United States of America et al v. Coloplast A/S et al
Filing
480
Judge Rya W. Zobel: ORDER entered denying 459 Motion for Judgment as a Matter of Law; denying 462 Motion for New Trial (Urso, Lisa)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 11-12131-RWZ
THE UNITED STATES OF AMERICA, and THE STATE OF CALIFORNIA, ex rel.
KIMBERLY HERMAN, AMY LESTAGE and KEVIN ROSEFF
v.
COLOPLAST CORP., et al.
ORDER
September 13, 2019
ZOBEL, S. D.J.
After a five-day trial, a jury returned a verdict for plaintiff Amy Lestage, finding
that defendant Coloplast Corp. retaliated against her for reporting company conduct
that allegedly violated the False Claims Act (“FCA”). It awarded damages in the
amount of $762,525 as compensation for (1) Coloplast’s decision to place Lestage on
paid administrative leave, and (2) the manner in which Coloplast reassigned accounts
to Lestage when she returned to work. Coloplast has renewed its motion for judgment
as a matter of law (Docket # 459) and moves alternatively for a new trial (Docket #
462). Both motions are denied.
I.
Background1
Coloplast develops, manufactures, and markets medical devices and services
1
In its review, the court relies on stipulated facts and uncontroverted trial testim ony.
1
related to medical conditions and surgeries like incontinence and ostomy. It sells its
products to distributors and dealers, and to this end employs Key Account Managers
(“KAMs”) to maximize sales to, and manage the relationship with, its most profitable
customers. It compensates each KAM with a base salary as well as commission based
on the growth of their account portfolio. Plaintiff began working for Coloplast as a sales
and services representative in 2004 and was promoted to KAM in 2011.
In December 2011, Lestage and two former Coloplast employees filed a False
Claims Act qui tam lawsuit against Coloplast and several other entities including Byram
Healthcare, one of its largest distributors. The qui tam action alleged that Coloplast,
Byram, and others had engaged in an illegal kickback scheme to inflate their Medicare
and Medicaid reimbursement amounts and thereby defraud the federal government. As
required in qui tam cases, the complaint was initially filed under seal. An unsealed
amended complaint filed on November 20, 2014, for the first time publicly identified
Lestage as a relator.
At this time, in November 2014, plaintiff’s accounts at Coloplast included Byram,
ABC Home Medical, Home Care Delivered, Buffalo Hospital Supply, Inc., and Claflin
Medical Equipment Co. On December 19, 2014, Perry Bernocchi, the CEO of Byram,
notified Coloplast that it no longer wanted to work with Lestage and asked for a different
KAM to be assigned. Around this time, Coloplast also learned of Lestage’s role in the
qui tam case. On December 23, 2014, it placed plaintiff on an indefinite, fully-paid,
administrative leave. In December 2015, Coloplast and the federal government settled
the qui tam action. On January 15, 2016, Coloplast asked plaintiff to return to work.
Having delivered her third child less than two months earlier, plaintiff elected to take
2
twelve weeks of leave under the Family and Medical Leave Act (“FMLA”) before
returning to work on April 12, 2016. At that point she was assigned three of her old
accounts—Claflin, Home Care Delivered and Buffalo—plus four new ones—Geriatric,
AmeriSource Bergen, Blackburns, and Concordance. Neither Byram nor ABC were
returned to her.
On June 1, 2015, Lestage filed the instant FCA retaliation claim against
Coloplast. She alleges the company took adverse action against her because of her
role as a qui tam relator by (1) placing her on paid administrative leave for 388 days,
and (2) assigning her a portfolio of low-growth accounts upon her return. In February
2018, this court denied Coloplast’s motion for summary judgment and in April 2019 the
dispute was tried to a jury. Before resting its case Coloplast moved for judgment as a
matter of law, on which the court reserved. The jury returned a special verdict in favor
of plaintiff and awarded $762,525 in compensatory damages. Coloplast subsequently
renewed its motion for judgment as a matter of law, and, in the alternative, filed a
motion for new trial.
