Annappareddy v. Pascale

996 F.3d 120

Reddy Vijay ANNAPPAREDDY, Plaintiff – Appellee,

v.Catherine Schuster PASCALE, Defendant – Appellant,andMaura Lating; Robert Mosley ; Pam Arnold; James P. Ryan; Sandra Wilkinson; Steven Capobianco; United States of America, Defendants.

Reddy Vijay Annappareddy, Plaintiff – Appellant,

v.Maura Lating; Robert Mosley ; James P. Ryan; Sandra Wilkinson; Steven Capobianco, Defendants – Appellees,andCatherine Schuster Pascale; Pam Arnold; United States of America, Defendants.

Reddy Vijay Annappareddy, Plaintiff – Appellee,

v.Maura Lating, Defendant – Appellant,andCatherine Schuster Pascale; Robert Mosley ; Pam Arnold; James P. Ryan; Sandra Wilkinson; Steven Capobianco; United States of America, Defendants.

Reddy Vijay Annappareddy, Plaintiff – Appellee,

v.James P. Ryan, Defendant – Appellant,andCatherine Schuster Pascale; Maura Lating; Robert Mosley ; Pam Arnold; Sandra Wilkinson; Steven Capobianco; United States of America, Defendants.

Reddy Vijay Annappareddy, Plaintiff – Appellee,

v.Steven Capobianco, Defendant – Appellant,andCatherine Schuster Pascale; Maura Lating; Robert Mosley ; Pam Arnold; James P. Ryan; Sandra Wilkinson; United States of America, Defendants.

Reddy Vijay Annappareddy, Plaintiff – Appellee,

v.Robert Mosley, Defendant – Appellant,andCatherine Schuster Pascale; Maura Lating; Pam Arnold; James P. Ryan; Sandra Wilkinson; Steven Capobianco; United States of America, Defendants.

Reddy Vijay Annappareddy, Plaintiff – Appellee,

v.Sandra Wilkinson, Defendant – Appellant,andCatherine Schuster Pascale; Maura Lating; Robert Mosley ; Pam Arnold; James P. Ryan; Steven Capobianco; United States of America, Defendants.

No. 19-2285

No. 19-2337

No. 19-2344

No. 19-2351

No. 19-2352

No. 19-2369

No. 19-2370

United States Court of Appeals, Fourth Circuit.

Argued: January 25, 2021

Decided: April 26, 2021

ARGUED: Joshua D. Greenberg, JOSH GREENBERG LAW FIRM, Washington, D.C., for Plaintiff-Appellee/Cross-Appellant Reddy Vijay Annappareddy. Steven M. Klepper, KRAMON & GRAHAM, P.A., Baltimore, Maryland; Brian Frey, ALSTON & BIRD, LLP, Washington, D.C.; Jodie Buchman, SILVERMAN | THOMPSON | SLUTKIN | WHITE LLC, Baltimore, Maryland; Wesley Wintermyer, CADWALADER, WICKERSHAM & TAFT LLP, Washington, D.C., for Defendants-Appellees/Cross-Appellants. ON BRIEF: Stuart M. Paynter, PAYNTER LAW FIRM PLLC, Washington, D.C., for Plaintiff-Appellee/Cross-Appellant. John A. Bourgeois, Geoffrey H. Genth, William J. Harrington, KRAMON & GRAHAM, P.A., Baltimore, Maryland, for Appellant Catherine Pascale. Andrew C. White, Christopher J. Macchiaroli, SILVERMAN | THOMPSON | SLUTKIN | WHITE LLC, Baltimore, Maryland, for Appellee/Cross-Appellant Maura Lating. Brent J. Gurney, Kelly P. Dunbar, Edward Williams, WILMER CUTLER PICKERING HALE AND DORR LLP, Washington, D.C., for Appellee/Cross-Appellant Steven Capobianco. Thomas H. Barnard, Kelly M. Preteroti, Christopher C. Dahl, BAKER, DONELSON, BEARMAN, CALDWELL BERKOWITZ, PC, Baltimore, Maryland, for Appellee/Cross-Appellant James P. Ryan. Edward T. Kang, Brandon Springer, ALSTON & BIRD, LLP, Washington, D.C., for Appellee/Cross-Appellant Sandra Wilkinson. Douglas Gansler, William Simpson, CADWALADER, WICKERSHAM & TAFT LLP, Washington, D.C., for Appellee/Cross-Appellant Robert Mosley.

Before GREGORY, Chief Judge, and MOTZ and HARRIS, Circuit Judges.

Affirmed in part, reversed in part, and remanded by published opinion. Judge Harris wrote the opinion, in which Chief Judge Gregory and Judge Motz joined.

PAMELA HARRIS, Circuit Judge:

Reddy Vijay Annappareddy was the owner of a chain of pharmacies in Maryland and nearby states when he was prosecuted for Medicaid fraud. A district court ultimately dismissed the charges against him, finding that the government had used flawed analyses of the pharmacies’ inventory and billing practices to convict Annappareddy at trial, and then destroyed relevant evidence while a motion for retrial was pending.

