F1aintffs, Civil Action No. 11-1210

v. OPINION & ORDER

BOSTON SCIENTIFIC

NEUROMODULATION CORPORATION,

Defendant.

John Michael Vazguez, U.S.D.J.

Currently pending before before the Court, in this false Claims Act case, is a motion in

limine filed by Defendant Boston Scientific Neuromodulation Corporation (“BSNC” or

“Defendant”), which seeks to exclude certain evidence regarding claims data. D.E. 420. Plaintiffs

Wendy Bahnsen and Caroline Fuentes (collectively “Plaintiffs”) filed a brief in opposition (D.E.

421), to which Defendant replied (D.E. 422). The Court reviewed the submissions made in

support and in opposition, and considered this motion without oral argument pursuant to Federal

Rule of Civil Procedure 78(b) and Local Civil Rule 78.1(b). For the reasons that follow,

Defendant’s motion is GRANTED in part and DENIED in part.

INTRODUCTION

BSNC seeks to exclude certain evidence, such as individual line entries, unprocessable

entries, adjusted line entries, voided line entries, and duplicate submissions. BSNC argues that the

‘In this opinion, BSNC’s brief in support of its motion will be refened to as “BSNC’s Br.”;

Plaintiffs’ brief in opposition will be referred to as “Plfs’ Opp.”; and BSNC’s reply brief will be

referred to as “BSNC’s Reply”.
judgment. Alternately, Plaintiff argues that all entries on the spreadsheet are in fact claims under

the FCA, or at a minimum, that a jury should decide whether the relevant entries qualify as claims.

At the outset, the Court does not understand Plaintiffs’ argument concerning summary

judgment because the Court expressly permitted B$NC to raise this issue by way of a motion in

timine rather than deciding it at the summary judgment stage. D.E. 38$ at 30. Consequently,

Defendant’s motion is proper. However, there is additional infonTiation that the Court needs in

order to definitively rule on the motion at hand. In the Court’s view, both parties to some extentadvocate for a definition of claim that is not consistent with the FCA. As a result, the Court will

review the relevant law as to what constitutes a claim for FCA purposes before turning to the

parties’ arguments. In addition, the Court will rule on the motion to the extent possible, given the

information that is curmently available to the Court.

“CLAIM” UNDER THE FCA

The FCA provides, in relevant part, as follows:

[A]ny person who—

(A) knowingly presents, or causes to be presented, a false orfraudulent claim for payment or approval;(B) knowingly makes, uses, or causes to be made or used, a false

record or statement material to a false or fraudulent claim;is liable to the United States Government for a civil penalty of not

less than $5,000 and not more than $10,000, . . . plus 3 times theamount of damages which the Government sustains because of theact of that person.

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are also subject to FCA liability. Id. at 184 (stating that the FCA 

seeks to redress fraudulent

activity which attempts to or actually causes economic loss to the United States government”).

The FCA imposes two types offinancial liability. First, a submitter of a “false or fraudulent

claim” (or false record/statement vis-ã-vis such a claim) is liable for a civil monetary penalty

between $5,000 to $10,000 per claim. 31 U.S.C. § 3729(a); United States v. Bornstein, 423 U.S.

303, 313 (1976). This penalty will be imposed for false claims that are actually paid by the

government, in addition to attempted false claims. United States ex rel. Schwedt v. Planning

Research Corp., 59 F.3d 196, 199 (D.C. Cir. 1995) (“[E]ven if the claim is rejected, its very

submission is a basis for liability.”). Second, the submitter of the claim is also liable for actual

damages, which are trebled under the FCA. 31 U.S.C. § 3729(a)(1)(G); see also United States v.

Anchor Mortg. Corp., 711 F.3d 745, 748 (7th Cir. 2013) (stating that the “statute requires treble

damages”).

The FCA further defines “claim”:

(2) the term “claim”—

(A) means any request or demand, whether under a contract or

otherwise, for money or property and whether or not the United

States has title to the money or property, that—

(i) is presented to an officer, employee, or agent of the

United States; or(ii) is made to a contractor, grantee, or other recipient, if

the money or property is to be spent or used on the

Government’s behalf or to advance a Government

program or interest, and if the United States

Government3
the Government has paid to an individual as compensation for

Federal employment or as an income subsidy with no restrictions on

that individual’s use of the money or property[.]

