Guilfoile v. Shields Pharmacy, LLC

MEMORANDUM AND ORDER

DENISE J. CASPER, UNITED STATES DISTRICT JUDGE

I. Introduction

Plaintiff Thomas Guilfoile (“Guilfoile”) has filed this lawsuit against Defendants Shields Pharmacy LLC (“Shields Pharmacy”), UMASS Memorial Shields Pharmacy, LLC (“UMSP”), Shields Pharmacy Equity, LLC (“Shields Equity”), Shields Specialty Pharmacy Holdings, LLC (Shields Holdings”) (collectively, “Corporate Defendants”) and John M. Shields, Sr. (Shields”) in his individual capacity asserting claims for breach of contract (Count I), declaratory judgment (Count II), breach of the implied covenant of good faith and fair dealing (Count III), retaliation in violation of the False Claims Act, 31 U.S.C. § 3730(h) (“FCA”) (Count IV), wrongful termination (Count V), breach of fiduciary duty (Count VI), intentional interference with advantageous contractual/business/employment relationship (Count VII) and failure to pay wages in violation of Massachusetts Wage Act, Mass. Gen. L. c. 149 § 148 (Count VIII). D. 29. Guilfoile brings Counts

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I-V against Corporate Defendants, Counts VI-VII against Shields in his individual capacity and Count VIII against all Defendants. Defendants now move for partial summary judgment, D. 143, and Guilfoile moves for cross partial summary judgment, D. 146. For the reasons discussed below, the Court ALLOWS Defendants' motion as to the measure of damages for breach of contract (Count I), declaratory judgment (Count II), FCA retaliation (Count IV), wrongful termination (Count V), breach of fiduciary duty (Count VI), intentional interference (Count VII) and the Wage Act Claim (Count VIII), D. 142, and DENIES Guilfoile's motion for summary judgment. D. 146.

II. Standard of Review

The Court grants summary judgment where there is no genuine dispute regarding any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A material fact is one that “carries with it the potential to affect the outcome of the suit under the applicable law.” García-González v. Puig-Morales, 761 F.3d 81, 87 (1st Cir. 2014) (quoting Newman v. Advanced Tech. Innovation Corp., 749 F.3d 33, 36 (1st Cir. 2014)) (internal quotation mark omitted). The moving party “bears the burden of demonstrating the absence of a genuine issue of material fact.” Rosciti v. Ins. Co. of Pa., 659 F.3d 92, 96 (1st Cir. 2011) (citation omitted). Once that burden is met, the non-moving party may not rest on the allegations or denials in his pleadings, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986), but, “with respect to each issue on which [he] would bear the burden of proof at trial, ” must “demonstrate that a trier of fact could reasonably resolve that issue in [his] favor.” Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010) (citations omitted). The Court views the record in the light most favorable to the non-moving party, “drawing reasonable inferences” in his favor. Noonan v. Staples, Inc., 556 F.3d 20, 25 (1st Cir. 2009) (citation omitted). “Conclusory allegations, improbable inferences, and unsupported speculation, ” however, are

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“insufficient to establish a genuine dispute of fact.” Travers v. Flight Servs. & Sys., Inc., 737 F.3d 143-1, 146 (1st Cir. 2013) (citation and internal quotation mark omitted).

III. Factual Background

A. Guilfoile's Employment with Defendants

The following facts are drawn from the parties' statements of material facts as well as supporting filings and are undisputed unless otherwise noted. Shields Health Solutions (“SHS”) is an entity under which Defendants operated businesses that provided flexible specialty pharmacy solutions to hospital partners.^[1] D. 161 ¶ 1. In August 2013, SHS hired Guilfoile as its president. D. 161 ¶ 2. During the time Guilfoile was employed by Corporate Defendants, the collection of entities was known as SHS, D. 163 ¶ 5, and shared the same management team including Shields as Chief Executive Officer, Guilfoile as president and John Lucey (“Lucey”) as Chief Financial Officer. Id. at ¶¶ 6-7.

B. Negotiation of Employment Terms

In August 2013, Guilfoile prepared a term sheet regarding the terms of his employment. D. 145-2; D. 161 ¶ 4. This term sheet, to be effective as of August 26, 2013, provided that Guilfoile would serve as President of Shields Pharmacy, would receive an annual salary of $275, 000, would be entitled to certain profit sharing, would receive certain equity in the company and would be entitled to 12 months' severance (and including already vested ownership) upon termination other than voluntary termination. D. 145-2 at 3-4. In the spring or summer of 2014, Guilfoile realized he had misunderstood the Corporate Defendants' structure in relation to part of his equity interests

