Reduction on Damages for Millennium Labs

(CN) - Drug-testing firm Millennium Laboratories won a $3.5 million reduction of the damages it owes a competitor that accused it of paying kickbacks.

A federal jury in Tampa, Fla., had initially awarded rival firm Ameritox more than $2.7 million in actual damages and $12 million in punitive damages after concluding that Millennium violated the state laws of Tennessee, Florida and Texas regarding the inducement of referrals by providing free drug-testing cups to doctors in exchange for returning the cups to Millennium for confirmatory testing.

U.S. District Judge Susan Bucklew granted Millennium a reduction on the punitive damages on Friday, finding that it should only pay $8.5 million.

While the jury included $7 million in the initial punitive damages calculation for tortious interference and unfair competition under Florida law, Bucklew found this figure excessive and reduced it to $4.875 million.

The jury was not specifically asked whether Millennium had a "specific intent" to harm Ameritox with its conduct in Florida, according to the ruling. Under Florida law, punitive damages for such claims cannot exceed the greater of three times the amount of compensatory damages or $500,000. An exception to the cap may be triggered if the jury determined a "specific intent to harm" Ameritox and that the conduct did in fact harm Ameritox.

"Instead, the jury instructions allowed the jury to find in favor of Ameritox on its Florida tortious interference claim upon a finding that Millennium used illegal conduct when competing with Ameritox," the 29-page opinion states. "The jury concluded that Millennium violated the [anti-kickback statute] and Stark Law, and thus, they could have concluded that such illegal conduct was sufficient to support Ameritox's tortious interference claim under Florida law. Thus, the jury may not have considered whether Millennium also had the specific intent to harm Ameritox when it interfered with Ameritox's customers."

The initial punitive damages award also included $2.4 million under Tennessee law, a figure that Bucklew cut by more than half.

Under Tennessee law, punitive damages on the tortious interference claim cannot exceed the greater of two times the amount of compensatory damages or $500,000.

"Given the ambiguity regarding which customer(s) the jury found that Millennium tortiously interfered with, the court cannot conclude with any confidence that the punitive damages were awarded for an interference that occurred prior to October 1, 2011," the ruling states. "Therefore, the court concludes that the cap of two times the amount of compensatory damages should be applied to the Tennessee punitive damages award. As such, the Tennessee punitive damages award is reduced to $1,110,000."

Millennium failed, however, to win a reduction of the $2.52 million in punitive damages awarded under Texas law. Bucklew cited the company's "fairly reprehensible conduct" in Texas in finding that the award does not violate the due-process clause.

Ameritox did not immediately respond to a request for comment Monday afternoon.

Millennium spokeswoman Nicole Beckstrand said the company was "pleased" with the damages reduction.

"We will be appealing the remaining judgment immediately," she said in an interview. "In the meantime, we remain committed to providing outstanding service to our customers and helping them to provide the best possible care for their patients."

Edward Zicari, a former regional manager for Millennium, sued the company two years ago in Dallas County Court. He claimed he was abruptly fired in 2010 after he refused to perform certain illegal acts.

"As one example, an officer of Millennium directed Zicari to offer monetary bribes to physician clinics in his territory, including Texas, to obtain information on competitors," Zicari's complaint states. "The Millennium officer represented to Zicari that monetary bribes had been successfully employed in other regions by other region managers."

Zicari also complained that the company sued him a year earlier in Dallas.

"The lawsuit was based on Zicari's production of documents to counsel for a party in federal litigation pending in Florida," Zicari alleged. "There was no relief awarded to Millennium in the Dallas federal lawsuit. Millennium and Zicari entered an agreement resolving the Dallas federal lawsuit in July 2012."

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