31 U.S.C. § 3729(b).

In United States Bornstein, 423 U.S. 303 (1976), the Supreme Court ofthe United States

set forth the parameters of a claim under the FCA.2 In Bornstein, Model Engineering &

Manufacturing Corporation (“Model”) had a contract with the United States to provide radio kits.

United National Labs (“United”), Model’s subcontractor, sent twenty-one boxes of misbrandedtubes to Model in three separately invoiced shipments. Model then used 397 of the misbranded

tubes in radio kits that it provided to the United States, and sent thirty-five invoices to the

Government for the kits. Each invoice included claims for payment for the misbranded tubes that

had been supplied to Model by United. Bornstein, 423 U.S. at 307. After the Government

discovered the fraud, it brought suit under the FCA against United and its officer-owners. Using

Model’s invoices to the Government, the district court determined that there were thirty-five

claims. The circuit court, however, concluded that because there was only one subcontract

involved, there was just one claim. Id. at 308.

The Supreme Court disagreed with both the district court and the circuit court’s

determination of what constituted a claim under the FCA. As for the circuit court’s interpretation,

2 Bornstein addressed a prior version ofthe FCA in which penalties were deemed forfeitures, andwere limited to $2,000 per claim. In addition, damages were doubled rather than trebled. See

Bornstein, 423 U.S. at 316-17.

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actions of United.

The Bornstein Court observed that the FCA “penalizes a person for his own acts, not for

the acts ofsomeone else.” Id. at 312. While United certainly caused Model to submit false claimsto the government, the Court noted, United did not cause Model to submit a specific number of

claims. The fact that Model submitted thirty-five invoices, rather than some other number, was“wholly irrelevant, completely fortuitous and beyond United’s knowledge and control[,]”

according to the Supreme Court. Id. at 312. Consequently, the Supreme Court concluded as

follows

A correct application of the statutory language requires, rather, that

the foctts in each case be upon the specific conduct of the person

from whom the Government seeks to collect the statutoryforfeitares.

In the present case United committed three acts which caused Model

to subit [sic] false claims to the Government—the three separatelyinvoiced shipments to Model. If United had not shipped any falsely

branded tubes to Model, Model could not have incorporated such

tubes into its radio kits and would not have had occasion to submit

any false claims to the United States. When, however, Uniteddispatched each shipment of flasely [sic] marked tubes to Model, itdid so knowing that Model would incorporate the tubes into the

radio kits it later shipped to the Government, ant [sic] that it would

ask for payment from the Government on account of those tubes.

Thus, United’s three shipments of falsely branded tubes to Model

caused Model to submit false claims to the United States, and United

is thus liable for three $2,000 statutory forfeitures representing thethree separate shipments that it made to Model.

Id. at 313 (emphasis added).

In United States v. Krizek, 111 F.3d 934 (D.C. Cir. 1997), the District of Columbia Circuit

also addressed what constitutes a claim for FCA purposes. Krizek involved a psychiatrist’s

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reimbursement was sought. The Form 1500 pertained to a single patient but could include a host

of CPT codes ifthe patient was treated on several occasions before the Form 1500 was submitted.

Id. at 936. Following the recommendation of a special master, the district court treated each CPT

Code as a unique false claim, despite the fact that multiple CPT codes appeared on the same Form

1500. Id. at 937.

The District of Columbia Circuit deteniiined that the district court erroneously treated each

CPT code as a separate claim when computing penalties under the FCA. Instead, the Krizek court

ruled, each Form 1500 constituted a claim, even if the Fon 1500 included multiple fraudulent

CPT codes. Id. at 938-39 (citing Bornstein, 423 U.S. at 307, 313; United States ex ret. Marcus e.

