UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY

-------------------------------------------------x 

UNITED STATES, ex rel. : 

BAHNSEN, et al., : 

 : 

 Plaintiffs, : 

 : 

vs. : Case No.: 11-cv-1210 (SDW) (MCA) 

 : 

BOSTON SCIENTIFIC : 

NEUROMODULATION : 

CORPORATION, : 

 : 

 Defendant. : 

-------------------------------------------------x 

DEFENDANT’S MEMORANDUM OF LAW IN SUPPORT OF MOTION 

TO DISMISS 

 Felice B. Galant 

Fulbright & Jaworski L.L.P. 

666 Fifth Avenue 

New York, New York 10103 

Telephone: 212-318-3000 

Telecopier: 212-318-3400 

fgalant@fulbright.com 

Frederick Robinson 

(admitted pro hac vice) 

Lesley C. Reynolds 

(admitted pro hac vice) 

Fulbright & Jaworski L.L.P. 

801 Pennsylvania Avenue, NW 

Washington, DC 20004 

Telephone: 202-662-0200 

frobinson@fulbright.com 

lreynolds@fulbright.com 

Attorneys for Defendant

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TABLE OF CONTENTS

Page

I. BACKGROUND ............................................................................................ 1 

II. LEGAL STANDARD .................................................................................... 4 

III. RELATORS HAVE FAILED TO STATE A CLAIM UPON WHICH 

RELIEF CAN BE GRANTED AS TO THEIR BILLING 

ALLEGATIONS ............................................................................................. 5 

A. Relators’ claims regarding physicians’ orders ignore 

Medicare guidelines ................................................................... 7 

B. Relators cannot allege that Defendant’s reporting of 

diagnosis codes was improper or material to any claim 

for payment .............................................................................. 10 

C. Because Relators have not shown any diagnosis code 

provided was inaccurate, Relators cannot proceed under a 

theory of false certification ...................................................... 13 

IV. RELATORS’ IMPROPER BILLING ALLEGATIONS 

REGARDING THE FAILURE TO REPLACE DEFECTIVE 

EQUIPMENT UNDER WARRANTY ARE INSUFFICIENT ................... 17 

V. RELATORS HAVE FAILED TO PLEAD THEIR ADVERSE 

EVENT REPORTING CLAIMS WITH PARTICULARITY ..................... 19 

VI. RELATORS’ ADVERSE EVENT CLAIMS ARE ALSO BARRED 

UNDER THE PUBLIC DISCLOSURE DOCTRINE ................................. 22 

A. The adverse event reporting issues of which Relators 

complain have already been publicly disclosed, in any 

investigation ............................................................................. 23 

B. Relators are not original sources of the information ............... 24 

VII. RELATORS’ OFF-LABEL ALLEGATIONS CANNOT SUPPORT 

A CLAIM UNDER THE FCA ..................................................................... 26 

A. By Relators’ own description, there was no off-label promotion ...... 26 

B. Off-label promotion alone in the medical device context does 

not give rise a false claim ................................................................... 28 

VIII. RELATORS HAVE NOT ALLEGED A KICKBACK SCHEME 

THAT WOULD GIVE RISE TO FALSE CLAIMS ACT LIABILITY ...... 30 

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TABLE OF CONTENTS

(continued) 

Page

IX. RELATORS HAVE NOT ALLEGED VIABLE RETALIATION 

CLAIMS ....................................................................................................... 32 

A. Relators’ alleged billing complaints do not qualify as “protected 

activity.” ............................................................................................. 32 

B. Relator Fuentes provides no allegations that she ever put BSNC 

on notice of her “protected activity.” ................................................. 33 

C. Relator Bahnsen relies upon unsupported conjecture to allege 

protected activity ................................................................................ 34 

X. RELATORS’ STATE LAW CLAIMS SHOULD BE DISMISSED ........... 35 

XI. CONCLUSION ............................................................................................. 37 

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TABLE OF AUTHORITIES 

 Page(s) 

CASES 

Ashcroft v. Iqbal, 

556 U.S. 662 (2009) ...................................................................... 4, 10, 18, 19, 27 

Bell Atlantic Corp. v. Twombly, 

550 U.S. 544 (2007) .............................................................................................. 4 

United States ex rel. Bennett v. Boston Sci. Corp, 

No. H-07-2467 2011 U.S. Dist. LEXIS 34745 (S.D. Tex 2011) .............. 6, 28, 29 

Buckman Co. v. Plaintiffs’ Legal Comm., 

531 U.S. 341, 121 S. Ct. 1012, 148 L. Ed. 2d 854 (2001) ................................... 9 

In re Cardiac Devices Qui Tam Litig., 

221 F.R.D. 318 (D. Conn. 2004) .......................................................................... 7 

Dookeran v. Mercy Hosp. of Pittsburgh, 

281 F.3d 105 (3d Cir. 2002) ......................................................................... 33, 34 

Eli Lilly & Co. v. Roussel Corp., 

23 F Supp. 2d 460 (D.N.J. Jul. 7, 1998) ............................................................... 5 

Graham County Soil & Water Conservation Dist. v. United States ex rel. 

Wilson,

130 S. Ct. 1396 (2010) ........................................................................................ 23 

United States ex rel. Hefner v. Hackensack Univ. Med. Ctr., 

495 F.3d 103 (3d Cir. 2007) ............................................................................... 32 

Hutchins v. Wilentz, 

253 F.3d 176 (3d Cir. 2001) ......................................................................... 33, 34 

United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 

360 F.3d 220 (1st Cir 2004) ................................................................................ 30 

United States ex rel. Lamers v. City of Green Bay,

168 F.3d 1013 (7th Cir. 1999) ............................................................................ 27 

Case 2:11-cv-01210-SDW-MCA Document 30-1 Filed 10/24/12 Page 4 of 43 PageID: 402
Mason v. Coca-Cola Co.,

774 F. Supp.2d 669 (D.N.J. 2011) .................................................................. 5, 26 

Morse v. Lower Merion Sch. Dist.,

132 F.3d 902 (3d Cir. 1997) ................................................................................. 5 

United States ex rel. Piacentile v. Sanofi Synthelabo, Inc.,

No. 05-2927, 2010 U.S. Dist. LEXIS 137895 (D.N.J. Dec. 30, 2010) .............. 35 

United States ex rel. Provuncher v. Angioscore, Inc., 

No. 09-12176-RGS, 2012 U.S. Dist. LEXIS 60390 (D. Mass. May 1, 

2012) ................................................................................................................... 20

United States ex rel. Provuncher v. Angioscore, Inc., 

No. 09-12176-RGS, 2012 U.S. Dist. LEXIS 108487 (D. Mass. Aug. 3, 

2012) ............................................................................................................. 20, 21 

United States ex rel. Roop v. Hypoguard USA, Inc. 