II.
Standard
“The standard for granting a Rule 50 motion is stringent. ‘Courts may only grant
a judgment contravening a jury’s determination when the evidence points so strongly
and overwhelmingly in favor of the moving party that no reasonable jury could have
returned a verdict adverse to that party.’” Malone v. Lockheed Martin Corp., 610 F.3d
16, 20 (1st Cir. 2010) (quoting Rivera Castillo v. Autokirey, Inc., 379 F.3d 4, 9 (1st Cir.
2004)). In making its determination, the court may not weigh the evidence, determine
the credibility of the witnesses presented, or attempt to resolve conflicting testimony.
3
MacQuarrie v. Howard Johnson Co., 877 F.2d 126, 128 (1st Cir. 1989).
Under Federal Rule of Civil Procedure 59(a), a court may order a new trial “only
if the verdict is against the law, against the weight of the credible evidence, or
tantamount to a miscarriage of justice.” Crowe v. Marchand, 506 F.3d 13, 19 (1st Cir.
2007) (quoting Casillas-Díaz v. Palau, 463 F.3d 77, 81 (1st Cir. 2006)).
III.
Discussion
In reaching its verdict, the jury made five specific findings that mirror the
elements of an FCA retaliation claim: (1) plaintiff engaged in protected conduct under
the FCA (by filing a qui tam action); (2) Coloplast knew of plaintiff’s protected conduct
on or before December 23, 2014 (the date the alleged retaliation began); (3) Coloplast
retaliated against plaintiff because of her protected conduct by both (a) placing her on
indefinite administrative leave, and (b) the choice of accounts assigned to her upon her
return in 2016; (4) defendant’s conduct caused plaintiff to suffer damages as a result of
one or both (a) the administrative leave, and (b) the assignment of accounts; and (5)
plaintiff should be awarded compensatory damages in the amount of $762,525.
A.
Judgment as a Matter of Law
Coloplast challenges the sufficiency of the evidence adduced at trial. Yet the
evidence sufficiently supports the jury’s verdict in this case.
1.
Reason for Administrative Leave
Coloplast argues that the company placed plaintiff on leave solely because of
Byram’s request that it assign a different KAM to its account. It is true that the two
Coloplast executives who testified at trial, Ed Veome and Morton Hansen, identified
Byram’s request as a motivating factor in their decision to place Lestage on leave.
4
While that fact was clearly important, the evidence also showed that Byram was
Coloplast’s largest account and that it was a co-defendant in the qui tam case.
Moreover, the testimony of Hansen and Veome supported the conclusion that Coloplast
knew about plaintiff’s role in the qui tam litigation at the time it decided to place her on
leave. Tr. Day 1, 139:4-8 (Hansen); Tr. Day 2, 34:7-17 (Veome). And Veome testified
that the decision was precipitated by a conversation with counsel, including Coloplast’s
outside counsel who also represented the company in the qui tam litigation. Tr. Day. 2,
25-26 (Veome). A reasonable jury could infer that it was not simply the isolated request
of one of her customers, but rather Lestage’s involvement in the FCA case, that
prompted Coloplast to place her on leave.
2.
Damages During Administrative Leave
Coloplast next argues that because the company fully paid plaintiff while she was
on leave, she could not have accrued any damages during this time. This argument
discounts plaintiff’s and her husband’s detailed testimony regarding the anxiety and
emotional strain occasioned by Coloplast’s closeted management of the leave,
including Coloplast’s prohibition of plaintiff’s communication with her colleagues during
the leave, and the continued uncertainty about the duration of the leave and the fate of
her career at the company. E.g., Tr. Day 2 at 106:4-7, 106:14-18, 107:17-108:8, 109:312, 110-111 (Lestage); Tr. Day 3 at 126:14-21, 127:4-11 (Lord). Lestage also detailed
the damage to her client relationships created by Coloplast’s apparent failure to
communicate her absence to her clients. Tr. Day 2, 126. On this basis a reasonable
jury could find Lestage incurred damages while on leave.
