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Boston Scientific Counter-claims Against Whistleblowers May Stand…for now. (Part 2)

Whistleblowers Wendy Bahsen and Carolina Fuentes brought a qui tam suit in Federal Court, under seal against Boston Scientific, alleging violations of the Federal False Claims Act (FCA). The suit was unsealed after the Feds and 28 other states decided not to intervene on their behalf.

The pair amended their complaint and proceeded on their own. They stated that BS violated the FCA by (1) submitting claims without a determination of “medical necessity” by a physician; (2) falsifying diagnosis codes on reimbursement forms and falsely certifying the truthfulness of the forms; (3) promoting the System for off-label uses, including for urinary incontinence and phantom limb pain; (4) providing free reimbursement services and other “inducements” and “kickbacks” to physicians; and (5) concealing defective equipment and withholding adverse event information from the FDA.

BS filed a motion to dismiss the complaint, and motion to strike portions of the complaint related to specific claim information on the grounds it violated HIPAA and to disqualify the whistleblower’s counsel as a necessary fact witness. BS’ motions were denied.

The court found that HIPAA did not apply to whistleblowers, to which BS responded by filing a counterclaim against the two former employees directly. The counterclaim alleged that the pair had violated their employment agreement by misappropriating proprietary information, obtained while working in the billing department, failing to return the information following their termination and using it to file the amended complaint.

The whistleblowers filed a motion to dismiss the counterclaims and argued, citing numerous cases in support that it would be against public policy to permit private employment agreements to supersede the FCA’s purpose in uncovering fraud upon the government.

In a surprising display of corporate love, Judge Wigenton upheld the counterclaim.

“At this stage, defendant has sufficiently pled breach of contract counterclaims. Both relators signed employment agreements, at the beginning of their employment at [BS], requiring them to refrain from disclosing or retaining certain [BS] confidential or proprietary information. Defendant claims that plaintiffs impermissibly ‘took, disclosed, and then published’ confidential patient claims data and proprietary business information related to the [Precision Plus] system and customer lists in their 1st amended complaint, thereby breaching their employment contracts,” Wigenton wrote.

Apparently the Judge feels that a corporation’s ability to hide its own wrongdoing is more important than the government’s interests in weeding out fraudulent and unlawful behavior. Under her scheme, employers would be free to force employees into signing privacy agreements and then keeping them from whistleblowing, or run the risk of being sued for damages when they do.

We will keep watch on this case. Hopefully Wigenton’s decision gets appealed to a higher, more reasonable court.