559 F.3d 818 (8th Cir. 2009) .............................................................................. 21 

In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 

678 F.3d 235 (3d Cir. 2012) ............................................................................... 29 

Wang v. FMC Corp.,

975 F.2d 1412 (9th Cir. 1992) ............................................................................ 27 

Wash. Legal Found. v. Henney, 

202 F.3d 331, 340 U.S. App. D.C. 108 (D.C. Cir. 2000) ................................... 29 

United States ex rel. Wilkins v. United Health Group, Inc., 

659 F.3d 295 (3d Cir. 2011) .......................................................12, 13, 14, 29, 30 

Williams v. WMX Techs, Inc., 

112 F.3d 175 (5th Cir. 1997) ................................................................................ 6 

Zahodnick v. Int’l Bus. Mach. Corp., 

135 F.3d 911 (4th Cir. 1997) .............................................................................. 34 

RULES AND STATUTES 

21 U.S.C. § 360i(1) .................................................................................................. 19 

31 U.S.C. § 3729 et seq. ............................................................................................. 3 

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31 U.S.C. § 3729(b)(4)............................................................................................. 12 

31 U.S.C. § 3730 ...................................................................................................... 24 

31 U.S.C. § 3730(e)(4) ............................................................................................. 22 

31 U.S.C. § 3730(e)(4)(a) ........................................................................................ 25 

31 U.S.C. § 3730(h) ................................................................................................. 32 

42 U.S.C. § 1320 ...................................................................................................... 30 

42 U.S.C. § 1395m ................................................................................................... 12 

42 U.S.C. § 1395m(a) .......................................................................................... 8, 12 

Federal Rule of Civil Procedure 8(a) ................................................................... 1, 10 

Federal Rule of Civil Procedure 9(b) ........ 1, 5, 15, 18, 19, 20, 21, 25, 26, 30, 31, 35 

Federal Rule of Civil Procedure 12(b)(6) ........................................................ 1, 4, 15 

42 C.F.R. § 414.210(a) ............................................................................................. 12 

42 C.F.R. § 416.65 ..................................................................................................... 6 

OTHER AUTHORITIES 

Medicare Benefit Policy Manual, Pub. 100-02.......................................... 8, 9, 13, 18 

Medicare National Coverage Determinations Manual, Pub. 100-03 ................. 7, 8, 9 

Medicare Claims Processing Manual, Pub. 100-04 ....................................... 6, 11, 12 

Medicare Program Integrity Manual, Pub. 100-08 .................................................... 8 

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 1 

DEFENDANT’S MEMORANDUM OF LAW IN SUPPORT OF MOTION 

TO DISMISS 

Defendant Boston Scientific Neuromodulation Corporation (“BSNC” or 

“Defendant”) hereby brings this Motion to Dismiss Relators’ Amended Complaint 

pursuant to Federal Rules of Civil Procedure 12(b)(6), 8(a) and 9(b). Relators have 

failed to state a claim upon which relief can be granted, and Relators have failed to 

allege their claims with the requisite particularity required under the Federal Rules. 

Simultaneously with this Motion to Dismiss, Defendant has submitted a Motion to 

Strike Confidential and Protected Health Information from the Relators’ First 

Amended Complaint. Defendant urges the Court to review the Motion to Strike 

first, or alternatively to review both the Motion to Strike and this Motion to 

Dismiss together, so that the “final” version of the First Amended Complaint is 

what the Court considers when deciding this Motion to Dismiss. 

I. BACKGROUND1

BSNC manufactures, sells, and supplies the spinal cord stimulation (“SCS”) 

system known as the Precision PlusTM SCS System. (Am. Compl. ¶¶ 16-17). The 

Precision PlusTM SCS System consists of both an implanted device and external 

accessories. The implanted device sends electrical signals through leads that are 

 

1

 For purposes of this motion to dismiss only, the Relators’ factual allegations are 

accepted as true. 

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inserted along a patient’s spinal cord under the skin, and is used to treat chronic 

pain of the trunk and limbs. (Id. ¶¶ 17, 90.) The system’s external accessories 

include a wireless remote control, a cordless battery charger, and the Precision 

Adhesive Kit. (Id. ¶ 17. ) 

BSNC employed Relator Wendy Bahnsen in BSNC’s Customer Service 

Department, where she assisted patients with issues they were having with the 

Precision PlusTM SCS System, from March 2008 through January 2009. (Id. ¶ 8.) 

In January 2009, Relator Bahnsen was transferred to BSNC’s Billing and 

Collections Department where she worked until her termination on October 15, 

2009. (Id. ¶¶ 7-8.) Relator Carolina Fuentes worked as an assistant to BSNC’s 

Vice President of Health Economics and Reimbursement before being transferred 

to BSNC’s Billing and Collections Department in February 2009. (Id. ¶ 13.) 

Relator Fuentes then worked in the Billing and Collections Department until June 

2010. (Id.) According to their First Amended Complaint, as a member of the 

Billing and Claims Department, beginning in early 2009, Relator Bahnsen 

submitted claims on behalf of BSNC to insurers in order to obtain reimbursement 

for products associated with the Precision PlusTM SCS System. (Id. ¶ 9.) 

On March 2, 2011, Relators Bahnsen and Fuentes (collectively herein 

“Relators”) filed a qui tam complaint under seal against BSNC, alleging violations 

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of the federal False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., as well as the 

laws of 27 states and the District of Columbia, in connection with claims submitted 

to the Government for the Precision PlusTM SCS System and its accompanying 

accessories. After investigating for more than a year, on February 24, 2012, the 

federal government declined to intervene in the case (Dkt. 8), and the case was 

unsealed on February 28, 2012. (Dkt. 9.) The 27 states and the District of 

Columbia declined to intervene on April 23, 2012. (Dkt. 12.) The case was 

dismissed against BSNC with respect to Maryland state law with prejudice on 

May 7, 2012. (Dkt. 13.) 

On September 10, 2012, Relators filed their First Amended Complaint, again 

alleging that BSNC violated the FCA by engaging in improper billing schemes that 

resulted in the submission of false claims to the Government. (See Am. Compl. ¶¶ 

23-54.) Additionally, Relators now claimed that BSNC failed to report adverse 

events related to the Precision PlusTM SCS System and charged the Government for 

defective equipment, which caused the Government to reimburse BSNC for claims 

that were not “reasonable and necessary.” (Id. ¶¶ 85-87.) Relators further 

contended that Defendant promoted the Precision PlusTM SCS System for off-label 

purposes and provided physicians with free reimbursement services in order to 

encourage physicians to order the Precision PlusTM SCS System. (Id. ¶ 106.) 

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Relators also re-asserted their state law claims against 25 states and the District of 

Columbia. (Id. ¶¶ 175-357.) Finally, Relators alleged, as they did in their Original 

Complaint, that BSNC improperly retaliated against them by terminating their 

employment relationships when Relator Bahnsen complained about BSNC’s 

billing practices. (Id. ¶ 143.) 

II. LEGAL STANDARD 

To survive a motion to dismiss under Federal Rule of Civil 

Procedure 12(b)(6), a complaint must plead “enough facts to state a claim to relief 

that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 

(2007). “Threadbare recitals of the elements of a cause of action, supported by 

mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 

(2009). The pleadings must establish claims that cross “the line from conceivable 

to plausible.” Twombly, 550 U.S. at 570. A complaint alleging facts that are 

“merely consistent with a defendant’s liability . . . stops short of the line between 

possibility and plausibility of entitlement to relief.” Iqbal, 556 U.S. at 678 

(quoting Twombly, 550 U.S. at 557). 

