Case 2:22-cv-00390 Document 1 Filed 01/26/22 Page 1 of 21 PageID: 1
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`Alan S. Golub, Esq. – Attorney ID No. 025461993 (agolub@fskslaw.com)
`Gregg P. Tabakin – Attorney ID No. 017521980 (gtabakin@fskslaw.com)
`Fein, Such, Kahn & Shepard, P.C.
`7 Century Drive, Suite 201
`Parsippany, New Jersey 07054
`Telephone: 973-538-4700
`Facsimile: 973-397-2976
`
`Attorneys for Plaintiff RUTGERS, THE STATE UNIVERSITY OF NEW JERSEY
`
`
`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
`
`
`
`
`
`
`CIVIL ACTION NO.
`
`
`
`COMPLAINT
`(AND JURY DEMAND)
`
`
`
`RUTGERS, THE STATE UNIVERSITY OF
`NEW JERSEY,
`
` Plaintiff,
`
`vs.
`
`SAI VARUNI PHARMACY, LLC D/B/A
`METRO PHARMACY, SAI CHANDI
`PHARMACY, LLC D/B/A QUICKSTOP
`PHARMACY, BHAVANI DONEPUDI, AND
`JOHN DOES 1 – 10,
`
` Defendants.
`
`
`
`
`
`Plaintiff Rutgers, The State University of New Jersey (“Plaintiff” or “Rutgers”), by its
`attorneys, for its complaint against Sai Varuni Pharmacy, LLC d/b/a Metro Pharmacy (“Metro”),
`Sai Chandi Pharmacy, LLC d/b/a QuickStop Pharmacy (“QuickStop”) (Metro and QuickStop are
`hereinafter collectively referred to as the “Pharmacy Defendants”), and Bhavani Donepudi
`(“Donepudi”), an individual member and the manager of both Metro and QuickStop, hereby alleges
`as follows:
`
`NATURE OF THE ACTION
`
`1. This is an action by Plaintiff Rutgers against the Pharmacy Defendants, Donepudi, and
`John Does 1 - 10 for breach of contract, conversion, unjust enrichment, fraudulent representation,
`negligent misrepresentation, and violations of the Section 340B Drug Pricing Program (the “340B
`Program”) under the Public Health Service Act, 42 U.S.C. § 256b (the “Act”).
`
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`THE PARTIES
`
`2. Rutgers is a preeminent State university with locations in three major New Jersey cities,
`including a principal office at 7 College Avenue, New Brunswick, New Jersey 08901.
`
`3. Rutgers is also home to the New Jersey Medical School at Rutgers, with its principal office
`located in the Medical Science Building at 185 South Orange Avenue, Newark, NJ 07103.
`
`4. Metro Pharmacy is a limited liability company formed under the laws of the State of New
`Jersey and authorized to conduct business in the State of New Jersey, with a principal place of business
`at 727 Frelinghuysen Ave, Newark, New Jersey 07114.
`
`5. QuickStop Pharmacy is a limited liability company formed under the laws of the State of
`New Jersey and authorized to conduct business in the State of New Jersey, with a principal place of
`business at 198 Market Street, Newark, New Jersey 07102.
`
`6. On information and belief, defendant Donepudi is a resident of the State of New Jersey
`with a primary residence located at 14 Sterlight Drive, Mount Laurel, New Jersey 08054.
`
`7. On information and belief, defendant Donepudi is an Owner and Manager of both
`Pharmacy Defendants.
`
`8. Upon information and belief, John Does 1- 10 are presently unknown other individuals
`with ownership interests and/or managerial involvement in one or both of Pharmacy Defendants’
`operations, including but not limited to the matters alleged herein.
