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LUCKEY v. BAXTER HEALTHCARE CORP.

April 20, 1998

JOAN P. LUCKEY, Plaintiff,
v.
BAXTER HEALTHCARE CORP., Defendant.



The opinion of the court was delivered by: CASTILLO

MEMORANDUM OPINION AND ORDER

 Relator Joan Luckey, a former technician at the laboratories of defendant Baxter Healthcare Corporation ("Baxter"), brings this action on behalf of the United States pursuant to the qui tam provision of the False Claims Act ("FCA"), 31 U.S.C. § 3730(h). Count I of the complaint alleges that Baxter made false claims to the United States by (1) misrepresenting its testing of plasma and plasma based therapies was "adequate and effective"; and (2) misrepresenting compliance with federal regulations, in violation of 31 U.S.C. § 3729(a)(1). In Count II, Luckey alleges that Baxter wrongfully terminated her employment in retaliation for her pursuit of and investigation into Baxter's allegedly false claims, in violation of the anti-retaliatory discharge provision of the FCA, 31 U.S.C. § 3730(h).

 The United States has declined to intervene in this action pursuant to 31 U.S.C. § 3730(b)(4)(B). Luckey, however, continues to litigate these claims as the Relator under the qui tam provisions of the FCA. Currently before the Court is Baxter's motion for summary judgment on all counts of Luckey's amended qui tam complaint. Baxter argues that Count I of Luckey's complaint fails as a matter of law because Luckey has not submitted evidence demonstrating that Baxter knowingly lied to the government to procure a benefit. Baxter similarly characterizes Count II as baseless, contending that the evidence shows that Luckey was terminated for harassing her coworkers and other inappropriate behavior. For the following reasons, Baxter's motion for summary judgment is granted in its entirety.

 RELEVANT FACTS1

 1. Baxter's Plasma Testing

 Baxter is one of the world's largest producers of plasma products. Baxter, through its subsidiaries, sells plasma products to hospitals, clinics, health maintenance organizations, doctors' offices, and other medical facilities. Baxter's customers include Medicare, Medicaid, Veterans Hospitals, and other hospitals receiving federal subsidies.

 Baxter's plasma products are produced from plasma that is collected from paid members of the general public at donor centers. Plasma is a primary component of human blood and can potentially carry bacterial and viral contaminants, including HIV 1, HIV 2, Hepatitis B, Hepatitis C, Syphilis, and Creutzfeldt-Jakob disease. Prior to incorporating donor-center samples into its plasma products, Baxter sends donated plasma to its subsidiary, Baxter Biotechnology Screening Laboratory ("Baxter labs"), for product testing. Baxter labs conducts several tests to determine whether the donated plasma contains harmful contaminants.

 The routine testing protocol includes the Alanine Amino Transfer test ("ALT"), which Baxter labs uses to determine, among other things, the donor's liver quality. Samples yielding low ALT results are subject to additional testing to make certain the samples actually consist of plasma. Baxter became aware that some donor centers were using inadequate plasma collection procedures that failed to prevent saline from mixing with plasma. The presence of excessive saline could impair the screening tests' ability to detect the existence of viral contaminants, causing "false negative results".

 Prior to 1995, Baxter labs utilized the Color Inspection Test to evaluate the quality of suspect samples. Under this approach, technicians were directed to inform their supervisors when samples yielded a low ALT result. The supervisor then inspected the sample to determine whether it was clear, cloudy, or colorless. If the sample appeared colorless, the supervisor would order a Total Protein Test to determine whether proteins were present in the samples. The absence of proteins indicated that the sample could be saline diluted, and the sample would be rejected.

 Baxter issued Protocol 93-019 to combat the saline problem in the spring of 1993. Protocol 93-019 conceded that samples improperly diluted with saline were presented for testing at Baxter labs. This protocal instructed workers in Baxter labs' customer operations division to examine and evaluate the samples when they first arrive at Baxter, prior to testing. Bychowski Dep. at 153. Baxter subsequently adopted Protocol 94-025 in the spring of 1994 to provide a method to test samples suspected of being diluted with saline. Bychowski Dep. at 163. This protocol enabled technicians to test suspect plasma samples for total proteins. Id. at 165. Following an audit by the Federal Food and Drug Administration, Baxter was directed to and did adopt a protocol requiring technicians to perform the Total Protein Test on all plasma samples yielding a low ALT result, regardless of whether the samples were colorless.