To withstand a motion to dismiss a “complaint must set forth sufficient 

information to suggest that there is some recognized legal theory upon which relief 

may be granted.” Eli Lilly & Co. v. Roussel Corp., 23 F Supp. 2d 460, 475 (D.N.J. 

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Jul. 7, 1998). Although a court must accept as true “well-pleaded” factual 

allegations made in the complaint, a court need not credit a complaint’s ‘bald 

assertion’ or ‘legal conclusions.’” Morse v. Lower Merion Sch. Dist., 132 F.3d 

902, 906 (3d Cir. 1997). 

Because FCA actions are actions based in fraud, the heightened pleading 

requirements of Federal Rule of Civil Procedure 9(b) also apply. See Mason v. 

Coca-Cola Co., 774 F. Supp. 2d 699, 702 (D.N.J. 2011). In alleging fraud, “a 

plaintiff must allege the ‘who, what, when, where, and how’ of the claim.” See id. 

“The rule’s heightened pleading requirements ‘give [defendants] notice of the 

claims against them, provides an increased measure of protection for their 

reputations, and reduces the number of frivolous suits brought solely to extract 

settlements.’” See id. For the reasons stated below, Relators have failed to meet 

these standards. Consequently, Relators’ Complaint should be dismissed. 

III. RELATORS HAVE FAILED TO STATE A CLAIM UPON WHICH 

RELIEF CAN BE GRANTED AS TO THEIR BILLING 

ALLEGATIONS 

Relators first attack BSNC’s billing practices related to the external 

accessories for the Precision PlusTM SCS System. (See Am. Compl. ¶ 23.) 

Relators specifically allege that BSNC: (1) submitted claims for the external 

accessories without a physician’s order of medical necessity; (2) changed or made 

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up diagnosis codes for the external accessories that were submitted on Government 

claim forms; and (3) falsely certified compliance with the law on Government 

claim forms. (Id.) Notably, Relators do not contend – nor could they – that 

Defendant submitted any claims to the Government for payment related to the 

implantation of the SCS device.2

 

The Relators’ false billing allegations fail as a matter of law, because 

Medicare rules and guidance contradict the Relators’ allegations. The Centers for 

Medicare & Medicaid Services (“CMS”) has created the CMS Manual System, 

which contains policies, procedures, and instructions for the provision of services 

and billing for such services under Government programs. The CMS Manual 

System contains interpretive rules that are binding upon Medicare providers and 

suppliers. See In re Cardiac Devices Qui Tam Litig., 221 F.R.D. 318, 351-353 (D. 

Conn. 2004) (“[T]o adopt defendant’s position that interpretive rules are not 

 

2

 Hospitals and physicians submit claims for payment for the implantation of the 

prosthetic device itself. See e.g. Medicare Claims Processing Manual, Pub. 100-04, 

Ch. 14 § 10.2 (“[Ambulatory surgical center (“ASC”)] services for which payment 

is included in the ASC payment for a covered surgical procedure under 42 C.F.R. § 

416.65 include, but are not limited to . . . Implanted prosthetic devices, including 

intraocular lenses (IOLs), and related accessories and supplies not on pass-through 

status . . . .”); See also United States ex rel. Bennett v. Boston Sci. Corp, No. H-07-

2467 2011 U.S. Dist. LEXIS 34745, at * 78 (S.D. Tex 2011) (discussing same in a 

medical device context). Relators have not alleged that the claims submitted for 

the System implantations suffered from the same deficiencies as the claims for the 

accessories. 

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binding would effectively nullify the Medicare manuals in their entirety[.]”). 

Contractors, providers, and suppliers are required to consult this Manual System to 

answer questions regarding coverage eligibility and claims processing. See id. at 

351-352 (citations omitted) (stating that failing to follow the guidance provided in 

Medicare manuals has resulted in numerous cases imposing liability under the 

False Claims Act). Because Relators have ignored relevant guidance from CMS, 

which demonstrates that BSNC’s actions did not result in the submission of false 

claims, Relators have not stated a claim upon which relief can be granted. 

A. Relators’ claims regarding physicians’ orders ignore Medicare 

guidelines. 

Applicable Medicare guidance refutes Relators’ allegations that BSNC 

engaged in improper billing practices by submitting claims for external accessories 

to the Precision PlusTM SCS System without first receiving physicians’ orders. The 

Medicare National Coverage Determinations Manual, Publication 100-03, specifies 

the coverage criteria for Electrical Nerve Stimulators, such as the Precision PlusTM 

SCS System. See Medicare National Coverage Determinations Manual, Pub 100-

03, Pt. 2 § 160.7. The Government will provide reimbursement for stimulators 

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under the prosthetic device benefit.3

 Id. Medicare covers these devices when they 

are furnished pursuant to a physician’s order. Id. Coverage for prosthetic devices 

automatically includes coverage for supplies, replacement, and repairs to the 

prosthetic device, and CMS Manuals do not state that a separate physician’s order 

is required to prove the medical necessity of supplies for a prosthetic device. 

Medicare Benefit Policy Manual, Pub. 100-02, Ch. 15 §§ 120(D), 110.2. If 

patients require replacement supplies in order to efficiently operate a piece of 

durable medical equipment or a prosthetic device, a physician may specify on the 

initial order the types of supplies necessary and the frequency with which the 

patient may obtain the supplies. Medicare Program Integrity Manual, Pub. 100-08, 

Ch. 5 § 5.9. In this case, the physician’s initial order for the implanted device 

would serve as “medical evidence for supply replacement claims.” Id. A new 

physician’s order is only required if an item is replaced or there is a change in the 

order for the supply or accessory. Id. at § 5.2.4. 

In their First Amended Complaint, Relators initially claim that BSNC 

improperly billed the Government for the external accessories to the Precision 

 

3

 CMS manuals define “prosthetic devices” as those devices that “replace all or 

part of an internal body organ . . . or replace all or part of the function of a 

permanently inoperative or malfunctioning internal body organ[.]” Medicare 

Benefit Policy Manual 100-02, Ch. 15 § 120. Medicare covers durable medical 

equipment, prosthetics, orthotics, and supplies (“DMEPOS”) under Medicare Part 

B. See 42 U.S.C. § 1395m(a). 

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PlusTM SCS System because BSNC had not obtained separate physicians’ orders 

for the external accessories (see Am. Compl. ¶¶ 40-41), distinct from the 

physicians’ orders for the implant itself. Relators also claim that BSNC shipped 

the external accessories to patients prior to receiving physicians’ orders. (Id. ¶ 40.) 

