Michelle Nemeh v. National Breathe Free Sinus & Allergy Centers LLC, et al.

• Court: District Court, D. Arizona
• Decided: June 4, 2026
• Docket: 2:23-cv-02009
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Michelle Nemeh, No. CV-23-02009-PHX-JJT

10 Plaintiff, ORDER

11 v.

12 National Breathe Free Sinus & Allergy Centers LLC, et al., 13 Defendants. 14 15 At issue is Defendants’ Motion to Dismiss Amended Complaint (Doc. 38, Mot.), to 16 which Plaintiff-Relator Michelle Nemeh (“Relator”) and Plaintiff-in-Interest United States 17 of America (“Government”) separately responded (Doc. 42, Rel. Resp.; Doc. 46, Gov’t 18 Resp.), and Defendants replied (Doc. 47, Reply). The Court finds this matter appropriate 19 for resolution without oral argument. LRCiv 7.2(f). For the reasons below, the Court will 20 grant in part and deny in part Defendants’ Motion. 21 I. BACKGROUND1 22 The following facts are drawn from Relator’s First Amended Complaint (Doc. 32, 23 FAC). Defendant National Breathe Free Sinus & Allergy Centers LLC (“NBF”) was 24 founded by Defendants Dr. Manish Khanna and Nabiel Matthew Ghanem to provide ear, 25 nose, and throat (“ENT”) healthcare. (FAC ¶ 2.) NBF has its principal place of business in 26 Phoenix, Arizona and does business as “Scottsdale Sinus and Allergy Center,” “Oasis Ear, 27 Nose, and Throat,” and “Premier Sinus and Allergy Center.” (FAC ¶ 9.) The executives of

28 1 When referring to papers submitted by the parties, the Court cites to the page number as generated by the Electronic Court Filing system, not the parties’ own page demarcation. 1 NBF include Mr. Ghanem, Dr. Khanna, and Defendant Taylor Borane. (FAC ¶¶ 18–20.) 2 NBF has grown to affiliate with thirty clinics across the country. (FAC ¶ 4.) Of those 3 affiliates, seven are named as defendants here and two of them are located in Arizona, one 4 in Texas, one in California, one in Washington D.C., and two in Florida. (FAC ¶¶ 10–16.) 5 Relator is a physician assistant and worked first for Scottsdale Sinus and Allergy 6 Center and then an affiliate clinic named Trinity ENT and Facial Aesthetics, LLC, both 7 located in Arizona. (FAC ¶ 7). Relator brings a qui tam action under the False Claims Act 8 (“FCA”), 31 U.S.C. §§ 3729–30, alleging a nationwide scheme by NBF and its affiliates 9 to submit false claims to Medicare, Medicaid, Tricare, and Medicare Advantage 10 (“Government Programs”). Specifically, Relator alleges Defendants systematically pushed 11 balloon sinuplasties on patients without determining whether those procedures were 12 medically necessary then falsified medical records to support claims for payment to the 13 Government Programs. (See FAC ¶¶ 1, 5, 44, 48.) 14 A balloon sinuplasty involves the insertion and inflation of a balloon catheter into 15 the sinus cavity to reduce pressure and improve drainage. (FAC ¶ 45.) Such procedures 16 cost between $5,000 and $14,000. (FAC ¶ 46.) To submit a claim for payment for balloon 17 sinuplasties to Government Programs, a provider certifies by his or her signature that the 18 services billed were medically necessary based on the patient’s medical history, complaints 19 and diagnosis. (FAC ¶¶ 29, 31, 36–38.) Medical necessity must be supported by the 20 patient’s medical records. (FAC ¶¶ 32, 36–28, 47.) Medical necessity for balloon 21 sinuplasties is generally established when a patient has recurrent sinus infections that are 22 unresponsive to medication, intractable sinus pain, or an affected sinus area in the cheeks, 23 forehead, or back of the nose. (FAC ¶ 46.) The procedure is generally not deemed to be 24 “medically necessary” if a patient has not tried more conservative treatment like 25 medication or has sinus issues that are acute or caused by polyps or a deviated septum. 26 (FAC ¶ 46.) 27 NBF developed and implemented a training protocol that instructed physician 28 assistants and medical assistants inexperienced in the ENT field to use scripted “talk 1 tracks” to promote balloon sinuplasties during all first visits regardless of the patient’s 2 symptoms or diagnosis. (FAC ¶¶ 49–50.) Dr. Khanna emphasized to physician assistants 3 the importance of these talk tracks, and the NBF executives instructed physician assistants 4 during training and afterwards that all first-time patients should be encouraged to book a 5 balloon sinuplasty. (FAC ¶¶ 50–51.) Dr. Khanna even told Relator that he competed with 6 another NBF physician to book a higher number of balloon sinuplasties. (FAC ¶ 51.) 7 Relator received this training in August and September 2021 shortly after she was hired. 8 (FAC ¶ 90.) 9 Relator describes several policies used by Defendants to ensure balloon sinuplasties 10 were booked and paid. For example, Defendants performed “free” CT scans on nearly all 11 new patients using untrained medical assistants, interpreted those scans to suggest the 12 patient needed a balloon sinuplasty, hid from regulators and payors that medical assistants 13 performed CT scans, and ordered repeat scans to meet insurance criteria. (FAC ¶¶ 74–78.) 14 Defendants also instructed physician assistants to document that a patient attempted to use 15 antibiotics to address their sinus issues even if they had not so the medical records would 16 falsely suggest that a ballon sinuplasty was the next necessary treatment step. (FAC ¶¶ 54, 17 56.) Defendants would also set quotas for booking rates pursuant to NBF’s expectations 18 and used a reward system that included gifts to incentivize more bookings. (FAC ¶ 52.) 