United States District Court, E.D. Tennessee, Greeneville
MEMORANDUM OPINION AND ORDER
RONNIE GREER UNITED STATES DISTRICT JUDGE.
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,
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].
following synopsis summarizes the relevant allegations in the
indictment that the government eventually must prove beyond a
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, 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].
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).
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
Duplicity of Count One
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.).
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,
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].
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 ...