`
`JURISDICTION AND VENUE
`
`9. This Court has original subject matter jurisdiction over the claims in this action pursuant to 28
`U.S.C. § 1331 (actions arising under the laws of the United States) insofar as the claims asserted hereunder
`are based on plaintiff Rutgers’ status as a “Covered Entity” as defined in Section 340B of the Public Health
`Service Act (the “Act”), 42 U.S.C. § 256b (the Federal 340B Drug-Pricing Program, hereinafter the “340B
`Program”). This Court has supplemental jurisdiction over the claims in this Complaint that arise under
`statutory and common law pursuant to 28 U.S.C. § 1367(a).
`
`10. Venue is proper in this Court pursuant to 28 U.S.C. §§ 1391, as on information and belief,
`
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`a substantial part of the events or omissions giving rise to the claims occurred within this District.
`
`FACT COMMON TO ALL COUNTS
`
`11. The New Jersey Medical School at Rutgers (the “NJ Medical School”) offers a broad range
`of training for careers in the medical field, innovative clinical research, and clinical health care services.
`
`12. The NJ Medical School’s clinical programs focus on early student exposure to patient care,
`clinical skills, and hands-on simulations, with strong emphasis on service learning and a focus on the
`health of the underserved and vulnerable population in the local community.
`
`13. The NJ Medical School’s Division of Infectious Diseases oversees two such clinical
`programs: (a) a Ryan White funded outpatient center for the care and treatment of HIV/AIDS infection in
`adults ages 16 and older (the “RW Clinic”), and (b) a Sexually Transmitted Disease clinic (the “STD
`Clinic”). The RW Clinic and the STD Clinic are hereinafter collectively referred to as the “Rutgers
`Clinics.”
`
`14. The Rutgers Clinics serve the local community by providing quality outpatient medical
`care and support services to all people regardless of their sexual orientation, race, or ability to pay.
`
`15. In order to serve as a vital medical care and support services resource to the local
`community, the Rutgers Clinics rely on a variety of Federal and State programs designed to make such
`programs financially sustainable.
`
`16. One such program is the 340B Program, overseen by the Health Resources and Services
`Administration (“HRSA”) within the United States Department of Health and Human Services, which
`requires participating pharmaceutical manufacturers to provide certain outpatient prescription drugs,
`clinic-administered drugs, and over-the-counter drugs to eligible health care organizations, known as
`“Covered Entities” under the Program, at significantly reduced prices.
`
`17. With the cost savings realized under the 340B Program, Covered Entities can reduce prices
`for patients, expand their services, treat more patients, and ultimately, improve overall patient care.
`
`18. Both Rutgers Clinics are registered as Covered Entities under the 340B Program and are
`eligible to participate in same.
`
`
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`19. Under the Program, a “Covered Entity” that does not have its own pharmacy is permitted
`to contract with outside pharmacies to provide covered outpatient drugs to its patients.
`
`20. The benefits of utilizing a contract pharmacy include potentially increasing patient access
`to 340B drugs by partnering with local pharmacies that provide more flexible hours and convenient
`locations for eligible patients and eliminating many potentially significant administrative and overhead
`burdens associated with operating an in-house pharmacy.
`
`21. While a contract pharmacy must register with HRSA in order to participate in the 340B
`Program, the Covered Entity remains responsible to ensure the contract pharmacy’s compliance with the
`Act and all HRSA guidelines.
`
`22. On or about July 15, 2019, Rutgers sought to leverage the benefits of utilizing outside
`pharmacies to provide discounted outpatient drugs to patients of its Rutgers Clinics by entering into a
`Pharmacy Services Agreement (the “PSA”) with Metro and QuickStop, which served as contract
`pharmacies for the Rutgers Clinics, and with 340Basics, Inc. (“340Basics”), an experienced third-party
`administrator (“TPA”) of 340B programs.
`
`23. Under the PSA, the Pharmacy Defendants were responsible for dispensing 340B
`medications to eligible patients of the Rutgers Clinics, charging only the 340B drug prices authorized
`under the Act, collecting copayments from those eligible patients, and submitting all claims to the
`Pharmacy Defendants’ “Switch” company which, in turn, dealt with 340Basics.
