Court Dismisses False Claims Against CVS

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The Third Circuit Court of Appeals has affirmed the decision to dismiss a whistleblower action against CVS Caremark. The Court found that the evidence was insufficient to prove that CVS knew Medicare Part D sponsors were intentionally submitting false information about costs to Medicare and Medicaid.

Anthony R. Spay is a former pharmacist who co-founded a company that audits pharmacies. In the whistleblower action, Spay alleged that Medicare Part D sponsors intentionally submitted false information about costs to the government during the reconciliation process. Specifically, Spay says these sponsors populated prescriber ID records with falsified IDs, which they claimed were used to replace ID data that was entered in error.  According to Spay, as a result of these falsified submissions, the government paid these sponsors more than they were entitled to.

A panel of three appellate judges ruled that the government was aware of the industry practice of using falsified IDs, yet paid the claims and never sought repayment from CVS Caremark. According to Third Circuit Judge Theodore McKee’s opinion, CVS could not be held liable for making false claims because Medicare and Medicaid were aware of the practice. Medicare Part D sponsors are companies that sell prescription plans and enter into subcontracts with pharmacies like CVS.

The Court’s decision was expressly informed by the government knowledge inference doctrine. Pursuant to this doctrine, if the government knows about the alleged misconduct, then it is already aware of the false claims and does not need assistance from private whistleblowers to identify them.  Although the Court affirmed the dismissal of the case, it disagreed with the trial court on its interpretation of that doctrine as applied to the facts at bar. The Third Circuit itself discussed the issue in depth in 1999, stating in Cantekin v. University of Pittsburgh that if the government was aware of the alleged false claims yet took no action, then any private suit was likely motivated by the sizable damages award promised to whistleblowers under the law.

However, the Third Circuit found that the doctrine was inapplicable here because CVS was unaware that the government knew about the false claims. The Court found that there was no evidence of tacit approval from the government to CVS Caremark of the stopgap industry practice.

Philadelphia Whistleblower Lawyers at Sidkoff, Pincus & Green P.C. Provide Confidential Consultations to Whistleblowers

If you have knowledge of false claims being submitted to the government, schedule a consultation with the Philadelphia whistleblower lawyers at Sidkoff, Pincus & Green P.C. today. Our legal team represents clients in qui tam actions and whistleblower claims under the False Claims Act in Pennsylvania and New Jersey. Call us today at 215-574-0600 or contact us online to schedule a confidential consultation.

Hearst Corporation in Unpaid Intern Lawsuit

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Approximately five years after interns filed a lawsuit against Hearst Corporation, the Second Circuit Court of Appeals has ruled that the company did not systematically exploit interns by having them perform entry-level work without pay. The interns claimed that Hearst Corp. violated federal and state law when it declined to pay thousands of interns.

Internship vs Entry-Level

The lead plaintiff, Xuedan Wang, alleged that 3,000 interns at Hearst’s numerous publications, including Elle, Marie Claire, Cosmopolitan, and Seventeen magazines, were exploited in violation of the Fair Labor Standards Act (FLSA) and New York state laws. The FLSA and state laws set forth specific requirements for internships, which distinguish them from entry-level jobs. To be exempt from the minimum wage requirements, employers must ensure that internships benefit the interns, among other things.

According to Second Circuit Judge Dennis Jacobs, the question before the Court was whether Hearst Corp. offers bona fide for-credit internships, or whether it relied on student labor to avoid compensating entry-level employees. The key case that speaks to the legal standard is Glatt v. Fox Searchlight Pictures Inc. In this case, the Court considered whether the intern or their employer was the primary beneficiary of the relationship. If the employer is the primary beneficiary, it cannot be deemed an internship, and is subject to the minimum wage requirements set forth under the Fair Labor Standards Act.

In the Hearst Corp. case, Judge Jacobs found that Hearst made it clear to the interns that they would not be paid, and that the internships provided training similar to those provided in an educational environment. The students were also told that the internships were tied to a formal education program.

Distinguishing the Difference

The plaintiffs argued that internships should not include menial and repetitive tasks, with little supervision or guidance.  These, according to the plaintiffs, were tasks more likened to employment than an educational internship. However, the Judge found that many useful internships are designed to correct the impression that work is just as rewarding and fulfilling as school. Repeating administrative and organizational tasks, she ruled, can provide useful skills such as how to be more organized and focused in a professional setting. Plaintiffs can still appeal this ongoing ruling to the United States Supreme Court.

