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

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Michelle Nemeh,
Plaintiff,
v.
National Breathe Free Sinus & Allergy
Centers LLC, et al.,
Defendants.
No. CV-23-02009-PHX-JJT
ORDER
At issue is Defendants’ Motion to Dismiss Amended Complaint (Doc. 38, Mot.), to
which Plaintiff-Relator Michelle Nemeh (“Relator”) and Plaintiff-in-Interest United States
of America (“Government”) separately responded (Doc. 42, Rel. Resp.; Doc. 46, Gov’t
Resp.), and Defendants replied (Doc. 47, Reply). The Court finds this matter appropriate
for resolution without oral argument. LRCiv 7.2(f). For the reasons below, the Court will
grant in part and deny in part Defendants’ Motion.
I. BACKGROUND1
The following facts are drawn from Relator’s First Amended Complaint (Doc. 32,
FAC). Defendant National Breathe Free Sinus & Allergy Centers LLC (“NBF”) was
founded by Defendants Dr. Manish Khanna and Nabiel Matthew Ghanem to provide ear,
nose, and throat (“ENT”) healthcare. (FAC ¶ 2.) NBF has its principal place of business in
Phoenix, Arizona and does business as “Scottsdale Sinus and Allergy Center,” “Oasis Ear,
Nose, and Throat,” and “Premier Sinus and Allergy Center.” (FAC ¶ 9.) The executives of
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.
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 1 of 20

- 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
NBF include Mr. Ghanem, Dr. Khanna, and Defendant Taylor Borane. (FAC ¶¶ 18–20.)
NBF has grown to affiliate with thirty clinics across the country. (FAC ¶ 4.) Of those
affiliates, seven are named as defendants here and two of them are located in Arizona, one
in Texas, one in California, one in Washington D.C., and two in Florida. (FAC ¶¶ 10–16.)
Relator is a physician assistant and worked first for Scottsdale Sinus and Allergy
Center and then an affiliate clinic named Trinity ENT and Facial Aesthetics, LLC, both
located in Arizona. (FAC ¶ 7). Relator brings a qui tam action under the False Claims Act
(“FCA”), 31 U.S.C. §§ 3729–30, alleging a nationwide scheme by NBF and its affiliates
to submit false claims to Medicare, Medicaid, Tricare, and Medicare Advantage
(“Government Programs”). Specifically, Relator alleges Defendants systematically pushed
balloon sinuplasties on patients without determining whether those procedures were
medically necessary then falsified medical records to support claims for payment to the
Government Programs. (See FAC ¶¶ 1, 5, 44, 48.)
A balloon sinuplasty involves the insertion and inflation of a balloon catheter into
the sinus cavity to reduce pressure and improve drainage. (FAC ¶ 45.) Such procedures
cost between $5,000 and $14,000. (FAC ¶ 46.) To submit a claim for payment for balloon
sinuplasties to Government Programs, a provider certifies by his or her signature that the
services billed were medically necessary based on the patient’s medical history, complaints
and diagnosis. (FAC ¶¶ 29, 31, 36–38.) Medical necessity must be supported by the
patient’s medical records. (FAC ¶¶ 32, 36–28, 47.) Medical necessity for balloon
sinuplasties is generally established when a patient has recurrent sinus infections that are
unresponsive to medication, intractable sinus pain, or an affected sinus area in the cheeks,
forehead, or back of the nose. (FAC ¶ 46.) The procedure is generally not deemed to be
“medically necessary” if a patient has not tried more conservative treatment like
medication or has sinus issues that are acute or caused by polyps or a deviated septum.
(FAC ¶ 46.)
NBF developed and implemented a training protocol that instructed physician
assistants and medical assistants inexperienced in the ENT field to use scripted “talk
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 2 of 20

- 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
tracks” to promote balloon sinuplasties during all first visits regardless of the patient’s
symptoms or diagnosis. (FAC ¶¶ 49–50.) Dr. Khanna emphasized to physician assistants
the importance of these talk tracks, and the NBF executives instructed physician assistants
during training and afterwards that all first-time patients should be encouraged to book a
balloon sinuplasty. (FAC ¶¶ 50–51.) Dr. Khanna even told Relator that he competed with
another NBF physician to book a higher number of balloon sinuplasties. (FAC ¶ 51.)
Relator received this training in August and September 2021 shortly after she was hired.
(FAC ¶ 90.)
Relator describes several policies used by Defendants to ensure balloon sinuplasties
were booked and paid. For example, Defendants performed “free” CT scans on nearly all
new patients using untrained medical assistants, interpreted those scans to suggest the
patient needed a balloon sinuplasty, hid from regulators and payors that medical assistants
performed CT scans, and ordered repeat scans to meet insurance criteria. (FAC ¶¶ 74–78.)
Defendants also instructed physician assistants to document that a patient attempted to use
antibiotics to address their sinus issues even if they had not so the medical records would
falsely suggest that a ballon sinuplasty was the next necessary treatment step. (FAC ¶¶ 54,
56.) Defendants would also set quotas for booking rates pursuant to NBF’s expectations
and used a reward system that included gifts to incentivize more bookings. (FAC ¶ 52.)
Physician assistants were also instructed not to sign medical records so non‑medical
“Auth Teams” could later edit or create templated “Z‑Auths” adding or altering symptoms,
antibiotic history, and other facts material to medical necessity before finalizing the
medical records. (FAC ¶¶ 53–54, 57, 61.) For example, Relator noticed that administrative
staff removed from the clinical notes she prepared that a patient possibly had polyps, which
would have made that patient a poor candidate for a balloon sinuplasty. (FAC ¶ 94.) Auth
Teams would also add notes to support the delivery of other procedures concurrent with
balloon sinuplasties that reduce nasal anatomy to improve congestion, regardless of
whether the observing medical professional initially recommended those additional
procedures. (FAC ¶ 72.) Administrative staff affixed forged electronic signatures of
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 3 of 20

