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Caremark is a pharmacy benefit manager. In 2006, Caremark employees identified approximately 4,500 Prescription Drug Events (PPDEs) under Medicare Part D that had been authorized for payment by Caremark, but not yet submitted to the Centers for Medicare and Medicaid Services (CMS), due to the lack of a compatible Prescriber ID. Caremark then used a dummy Prescriber ID for those PDEs and programmed that dummy Prescriber ID into its system. Thereafter, when any claim with a missing or incorrectly formatted Prescriber ID was processed, the system would default to the dummy, which allowed Caremark to submit for payment PDEs without trigging CMS error codes. Spay, a pharmacy auditor, discovered the use of “dummy” Prescriber IDs while auditing a Caremark client. That client dropped all issues identified in the audit, collected no recovery from Caremark, and did not pay Spay. Spay filed a qui tam lawsuit, asserting violations of the False Claims Act because the inaccurate PDEs were used to support reimbursement requests. The government declined to intervene. The court granted Caremark summary judgment, finding that Caremark had established sufficient government knowledge to preclude finding the required element of scienter, noting that several courts have adopted the government knowledge inference doctrine. The Third Circuit affirmed, declining to adopt that doctrine but stating that the misrepresentations were not material to the government’s decision to pay the underlying claims. View "Spay v. CVS Caremark Corp" on Justia Law

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Mullin, age 29, had been in and out of prison and struggled with substance abuse. Serving a sentence at a halfway house, Mullin was found in possession of contraband and was transferred to New Jersey’s Central Reception & Assignment Facility, where he was assessed and assigned to an area that did not feature extensive or individualized supervision. In his Assignment Facility cell, he fashioned a noose from a bedsheet and took his own life. Mullin’s mother, Joan, was given information that was incomplete and inaccurate; she was told that her son had died at a different facility, an error repeated on his death certificate. More than two years into Joan’s civil-rights suit, her attorney received a previously-undisclosed investigative report that contained statements by fellow inmates about a guard who allegedly refused Mullin’s requests for psychiatric assistance and urged Mullin to kill himself. Due to a clerical error, the disc containing those disclosures was misfiled, and not accessed until 10 months later. By that time, Joan’s complaint, premised on a knew-or-should-have-known theory of vulnerability to suicide, had been partially dismissed. The district court denied a request for leave to amend and granted the remaining defendant summary judgment. The Third Circuit vacated. Denying leave to amend was an impermissible exercise of discretion. Some factors relied upon to deny leave are not supported by the record or are at odds with precedent. Counsel’s mistake does not, alone, support the denial. View "Mullin v. Balicki" on Justia Law

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Pursuit, managed by its founders, Schepis and Canelas, created and was the general partner in two funds to “acquire securities for trading and investment appreciation.” They invested in offshore entities formed in the Cayman Islands. Pursuit voluntarily petitioned for Chapter 7 bankruptcy in 2014, after it became liable for legal judgments of $5 million. Pursuit listed no assets but indicated that it had a “[p]otential indemnification claim” against one of the funds it managed and claims connected to other cases. Financial statements revealed that Pursuit’s 2011 gross income, $645,571.22 from one fund, was transferred to Pursuit’s members in 2013. Creditors Group claimed Schepis and Canelas enriched themselves at the expense of creditors and sought avoidance, 11 U.S.C. 544, 547, 548. The Trustee obtained court approval of an agreement to “settle, transfer and assign” the avoidance claim and other potential claims. The Pursuit Parties objected, seeking to purchase the claims themselves. The Trustee sold the claims to Creditors Group for $180,001. The Bankruptcy Court approved the sale. The Pursuit Parties did not seek a stay. Creditors Group sued on the claims in the Bankruptcy Court. The Third Circuit affirmed the district court’s dismissal of an appeal as moot under 11 U.S.C. 363(m), because the Pursuit Parties the requested remedy, if entered, would affect the validity of the sale. View "In re: Pursuit Capital Management" on Justia Law