19 Physician assistants were also instructed not to sign medical records so non‑medical 20 “Auth Teams” could later edit or create templated “Z‑Auths” adding or altering symptoms, 21 antibiotic history, and other facts material to medical necessity before finalizing the 22 medical records. (FAC ¶¶ 53–54, 57, 61.) For example, Relator noticed that administrative 23 staff removed from the clinical notes she prepared that a patient possibly had polyps, which 24 would have made that patient a poor candidate for a balloon sinuplasty. (FAC ¶ 94.) Auth 25 Teams would also add notes to support the delivery of other procedures concurrent with 26 balloon sinuplasties that reduce nasal anatomy to improve congestion, regardless of 27 whether the observing medical professional initially recommended those additional 28 procedures. (FAC ¶ 72.) Administrative staff affixed forged electronic signatures of 1 physicians, including that of Dr. Khanna, to finalize the medical records. (FAC ¶¶ 59–60.) 2 Defendants then submitted or caused the submission of claims that expressly and impliedly 3 certified that a balloon sinuplasty was medically necessary based on the edited medical 4 records. (FAC ¶ 64.) NBF clinics each performed between one and forty balloon 5 sinuplasties each month between 2022 and 2023. (FAC ¶ 66.) 6 Relator recounts ten patients’ records kept at Trinity ENT. Each patient presented 7 with non‑sinus complaints or had not attempted less invasive treatment for sinus 8 complaints but agreed to balloon sinuplasty recommendations, and those records were later 9 edited by administrative staff to include contradictory or fabricated symptoms, altered 10 antibiotic histories, and forged provider signatures before the claims were submitted to the 11 Government Programs. (FAC ¶¶ 79–89.) Relator describes other examples of observing 12 changes made to patient medical records she wrote that were false or misleading and 13 resulted in that patient receiving an unnecessary balloon sinuplasty. (See FAC ¶¶ 94–96.) 14 Relator sues Defendants on behalf of the United States for violations of the first 15 three subsections of 31 U.S.C. § 3729(a)(1): (1) presentation of false claims for balloon 16 sinuplasties and related services under subsection (A); (2) presentation of false records or 17 statements material to false claims under subsection (B); and (3) conspiracy to violate the 18 FCA under subsection (C). 19 II. CONSTITUTIONALITY OF QUI TAM PROVISION 20 The Court addresses Defendants’ arguments for dismissal in reverse order, 21 beginning with their constitutional challenge the qui tam provision of the FCA that 22 provides the basis for all Relator’s claims. Defendants argue that the qui tam provision 23 violates Article II of the U.S. Constitution by infringing on the authority vested solely in 24 the executive branch under the Appointments Clause. (Mot. at 33.) According to 25 Defendants, the Supreme Court in Seila Law LLC v. Consumer Financial Protection 26 Bureau, 591 U.S. 197 (2020) and United States ex rel. Polansky v. Executive Health 27 Resources, Inc., 599 U.S. 419 (2023) cast doubt upon the Ninth Circuit’s holding in U.S. 28 ex rel. Kelly v. Boeing Co., 9 F.3d 743 (9th Cir. 1993) that the qui tam provision did not 1 violate Article II of the Constitution. (Mot. at 34.) Under Defendants’ reading, those 2 Supreme Court cases held that the right given to relators to bring an action in the name of 3 the Government under the FCA was a “quintessentially executive power” that is vested in 4 the executive branch alone under the Appointments Clause. (Mot. at 34.) Defendants point 5 out that one district court in Florida relied on Seila Law and Polansky to determine that the 6 FCA’s qui tam provision is unconstitutional in United States ex rel. Zafirov v. Florida 7 Medical Associates, LLC, 751 F. Supp. 3d 1293 (M.D. Fla. 2024). (Mot. at 34–35.) 8 Both Relator and the Government2 dispute Defendants’ characterization of the 9 current landscape of binding authority. Relator argues that neither Seila Law nor Polansky 10 expressly overruled Kelly. Relator cites two cases from this District that rejected the exact 11 argument made by Defendants here. See United States ex rel. Stenson v. Radiology Ltd., 12 LLC, No. CV-19-00306-TUC-JGZ, 2025 WL 1785266, at *2 (D. Ariz. June 27, 2025); 13 United States ex rel. Thomas v. Care, No. CV-22-00512-PHX-JAT, 2023 WL 7413669, at 14 *4 (D. Ariz. Nov. 9, 2023). In addition to those two cases, the Government cites an 15 overwhelming number of district and Circuit cases across the country that have similarly 16 dispensed with the same constitutional challenge. (Gov’t Resp. at 1–2.) The Government 17 also sets forth detailed and substantive arguments that the qui tam provision of the FCA 18 does not violate the Appointments Clause. (Gov’t Resp. at 3–11.) 19 Defendants respond to no part of the Government’s substantive argument or attempt 20 to distinguish any of the dozens of cases cited in the responsive papers. Defendants’ only 21 argument in reply is that this Court should “follow the studied decision in [Zafirov].” This 22 argument is hollow and unpersuasive. First, Defendants do not explain how Seila Law or 23 Polansky could be read to invalidate the entire qui tam provision of the FCA. In Seila Law, 24 the Supreme Court held that the Consumer Financial Protection Bureau’s leadership 25 structure, which at the time was led by a single director removable for only limited reasons, 26 violated Article II and the separation of powers. 591 U.S. at 213. In Polansky, the Supreme 27 2 The Government’s responsive brief only addresses Defendants’ constitutional challenge 28 to the FCA and “takes no position on Defendants’ other arguments” for dismissal. (Gov’t Resp. at 1 n.1.) 1 Court held that the Government may dismiss the FCA action at any time after it intervenes 2 and such voluntary dismissal is evaluated under Federal Rule of Civil Procedure 41. 