Litigation > False Claims Act/Qui Tam Defense > State FCA Resource Center > State and Federal False Claims Act Defendant Seeks to Prevent Use of Claims Documents in Case Filed By Former Employees
25 Oct '13

United States ex rel. Bahnsen v. Boston Scientific Neuromodulation Corp., No. 11 CV 1210 (SDW) (MCA) (D.N.J.).: Two former employees of Boston Scientific Neuromodulation Corporation (BSNC) – one from its Customer Service Department and the other from its Billing and Collections Department – brought this action alleging that BSNC violated the federal and several state False Claims Act, including New York, California, Texas, and Virginia. The complaint alleges that BSNC submitted claims for medically unnecessary services that contained false diagnosis codes and falsely certified that its submissions complied with the law. The complaint, which includes 15 pages describing the alleged false claims, survived BSNC’s motion to dismiss. The court found that the “[r]elators have pled with adequate particularity their claims, including those regarding improper billing, adverse event reporting, off-label allegations, and kickback payments, as well as retaliation.”

However, BSNC has asserted two counterclaims – one against each of the two relators – alleging that they breached their employment agreements, which required them to maintain the confidentiality of BSNC’s claims documents and to return them to BSNC upon termination of their employment. BSNC seeks dismissal of the action, money damages, and injunctive relief directing the relators to return BSNC’s claims documents and enjoining the relators from using the documents in the action. The relators moved to dismiss the counterclaims, arguing, in part, that “Defendant attempts to immunize itself from this damning and damaging evidence that Relators possess by virtue of their status as whistleblowers and which Relators have turned over to the federal and state Governments in compliance with the specific provisions of the FCA and state law counterparts. Compelling public policy reasons prohibit counterclaims of this nature.” The motion was fully submitted last month on September 11, 2013, and the court, two days later, scheduled a conference for October 23, 2013, thereafter adjourned to October 24, 2013.

BSNC’s counterclaims raise an interesting issue as to whether FCA whistleblowers are immune from laws that prohibit employees from taking confidential information from their employers. Notably, the New York FCA specifically provides that an employer may not retaliate against an employee for “lawful acts” done in furtherance of a NY FCA action, and defines “lawful acts” to include:

"obtaining or transmitting to the state, a local government, a qui tam plaintiff, or private counsel solely employed to investigate, potentially file, or file a cause of action under this article, documents, data, correspondence, electronic mail, or any other information, even though such act may violate a contract, employment term,or duty owed to the employer or contractor, so long as the possession and transmission of such documents are for the sole purpose of furthering efforts to stop one or more violations of this article.”

NY FCA § 191. Although the federal and other state FCAs protect employees from retaliation by their employees for engaging in activities in furtherance of FCA suits, the statutes do not define the protected conduct to include an employee’s taking of his employer’s confidential information.