Based on the guidance in the CMS Manual System, however, Relators’ allegations 

that Defendant fraudulently submitted claims without appropriate documentation 

simply cannot stand. As a nerve stimulator, the Precision PlusTM SCS System 

would be reimbursed under the prosthetic device benefit when furnished pursuant 

to a physician’s order. See Medicare National Coverage Determinations Manual, 

Pub. 100-03, Pt. 2 § 160.7. In addition, all of the accompanying external 

accessories, including the wireless remote control, the cordless battery charger, and 

the Precision Adhesive Kit, would be automatically covered pursuant to the same 

physician’s order. Medicare Benefit Policy Manual, Pub. 100-02, Ch. 15 

§§ 120(D), 110.2. Therefore, because the initial physician’s order for the Precision 

PlusTM SCS System by itself would support the medical necessity of the implanted 

device, its external accessories, and replacement of those external accessories, 

Relators have not adequately alleged that BSNC submitted false claims to the 

government for the external accessories. Allegations of billing actions that are 

merely consistent with a theory of liability, rather than leading one to believe there 

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is plausible liability, do not satisfy the pleading requirements of Rule 8(a). See 

Iqbal, 556 U.S. at 678. Relators’ allegations that BSNC shipped external 

accessories prior to the receipt of physicians’ orders instead betray Relators’ failure 

to realize that CMS guidance permits BSNC to ship external accessories pursuant 

to the initial physician’s order or a previous physician’s order for the implanted 

device. As a result, Relators have not alleged the submission of any false claim, 

due to the purported lack of separate physicians’ orders for the external 

accessories. Without any predicate false claim, this portion of the Amended 

Complaint fails as a matter of law. 

B. Relators cannot allege that Defendant’s reporting of diagnosis 

codes was improper or material to any claim for payment. 

Relators allege that BSNC submitted false claims to the government by 

changing and making up diagnosis codes on claims for the external accessories in 

violation of Medicare rules and OIG guidance. (See Am. Compl. ¶¶ 32-39.) 

Relators further claim that BSNC used the general diagnosis code 724.2 

(Lumbago-back pain) when it submitted claims for the external accessories for the 

Precision PlusTM SCS System because it was “financially advantageous” for BSNC 

to use such codes. (Id. at ¶ 33.) However, Relators ignore that it is appropriate in 

certain instances for a supplier to provide diagnosis codes. 

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The Medicare Claims Processing Manual explains that valid diagnosis codes 

are required for all electronically submitted DMEPOS claims. See Medicare 

Claims Processing Manual, Pub. 100-04, Ch. 23 § 10. However, if physicians 

provide only a narrative description of the diagnosis, rather than the specific 

diagnosis code, suppliers “may choose to utilize a variety of sources to determine 

the most specific diagnosis code to include on the individual line item of the 

claim.” Id. In determining the specific diagnosis code, suppliers may look to 

coding resources, documentation in the patient’s medical record, and other contact 

with health professionals, among other avenues. Id. Thus, the Medicare guidance 

specifically allows suppliers to engage in the process that Relators complain of in 

this matter. 

Moreover, Relators are also mistaken that the diagnosis code is material to 

the approval of the claim or to the amount of payment on a claim for the external 

accessories. The Third Circuit has held that there is a materiality component to the 

FCA, and this standard has been written into the more recent revisions of the FCA. 

“The FCA defines ‘material’ as having a ‘natural tendency to influence, or be 

capable of influencing, the payment or receipt of money or property.’” United 

States ex rel. Wilkins v. United Health Group, Inc., 659 F.3d 295, 303 (3d Cir. 

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2011) (citing 31 U.S.C. § 3729(b)(4). Here, there are two reasons why Relators 

cannot show materiality. 

First, payment for prosthetic devices is determined by the Health Common 

Procedure Coding System (“HCPCS”) fee schedule for the item, less any 

deductible. Id. at § 1395m(a); 42 C.F.R. § 414.210(a). For items included in the 

HCPCS fee schedule, the Social Security Act requires suppliers to use fee 

schedules under Medicare Part B in order to receive reimbursement for DMEPOS. 

See id. at § 1834(a); Medicare Claims Processing Manual, Pub. 100-04, Ch. 20 § 

20. DMEPOS items are divided into different Medicare payment categories, and 

each category has its own reimbursement rules. See 42 U.S.C. § 1395m. 

Reimbursement amounts for supplies listed in the HCPCS fee schedule do not vary 

based on the diagnosis code provided on the claim for the device. As a result, there 

could be no “financial advantage” to BSNC from supplying one code versus 

another. Because the external supplies for an implanted system will already be 

reimbursable on the basis of the diagnosis code that supported the original 

implantation, any error in the diagnosis code supplied with a claim for external 

accessories will not be material to Medicare’s payment decision. Given this lack 

of materiality, Relators’ claims relating to diagnosis codes fail to state a claim as a 

matter of law. 

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Second, the diagnosis code provided on a claim for the external supplies is 

simply not material to Medicare’s payment decision, because the diagnosis code 

that was submitted to Medicare to support the initial claim for the implanted device 

will also supply any subsequent claim for the external accessories. See Medicare 

Benefit Policy Manual, Pub. 100-02, Ch. 15 §§ 120(D), 110.2. 

C. Because Relators have not shown any diagnosis code provided 

was inaccurate, Relators cannot proceed under a theory of false 

certification. 

In their Amended Complaint, Relators allege that BSNC’s fraudulent billing 

practices resulted in numerous legally false certifications to the Government. (See 

Am. Compl. ¶¶ 46-47, 126, 128.) A claim is legally false under the FCA when a 

claimant knowingly certifies to the Government that it has complied with certain 

statutes or regulations, and such compliance is a condition for Government 

payment of the claim. See Wilkins, 659 F.3d at 305. Legally false claims may be 

express or implied. Id. An entity is liable for making a legally express false claim 

by explicitly certifying to the government that it complied with statutes and 

regulations that are preconditions to payment by the Government for the claim. Id. 

The Third Circuit has also recognized false claims liability for legally implied false 

claims. Id. at 306. Implied false certification liability under the False Claims Act 

occurs if a claimant makes a claim for Government payment without specifically 

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certifying that it violated statutes or regulations that are required in order to receive 

payment. Id. at 305. 

In this case, Relators claim that BSNC submitted legally express false 

certifications to the Government by allegedly falsifying CMS-1500 forms. (See 

Am. Compl. ¶¶ 46-47, 116-117, 126, 128.) Specifically, Relators claim that BSNC 

violated the FCA by: (1) certifying that the external accessories were medically 

necessary without having knowledge of that fact; and (2) certifying that the 

information contained on the forms was true and complete. (Id. at ¶¶ 46- 47, 126, 

128.) For the reasons set forth below, Relators have not alleged a falsity arising 

out of any claims submitted by BSNC that would give rise to liability under a false 

certification theory. 

Under the FCA, claims are factually false if the claimant misrepresents to 

the Government the goods or services it provided to individuals. See Wilkins, 659 

F.3d at 305. Relators also allege that BSNC submitted factually false claims to the 

Government by either using different diagnosis codes on the CMS-1500 claim 

forms than the code provided by the physician or inserting its own diagnosis code 

if the physician did not provide one. (See Am. Compl. ¶¶ 38, 42-43, 45.) 

However, as noted above, the Medicare Manuals clearly allow suppliers to insert a 

diagnosis code if one is not specifically provided and a narrative description of the 

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 15 

patient’s condition is provided instead. In addition, the medical necessity of the 

external supplies was already established by the medical necessity of the 

implantable device. 

Moreover, to the extent that the protected health information (“PHI”) that 

Relators improperly included in their First Amended Complaint is not stricken, the 

tables in Relators’ First Amended Complaint clearly include clams that could be 

proper.