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under the employment agreement. D. 161 ¶ 5. As a result of this misunderstanding, in October 2014, Guilfoile and Shields discussed Guilfoile's equity and bonus compensation. Id. ¶ 6. After meeting on both October 7 and October 13, 2014, Guilfoile sent Shields an email to confirm what he believed their agreement to be regarding his compensation package. Id. ¶ 8. Guilfoile acknowledged that he did not own equity in UMSP directly. Id. ¶ 10. On October 17, 2014, Guilfoile forwarded an October 14, 2014 email to attorneys at the law firm Mintz Levin, asking them to prepare an agreement consistent with the terms set forth in his email. Id. ¶ 11. Pursuant to the original term sheet, the parties agreed that the Corporate Defendants would repurchase Guilfoile's vested equity in the event of a termination. Id. ¶ 15. Between December 2014 and September 2015, Guilfoile and Lucey worked with attorneys at Mintz Levin to prepare incentive interest agreements for some of the Corporate Defendants' employees, including Guilfoile. Id. ¶ 17. On September 4, 2015, Mintz Levin circulated the most recent drafts of the incentive interest agreements to Guilfoile and Lucey. Id. ¶ 18. Mintz Levin prepared incentive interest agreements for Guilfoile and attached them to the September 4, 2015 email; there was an agreement for each of the businesses that existed at the time aside from UMSP: Shields Pharmacy, LLC, Shields Pharmacy of Greater Springfield, LLC, Shields Pharmacy of Newark, LLC, Shields Pharmacy of Berkshire, LLC, Shields Pharmacy of Hartford, LLC, Shields Pharmacy of Camden, LLC and Shields Specialty Pharmacy Holdings, LLC (collectively, the “incentive agreements”). Id. ¶ 20.

C. Guilfoile Expresses Concern regarding Alleged Kickback

Michael Greene (“Greene”) owns and operates a healthcare consulting and advisement firm called Ayrault Consulting Group. D. 161 ¶ 45. In October 2012, Greene, a contact of Shields, introduced Shields to Dr. John Brennan, the president and chief executive officer of Newark Beth Israel Medical Center (“NBIMC”). Id. ¶ 47. In January 2013, Ayrault executed a contract with

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NBIMC to provide consulting services directly to Dr. Brennan, Id. ¶ 48, and pursuant to the contract, Greene was a consultant and not an employee of the hospital or its parent company, Barnabas. Id. ¶ 49. Around the same time that Ayrault and the hospital executed their consulting contract, Greene advised Dr. Brennan that he intended potentially to provide services to SHS. Id. ¶ 52. In late 2013, a meeting was held between NBIMC and SHS with Dr. Brennan, Dominic Segalla (“Segalla”), NBIMC's vice president of finance, Ralph Iadorola, Greene and Shields. Id. ¶¶ 53-54. Prior to this meeting, Greene disclosed to Segalla that he intended to do business with SHS and that he had recused himself from NBMIC's consideration of or negotiations with SHS. Id. ¶ 55.

NBIMC and SHS executed a contract on March 31, 2014. Id. ¶ 60. Neither SHS nor NBIMC submitted a claim to the federal government for reimbursement of the services provided to NBIMC. Id. ¶ 62. The Corporate Defendants did not own a specialty pharmacy at NBIMC, nor did they operate a specialty pharmacy for NBIMC. Id. at ¶ 63. Instead, NBIMC had pre-existing relationships with contract pharmacies that provided 340B outpatient services to NBMIC patients. Id. ¶ 64.

In September 2014, Corporate Defendants and Ayrault executed a contract recognizing Ayrault as an independent contractor. Id. ¶ 89. The Corporate Defendants also issued payments to Ayrault under that contract for Greene's introductions to NBIMC and the hospital. Id. ¶ 90.

In September 2015, Lucey requested Guilfoile's approval to pay Ayrault consistent with the terms of the contract. In response, on September 23, 2015, Guilfoile requested and received a copy of the Ayrault contract from Lucey. Id. ¶ 92. Guilfoile raised concerns regarding an alleged kickback in an email to Shields on January 3, 2016, after his termination. Id. ¶ 102. Guilfoile testified in his deposition that he had already consulted with attorneys at the time he sent the

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January 3, 2016 email. Id. ¶ 104. During the time Guilfoile expressed concerns about the Ayrault contract, he also sought confirmation that Michael Nudo of MKN Capital LLC, which executed a contract with the Corporate Defendants around the time of the Ayrault contract, had disclosed a potential conflict of interest to the hospitals to which he had introduced the Corporate Defendants. Id. ¶ 107.

D. Guilfoile's Termination

In December 2015, Shields terminated Guilfoile. D. 161 ¶¶ 22-23. Guilfoile alleges that he was terminated by Shields “because he did not want [Guilfoile] to disclose his activities to the board and to UMass, ” in particular “the contract with Michael Greene, the misrepresentation in the CNE contract [about a 24/7 call center], and the establishment of Waterline Ventures with Robbie Greenglass.” Id. ¶ 27. A...