U.S. District Judge
The government has said the alleged fraud scheme, for which four people were previously convicted, allegedly cost the insurers between
According to court records the charges against Annappareddy, contained in a superseding indictment issued in August, were dismissed with prejudice, meaning the government cannot refile them unless the judge's ruling were first overturned on appeal.
"Supervisors are reviewing the judge's ruling and will take appropriate steps,"
Russell's ruling brings a bizarre halt to a case in which four of Annappareddy's former employees pleaded guilty to charges stemming from the alleged fraud scheme and a jury convicted Annappareddy. He then hired new lawyers, who successfully pressed for a new trial, arguing that prosecutors had made misleading statements to the jury, proffered erroneous evidence and, later, permitted the destruction of records and other materials that might have confirmed the defendant's innocence.
Although the government has denied there was willful misconduct, it has conceded in various court filings that documents and other evidence were destroyed and erroneous evidence was placed before the jury.
"The case completely unraveled, which is highly unusual in federal system, quite stunning, actually," said
"This was great legal work by the new legal team, particularly by
In reading transcripts and documents from the case and the tenor of Russell's rulings, Wisenberg, who leads the white collar defense team at
"I think the judge sent a message that if they [the government] want to appeal and he gets reversed, they will spend a very long time" retrying the case, Wisenberg continued.
Of the evidence, which included pharmacy records and medications seized from Annappareddy's businesses and which had not been used in his first trial, Wisenberg said its destruction by the government while a motion for a new trial was pending was a significant error.
"You just don't do it -- it's incredible, never ever done," he said. "I think that's what drove the judge over the edge. He didn't say [Annappareddy] was innocent or that government acted intentionally, but this was a bad sign for the prosecution."
According to court documents, the defense's arguments that there had been wrong or false evidence presented by prosecutors was compelling enough that the government joined in asking for a new trial for Annappareddy.
In a letter to the court on
Once Russell granted the motion for a new trial, he soon rejected a request from the government to delay the proceeding and then ruled favorably on the defense motion to dismiss the charges completely.
According to court filings by Annappareddy's lawyers, the original criminal fraud charges were based on regulations and laws regarding returning unused prescription medication insurance reimbursements that were not in effect during the period between 2007 and 2013 when the allegedly fraudulent acts of their client took place.
Although regulatory changes have occurred since to require that insurers be repaid within 14 days, the government's lawyers did not explain this to the grand jury that indicted Annappareddy nor during his trial, basing the most serious charges against him on information they knew was not correct, his lawyers said.
"The prosecutors were reckless and willfully blind in presenting false evidence on three categories of material evidence...," defense counsel wrote in a brief seeking dismissal of the charges.
"The pattern of reckless and willfully blind use of false evidence and other misconduct here is unmistakable and undeniable," the brief states. "The government's prosecution of Mr. Annappareddy -- who is actually innocent -- is gravely and irretrievably tainted by the prosecutors' misconduct."
The government had alleged in both the original and superseding indictments that a pharmacist and two pharmacy technicians employed by pharmacies owned by Annappareddy and trading under the names Pharmacare and Caremerica, refilled prescriptions and then billed customers' insurance "regardless of whether the customer requested or directly consented to such refill."
The pharmacies in
When the prescriptions weren't picked up, the medications were reused and the claims for refills filed with insurers "were not timely reversed when the prescription drugs were not actually dispensed, delivered or picked up by a customer," the indictments alleged. Some of the drugs involved, according to indictment, are expensive and used by patients with HIV or cancer.
The alleged scheme, according to the government, operated from 2007 until
The government also charged Annappareddy with using the names and insurance information of customers to further the alleged scheme and with visa fraud for allegedly falsifying H-1B visa documents regarding three people, who were employed at his pharmacies.
A federal jury convicted Annappareddy on all three counts in
Annappareddy faced up to 10 years in prison for the health care fraud conviction and a mandatory minimum of two years in prison consecutive to any sentence imposed for aggravated identity theft, plus a
Included in the preliminary order of forfeiture the judge signed in
Sentencing was delayed for months after Annappareddy's new lawyers challenged the forfeiture order on grounds that the government had erroneously calculated the volume of drugs that were at the heart of the alleged scheme, and hence their value.
As that challenge unfolded, the defense team also pressed for a new trial and then began uncovering the alleged actions of prosecutors that violated rules of evidence and deceived both the grand and trial juries, according to various court filings.
The four people, who at one time worked for Annappareddy, who pleaded guilty to charges stemming from the alleged fraud, are
According to the
No sentencing information is available in court records for Vipinkumar Patel. The
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