 Once a sample is approved at Baxter labs, Baxter forwards the sample to another Baxter subsidiary, the Hyland Division of Baxter Healthcare ("Hyland"). Hyland pools plasma from various testing centers to create its plasma products. Hyland's combined pool contains approximately 20,000 liters of plasma.

 2. Joan Luckey's Employment with Baxter

 Luckey began working at Baxter labs as a Lab Technician III in December, 1991. Baxter places all new employees on probationary status for three months, and Luckey was no exception to the rule. As a probationary employee, Luckey was responsible for reviewing data and checking test results for accuracy. Charmaine Bychowski, Luckey's supervisor, evaluated Luckey's performance after 30, 60, and 90 days. *fn2" Luckey received "acceptable" ratings-- the highest rating available-- in all categories evaluated on her 30 and 60 day reviews. In Luckey's 90 day review, however, Bychowski downgraded her assessment of the quality of Luckey's work to "marginal", noting that "[Luckey] released a bundle . . . without first submitting it for verification testing. Joan has a fair number of 'missing signature/initials' type of documentation errors." Pl.'s Facts Ex. R. Baxter decided that "in an effort to raise [Luckey's] quality to acceptable, the probationary period will be extended to ten days." Id.

 In the Spring of 1992, technician Candy Johnson tested and retested a plasma sample, achieving invalid results. Luckey examined the sample, noted that it looked like water or saline, and informed Bychowski of her discovery. Luckey suggested running a Total Protein Test to determine whether the sample was actually plasma. Luckey Dep. at 18. Luckey alleges that Bychowski responded that "we don't look" and "we don't ask questions." Luckey Dep. at 14. Luckey contends that she had continuing discussions with Bychowski regarding the saline incident and the need to use the Total Protein Test consistently. Id. at 24.

 Bychowski completed Luckey's five month evaluation in May of 1992. Bychowski gave Luckey very middle-of-the- road marks in all categories, but was generally pleased with Luckey's progress, stating that "the quality of work Joan completes is exceptional. She needs to ensure that all necessary precautions are being taken to maintain the highest quality of work, as well. Joan is a very dependable worker." Pl.'s Facts Ex. S. However, Bychowski found the accuracy of Luckey's work was inconsistent ("submits reports that occasionally are missing information"), and that Luckey's people sensitivity skills needed improvement ("occasionally reacts badly to others due to job pressures"). Id.

 Luckey's one year evaluation showed some improvement. Luckey received high marks for her ability to gather and evaluate information, meet deadlines, and organize her work. Bychowski noted that Luckey was "very dependable", aspired to obtain a promotion, and had joined Baxter's Employee Team Committee ("ETC"), a volunteer committee that provided employees with a forum to voice their concerns. Id. However, Bychowski also found that Luckey's "work contains preventable errors. She occasionally does not detect discrepancies while verifying." Bychowski Dep. at 308. In addition, Bychowski noted that Luckey was "not always pleasant with her coworkers" or "considerate of others' feelings." Id. at 275. On at least four occasions when Bychowski discovered errors in Luckey's work, Luckey refused to accept responsibility and instead accused coworkers of sabotage. Id. at 308.

 Unfortunately, Bychowski's warnings to eliminate preventable errors did not curtail Luckey's shortcomings in this area. On March 26, 1993, Baxter issued Luckey a verbal warning (documented in writing) for two laboratory errors. Def.'s Facts Ex. I. Luckey received an addendum to the verbal warning on April 9, 1993 for an additional laboratory error. Id. at Ex. J. Baxter labs' Quality Assurance department had discovered the errors before the incorrect results were released, and no additional action was taken against Luckey.

