May 13, 2015
By Alex Keown, BioSpace.com Breaking News Staff
LITTLE ROCK, Ark. – A federal judge berated Bayer HealthCare over the company’s decision to reinstate a whistleblower in a new position more than 500 miles from his home.
Three years ago a jury concluded that Bayer unlawfully terminated Mike Townsend, an Arkansas-based sales representative, after he informed the state’s attorney general that physicians were overbilling Medicaid for Bayer’s medications. Shortly thereafter the company, which was not involved in the Medicaid fraud, found a way to terminate Townsend, claiming the dismissal was over unauthorized use of his company credit card.
Townsend filed a lawsuit over his lost position, claiming it had to do with his whistleblowing actions and not the credit card issue. A jury agreed, awarding him $1.2 million in back pay and emotional damage. The court also ordered Bayer to reinstate Townsend at the same rate of pay and seniority level, which it did, except they gave him a position in Knoxville, Tenn., more than 500 miles from Little Rock. Townsend rejected that position. Following his rejection of the job, which was offered to Townsend in 2013, Bayer objected to “any award of back pa or front pay,” according to legal filings.
Bayer’s move though, did not sit well with U.S. District Court Judge James Moody Jr. In a new brief dated May 4, Moody said the position in Knoxville was not a “good faith effort” by Bayer.
“The Knoxville position was not a substantially similar or comparable position to that held by the Plaintiff prior to the discrimination. Although the Defendant is not required to reinstate the Plaintiff to the exact same position he had prior to the discrimination, it must reinstate the Plaintiff to a comparable position with the same seniority status he would have had but for the discrimination. The Court does not find a “comparable position” to include one requiring relocation from Little Rock, Arkansas to Knoxville, Tennessee,” Moody wrote in his brief.
Townsend’s attorney told the Wall Street Journal that the whistleblower has three children in Little Rock schools and also noted the company continues to operate in Little Rock.
Townsend worked for the company for six years before reporting Kelly Dean Shrum, Bayer’s biggest Arkansas-based buyer of Mirena, a T-shaped, hormone-releasing device inserted into the uterus and left in place for five years to prevent pregnancy. In 2008 Shrum ceased buying Mirena in favor of a less expensive Canadian device that had not been approved by the U.S. Food and Drug Administration (FDA). The doctor though, was continuing to submit reimbursement claims to the government-run Medicaid program, Townsend said. After informing his superiors at Bayer of Shrum’s activities, Townsend reported the information to state authorities and Shrum was convicted of misbranding, a misdemeanor, according to a report in Law360.
At the same time Bayer changed its method of reimbursing sales representatives for entertainment and client education. Instead of the company paying off the cards, employees were given the funds to cover the expenses.
According to reports, Townsend’s wife used the funds meant for the credit cards on personal expenses, which caused her husband’s credit card to be suspended, which inhibited his ability to entertain clients. After Townsend paid off the account, the card was reinstated, but within a month he was terminated, which caused him to file the lawsuit against his employer. In the lawsuit Townsend provided evidence tips to state prosecutors were contrary to a “corporate culture that did not tolerate alerting authorities to false claims submitted by clients,” Law360 noted.
Earlier this month Bayer inked a $155 million deal with Carlsbad, Calif.-based Isis Pharmaceuticals, Inc. to develop and market ISIS-FXIRx, a treatment and preventative for thrombosis. ISIS-FXIRx targets Factor XI, a chemical produced by the liver that is a major component in blood clotting. Individuals with high levels of Factor XI are at increased risk of heart attacks and strokes.
Bayer’s stock (BAY) is down in morning trading, hitting a morning low of $146.77.