- 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
physicians, including that of Dr. Khanna, to finalize the medical records. (FAC ¶¶ 59–60.)
Defendants then submitted or caused the submission of claims that expressly and impliedly
certified that a balloon sinuplasty was medically necessary based on the edited medical
records. (FAC ¶ 64.) NBF clinics each performed between one and forty balloon
sinuplasties each month between 2022 and 2023. (FAC ¶ 66.)
Relator recounts ten patients’ records kept at Trinity ENT. Each patient presented
with non‑sinus complaints or had not attempted less invasive treatment for sinus
complaints but agreed to balloon sinuplasty recommendations, and those records were later
edited by administrative staff to include contradictory or fabricated symptoms, altered
antibiotic histories, and forged provider signatures before the claims were submitted to the
Government Programs. (FAC ¶¶ 79–89.) Relator describes other examples of observing
changes made to patient medical records she wrote that were false or misleading and
resulted in that patient receiving an unnecessary balloon sinuplasty. (See FAC ¶¶ 94–96.)
Relator sues Defendants on behalf of the United States for violations of the first
three subsections of 31 U.S.C. § 3729(a)(1): (1) presentation of false claims for balloon
sinuplasties and related services under subsection (A); (2) presentation of false records or
statements material to false claims under subsection (B); and (3) conspiracy to violate the
FCA under subsection (C).
II. CONSTITUTIONALITY OF QUI TAM PROVISION
The Court addresses Defendants’ arguments for dismissal in reverse order,
beginning with their constitutional challenge the qui tam provision of the FCA that
provides the basis for all Relator’s claims. Defendants argue that the qui tam provision
violates Article II of the U.S. Constitution by infringing on the authority vested solely in
the executive branch under the Appointments Clause. (Mot. at 33.) According to
Defendants, the Supreme Court in Seila Law LLC v. Consumer Financial Protection
Bureau, 591 U.S. 197 (2020) and United States ex rel. Polansky v. Executive Health
Resources, Inc., 599 U.S. 419 (2023) cast doubt upon the Ninth Circuit’s holding in U.S.
ex rel. Kelly v. Boeing Co., 9 F.3d 743 (9th Cir. 1993) that the qui tam provision did not
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 4 of 20

- 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
violate Article II of the Constitution. (Mot. at 34.) Under Defendants’ reading, those
Supreme Court cases held that the right given to relators to bring an action in the name of
the Government under the FCA was a “quintessentially executive power” that is vested in
the executive branch alone under the Appointments Clause. (Mot. at 34.) Defendants point
out that one district court in Florida relied on Seila Law and Polansky to determine that the
FCA’s qui tam provision is unconstitutional in United States ex rel. Zafirov v. Florida
Medical Associates, LLC, 751 F. Supp. 3d 1293 (M.D. Fla. 2024). (Mot. at 34–35.)
Both Relator and the Government2 dispute Defendants’ characterization of the
current landscape of binding authority. Relator argues that neither Seila Law nor Polansky
expressly overruled Kelly. Relator cites two cases from this District that rejected the exact
argument made by Defendants here. See United States ex rel. Stenson v. Radiology Ltd.,
LLC, No. CV-19-00306-TUC-JGZ, 2025 WL 1785266, at *2 (D. Ariz. June 27, 2025);
United States ex rel. Thomas v. Care, No. CV-22-00512-PHX-JAT, 2023 WL 7413669, at
*4 (D. Ariz. Nov. 9, 2023). In addition to those two cases, the Government cites an
overwhelming number of district and Circuit cases across the country that have similarly
dispensed with the same constitutional challenge. (Gov’t Resp. at 1–2.) The Government
also sets forth detailed and substantive arguments that the qui tam provision of the FCA
does not violate the Appointments Clause. (Gov’t Resp. at 3–11.)
Defendants respond to no part of the Government’s substantive argument or attempt
to distinguish any of the dozens of cases cited in the responsive papers. Defendants’ only
argument in reply is that this Court should “follow the studied decision in [Zafirov].” This
argument is hollow and unpersuasive. First, Defendants do not explain how Seila Law or
Polansky could be read to invalidate the entire qui tam provision of the FCA. In Seila Law,
the Supreme Court held that the Consumer Financial Protection Bureau’s leadership
structure, which at the time was led by a single director removable for only limited reasons,
violated Article II and the separation of powers. 591 U.S. at 213. In Polansky, the Supreme
2 The Government’s responsive brief only addresses Defendants’ constitutional challenge
to the FCA and “takes no position on Defendants’ other arguments” for dismissal. (Gov’t
Resp. at 1 n.1.)
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 5 of 20