 In November 1993, Baxter transferred Bychowski to the first shift, and promoted technician Dan Garretttt to Bychowski's old position supervising the second shift. Initially, Garretttt seemed impressed with Luckey's abilities. In evaluating Luckey's 1993 performance, Garretttt found Luckey to be "outstanding" in the technical areas of her work. Garretttt noted that Luckey initiated the "Pat on the Back" program, as well as the Health Support Group. Moreover, Luckey was "always looking for ways to improve things in the lab" (Pl.'s Rsp. at 24) and "discovers several errors that others have made and comes up with solutions so they will not occur again." Pl.'s Rsp. at 25. Luckey's difficulty in getting along with her coworkers persisted, however, causing Garretttt to note that Luckey "needs to continue to improve in her people sensitivity and to be aware of how she comes across to the listener." Pl.'s Facts, Ex. U.

 Luckey sought a promotion to the lead Tech III position in June 1994. When Baxter did not select Luckey for a second round of interviews, Luckey told Garretttt that she intended to file an age discrimination suit. Dep. at 138. Baxter instead promoted Manju Tyagi, a pregnant women under the age of 40, of Asian-Indian heritage. Def.'s Facts Ex. 20-H, Garretttt Aff. P 6. Shortly thereafter, Luckey drafted a Corrective Action Request ("CAR") categorizing Baxter employees by ethnicity, marital status, pregnancy, and age, among other criteria. Garretttt Aff. P 6. Luckey criticized Baxter for promoting only married employees who were under the age of 40, pregnant, and of Indian descent. Id. Several of Luckey's coworkers complained to supervisor Dan Garretttt, Baxter's Laboratory Operations Manager Joanna Yankula, and Baxter's Human Resource Manager Tracey Mohr that they were offended not only by the CAR, but also by Luckey's assertion that Middle Eastern males traditionally had oppressed women. Id.

 On June 22, 1994, Garretttt and Mohr met with Luckey to discuss these complaints. When Luckey contended that others supported her assessment of Baxter's promotion policies, Mohr indicated that promotion concerns should be taken up with management, not her coworkers. *fn3" Ex. 20-A. Luckey admitted making the statement about middle eastern males, but claimed that she didn't mean to offend anyone, adding that "ethnics are my friends." Id. Mohr counseled Luckey that her intent was not the issue, rather, she had to be cognizant of others' perceptions. Id. Luckey was warned that further incidents would trigger disciplinary action. Garrettt Aff. P 9.

 On August 16, 1994, Luckey received another verbal warning concerning three laboratory errors, all involving Standard Operating Procedure ("SOP") 235. Def. Ex. 7-K. The first two errors occurred on May 17 and May 24, 1994, respectively. In response to these errors, Garretttt suggested that Luckey be retrained on SOP 235. Def. Ex 7-K. Luckey refused, blaming the errors on too may distractions in the lab. Id. When Luckey committed a similar error on August 9, 1994, Garretttt ordered Luckey to undergo retraining on SOP 235, warning that "these are serious errors, yet you have resisted taking responsibility for these actions. You have told me that it is the number of distractions that are causing these errors, yet other technicians are able to consistently perform this work." Id. Luckey signed the warning, but claimed that most of the other technicians were making similar errors. Id.

 During the first week of September 1994, Luckey's coworker Ken Kerst complained to Mohr about Luckey's behavior in the lab. Def. Ex. 24-B. Kerst explained that Luckey had asked him to sign an affidavit to "help her case." When Kerst responded that he didn't know what her case was, Luckey referred to an incident in 1992, where Char Bychowski allegedly allowed saline-contaminated samples to be improperly processed. Id. Kerst denied any knowledge of the incident and refused to sign the affidavit. Luckey persisted for days, finally telling Kerst that "you have no balls" and "you might as well sign it because in November you're going to get laid off anyway." Id.

