Sixth Circuit Says FCA Case Against Walmart Dismissed Over Allegations of Prescribing Opiates | McGuireWoods LLP

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The United States Court of Appeals for the Sixth Circuit dismissed a pharmacist-reporter False Claim Act (FCA) case, finding that the pharmacist’s claims, largely based on a summary of stolen medical expenses, did not were unfounded. In the United States ex. rel. Sheoran v. Wal-Mart Stores East, Case No. 20-2128 (6th Cir. June 4, 2021), the court dismissed all claims filed by a pharmacist against his former employer Walmart, including alleged violations of the FCA, Michigan Medicaid False Claims Act (MMFCA) and FCA retaliation provisions. The notice contains several key information about the standard of advocacy required for FCA claims.

In the background, Relator Ashwani Sheoran, RPh, previously worked at Walmart as a “floating pharmacist,” working at various Walmart drugstores across Michigan. Sheoran alleged that during his employment, patients were prescribed what he considered to be “high doses” of opioid prescriptions from a single physician and, based on his review by a summary of medical expenses, with a low number of payments by patients, he concluded that the excessive demands for the drugs must have been submitted to Medicare or Medicaid for payment. Sheoran was later fired after a supervisor discovered he had stolen the medical expense summary. The summary of the stolen medical bills was later included as evidence in a lawsuit alleging violations of state and federal laws against Walmart, three individual Walmart employees and three doctors. After the United States and Michigan refused to intervene, Walmart and one of the accused doctors requested that the complaint be dismissed, and the district court allowed the motions to dismiss in 2019. Sheoran appealed. , claiming that the district court did not “understand the complex problems in [the] Case. ”The Sixth Circuit disagreed, claiming the dismissal.

For context, in order to establish a claim under the FAA, the court noted that a claimant must allege that:

the defendant made a request for payment to the government; the claim was false or fraudulent; the defendant knew it was false or fraudulent; and the misrepresentation was material to the government’s payment.

Notably, the Sixth Circuit ruled that Sheoran had not established any of these four elements. Specifically, the court ruled that the summary of medical expenses was not sufficient to establish that claims had been submitted to a government body and that Sheoran’s “rudimentary claim” that the claims must have been submitted to the government was pure speculation. In addition, the court ruled that the summary of the medical costs was not sufficient to establish the element of falsity of an FCA request, finding that without the patient’s medical history, it is impossible to conclude that the doses of the substances prescribed were too high, as Sheoran alleged.

On the material side, given that the government would have had the same access to patient information as Walmart regarding potentially high doses (assuming they were paid for under a government health care program), the court ruled that the government’s decision to pay the claims despite having the same knowledge that Walmart had in submitting them, was “very strong evidence that these requirements are unimportant.” Indeed, the court noted the demanding materiality standard for an FCA claim after Escobar, finding that having the same information as the government would make an important argument difficult to maintain. The court also ruled that Sheoran had not established that Walmart knowingly created false records for false statements as well, because there was “nothing in [the] order [that] would tell Walmart “that filling out the order and submitting claims” was illegal, false or fraudulent. “

The court also ruled that Sheoran’s retaliation claim was unfounded because he had failed to demonstrate that at the time of his termination Walmart knew he was pursuing legal action against the FCA, noting that employees must clearly state their intention to initiate or assist in FCA action to show retaliation. Although Sheoran claimed he told his superiors about the allegedly bogus prescriptions, the court ruled, in line with Sixth Circuit precedent, that this was not enough – simply telling an employer of the violations does not establish not that he was pursuing FCA action. Such a favorable defense precedent is particularly interesting, as the Sixth Circuit ruled earlier this year that a former employee’s reprisal complaint can be continued.

The court noted that the FCA was not enacted to punish violations of “garden varieties”, concluding that it was a simple FCA case that did not require oral argument. This case demonstrates that the standard of advocacy for FCA cases does not allow cases based on mere speculation or crude assertions. The burden of this complainant has not been met despite the concerns of the complainant who tam with prescriptions for opiates, an important government goal in dealing with the national drug crisis. This case may be good news for companies concerned with fending off unfounded FCA or FCA retaliation claims.

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