United States District Court, E.D. Tennessee, Greeneville
MEMORANDUM OPINION AND ORDER
RONNIE GREER UNITED STATES DISTRICT JUDGE.
October 9, 2018, the United States of America filed a
thirty-two-count indictment alleging Defendants conspired to
commit healthcare fraud in violation of 18 U.S.C. §
1349, committed mail fraud in violation of 18 U.S.C. §
1341, and introduced misbranded 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). [Doc. 1].
January 14, 2019, Defendants jointly moved to transfer the
case from the Eastern District of Tennessee to the Middle
District of Florida. [Docs. 83, 84]. The parties submitted
briefs on the motion and United States Magistrate Judge
Clifton L. Corker issued an April 19, 2019 order denying
Defendants' motion to transfer venue. [Doc. 124].
Defendants jointly appealed the Magistrate Judge's
decision, [Docs. 135, 136], to which the Government
responded, [Doc. 151]. A hearing was held on July 15, 2019.
This appeal is currently before the Court.
following synopsis summarizes the relevant allegations in the
indictment that the Government eventually must prove beyond a
October 9, 2018 indictment charged Defendants with conspiracy
to commit health care fraud. Count One of the indictment
alleges the Defendants conspired with the telemedicine
company, HealthRight, LLC (“HealthRight”), and
its owner, Scott Roix, to defraud health care benefit programs
and pocket the proceeds. [Doc. 1 at ¶¶ 31-92]. The
scheme allegedly involved prescription brokering, and the
deception of both patients and doctors into requesting and
prescribing certain medications that the Defendant pharmacies
deemed particularly profitable. In submitting claims of
reimbursement to the patients' insurance carriers through
pharmacy benefit managers, the Defendant pharmacies allegedly
misrepresented the purchase price of the medications by
suggesting the prices were much higher than in reality.
[Id. at ¶¶ 39-44]. The indictment alleges
the Defendants profited from these misrepresentations and
split the proceeds with the telemedicine company.
[Id. at ¶¶ 45-66].
Two through Thirty of the indictment allege specific acts of
mail fraud in violation of 18 U.S.C. § 1341 directed to
patients in the Eastern District of Tennessee. [Id.
at ¶¶ 93-96]. Finally, Counts Thirty-One and
Thirty-Two allege the introduction of misbranded prescription
drugs into interstate commerce with the intent to defraud and
mislead in violation of 21 U.S.C. §§ 331(a),
353(b)(1), and 333(a)(2). [Id. at ¶¶
individual Defendants are residents of Florida. The Defendant
corporations are incorporated and located in the state of
Florida with two exceptions: ERX Consultants, LLC, doing
business as Zoetic Pharmacy, is located and incorporated in
the state of Texas, and ULD Wholesale Group Inc. is organized
under the laws of the state of Louisiana. [Id. at
¶¶ 7, 9]. Although HealthRight is not a defendant
in this case, the Court notes the company is organized under
the laws of the state of Delaware, but has locations both in
Pennsylvania and Florida. [Id. at ¶ 10].
April 19, 2019 order, the Magistrate Judge considered
Defendants' request to transfer venue for convenience as
permitted under Federal Rule of Criminal Procedure 21(b).
Magistrate Judge reviewed the indictment and concluded that
venue was proper in this District under Rule 21(a).
[Id. at 3-5]. More particularly, the Magistrate
Judge held that venue in the mail fraud counts are proper in
this District as part of the mail fraud involved mailing
Tennessee patients located in this District specific
medications. [Id. at 4]. Similarly, the Magistrate
Judge concluded that venue in this District was proper for
the conspiracy offense, because overt acts were committed in
the Eastern District of Tennessee when HealthRight obtained
insurance information from Tennessee patients, and the
signature of a Tennessee doctor, which permitted the
Defendants to send medication to patients in this District
and fraudulently bill for the medications prescribed to those
patients. [Id. at 4-5]. Finally, as to the
misbranding counts, the Magistrate Judge concluded venue was
proper as the indictment alleged Defendants sent misbranded
prescription drugs to Tennessee patients located in this
District without a valid prescription of the practitioner.
