Mike Townsend v. Bayer HealthCare

774 F.3d 446, 39 I.E.R. Cas. (BNA) 791, 2014 U.S. App. LEXIS 23697, 2014 WL 7172031
CourtCourt of Appeals for the Eighth Circuit
DecidedDecember 17, 2014
Docket13-1468
StatusPublished
Cited by33 cases

This text of 774 F.3d 446 (Mike Townsend v. Bayer HealthCare) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mike Townsend v. Bayer HealthCare, 774 F.3d 446, 39 I.E.R. Cas. (BNA) 791, 2014 U.S. App. LEXIS 23697, 2014 WL 7172031 (8th Cir. 2014).

Opinion

BYE, Circuit Judge.

Mikeo Townsend sued Bayer Healthcare Pharmaceuticals (Bayer) alleging Bayer wrongfully terminated him in violation of the whistleblower protection provisions of the False Claims Act (FCA), 31 U.S.C. § 3730(h). A jury awarded Townsend $321,373 in back pay, doubled to $642,746 pursuant to the FCA, and $568,000 in emotional distress damages for a total recovery of $1,210,746. The district court denied Townsend’s request for front pay and ordered Bayer to reinstate Townsend. Bayer appeals challenging the sufficiency of the evidence on a number of grounds. Bayer also contends Townsend’s suit was time-barred, the district court committed evidentiary errors, the district court erred in reinstating Townsend, the back pay award was contrary to the evidence, and the emotional distress damages were excessive. We affirm in part, reverse in part, and remand.

*452 I

We summarize the evidence presented at trial, viewing it in the light most favorable to Townsend. See Diesel Mach., Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 832 (8th Cir.2005) (setting forth the standard of review for a challenge to the sufficiency of the evidence).

Townsend worked as a pharmaceutical sales representative for Bayer in Arkansas. His primary responsibility involved selling Mirena, a contraceptive device manufactured and sold by Bayer. As a sales representative, Townsend regularly visited a number of physicians, including Dr. Kelly Shrum. Dr. Shrum practiced at the Arkansas Center for Women in Pine Bluff, Arkansas. In January 2008, Townsend learned Dr. Shrum had been importing a version of Mirena from Canada that had not been approved by the Food and Drug Administration (FDA). Dr. Shrum obtained the non-FDA approved version of Mirena at half the cost of the version approved for sale in the United States. Townsend also learned Dr. Shrum had been submitting Medicaid claims to the government for this “gray market Mirena” at the same rate as the version of Mirena approved by the FDA. Dr. Shrum bragged about the $50,000 in profit he had made using the cheaper version of Mirena.

By the time Townsend learned about Dr. Shrum’s fraudulent Medicaid claims, physician use of non-FDA approved Mire-na was generally well-known by Bayer’s sales force. In a November 2007 email chain which included Townsend’s superiors, the Mirena sales force discussed importation of the non-FDA approved version of Mirena by physicians and discussed the fact that physicians reimbursed by Medicaid for such contraceptives were committing Medicaid fraud. After learning of Dr. Shrum’s conduct, Townsend sought guidance from his superiors about what to do. Townsend asked his manager, Beth Whisenhunt, if he was required to report Dr. Shrum’s overbilling to the government. Whisenhunt never responded.

After Townsend did not receive a response from Whisenhunt, he and his fellow sales representatives continued to seek guidance from Bayer on how to deal with physicians submitting Medicaid claims for the price of the FDA approved version of Mirena but actually prescribing the less expensive non-FDA approved version. Bayer reacted by telling Townsend to focus on selling more Mirena, and not to get caught up with issues involving the non-FDA approved version of Mirena.

Eventually, however, Townsend called the Arkansas Attorney General’s Medicaid Fraud Hotline to report Dr. Shrum’s fraud even though he feared he might lose his job. On April 1, 2009, Townsend spoke with Priscilla Kilgore, a senior investigator in the Attorney General’s Medicaid fraud office. Townsend anonymously told Kil-gore that Dr. Shrum was overbilling the government for the non-FDA approved version of Mirena. Townsend requested anonymity because he feared losing his job. Townsend also told Kilgore Dr. Shrum had bragged about $50,000 in profit he had made in his scheme to defraud the government. Townsend’s call quickly led to an investigation of Dr. Shrum by the FDA, the United States Attorney’s Office, and the Arkansas Attorney General’s Office. Based on the information Townsend provided, a decision was made to execute a search warrant on the Arkansas Center for Women.

The government raided Dr. Shrum’s clinic on June 17, 2009, and found the non-FDA approved version of Mirena. Dr. Shrum was subsequently charged with Medicaid fraud in the United States District Court for the Eastern District of Arkansas, and ultimately convicted of sub *453 mitting false claims to the government. But for Townsend’s whistleblowing, Dr. Shrum would likely have continued his scheme. Townsend cooperated fully with the government’s investigation and prosecution of Dr. Shrum, which included the disclosure of his identity in the search warrant obtained for Dr. Shrum’s clinic. Townsend believed he might face repercussions from Bayer for his role in the Shrum investigation, but nevertheless informed Whisenhunt he had reported Dr. Shrum to the authorities. Trent Erway, another Bayer employee, agreed Townsend should be concerned about his job.

Meanwhile, in 2009 Bayer changed the way it paid for expenses incurred by its sales force. Before the change, sales representatives submitted expenses to Bayer and Bayer would itself pay the representatives’ company credit card bills. In February 2009, Bayer entered into an agreement with U.S. Bank to issue credit cards directly to Bayer’s sales representatives. Expenses were still submitted to Bayer for approval, but, instead of paying the credit card bills directly, Bayer reimbursed each individual sales representative. The sales representatives then paid their own individual credit card bills using the funds provided by Bayer. Bayer was required to keep close track of these expenses because of the regulations imposed upon the pharmaceutical industry.

Some time after Bayer changed its credit card expense practices, Townsend’s wife noticed the reimbursement funds Bayer had deposited into their checking account and, not knowing the funds were earmarked to pay the U.S. Bank credit card, used some of the money to pay other bills instead. Townsend got behind on his U.S. Bank payments as a result, and U.S. Bank closed his account in October 2009. In March 2010, Townsend used a bonus he received from Bayer to pay off the outstanding balance on his credit card account. On April 1, 2010, U.S. Bank reactivated Townsend’s account at the request of Lori Kushik, Bayer’s Program Administrator for the U.S. Bank credit card program.

Even though Townsend’s credit card account had been reactivated, Bayer fired him on May 5, 2010, claiming his closed credit card account did not allow him to perform his job because he could not entertain physicians. Three Bayer representatives met with Townsend — Blake Mounce, Townsend’s supervisor; David Beasley, Bayer’s Area Director; and John O’Donnell, a corporate human resources department employee. O’Donnell led the meeting and did most of the talking. He told Townsend he was being terminated because his U.S. Bank credit card had been deactivated, despite the fact that the account had been reactivated at Bayer’s request over a month earlier. No one at the meeting asked Townsend about the outstanding balance on his company credit card. Likewise, no one confiscated Townsend’s card even though there was a policy requiring them to do so.

On March 7, 2011, Townsend sued Bayer.

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Cite This Page — Counsel Stack

Bluebook (online)
774 F.3d 446, 39 I.E.R. Cas. (BNA) 791, 2014 U.S. App. LEXIS 23697, 2014 WL 7172031, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mike-townsend-v-bayer-healthcare-ca8-2014.