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United States v. Assad

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

October 22, 2019

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

          MEMORANDUM OPINION AND ORDER

          J. RONNIE GREER UNITED STATES DISTRICT JUDGE.

         On 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].

         On 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[1] 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.

         I. Background

         A.

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

         The 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[2], 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].

         Counts 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 ¶¶ 97-100].

         All the 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].

         B.

         In the 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). [Doc. 124].

         The 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].

         Continuing 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.

         II. Standard of Review

         Congress 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. § 636(b)(1)(A).

         This 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").

         III. Analysis

         The 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 Florida.

         Article 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).

         A. Transfer of Venue Under Federal Rule of Criminal Procedure 21(b)

         Under 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 ...

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