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United Statesd v. Alere Home Montoring, Inc.

United States District Court, D. Massachusetts

January 7, 2019

UNITED STATES OF AMERICA ex rel. JAMES F. ALLEN, Plaintiff,
v.
ALERE HOME MONITORING, INC., ROCHE HEALTH SOLUTIONS, INC., ADVANCED CARDIO SERVICES, CARDIOLINK CORP., MD INR, LLC, PATIENT HOME MONITORING, INC., TAMBRA INVESTMENTS, INC., and U.S. HEALTHCARE SUPPLY, LLC, Defendants.

          MEMORANDUM AND ORDER

          Patti B. Saris Chief United States District Judge

         INTRODUCTION

         This is a False Claims Act (“FCA”) case involving Medicare reimbursements for at-home blood-testing kits for patients receiving blood-thinning treatment. In August 2018, the Court issued a memorandum and order dismissing the claims against several Defendants, while permitting claims against three Defendants to go forward. See generally United States ex rel. Allen v. Alere Home Monitoring, Inc., 334 F.Supp.3d 349 (D.Mass. 2018). What follows assumes familiarity with that decision.

         Prior to issuing the decision, the Court had twice stayed proceedings against Defendant Tambra Investments (“Tambra”) pending settlement discussions. The most recent stay expired before the Court issued its decision. But the Court's decision did not address the claims against Tambra in light of the prior stays and the parties' representations that they were attempting to settle the matter.

         Now before the Court is a motion by Relator James Allen to enforce a purported settlement agreement, filed two days after the Court issued its decision. Relator claims that Tambra and he reached an enforceable settlement agreement prior to the Court's opinion. Tambra counters that no such agreement existed because its consent was contingent on the government agreeing to release Tambra's corporate officers from liability -- a proposal the government ultimately rejected. Without an enforceable settlement agreement, Tambra asks the Court to rule on its motion to dismiss.

         For the reasons that follow, the Court agrees with Tambra that the parties never reached a meeting of the minds on the scope of the release from the government that Tambra sought. Because this was a material term of the contemplated settlement, they did not reach an enforceable agreement. Thus, the motion to enforce (Dkt. No. 154) is DENIED.

         On the merits, Tambra's motion to dismiss (Dkt. No. 101) is ALLOWED.

         FACTUAL BACKGROUND

         The material facts are drawn from written communications between the parties submitted in connection with the motion to enforce a settlement. They are not subject to genuine dispute. Facts relating to the underlying litigation are set forth in more detail in the Court's prior opinion. See Allen, 334 F.Supp.3d at 352-54.

         I. Initial Settlement Offer

         Relator made his initial settlement offer to Tambra in a February 2018 letter, which proposes that Relator obtain a monetary payment, and that Tambra agree to allow the blood testing at issue in the case to be done at the frequency independently chosen by a prescribing physician. Dkt. No. 155-1 at 3. In exchange, Tambra would receive a “release of all claims of the United States related to conduct alleged by the Amended Complaint through the date of the settlement agreement.” Id. (emphasis added).

         The letter contains a full paragraph describing the importance of government approval to the settlement process. Relator stated that “the United States remains the real party in interest in this action, and any proposed settlement will require the consent of the Department of Justice.” Id. at 2. The letter later reiterated that the settlement proposal “is necessarily contingent upon approval from the Department of Justice.” Id.

         The attorneys for Relator and Tambra continued to negotiate the terms of a possible monetary payment into March and April 2018. In a March 2018 email, Tambra's counsel proposed a monetary payment in exchange for “a broad mutual release” and the dismissal of the case against Tambra with prejudice. Dkt. No. 198-1 at 13. Relator's attorney said these terms were “generally fine (subject, as always, to the government's blessing).” Id. In a subsequent March 2018 settlement offer, Tambra's counsel again stated, “Naturally there must be a full release and dismissal with prejudice.” Id. at 12.

         II. The Stay

         In April 2018, the parties jointly asked the Court for a stay. Dkt. No. 128. Tambra's counsel wrote, “I agree with the idea of staying as to [Tambra] so we can close on settlement.” Dkt. No. 155-2 at 3. At this juncture, Relator's counsel remained cognizant of the fact that the parties would still need “to get [the settlement agreement] by the government.” Id. This understanding was also reflected in the motion for a stay. Dkt. No. 128 ¶¶ 2-6. The motion stated, “Allen and [Tambra] agree that, if for some reason, the government objects to the settlement and the settlement cannot be effectuated, the stay may be lifted, and the case against [Tambra] will proceed . . . .” Id. ¶ 8. The Court allowed the motion. Dkt. No.

         III. Government's Involvement

         In April and May 2018, the federal government became involved in the settlement talks. See Dkt. No. 168-4 at 1; Dkt. No. 198-1 at 5. The parties agreed to begin drafting a settlement agreement using a government template. Dkt. No. 198-1 at 5. The government later provided Tambra's counsel with a first draft of a proposed settlement agreement, cautioning that the settlement “remain[ed] currently under consideration by the United States.” Dkt. No. 168-4 at 1.

         In June 2018, the government “approved the settlement parameters.” Dkt. No. 155-3 at 2. The agreement still lacked “[f]inal approval” from the Department of Justice (“DOJ”) and the United States Attorney's Office, but such approval could come only after Relator and Tambra finalized the draft from their end. Id.

         Around the same time, the parties' initial 60-day stay expired. They sought, and received, a second stay on June 4, 2018. Dkt. Nos. 151, 152.

         In July 2018, settlement discussions faltered. On July 3, 2018, counsel for Tambra sent a redline draft of the settlement agreement to the assistant United States attorney working on the case. Dkt. No. 168-5 at 2. In the email accompanying the draft, Tambra's attorney stated that his “primary concern relate[d] to the scope of the release.” Id.

Individual officers, directors, and employees, acting in their respective corporate capacities, need to be included in the scope of the release. I can't have a world where the company is dismissed and released, and then one week later, the officers, directors, and employees are sued for the exact same thing. Need to include everyone.

Id. Counsel for Relator was copied on this email. Id.

         About an hour later, the government's attorney responded (again copying Relator's counsel), stating that “many” of Tambra's proposed edits remained “very problematic” for the government. Dkt. No. 168-6 at 2.

         On July 5, 2018, the government's attorney sent a new draft. Dkt. No. 168-7 at 2. Despite the government's prior email, this version accepted Tambra's proposed release for officers and directors. Id. However, the government's email again concluded with the caveat that DOJ would still need to review and accept the draft agreement. Id. Relator's attorney, who was copied on this email, approved the new draft. Id. at 3.

         On July 6, 2018, the government's attorney retracted his acceptance of the release. Dkt. No. 168-9 at 2. He informed the parties that releasing the individual officers or directors would violate a DOJ policy instituted in a 2015 memorandum by former Deputy Attorney General Sally Yates. Id. He ...


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