`
`24. 340Basics was responsible under the PSA to collect claims data from the Switch company,
`verify patient eligibility, track inventory of covered medications, and replenish inventory for the Pharmacy
`Defendants once certain use thresholds were met.
`
`25. As consideration for its participation in Rutgers’ 340B Program, the Pharmacy Defendants
`were entitled to collect a “Dispense Fee” for each eligible prescription provided to an eligible patient.
`
`26. The Dispense Fees were expressly set forth in an Exhibit A to two Addenda (one for each
`Rutgers Clinic) to the PSA as follows:
`
`1. The Pharmacy Dispense Fee for Uninsured Patient claims
`shall be $10.
`
`
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`
`2. The Pharmacy Dispense Fee for both MCO [Managed
`Care Organizations] and 3rd Party Claims shall 11% of Total Claim
`Reimbursement.
`
`27. Implementation of Rutgers’ 340B Program under the PSA included custom software
`provided by 340Basics which tracked all transactional aspects of the program, including eligible
`prescription sales by the Pharmacy Defendants, co-pays made by eligible patients, the Dispense Fees
`earned by the Pharmacy Defendants on each transaction, and the amount due to Rutgers once each claim
`was processed, net of the Pharmacy Defendants’ Dispense Fees.
`
`28. Under Paragraph 9.1c of the PSA, the Pharmacy Defendants were required to “[m]aintain
`all required records and reports required under this Agreement and all applicable to Federal, State, and
`local laws and regulations.”
`
`29. Paragraph 12 of the PSA makes clear that the Pharmacy Defendants are subject to audits
`of records related to their implementation of the 340B Program on behalf of Rutgers, and that the
`Pharmacy Defendants consent to desktop audits by 340Basics on behalf of Rutgers to ensure compliance
`by the Pharmacy Defendants.
`
`30. The effective start date of the 340B Program for both the RW Clinic and the STD Clinic
`was April 2020.
`
`31. Between April 2020 and October 2020, Rutgers paid wholesaler drug costs for covered
`prescriptions under the 340B Program, and the covered prescriptions were dispensed by Metro and
`QuickStop to eligible patients from both Rutgers Clinics.
`
`32. Under Paragraph 6.4 of the PSA, Rutgers and 340Basics created a 340B operating account
`(the “Operating Account”) for the processing of all revenue generated under the program.
`
`33. The Pharmacy Defendants were obligated to deposit all such revenue into the Operating
`Account, less their authorized Dispense Fees.
`
`34. With prescription claim capture commencing in April 2020, Rutgers reasonably anticipated
`that the Pharmacy Defendants would commence deposits to the Operating Account within 30-60 days.
`
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`35. The Pharmacy Defendants never made any deposits to the Operating Account.
`
`36. Beginning on or about July 13, 2020, Rutgers contacted defendant Donepudi, an owner
`and manager of both Metro and QuickStop, and asked him to complete an ACH form for both Pharmacy
`Defendants in order to expedite payment to Rutgers “as soon as possible as copays for dispenses from
`April/May were due to be electronically debited in June/July.”
`
`37. Although Donepudi initially agreed to complete the ACH form in order to expedite
`payments to Rutgers, he never returned the completed form, and the delays in making any payments to
`Rutgers continued.
`
`38. Between in or around April 2020 and November 5, 2020, Rutgers and 340Basics made
`multiple efforts to communicate with defendant Donepudi to discuss the Pharmacy Defendants’ failure to
`pay, solutions for the timely processing of payments, a timetable for bringing all accounts up to date, and
`conference calls or meetings to review the backup documentation for all 340B Program transactions in
`order to confirm all amounts owed to Rutgers.
`
`39. Most of these communication efforts were initially ignored by Donepudi, after which he
`apologized for the delay and proffered technical or ministerial excuses for failing to make the requisite
`payments.
`
`40. These excuses served only to buy Donepudi and the Pharmacy Defendants more time to
`delay making required 340B Program payments to Rutgers under the PSA.