4

 While Defendant is reluctant to even discuss the PHI included in the 

tables, a brief review shows that for the majority of claims in Relators’ improperly 

included tables, the diagnosis codes submitted on the CMS-1500 claim form could 

have been submitted correctly. For example, in paragraph 34, Relators claim that 

even though Dr. BV5

 did not provide a diagnosis code on a physician’s order, 

BSNC inserted diagnosis code 724.2 on the corresponding CMS-1500 form. (See 

Am. Compl. ¶ 34.) However, in this and every other instance in Table 1 where 

Relators claim that a physician did not include a diagnosis code on an order, 

 

4

 In the event that the Defendant’s Motion to Strike is denied, Defendant concedes 

that Relators have plead their billing allegations with enough detail to survive 

Federal Rule of Civil Procedure 9(b). However, the Relators’ allegations still fail 

as they have not stated a claim upon which relief can be granted under Federal 

Rule of Civil Procedure 12(b)(6). In the event the tables are stricken from the 

record as they should be, Relators have also not alleged adequate detail as to their 

billing allegations under Federal Rule Civil Rule of Procedure 9(b). 

5

 Physician names have been de-identified herein to stop the flow of improperly 

referenced HIPAA-protected data. 

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Relators have failed to allege that the physician did not provide a narrative 

description for the diagnosis code or that BSNC did not have any access to other 

information that supported its code selection. 

Relators set forth additional and similarly flawed examples, such as the 

claim submitted by Dr. SH for an Adhesive Kit, which included the diagnosis code 

724.4 on the physician’s order. According to Relators, BSNC submitted the CMS1500 form for this clam with the codes 724.4 and 722.83. (See id.) However, 

nothing in the Medicare Manuals prohibits a supplier from adding a more specific 

diagnosis code to a claim form.

Consequently, BSNC did not provide or submit any false information or 

claims to the Government, because BSNC followed relevant Medicare rules and 

guidelines in the submission of claims relating to the external accessories to the 

Precision PlusTM SCS System. Even assuming, arguendo, that BSNC had inserted 

or changed diagnosis codes as Relators have alleged, Relators have failed to 

recognize that the Precision PlusTM SCS System cannot operate without the 

external accessories, which includes the wireless remote control, cordless battery 

charger, and the Precision Adhesive Kit. If patients have already received the 

implant pursuant to a particular diagnosis code, including 724.2, it is simply 

unfathomable that a different diagnosis code would apply to the external 

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accessories. Furthermore, without the external accessories, the implant itself 

would be worthless, and patients requiring the use of the Precision PlusTM SCS 

System would be unable to receive the necessary supplies to treat their chronic 

pain. 

Just as importantly, what Relators have set forth in their First Amended 

Complaint actually describes acceptable billing practices for suppliers of prosthetic 

devices. Relators have overlooked relevant CMS guidance regarding the 

submission of claims for the external accessories. At most, Relators have alleged 

that it is conceivable that an error could have been made in the selection of 

diagnostic codes by BSNC; however, conceivability does not create liability under 

the FCA. Therefore, without the submission or certification of false claims on 

CMS-1500 forms, Relators’ claims fail as a matter of law, as these claims do not 

raise to the level of factually or legally false certifications.

IV. RELATORS’ IMPROPER BILLING ALLEGATIONS REGARDING 

THE FAILURE TO REPLACE DEFECTIVE EQUIPMENT UNDER 

WARRANTY ARE INSUFFICIENT. 

Relators also allege that BSNC improperly billed the Government for 

replacement devices and equipment that BSNC allegedly should have covered 

under warranties. (See Am. Compl. ¶ 87.) However, Relators provide so little data 

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as to these claims that it is impossible to tell if Government Programs were even 

billed. 

Although Relators provide a single example where BSNC allegedly denied a 

customer a free replacement of the Precision Charger 2.0 product (see id. at ¶ 70-

71), Relators concede that they have no actual knowledge of a false claim being 

submitted for payment to a Government program for the product. (See id. at ¶ 72) 

(speculating only that the patient’s insurance carrier was “most likely Medicare”). 

For this reason alone, the Relators’ claims should be dismissed under Rule 9(b). 

Moreover, even assuming Relators could allege these patients were covered under 

Medicare, nothing prohibits Medicare from reimbursing a supplier for a device or 

accessories for a device that are no longer covered under a warranty. See Medicare 

Benefit Policy Manual, Pub. 100-02, Ch. 16 § 40.4. Relators’ other warranty 

claims fail for similar reasons. (See e.g. Am. Compl. ¶ 71) (referencing once again 

only that a patient was referred to his or her generic “insurance company” when 

the product was not covered by warranty.) This Court cannot, and should not be 

required to, read Relators’ mind and determine the details of this specific claim for 

basic details such as whether government programs are implicated. Such 

hypothetical presumptions are the exact pleading deficiencies that Iqbal rejects. 

See Iqbal, 556 U.S. at 678. Rather, Relators must plead their false claims 

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allegations with sufficient particularity, as required by Federal Rule of Civil 

Procedure 9(b), and consequently Relators’ warranty claims must be dismissed. 

V. RELATORS HAVE FAILED TO PLEAD THEIR ADVERSE EVENT 

REPORTING CLAIMS WITH PARTICULARITY 

The Federal Food and Drug and Cosmetic Act (“FDCA”) requires medical 

device manufacturers to report adverse event incidents. See 21 U.S.C. § 360i(1). 

Relators contend that BSNC knew that customers had encountered problems as a 

result of “defective equipment” that accompanied the Precision PlusTM SCS 

System. (Am. Compl. ¶ 74.) Relators claim that BSNC was required to report 

these incidents to the FDA as adverse events, and that BSNC knew that these 

product defects rendered these products “not reasonable and necessary.” (Id. ¶ 85.) 

Relators argue that, as a result of continuing to supply these products, BSNC 

knowingly caused false claims to be submitted to government programs. (Id. ¶ 

87.) Relators do not, however, allege a single false claim that was actually 

submitted to a government program as a result of BSNC’s failure to report adverse 

events. Relators’ pleadings therefore cannot satisfy Rule 9(b). 

Courts routinely reject FCA cases premised on a purported failure to file 

adverse event reports with the FDA. The United States District Court for the 

District of Massachusetts has had several recent cases arising out of adverse event 

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reporting, and has consistently found that these claims do not give rise to liability 

under the FCA. 

In the case of United States ex rel. Provuncher v. Angioscore, Inc., No. 09-

12176-RGS, 2012 U.S. Dist. LEXIS 60390, at *13 (D. Mass. May 1, 2012) 

[hereinafter Provuncher I], the relator argued that the EX Catheter product 

routinely separated, and this defect rendered the product defective. Similar to the 

case at bar, the relator in Provuncher I alleged that the manufacturer violated the 

FCA by concealing adverse event information from the FDA relating to alleged 

defects in the catheter and claimed such information would have been material to 

the government’s decision to pay claims for the device. Id. at *5-6. The court 

disagreed and dismissed the case under Federal Rule of Civil Procedure 9(b), 

because the Relator failed to show that the defendant had presented a false claim to 

the government. Id. at *12. The Relators were given leave to amend and again in 

an amended complaint argued that any claim for payment of the defective EX 

Catheter was ipso facto a false claim under the FCA, because every catheter that 

was sold was defective and thus had no value. United States ex rel. Provuncher v. 

Angioscore, Inc., No. 09-12176-RGS, 2012 U.S. Dist. LEXIS 108487, at *4 (D. 