599 3 U.S. at 428–29. To extend these holdings would require several leaps in reasoning not 4 made by Defendants here. Second, the district court’s opinion in Zafirov does not convince 5 this Court that Seila Law and Polansky announce case law that is so incongruent with Kelly 6 as to implicitly overrule it. Ultimately, this Court finds no reason to disregard binding Ninth 7 Circuit authority and the nationwide circuit trend on the account of “[a] single, outlier trial- 8 court decision that whistles past precedent binding upon this Court.” United States v. 9 Chattanooga Hamilton Cnty. Hosp. Auth., No. 1:21-CV-84, 2024 WL 4784372, at *3 (E.D. 10 Tenn. Nov. 7, 2024) (rejecting the constitutional challenge to the FCA qui tam provision 11 and declining to follow Zafirov); see Hart v. Massanari, 266 F.3d 1155, 1170 (9th Cir. 12 2001) (“Binding authority must be followed unless and until overruled by a body 13 competent to do so.”). 14 III. PERSONAL JURISDICTION 15 The Court next considers the Defendants’ penultimate argument for partial 16 dismissal of claims against several non-resident entities for want of personal jurisdiction. 17 A. Legal Standard 18 For a federal court to adjudicate a matter, it must have jurisdiction over the parties. 19 Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701 (1982). 20 There are two types of personal jurisdiction: general and specific. General jurisdiction is 21 not at issue here. Rather, Defendants argue that the Court lacks specific personal 22 jurisdiction over Capitol Breathe Free Sinus and Allergy Centers, LLC, Breathe Free of 23 Florida, LLC, Breathe Free Sinus & Allergy Centers of Florida, LLC; Dallas Breathe Free, 24 and SoCal Breathe Free Sinus & Allergy Centers MSO, LLC, all non-residents of the State 25 of Arizona. (Mot. at 31.) 26 To exercise specific personal jurisdiction over a non-resident defendant, due process 27 requires that the defendant have sufficient minimum contacts with the forum so that 28 “maintenance of the suit does not offend traditional notions of fair play and substantial 1 justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation modified). The 2 traditional “minimum contacts test” focuses “on the relationship among the defendant, the 3 forum, and the litigation.” Briskin v. Shopify, Inc., 135 F.4th 739, 750 (9th Cir. 2025). 4 Federal Rule of Civil Procedure 4(k)(2), known as the “federal long-arm statute,” 5 establishes specific personal jurisdiction over a defendant if the following three conditions 6 are met: (1) the claims arise under federal law; (2) the defendant is not subject to 7 jurisdiction in any state’s courts of general jurisdiction; and (3) exercising jurisdiction 8 comports with due process. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1159 (9th Cir. 9 2006); see Fed. R. Civ. P. 4(k)(2). The due process analysis under Rule 4(k)(2) “is nearly 10 identical to traditional personal jurisdiction analysis but rather than considering contacts 11 between the defendant and the forum state, we consider contacts with the nation as a 12 whole.” Ayla, LLC v. Alya Skin Pty. Ltd., 11 F.4th 972, 979 (9th Cir. 2021) (citation 13 modified). 14 B. Analysis 15 In pleading that this Court has personal jurisdiction over all Defendants, Relator 16 cites to 31 U.S.C. § 3732(a) that states:

17 Any action under section 3730 may be brought in any judicial 18 district in which the defendant or, in the case of multiple defendants, any one defendant can be found, resides, transacts 19 business, or in which any act proscribed by section 3729 20 occurred. A summons as required by the Federal Rules of Civil Procedure shall be issued by the appropriate district court and 21 served at any place within or outside the United States. 22 23 Relator contends that § 3732(a) allows nationwide service of process, which means that 24 the relevant forum to which the minimum contacts test is applied is the nation as a whole, 25 not just the State of Arizona. (Rel. Resp. at 25–26.) 26 Defendants argue that § 3732(a) relates to venue, not jurisdiction, so Relator must 27 meet the traditional specific minimum contacts test with the relevant forum being the State 28 of Arizona. (Mot. at 32.) In support of their position, Defendants rely on United States v. 1 Universal Fruits & Vegetables Corp., 370 F.3d 829 (9th Cir. 2004). There, the Government 2 brought an FCA claim against the defendant company for avoiding customs duties. Id. at 3 831. The narrow question presented to the Ninth Circuit was whether the district court or 4 the Court of International Trade had subject-matter jurisdiction over the FCA claim. Id. In 5 answering that question, the Ninth Circuit was persuaded by U.S. ex rel. Thistlethwaite v. 6 Dowty Woodville Polymer, Ltd., in which the Second Circuit held that § 3732(a) “does not 7 govern subject matter jurisdiction.” 110 F.3d 861, 863 (2d Cir. 1997). Neither case dealt 8 with personal jurisdiction at all. 9 There is only one other Ninth Circuit case discussing § 3732(a) in the context of 10 personal jurisdiction. In an unpublished opinion, the Ninth Circuit “assess[ed] [the 11 defendant’s] conduct on a nationwide basis because 31 U.S.C. § 3732(a) authorizes 12 nationwide service of process.” Silbersher v. Valeant Pharms. Int’l, Inc., No. 20-16256, 13 2023 WL 4946736, at *1 (9th Cir. Aug. 3, 2023). The court quoted Go-Video, Inc. v. Akai 14 Electric Co. Ltd., which held that the “national contacts analysis more often finds its basis 15 . . . in the concrete language of a statute under which Congress has, as it is unquestionably 16 empowered to, authorized nationwide service of process.” 