After the case against him was dismissed, Annappareddy filed a wide-ranging complaint in federal court, seeking compensatory and punitive damages from multiple defendants. According to Annappareddy, state and federal investigators and prosecutors, working together, violated his rights under the federal Constitution and Maryland law, fabricating evidence against him and then destroying exculpatory evidence when it seemed their malfeasance might come to light. For the complaint's federal constitutional claims against individual officers, Annappareddy relied on a Bivens cause of action. He also sought relief against individual state officers under § 1983 and Maryland state law, and against the United States under the Federal Tort Claims Act.

At issue in these appeals are two preliminary rulings by the district court. First, the court dismissed Annappareddy's federal constitutional claims, ruling that they would constitute impermissible extensions of the Bivens cause of action. But the court allowed several state-law claims to proceed against one of the prosecutors in charge of Annappareddy's criminal case, Catherine Pascale, rejecting her argument that absolute prosecutorial immunity shielded her from allegations that she had fabricated inculpatory evidence and destroyed exculpatory evidence.

The parties appealed both determinations. On review, we affirm the district court's dismissal of the federal constitutional claims. Like the district court, we conclude that these claims would extend the Bivens remedy into a new context, and that special factors counsel against an extension to cover intertwined allegations of wrongdoing by prosecutors and criminal investigators in Annappareddy's prosecution. We disagree, however, with the district court's determination that the state-law claims can move forward against Pascale, finding instead that absolute prosecutorial immunity bars the claims against her. Accordingly, we affirm in part and reverse in part, and remand for further proceedings.

I.

A.

Because we review this case at the motion-to-dismiss stage, we draw the following facts from the complaint, accepting them as true for the purposes of this appeal. See Nero v. Mosby , 890 F.3d 106, 114 (4th Cir. 2018).

1.

We begin with the investigation and indictment of Reddy Vijay Annappareddy. We focus here on several investigators who would become defendants in Annappareddy's suit, accused of fabricating evidence against him and submitting a false affidavit to obtain a search warrant.

Annappareddy is the founder and owner of Pharmacare, a now-shuttered chain of pharmacies that once had nine locations in several states. In 2012, Maryland's Medicaid Fraud Control Unit ("MFCU") began investigating Pharmacare's billing practices after a former employee accused the company of billing government health care programs for prescriptions that were never delivered. MFCU investigators soon began working with a pharmacist at one of Pharmacare's stores, Lisa Ridolfi, to gather evidence. Annappareddy alleges that Ridolfi, in the hopes of receiving payment as a "whistleblower," began fabricating evidence of fraud. According to Annappareddy, Ridolfi's main contact at the MFCU, investigator Pam Arnold, was aware of and encouraged these fabrications, and passed the false information to prosecutors "as if it were accurate and reliable."

At some point in 2013, federal law enforcement joined the investigation, and began building a case that Annappareddy was submitting claims for prescriptions for high-dollar medications that were never filled or received by patients. Maura Lating, a special agent for the Federal Bureau of Investigation ("FBI"), took over leadership of the team of investigators. Also on the team was Robert Mosley, a special agent in the Office of Inspector General of the U.S. Department of Health & Human Services ("HHS").

Mosley worked with a Medicare drug integrity contractor ("MEDIC") to prepare what would turn out to be a critical analysis of Pharmacare's invoices and inventory. That MEDIC analysis purported to find "shortages" of dozens of medications – that is, that Pharmacare had insufficient inventory to fill prescriptions for which it billed and was paid. Annappareddy alleges that Mosley "rig[ged]" those findings, so that they failed to account for legal transfers between Pharmacare locations and ignored significant inventory of the medications in question. J.A. 113. And then, according to Annappareddy, investigators used this falsified analysis as evidence to obtain both a search warrant against Pharmacare and a criminal indictment against him.

On July 23, 2013, a magistrate judge issued sealed warrants to search six Pharmacare locations. To secure those warrants, Lating – the FBI agent now leading the investigation – submitted an affidavit (the "Lating Affidavit") that, Annappareddy claims, purported to establish probable cause through "material false statements and omissions." J.A. 114. Most important, the Lating Affidavit included the MEDIC "invoice review" described above, which falsely showed that Pharmacare had medication shortages that in fact did not exist. Other claimed flaws in the Lating Affidavit included misstatements of the law governing prescription billing and information provided by untrustworthy informants. Annappareddy alleges that Lating had "actual knowledge" of these fabrications and falsehoods, and "acted at least recklessly in making" them. J.A. 116. And without this flawed evidence, he contends, the Lating Affidavit would not have established probable cause, and the magistrate judge would not have issued the warrants.

The same day that investigators secured the search warrants, a grand jury charged Annappareddy and two Pharmacare pharmacy technicians with health care fraud and aggravated identity theft. Annappareddy alleges that this indictment, like the search warrants, was secured by evidence Lating, Mosley, and Arnold knew to be false.

Two days later, on July 25, 2013, federal and state agents raided six Pharmacare locations and executed the search warrants....