 In December 1994, Luckey distributed magnets to at least three of her coworkers. The magnets bore the motto "We won't be promoted" and the acronym "V.I.P.S-N.I.P.S", which Luckey explained stood for the phrase "Very Important People Slated With No Personal Skills." Luckey Dep. at 345-46; Garretttt Aff. P 9. After several coworkers complained that the magnets were offensive, (see, e.g., Kerst Dep. at 63-64), Garretttt issued Luckey a written warning on December 28, 1994, detailing Luckey's violation of Baxter's Distribution, Solicitation and Vending policy, for "repeated harassment of other employees, and for behavior that is defamatory to [Baxter]." Garretttt Aff. P 9. In addition, Baxter counseled Luckey about the impropriety of her earlier remarks to Kerst and warned Luckey that further disciplinary action, including termination, could be taken if the conduct persisted. While Luckey admitted creating and distributing the magnets, she denied offending anyone and pointed to examples of arguably similar but unpunished behavior. Luckey Dep. at 345-46. Luckey denied making the statements to Kerst.

 Luckey submitted a letter to Baxter management on January 23, 1995, expressing her belief that Baxter was retaliating against her for her efforts to institute new plasma testing. Def. Ex. 7-M. While admitting that she gave coworkers the VIPS-NIPS magnet, she claimed that she was innocent of the charges raised in the December 28, 1994 warning. Luckey labeled her supervisors and Baxter management "corrupt." Id.

 Garretttt's assessment of Luckey's 1994 performance reflected his frustration with Luckey's behavior. Garretttt concluded that while Luckey met most of Baxter's expectations concerning performance objectives, her behavior and interpersonal skills were substandard. Pl.'s Facts, Ex. V. Garretttt found that Luckey was argumentative, had offended several of her coworkers, and needed to "improve . . . her interpersonal skills" and "her teamwork. She has been openly critical of management decisions and needs to express her concerns to the appropriate individuals." Id ; Garretttt Dep. at 103. In addition, Luckey had released incorrect test results and violated safety procedures by repeatedly failing to button up her lab coat. Garretttt Dep. at 110, 118. While accounting for her difficulty to get along and communicate with others, Garretttt's overall assessment of Luckey's performance was generally positive, finding that Luckey "displays initiative and has made several improvements in the lab . . . . [she] consistently shares ideas for improvements . . . . Joan thinks outside her position and offers solutions to potential problems. An example of this is her proposal for saline contamination samples." Pl.'s Facts, Ex. V.

 In response to Garretttt's evaluation, Luckey issued a written comment on February 16, 1995. Luckey charged Garretttt and Baxter of being biased against her, characterizing the evaluation as "obviously their answer to my expressed concerns for product safety issues which they do not wish to address." Pl.'s Facts Ex. V. Touting her numerous contributions to Baxter, Luckey noted that "the visible improvements that have taken place within the last year in the issue of saline contamination are due directly to my unceasing efforts to stop the approval of essentially untested plasma for use in plasma products. It is unfortunately not totally corrected, although I have suggested detailed means for accomplishing this (citation to protocol omitted)." Id. Luckey rated herself as "perfect" in her self-evaluation, and defined her job responsibilities as updating and revising the currently released Total Protein SOPs, identifying problems and corrective actions required in ALT and Total Protein processing, and suggesting improvements in lab safety and effectiveness.

 Despite her "perfect" self-evaluation, Garretttt informed Luckey on March 20, 1995 that she would not be receiving a merit-based pay raise. Def. Ex. 24. According to lead lab technician Marie McMahon, Luckey returned to the lab and stated "I did not get anything," but "I don't care if they fire me, I'm ready. I'll have a surprise for them next week." Def. Ex. 24-E. The next day, Luckey asked McMahon to try to convince management that Luckey deserved a raise. When McMahon did not respond, Luckey stated "Well, I'm sorry but you're all going to court." Id. On March 22, 1995, McMahon informed Mohr of Luckey's remarks, characterizing them as threatening and coercive. Id.