`
`41. For example, Donepudi intentionally delayed payment to Rutgers based on the following
`excuses: (a) he was confused about the payment protocol that Pharmacy Defendants were required to
`follow under the PSA; (b) he was unable to access the 340Basics portal; (c) he lost his portal credentials;
`and (d) he needed Rutgers to send and/or re-send to him copies of copay statements that were equally and
`readily available to him through the 340Basics portal.
`
`42. On several occasions between July 2020 and October 2020, Donepudi knowingly made
`false promises to pay the amount owed to Rutgers by a date certain, only to consistently fail to make the
`promised payment on the promised date.
`
`43. By mid-October, seven months after the Program began and over seven hundred thousand
`
`
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`dollars in arrears, the Pharmacy Defendants finally made their first payments to Rutgers, cutting eight
`checks totaling $212,349.57. As reflected in the table1 below, which includes credits for these October
`partial payments, the Pharmacy Defendants still owe Rutgers the Amount Due of $514,875.87:
`
`Pharmacy/340B
`Program
`
`Quick Stop (RW)
`Quick Stop (STD)
`Metro (RW)
`Metro (STD)
`Total Balance
`
`Insurance
`Reimbursement-
`Paid to Pharmacy
`
`508,060.48$
`
`
`53,568.47$
`
`249,267.64$
`8,931.31$
`
`
`819,827.90$
`
`Pharmacy Fees
`(Quickstop &
`Metro's 11% and
`Dispense Fees)
`(55,886.61)$
`
`
`(7,454.83)$
`
`(27,419.43)$
`
`(1,384.70)$
`
`(92,145.57)$
`
`Switch Fees
`True Up
`
`Total Amt Amt Paid by
`
`Due to Rutgers
`Pharmacy
`
`Total Remaining
`Balance Due
`
`(488.57)$
`
`5.16$
`
`
`25.44$
`1.08$
`
`
`(456.89)$
`
`451,685.30$
`
`
`46,118.80$
`
`221,873.65$
`7,547.69$
`
`
`727,225.44$
`
`143,838.63$
`
`
`10,433.32$
`
`51,423.30$
`6,654.32$
`
`
`212,349.57$
`
`307,846.67$
`
`35,685.48$
`
`
`170,450.35$
`893.37$
`
`
`514,875.87$
`
`
`
`44. Under Section 22 of the PSA, Metro and QuickStop are obligated to fully “save, indemnify,
`and hold harmless” Rutgers “from any and all liability loss, claims, actions, costs, including attorney fees
`resulting from … Pharmacy failure to meet duties specified in this Agreement or resulting from failure to
`comply with Federal, State, or Local Laws.”
`
`45. On or about October 19, 2020, Anne Marie Diaz of 340Basics notified Donepudi and the
`Pharmacy Defendants via e-mail (the “340Basics Notice of Termination”) that the PSA was being
`terminated by Rutgers, effective October 20, 2020 (the “Termination Date”), due to nonpayment and other
`breaches of the PSA.
`
`46. The 340Basics Notice of Termination also included the following demand to Donepudi
`and the Pharmacy Defendants: “Your balance owing to Rutgers University shall be due within 30 days
`of your date of termination.”
`
`47. Attached to the 340Basics Notice of Termination was a copy of a separate formal
`termination letter from Rutgers dated October 16, 2020 (the “Rutgers Notice of Termination”), in which
`Rutgers advised that: (a) the Pharmacy Defendants had failed to comply with provisions of the PSA by
`failing to remit payment due to the covered entity in a timely manner; (b) the covered entity had maintained
`the terms and conditions of the PSA by providing replenishment medications and financial true-ups to the
`
`
`1 As used in the Table, RW signifies eligible transactions by QuickStop and Metro for patients of Rutgers’
`Ryan White Clinic, and STD signifies eligible transactions by QuickStop and Metro for patients of Rutgers’ STD
`Clinic
`
`
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`pharmacies and covering the costs of all 340B medications; (c) the pharmacies’ failure to pay the balances
`due had resulted in arrears to the covered entity at a length beyond four months; and (d) the letter was to
`serve as notice of termination of the PSA, with the final day of participating claim capture to occur on
`October 20, 2020.