Mass. Aug. 3, 2012) (dismissing second amended compliant) [hereinafter 

Provuncher II]. The Court again dismissed the relator’s complaint recognizing that 

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“the provision of a sophisticated medical device that almost inevitably will be 

subject to a statistically predictable failure rate, is not the evil that Congress sought 

to root out by passage of the False Claims Act.” See id. at *4. 

The Eighth Circuit similarly found that allegations of consumer injury and 

non-compliance with FDA regulations were “arguably relevant to a products 

liability case but . . . [were] insufficient to satisfy the Rule 9(b) requirement that 

the FCA fraud claims be pleaded with particularity.” See United States ex rel. 

Roop v. Hypoguard USA, Inc. 559 F.3d 818, 822-823 (8th Cir. 2009) (affirming the 

district court’s dismissal of the relator’s first amended complaint where relator 

alleged that diabetes-related medical devices and accessories were defective, and 

that such defects were not properly reported, but failed to identify false or 

fraudulent reimbursement claims or allege how “any product defect . . . was 

material to . . . the government’s decision to pay . . . unidentified Medicare 

reimbursement claims”). 

Similarly here, Relators’ allegations about adverse event reporting fail to 

plead a violation of the FCA. At no time do Relators tell us what false claims were 

submitted as a result of the alleged failure to report adverse events. Nor do they 

explain how the failure to make these reports was material to any payment 

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decision. Consequently, their claims arising out of adverse event reporting must be 

dismissed. 

VI. RELATORS’ ADVERSE EVENT CLAIMS ARE ALSO BARRED 

UNDER THE PUBLIC DISCLOSURE DOCTRINE 

Even assuming arguendo, that Relators were able to allege a cognizable 

claim under the FCA based on BSNC’s purported to disclose adverse events to the 

FDA, their claims would still be barred under the public disclosure bar of the FCA. 

The public disclosure bar provides that a court “shall dismiss an action or claim 

under this section, unless opposed by the Government, if substantially the same 

allegations or transactions as alleged in the action or claim were publicly disclosed 

. . . unless the action is brought by the Attorney General or the person bringing the 

action is an original source of the information.” 31 U.S.C. § 3730(e)(4). In order 

to qualify as a public disclosure, the disclosure must have taken place either “(i) in 

a Federal criminal, civil, or administrative hearing in which the Government or its 

agent is a party; (ii) in a congressional, Government Accountability Office, or 

other Federal report, hearing, audit, or investigation; or (iii) from the news media . 

. .” See id. 

A. The adverse event reporting issues of which Relators complain 

have already been publicly disclosed, in any investigation. 

Relators allege that BSNC’s failure to characterize adverse event reports 

correctly with respect to the Precision PlusTM SCS system led to an underreporting 

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 23 

of errors that ultimately resulted in an FDA violation. However, the exact nature 

of the adverse event reporting issues was already the subject of a federal report and 

investigation. BSNC participated in a lengthy remediation of several issues with 

the Food and Drug Administration beginning in 2009. One of the issues that was 

reported on at length during the time period of April 2009 – October 2010 was the 

potential underreporting of the adverse event reports related to the Precision PlusTM

System. See Decl. of Felice Galant, Exhibit 1.6

 As a result of discussions between 

BSNC and the FDA, BSNC filed an additional 500 adverse event reports with the 

agency. These letters to the FDA specifically addressed whether BSC should report 

as adverse events certain incidents that had not previously been classified as 

complaints. The letters and subsequently filed adverse events reports were 

requested by the FDA pursuant to its regulatory authority and would have clearly 

put the government on notice of any fraudulent activity, relating to an underreporting of adverse events. Graham County Soil & Water Conservation Dist. v. 

United States ex rel. Wilson, 130 S. Ct. 1396, 1410 (2010) (stating that “the 

statutory touchstone . . . is whether the allegations of fraud have been ‘public[ly] 

disclos[ed], not whether they have landed on the desk of a DOJ lawyer”’) 

 

6

 Information related to products not at issue in this lawsuit has been redacted. In 

the event that an appropriate protective order is put in place, Defendant will 

provide unredacted copies to opposing counsel. 

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(alterations in original) (citations omitted). Moreover, the FDA Adverse Event 

Reporting System (“FAERS”) database, which contains information regarding 

adverse events that companies have submitted to the FDA, is available to the 

public. 7

 These communications between BSNC and the FDA consequently 

qualify as a public disclosure that would trigger the FCA’s jurisdictional bar. 

B. Relators are not original sources of the information. 

Because the multiple communications between BSNC and the FDA, 

including any late-filed adverse event reports, satisfy the public disclosure 

requirement, Relators are only entitled to bring this action if they qualify as 

original sources. An original source is defined as an individual who “either (i) 

prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to 

the Government the information on which allegations or transactions in a claim are 

based, or (ii) who has knowledge that is independent of and materially adds to the 

publicly disclosed allegations or transactions, and who has voluntarily provided the 

information to the Government before filing an action under this section.” See 31 

U.S.C. § 3730. Relators cannot meet these original source requirements. 

 

7 See FAERS (formerly AERS), Sept. 10, 2012, 

http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Surveillan

ce/AdverseDrugEffects/default.htm (stating that FAERS data is available to the 

public through FAERS statistics, FAERS data files, or filing a Freedom of 

Information request to the FDA.) 

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First, Relators cannot qualify under the first prong of this test, as they do not 

allege that they provided their information to the government before the public 

disclosures at issue, which occurred over a period of several months beginning in 

April 2009. Relators do not even claim to have produced the publicly disclosed 

information to the government prior to its disclosure, by BSNC to the FDA. 

Instead, Relators’ plead that they only provided “non-public information to the 

government prior to filing this action.” (Am. Compl. ¶¶ 12, 15.) Relators first 

filed their lawsuit in March of 2011 (Dkt.1), almost two years after the remediation 

efforts were well-documented with the FDA. See Decl. of Felice Galant, Ex. 1. 

Accordingly, Relators have not satisfied the first requirement of the original source 

test. 

Second, Relators do not satisfy the next prong of the original source criteria, 

as they have no knowledge of these claims that materially add to the public 

disclosure. See 31 U.S.C. § 3730(e)(4)(a). The lack of detail and specificity that 

plagues these claims under Rule 9(b) also prevents Relators from meeting this 

original source knowledge standard, as they simply have not plead any specific 

false claims. As such, Relators’ claims relating to adverse event reports should be 

dismissed under the public disclosure bar. 

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VII. RELATORS’ OFF-LABEL ALLEGATIONS CANNOT SUPPORT A 

CLAIM UNDER THE FCA 

Relators allege that Defendant engaged in off-label marketing activities 

which caused false claims to be filed, specifically certain promotional activities 

related to phantom limb pain. As detailed above, there are simply no specific 

factual allegations in this case that any claims for reimbursement were submitted to 

the Medicare program associated with the use of the Precision PlusTM SCS System 

for the treatment of phantom limb pain. This is a fatal and repetitive flaw in 

Relators’ complaint, as Relators have once again failed to provide the who, what, 

where, when, and how as required under Rule 9(b). Mason v. Coca-Cola Co., 774 

F. Supp.2d 669, 702 (D.N.J. 2011). Moreover, Relators’ claims must fail because 

they have failed to allege that Defendant engaged in any off-label marketing and 

that any such marketing could be actionable under the FCA. 