885 F.2d 1406, 1416 (9th Cir. 17 1989) (citations and quotation marks omitted). Therefore, “when a statute authorizes 18 nationwide service of process, national contacts analysis is appropriate.” Id. 19 Silbersher acknowledges that § 3732(a) authorizes nationwide service of process, 20 and that statutory feature means that a nationwide contacts analysis is appropriate under 21 Go-Video. While not binding authority, the Court finds Silbersher persuasive in light of 22 the express language of § 3732(a), which states that “[a] summons . . . shall be issued by 23 the appropriate district court and served at any place within or outside the United States.” 24 (emphasis added). This language is expansive and like other federal statutes known to 25 authorize nationwide service of process. See 7 U.S.C. § 25(c) (“Process in such action may 26 be served in any judicial district of which the defendant is an inhabitant or wherever the 27 defendant may be found.”); 15 U.S.C. § 22 (“[A]ll process in such cases may be served in 28 the district of which it is an inhabitant, or wherever it may be found.”); Cox v. 1 CoinMarketCap OPCO, LLC, 112 F.4th 822, 833 (9th Cir. 2024), cert. denied, 145 S. Ct. 2 2846 (2025) (holding that 7 U.S.C. § 25 authorizes nationwide service of process and 3 applying the nationwide contacts test); Action Embroidery Corp. v. Atl. Embroidery, Inc., 4 368 F.3d 1174, 1180 (9th Cir. 2004) (same as to 15 U.S.C. § 22). 5 In reply, Defendants argue that many district courts in this Circuit have required a 6 relator to plead sufficient minimum contacts between the defendant and the forum state 7 rather than using a nationwide contacts test. (Reply at 14–15 (collecting cases).) To 8 Defendants’ credit, the Court acknowledges that, in this Circuit, “[d]istrict courts are split 9 whether [§ 3732(a)] authorizes personal jurisdiction based on a defendant’s nationwide 10 contacts rather than contacts with the district where the action is pending.” Southard v. 11 Kipper Tool Co., No. 3:15-CV-03621-JSC, 2023 WL 6959145, at *2 (N.D. Cal. Oct. 19, 12 2023) (collecting cases). Still, all the district court cases cited by Defendants are outside 13 this District and unreported, or if they are reported they do not acknowledge Go-Video’s 14 holding that nationwide contacts analysis is appropriate where, as here, the statute 15 authorizes nationwide service of process. (Mot. at 31–32; Reply at 15.) 16 In light of Go-Video and the express language of § 3732(a) that authorizes 17 nationwide service of process, the Court agrees with Relator that the nationwide contacts 18 test is appropriate. Defendants do not challenge any of the three conditions permitting the 19 nationwide contacts test established by Pebble Beach Co. discussed supra, or that they 20 each have sufficient minimum contacts with the nation as a whole. Accordingly, the Court 21 declines to dismiss Relator’s claims for want of personal jurisdiction. 22 IV. RULES 12(B)(6) AND 9(B) 23 Defendants’ only remaining argument for dismissal turns on whether Relator 24 sufficiently states her claims under both Rule 12(b)(6) and Rule 9(b). 25 A. Legal Standard 26 Rule 12(b)(6) is designed to “test[] the legal sufficiency of a claim.” Navarro v. 27 Block, 250 F.3d 729, 732 (9th Cir. 2001). A dismissal under Rule 12(b)(6) for failure to 28 state a claim can be based on either: (1) the lack of a cognizable legal theory; or (2) the 1 absence of sufficient factual allegations to support a cognizable legal theory. Balistreri v. 2 Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). When analyzing a complaint for 3 failure to state a claim, the well-pled factual allegations are taken as true and construed in 4 the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 5 (9th Cir. 2009). A plaintiff must allege “enough facts to state a claim to relief that is 6 plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has 7 facial plausibility when the plaintiff pleads factual content that allows the court to draw the 8 reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 9 Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). “The plausibility 10 standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer 11 possibility that a defendant has acted unlawfully.” Id. 12 “To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a 13 complaint generally must satisfy only the minimal notice pleading requirements of Rule 14 8(a)(2).” Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). However, when as here “a 15 complaint includes allegations of fraud, Federal Rule of Civil Procedure 9(b) requires more 16 specificity including an account of the time, place, and specific content of the false 17 representations as well as the identities of the parties to the misrepresentations.” Swartz v. 18 KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (citation modified). “To comply with Rule 19 9(b), allegations of fraud must be specific enough to give defendants notice of the particular 20 misconduct which is alleged to constitute the fraud charged so that they can defend against 21 the charge and not just deny that they have done anything wrong.” Bly-Magee v. California, 22 236 F.3d 1014, 1019 (9th Cir. 2001) (citation modified). Put simply, Rule 9(b) requires 23 “the who, what, when, where, and how of the misconduct charged.” Ebeid ex rel. U.S. v. 24 Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (citation omitted). 25 B. Analysis 26 The three subsections giving rise to Relator’s FCA claims make “any person who— 27 (A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment 28 or approval; (B) knowingly makes, uses, or causes to be made or used, a false record or 1 statement material to a false or fraudulent claim; [or] (C) conspires to commit a violation 2 of subparagraph (A) [or] (B) . . . liable to the United States Government.” 31 U.S.C. § 3 3729(a)(1). Relator’s FCA claims each present a “false certification” theory of liability. In 4 “[f]alse certification cases . . . parties avail themselves of benefits of some type . . . through 5 false statements which create eligibility that otherwise would not exist.” U.S. ex rel. 6 Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996). 