5
3.
Retaliation Via Account Assignments
Coloplast emphatically argues that no reasonable jury could have determined the
company’s assignment of accounts upon Lestage’s return was retaliatory. Both Byram
and ABC had asked not to work with Lestage, Coloplast contends, and there was no
evidence that the new accounts negatively impacted her compensation or deprived her
of any non-pecuniary employment benefit.
Again, Coloplast’s argument ignores plaintiff’s own testimony, which the jury was
fully entitled to credit. Plaintiff detailed how her boss, Morton Hansen, stymied her
efforts to take back the ABC account. Though ABC did initially ask that Henrik Wurgler
(the KAM who had been covering for Lestage) continue when Lestage returned, when
Wurgler moved out of the country Lestage saw an opportunity to rebuild her relationship
with the client. But Hansen shut down Lestage’s inquiry and instead assigned the
Pennsylvania-based ABC account to a KAM who lived in California. Tr. Day 2, 130:23134:5. In addition, Lestage explained that some of the accounts she was assigned
were considered “house accounts”—accounts not previously managed by a KAM—and
some larger ones were “maintenance accounts” with low growth potential. Tr. Day 2,
134:6-136:2. She also stated that some of her customers were not willing to engage in
campaigns with Coloplast and did not have an outside sales force, which are important
factors in driving sales. Tr. Day 2, 135:17-136:2; 138:9-24; 141:10-19. Though the
Coloplast executives’ testimony conflicted with Lestage’s take on these points, whose
explanation to believe, and whether to credit defendant’s proffered nondiscriminatory
justifications, are decisions properly left for the jury. Likewise, the pecuniary or nonpecuniary adverse impact of Coloplast’s treatment, if any, was properly reserved for the
6
jury to address.2
B.
New Trial
Alternatively, Coloplast requests a new trial. Here it tries to revive an argument
previously made and ultimately rejected by the court: that plaintiff’s damages expert
should be excluded under Rule 702 of the Federal Rules of Evidence. Coloplast thus
requests the court remit the damages award as plainly excessive.
Coloplast first challenged plaintiff’s expert, Dr. Judith Roberts, in a pretrial motion
in limine (Docket # 370). In addition to disputing her overall qualifications, defendant
critiqued Roberts’ reliance on Lestage’s two highest commission years to project but-for
compensation. Coloplast also argued that Roberts’ extension of the damages
projection was based on a faulty assumption that plaintiff would still feel the impact of
Coloplast’s retaliation at retirement twenty years down the road.
The court reserved ruling until trial where, after a voir dire, Dr. Roberts was found
to be qualified and allowed to testify. Coloplast presents no adequate reason to
reconsider this decision. Although Dr. Roberts may not have presented the best
damages model, the model she presented reflected a straight-forward and rational
method for approximating otherwise opaque sums. Indeed, even Coloplast’s rebuttal
expert agreed that, accepting Roberts’ assumptions as true, she used a well-accepted
calculation method that was correctly executed.
2
To the extent that Coloplast seeks to im port factual findings from the court’s sum m ary judgm ent
decision, neither the jury nor the court is bound by such pretrial findings. Fed. R. Civ. P. 56 advisory
com m ittee’s note to 2010 am endm ent (“The fact is considered undisputed only for purposes of the m otion;
if sum m ary judgm ent is denied, a party who failed to m ake a proper Rule 56 response or reply rem ains
free to contest the fact in further proceedings. And the court m ay choose not to consider the fact as
undisputed, particularly if the court knows of record m aterials that show grounds for genuine dispute.”).
7
Coloplast’s objections, then, boil down to a criticism of Dr. Roberts’ assumptions.
The jury, however, was well-prepared to assess the facts presented and decide
whether to adopt her assumptions or those of defendant’s expert.