`
`48. Despite the demand for payment set forth in the 340Basics Notice of Termination, the
`Defendants failed to pay the balance owed to Rutgers within 30 days of the Termination Date as demanded
`in the 340Basics Notice of Termination.
`
`49. On or about August 20, 2021, Rutgers sent via Federal Express Overnight Delivery to Donepudi
`and Pharmacy Defendants a written notice of violations under the Act and breaches under the PSA, and
`demanded payment in full of all amounts due to Rutgers under the 340B Program (the “8/20/2021
`Demand”) no later than September 3, 2021 (the “Initial Deadline”).
`
`50. Donepudi and the Pharmacy Defendants ignored the 8/20/2021 Demand, and the Initial
`Deadline passed without any response.
`
`51. After several failed attempts, counsel for Rutgers was finally able to reach Donepudi by
`phone on or about September 28, 2021 to discuss Rutgers’ 8/20/2021 Demand.
`
`52. At that time, Donepudi advised that he disputed the amount that Rutgers claimed was owed,
`and needed one additional week to provide a full written response, including a full accounting of all
`transactions for Rutgers under the PSA, and backup documentation.
`
`53. By letter dated September 28, 2021, Rutgers’ outside counsel confirmed in writing to Mr.
`Donepudi that Rutgers agreed to provide him one additional week, until close of business on October 5,
`2021 (the “Extended Deadline”), to provide a written response, with a full accounting including any
`relevant backup documentation.
`
`54. Donepudi and the Pharmacy Defendants failed to provide any response by the Extended
`Deadline, and as of the date of this Complaint have neither responded nor provided any additional
`information, documentation, or payments to Rutgers.
`
`
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`COUNT I
`
`BREACH OF CONTRACT
`
`55. Plaintiff hereby re-alleges and incorporates by reference the foregoing allegations as if
`fully set forth herein.
`
`56. The PSA constitutes a binding contract among Rutgers, Metro Pharmacy, QuickStop
`Pharmacy, and 340Basics.
`
`57. Donepudi signed the PSA on or about May 22, 2019 on behalf of both of the Pharmacy
`Defendants.
`
`58. Under the PSA, the Pharmacy Defendants were responsible to:
`
`(a) Dispense medications to eligible patients submitting prescriptions written by health care
`providers affiliated with the Rutgers Clinics (PSA ¶ 2.1a); and
`
`(b) Deposit all payments received from patients and third-party payor(s) into a 340B
`operating account created by Rutgers minus the dispensing fee provided for in the PSA
`(PSA ¶ 6.4).
`
`59. Based on the prescription transactions tracked through the 340Basics software program
`deployed under the PSA for the specific purpose of, among other things, tracking amounts owed to Rutgers
`and fees owed to the Pharmacy Defendants, the Pharmacy Defendants received $514,875.87 (the “Amount
`Due”) that should have been deposited in the 340B operating account for the benefit of Rutgers.
`
`60. The Pharmacy Defendants’ failure to deposit the Amount Due in the 340B operating
`account or otherwise pay the Amount Due to Rutgers constitutes a breach of the PSA.
`
`61. Rutgers has at all times complied with its obligations under the PSA.
`
`62. As a result of the Pharmacy Defendants’ aforementioned breach, Rutgers has been
`damaged in the Amount Due.
`
`63. Under Paragraph 22 of the PSA, the Pharmacy Defendants are obligated to fully “save,
`indemnify, and hold harmless” Rutgers “from any and all liability loss, claims, actions, costs, including
`
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`attorney fees resulting from … Pharmacy failure to meet duties specified in this Agreement or resulting
`from failure to comply with Federal, State, or Local Laws.”
