929 F. Supp. 2d 1033
C.D. Cal.2012Background
- Relators Ruhe, Serwitz, and Caíala filed a qui tarn action against Masimo on Oct 29, 2010, with government service of the complaint and substantial evidence.
- The First Amended Complaint (FAC) was filed Oct 22, 2011, asserting FCA counts for false claims, false records, and conspiracy.
- Relators allege Masimo misrepresented device accuracy (Radical-7, Pronto, Pronto-7) to physicians, leading to government payment for defective testing.
- Relators allege Masimo obtained a government CPT billing code and instructed reps to market it to bill government health plans.
- Masimo moved to dismiss under Rule 12(b)(6) and to strike Exhibits A and B; the court denied the motions in substantial part, preserving most claims and striking only the conspiracy claim to the extent moot.
- The court concluded the FCA reaches broader fraud aimed at causing government payment, rejected narrow “promissory fraud”/“false certification” limitations, found Rule 9(b) satisfied, and held the intracorporate conspiracy doctrine bars Relators’ conspiracy claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FCA claim theory is properly pleaded. | Relators argue FCA covers all fraudulent attempts to obtain government payment. | Masimo argues FCA claims must fit promissory fraud or false certification. | FCA theory is not so limited; allegations fit broader fraudulent payments. |
| Rule 9(b) sufficiency of fraud allegations. | Relators plead time, place, content, and actors with detail. | Masimo contends insufficient specificity for some elements. | Rule 9(b) satisfied for fraud elements; detail adequate to notify Masimo. |
| Conspiracy claim viability. | Masimo and its management could be co-conspirators. | Intracorporate conspiracy doctrine excludes conspiracies within a single entity. | Conspiracy claim dismissed due to intracorporate conspiracy doctrine. |
| Motion to strike Exhibits A and B. | Exhibits are relevant to alleged fraud and public policy protects whistleblowers. | Exhibits are scandalous/impertinent and unnecessary. | Exhibits not scandalous or impertinent; denial of motion to strike except for conspiracy issue. |
Key Cases Cited
- Gilligan v. Jamco Dev. Corp., 108 F.3d 246 (9th Cir.1997) (standards for 12(b)(6) dismissal and pleading sufficiency)
- Neifert-White Co. v. United States, 390 U.S. 228 (Supreme Court, 1968) (broad FCA reach to fraudulent claims)
- Cook County v. United States ex rel. Chandler, 538 U.S. 119 (Supreme Court, 2003) (Congress intended FCA to reach all frauds causing government loss)
- Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388 (9th Cir.1988) (pleading requirements for fraud claims under Rule 9(b))
- Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir.2003) (necessity of specific fraud details and notice to defendants)
- Hoefer v. Fluor Daniel, Inc., 92 F.Supp.2d 1055 (C.D. Cal.2000) (intracorporate conspiracy doctrine applies to FCA claims)
- United States ex rel. Cafasso v. General Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir.2011) (relator need not prove every detail with certainty; evidence in defendant's control)