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United States v. Wal-Mart Stores East, LP

United States District Court, E.D. Michigan, Southern Division

August 20, 2019

UNITED STATES OF AMERICA and the STATE OF MICHIGAN, ex rel., ASHWANI SHEORAN, RPh, Plaintiff-Relator,
v.
WAL-MART STORES EAST, LP, d/b/a WALMART, a foreign corporation, TOI WALKER, DOUG HENGER, ALFRED RODRIGUEZ, RICHARD LOCKARD, M.D., NAVEED MAHFOOZ, M.D., and TAREK EZZEDDINE, M.D., Defendants.

          OPINION AND ORDER (1) GRANTING DEFENDANT LOCKARD'S MOTION TO DISMISS SECOND AMENDED COMPLAINT (ECF NO. 58) AND (2) GRANTING WALMART DEFENDANTS' MOTION TO DISMISS SECOND AMENDED COMPLAINT (ECF NO. 61)

          LINDA V. PARKER U.S. DISTRICT JUDGE.

         Plaintiff-Relator (“Relator”), Ashwani Sheoran, RPh, on behalf of himself, the United States and the State of Michigan, initiated this lawsuit on February 11, 2013, filing a qui tam complaint under seal against Defendants (1) Walmart, (2) Toi Walker, (3) Doug Henger, (4) Alfred Rodriguez, (5) Richard Lockard, M.D., (6) Naveed Mahfooz, M.D., and (7) Tarek Ezzeddine, M.D. (Compl., ECF No. 1.) As a matter of course, on April 16, 2013, Relator filed his First Amended Complaint (“FAC”) against the same Defendants and alleging the same claims. (Am. Compl., ECF No. 3.)

         On December 7, 2018, Relator filed his Second Amended Complaint (“SAC”) alleging violations of (1) the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., (2) the Fraud Enforcement Recovery Act of 2009 (“FERA”), 31 U.S.C. §§ 3729-3733, (3) the Michigan Medicaid False Claims Act (“MMFCA”), Mich. Comp. Laws § 400.601 et seq., and (4) the retaliation provisions of 31 U.S.C. § 3730(h). (Sec. Am. Compl., ECF No. 57.) The federal and state FCA claims are against all Defendants, Sec. Am. Compl. at 25-28, Pg. ID 589-592, while the FCA retaliation claim is only against Walmart, id. at 28, Pg. ID 592. On March 8, 2018, this Court unsealed the complaints after the United States and the State of Michigan declined to intervene. (ECF Nos. 24, 25.)

         Presently before the Court are Defendant Lockard's and Defendants Wal-Mart Stores East, LP, Toi Walker, Doug Henger, and Alfred Rodriguez's (the “Walmart Defendants”) respective Motions to Dismiss[1] pursuant to Federal Rule of Civil Procedure 12(b)(6). (Lockard Dismiss Mot., ECF No. 58; Walmart Dismiss Mot., ECF No. 61.) The Motions have been fully briefed. (ECF Nos. 58, 61, 62, 63, 64, 65.) Finding the facts and legal arguments sufficiently presented in the parties' briefs, the Court is dispensing with oral argument pursuant to Local Rule 7.1(f). For the reasons that follow, the Court grants both motions and dismisses all claims against Defendant Lockard and the Walmart Defendants[2].

         I. Legal Standard

         A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the complaint. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996). Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” To survive a motion to dismiss, a complaint need not contain “detailed factual allegations, ” but it must contain more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action . . ..” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A complaint does not “suffice if it tenders ‘naked assertions' devoid of ‘further factual enhancement.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557). As the Supreme Court provided in Iqbal and Twombly, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). The plausibility standard “does not impose a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct].” Twombly, 550 U.S. at 556. In deciding whether the plaintiff has set forth a “plausible” claim, the court must accept the factual allegations in the complaint as true. Erickson v. Pardus, 551 U.S. 89, 94 (2007). This presumption is not applicable to legal conclusions, however. Iqbal, 556 U.S. at 668. Therefore, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555).

         Additionally, claims brought under the FCA have a heightened standard and must also comply with Federal Rule of Civil Procedure 9(b). When alleging fraud, “a party must state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b)[3].

         II. Factual and Procedural Background

         On or about May 2012 to January 2013, Relator worked for Walmart as a “full-time floater pharmacist.” (SAC ¶¶ 7, 36-37, 166.) This lawsuit concerns observations that Relator made at various Walmart pharmacies between July 14 and August 30, 2012. (Id. ¶¶ 41-125.)

         Allegations Related to Defendant Lockard

         On or about July 31, 2012, Relator was assigned to work at a Walmart store in Bad Axe, Michigan. (Id. ¶ 73.) Upon arriving that day before 8 a.m., he observed a line of roughly ten customers waiting for the pharmacy to open-each one a patient of Defendant Lockard's. (Id. ¶¶ 74, 75.) Relator alleges that each of these patients was prescribed “high doses” of controlled substances-methadone, morphine sulfate, and/or oxycodone-and that Medicare or Medicaid was used in paying for them. (Id. ¶¶ 76-78.)

         On or about August 6, 2012, while working at the same Walmart in Bad Axe, Relator observed “large numbers of controlled substances” prescribed from Defendant Lockard's office being presented to the pharmacy, and he declined to fulfill them. (Id. ¶¶ 97, 100.) Relator contends that Defendant Lockard's prescriptions were either false, fraudulent or submitted to the Walmart pharmacy in violation of state and federal healthcare law. (Id. ¶¶ 168, 172, 176.)

         Allegations Related to Walmart Defendants

         Relator also alleged that, while working at various Walmart pharmacies, he observed a customer attempting to refill prescriptions prematurely, customers presenting allegedly “high dose[ ]” prescriptions, a customer attempting to use a stolen prescription pad, and customers presenting out-of-area prescriptions. (See Id. ¶¶ 68, 73-81, 87, 97, 114.)

         Relator further alleged that he shared his observations and suspicions with his direct supervisor, Defendant Toi Walker, and with other members of Walmart management, including Defendant Doug Henger. (Id. ¶¶ 119-21.) Walmart investigated, and on September 12, 2012, Relator received an email stating that the investigation had been closed. (Id. ¶¶ 130-131, 146.) Defendant Alfred Rodriguez, a Walmart Human Resources Director, sent Relator an email stating that the investigation found “that ...


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