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Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C., we handle all types of employment litigation, including claims that an employer has violated the Fair Labor Standards Act, or local laws, by failing to pay overtime, meet minimum wage requirements, and more. To learn more about how we can help you and to schedule a confidential consultation, call us today at 215-574-0600 or contact us online. We represent clients in employment litigation in Pennsylvania and New Jersey.

Star Trek and Dr. Seuss Mashup Copyright Suit

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ComicMix is currently embroiled in copyright and trademark litigation with Dr. Seuss Enterprises stemming from a crowd-funded book project called Oh, The Places You’ll Boldly Go! The project originated on the crowd-funding website Kickstarter. ComicMix intended to create a mashup of Dr. Seuss and Star Trek, and raised thousands of dollars to fund the project.

The lawsuit was filed at the end of 2016, and a federal court judge has recently ruled that the suit can proceed. Earlier, a U.S. District Court Judge had dismissed the trademark claims, allowing only the copyright claims to proceed. The claims were subsequently amended and are proceeding along with an additional claim for unfair competition.

This case, according to the District Court Judge, addresses an important and timely question about the new mashup culture, wherein two unique and independent creative concepts are mashed together. Courts are struggling to decide how this culture squares with the legal doctrine of nominative fair use. This doctrine allows for the use of another’s trademark for purposes such as commentary, criticism, comparative advertising, or parody. The legal standards for what constitutes fair use was articulated in 1992 after a number of newspapers used toll numbers to conduct polls on the popular band, The New Kids on the Block.

In trying to figure out whether ComicMix’s project constitutes nominative fair use, the Court considered whether the product is readily identifiable without the use of the trademark, and whether ComicMix falsely suggested that the project was sponsored by Dr. Seuss Enterprises. The trademark at issue was the title used and the font style.

The question still pending as the litigation proceeds is whether the use of the title, which the original use has sold over 650 million copies, was more than reasonably necessary. The most pressing issue in the case is that the mash-up used the exact same font as the Dr. Seuss original, even imitating exactly the unique shape of the original exclamation point. Because ComicMix was unable to establish fair use, the litigation was allowed to proceed to jury.

The licensing program of Dr. Seuss Enterprises currently allows other authors to publish books based off of its existing books and use of its characters. However, it does not have a licensing program that addresses the mash-up market. The company has stated if it decides to license mash-ups, it would be based on a new licensing program, not similar to or derived from its existing one.

Philadelphia Trademark Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in All Types of Intellectual Property Claims

To schedule a consultation with the Philadelphia trademark lawyers at Sidkoff, Pincus & Green P.C., call us today at 215-574-0600 or contact us online. We represent clients throughout Pennsylvania and New Jersey in all types of business litigation, including fair use, trademark, copyright, contract, tortious interference, and unfair competition claims.

ACLU Settles Cases Against City of Philadelphia

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The Pennsylvania Chapter of the American Civil Liberties Union (ACLU) has settled two lawsuits against the city of Philadelphia filed by activists who claimed police retaliated against them for filming them in public. The City agreed to pay plaintiffs a combined settlement of $250,000, including attorney fees.

One of the litigants was a member of a police watchdog group. She alleged that she was pinned against a pillar by an officer just after filming his arrest of a protester in 2012 at a demonstration against fracking held outside the Philadelphia Convention Center. The other litigant was a student at Temple University. He alleged that a police officer saw him photographing police breaking up a house party across the street, and asked him if he liked taking photos of grown men. He was then taken into custody after refusing to leave. The police confiscated his cell phone and cited him for obstructing a public passageway. The charges were eventually dismissed because the police officer did not report to testify in court.

According to the ACLU, these two lawsuits were part of a series of five suits filed against the city for similar retaliatory police conduct. The cases settled several months after a federal appellate court ruled that recording police in public is a first amendment right. The ACLU believes the ubiquity of smartphones is one of the best tools for police accountability. Since 2012, the City of Philadelphia has had a policy that establishes very clear guidelines for allowing the public to record officers while they are engaging in their official duties. The policy was instituted after the federal Department of Justice (DOJ) weighed in on the issue, five years before the Third Circuit Court of Appeals recognized recording officers was a first amendment right. The policy prohibits officer retaliation against activities that are protected by the First Amendment.