A. By Relators’ own description, there was no off-label promotion. 

Relators’ entire theory is premised on their belief that the treatment of 

phantom limb pain is an off-label use of the BSNC’s SCS device. (Am. Compl. ¶ 

94.) Whether the treatment of “phantom limb pain” is an off-label use of BSNC’s 

device is a legal conclusion made by Relators and does not need to be accepted as 

true for purposes of a motion to dismiss. See Iqbal, 556 U.S. at 678 (“[T]he tenet 

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that a court must accept as true all of the allegations contained in a complaint is 

inapplicable to legal conclusions.”) 

“The Precision Plus is approved by the FDA as an aid in the management of 

chronic intractable pain of the trunk and/or limbs, including unilateral or bilateral 

pain associated with the following: failed back surgery syndrome, intractable low 

back pain and leg pain.” (Am. Compl. ¶ 90) (emphasis added.) Relators make no 

effort to explain phantom limb pain falls outside the System’s approved use, as by 

their own allegations Mike Roman has pain in his “phantom limb.” (Id. at. ¶ 96) 

(emphasis added.) Instead, Relators only rely on a conclusory allegation that this 

is “an unapproved use.” See id. At most, the question of whether the treatment of 

phantom limb pain is an “off-label” use is a regulatory “gray area” and violations 

of such unclear rules are not, as a matter of law, actionable under the FCA. See, 

e.g., United States ex rel. Lamers v. City of Green Bay, 168 F.3d 1013, 1018 (7th 

Cir. 1999) (“imprecise statements or differences in interpretation growing out of a 

disputed legal question are . . ..not false under the FCA”); Wang v. FMC Corp.,

975 F.2d 1412, 1421 (9th Cir. 1992) (court rejected relator’s attempt to argue that 

defendant’s method of resolving an engineering problem on a weapon system was 

actionable under the FCA because “false” does not mean “scientifically untrue,” it 

means “a lie.”) 

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Thus, Relators have not adequately pled that Defendants’ “marketing” of 

their products for the treatment of phantom limb pain—even if it occurred as 

alleged by Relators—was “wrong.” Moreover, there is no allegation in the 

complaint whatsoever that any Government Program patient received an implant to 

treat phantom leg pain. Such vague and conclusory pleadings should not be 

accepted by this Court and are not determinative as a matter of law. 

B. Off-label promotion alone in the medical device context does not give 

rise a false claim. 

Case law is clear, medical implants covered by the Medicare DMEPOS 

benefit may be reimbursable even when used off-label. “In the specific context of 

reimbursement claims for using a drug or device in a way that violates the FDA, 

the courts have held that the ‘mere fact’ of ‘violating FDA regulations does not 

translate into liability for causing a false claim to be filed.” See United States ex 

rel. Bennett v. Boston Sci. Corp., No. H-07-2467, 2011 U.S. Dist. LEXIS 34745 at 

*45 (S.D. Tex. Mar. 31, 2011). The Bennett court described the differences 

between off-label use of a medical device and an unnecessary use, stating “Offlabel use of many devices and drugs is an accepted medical practice. . . . Courts 

recognize that off-label use of a drug or medical device is not the same as a 

medically unnecessary use of that drug or device.” See id. at *7-8. In fact, the 

court further noted that, “For medical devices eligibility for reimbursement 

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depends on whether the procedure performed is ‘medically necessary’ or 

‘reasonable and necessary.’” See id. at *16. 

The Third Circuit has recently looked at off-label issues in a fraud context 

and similarly recognized that without more of a showing of fraud, off-label 

promotion in and of itself does not mean the prescription was medically 

unnecessary.

Because the FDA does not regulate the practice of medicine, 

physicians may lawfully prescribe drugs for off-label uses. See 

Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 350, 121 S. 

Ct. 1012, 148 L. Ed. 2d 854 (2001) (recognizing off-label usage as 

“an accepted and necessary corollary of the FDA’s mission to regulate 

in this area without directly interfering with the practice of 

medicine.”); Wash. Legal Found. v. Henney, 202 F.3d 331, 333, 340 

U.S. App. D.C. 108 (D.C. Cir. 2000) (“A physician may prescribe a 

legal drug to serve any purpose that he or she deems appropriate, 

regardless of whether the drug has been approved for that use by the 

FDA.”) .” 

In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 

235, 240 (3d Cir. 2012); see also United States ex rel Wilkins v. United Health 

Grp., Inc., 659 F.3d 295, 308 (3d Cir. 2011) (finding that Medicare marketing 

activities could not give rise to liability under the False Claims Act.) 

Here, Relators have failed to explain how Defendant submitted claims for 

external accessories that were medically unnecessary, because they were was used 

off label. The Relators have not pointed to a single physician that both received 

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off-label promotional materials from BSNC and then unnecessarily ordered a 

Precision PlusTM SCS System for a Medicare beneficiary. Without such an 

allegation, Relators have failed to provide the critical information that would 

establish the filing of a false claim or to satisfy Federal Rule of Civil Procedure 

9(b). Consequently, Relators off-label allegation should be dismissed. 

VIII. RELATORS HAVE NOT ALLEGED A KICKBACK SCHEME THAT 

WOULD GIVE RISE TO FALSE CLAIMS ACT LIABILITY. 

Relators also claim, in a muddled way amidst their off-label promotion 

allegations, that BSNC improperly “provided physicians free reimbursement and 

prior authorization services to physicians to steer Government Program payments 

for on and off-label uses of the Precision Plus system.” (Am. Compl. ¶ 98.) The 

Anti-Kickback Statute prohibits the solicitation or receipt of remuneration in return 

for referrals of patients covered by federal government programs and the payment 

of remuneration to induce such referrals. See, e.g., 42 U.S.C. § 1320. The mere 

allegation of an Anti-Kickback Statute violation, however, is meaningless without 

evidence of subsequent claims made by providers as a result of the improprieties 

and evidence of receipt of federal funds in response to these claims that “was in 

some way conditioned on compliance with these regulations.” Wilkins, 659 F.3d at 

307; See also United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 

220, 232 (1st Cir 2004)) ("Underlying schemes and other wrongful activities that 

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result in the submission of fraudulent claims are included in the 'circumstances 

constituting fraud or mistake' that must be pled with particularity pursuant to Rule 

9(b) . . . [and] such pleadings invariably are inadequate unless they are linked to 

allegations, stated with particularity, of the actual false claims submitted to the 

government that constitute the essential element of an FCA qui tam action"). 

Relators offer meager support for their claims of kickbacks by saying that 

these “reimbursements and prior authorization services” are of a “type that 

physicians would otherwise provide and pay for themselves.” (Am. Compl. ¶ 98). 

However, that is the only detail Relators are able to provide about these 

purportedly illegal services. Rather than providing any detail about what specific 

services were offered, who the services were offered to, where the services were 

provided and when the services took place, Relators discuss generally U.S. 

Department of Health and Human Services Office of Inspector General (“OIG”) 

guidance on reimbursement support services. (See id. at ¶102.) However, Relators 

fail to provide even the bare minimum of details that would be needed to determine 

if the OIG opinion cited is applicable to the case at bar. 

