Henry Roop v. Southern Pharmaceuticals Corporation
188 So. 3d 1179
Miss.2016Background
- Henry Roop was hired in June 2008 as Diabetic Sales Director for Southern Pharmaceuticals Corp. (SPC) under a contract with production goals; SPC derived most revenue from Medicare/Medicaid.
- In July 2009 Roop accompanied branch manager Johnny Pettigrew on a sales call to Central Medical, where an employment application for Patrick Gregory’s wife, Josephine, was presented to SPC’s representatives.
- Roop alleges Pettigrew told him the wife would be a sham employee paid a commission (a kickback) for referrals by Patrick; Roop reported this to SPC owner Doug Martin and was terminated the next day.
- Roop sued for wrongful termination under the McArn public-policy exception (reporting illegal acts), breach of contract, and related claims; most claims were dismissed pre-verdict, leaving wrongful-termination and breach-of-contract to the jury.
- The jury found for Roop on the anti-kickback report claim and awarded $18,750; the trial court set aside the verdict by JNOV reasoning the illegality was speculative because no hire or payment occurred.
- The Mississippi Supreme Court reversed, holding an offer alone can violate the federal Anti-Kickback Statute and reinstating the jury verdict; remanded for punitive-damages hearing and attorneys’ fees consideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the reported conduct (offer to "hire" Josephine as a sham to pay commissions) was illegal under the Anti-Kickback Statute | Roop: statute criminalizes offering or paying remuneration to induce referrals, so an offer alone is illegal; his report therefore raised protected activity | SPC: no completed hire or payment; at most an application, and the bona-fide-employee exception could apply — evidence was speculative and legally insufficient | Held: Offer is sufficient; jury could find SPC offered a kickback and the trial court erred in requiring a completed transaction |
| Whether substantial evidence supported that Roop was terminated for reporting illegal activity | Roop: contemporaneous report to Martin and quick termination (next day) plus testimony supports retaliatory motive | SPC: terminated for cause—failure to meet contractual goals and conflicts with managers; timing coincidence; insufficient direct evidence of retaliatory motive | Held: Viewing evidence in favor of Roop, reasonable jurors could find he was fired for reporting illegal activity; JNOV was improper |
| Whether bona-fide-employee exception barred finding a violation when no hire occurred | Roop: exception cannot be used to justify awaiting completion of a sham scheme; circumstantial evidence allowed jury to infer sham | SPC: only an application existed; no testimony Josephine would be paid or be sham; exception could apply if she would be bona fide employee | Held: Exception does not preclude liability for an offer that is in fact a sham; jury could infer sham from circumstantial evidence |
| Whether the trial court erred by denying a punitive-damages hearing | Roop: jury found illegal conduct and awarded compensatory damages; statute and Rule require an evidentiary hearing to consider punitive damages | SPC: trial court declined based on JNOV and concerns about inconsistent verdict | Held: Trial court erred; case remanded to empanel a jury for an evidentiary hearing on punitive damages and to consider attorneys’ fees under the contract |
Key Cases Cited
- McArn v. Allied Bruce-Terminix Co., Inc., 626 So. 2d 603 (Miss. 1993) (establishes public-policy exception for employees discharged for reporting illegal employer acts)
- Cheeks v. Autozone, Inc., 154 So. 3d 817 (Miss. 2014) (standard of review for JNOV; view evidence in light most favorable to nonmoving party)
- White v. Stewman, 932 So. 2d 27 (Miss. 2006) (standards for sufficiency review of jury verdicts and JNOV)
- Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003) (circumstantial evidence can be sufficient and persuasive)
- Nero v. Industrial Molding Corp., 167 F.3d 921 (5th Cir. 1999) (close timing between protected activity and termination can support inference of causation)
- United States v. Duz–Mor Diagnostic Lab., Inc., 650 F.2d 223 (9th Cir. 1981) (offer of bribery sufficient for criminal liability under predecessor statute)
- U.S. ex rel. Kester v. Novartis Pharm. Corp., 23 F. Supp. 3d 242 (S.D.N.Y. 2014) (Anti-Kickback Statute violation can occur where an offer is made even if the scheme does not produce referrals)
- Hammons v. Fleetwood Homes of Miss. Inc., 907 So. 2d 357 (Miss. Ct. App. 2004) (clarifies McArn requires acts warrant criminal penalties, not mere civil violations)