- 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Court held that the Government may dismiss the FCA action at any time after it intervenes
and such voluntary dismissal is evaluated under Federal Rule of Civil Procedure 41. 599
U.S. at 428–29. To extend these holdings would require several leaps in reasoning not
made by Defendants here. Second, the district court’s opinion in Zafirov does not convince
this Court that Seila Law and Polansky announce case law that is so incongruent with Kelly
as to implicitly overrule it. Ultimately, this Court finds no reason to disregard binding Ninth
Circuit authority and the nationwide circuit trend on the account of “[a] single, outlier trial-
court decision that whistles past precedent binding upon this Court.” United States v.
Chattanooga Hamilton Cnty. Hosp. Auth., No. 1:21-CV-84, 2024 WL 4784372, at *3 (E.D.
Tenn. Nov. 7, 2024) (rejecting the constitutional challenge to the FCA qui tam provision
and declining to follow Zafirov); see Hart v. Massanari, 266 F.3d 1155, 1170 (9th Cir.
2001) (“Binding authority must be followed unless and until overruled by a body
competent to do so.”).
III. PERSONAL JURISDICTION
The Court next considers the Defendants’ penultimate argument for partial
dismissal of claims against several non-resident entities for want of personal jurisdiction.
A. Legal Standard
For a federal court to adjudicate a matter, it must have jurisdiction over the parties.
Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701 (1982).
There are two types of personal jurisdiction: general and specific. General jurisdiction is
not at issue here. Rather, Defendants argue that the Court lacks specific personal
jurisdiction over Capitol Breathe Free Sinus and Allergy Centers, LLC, Breathe Free of
Florida, LLC, Breathe Free Sinus & Allergy Centers of Florida, LLC; Dallas Breathe Free,
and SoCal Breathe Free Sinus & Allergy Centers MSO, LLC, all non-residents of the State
of Arizona. (Mot. at 31.)
To exercise specific personal jurisdiction over a non-resident defendant, due process
requires that the defendant have sufficient minimum contacts with the forum so that
“maintenance of the suit does not offend traditional notions of fair play and substantial
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 6 of 20

- 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation modified). The
traditional “minimum contacts test” focuses “on the relationship among the defendant, the
forum, and the litigation.” Briskin v. Shopify, Inc., 135 F.4th 739, 750 (9th Cir. 2025).
Federal Rule of Civil Procedure 4(k)(2), known as the “federal long-arm statute,”
establishes specific personal jurisdiction over a defendant if the following three conditions
are met: (1) the claims arise under federal law; (2) the defendant is not subject to
jurisdiction in any state’s courts of general jurisdiction; and (3) exercising jurisdiction
comports with due process. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1159 (9th Cir.
2006); see Fed. R. Civ. P. 4(k)(2). The due process analysis under Rule 4(k)(2) “is nearly
identical to traditional personal jurisdiction analysis but rather than considering contacts
between the defendant and the forum state, we consider contacts with the nation as a
whole.” Ayla, LLC v. Alya Skin Pty. Ltd., 11 F.4th 972, 979 (9th Cir. 2021) (citation
modified).
B. Analysis
In pleading that this Court has personal jurisdiction over all Defendants, Relator
cites to 31 U.S.C. § 3732(a) that states:
Any action under section 3730 may be brought in any judicial
district in which the defendant or, in the case of multiple
defendants, any one defendant can be found, resides, transacts
business, or in which any act proscribed by section 3729
occurred. A summons as required by the Federal Rules of Civil
Procedure shall be issued by the appropriate district court and
served at any place within or outside the United States.
Relator contends that § 3732(a) allows nationwide service of process, which means that
the relevant forum to which the minimum contacts test is applied is the nation as a whole,
not just the State of Arizona. (Rel. Resp. at 25–26.)
Defendants argue that § 3732(a) relates to venue, not jurisdiction, so Relator must
meet the traditional specific minimum contacts test with the relevant forum being the State
of Arizona. (Mot. at 32.) In support of their position, Defendants rely on United States v.
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 7 of 20