The Third Circuit Judge acknowledged that we ask much of our police, yet as public officials engaging in public duties, the First Amendment requires them to allow being recorded in the interest of transparency. The Court noted that these recordings would often benefit the officers themselves. There are limits to when recording can be done, according to the Court’s opinion, in other words, the right is not absolute. If a recording interferes with an ongoing investigation or exposes a confidential informant, it is severely restricted or banned altogether.

Philadelphia Civil Rights Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in All Types of Civil Rights Violations

Philadelphia civil rights lawyers at Sidkoff, Pincus & Green P.C. regularly appear in both federal and state courts. We are familiar with the local rules of Pennsylvania and South Jersey courts, including discovery rules, pleadings procedures, brief timelines and formatting, trial practice, motion practice, settlement negotiations, and more. For more information, or to schedule a confidential consultation, call us at 215-574-0600 or contact us online today.

Court Defines Supervisor Under Title VII

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The United States Court of Appeals for the Third Circuit recently issued a precedential opinion interpreting what it means to be a supervisor in a hostile work environment case. The Court found that a supervisor is someone who controls a sizeable amount of the hours employees work, and/or someone who determines whether employees will be assigned work.

Moody v. Atlantic City Board of Education

Employee Michelle Moody was hired by the Atlantic City Board of Education (BOE) to serve as a substitute custodian in 2011. Moody alleged that she was unhappy with the unsteady nature of her employment, as she was only gainfully employed when the primary custodian could not work. She wanted to work more hours and raised her concerns with a member of the BOE, who suggested that she speak to the custodial foremen of different districts. The BOE member told her that these foremen were responsible for delegating authority to select which substitute custodian would fill in at schools in their respective districts.

Moody then contacted 10 foremen from different school districts, including one named Maurice Marshall. Marshall allegedly began harassing Moody immediately after she started work. According to the Court’s opinion, he allegedly suggested that he would give her more work if she performed sexual favors for him. After a litany of disturbing incidents, including explicit text messages, unwanted sexual contact, and unwanted visits to her home, Moody succumbed to Marshall’s unwanted advances. Although she never received more work hours, after reporting Marshall, her work hours steadily declined.

Determining the Meaning of Supervisor

Moody filed a claim in the District of New Jersey, which was ultimately dismissed on grounds that Marshall was not her supervisor, and that she suffered no tangible adverse employment action. The Third Circuit reversed that decision after an extensive review of Marshall’s role in assigning work to other employees. The Court examined a U.S. Supreme Court precedent that interpreted the term of supervisor. Ultimately, the Third Circuit determined that Marshall had the power to decide whether Moody worked at all and had authority to set her hours, falling under the Supreme Court’s definition of a supervisor. The court also found that during the times Moody was chosen to fill in at Marshall’s school, he was her immediate supervisor.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Handle All Types of Sexual Harassment and Discrimination Employment Claims

If you have suffered adverse employment action due to sexual harassment or discrimination, you may be entitled to compensation. To arrange a consultation with one of our Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C., call us today at 215-574-0600, or contact us online.

Ameriprise Prevails Against Former Advisor

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A Financial Industry Regulatory Authority (FINRA) arbitration panel recently decided that a former Ameriprise broker had to pay Ameriprise $675,000 after a customer complaint against the firm settled. The customer was awarded $675,000 in the settlement, and Ameriprise then filed the third-party arbitration claim against its former broker to recover the funds. The broker is alleged to have misappropriated the client’s investment funds.

According to records maintained by FINRA, Ameriprise accused the broker of violating several company policies related to maintaining a beneficiary relationship with a client, complaint handling, comingling of funds, and conducting business with a foreign client.

A spokeswoman for Ameriprise has stated that the company is pleased with FINRA’s decision to hold its former broker accountable for the violations. After being dismissed from Ameriprise, the broker went to another global firm, but is no longer employed there. She has been named in another Finra arbitration, where several individuals claimed she advised them to purchase a failing business for her own personal gain, and illegally borrowed and comingled funds. The plaintiffs in the pending arbitration are seeking $1 million in damages.

