United States ex rel. Sherri McDermott v. Haworth Apothecary

District Court, D. New Jersey·Decided March 26, 2026·No. 2:19-cv-15360·Unknown

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

UNITED STATES ex rel. SHERRI MCDERMOTT, Civil Action No. 19-15360 (ES) (MAH)

Plaintiff,

v. OPINION HAWORTH APOTHECARY,

Defendant.

I. INTRODUCTION This matter comes before the Court by way of Relator Sherri McDermott’s (“Relator”) third motion for leave to amend the complaint. Third Mot. to Amend, Dec. 08, 2025, D.E. 469. Defendant1 Haworth Apothecary (“Haworth” or “Defendant”) opposes the motion. Def.’s Opp’n, Jan. 12, 2026, D.E. 475. The Court has reviewed the parties’ submissions in support of and in opposition to the instant motion and has considered the motion without oral argument. Fed. R. Civ. P. 78; Local Civ. R. 78.1. For the reasons set forth below, Relator’s third motion to amend the complaint is DENIED. II. BACKGROUND Relator initiated this qui tam action against Defendants by filing a Complaint under seal pursuant to the federal False Claims Act, 31 U.S.C. § 3729, and New Jersey False Claims Act,

1 Haworth is the only remaining Defendant. See Order of Dismissal, May 29, 2025, D.E. 426 (dismissing with prejudice Soloman Health Care, LLC); Order of Dismissal, May 30, 2025, D.E. 429 (dismissing with prejudice and without costs Defendants Life Source Services, LLC, Val Chapman, Karen D’Imperio, and Hersh Krausz (the “LSS Defendants”). This Court uses “Defendants” to refer to all Defendants, including those now dismissed. N.J.S.A. 2A:32C-10. See Compl., July 12, 2019, D.E. 1, ¶ 1.2 On September 15, 2020, the United States of America and State of New Jersey declined to intervene in this matter. Notice of Declination, D.E. 4. The Court therefore restored the Complaint and unsealed the matter to allow Relator to effect service. Order Restoring Compl., Apr. 13, 2021, D.E. 5.

After Defendants filed their respective Answers, the Court held a scheduling conference pursuant to Federal Rule of Civil Procedure 16 on September 24, 2021. At the conclusion of that conference, the Court issued a Pretrial Scheduling Order (“PTSO”), which set forth deadlines to complete discovery and engage in certain motion practice. PTSO, D.E. 34. Pertinent to this motion, the PTSO set a deadline of January 31, 2022 for any motion to amend the pleadings or add new parties. Id. ¶ 12. In fact, the Court granted Relator’s motion to amend the complaint, over Haworth’s objection, on January 7, 2022. Order Granting Mot. to Amend, Jan. 7, 2022, D.E. 85; First Am. Compl., Jan. 8, 2022, D.E. 87. The First Amended Complaint is the Relator’s operative pleading. The First Amended Complaint (“FAC”) alleges that beginning in or around March 2017,

Defendants defrauded Medicare and Medicaid by obtaining reimbursement for hospice services and other items to which Defendants were not entitled. FAC, D.E. 87 ¶¶ 2-5. Relator asserts that as part of the scheme, now-dismissed Defendants Chapman and D’Imperio, who were employees of now-dismissed Defendant Life Source Services, directed Relator to falsify hospice care records. Id. ¶¶ 8, 10, 62-63. Relator contends that after she objected to falsifying the records, Life Source Services wrongfully terminated her on or about June 28, 2017. Id. ¶¶ 10,

2 The parties are well familiar with the facts and history of this action. In addition, the Undersigned set forth a comprehensive factual background in this Court’s Opinion on June 15, 2022, D.E. 128, as well as the February 27, 2023 Opinion denying Relator’s second motion to amend the complaint, D.E. 223. The Court incorporates those backgrounds as reference and supplements them only as necessary to address Relator’s current motion. 99. The FAC alleges four causes of action: Counts One and Two allege violations of the federal False Claims Act; Count Three alleges violations of the New Jersey False Claims Act; and Count Four alleges retaliation in violation of the anti-retaliation provisions of multiple federal and state laws, including CEPA, based on the termination of Relator’s employment. Id. ¶¶ 83-100.

Second Motion to Amend Several months after the Court granted Relator’s motion to file the FAC, she again sought to amend. Second Mot. to Amend, Dec. 16, 2022, D.E. 177. Relator wanted to add new parties to the complaint, contending that she first learned of them in June 2022. Id. at 7. Relator also sought to expand the timeframe of the alleged false claims significantly beyond her period of employment at Life Source Services. Relator primarily argued the Court should grant leave to amend under Federal Rule of Civil Procedure 15 because Defendants were unable to show prejudice, undue delay, or bad faith if the Court were to grant the motion. D.E. 177, at 9-12. Additionally, Relator argued she demonstrated good cause to amend the complaint under both Rules 15 and 16(b)(4), because she exercised reasonable diligence in seeking to amend and

newly discovered information warranted amendment. Id. at 12-14; Relator’s Supp. Br., D.E. 220. Haworth opposed the motion. Haworth contended that the proposed amendment would be futile. Haworth’s Opp’n, D.E. 198, at 9-17. Haworth also argued any such amendment would result in undue prejudice and delay given that the litigation had been proceeding for “the past seventeen months.” Id. at 18-20. Finally, Haworth argued Relator lacked good cause to amend under Rule 16(b)(4) because she failed to request an extension of the deadline to amend under the operative scheduling order, even though Relator had the information on which she relied to amend for some time. Haworth’s Supp. Br., D.E. 219. The Court denied Relator’s motion on February 27, 2023. Op. & Order, D.Es. 223 & 224. The Court found that Relator failed to show good cause under Rule 16. Although she discovered the existence of additional parties in June 2022, Relator did not establish good cause for the several months she waited before moving to amend. D.E. 223, at 8. Additionally,

Relator failed to satisfy Rule 15, particularly on the issue of whether granting Relator’s motion would cause undue delay in advancing the litigation to adjudication on the merits. Id. at 10. Additionally, the Court noted that Relator’s “attempt[] to amend the FAC at this stage to increase the timeframe by which to attempt to gather discovery for a period extending beyond the Relator’s employment” would be inappropriate, because “Relator cannot use Rule 15 to circumvent the Court’s rulings on the scope of discovery.” Id. at 11. Notably, the Court did not permit Relator “to amend the complaint to add specific allegations” that “concerned the same scheme that Relator has already plead in the FAC.” Id. at 8. The Court noted that “[n]either Rule 15 nor Rule 16 stands for the proposition that a party can amend the complaint each and every time she becomes aware of new factual allegations that

already support the allegations as set forth in the complaint.” Id. at 8 (citing Strategic Prods. & Servs., LLC v. Integrated Media Techs., Inc., No. 18-694, 2020 WL 5810561, at *3 (D.N.J. Sept. 30, 2020)). Relator appealed the Undersigned’s decision. Appeal of Magistrate Judge Decision, Mar. 9, 2023, D.E. 229. The District Court affirmed the Undersigned on December 28, 2023. Op. & Order, D.Es. 303 & 304.

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