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”), (collectively the “Smith
Defendants”), Joint Motion to Dismiss, [Doc. 126], the
United States' Response, [Doc. 145], and the
defendants' Joint Reply, [Doc. 154].
Andrew Assad (“Assad”), Peter Bolos
(“Bolos”), Michael Palso (“Palso”),
Synergy Pharmacy Services, Inc. (“Synergy”), and
Precision Pharmacy Management LLC (“Precision”),
(collectively the “Synergy Defendants”), have
filed for leave to join and adopt the Joint Motion to
Dismiss. [Docs. 127, 155].
addition, the Court will consider, defendants' Germaine
Pharmacy Inc. (“Germaine”), and ERX Consultants,
LLC (“ERX”), Motion to Dismiss, [Doc. 130]. The
matters are now ripe for review.
following synopsis summarizes the relevant allegations in the
indictment that the government eventually must prove beyond a
are either pharmacists, pharmacies, wholesalers, or managers
who operated pharmacies. The indictment alleges that
beginning around June 2015 and continuing through in or
around 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 a telemedicine
company to deceive doctors to prescribe 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
defendant pharmacies. [Id. at ¶¶ 34-38].
Afterwards, in submitting a claim of reimbursement to the
patients' insurance companies 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
profit with the telemedicine company. [Id. at
October 9, 2018, defendants were charged by way of indictment
with thirty-two separate counts: one count of conspiracy to
commit health care fraud in violation of 18 U.S.C. §
1349, twenty-nine 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.]. Defendants now move to dismiss the
indictment for failure to state an offense. [Docs. 126, 130].
to Rule 12 of the Federal Rule of Criminal Procedure, a
“party may raise by pretrial motion any defense,
objection, or request that the court can determine without a
trial on the merits.” Fed. R. Crim. P. 12(b)(1). Rule
12(b)(3) specifies the motions which must be made before
trial. Fed. R. Crim. P. 12(b)(3). Among these, a defendant
may bring a motion to dismiss for “a defect in the
indictment or information including . . . (v) failure to
state an offense.” Fed. R. Crim. P. 12(b)(3)(B)(v).
7(c)(1) of the Federal Rules of Criminal Procedure requires
that an indictment "be a plain, concise, and definite
written statement of the essential facts constituting the
offense charged." The United States Supreme Court has
held that "an indictment is sufficient if it, first,
contains the elements of the offense charged and fairly
informs a defendant of the charge against which he must
defend, and, second, enables him to plead an acquittal or
conviction in bar of future prosecutions for the same
offense." Hamling v. United States, 418 U.S.
87, 117 (1974) (citations omitted). See United States v.
Anderson, 605 F.3d 404, 411 (6th Cir. 2010). "It is
generally sufficient that an indictment set forth the offense
in the words of the statute itself, as long as [they] . . .
fully, directly, and expressly, without any uncertainty or
ambiguity, set forth all the elements necessary to constitute
the offence intended to be punished." Hamling,
418 U.S. at 117-18 (citations and internal quotations
omitted). In other words, where the indictment “clearly
track[s] the language of the statute, ” it sufficiently
“contain[s] the elements of the offense.”
Anderson, 605 F.3d at 411. Where the charging
language includes “the relevant time period and the
specific event that triggered the charge, ” the
defendant will “accordingly be able to adequately plead
an acquittal or conviction in bar of any future prosecutions
arising from the same offense.” Id.
12(b)(3)(B)(v) motion is appropriate only "when it
raises questions of law rather than fact." United
States v. Ali, 557 F.3d 715, 719 (6th Cir. 2009)
(approving defendant making a Rule 12 motion that
"raise[d] a purely legal question about whether the
indictment stated an offense"); see also, e.g.,
Universal Milk Bottle Serv. v. United States, 188 F.2d
959, 962, 64 Ohio Law Abs. 186 (6th Cir. 1951) (holding a
motion "claiming that [the indictment's] allegations
are false and untrue" improper because "issues of
fact" must "be tried by a jury"); United
States v. Levin, 973 F.2d 463, 467 (6th Cir. 1992)
(holding a Rule 12 motion inappropriate if it requires the
court to "invade the province of the ultimate finder of
fact"). “[A] court cannot consider a factual
challenge to an indictment purporting to show a defect
consisting solely of insufficient evidence to prove a
particular charge.” United States v. Hann, 574
F.Supp.2d 827, 830 (M.D. Tenn. 2008) (citation omitted).
Accordingly, an indictment that is valid on its face may not
be dismissed on the ground that it is based on inadequate or
insufficient evidence. United States v. Williams,
504 U.S. 36, 54 (1992).
context, the Court must review the indictment's factual
allegations as true and construe those allegations in a
practical sense with all of the necessary implications.
United States v. Reed, 77 F.3d 139, 140 n. 1 (6th
Cir. 1996) (en banc). Defendants' burden in this
context is, correspondingly, “a heavy” one.
United States v. Lamoureux, 711 F.2d 745, 747 (6th
argue the indictment “is fatally flawed because it
fails to allege facts that state a criminal offense.”
[Doc. 126 at 7]. Specifically, defendants assert that the
indictment does not allege defendants' participation in a
scheme to defraud, or an intent to defraud. Conversely, the
government contends that the indictment fully tracks the
relevant statutes, includes the relevant time periods, and
each charge is substantiated by specific allegations that
fairly inform defendants of the charges against which they
must defend. [Doc. 145 at 3].
Breach of PBM Provider Agreements Amounts to a Civil Breach
“the indictment charges a conspiracy: [i]t is well
settled that [in] an indictment for conspiring to commit an
offense-in which the conspiracy is the gist of the crime-it
is not necessary to allege with technical precision all the
elements essential to the commission of the offense which is
the object of the conspiracy." United States v.
Ogbazion 2017 WL 1315813, at *22-23 (S.D. Ohio Apr. 10,
2017) (quoting United States v. Superior Growers Supply,
Inc., 982 F.2d 173, 176 (6th Cir. 1992)). See United
States v. Reynolds, 762 F.2d 489, 494 (6th Cir. 1985).
"To establish conspiracy to commit [health care] fraud
under 18 U.S.C. § 1349, the government must demonstrate
that 'two or more persons conspired, or agreed, to commit
the crime of [health care fraud] and that the defendant
knowingly and voluntarily joined the conspiracy.'"
Ogbazion, 2017 WL 1315813, at *23 (quoting
United States v. Harrison, 663 Fed. App'x. 460,
464 (6th Cir. 2016)). Further, the crime of health care fraud
requires a scheme or artifice to defraud a health care
benefit program in connection with the delivery of or payment
for health care benefits, items, or services, the defendants
knowingly and willfully executed or attempted to execute this
scheme or artifice to defraud, and defendants acted with
intent to defraud. 18 U.S.C. § 1347.
on this authority, the offense of conspiracy to commit health
care fraud charged in Count One of the indictment does not
need to "'allege with technical precision all the
elements essential to . . . the object of the conspiracy
[(i.e., [health care] fraud)]." Ogbazion, 2017
WL 1315813, at *25-6 (quoting Superior Growers, 982
F.2d at 176). “Rather, the charge ...