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Judge: West Virginian shouldn't be representing Michigan

By John O'Brien | Sep 28, 2010

Brian Glasser

GRAND RAPIDS, Mich. (Legal Newsline) - The state of Michigan's interests won't be served by a West Virginia whistleblower and a West Virginia law firm in a lawsuit against prescription drug retailers, a Michigan judge has ruled.

Kent County Circuit Judge James Robert Redford granted summary disposition in early September to a group of drug stores in a case that alleged the stores were ripping off the state's Medicaid program. The suit was filed in Grand Rapids by Marcia Gurganus, a pharmacist from Princeton, W.Va.

She was represented by Bailey & Glasser of Charleston, W.Va., which has also been hired by West Virginia Attorney General Darrell McGraw for a pair of similar lawsuits.

Among the defendants were CVS Pharmacy, Kmart, Rite Aid, Walgreen and Kroger. Gurganus is a pharmacist at Kroger and claimed the generic drug-pricing information she obtained showed the defendants were violating Medicaid reimbursement laws.

"(T)he sheer number of claims does not overshadow the fact that the only actual pricing information that is the premise for all of these claims is derived from insider Kroger information obtained in West Virginia in violation of Kroger's computer use policies," Redford wrote.

According to Gurganus' Facebook page, her husband is attorney Alvin Gurganus, a partner at Princeton law firm Williamson, Magann & Gurganus.

The lawsuit was met with disbelief by the companies in their joint motion to dismiss.

"(The lawsuit) is an improper and misguided (whistleblower) action that fails as a matter of law both procedurally and substantively," they wrote.

"Plaintiff/Relator, a pharmacist from West Virginia, seeks to recover damages on behalf of the state of Michigan."

The motion also notes that Michigan Attorney General Mike Cox declined to intervene in the case, as is his right in whistleblower lawsuits which he decides have merit.

"Plaintiff makes sweeping allegations against all of the defendants despite the fact that she fails to identify a single transaction that allegedly violated the section of the Public Health Code at issue, let alone identify a single reimbursement claim that was allegedly false or deceptive," the companies wrote.

"Moreover, Plaintiff fails to make a single allegation against, or even mention, the majority of the defendants named in the complaint."

The complaint alleged a violation of Michigan's Medicaid False Claims Act. It says the defendants presented false claims to the State for reimbursement for generic drugs dispensed to Medicaid participants.

Redford wrote that because Gurganus and her attorneys could not state a claim for relief, then she is not an appropriate party to represent Michigan. He also threw out two other cases that relied on the information obtained by Gurganus.

"There is no foundation for Plaintiff's conclusion that Defendants are perpetuating Medicaid fraud in Michigan," he added.

"As alleged, the generic product acquisition cost data alone is insufficient to support a (whistleblower) action without Michigan-specific Medicaid claim and reimbursement information, which Plaintiff is unable to independently and legally obtain."

Bailey & Glasser teamed with Grand Rapids law firm Varnum Riddering Schmidt & Howlett to file the lawsuit.

For McGraw's two lawsuits against the group of drug stores, he hired Bailey & Glasser and DiTrapano Barrett & DiPiero. The two firms have contributed more than $60,000 to McGraw's campaign fund over the years, including $11,800 for his 2008 race against Republican Dan Greear.

One of McGraw's cases is filed against Target, Wal-Mart, CVS, Kmart, Kroger and Walgreen, while the other is against Rite Aid. Both have been remanded to Boone County Circuit Court.

Bailey & Glasser also filed a similar lawsuit in Minnesota on behalf of Graphic Communications Local 1B Health & Welfare Fund A and the Twin Cities Bakery Drivers Health and Welfare Fund. It has been remanded to Hennepin County Court.

The Varnum firm joined Bailey & Glasser for that suit, too, as did Minneapolis firm Felhaber Larson Fenlon & Vogt.

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