- 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Universal Fruits & Vegetables Corp., 370 F.3d 829 (9th Cir. 2004). There, the Government
brought an FCA claim against the defendant company for avoiding customs duties. Id. at
831. The narrow question presented to the Ninth Circuit was whether the district court or
the Court of International Trade had subject-matter jurisdiction over the FCA claim. Id. In
answering that question, the Ninth Circuit was persuaded by U.S. ex rel. Thistlethwaite v.
Dowty Woodville Polymer, Ltd., in which the Second Circuit held that § 3732(a) “does not
govern subject matter jurisdiction.” 110 F.3d 861, 863 (2d Cir. 1997). Neither case dealt
with personal jurisdiction at all.
There is only one other Ninth Circuit case discussing § 3732(a) in the context of
personal jurisdiction. In an unpublished opinion, the Ninth Circuit “assess[ed] [the
defendant’s] conduct on a nationwide basis because 31 U.S.C. § 3732(a) authorizes
nationwide service of process.” Silbersher v. Valeant Pharms. Int’l, Inc., No. 20-16256,
2023 WL 4946736, at *1 (9th Cir. Aug. 3, 2023). The court quoted Go-Video, Inc. v. Akai
Electric Co. Ltd., which held that the “national contacts analysis more often finds its basis
. . . in the concrete language of a statute under which Congress has, as it is unquestionably
empowered to, authorized nationwide service of process.” 885 F.2d 1406, 1416 (9th Cir.
1989) (citations and quotation marks omitted). Therefore, “when a statute authorizes
nationwide service of process, national contacts analysis is appropriate.” Id.
Silbersher acknowledges that § 3732(a) authorizes nationwide service of process,
and that statutory feature means that a nationwide contacts analysis is appropriate under
Go-Video. While not binding authority, the Court finds Silbersher persuasive in light of
the express language of § 3732(a), which states that “[a] summons . . . shall be issued by
the appropriate district court and served at any place within or outside the United States.”
(emphasis added). This language is expansive and like other federal statutes known to
authorize nationwide service of process. See 7 U.S.C. § 25(c) (“Process in such action may
be served in any judicial district of which the defendant is an inhabitant or wherever the
defendant may be found.”); 15 U.S.C. § 22 (“[A]ll process in such cases may be served in
the district of which it is an inhabitant, or wherever it may be found.”); Cox v.
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 8 of 20

- 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
CoinMarketCap OPCO, LLC, 112 F.4th 822, 833 (9th Cir. 2024), cert. denied, 145 S. Ct.
2846 (2025) (holding that 7 U.S.C. § 25 authorizes nationwide service of process and
applying the nationwide contacts test); Action Embroidery Corp. v. Atl. Embroidery, Inc.,
368 F.3d 1174, 1180 (9th Cir. 2004) (same as to 15 U.S.C. § 22).
In reply, Defendants argue that many district courts in this Circuit have required a
relator to plead sufficient minimum contacts between the defendant and the forum state
rather than using a nationwide contacts test. (Reply at 14–15 (collecting cases).) To
Defendants’ credit, the Court acknowledges that, in this Circuit, “[d]istrict courts are split
whether [§ 3732(a)] authorizes personal jurisdiction based on a defendant’s nationwide
contacts rather than contacts with the district where the action is pending.” Southard v.
Kipper Tool Co., No. 3:15-CV-03621-JSC, 2023 WL 6959145, at *2 (N.D. Cal. Oct. 19,
2023) (collecting cases). Still, all the district court cases cited by Defendants are outside
this District and unreported, or if they are reported they do not acknowledge Go-Video’s
holding that nationwide contacts analysis is appropriate where, as here, the statute
authorizes nationwide service of process. (Mot. at 31–32; Reply at 15.)
In light of Go-Video and the express language of § 3732(a) that authorizes
nationwide service of process, the Court agrees with Relator that the nationwide contacts
test is appropriate. Defendants do not challenge any of the three conditions permitting the
nationwide contacts test established by Pebble Beach Co. discussed supra, or that they
each have sufficient minimum contacts with the nation as a whole. Accordingly, the Court
declines to dismiss Relator’s claims for want of personal jurisdiction.
IV. RULES 12(B)(6) AND 9(B)
Defendants’ only remaining argument for dismissal turns on whether Relator
sufficiently states her claims under both Rule 12(b)(6) and Rule 9(b).
A. Legal Standard
Rule 12(b)(6) is designed to “test[] the legal sufficiency of a claim.” Navarro v.
Block, 250 F.3d 729, 732 (9th Cir. 2001). A dismissal under Rule 12(b)(6) for failure to
state a claim can be based on either: (1) the lack of a cognizable legal theory; or (2) the
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 9 of 20

- 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
absence of sufficient factual allegations to support a cognizable legal theory. Balistreri v.
Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). When analyzing a complaint for
failure to state a claim, the well-pled factual allegations are taken as true and construed in
the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067
(9th Cir. 2009). A plaintiff must allege “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has
facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). “The plausibility
standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer
possibility that a defendant has acted unlawfully.” Id.
“To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a
complaint generally must satisfy only the minimal notice pleading requirements of Rule
8(a)(2).” Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). However, when as here “a
complaint includes allegations of fraud, Federal Rule of Civil Procedure 9(b) requires more
specificity including an account of the time, place, and specific content of the false
representations as well as the identities of the parties to the misrepresentations.” Swartz v.
KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007) (citation modified). “To comply with Rule
9(b), allegations of fraud must be specific enough to give defendants notice of the particular
misconduct which is alleged to constitute the fraud charged so that they can defend against
the charge and not just deny that they have done anything wrong.” Bly-Magee v. California,
236 F.3d 1014, 1019 (9th Cir. 2001) (citation modified). Put simply, Rule 9(b) requires
“the who, what, when, where, and how of the misconduct charged.” Ebeid ex rel. U.S. v.
Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (citation omitted).
B. Analysis
The three subsections giving rise to Relator’s FCA claims make “any person who—
(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment
or approval; (B) knowingly makes, uses, or causes to be made or used, a false record or
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 10 of 20

