United States of America v. Coloplast A/S

CourtDistrict Court, D. Massachusetts
DecidedFebruary 26, 2018
Docket1:11-cv-12131
StatusUnknown

This text of United States of America v. Coloplast A/S (United States of America v. Coloplast A/S) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States of America v. Coloplast A/S, (D. Mass. 2018).

Opinion

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS CIVIL ACTION NO. 11-12131-RWZ

UNITED STATES OF AMERICA and THE STATE OF CALIFORNIA, ex rel. KIMBERLY HERMAN, et al. v. COLOPLAST CORP., et al. MEMORANDUM OF DECISION February 26, 2018 ZOBEL, S.D.J.

Defendant Coloplast Corp. moves for summary judgment on plaintiff-relator Amy Lestage’s claim that Coloplast violated the anti-retaliation provision of the False Claims Act (“FCA”), 31 U.S.C. § 3730(h). I. Factual Background I summarize the facts in the light most favorable to the non-moving party. See Planadeball v. Wyndham Vacation Resorts, Inc., 793 F.3d 169, 172 (1st Cir. 2015). In 2011, Lestage became a Key Account Manager (“KAM”) at Coloplast. KAMs sell medical product devices to distributors and dealers and manage those contractual relationships. They are paid commissions based on the percentage of growth of each

account in their portfolio, and these “[c]ommissions are a key component of a KAM’s compensation package, [and] in some cases amount to half (or more) of a KAM’s annual compensation.” Docket # 285 ¶ 52. “If a KAM hits 100% of the quota for his or her portfolio, he or she will earn the ‘target incentive’ in commissions for that fiscal year ....” Docket # 282 ¶ 9. If a KAM exceeds 100% of the quota, she will receive a larger percentage of the target incentive. Lestage exceeded 100% of the quota in both FY 12/13 and FY 13/14, mainly due to her principal account, Byram Healthcare, Inc., one of the named defendants in the underlying qui tam action.

In August 2014, the docket in this case was unsealed and on November 20, 2014, the Amended Complaint publicly filed. At that time plaintiff’s identity as a relator was revealed. In the Amended Complaint, relators alleged that defendants, including Coloplast and Byram, engaged in an illegal kickback scheme regarding the sale of ostomy and/or continence care products reimbursed by Medicare and Medicaid, and defrauded the federal government. On December 18, 2014, Byram’s CEO sent a letter to Edmond Veome, Coloplast’s president, requesting that Coloplast “provide Byram Healthcare with a different account representative” and stating that it “no longer wish[ed] to work with Amy Lestage regarding [their] business together.” Docket # 274–10 at 2. Byram directed Coloplast to its legal counsel regarding any questions it may have on the matter.

On December 23, 2014, Coloplast informed Lestage by letter that it was placing her “on an indefinite, paid administrative leave . . . while [it] investigated [Byram’s demand to remove her from its account].” Docket # 283–10 at 2. The parties dispute whether Coloplast knew at that point that Lestage was a relator in the qui tam action. They also disagree whether to characterize this event as a “suspension” or a “paid

2 administrative leave.”1 Whether termed a “suspension” or “paid administrative leave,” it is undisputed that plaintiff was required to “immediately cease performing any services on behalf of Coloplast.” Docket # 283–10 at 2. Coloplast told plaintiff that “while on leave, [her] salary will be paid on the regular, biweekly process and [her] commission will be paid out according to the monthly process. For any month where [she is] on paid administrative leave, Coloplast will

guarantee a minimum commission payment of 100% of the eligible [target incentive] for that month ($6,666.67). [She] also remain[s] fully eligible for any benefits [she had] enrolled in.” Docket # 283–11 at 2. Indeed, “[f]or FY14/15 and FY15/16, Coloplast paid Plaintiff $80,000 in commission while on leave whereas the average KAM commission was less than $68,000 during this same period.” Docket # 282 ¶ 43. She also continued to use the company-issued vehicle and fuel card, accrue paid time off, receive contributions to her 401(k), maintain health, disability, and life insurance benefits, and she received a raise. She was, however, prohibited from “performing any services on behalf of Coloplast” or “hav[ing] any contact with Coloplast customers or employees relating to [her] accounts . . . or any Coloplast business.” Docket # 283–11

at 2. On May 6, 2015, relators moved to file a Second Amended Complaint, in part to add Lestage’s retaliation claim against Coloplast.

1 Courts have referred to such a situation interchangeably as a “suspension” and “paid administrative leave.” See e.g., Richardson v. Petasis, 160 F. Supp. 3d 88, 106 (D.D.C. 2015) (evaluating discrimination claim under Title VII framework and explaining that plaintiff was placed “on ‘paid administrative leave’ (which can also be appropriately referred to as a suspension)”); Scott v. Metropolitan Health Corp., 234 Fed. Appx. 341, 348 (6th Cir. 2007) (referring to a paid leave as “a suspension with pay and full benefits”). For the purposes of this Memorandum of Decision, I use the word “leave” for convenience while nevertheless drawing all reasonable inferences about the situation in Lestage’s favor. 3 Although Coloplast allowed Lestage to return to work on January 25, 2016, she had delivered a baby in November 2015 and elected to take twelve weeks of maternity leave under the Family Medical Leave Act (“FMLA”) beginning in January 2016. On April 12, 2016, following the end of her FMLA leave, she resumed working and was allowed to accrue immediately four days of paid time off to take a vacation. Prior to her leave, plaintiff’s portfolio of accounts included Byram, ABC Home

Medical, Home Care Delivered, Buffalo Hospital Supply, Inc., and Claflin Medical Equipment Co. Upon her return in April 2016, she was taken off the Byram and ABC accounts. She did maintain the Home Care Delivered, Buffalo Hospital Supply, and Claflin accounts, and was also assigned four new accounts: AmeriSource Bergen, Blackburns Physician’s Pharmacy, Concordance Healthcare Solutions, and Geriatric Medical. The parties dispute the growth potential of these four new accounts. It is undisputed, however, that plaintiff, through her counsel, wrote to Coloplast on December 28, 2015 that “given her status as a relator against her key accounts, it would be impossible for Ms. Lestage to return to an account position where she would be handling clients, like Byram and Liberator, that she had handled prior to the qui tam

action.” Docket # 282 ¶ 30. On June 20, 2016, Coloplast answered the Amended Complaint and asserted counterclaims against Lestage for breach of contract and breach of duty of loyalty. The counterclaims allege that, between 2010 and 2013, Lestage sent eleven emails outside the company; that the emails contained confidential Coloplast information; that her “Employment Agreement prohibited Lestage from disclosing confidential information other than for the sole purpose of performing her employment duties” and required her 4 to “take all reasonable precautions to prevent the inadvertent disclosure” of confidential information; and that, “on information and belief, Lestage has shared the information forwarded to non-Coloplast email addresses with individuals outside of Coloplast.” Docket # 144 at 56. Coloplast says it discovered the alleged violations inadvertently while conducting “its investigation and responding to inquiries from the government in this lawsuit.” Docket # 284 at 5.

II. Legal Standards A. Summary Judgment Summary judgment is appropriate when “there is no genuine issue as to any material fact” and “the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c).

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