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Collins, who worked as a Mary Kay beauty consultant in New Jersey, brought a putative class action, claiming that Mary Kay policies and practices violated the New Jersey Wage Payment Law. Mary Kay, a Texas-based company, moved to dismiss on forum non conveniens grounds, relying on written agreements that set forth the parties’ relationship. Both contained forum selection clauses specifying that legal claims would be submitted to Texas state court and contained choice-of-law clauses stating that Texas law would apply. The district court granted Mary Kay’s motion. The Third Circuit affirmed. Although Collins argued that her claims fell outside the scope of the forum-selection clause, Texas contract law applies to govern the interpretation of that clause. The parties have a substantial relationship to the state of Texas and there is no evidence New Jersey has a “materially greater interest” in the application of its own contract law to the interpretation of the forum selection clauses, or that application of Texas contract law to interpret the scope of the forum selection clauses would offend the “fundamental policy” of New Jersey. View "Collins v. Mary Kay Inc" on Justia Law

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Defendants manufacture and distribute FDA-approved prescription eye drop medications for treating conditions such as glaucoma. Bottles are pre-packaged with a fixed volume of medication; labeling does not indicate how many doses or days of treatment a patient can extract from the bottle. The dimensions of the bottle’s dropper tip dictate the size of the drop dispensed. Scientific research indicates that a normal adult’s inferior fornix – the area between the eye and the lower eyelid – has a capacity of approximately 7-10 microliters (µLs) of fluid. If a drop exceeding that capacity is placed into an eye, excess medication is expelled, providing no pharmaceutical benefit to the patient. Expelled medication also may flow into a patient’s tear ducts and move into his bloodstream, increasing the risk of certain harmful side effects. These studies conclude that eye drops should be 5-15 µLs. Defendants’ products emit drops that are considerably larger so that at least half of every drop goes to waste. The Third Circuit reversed dismissal of a putative class action (Class Action Fairness Act, 28 U.S.C. 1332) under state consumer protection statutes. The consumers’ allegations of injury were sufficient to confer standing. Plaintiffs claim economic interests in the money they spent on medication that was impossible for them to use; their concrete and particularized injury claims fit comfortably in categories of “legally protected interests” readily recognized by federal courts. View "Cottrell v. Alcon Laboratories" on Justia Law

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The Hayes family is a low-income family whose rent is subsidized by enhanced voucher assistance under the Housing Act of 1937, 42 U.S.C. 1437f(t) (Section 8). Because an ordinary voucher does not cover a tenant’s rent to the extent that it exceeds the applicable payment standard, and, following a valid opt-out, property owners are no longer subject to limitations on what they may charge for rent, enhanced vouchers exist to enable residents to “choose” to continue renting the “dwelling unit in which they currently reside.” The Hayes family's eligibility to receive enhanced vouchers is contingent upon their continued tenancy in a unit currently owned by Harvey. Toward the end of their most recent lease term, Harvey notified the Hayes family that he would not renew their lease. The Hayes family refused to vacate the premises, arguing that as enhanced-voucher tenants, they have an enforceable “right to remain” in their unit as long as it is offered for rental housing. The district court granted Harvey summary judgment. The Third Circuit affirmed. The Act does not obligate property owners to renew enhanced-voucher tenancies after the initial lease term. View "Hayes v. Harvey" on Justia Law

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Represented by Folkenflik, Plaintiffs, victims of Bressman’s manipulation of stock prices, brought civil securities fraud and RICO claims against Bressman and others. Bressman filed for Chapter 11 bankruptcy. Plaintiffs then filed the adversary complaint. The civil securities fraud and RICO claims continued against Bressman’s co-defendants. In 1998, some of those claims were settled for $6,250,000. Folkenflik received the funds. The approved Settlement Agreement included a confidentiality order. Months later, Plaintiffs sought a default judgment against Bressman. Folkenflik submitted an affidavit that indicated that the damages totaled $5,195,081, provided a comprehensive account of the underlying proceedings, but did not mention the settlement. The bankruptcy court entered a default judgment against Bressman. Plaintiffs later sought RICO damages and attorneys’ fees, again not mentioning the settlement. The bankruptcy court entered a RICO judgment for treble damages: $15,585,243 plus $910,855.93 in attorneys’ fees. More than 10 years later, Folkenflik learned that Bressman might receive $10 million, and filed ex parte applications on behalf of Plaintiffs to appoint a receiver to search for and seize Bressman’s assets. Searches and seizures were executed. Flolkenflik did not disclose the settlement and made misleading representations to the courts and Bressman’s attorney. When the courts learned about the settlement, the orders were vacated and the seized materials returned. The bankruptcy court found that Folkenflik’s conduct constituted fraud on the court, vacated the default judgment, and dismissed the adversary complaint with prejudice. The Third Circuit affirmed. Bressman’s motion was not barred by laches. Folkenflik’s failure to disclose the settlement constituted intentional fraud. Even if he believed that the confidentiality order prohibited him from disclosing the existence of the Agreement, he could have so stated in his affidavit and asked the courts for guidance. View "In re: Bressman" on Justia Law