- 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
statement material to a false or fraudulent claim; [or] (C) conspires to commit a violation
of subparagraph (A) [or] (B) . . . liable to the United States Government.” 31 U.S.C. §
3729(a)(1). Relator’s FCA claims each present a “false certification” theory of liability. In
“[f]alse certification cases . . . parties avail themselves of benefits of some type . . . through
false statements which create eligibility that otherwise would not exist.” U.S. ex rel.
Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir. 1996).
i. Counts One and Two
To sufficiently plead a false certification claim under subsections
§ 3729(a)(1)(A)-(B) of the FCA, “[a] plaintiff must allege: (1) a false statement or
fraudulent course of conduct, (2) made with the scienter, (3) that was material, causing, (4)
the government to pay out money or forfeit moneys due.” Winter ex rel. United States v.
Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108, 1114 (9th Cir. 2020). “[T]he Act
attaches liability, not to underlying fraudulent activity, but to the ‘claim for payment.’ What
constitutes the FCA offense is the knowing presentation of a claim that is either fraudulent
or simply false.” Hopper, 91 F.3d at 1266 (citation modified). Rule 9(b) requires such
allegations to be particular and “provide a reasonable basis to infer that (1) the defendant
explicitly undertook to comply with a law, rule or regulation that is implicated in
submitting a claim for payment and that (2) claims were submitted (3) even though the
defendant was not in compliance with that law, rule or regulation.” Ebeid, 616 F.3d at 998.
To do so, a plaintiff may either plead a “representative example” of the fraud or “particular
details of a scheme to submit false claims paired with reliable indicia that lead to a strong
inference that claims were actually submitted.” Id. at 998–99.
Defendants argue that Relator fails to plead each of the four elements that make up
an FCA claim under the heightened pleading standard imposed by Rule 9(b). The Court
evaluates each element in turn.
a. Falsity or Fraudulent Course of Conduct
In the Ninth Circuit, courts do not require “a plaintiff to plead an ‘objective
falsehood’” to state a claim under the FCA. Winter, 953 F.3d at 1119. As relevant here,
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 11 of 20

- 12 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
“[b]ecause medical necessity is a condition of payment, every Medicare claim includes an
express or implied certification that treatment was medically necessary. Claims for
unnecessary treatment are false claims.” Id. Accordingly, a plaintiff may plead falsity by
alleging facts showing that a physician’s certification was either: (1) based on an opinion
that was not honestly held; or (2) implies facts that do not exist. Id.
First, Defendants contend that Relator does not sufficiently plead facts to suggest
that Defendants’ physicians did not honestly believe that balloon sinuplasties were
medically necessary for the patients that received them. (Mot. at 7.) But Relator alleges
that Defendants relegated patient visits to physician assistants, that physicians were
removed from the process of developing proper treatment plans for patients, and that
physicians’ signatures certifying medical necessity were forged. Under this theory, the
Court can reasonably infer that Defendants’ physicians did not honestly hold whatever
opinions were contained in patient records or the claim because they did not form those
opinions.
Second, Defendants assert that Relator failed to allege that the certifications of
medical necessity implied facts that did not exist. (Mot. at 16–17.) As Relator points out,
allegations of that sort are abundant in the First Amended Complaint, and the Court can
easily infer from the facts alleged that the certifications did imply nonexistent facts.
Defendants contend that Relator fails to assert any basis in law, regulation,
governmental guidance, or medical consensus to support her allegations “that sinuplasty
patients [must] meet certain alleged ‘prerequisite requirements,’ such as being treated with
antibiotics in the past year” before a sinuplasty would be deemed “medically necessary.”
(Mot. at 17.) But Relator references several parts of the Code of Federal Regulations,
United States Code, and Government Program manuals in pleading her allegations
regarding billing requirements. (FAC ¶¶ 26–40.) Relator also alleges when a balloon
sinuplasty is a necessary procedure and when it is not. (FAC ¶ 46.) Defendants point out
no particular law or authority that contradicts the legal basis for Relator’s allegations.3
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
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 12 of 20