7 i. Counts One and Two 8 To sufficiently plead a false certification claim under subsections 9 § 3729(a)(1)(A)-(B) of the FCA, “[a] plaintiff must allege: (1) a false statement or 10 fraudulent course of conduct, (2) made with the scienter, (3) that was material, causing, (4) 11 the government to pay out money or forfeit moneys due.” Winter ex rel. United States v. 12 Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108, 1114 (9th Cir. 2020). “[T]he Act 13 attaches liability, not to underlying fraudulent activity, but to the ‘claim for payment.’ What 14 constitutes the FCA offense is the knowing presentation of a claim that is either fraudulent 15 or simply false.” Hopper, 91 F.3d at 1266 (citation modified). Rule 9(b) requires such 16 allegations to be particular and “provide a reasonable basis to infer that (1) the defendant 17 explicitly undertook to comply with a law, rule or regulation that is implicated in 18 submitting a claim for payment and that (2) claims were submitted (3) even though the 19 defendant was not in compliance with that law, rule or regulation.” Ebeid, 616 F.3d at 998. 20 To do so, a plaintiff may either plead a “representative example” of the fraud or “particular 21 details of a scheme to submit false claims paired with reliable indicia that lead to a strong 22 inference that claims were actually submitted.” Id. at 998–99. 23 Defendants argue that Relator fails to plead each of the four elements that make up 24 an FCA claim under the heightened pleading standard imposed by Rule 9(b). The Court 25 evaluates each element in turn. 26 a. Falsity or Fraudulent Course of Conduct 27 In the Ninth Circuit, courts do not require “a plaintiff to plead an ‘objective 28 falsehood’” to state a claim under the FCA. Winter, 953 F.3d at 1119. As relevant here, 1 “[b]ecause medical necessity is a condition of payment, every Medicare claim includes an 2 express or implied certification that treatment was medically necessary. Claims for 3 unnecessary treatment are false claims.” Id. Accordingly, a plaintiff may plead falsity by 4 alleging facts showing that a physician’s certification was either: (1) based on an opinion 5 that was not honestly held; or (2) implies facts that do not exist. Id. 6 First, Defendants contend that Relator does not sufficiently plead facts to suggest 7 that Defendants’ physicians did not honestly believe that balloon sinuplasties were 8 medically necessary for the patients that received them. (Mot. at 7.) But Relator alleges 9 that Defendants relegated patient visits to physician assistants, that physicians were 10 removed from the process of developing proper treatment plans for patients, and that 11 physicians’ signatures certifying medical necessity were forged. Under this theory, the 12 Court can reasonably infer that Defendants’ physicians did not honestly hold whatever 13 opinions were contained in patient records or the claim because they did not form those 14 opinions. 15 Second, Defendants assert that Relator failed to allege that the certifications of 16 medical necessity implied facts that did not exist. (Mot. at 16–17.) As Relator points out, 17 allegations of that sort are abundant in the First Amended Complaint, and the Court can 18 easily infer from the facts alleged that the certifications did imply nonexistent facts. 19 Defendants contend that Relator fails to assert any basis in law, regulation, 20 governmental guidance, or medical consensus to support her allegations “that sinuplasty 21 patients [must] meet certain alleged ‘prerequisite requirements,’ such as being treated with 22 antibiotics in the past year” before a sinuplasty would be deemed “medically necessary.” 23 (Mot. at 17.) But Relator references several parts of the Code of Federal Regulations, 24 United States Code, and Government Program manuals in pleading her allegations 25 regarding billing requirements. (FAC ¶¶ 26–40.) Relator also alleges when a balloon 26 sinuplasty is a necessary procedure and when it is not. (FAC ¶ 46.) Defendants point out 27 no particular law or authority that contradicts the legal basis for Relator’s allegations.3

28 3 Defendants suggest that “published literature supports that balloon sinuplasties are effective, minimally invasive and relatively low risk, and are prescribed for a variety of 1 Defendants lastly contend that Relator fails to assert that the medical records as 2 edited by administrative staff “actually influenced physician decision-making.” (Mot. at 3 19.) Whether a physician was influenced by the records is more relevant to whether the 4 physician honestly believed that the procedure was necessary. In any event, though, the 5 Court can infer from Relator’s allegations that physicians had little to no involvement in 6 patient treatment, so whether they would have been influenced by the falsified records is 7 inapplicable to Relator’s theory of the case. Rather, the claims here are clearly based on 8 allegations showing that administrative staff injected nonexistent facts into patient records 9 and forged a physician’s signature formalizing those records all unbeknownst to the 10 physician so that NBF or its affiliates could be paid for balloon sinuplasty claims. At this 11 stage, these allegations sufficiently state that the claims submitted by Defendants to the 12 Government were false. 13 b. Scienter 14 Unlike the other elements of an FCA claim, “scienter need not be pleaded with 15 particularity, but may be alleged generally.” Winter, 953 F.3d at 1122 (citations omitted). 