`
`64. The Pharmacy Defendants’ failure to make required payments under the PSA trigger the
`duty under Paragraph 22 of the PSA to save, indemnify, and hold harmless Rutgers from any and all
`liabilities and costs arising therefrom, including but not limited to attorneys’ fees and court costs.
`
`COUNT II
`
`UNJUST ENRICHMENT
`
`65. Plaintiff hereby re-alleges and incorporates by reference the foregoing allegations as if
`fully set forth herein.
`
`66. By selecting the Pharmacy Defendants to serve as its contract pharmacies under the
`PSA and the 340B Program, Rutgers conferred a benefit upon the Pharmacy Defendants in the form
`of: (a) Dispense Fees resulting from prescriptions filled for the benefit of patients referred to the
`Pharmacy Defendants by and from the Rutgers Clinics; (b) goodwill within the local community as
`an exclusive provider of discounted pharmaceuticals under a federal program designed to assist
`certain underserved and vulnerable members of that community; and (c) increased traffic in the stores
`operated by Pharmacy Defendants, which increases the potential for incidental and other purchases
`by patients referred by the Rutgers Clinics.
`
`67. In exchange for the foregoing benefits conferred upon it by Rutgers, Rutgers expected the
`Pharmacy Defendants to promptly deposit or pay to Rutgers all amounts collected by the Pharmacy
`Defendants, less appropriate Dispense Fees earned under the PSA.
`
`68. The Pharmacy Defendants’ failure to deposit or pay the Amount Due to Rutgers enriched
`the Pharmacy Defendants beyond their contractual rights under the PSA.
`
`69. The acts complained of above constitute unjust enrichment of the Pharmacy Defendants at
`Rutgers’ expense in violation of the common law of the State of New Jersey.
`
`70. Based on the intentional, willful, and malicious nature of Defendants’ actions, Rutgers is
`entitled to recover monetary damages, exemplary or punitive damages, and reasonable attorneys’ fees and
`costs incurred in connection with this action.
`
`
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`COUNT III
`
`CONVERSION
`
`71. Plaintiff hereby re-alleges and incorporates by reference the foregoing allegations as if
`fully set forth herein.
`
`72. Upon receipt of payments under the 340B Program, the Pharmacy Defendants were
`required to deposit same, minus Dispense Fees, into the 340B operating account for the benefit of Rutgers.
`
`73. As such, Rutgers was entitled to immediate possession of payments received by the
`Pharmacy Defendants under the 340B Program, less Dispense Fees.
`
`74. The Pharmacy Defendants wrongfully interfered with Rutgers’ right to immediate
`possession of payments received under the 340B Program.
`
`75. Based on the tracking information provided by the 340Basics software designed for that
`very purpose, the Pharmacy Defendants wrongfully interfered with Rutgers’ right to immediate possession
`of $514,975.87 (the Amount Due) in payments received by the Pharmacy Defendants for the benefit of
`Rutgers.
`
`76. As a result of the foregoing conversion of the Amount Due by the Pharmacy Defendants,
`Rutgers has been damaged in the amount of $514,975.87.
`
`COUNT IV
`
`DEMAND FOR FULL AUDIT AND ACCOUNTING
`
`77. Plaintiff hereby re-alleges and incorporates by reference the foregoing allegations as if
`fully set forth herein.
`
`78. Under Paragraphs 9.1c and 12 of the PSA, the Pharmacy Defendants were required to
`maintain all records required under federal, state, and local laws, and to make such records available for
`inspection or audit, including audit by 340Basics on behalf of Rutgers to ensure compliance by the
`Pharmacy Defendants.
`
`79. Between approximately July 13, 2020 through November 5, 2020, Rutgers and 340Basics
`
`
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`tried to schedule conference calls and meetings with defendant Donepudi on multiple occasions, not only
`to discuss the Pharmacy Defendants’ default in making 340B Program payments to Rutgers, but to review
`all 340B Program backup documentation in order to demonstrate the correct amount owed to Rutgers.