- 13 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Defendants lastly contend that Relator fails to assert that the medical records as
edited by administrative staff “actually influenced physician decision-making.” (Mot. at
19.) Whether a physician was influenced by the records is more relevant to whether the
physician honestly believed that the procedure was necessary. In any event, though, the
Court can infer from Relator’s allegations that physicians had little to no involvement in
patient treatment, so whether they would have been influenced by the falsified records is
inapplicable to Relator’s theory of the case. Rather, the claims here are clearly based on
allegations showing that administrative staff injected nonexistent facts into patient records
and forged a physician’s signature formalizing those records all unbeknownst to the
physician so that NBF or its affiliates could be paid for balloon sinuplasty claims. At this
stage, these allegations sufficiently state that the claims submitted by Defendants to the
Government were false.
b. Scienter
Unlike the other elements of an FCA claim, “scienter need not be pleaded with
particularity, but may be alleged generally.” Winter, 953 F.3d at 1122 (citations omitted).
“A complaint therefore must set out sufficient factual matter from which a defendant’s
knowledge of a fraud might reasonably be inferred” but need not reach the pleading
standard set forth in Rule 9(b). United States ex rel. Anita Silingo v. WellPoint, Inc., 904
F.3d 667, 679–80 (9th Cir. 2018). Facts supporting that a defendant had “either actual
knowledge, deliberate ignorance, or recklessness will suffice.” United States ex rel. Schutte
v. SuperValu Inc., 598 U.S. 739, 750 (2023). “First, the term ‘actual knowledge’ refers to
whether a person is ‘aware of’ information. Second, the term ‘deliberate ignorance’
encompasses defendants who are aware of a substantial risk that their statements are false
but intentionally avoid taking steps to confirm the statement’s truth or falsity. And third,
the term ‘reckless disregard’ similarly captures defendants who are conscious of a
conditions based on factors that may vary from case to case and from physician to
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
allegations is that, at least for some patients receiving care through NBF and its affiliates,
balloon sinuplasties are unnecessary.
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 13 of 20

- 14 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
substantial and unjustifiable risk that their claims are false, but submit the claims anyway.”
Id. at 751.
Defendants argue that Relator fails to plead facts suggesting that Defendants
submitted false claims with the intent to defraud or facts supporting a “strong inference”
of that intent. But the cases cited by Defendants for this proposition are not within the Ninth
Circuit, and binding authority here states that, “unlike in common law fraud claims, a
plaintiff need not prove a ‘specific intent to defraud’ under the FCA.” Winter, 953 F.3d at
1122. The Court declines to impose a harsher standard than what is required by Winter.
Here, Relator sufficiently pleads that Defendants were, at minimum, conscious of a
substantial and unjustifiable risk that the claims they submitted for balloon sinuplasties
were false but submitted them anyway. First, NFB and affiliates trained and instructed staff
to “convince as many patients as possible . . . to undergo a balloon-sinuplasty procedure
without any consideration of medical necessity.” (FAC ¶ 45.) At the direction of NFB,
affiliates set quotas for scheduling first-time patients for balloon sinuplasties regardless of
the patient’s medical complaints. (FAC ¶ 52.) The healthcare professionals who exceeded
the NFB executives’ expectations were rewarded (FAC ¶ 52), while those who failed to
meet or questioned those expectations were scrutinized, punished, or in one instance fired
(FAC ¶¶ 52, 91, 93). These facts suggest that Defendants motivated their employees to
submit claims for ballon sinuplasties even if they were unnecessary, thereby creating a
substantial and unjustifiable risk that at least some of the claims would be false.
Second, NFB and its affiliates maintained a policy that healthcare professionals
would keep a patient’s medical records “open” and unsigned so that administrative staff
could edit and formalize them without giving healthcare professionals the opportunity to
review the edits. (FAC ¶¶ 60, 64.) In other words, Defendants took active steps to screen
out healthcare professionals capable of vetting that documentation for accuracy so that the
edits containing false information would be preserved. This suggests that Defendants were
aware or conscious that at least some of the records that were submitted were false.
. . .
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 14 of 20

- 15 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
These facts, when taken as true, show that Defendants were “conscious of a
substantial and unjustifiable risk that their claims are false.” Schutte, 598 U.S. at 751; see
also United States ex rel. Campie v. Gilead Scis., Inc., 862 F.3d 890, 904 (9th Cir. 2017)
(finding allegations that a defendant established practices and took actions to hide fraud,
such as altering documents, were sufficient to plead scienter).
c. Materiality
“For a false statement to be material, a plaintiff must plausibly allege that the
statutory violations are ‘so central’ to the claims that the government ‘would not have paid
these claims had it known of these violations.’” Winter, 953 F.3d at 1121. In the Ninth
Circuit, courts deem “a false certification of medical necessity” as material. Id. at 1122.
“The medical necessity requirement is not an insignificant regulatory or contractual
violation. Congress prohibited payment for treatment not reasonable and necessary for the
diagnosis or treatment of illness or injury.” Id. (citation modified).
Here, Relator pleads that the claims submitted to the Government contained a false
express or implied certification that balloon sinuplasties were medically necessary and that
the Government would not have paid those claims absent the false certification. (FAC
¶ 65.) Under the Ninth Circuit case law, these allegations meet the materiality element of
a FCA claim. Winter, 953 F.3d at 1122.
d. Causation
“The causation element under 31 U.S.C. § 3729 is satisfied if a person ‘presents, or
causes to be presented,’ a false or fraudulent claim to the United States for payment or
approval . . . Thus, a person need not be the one who actually submitted the claim forms in
order to be liable.” United States v. Mackby, 261 F.3d 821, 827 (9th Cir. 2001) (citation
modified). District courts in the Ninth Circuit “use general tort law principles to analyze
the FCA’s causation element,” and “[u]nder those principles, a defendant may be liable for
false claims that others submit if its conduct was a substantial factor in bringing about the
false claims, and such claims were a foreseeable and natural consequence of its conduct.”
United States ex rel. Puhl v. Terumo BCT, No. CV 17-8446 PSG (JPRX), 2019 WL
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 15 of 20