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Zimmerman, a former employee of the Pennsylvania legislature, sued current and former high ranking officials of the Commonwealth of Pennsylvania, including a former Attorney General who subsequently became Governor, under 42 U.S.C. 1983, alleging that the defendants were all involved in bringing criminal charges against him and that those charges amounted to malicious prosecution in violation of the Fourth and Fourteenth Amendments and Pennsylvania law. Zimmerman was one of nine staff members arrested after the “Computergate” investigation, which involved receiving bonuses for campaign-related work performed on state time. Zimmerman was charged with intentionally hindering an investigation “by concealing or destroying evidence of a crime.” The charges were subsequently dismissed. The Third Circuit reversed the district court’s denial of the defendants’ motion for judgment on the pleadings. There was probable cause to initiate those criminal proceedings; Zimmerman cannot establish a prima facie case of malicious prosecution. View "Zimmerman v. Corbett" on Justia Law

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Progressive publishes and sells business publications, using sales representatives who are paid an hourly wage plus bonuses based on the number of sales per hour while they are logged onto their workstation computers. Progressive previously gave employees two 15-minute paid breaks per day. In 2009, Progressive eliminated paid breaks but allowed employees to log off of their computers at any time, for any duration. Progressive does not pay them for time they are logged off of their computers, including bathroom breaks and time used to prepare for the next call. Sales representatives estimate the total number of hours that they expect to work during the upcoming pay period. They are subject to discipline for failing to work that number of hours. Progressive sends representatives home for the day if their sales are not high enough and sets fixed schedules for representatives when that is deemed necessary. The Department of Labor alleged that this policy violated the Fair Labor Standards Act “by failing to compensate . . . sales representative employees for break[s] of twenty minutes or less . . . .” The district court agreed that that 29 C.F.R. 785.18 created a bright-line rule. The Third Circuit affirmed that the Act requires employers to compensate employees for all rest breaks of 20 minutes or less. View "Secretary United States Department of Labor v. American Future Systems Inc." on Justia Law

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Rubi, a U.S. citizen, is the Director of 7R Holdings LLC, which has its principal place of business in Puerto Rico. Holdings holds 7R Charters, which owned M/Y Olga, a yacht registered in the British Virgin Islands (BVI). Calot captains Olga. Using email and the telephone, Calot, while in Puerto Rico, hired Trotter, while in Florida, to work as a chef on Olga. Trotter boarded Olga in St. Thomas, U.S. Virgin Islands. Days later, Olga traveled to Scrub Island, BVI, and let down its anchor. Trotter allegedly sustained an injury while descending stairs to the dock, was treated for her alleged injuries at a BVI hospital, and returned to Florida. Trotter sued Rubi, Holdings, and Olga in the District Court of the Virgin Islands under the Jones Act, 46 U.S.C. 30104, and general maritime laws. The court dismissed, citing forum non conveniens. The Third Circuit affirmed, applying the general presumption that the possibility of a change in substantive law should ordinarily not be given substantial weight in the forum non-conveniens inquiry, because the remedy provided by the alternative forum is not clearly inadequate and because the Jones Act does not contain a special venue provision. The court did not abuse its discretion in exercising its forum non-conveniens power after reasonably balancing the relevant private and public interest factors. View "Trotter v. 7R Holdings LLC" on Justia Law