`
`80. Donepudi initially ignored these requests, and even when the parties managed to confirm
`an appointment to speak by phone or meet in person, Donepudi failed to show up and/or participate on at
`least three separate occasions.
`
`81. In any event, Donepudi never produced any accounting, audit, or backup documentation to
`demonstrate in any way that the amounts claimed by Rutgers to be due to it under the PSA were incorrect
`or inaccurate.
`
`82. On or about September 28, 2021, defendant Donepudi advised counsel for Plaintiff that he
`was working on and would finally deliver a full accounting of all 340B Program transactions handled on
`behalf of Rutgers, including all relevant backup documentation, by October 5, 2021.
`
`83. On or about September 28, 2021, counsel for Rutgers demanded in writing that Donepudi
`deliver a full accounting of all 340B transaction handled on behalf of Rutgers, including all backup
`documentation, no later than close of business on October 5, 2021.
`
`84. To this day, Donepudi has failed to deliver any accounting to Rutgers.
`
`COUNT V
`
`BREACH OF GOOD FAITH AND FAIR DEALING
`
`85. Plaintiff hereby re-alleges and incorporates by reference the foregoing allegations as if
`fully set forth herein.
`
`86. All contracts include an implied covenant of good faith and fair dealing owed by each party
`to the other.
`
`87. The PSA constitutes a valid and binding contract under New Jersey law.
`
`88. In rendering performance of its obligations under the PSA, plaintiff Rutgers at all times
`acted in good faith and dealt fairly with the Pharmacy Defendants.
`
`
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`89. In contrast, on behalf of the Pharmacy Defendants, defendant Donepudi repeatedly lied,
`misrepresented the timing and amount of payments that would be made, and otherwise delayed the making
`of payments due to Rutgers under the PSA.
`
`90. Such acts and failure to perform by the Pharmacy Defendants and Donepudi constitute a
`breach of the covenant of good faith and fair dealing owed to Rutgers under the PSA.
`
`91. As a result of the foregoing breach by Defendants, Rutgers has suffered damages.
`
`COUNT VI
`
`FRAUD/FRAUDULENT MISREPRESENTATION
`
`92. Plaintiff hereby re-alleges and incorporates by reference the foregoing allegations as if
`fully set forth herein.
`
`93. The foregoing conduct by defendant Donepudi, by which he ignored requests for
`payment, feigned ignorance about accessing and using the 360Basics software to make necessary
`payments, breached a promise to complete ACH forms forwarded by Rutgers in order to expedite
`360B Program payments to Rutgers, agreed to participate in meetings and calls to discuss making
`payments and then failed to show up, agreed but failed to provide an accounting and/or backup
`documentation to demonstrate alleged but never explained challenges to Rutgers’ claims for
`payments under the PSA, reneged on promises to have checks prepared and waiting for pickup by
`Rutgers, and ignored written demands by Rutgers’ outside counsel for payment in full of all amounts
`owed under the PSA and an accounting/audit with full backup documentation to support any alleged
`challenges to the amount claimed to be owed, were all part and parcel of a scheme by Donepudi and
`the Pharmacy Defendants to delay making payments to Rutgers in order to obfuscate the fact that
`Donepudi had no intention of making the required payments.
`
`94. Specifically, Donepudi made the following statements/representations to Rutgers that
`he knew to be false at the time he made them:
`
`a. On or about July 13, 2020, Donepudi promised Latasha Upshaw, Program
`Coordinator of the New Jersey Medical School at Rutgers, that he would complete
`the ACH forms she had sent him for both Metro Pharmacy and QuickStop
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`Case 2:22-cv-00390 Document 1 Filed 01/26/22 Page 14 of 21 PageID: 14
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`Pharmacy in order to expedite electronic payments to Rutgers for April and May
`that should have been paid in June/early July – in fact, Donepudi never completed
`those forms and had no intention of doing so, as evidenced by the fact that he
`ignored written follow-up inquiries from Ms. Upshaw on August 5, 2020, August
`14, 2020, and August 19, 2020, and never completed the ACH forms needed to
`facilitate payments to Rutgers;
`
`b. During a telephone call on or about September 15, 2020, Donepudi promised Ms.