Philadelphia FINRA Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in FINRA Arbitrations

To learn more about how we can help with your business or commercial arbitration, contact the Philadelphia FINRA lawyers at Sidkoff, Pincus & Green, P.C. today. Our offices are conveniently located in Philadelphia, and we represent clients in Pennsylvania and New Jersey. Call us today at 215-574-0600 or contact us online.

 

 

Court Ruling on Employee Abuse of FMLA Leave

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Recently, the Third Circuit Court of Appeals ruled that an employer’s honest belief that an employee misused their rights under the Family and Medical Leave Act (FMLA) was sufficient to defeat the employee’s claim for retaliation. This holds true even if it turns out that the employer was mistaken, and that the employee was not misusing their rights under the FMLA. Pennsylvania is within the jurisdiction of the Third Circuit Court of Appeals.

In Capps v. Mondelez Global, LLC, the employer, Mondelez, had an FMLA policy in place. The policy made clear that any employee who fraudulently misused FMLA time would be subject to discipline and possible termination. The company also had an additional policy that provided discipline if an employee was found to have engaged in dishonest acts. One of Mondelez’s employees, Frederick Capps, was experiencing bouts of severe pain following a bilateral hip replacement that he underwent in 2003. Mondelez provided him with intermittent leave under the FMLA during these bouts of pain.

One day in 2013, Capps took the day off alleging it was for pain related to his medical condition. Later that evening, he went to a bar and was arrested for a DWI while driving home. Although he was scheduled to work the next day, he called out complaining of pain related to his hip surgery. Capps’s employer learned of his arrest in the newspaper, and discovered that he fraudulently requested FMLA for the day after his arrest and on subsequent court dates; the absences were not related to his medical condition. As a result, his employment was terminated.

Termination Retaliation

Mr. Capps sued his employer for allegedly retaliating against him for taking FMLA leave. The District Court and Third Circuit Court of Appeals both ruled in favor of Mondelez Global, LLC on grounds that it acted on an honest belief that Capps had been abusing FMLA leave. Although the Court ultimately found that he had not established a prima facie case of retaliation, it noted that Mondelez had established a legitimate, nondiscriminatory reason for terminating Capps, stating that he violated the company’s Dishonestly Policy. Because the employer acted in good faith, the Court ruled in its favor, concluding that even if the employer’s belief turned out to be untrue, it still would have prevailed because it had established that it acted in good faith.

This is consistent with the Third Circuit Court of Appeals’ rulings in other discrimination claims, such as age-discrimination and Title VII cases, whereby an employer’s legitimate, nondiscriminatory reason for termination will not be defeated by a plaintiff demonstrating that the belief was ultimately incorrect.

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The statutes, regulations, and case law that govern the employer-employee relationship are constantly evolving. If you have questions about a legal situation, contact the Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. today to schedule a confidential consultation. We can be reached at 215-574-0600 or by submitting a convenient online contact form.

Pennsylvania Supreme Court Rules Proving Dishonest Purpose or Motive is Not Necessary to Prevail on Bad Faith Insurance Claims

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In a recent landmark decision, the Pennsylvania Supreme Court recognized that insurance policyholders do not need to demonstrate an insurance company’s dishonest purpose or motive to prevail on bad faith claims against their providers.

In Rancosky v. Washington National Insurance Company, No. 28 WAP 2016, 2017 WL 4296351 (Pa. 2017), the plaintiffs were husband and wife, Matthew and LeAnn Rancosky, who purchased a “cancer insurance policy” for Mrs. Rancosky as a supplement to her primary employer-based health insurance. To pay for this policy, Mrs. Rancosky’s employer automatically deducted bi-weekly payments from her paycheck. Most importantly, her policy contained a waiver-of-premium provision which excused premium payments if she became disabled due to cancer. During Mrs. Rancosky’s employment, she was diagnosed with ovarian cancer. She subsequently aimed to invoke the policy provision when she could no longer work due to disability resulting from her disease. After submitting a physician’s statement and waiver-of-premiums forms, Mrs. Rancosky believed her premiums had been waived and ceased making payments. Defendant later conducted a policy audit two years later and, upon discovery of the plaintiff’s ceased payments, deemed her policy to have lapsed. They subsequently denied her claim for further benefits. Mrs. Rancosky sought reconsideration of their decision alleging inconsistent filings and erroneous information stated by her physician.