16 “A complaint therefore must set out sufficient factual matter from which a defendant’s 17 knowledge of a fraud might reasonably be inferred” but need not reach the pleading 18 standard set forth in Rule 9(b). United States ex rel. Anita Silingo v. WellPoint, Inc., 904 19 F.3d 667, 679–80 (9th Cir. 2018). Facts supporting that a defendant had “either actual 20 knowledge, deliberate ignorance, or recklessness will suffice.” United States ex rel. Schutte 21 v. SuperValu Inc., 598 U.S. 739, 750 (2023). “First, the term ‘actual knowledge’ refers to 22 whether a person is ‘aware of’ information. Second, the term ‘deliberate ignorance’ 23 encompasses defendants who are aware of a substantial risk that their statements are false 24 but intentionally avoid taking steps to confirm the statement’s truth or falsity. And third, 25 the term ‘reckless disregard’ similarly captures defendants who are conscious of a 26 conditions based on factors that may vary from case to case and from physician to 27 physician.” (Mot. at 18.) This may ultimately be true, and Relator’s own allegations suggest that balloon sinuplasties can be effective treatment. (FAC ¶ 45.) But the basis of her 28 allegations is that, at least for some patients receiving care through NBF and its affiliates, balloon sinuplasties are unnecessary. 1 substantial and unjustifiable risk that their claims are false, but submit the claims anyway.” 2 Id. at 751. 3 Defendants argue that Relator fails to plead facts suggesting that Defendants 4 submitted false claims with the intent to defraud or facts supporting a “strong inference” 5 of that intent. But the cases cited by Defendants for this proposition are not within the Ninth 6 Circuit, and binding authority here states that, “unlike in common law fraud claims, a 7 plaintiff need not prove a ‘specific intent to defraud’ under the FCA.” Winter, 953 F.3d at 8 1122. The Court declines to impose a harsher standard than what is required by Winter. 9 Here, Relator sufficiently pleads that Defendants were, at minimum, conscious of a 10 substantial and unjustifiable risk that the claims they submitted for balloon sinuplasties 11 were false but submitted them anyway. First, NFB and affiliates trained and instructed staff 12 to “convince as many patients as possible . . . to undergo a balloon-sinuplasty procedure 13 without any consideration of medical necessity.” (FAC ¶ 45.) At the direction of NFB, 14 affiliates set quotas for scheduling first-time patients for balloon sinuplasties regardless of 15 the patient’s medical complaints. (FAC ¶ 52.) The healthcare professionals who exceeded 16 the NFB executives’ expectations were rewarded (FAC ¶ 52), while those who failed to 17 meet or questioned those expectations were scrutinized, punished, or in one instance fired 18 (FAC ¶¶ 52, 91, 93). These facts suggest that Defendants motivated their employees to 19 submit claims for ballon sinuplasties even if they were unnecessary, thereby creating a 20 substantial and unjustifiable risk that at least some of the claims would be false. 21 Second, NFB and its affiliates maintained a policy that healthcare professionals 22 would keep a patient’s medical records “open” and unsigned so that administrative staff 23 could edit and formalize them without giving healthcare professionals the opportunity to 24 review the edits. (FAC ¶¶ 60, 64.) In other words, Defendants took active steps to screen 25 out healthcare professionals capable of vetting that documentation for accuracy so that the 26 edits containing false information would be preserved. This suggests that Defendants were 27 aware or conscious that at least some of the records that were submitted were false. 28 . . . 1 These facts, when taken as true, show that Defendants were “conscious of a 2 substantial and unjustifiable risk that their claims are false.” Schutte, 598 U.S. at 751; see 3 also United States ex rel. Campie v. Gilead Scis., Inc., 862 F.3d 890, 904 (9th Cir. 2017) 4 (finding allegations that a defendant established practices and took actions to hide fraud, 5 such as altering documents, were sufficient to plead scienter). 6 c. Materiality 7 “For a false statement to be material, a plaintiff must plausibly allege that the 8 statutory violations are ‘so central’ to the claims that the government ‘would not have paid 9 these claims had it known of these violations.’” Winter, 953 F.3d at 1121. In the Ninth 10 Circuit, courts deem “a false certification of medical necessity” as material. Id. at 1122. 11 “The medical necessity requirement is not an insignificant regulatory or contractual 12 violation. Congress prohibited payment for treatment not reasonable and necessary for the 13 diagnosis or treatment of illness or injury.” Id. (citation modified). 14 Here, Relator pleads that the claims submitted to the Government contained a false 15 express or implied certification that balloon sinuplasties were medically necessary and that 16 the Government would not have paid those claims absent the false certification. (FAC 17 ¶ 65.) Under the Ninth Circuit case law, these allegations meet the materiality element of 18 a FCA claim. Winter, 953 F.3d at 1122. 19 d. Causation 20 “The causation element under 31 U.S.C. § 3729 is satisfied if a person ‘presents, or 21 causes to be presented,’ a false or fraudulent claim to the United States for payment or 22 approval . . . Thus, a person need not be the one who actually submitted the claim forms in 23 order to be liable.” United States v. Mackby, 261 F.3d 821, 827 (9th Cir. 2001) (citation 24 modified). District courts in the Ninth Circuit “use general tort law principles to analyze 25 the FCA’s causation element,” and “[u]nder those principles, a defendant may be liable for 26 false claims that others submit if its conduct was a substantial factor in bringing about the 27 false claims, and such claims were a foreseeable and natural consequence of its conduct.” 