- 16 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
6954317, at *4 (C.D. Cal. Sept. 12, 2019). It is not enough to describe conduct that is
merely unsavory, Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047,
1058 (9th Cir. 2011), or “to describe a private scheme in detail but then to allege simply
and without any stated reason for [the] belief that claims requesting illegal payments must
have been submitted,” United States v. Kitsap Physicians Serv., 314 F.3d 995, 1002 (9th
Cir. 2002) (citation omitted). Rather, a plaintiff “must show an actual false claim for
payment being made to the Government.” Id. (emphasis and citation omitted).
Defendants argue that Relator fails to plead that Defendants engaged in anything
more than “unsavory conduct.” (Mot. at 24.) The Court disagrees. Relator sufficiently
alleges the Government requires a claim submitted for payment to be medically necessary
and supported by sufficient documentation (FAC ¶¶ 29–40), sets forth specific examples
of medical documentation that were falsified to meet this standard for payment (FAC
¶¶ 80–89), and alleges that those claims were submitted anyway (id.). If true, this conduct
was not merely unsavory; it was fraudulent.
As for whether Relator sufficiently pleads that claims were actually submitted to the
Government for payment, the Court can infer from the alleged facts that they were. Relator
pleads a detailed scheme to encourage healthcare professionals to schedule unnecessary
balloon sinuplasties and to falsify supporting medical documentation formalized by forged
signatures of healthcare professionals. Each month between 2022 and 2023, one to forty
patients at NBF clinics who were insured by Government Programs received balloon
sinuplasties. (FAC ¶ 66.) This allegation supports the inference that, under the detailed
scheme, some portion of those procedures were unnecessary. At least two of Relator’s own
patients, L.P. and R.S., were insured by Government programs and Relator observed that
their medical records were altered by administrative staff. (FAC ¶¶ 84–85.) According to
Relator, L.P. and R.S. ultimately received balloon sinuplasties, and the Court can infer that
Trinity ENT submitted the edited records to support claims for payment for those two
balloon sinuplasties to the Government. The facts alleging the detailed scheme adopted by
NBF and its affiliates and the representative examples of L.P. and R.S., when taken
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 16 of 20

- 17 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
together and presumed to be true at this stage, are sufficient to allege that NBF and its
affiliates caused or were a substantial factor in bringing about the submission of false
claims to the Government.
Defendants’ citation to an unpublished Northern District of California case does not
change the Court’s conclusion here. In United States ex rel. Armstrong-Young v. Carelink
Hospice Services, Inc., a social worker brought FCA claims against her employer for
allegedly submitting false claims for payment to Medicare for patients who were ineligible
for the billed services. No. 15-cv-04095, 2018 WL 4773111, at *1 (N.D. Cal. Oct. 1, 2018).
There, the social worker generally alleged that she believed claims were submitted but did
not plead any particular facts or reasonable indicia of facts that would allow the court to
“infer that claims had been submitted on behalf of any particular patient.” Id. at *3.
But Relator does identify specific patients she saw at Trinity ENT who were insured
by Government programs, had their medical records altered from the time Relator saw
them, and ultimately received balloon sinuplasties. There are also sufficient and reliable
indicia to suggest that at least a portion of the one to forty balloon sinuplasties eventually
billed to Government Programs were unnecessary due to the specific and detailed scheme
enforced by NBF executives and affiliates.
e. Group Pleading
“Rule 9(b) does not allow a complaint to merely lump multiple defendants together
but requires plaintiffs to differentiate their allegations when suing more than one defendant
and inform each defendant separately of the allegations surrounding his alleged
participation in the fraud.” Swartz, 476 F.3d at 764–65 (citation modified). “In the context
of a fraud suit involving multiple defendants, a plaintiff must, at a minimum, identify the
role of each defendant in the alleged fraudulent scheme.” Id. at 765 (citation modified).
“There is no flaw in a pleading [] where collective allegations are used to describe the
actions of multiple defendants who are alleged to have engaged in precisely the same
conduct,” so long as there are “particular details of the scheme as applied to defendants [].”
United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1184 (9th Cir. 2016).
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 17 of 20