Hess, 317 U.S. 537, 552 (1943) (finding that a false claim was submitted for each project with the

government although each project involved multiple forms); Miller v. United States, 550 F.2d 17,24 (Ct. Cl. 1977) (finding that a contractor made five false claims through monthly bills togovernment despite fact that the bills included multiple invoices); United States v. Woodbury, 359F.2d 370, 378 (9th Cir. 1966) (finding that applications and not the individual documents attachedto applications were claims).) The key, the circuit court concluded, was to focus on the defendant’s

conduct and to ask the following: “[w]ith what act did the defendant submit his demand or requestand how many such acts were there?” Krizek, 111 F.3d at 939. The manner in which theGovernment chooses to process a claim is irrelevant, according to the court in Krizek, in

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service, a description of the procedures, a diagnosis code, and thecharges. The charges are then totaled to produce one request ordemand—line 27 asks for total charges, line 2$ for amount paid, and

line 29 for balance due. The CPT codes function in this context as

a type of invoice used to explain how the defendant computed his

request or demand.

Id. at 940. Moreover, the Krizek Court noted, had it adopted the Government’s position that each

CPT code constituted a claim, it would have enabled the govenunent to seek “an astronomical $$1

million worth of damages for alleged actual damages of $245,392.” Krizek, 111 F.3d at 940. See

also United States v. Speqtrum, Inc., No. 10-2111, 2016 WL 5349196, at *4 (D.D.C. Sept. 23,2016) (following Krizek in concluding that invoices, not the individual false entries in the invoices,

were claims); Cantrell v. New York Univ., 326 F. Supp. 2d468, 470 (S.D.N.Y. 2004) (“One invoice

constitutes one false claim, even thought it contains numerous individual entries, and a false claim

is made when the invoice is presented for payment.” (citing Krizek, 111 F.3d at 93$-40)).

With the statutory language and case law in mind, the Court turns to the parties’ arguments.

ANALYSIS

Individual Line Entries Versus Form 1 500s

Defendant argues that Plaintiffs improperly count every line entry, in the spreadsheet that

was produced by the MAC, as a claim. Defendant continues that the correct measurement of a

claim is the HCFA 1500 form, as was the case in Krizek. BSNC’s Br. at 3-$. The Court agrees.

As Bornstein instructs and as echoed in Krizek, the focus in detennining a claim under the FCA ison Defendant’s actions, not how a MAC aggregated the information afier it was supplied by BSNC

(or, for that matter, how the MAC produced the information in discovery). Thus, the Form 1500

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physical HCfA-1500 fonTis is unnecessary for this analysis.” BSNC Reply at 1. The Court doesnot have complete information as to what BSNC did or did not produce in discovery. But ifBSNC

failed to provide sufficient discovery to enable Plaintiffs to calculate the total number of Form

1 500s at issue, the Court will certainly entertain future arguments as to the appropriate remedy for

BSNC’s failure to produce the very information that it now argues, and with which the Court

agrees, is the appropriate measure to determine the number of claims that it submitted. The Court

will set forth a briefing schedule as to this issue.

Unprocessable, Adjusted or Voided Line Entries & Duplicate Submissions3

Plaintiffs take the position that if, for example, a claim was submitted by 3SNC and then

resubmitted because it was at first unprocessable, and then resubmitted again because it wasvoided, then BSNC is liable for three false claims (the initial presentment, the first resubmission,

and the second resubmission). Plfs’ Opp. at 11-20. Of course, if BSNC was not reimbursed forany of the three submissions then no damages would result. But this would not absolve BSNC of

As noted in the previous section, the Court finds that the proper measure for a claim is the Forni

1500, rather than line entries from a spreadsheet that was produced by the MAC during discovery.

As also noted, however, Plaintiffs contend that Defendant refused to turn over relevant Form 1 500s

in discovery. Consequently, the Court may have to adjust its finding once the Court receives moreinforniation about the issue from the parties.

Further, the Court will refer to line entries in this section because that is the manner in which theparties’ briefed the issue. The Court refers to line entries to not confuse the issue, but thisnomenclature does not change the Court’s ruling concerning what document or information

constitutes a claim under the FCA.

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Krizek. See Krizek, 111 F.3d at 940 (stating that had the court accepted the government’s argument

that each CPT code was a claim it would have resulted in an “astronomical” amount of penalties).The Court also could not find any precedent to support Plaintiffs’ argument. Thus, the Court

concludes that if B$NC was seeking reimbursement for the same item(s), but did so throughseveral submissions, BSNC is only liable for one claim under the FCA. The reason is that thegovernment would only, at most, have paid for the item(s) once.