28 United States ex rel. Puhl v. Terumo BCT, No. CV 17-8446 PSG (JPRX), 2019 WL 1 6954317, at *4 (C.D. Cal. Sept. 12, 2019). It is not enough to describe conduct that is 2 merely unsavory, Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 3 1058 (9th Cir. 2011), or “to describe a private scheme in detail but then to allege simply 4 and without any stated reason for [the] belief that claims requesting illegal payments must 5 have been submitted,” United States v. Kitsap Physicians Serv., 314 F.3d 995, 1002 (9th 6 Cir. 2002) (citation omitted). Rather, a plaintiff “must show an actual false claim for 7 payment being made to the Government.” Id. (emphasis and citation omitted). 8 Defendants argue that Relator fails to plead that Defendants engaged in anything 9 more than “unsavory conduct.” (Mot. at 24.) The Court disagrees. Relator sufficiently 10 alleges the Government requires a claim submitted for payment to be medically necessary 11 and supported by sufficient documentation (FAC ¶¶ 29–40), sets forth specific examples 12 of medical documentation that were falsified to meet this standard for payment (FAC 13 ¶¶ 80–89), and alleges that those claims were submitted anyway (id.). If true, this conduct 14 was not merely unsavory; it was fraudulent. 15 As for whether Relator sufficiently pleads that claims were actually submitted to the 16 Government for payment, the Court can infer from the alleged facts that they were. Relator 17 pleads a detailed scheme to encourage healthcare professionals to schedule unnecessary 18 balloon sinuplasties and to falsify supporting medical documentation formalized by forged 19 signatures of healthcare professionals. Each month between 2022 and 2023, one to forty 20 patients at NBF clinics who were insured by Government Programs received balloon 21 sinuplasties. (FAC ¶ 66.) This allegation supports the inference that, under the detailed 22 scheme, some portion of those procedures were unnecessary. At least two of Relator’s own 23 patients, L.P. and R.S., were insured by Government programs and Relator observed that 24 their medical records were altered by administrative staff. (FAC ¶¶ 84–85.) According to 25 Relator, L.P. and R.S. ultimately received balloon sinuplasties, and the Court can infer that 26 Trinity ENT submitted the edited records to support claims for payment for those two 27 balloon sinuplasties to the Government. The facts alleging the detailed scheme adopted by 28 NBF and its affiliates and the representative examples of L.P. and R.S., when taken 1 together and presumed to be true at this stage, are sufficient to allege that NBF and its 2 affiliates caused or were a substantial factor in bringing about the submission of false 3 claims to the Government. 4 Defendants’ citation to an unpublished Northern District of California case does not 5 change the Court’s conclusion here. In United States ex rel. Armstrong-Young v. Carelink 6 Hospice Services, Inc., a social worker brought FCA claims against her employer for 7 allegedly submitting false claims for payment to Medicare for patients who were ineligible 8 for the billed services. No. 15-cv-04095, 2018 WL 4773111, at *1 (N.D. Cal. Oct. 1, 2018). 9 There, the social worker generally alleged that she believed claims were submitted but did 10 not plead any particular facts or reasonable indicia of facts that would allow the court to 11 “infer that claims had been submitted on behalf of any particular patient.” Id. at *3. 12 But Relator does identify specific patients she saw at Trinity ENT who were insured 13 by Government programs, had their medical records altered from the time Relator saw 14 them, and ultimately received balloon sinuplasties. There are also sufficient and reliable 15 indicia to suggest that at least a portion of the one to forty balloon sinuplasties eventually 16 billed to Government Programs were unnecessary due to the specific and detailed scheme 17 enforced by NBF executives and affiliates. 18 e. Group Pleading 19 “Rule 9(b) does not allow a complaint to merely lump multiple defendants together 20 but requires plaintiffs to differentiate their allegations when suing more than one defendant 21 and inform each defendant separately of the allegations surrounding his alleged 22 participation in the fraud.” Swartz, 476 F.3d at 764–65 (citation modified). “In the context 23 of a fraud suit involving multiple defendants, a plaintiff must, at a minimum, identify the 24 role of each defendant in the alleged fraudulent scheme.” Id. at 765 (citation modified). 25 “There is no flaw in a pleading [] where collective allegations are used to describe the 26 actions of multiple defendants who are alleged to have engaged in precisely the same 27 conduct,” so long as there are “particular details of the scheme as applied to defendants [].” 28 United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1184 (9th Cir. 2016). 1 Defendants argue that Relator’s claims fail under Rule 9(b) for “grouping of 2 defendants into categories.” (Mot. at 23.) According to Defendants, the lack of any 3 substantive allegations about Arizona Breathe Free, Breathe Free of Florida, LLC, Breathe 4 Free Sinus & Allergy Centers of Florida, LLC, SoCal Breathe Free, or Dallas Breathe Free 5 requires the FCA claims to be dismissed against them. (Mot. at 27.) 