 That same day, Ken Kerst told Mohr that Luckey had previously threatened to shut down the lab by early January 1995, and stated that she was "going to get rid of Tracey [Mohr], Wendy [Brendel], Julie [Wetterman], Joanna [Yankula], and unfortunately, Dave [Garretttt]." Def. Ex. 24-F. Kerst claimed that Luckey had told him of her plan to move to the south side of Chicago after she shut down the lab because she was afraid that someone from Baxter would try and kill her. Id. Luckey confided to Kerst that she would be willing to "forget the whole thing" if Baxter promoted her. Id.

 Mohr and Garretttt interpreted Luckey's statements to McMahon and Kerst as threatening. On March 23, 1995, they suspended Luckey. Def.'s Ex. 7. The written notice informed Luckey that she was being suspended for three days without pay for "repeated harassment of other employees and statements that constitute threats to the safety of the workplace and the well-being of coworkers." Def. Ex. 7- N. Baxter extended Luckey's suspension on March 27, 1995 to allow for further investigation. Id. On April 18, 1995, Baxter terminated Luckey, purportedly for the reasons stated in the notice of suspension. Id.

 3. Luckey's Saline-Dilution Complaints

 Luckey began complaining about Baxter's handling and testing of samples as early as 1992. Luckey contends that she became aware of saline-diluted samples in the Spring of 1992, after technician Candy Johnson's repeated ALT tests on one sample yielded invalid results. Luckey brought the sample to the attention of supervisor Bychowski, insisting that a Total Protein Test was required to determine if the sample was really plasma, or if it was merely saline. Luckey contends that Bychowski told her that examining samples was not within Luckey's job description. Luckey explains that a determination that the sample was actually saline diluted would require Baxter to prepare an incident report. Incident reports would then alert the Federal Food and Drug Administration ("FDA") of problems during internal audits of Baxter facilities-- something Baxter would rather avoid. Luckey insists that Baxter directed the lab technicians to essentially ignore plasma samples possibly tainted with saline.

 Despite Bychowski's admonishment, Luckey's coworkers often referred suspicious samples to her. Luckey Dep. at 46, 264. Luckey began documenting all incidents of suspicious samples. Luckey contends that Bychowski repeatedly warned Luckey to stop looking for saline in the plasma samples. Luckey Dep. at 261. Bychowski took Luckey aside and told her "Joan, you are getting managers very angry about the salines. You must stop looking at samples. You must stop proceeding with saline issues, because they are angry, and they will become retaliatory, and I can't protect you." Id. Luckey contacted several old colleagues and attorney Leonard Spring about Baxter's practices. Id. at 467.

 Luckey contends that she "often spoke with [her] coworkers about the saline issue and its severity, how improper testing and misrepresenting results was probably subject to legal ramifications. And at some point after approximately June of '94, I may have additionally added that I believe they were setting me up to fire me by a paperwork trail." Luckey Dep. at 395. In the spring of 1994, Luckey submitted a written proposal to Baxter management, addressing the issue of saline contamination. Wettermen Dep. at 101-102. Luckey's proposal reiterated her belief that further testing of colorless plasma samples was required to detect possible saline contamination. Luckey conferred with Julie Wetterman, Wendy Brendl (Director of Screening Services at Baxter), and Joanna Yankula in July 1994 about the proposal. Id. at 114-15. Even though Luckey repeatedly contacted Wetterman, Brendl, and Yankula about the proposal, she received virtually no information on its progression. By late 1994, Luckey had hired the law firm of Power, Rogers & Smith to represent her in an action against Baxter. Id. at 473.

 While Baxter had taken some action regarding the saline issue-- specifically, by issuing Protocols 93-019 and 94-025-- Luckey was concerned that the protocols did not go far enough. Luckey contacted Baxter executive Ms. Dahl in January 1995. Luckey told Ms. Dahl that she "was being accused of offenses I did not commit and that . . .[Baxter] was setting up a paperwork trail to fire me, and it was over my concerns of safety violations that I believe [Baxter has] been involved in for a long time and have refused to officially address and solve and resolve." Luckey Dep. at 374. Ms. Dahl asked Luckey to send her a letter regarding their conversation. Id. Luckey agreed and sent Ms Dahl a letter dated January 23, 1995, documenting their conversation and informing Ms. Dahl that Luckey had "sought legal advice" and "was advised to appeal to you." Id. at 378 However, Luckey acknowledges that she never informed Ms. Dahl that she was considering an FCA action, or that she had contacted anyone at the federal government or the FDA. Id. at 375. Similarly, Luckey admits that she never informed anyone at Baxter that she was conducting an investigation of any sort. Id.

