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Bayer Healthcare Whistleblower Still Fighting To Regain Job

by Mark Friedman  ArkansasBusiness.com on Monday, Mar. 16, 2015 12:00 am

A Little Rock man who sued a pharmaceutical company for firing him in 2010 after reporting a health care fraud continues to fight to get his old job back.

A motion is pending in U.S. District Court in Pine Bluff to enforce a court’s order from 2012 that Bayer Healthcare Pharmaceuticals Inc. reinstate Mike Townsend at his previous position and seniority with the company, according to one of his attorneys, Brian Reddick of Little Rock. Townsend also was represented by attorney Chuck Banks of Little Rock.

Townsend sued Bayer for retaliation in violation of the whistleblower protection provisions of the federal False Claims Act.

“It’s a very significant employment case for folks who are fired by their employers,” Reddick said.

Usually a whistleblower is fired for reporting wrongdoing that his company did. But that wasn’t the case for Townsend.

“This was a case where he saw something that one of [Bayer’s] biggest clients was engaged in and reported it because the company wouldn’t report it,” Reddick said. “The company just wanted to continue making money off it.”

The roots of the lawsuit date back to 2008. Townsend, who was born and raised in Pine Bluff, was a pharmaceutical sales representative for Bayer and sold its intrauterine device, Mirena, which was one of the company’s best-selling items. One of the top buyers of Mirena in Arkansas was Dr. Kelly Dean Shrum, an obstetrician and gynecologist who practiced at the Arkansas Center for Women Ltd. in Pine Bluff. Shrum was also Townsend’s client.

But suddenly, Shrum’s orders dried up in January 2008. When Townsend asked Shrum why, the doctor boasted that he was now getting the contraceptive at a much lower price from Canada. That Canadian product wasn’t approved by the Food & Drug Administration.

Townsend also learned that Shrum continued billing Arkansas Medicaid as if he were using the higher-priced FDA-approved Mirena and pocketing the difference.

Townsend first reported Shrum’s actions to a Bayer district manager.

“And they completely ignore him,” Reddick said. He said Townsend sent “countless emails” but nobody did anything for over a year.

It wasn’t until Townsend called the Medicaid Fraud Hotline in April 2009 and reported Shrum that government agents got involved.

Townsend agreed to help, but wanted to remain anonymous, his lawsuit said.

That didn’t happen, though.

“He was informed then that, because there was an imminent risk of harm to Dr. Shrum’s patients, the information he provided to the government, along with his identity, would no longer be kept secret,” the lawsuit said.

Townsend warned that he was going to get fired and blackballed from the industry if word got out that he was the one who reported the crime, Reddick said.

Reddick said that Bayer didn’t want to report the doctor because it makes both the drugs that are sold in the United States and those for foreign markets.

“And they don’t care as long as they’re being sold,” Reddick said. “And that was clear from all the emails and the refusals to turn doctors in.”

Shrum, meanwhile, was charged in U.S. District Court and a jury found him guilty of aiding and abetting health care fraud in 2011. He was sentenced to five years of probation and ordered to pay $200,000 in restitution.

Townsend was fired in May 2010.

“As a pretext, he was told by Bayer that he no longer had a job because he did not have a company credit card,” Townsend’s lawsuit said. “After six years of service for the company, Bayer had a taxi waiting for him in the parking lot.”

Bayer said Townsend wasn’t fired because he made the hotline tip.

“Bayer did not retaliate against plaintiff for reporting Dr. Kelly Shrum to the Arkansas Attorney General’s Office for Medicaid fraud,” one of Bayer’s attorneys, Michael Graziano of Washington, said in a court filing. “Bayer terminated plaintiff because U.S. Bank closed his corporate charge account thereby rendering him unable to fulfill his role as a Bayer sales representative.”

A jury disagreed and ruled in favor of Townsend. He was awarded $642,000 for back pay plus emotional distress damages of $300,000. In 2012, attorneys’ fees were awarded in the amount of $246,330 and costs of $13,074.

F. Joseph Nealon of Washington, another attorney for Bayer, declined to comment last week.