There is one caveat to this ruling. If BSNC sought to have the same item(s) paid for more

than once (i.e. double-billing) then the later submission would constitute a false claim. See

Hutchins, 253 F.3d at 184 (stating that the FCA encompasses each claim that could result in

economic loss to the government). On the other hand, and as noted, if BSNC only sought to have

the Govenm-ient pay for the item(s) once, and made multiple submissions seeking the singlepayment, then the multiple submissions would constitute one claim. Cf Schwedt, 1994 WL

118222, at *2.3 (stating that oral requests for payments and readjustments were not separate claims

as they “merely echo claims that [defendant] had already submitted . . . or intended to andeventually did submit”). For example, BSNC argues that it made eoneous duplicate submissions.

BSNC’s Br. at 13-14. If the facts are clear that BSNC made an honest mistake in submitting the

duplicate submission, and was only seeking a single payment, then the duplicate submission would

not be considered an additional claim. If, however, there is evidence to support a finding thatB$NC was actually seeking a double payment for the same item(s), then B$NC’s state of mind in

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have paid for the item(s), the submissions cannot be considered a claim. B $NC ‘s Br. at 10-11.

The Court disagrees. The fact that the Government did not pay for the item (and never would

have) means that the Government did not suffer any damages. BSNC, however, can still be subject

to a monetary penalty under the FCA ifthe submission otherwise meets the definition of a claim.Again, in determining whether a submission constitutes a claim, the Court reviews the issue based

on the action of a defendant and does not consider how the government processed the information.

Bornstein, 423 U.S. at 313. In addition, attempts are subject to liability under the FCA. Hutchins,

253 F.3d at 184. Of course, if the unprocessed claims were later resubmitted properly, then (asdiscussed above) the two submissions would nevertheless constitute one claim because BSNC wasonly seeking a single payment for the same item(s).Federal Rule of Evidence Rule 404(b)

Defendant also argues that evidence regarding the individual line entries should also be

precluded under Federal Rule of Evidence Rule 404(b). Defendant contends that the individual

line entries are irrelevant to determining whether it violated the FCA and fail to establish BSNC’s

knowledge or intent to violate the FCA. BSNC’s Br. at 17. Rule 404(b)(1) provides that

“[e]vidence of a crime, wrong, or other act is not admissible to prove a person’s character in order

to show that on a particular occasion the person acted in accordance with the character.” Rule404(b)(2), however, provides that such evidence “may be admissible for another purpose, such as

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entries to establish the amount of money that the government actually paid as a result of BSNC’s

allegedly false claims, the line entries are admissible. The Court, however, will reserve on the

remainder ofDefendant’s Rule 404(b) argument until it receives more information from the parties

regarding Defendant’s production (or lack thereof) ofthe Form 1500s.

ORDER

F or the foregoing reasons, and for good cause shown

IT IS on this 24th day of September, 201$ORDERED that Defendant Boston Scientific Neurornodulation Corporation’s motion in

lirnine (D.E. 420) is GRANTED in part and DENIED in part; and it is further

ORDERED that the HCFA 1500 forms shall be used to determine the number of false

claims submitted in this matter unless Defendant did not provide sufficient information during

discovery to enable Plaintiffs to calculate the number ofHCFA 1500 forms at issue; and it is further

ORDERED that as to whether Defendant failed to provide sufficient information during

discovery to enable Plaintiffs to calculate the number of HCFA 1500 forms at issue, the following

briefing schedule shall apply. The briefs shall address the substantive issue and the potential

remedy if Defendant did in fact fail to provide sufficient information. Plaintiffs shall submit a

brief no longer than fifteen (15) double-spaced pages by October 5, 2018; Defendant shall submit

an opposition brief no longer than fifteen (15) double-spaced pages by October 12, 2018; and

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treated as a single claim for FCA purposes; and it is further

ORDERED that any unprocessed, voided, adjusted, or duplicate submissions by

Defendant that sought more than one payment for the same item(s) in the multiple submissions

shall each be treated as separate claims for FCA purposes.

John Michael Vazqz .S.D.J.

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