6 Relator argues that she identified the roles of each above-named defendant as 7 affiliates of NBF that carry out the scheme devised by NBF. (Rel. Resp. at 16–17.) Relator 8 points to three categories of allegations to support that her pleading meets the Rule 9(b) 9 standard. First, Relator alleges that all healthcare providers and administrative staff who 10 work for NBF affiliates attend the same training that Relator attended where she was 11 trained to convince patients to undergo balloon sinuplasties. (Rel. Resp. at 16–17.) Second, 12 Relator alleges that NBF and its affiliates incentivize their staff to book as many 13 sinuplasties as possible in accordance with NBF policy. (Rel. Resp. at 17.) Third, Relator 14 alleges in great detail that NBF and its affiliates implement administrative teams to edit 15 and sign patient records before submitting those records in support of claims for balloon 16 sinuplasties. (Rel. Resp. at 17.) These events occurred at least since 2018 and led NBF and 17 its affiliates to perform between one and forty balloon sinuplasties per month between 2022 18 and 2023 on patients insured by Government Programs. (FAC ¶ 66.) Relator’s allegations 19 provide all named Defendants sufficient notice about the training, policies, type of records, 20 type of procedure, and type of insurance claims such that they can investigate and prepare 21 accordingly. This amounts to “the who, what, when, where, and how of the misconduct 22 charged” as required by Rule 9(b). Ebeid, 616 F.3d at 998 (citation omitted). 23 ii. Count Three 24 “To maintain a claim for conspiracy under 31 U.S.C. § 3729(a)(3), a plaintiff must 25 show (1) that the defendant conspired with one or more persons to get a false or fraudulent 26 claim paid by the United States; (2) that one or more of the conspirators performed any act 27 to effect the object of the conspiracy; and (3) that the United States suffered damages as a 28 result of the false or fraudulent claim.” U.S. ex rel. Woodruff v. Hawaii Pac. Health, 560 1 F. Supp. 2d 988, 998 (D. Haw. 2008), aff’d, 409 F. App’x 133 (9th Cir. 2010) (citation 2 modified). “It is not necessary to show that the conspirators intended the false record or 3 statement to be presented directly to the Government, but it must be established that they 4 agreed that the false record or statement would have a material effect on the Government’s 5 decision to pay the false or fraudulent claim.” Allison Engine Co. v. U.S. ex rel. Sanders, 6 553 U.S. 662, 673 (2008). 7 Defendants argue the conspiracy claim must fail because the only factual allegations 8 that support a conspiracy relate to an agreement made among the three NBF executives but 9 do not detail any agreement between NBF and its affiliates. (Mot. at 29–30.) Relator 10 responds that her conspiracy theory is one of “a classic hub-and-spoke . . . with Khanna, 11 Ghanem, and Borane serving as the hub and each of the [affiliates] serving as the spokes.” 12 (Rel. Resp. at 21.) Under this theory, Relator argues that Defendants “shared knowledge 13 that all NBF-affiliated clinics are operating in the same fashion” and shared a “goal of 14 defrauding the government programs” through coordinated actions, training and 15 incentives. (Rel. Resp. at 21.) 16 The theory of conspiracy advanced by Relator has been recognized in the Ninth 17 Circuit as “a ‘wheel conspiracy’ [that] involves ‘a single member or group (the ‘hub’) 18 separately agreeing with two or more other members or groups (the ‘spokes’).” Anita 19 Silingo, 904 F.3d at 678. “[I]f a fraudulent scheme resembles a wheel conspiracy, then any 20 parallel actions of the ‘spokes’ can be addressed by collective allegations.” Id. Under this 21 theory, Relator alleges in detail that NBF developed a scheme to induce patients to undergo 22 balloon sinuplasties, to submit a claim for payment to Government programs for those 23 procedures, and to create false records to support those claims. (See FAC ¶¶ 48–61.) That 24 each affiliate joined the conspiracy by adopting those same fraudulent policies, procedures, 25 and training designed to get false claims paid by the Government is sufficient to plead an 26 FCA conspiracy claim. 27 Next, Defendants argue that the conspiracy claim fails as to the NBF and its 28 executives under the intracorporate conspiracy doctrine. (Mot. at 30–31; Reply at 14.) “As 1 || a practical matter, a corporation cannot conspire with its own employees acting within the 2|| scope of their employment, as their actions are already deemed the actions of the || corporation.” U.S. ex rel. Ruhe v. Masimo Corp., 929 F. Supp. 2d 1033, 1038 (C.D. Cal. 2012). While the Ninth Circuit has not addressed it, district courts have applied this || doctrine to FCA claims. See, e.g., id. (collecting cases); United States v. Aerojet 6 || Rocketdyne Holdings, Inc., 381 F. Supp. 3d 1240, 1249 (E.D. Cal. 2019) (same). 7 In response, Relator does not attempt to distinguish Khanna, Ghanem, and Borane 8 || from NBF. Even if she had, Relator’s First Amended Complaint suggests that those 9|| individual defendants are agents of NBF. (FAC 4 18—20.) Accordingly, the Court || dismisses the conspiracy claim only as to against Khanna, Ghanem, and Borane, but not as 11 || to NBF because Relator has sufficiently alleged it has conspired with affiliates to defraud || the Government. The Court grants Relator leave to amend the conspiracy claim as to 13 || Khanna, Ghanem, and Borane if this defect can be cured by additional facts. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000). 15 IT IS ORDERED granting in part and denying in part Defendants’ Motion to Dismiss Amended Complaint (Doc. 38). 17 IT IS FURTHER ORDERED that Count Three alleging a violation of 31 U.S.C. § 3729(a)(1)(C) as to Defendants Dr. Manish Khanna, Nabiel Matthew Ghanem, and Taylor Borane is dismissed with leave to amend. Should Relator choose to amend this □□ claim, Relator may file an amended pleading no later than fourteen days from the date of this Order in a manner that complies with Local Rule of Civil Procedure 15.1 not to exceed || the scope of leave granted herein. Count Three as to the other named defendants and the 23 || entirety of Counts One and Two may proceed. 24 Dated this 4th day of June, 2026. CN

26 Unifgd State#District Judge 27 28

-20-