Relators’ complete failure to identify any reliable indicia of a kickback 

scheme including the failure to plead any false certifications made by physicians 

resulting in kickbacks, renders Relators’ kickback allegations utterly defective. 

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While Relators allege that BSNC is bound by the certification in its supplier 

agreement, Relators have not alleged any details of an actual underlying scheme 

that would be non-compliant with respect to the Anti-Kickback statute. 

IX. RELATORS HAVE NOT ALLEGED VIABLE RETALIATION 

CLAIMS 

Not every employment termination is actionable under the False Claims Act. 

In order to demonstrate a viable § 3730(h) claim, a Relator 

must show (1) he engaged in protected conduct, (i.e., acts done in 

furtherance of an action under § 3730) and (2) that he was 

discriminated against because of [their] protected conduct. For a 

plaintiff to demonstrate that he was discriminated against because of 

conduct in furtherance of a False Claims Act suit, a plaintiff must 

show that (1) his employer had knowledge he was engaged in 

protected conduct; and (2) that his employer’s retaliation was 

motivated, at least in part, by the employee’s engaging in ‘protected 

conduct.’ 

See United States ex rel. Hefner v. Hackensack Univ. Med. Ctr., 495 F.3d 103, 111 

(3d Cir. 2007) (internal citations omitted). 

A. Relators’ alleged billing complaints do not qualify as “protected 

activity.” 

 Despite Relators’ claims of retaliation, the Relators’ allegations in this case 

do not involve any protected activity. Relators allege generally that they 

complained to their supervisors about BSNC’s billing practices. However, mere 

disagreements regarding billing practices are not enough to rise to the level of 

protected activity. 

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In addressing what activities constitute protected conduct, the case 

law indicates that ‘protected [conduct]’ requires a nexus with the in 

furtherance of prong of [a False Claims Act] action. This inquiry 

involves determining whether [plaintiff’s] actions sufficiently 

furthered ‘an action filed or to be filed under’ the [False Claims Act] 

and, thus, equate to ‘protected [conduct].’ 

Hutchins v. Wilentz, 253 F.3d 176, 187 (3d Cir. 2001); see also Dookeran v. 

Mercy Hosp. of Pittsburgh, 281 F.3d 105, 108 (3d Cir. 2002) (following this 

reasoning). The Relators’ allegations that they repeatedly made internal 

complaints about billing practices are not the same as putting BSNC on notice that 

their inquiries and complaints were in furtherance of an action to be filed under the 

FCA. Instead, as set forth above. The only thing BSNC was on notice of was 

Relators’ lack of understanding around Medicare billing rules. 

B. Relator Fuentes provides no allegations that she ever put BSNC on 

notice of her “protected activity.” 

Notably, Relator Bahnsen is the only Relator who even attempted, albeit 

insufficiently, to provide any detail about her internal complaints. (See Am. 

Compl. ¶¶ 148, 149, 154, 155, 156) (alleging facts related solely to Relator 

Bahnsen). Relator Fuentes should not be allowed to ride on the coattails of Relator 

Bahnsen, where Relator Fuentes shows by her silence that she has no facts to 

plead. Where there is “no way” of Relator Fuentes’ complaints could “reasonably 

lead to a viable FCA action, then the whistle-blower provision provides [her] no 

protection.” See Dookeran, 281 F.3d at 108. “Mere dissatisfaction with one’s 

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treatment on the job is not, of course, enough. Nor is an employee’s investigation 

of nothing more than his employer’s non-compliance with federal or state 

regulations.” Hutchins, 253 F.3d at 187-188 (3d Cir. N.J. 2001); see also 

Zahodnick v. Int’l Bus. Mach. Corp., 135 F.3d 911, 914 (4th Cir. 1997) (“Simply 

reporting his concern of a mischarging to the government to his supervisor does 

not suffice to establish that Zahodnick was acting ‘in furtherance of’ a qui tam 

action.”). 

It is impossible to tell what, if any, activity Relator Fuentes is relying on to 

demonstrate that she engaged in any protected activity under the FCA. Given the 

complete lack of detail to these related claims, Relator Fuentes’ retaliation claims 

must be dismissed. 

C. Relator Bahnsen relies upon unsupported conjecture to allege 

protected activity. 

Relator Bahnsen alleges that she made a series of internal complaints wasn’t 

billing procedures. Then she adds the following sentence: “[f]ollowing the internal 

complaints to her employer, BSNC “was informed” that Relator Bahnsen intended 

to file a whistleblower case against BSNC.” (Am. Compl. ¶ 161.) (emphasis 

added.) Relator Bahnsen provides no factual details around this allegation. She 

alleges only in passive voice that BSNC “was informed.” (See id.) (emphasis 

added.) Relator does not allege that she put Defendant on any notice of protected 

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activity. The source of this information is unmentioned. Moreover, Relator does 

not identify who at BSNC was put on notice that she “intended to file a 

whistleblower case” or whether anyone at BSNC in a position to terminate Relator 

Bahnsen even knew of her intentions at all. Such vague and conclusory allegations 

cannot satisfy basic pleading requirements showing a plausible entitlement of 

relief. Consequently, Relator Bahnsen’s retaliation claim must be dismissed. 

X. RELATORS’ STATE LAW CLAIMS SHOULD BE DISMISSED 

Because Relators have failed to state any claim under the federal FCA, 

Defendants respectfully request that the Court decline to exercise jurisdiction over 

Relators’ state law claims and dismiss the First Amended Complaint in its entirety. 

See United States ex rel. Piacentile v. Sanofi Synthelabo, Inc., No. 05-2927, 2010 

U.S. Dist. LEXIS 137895, at *27-28 (D.N.J. Dec. 30, 2010) (declining to exercise 

pendent jurisdiction over relator’s state claims where relator’s federal FCA claim 

failed to survive a motion to dismiss). State law claims filed in federal court are 

held to the same 9(b) standards, and for the reasons stated above, Relators’ state 

law claims will suffer the same 9(b) fatality as the Medicare claims, and 

consequently should be dismissed. “We see no principled reason why . . . state 

claims of fraud should escape the pleading requirements of the federal rules.” 

Williams v. WMX Techs, Inc., 112 F.3d 175, 177 (5th Cir. 1997). Moreover, 

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Relators have failed to provide the factual basis for their claims under any state 

false claims act. As such, Relators’ state claims should be similarly dismissed. 

 

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XI. CONCLUSION 

For the foregoing reasons, Defendant respectfully requests that this Motion 

to Dismiss be granted. 

Dated: October 24, 2012. 

 By: /s/ Felice B. Galant 

Felice B. Galant 

Fulbright & Jaworski L.L.P. 

666 Fifth Avenue 

New York, New York 10103 

Telephone: 212-318-3000 

Telecopier: 212-318-3400 

fgalant@fulbright.com 

Frederick Robinson 

(admitted pro hac vice) 

Lesley C. Reynolds 

(admitted pro hac vice) 

Fulbright & Jaworski L.L.P. 

801 Pennsylvania Avenue, NW 

Washington, DC 20004 

Telephone: 202-662-0200 

Telecopier: 202-662-4643 

frobinson@fulbright.com 

lreynolds@fulbright.com 

Attorneys for Defendant

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