`Upshaw that he would expedite payment for the total balance owed by mailing and
`check and simultaneously faxing a copy to evidence payment – in fact, Donepudi never
`made any such payment and had no intention of doing so, as evidenced by the fact that
`he ignored Ms. Upshaw’s September 17, 2020 e-mail confirming their conversation,
`reiterating the amount due, providing payee information, and asking when the check
`will be mailed;
`
`c. Via text to Donepudi on or about September 25, 2020, Ms. Upshaw again inquired
`when he would be making payment to Rutgers. Donepudi responded, “Im [sic] working
`on them. We will start issuing those checks next week I didn’t forget. U will have all
`the checks. Im in mtg all day but I will call”. These statements by Donepudi were
`knowingly false as evidenced by the fact that he did not call, was not working on
`making payments, and did not issue checks to Rutgers the following week.
`
`d. On or about September 30, 2020, Ms. Upshaw texted Donepudi demanding to know
`where she could pick up the promised checks, inquiring whether he could pay off the
`then-owed sum of $423,650 via a 4-week payment plan, and asking when he is
`available the following week to discuss these issues. At this point, 6 months into
`performance under the PSA, Donepudi responded that he couldn’t log into the system
`to review the invoices, asked 360Basics to get him log in access, and also stated, quite
`inconsistently, that “I will get those checks rightaway”. Via e-mail that same day,
`Donepudi stated, “ I will work on them today and this week. I would like to get this
`done.” These statements were knowingly false, as evidenced by the fact that no
`payments were made to Rutgers that week as originally promised, or the week after
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`Case 2:22-cv-00390 Document 1 Filed 01/26/22 Page 15 of 21 PageID: 15
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`that as subsequently promised. When checks finally did arrive at the end of October
`2020, they were for approximately half of the more than $423,000 that was owed at
`that time.
`
`e. On or about October 2, 2020, Donepudi knowingly and falsely tried to blame the delays
`in payment on the insurance companies: “Just a reminder insurance companies pay us
`in 45 to 60 days from the date of claim. As of today we’re still getting insurance checks
`from beginning of August.” Ms. Upshaw rightly called Donepudi out on this knowingly
`false misrepresentation by stating, “Yes I’m aware. The past dues date back to claims
`from April.” It can be inferred from Donepudi’s statement about the timing of insurance
`payments that as of October 2, 2020, he had been sitting on payments received from
`the insurance companies for 360B Program transactions processed during the first four
`months of the PSA, April, May, June, and July 2020.
`
`f. From here on out, Donepudi grew even more difficult:
`
`i. He promised and then failed to call Ms. Upshaw on October 7, 2020;
`
`ii. He committed, several days in advance, to a 2 pm conference call on October
`13, 2020 with Ms. Upshaw and other representatives of Rutgers and 360Basics,
`but failed to call in or respond to texts sent inquiring as to his whereabouts
`shortly after the meeting was to have begun;
`
`iii. On or about October 29, 2020, Ms. Upshaw reached out to find out if she could
`pick up another check at Metro Pharmacy the following day – Donepudi never
`responded;
`
`iv. On or about November 5, 2020, Ms. Upshaw e-mailed Donepudi the updated
`outstanding balance and asked when she could pick up the next check –
`Donepudi never responded.
`
`v. On or about September 28, 2021, Donepudi stated that he was working on and
`would finally deliver a full accounting of all 340B Program transactions
`handled on behalf of Rutgers, including all relevant backup documentation, by
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`Case 2:22-cv-00390 Document 1 Filed 01/26