United States of America et al v. Ukrainian Village Pharmacy, Inc. et al
1:09-cv-07891
N.D. Ill.Sep 5, 2012Background
- Grenadyor worked as a pharmacist at UV Pharmacy in Chicago (2006–2008).
- UV Pharmacy is privately held, controlled by M. Bogachek, Dinkevich, Kharlamova, and Shevchuk; Bogachek family exercises control over PharmaLife pharmacies.
- Relator alleges the PharmaLife network used alter ego theory and centralized ordering via Buckhead Pharmacy name.
- Allegations focus on copay waivers to Medicare/Medicaid patients and other inducements as part of a scheme.
- Inducements included monthly gift packages (caviar, foods, Russian guide) and free OTC meds; some kickbacks to physicians and prescription recycling were alleged.
- Relator asserts violations of False Claims Act and state False Claims Acts; U.S. and several states declined to intervene; court granted motions to dismiss without prejudice and allowed leave to replead.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AKS waivers of copays violate the FCA per se | Grenadyor asserts waivers were unlawful remuneration. | Defs argue waivers meet AKS exception provisions when proper. | Dismissed to extent not pled with Rule 9(b) specificity and implied false certification not shown. |
| Whether implied false certification and PPACA amendments affect FCA claim | Relator relies on AKS compliance as prerequisite to payment. | Implied false certification not recognized; PPACA amendment not retroactive here. | Implied false certification rejected; need replead if pursued. |
| Whether FCA retaliation claims are cognizable given factual showings | Hours were cut and firing followed concerns about fraud. | FCA retaliation requires protected acts; mere discussion not enough. | Retaliation claims dismissed; state IWRPA retaliation also dismissed. |
| Whether leave to replead should be granted | Relator seeks opportunity to cure pleading deficiencies. | Repeated pleading failures counsel against amendment. | Leave to replead granted; firmness on later amendments. |
Key Cases Cited
- Ackerman v. Northwestern Mut. Life Ins. Co., 172 F.3d 467 (7th Cir. 1999) (Rule 9(b) requires specificity beyond conclusory allegations)
- Lusby v. Rolls-Royce Corp., 570 F.3d 849 (7th Cir. 2009) (Inferences allowed when exact invoices not available)
- Mason v. Medline Indus., 731 F.Supp.2d 730 (N.D. Ill. 2010) (Rule 9(b) requires representative examples)
- United States ex rel. Fanslow v. Chicago Mfg. Ctr., Inc., 384 F.3d 469 (7th Cir. 2004) (Protected FCA activity requires investigation/participation)
- Kennedy v. Aventis Pharms., Inc., 610 F.Supp.2d 938 (N.D. Ill. 2009) (Implied false certification limitations under AKS)
- Yannacopoulos v. Gen. Dynamics, 652 F.3d 818 (7th Cir. 2011) (Violations of law alone do not create FCA liability without false certification)