United States District Court, N.D. Illinois, Eastern Division
As Amended January 12, 2015.
[Copyrighted Material Omitted]
For Medscript Pharmacy, LLC, Plaintiff: Mark Daniel Roth, LEAD ATTORNEY, Orum & Roth, LLC, Chicago, IL.
For My Script, LLC, Khader David Pharmacy Services LLC., Ziad Khader, Neil Patel, Daniel Leben, Defendants, Counter Claimants: Thadford A. Felton, LEAD ATTORNEY, Courtney A Adair, David Benjamin Goodman, Greensfelder, Hemker & Gale, P.C., Chicago, IL; Marilyn McCabe Reidy, Johnson & Bell, Ltd., Chicago, IL.
For Nikhil Patel, Patel Khader, LLC, Defendants, Counter Claimants: Thadford A. Felton, LEAD ATTORNEY, Courtney A Adair, David Benjamin Goodman, Greensfelder, Hemker & Gale, P.C., Chicago, IL.
For Maryam Alrazzaq, Third Party Defendant: Mark Daniel Roth, Orum & Roth, LLC, Chicago, IL.
For Maryam Alrazzaq, Medscript Pharmacy, LLC, Medscript Pharmacy, LLC, Counter Defendants: Mark Daniel Roth, LEAD ATTORNEY, Orum & Roth, LLC, Chicago, IL.
For Khader David Pharmacy Services LLC., My Script, LLC, Counter Claimants: Thadford A. Felton, LEAD ATTORNEY, Courtney A Adair, David Benjamin Goodman, Greensfelder, Hemker & Gale, P.C., Chicago, IL.
AMENDED MEMORANDUM OPINION AND ORDER
Robert W. Gettleman, United States District Judge.
Plaintiff Medscript Pharmacy, LLC (Medscript) has brought a nine-count amended complaint against defendants My Script, LLC (My Script), Khader David Pharmacy Services, LLC d/b/a Valuscript (Valuscript), and Patel Khader, LLC (Khader LLC), Ziad Khader, Neil Patel, Nikhil Patel, and Daniel Leben (collectively Non-Pharmacy Defendants). Count I alleges false advertising pursuant to the Lanham Act (15 U.S.C. § 1125). Count II alleges a violation of the Illinois Uniform Deceptive Trade Practices Act (IUDTPA) (815 ILCS § 510, et seq.). Count III alleges tortious interference with prospective economic advantage. Count IV alleges a violation of Florida Deceptive and Unfair Trade Practices Act (FDUTPA) (Fla. Stat. § 501.201, et seq.). Count V (mislabeled " Count IV" ) alleges common law unfair competition. Count VI alleges unjust enrichment. Count VII alleges conversion. Count VIII alleges civil conspiracy. Count IX alleges a violation of the Illinois Pharmacy Practice Act (225 ILCS 85, et seq.).
Defendants have moved to dismiss all counts pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. All defendants assert that the amended complaint: (1) violates Fed.R.Civ.P. 9(b) because the counts based on averments of fraud (I, II, III, IV, VIII) are not pled with specificity; (2) violates Fed. R. Civ. P 8(a) by failing to give notice to defendants of the claims and relief sought against them; (3) cannot allege the factual elements necessary to prevail on the claims asserted in each count; (4) disguises Health Insurance Portability and Accountability Act (HIPAA) claims and that counts based on those claims fail because HIPAA provides no private right of action and Medscript does not have standing to assert claims based on the rights of third parties; and (5) cannot assert claims based on use of the patient list at issue because it was given to Non-Pharmacy Defendants without restriction. Additionally, My Script
moves to dismiss Count IV (FDUTPA) because it asserts that it is in compliance with Florida law and Count IX because Medscript has no standing to bring the claim. For the reasons discussed below the defendants' motions to dismiss are granted in part and denied in part.
Plaintiff Medscript is a Professional Compounding Centers of America (PCCA) certified compounding pharmacy with its principal place of business in Illinois. Defendant My Script is a compounding pharmacy with its principal place of business in Michigan. Defendant Valuscript is also a compounding pharmacy with its principal place of business in Indiana. Non-Pharmacy Defendants (Khader LLC, Neil Patel, Nikhil Patel, Khader, and Leben) are former owners and members of Medscript. Khader is a member of Khader LLC. Leben, Khader, and Neil Patel are members of My Script. Khader is also a member of Valuscript.
On December 31, 2013, Non-Pharmacy Defendants sold their interests in Medscript to Maryam Alrazzaq. Pursuant to the sale, Medscript provided Non-Pharmacy Defendants with a patient list, containing patients' protected health information, to allow Non-Pharmacy Defendants to verify the amount of payments they would receive from Medscript post-closing. By January 21, 2014, Non-Pharmacy Defendants had given the patient list to My Script and Valuscript to market My Script and Valuscript and to induce prescribers to fill prescriptions with My Script and Valuscript rather than Medscript. Medscript alleges that the use of the patient list for marketing purposes violates HIPAA.
Upon receiving the patient list, employees or agents of My Script began calling Medscript's patients and telling them one of two false statements: (1) Medscript was out of business and My Script was taking over its patients and would fill the patients' prescriptions, and (2) Medscript had changed its name to My Script, and My Script would fill the patients' prescriptions going forward. My Script also made these false statements to prescribers. The result was that many patients and prescribers believed these statements to be true. My Script further falsely advertised itself as a PCCA certified pharmacy. Additionally, My Script used the patient list to contact and fill prescriptions for patients in Illinois, where it is not licensed to fill prescriptions.
My Script also offered ownership interests to physicians in Florida, where Medscript and My Script are both licensed. The Florida physicians accepted ownership interest, creating a kickback scheme in which physicians are rewarded for referring patients to My Script.
Upon receiving the patient list, Valuscript began sending patients unauthorized prescriptions that were supposed to be filled by Medscript, and which patients had not ordered from Valuscript. Valuscript then billed the patients' insurance carriers for the prescriptions.
My Script and Valuscript also sent their representatives prescription pads to
give to prescribers that had Medscript's name on them but My Script's and Valuscript's fax numbers. The result was that prescribers believed they were filling prescriptions with Medscript but were ...