Masimo: Whistleblowers’ accusations not only false, but improper

Masimo: Whistleblowers' accusations not only false, but improper

Masimo (NSDQ:MASI) argued yesterday that whistleblowers’ allegations in a False Claims Act lawsuit, that the patient monitoring company withheld evidence and interfered with subpoenas, are not only untrue but deserving of sanction.

The whistleblowers, former sales reps for Irvine, Calif.-based Masimo, 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 – accused Masimo of withholding sales records and interfering with subpoenas issued to federal insurance programs seeking those documents, according to the filings.

They asked Judge Cormac Carney of the U.S. District Court for Central California to sanction Masimo for the alleged violations, seeking to quash or delay Masimo’s bid for summary judgment "because defendant’s misconduct prevented plaintiffs from being able to fully present facts essential to justify their opposition to the motion," according to the documents. They’re also seeking legal costs associated with "Masimo’s misconduct in withholding evidence," fines, corrections to the lawsuit’s record and want the trial jury informed of the alleged misconduct, according to court filings.

Ruhe, Serwitz and Catala accused Masimo of failing to produce evidence of "specific sales data" to government programs, alleging that "there are records showing a direct link between specific representations, including face-to-face meetings, and specific payments," according to the filings.

"The documents relators have obtained, and continue to obtain on an almost daily basis, through 3rd-party subpoenas and [Freedom of Information Act] requests of state [Special Supplemental Nutrition Program for Women, Infants & Children] agencies, show defendant has improperly refused to produce evidence of its marketing and sales of the SpHb devices to federally funded agencies," according to the filings. "Defendant had communications, via email, and in person, including with presentations, to various state agencies using federal money to cover claims for defendant’s products. Nevertheless, defendant knowingly withheld this information," according to the filings. "E-mails and contracts produced by WIC agencies identify evidence relators requested in discovery and that defendant is withholding concerning its representations about its devices and that defendant is withholding concerning its representations about its devices to government agencies that induced their purchases."

But Masimo argued yesterday that it has already provided voluminous evidence of its sales of the devices, including to the WIC agencies (which would only become relevant during the damages phase of the trial), and accused the whistleblowers of demanding documents Masimo had already produced.

"Relators continue to multiply these proceedings with meritless motions that waste resources and time," according to the documents, which allege that the whistleblowers "sought categories of documents that Masimo had already produced."

"In numerous instances, these documents had been produced to Relators several months before," Masimo said in the filings. "Relators’ accusations are designed to mask Relators’ own failure to diligently pursue discovery in the matter.

"Relators had every opportunity to pursue discovery since filing this case almost 3 years ago," Masimo added, according to the filings. "Relators’ allegations are unsupported by the record and, in any event, are insufficient to justify any sanctions – much less the outlandish laundry list of sanctions requested by relators. On the contrary, as Masimo has previously detailed, and as evidenced by the current Motion, it is relators who have vexatiously multiplied these proceedings and caused undue expense warranting sanctions."

And the accusation that Masimo also sought to interfere with the plaintiffs’ attempts to secure the documents through subpoenas and FOIA requests is baseless because it’s based on triple-hearsay, the company argued.

"Relators’ failure to identify either unidentified person parties in this triple-hearsay chain makes it impossible for Masimo to meaningfully respond," according to the documents. "The consequences of relators’ baseless filings and reckless allegations are not negligible. Relators’ actions continue to harm Masimo’s business and reputation, as this court has previously acknowledged. Masimo has done nothing improper, and has instead been forced time and again to defend itself in this litigation against relators’ wasteful motions caused by their own dilatory conduct."

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