Masimo (NSDQ:MASI) won the dismissal of a whistleblowers’ False Claims Act lawsuit after a federal judge found that the plaintiffs, a trio of former Masimo sales reps, failed provide any evidence of fraud or fraudulent intent.
The whistleblowers sued in October 2010, accusing Masimo of promoting off-label uses of its Pronto and Pronto-7 devices and improperly billing government insurance programs for the off-label uses, according to court documents. The reps – Michael Ruhe, Kristine Serwitz and Vicente Catala – also accused Masimo of withholding sales records and interfering with subpoenas issued to federal insurance programs seeking those documents, according to the filings.
But Judge Cormac Carney of the U.S. District Court for Central California yesterday granted Masimo’s bid for summary judgment, finding that the plaintiff’s failed to prove any of their allegations in the case, according to court documents.
"Relators’ evidence fails to demonstrate any false statement or fraudulent conduct by Masimo; further, even assuming a showing of falsity or fraud has been made, Relators have not shown that it was knowing fraud on the part of Masimo," Carney wrote [emphasis his]. "To be liable under the False Claims Act, a defendant must do more than simply be enthusiastic about its products and resilient to criticism about them. The defendant must be knowingly misleading about the products. Here, however, relators’ evidence does not demonstrate any knowingly misleading statements or conduct by Masimo in connection with its medical devices. At most, relators have shown that Masimo was aware of isolated complaints and anecdotal feedback from physicians regarding the performance of the devices. Such evidence falls far short of demonstrating the knowing fraud required for liability under the False Claims Act.”
Last month the whistleblowers sought sanctions against Masimo for allegedly concealing evidence and otherwise interfering with their discovery efforts in the case. Masimo countered that those allegations were not only untrue but deserving of sanctions themselves.