Upon the provider’s denial of her request for reconsideration, Plaintiffs brought suit against Defendant for breach of contract and bad faith under the Pennsylvania bad faith statute, 42 Pa.C.S.§8371. To prevail on a claim under this statute in Pennsylvania, the policy holder must satisfy a two-part test, presenting clear and convincing evidence that: (1) that the insurer did not have a reasonable basis for denying benefits under the policy; and (2) that the insurer knew of or recklessly disregarded its lack of a reasonable basis. The court in Rancosky ultimately ratified this test in its verdict, and ruled that policyholders no longer need to demonstrate an insurer’s motive of self-interest or ill-will to prevail on a bad faith claim. The court stated that this requirement creates an unduly high threshold for policyholders to meet and expanded the reach of the statute to provide greater opportunity for policyholders to prevail on their claims.

For more information, call our business lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Eastern District of Pennsylvania Rules Against Plaintiff’s Claim that Arbitration Clause is Unconscionable

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In Curtis v. Cintas Corporation, Plaintiff was terminated by her employer and she asserted claims for racial discrimination and retaliation.  229 F.Supp.3d 312, 315 (E.D. Pa. 2017).  Although Plaintiff sought to litigate her case in court, Defendant moved to dismiss her claims, and in the alternative, stay proceedings pending arbitration, as Defendant claimed that Plaintiff’s employment agreement contained an arbitration clause. In response, Plaintiff asserted that the arbitration agreement was unconscionable and therefore, invalid and unenforceable.

Under Pennsylvania law, to prove a claim of unconscionability, a plaintiff must prove that the contract was both substantively and procedurally unconscionable. Substantive unconscionability occurs when the contractual terms are unreasonable or grossly favorable to one side, which the disfavored party does not assent to.  In this case, Plaintiff asserted that Defendant is inherently favored because the employer pays the costs for arbitration.  However, the Eastern District Court of Pennsylvania pointed to case law stating that limiting costs to one party does not support a finding of substantive unconscionability. Procedural unconscionability pertains to the process in which an agreement is reached, but the form of the agreement is unclear.  Here, Plaintiff claimed that the agreement was procedurally unconscionable because she signed only on the last page, and that page did not contain an arbitration clause.  However, the Court explained that there is no requirement in Pennsylvania to affix a signature to each section or page of an agreement to manifest an in intent to be bound by the terms.

For more information, call our employment lawyers in Philadelphia at Sidkoff, Pincus & Green at 215-574-0600 or contact us online.

Third Circuit Says Employees Should Be Paid for Rest Breaks

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The Third Circuit Court of Appeals has recently held that under the Fair Labor Standards Act (FLSA), employers must compensate employees for breaks less than 20 minutes, even if they are not performing any work during their break time.

In the case presented to the Court, the employer was a company that produced business publications that were sold by sales representatives over the phone. The representatives were able to take breaks whenever they wanted to, and for any length of time. Their employer did not require them to remain on the premises during their break time. However, whenever these employees were logged off their computer for longer than a minute and a half, they were not paid.

The United States Department of Labor sued the company under a federal regulation that states break periods between five and 20 minutes are customarily paid, and must be counted as hours worked. The trial court concluded that the employer violated the FLSA, and the employer appealed, arguing that a different regulation governed its practices. According to the employer, these breaks were off duty, when employees were completely relieved of duty. The off-duty regulation specifically defines these periods as times when an employee is completely relieved of duty such that they can use the time effectively for their own purposes. The regulation describes this as a fact specific inquiry. The employer argued that since employees were free to leave for as long as they wanted, with no obligation to return to work, even brief breaks did not need to be compensated under the off-duty regulation.

The Third Circuit employed a common canon of construction; where there are two regulations arguably on point, the more specific regulation is controlling. Here, because the off-duty regulation was more generic than the rule governing break policies, it was not controlling. The Court characterized this as a bright line rule, providing that employers must pay employees for any rest breaks lasting 20 minutes or less. At the time of the Third Circuit’s ruling, no other Circuit Court had ruled on this question.

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