When Dr. Roberts took the stand, the court explained to the jury its “two jobs” in
evaluating the expert’s testimony: first, “[e]ven though there may be a ruling that she
can testify because she’s qualified, you have to make a separate judgment as to
whether she’s qualified to answer the specific questions that are relevant to your
determination of this case,” and second, “[i]f there is a question that has to do with her
making certain assumptions, you have to be very clear that the assumptions she is
asked to make accord with the facts as you find them.” Tr. Day. 3, 68:10-19.
Defendant later conducted a rigorous cross-examination, pointing out many
alleged flaws in Dr. Roberts’ damages model.3 And the next day defendant called a
rebuttal expert, Frances McCloskey, who tackled Dr. Roberts’ assumptions one-byone.4 “It [was] well within the fact-finder’s province to determine the weight accorded to
3
For exam ple, defendant solicited that no KAM has had a consistent year-over-year increase in
com m issions (Tr. Day 3, 107:9-19), Dr. Roberts did not look at the actual perform ance of Lestage’s
accounts while she was on leave (id. 112:10-16), Lestage exceeded her target incentive com m issions in
2013 and 2014 yet Dr. Roberts exclusively used those years to predict her future salary (id. 114:12-15),
the FCA com plaint asserted a highly lucrative schem e that could have contributed to Lestage’s particularly
good years in 2013 and 2014 (id. 117:11-16), Roberts did not assess the accounts that were available to
Lestage upon her return to Coloplast (id. 118:17-119:20), and Roberts did not account for changes in
com m ission structure, tax law, or any other potential future events (id. 121:4-123:2).
4
First, she criticized Dr. Roberts’ starting point of using Lestage’s average com pensation for
2013 and 2014 to predict her but-for com pensation, explaining that com m issions are not repeatable year
after year. Tr. Day 4, 110:22-116:17. McCloskey proposed her own m odel, which used an average of the
com m issions earned by other KAMs over four (rather than only two) years, finding a $68,600 average
com m ission, which would result in zero dam ages to Lestage. Tr. Day 4, 116:20-117:18. Second, she
faulted Dr. Roberts for predicting that Lestage’s com pensation would grow at a consistent rate year over
year, noting that such a m odel is “inconsistent with the facts and it’s inconsistent with the way
com m issions are earned.” Tr. Day 4, 114:24-115:13. Finally, McCloskey criticized Dr. Roberts’ decision
to project dam ages out for over twenty years, explaining that “[b]ecause of the nature of the way
com m issions are paid, because of the nature of the health care industry and uncertainty about the health
8
expert witnesses.” United States v. Shelton, 490 F.3d 74, 79 (1st Cir. 2007). Indeed,
“[v]igorous cross-examination, presentation of contrary evidence, and careful instruction
on the burden of proof are the traditional and appropriate means of attacking shaky but
admissible evidence.” Daubert v. Merrell Dow Pharm., 509 U.S. 579, 595 (1993); see
also Fed. R. Evid. 702 advisory committee’s note to 2000 amendment (the rule “is
broad enough to permit testimony that is the product of competing principles or
methods in the same field of expertise”).
Given the admissibility of Dr. Roberts’ testimony, Coloplast’s remaining
arguments for a new trial fall by the wayside. Lestage’s testimony provided sufficient
evidence of tangible and intangible loss both while on leave and after she returned to
work. And, with the support of Dr. Roberts’ testimony, the jury’s damages award is not
excessive.
IV.
Conclusion
Coloplast’s renewed motion for judgment as a matter of law (Docket # 459) and
motion for new trial (Docket #462) are denied.
September 13, 2019
/s/ Rya W. Zobel
DATE
RYA W . ZOBEL
SENIOR UNITED STATES DISTRICT JUDGE
care industry, because of the nature of reim bursem ent and pricing in the health care industry, I don’t think
it’s reasonable or even reasonably certain that you could predict m uch m ore than a few years, m aybe five
years out.” Tr. Day 4, 119:2-8.
9
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?