Boston Scientific‘s (NYSE:BSX) breach-of-contract counterclaims will stand in a whistleblower lawsuit filed by a pair of former customer service employees over the medical device company’s Precision Plus spinal cord stimulation system, a federal judge ruled last week.
Whistleblowers Wendy Bahnsen and Carolina Fuentes in March 2011 accused Boston Scientific of submitting fraudulent Medicare and Medicaid billing claims, concealing defects and denying replacement devices, engaging in a kickbacks scheme and retaliating against employees who raised the red flag about such practices.
Boston Scientific’s counter-claim alleged that Bahnsen and Fuentes breached their employment contracts by leaking confidential information, according to court documents. Bahnsen and Fuentes rebutted that they handed over the information to government authorities in compliance with federal anti-fraud laws, and that the medical device giant was seeking only to "immunize itself from this damning and damaging evidence" by attacking the whistleblowers. They asked Judge Susan Wigenton of the U.S. District Court for New Jersey to dismiss the counter-claims, according to the documents.
But Wigenton demurred, dismissing only 2 of the 23 counter-claims on the grounds that the plaintiffs " pled with sufficient particularity facts constituting [Boston Scientific’s] alleged fraud," according to court records.
"At this stage, defendant has sufficiently pled breach of contract counterclaims. Both relators signed employment agreements, at the beginning of their employment at [Boston Scientific], requiring them to refrain from disclosing or retaining certain [Boston Scientific] 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.
Boston Scientific lost its initial bid to have the lawsuit thrown out of court when Wigenton denied the motions and ruled that the case may proceed.