 On January 26, 1995, Joan Luckey filed suit against Baxter for violations of the False Claims Act. *fn4" Shortly after Luckey's suspension in March of 1995, Baxter instituted a protocol requiring lab technicians to perform Total Protein Tests on all samples yielding an ALT result of five or less. Luckey contends that this protocol represents the required saline testing that she had advocated for years.

 ANALYSIS

 I. Summary Judgment Standards

 Summary judgment is proper if the record reveals no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Cincinnati Ins. Co. v. Flanders Elec. Motor Serv., Inc., 40 F.3d 146, 150 (7th Cir. 1995). A genuine issue for trial exists only when the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The Court must view the evidence in a light most favorable to the nonmoving party, drawing all reasonable inferences in the nonmovant's favor. Cincinnati Ins., 40 F.3d at 150. However, if the evidence is merely colorable, or is not significantly probative, or merely raises "some metaphysical doubt as to the material facts", summary judgment may be granted. Liberty Lobby, 477 U.S. at 261. In an employment discrimination suit, where credibility and intent are crucial issues, these standards are applied with added rigor. See Courtney v. Biosound, 42 F.3d 414, 418 (7th Cir. 1994). Finally, this Court is mindful that credibility determinations and weighing evidence are jury functions, not those of a judge when ruling upon a motion for summary judgment.

 II. False Claims Act

 In order to succeed on her FCA claim, Luckey must establish that Baxter "knowingly presented or caused to be presented" a "false or fraudulent claim for payment or approval" to the United States government. 31 U.S.C. § 3729(a)(1). The term "knowingly" means that a person has actual knowledge of the information, or acts in deliberate ignorance or reckless disregard of the truth or falsity of the information. 31 U.S.C. § 3729(b). Innocent mistakes or mere negligence are not actionable, but a specific intent to deceive is not necessary. Hindo v. Univ. Of Health Sciences/The Chicago Medical Sch., 65 F.3d 608, 613 (7th Cir. 1995), cert. denied, 516 U.S. 1114, 116 S. Ct. 915, 133 L. Ed. 2d 846 (1996). "The requisite intent is the knowing presentation of what is known to be false." Id. (quoting United States ex rel. Hagood v. Sonoma County Water Agency, 929 F.2d 1416, 1420 (9th Cir. 1991)). "In short, the claim must be a lie." Id. (citing Wang v. FMC Corp., 975 F.2d 1412, 1420 (9th Cir. 1992)).

 Luckey directs the Court's attention to the following "false representations" Baxter allegedly made to the government by falsely claiming compliance with certain regulatory and contractual standards.

 The Establishment License : In order to get the required establishment license enabling it to produce plasma products, Baxter had to certify compliance with 42 U.S.C. § 262(d)(1)(a):

 
"(1) Licenses for the maintenance of establishments for the propagation or manufacture and preparation of products described in subsection (a) of this section may be issued only upon a showing that the establishment and the products for which a license is desired meet standards, designed to insure the continued safety, purity, and potency of such products, prescribed in regulations, and licenses for new products may be issued only upon a showing that they meet such standards. All such licenses shall be issued, suspended, and revoked as prescribed by regulations and all licenses issued for the maintenance of establishments for the propagation or manufacture and preparation, in any foreign country, of any such products for sale, barter, or exchange in any State or possession shall be issued upon condition that the licensees will permit the inspection of their establishments in accordance with subsection (c) of this section."

 FSS Contract; DLA Contracts

 Baxter represented in each contract that its plasma products "shall be in accordance with the interim item description AA051958." Commercial item description AA0051958, in turn, ...


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