[Id. at 5].
to adhere to Rule 21, the Magistrate Judge then applied the
ten-factor test to determine if a change of venue for
convenience was appropriate. See Platt v. Minnesota
Mining & Mfg. Co., 376 U.S. 240, 243-44
(1964). The Magistrate Judge found that the first and seventh
factors, the Defendants' location and location of
counsel, respectively, weighed in favor of transfer, as the
both the former and the latter are all mostly located in
Florida. The Magistrate Judge concluded that factor four, the
location of documents and records likely to be involved, was
neutral because of the ability to transfer the discovery into
an electronic format. [Doc. 124 at 11]. Further, the
Magistrate Judge found that factors two, location of possible
witnesses, three, location of events likely to be in issue,
five, disruption of Defendants' business, six, expense of
the parties, eight, the relative accessibility of place of
trial, and nine, docket condition of each district or
division involved, did not weigh in favor of transfer. In
regards to the tenth factor, any other special elements which
might affect the transfer, the Magistrate found that it did
not “warrant any particularly great weight.”
[Id. at 16]. Ultimately, after balancing the ten
Platt factors, the Magistrate Judge found this case
should not be transferred and should remain in this District.
Defendants now challenge that decision.
Standard of Review
enacted 28 U.S.C. § 636 to relieve the burden on the
federal judiciary by permitting the assignment of district
court duties to magistrate judges. See United States v.
Curtis, 237 F.3d 598, 602 (6th Cir. 2001) (citing
Gomez v. United States, 490 U.S. 858, 869-70
(1989)); see also Baker v. Peterson, 67 Fed.Appx.
308, 310 (6th Cir. 2003). Section 636(b) allows district
court judges, subject to certain exceptions, to
"designate a magistrate judge to hear and determine any
pretrial matter pending before the court." 28 U.S.C.
Court will set aside Magistrate Judge orders on
non-dispositive motions only if they are contrary to law or
clearly erroneous. See Fed. R. Crim. P. 59(a). The
clearly erroneous standard applies only to factual findings
made by the Magistrate Judge, while legal conclusions will be
reviewed under the more lenient contrary to law standard.
E.E.O.C. v. Burlington N. & Santa Fe Ry. Co.,
621 F.Supp.2d 603, 605 (W.D. Tenn. 2009) (internal quotation
marks omitted). Under the clearly erroneous standard for
findings of fact, the Court need only consider whether any
evidence or showing exists to support the Magistrate
Judge's finding and whether the finding was reasonable.
Tri-Star Airlines, Inc. v. Willis Careen Corp. of Los
Angeles, 75 F.Supp.2d 835, 839 (W.D. Tenn. 1999)
(citations omitted). "When examining legal conclusions
under the 'contrary to law' standard, the Court may
overturn 'any conclusions of law which contradict or
ignore applicable precepts of law, as found in the
Constitution, statutes, or case precedent.'" Doe
v. Aramark Educ. Res., Inc., 206 F.R.D. 459, 461 (M.D.
Tenn. 2002) (citing Gandee v. Glaser, 785 F.Supp.
684, 686 (S.D. Ohio 1992), aff'd, 19 F.3d 1432
(6th Cir. 1994)); see 32 Am.Jur.2d Federal Courts
§ 140 (2018) ("A magistrate judge's order is
contrary to law when it fails to apply or misapplies relevant
statutes, case law, or rules of procedure").
Court considers Defendants' joint motion under Federal
Rule of Criminal Procedure 21(b) to transfer venue from the
Eastern District of Tennessee to the Middle District of
III of the Constitution provides: "Trial of all Crimes .
. . shall be held in the State where the said Crimes shall
have been committed". U.S. Const. art. III § 2 cl.
3. The Sixth Amendment limits the geographic scope even
further, by providing that the accused shall have a
"trial, by an impartial jury of the State and district
wherein the crime shall have been committed". U.S.
Const. Amend. VI. Rule 18 provides, in pertinent part, that
"the Government must prosecute an offense in a district
where the offense was committed." Fed. R. Crim. P. 18.
Defendants do not dispute the Eastern District of Tennessee
is a proper venue for this criminal proceeding, rather, the
entirety of Defendants' argument is centered on the
“[in]convenience of the parties” to litigate in
this forum. Fed. R. Crim. P. 21(b).
Transfer of Venue Under Federal Rule of Criminal Procedure
Rule 21, a court may transfer a criminal case to another
district “for the convenience of the parties, any
victim, and the witnesses, and in the interest of
justice.” Fed. R. Crim. P. 21(b). The Sixth Circuit
uses a ten-factor analysis to determine whether a venue
transfer is appropriate:
(1) the defendant's location; (2) the location of
possible witnesses; (3) the location of events giving rise to
the proceeding: (4) the location of relevant documents and
records; (5) disruption of the defendant's business
unless the case is transferred; (6) the expense to the
parties; (7) the location of counsel; (8) relative
accessibility of place of trial; (9) docket condition of each