- 18 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Defendants argue that Relator’s claims fail under Rule 9(b) for “grouping of
defendants into categories.” (Mot. at 23.) According to Defendants, the lack of any
substantive allegations about Arizona Breathe Free, Breathe Free of Florida, LLC, Breathe
Free Sinus & Allergy Centers of Florida, LLC, SoCal Breathe Free, or Dallas Breathe Free
requires the FCA claims to be dismissed against them. (Mot. at 27.)
Relator argues that she identified the roles of each above-named defendant as
affiliates of NBF that carry out the scheme devised by NBF. (Rel. Resp. at 16–17.) Relator
points to three categories of allegations to support that her pleading meets the Rule 9(b)
standard. First, Relator alleges that all healthcare providers and administrative staff who
work for NBF affiliates attend the same training that Relator attended where she was
trained to convince patients to undergo balloon sinuplasties. (Rel. Resp. at 16–17.) Second,
Relator alleges that NBF and its affiliates incentivize their staff to book as many
sinuplasties as possible in accordance with NBF policy. (Rel. Resp. at 17.) Third, Relator
alleges in great detail that NBF and its affiliates implement administrative teams to edit
and sign patient records before submitting those records in support of claims for balloon
sinuplasties. (Rel. Resp. at 17.) These events occurred at least since 2018 and led NBF and
its affiliates to perform between one and forty balloon sinuplasties per month between 2022
and 2023 on patients insured by Government Programs. (FAC ¶ 66.) Relator’s allegations
provide all named Defendants sufficient notice about the training, policies, type of records,
type of procedure, and type of insurance claims such that they can investigate and prepare
accordingly. This amounts to “the who, what, when, where, and how of the misconduct
charged” as required by Rule 9(b). Ebeid, 616 F.3d at 998 (citation omitted).
ii. Count Three
“To maintain a claim for conspiracy under 31 U.S.C. § 3729(a)(3), a plaintiff must
show (1) that the defendant conspired with one or more persons to get a false or fraudulent
claim paid by the United States; (2) that one or more of the conspirators performed any act
to effect the object of the conspiracy; and (3) that the United States suffered damages as a
result of the false or fraudulent claim.” U.S. ex rel. Woodruff v. Hawaii Pac. Health, 560
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 18 of 20

- 19 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
F. Supp. 2d 988, 998 (D. Haw. 2008), aff’d, 409 F. App’x 133 (9th Cir. 2010) (citation
modified). “It is not necessary to show that the conspirators intended the false record or
statement to be presented directly to the Government, but it must be established that they
agreed that the false record or statement would have a material effect on the Government’s
decision to pay the false or fraudulent claim.” Allison Engine Co. v. U.S. ex rel. Sanders,
553 U.S. 662, 673 (2008).
Defendants argue the conspiracy claim must fail because the only factual allegations
that support a conspiracy relate to an agreement made among the three NBF executives but
do not detail any agreement between NBF and its affiliates. (Mot. at 29–30.) Relator
responds that her conspiracy theory is one of “a classic hub-and-spoke . . . with Khanna,
Ghanem, and Borane serving as the hub and each of the [affiliates] serving as the spokes.”
(Rel. Resp. at 21.) Under this theory, Relator argues that Defendants “shared knowledge
that all NBF-affiliated clinics are operating in the same fashion” and shared a “goal of
defrauding the government programs” through coordinated actions, training and
incentives. (Rel. Resp. at 21.)
The theory of conspiracy advanced by Relator has been recognized in the Ninth
Circuit as “a ‘wheel conspiracy’ [that] involves ‘a single member or group (the ‘hub’)
separately agreeing with two or more other members or groups (the ‘spokes’).” Anita
Silingo, 904 F.3d at 678. “[I]f a fraudulent scheme resembles a wheel conspiracy, then any
parallel actions of the ‘spokes’ can be addressed by collective allegations.” Id. Under this
theory, Relator alleges in detail that NBF developed a scheme to induce patients to undergo
balloon sinuplasties, to submit a claim for payment to Government programs for those
procedures, and to create false records to support those claims. (See FAC ¶¶ 48–61.) That
each affiliate joined the conspiracy by adopting those same fraudulent policies, procedures,
and training designed to get false claims paid by the Government is sufficient to plead an
FCA conspiracy claim.
Next, Defendants argue that the conspiracy claim fails as to the NBF and its
executives under the intracorporate conspiracy doctrine. (Mot. at 30–31; Reply at 14.) “As
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 19 of 20

- 20 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
a practical matter, a corporation cannot conspire with its own employees acting within the
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
Rocketdyne Holdings, Inc., 381 F. Supp. 3d 1240, 1249 (E.D. Cal. 2019) (same).
In response, Relator does not attempt to distinguish Khanna, Ghanem, and Borane
from NBF. Even if she had, Relator’s First Amended Complaint suggests that those
individual defendants are agents of NBF. (FAC ¶¶ 18–20.) Accordingly, the Court
dismisses the conspiracy claim only as to against Khanna, Ghanem, and Borane, but not as
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
Khanna, Ghanem, and Borane if this defect can be cured by additional facts. Lopez v. Smith,
203 F.3d 1122, 1130 (9th Cir. 2000).
IT IS ORDERED granting in part and denying in part Defendants’ Motion to
Dismiss Amended Complaint (Doc. 38).
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
entirety of Counts One and Two may proceed.
Dated this 4th day of June, 2026.
Honorable John J. Tuchi
United States District Judge
Case 2:23-cv-02009-JJT Document 55 Filed 06/04/26 Page 20 of 20