions in order to carry out the objectives of the conspiracy." United States v. Kelley, 461 F.3d 817, 830 (6th Cir. 2006) (citation and internal quotations omitted). “But where there are ‘multiple agreements to commit separate crimes,' then there are several conspiracies.” Id. at 483 (quoting United States v. Broce, 488 U.S. 563, 570-71 (1989)).

         Count One of the indictment, conspiracy to commit health care fraud in violation of 18 U.S.C. § 1349, alleges that the defendants had two common objectives: to defraud both public and private medical benefit programs, and for personal financial gain. [Doc. 1 at ¶¶ 32, 33].

         Defendants argue Count One is duplicitous because “it alleges two separate and distinct conspiracies, ” one between Healthright and the Smith Defendants and another between Healthright and the Synergy Defendants. [Doc. 128 at 4]. Further, defendants contend the indictment does not allege that the Smith Defendants had any knowledge whatsoever of, or worked towards a common goal with the Synergy Defendants and vice versa. [Id.]. The defendants maintain that the indictment alleges that both groups worked independently with Healthright for their own financial gain as competitors in the pharmaceutical industry. [Id. at 4-5]. Apart from lacking an overall common ...


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