A U.S. District Judge entered a judgment against Precision Lens and its owner, Paul Ehlen, for more than $487 million in a kickback case.
Judge Wilhelmina M. Wright’s decision follows a verdict handed down by a federal jury in Minnesota earlier this year. The jury concluded that the defendants violated the False Claims Act and the Anti-Kickback Statute. Precision Lens and Ehlen faced allegations of paying kickbacks to ophthalmic surgeons to induce the use of their products in cataract surgeries reimbursed by Medicare.
The jury found that the defendants submitted 64,575 false claims to Medicare, resulting in $43.7 million in damages to Medicare.
Under the False Claims Act, the minimum civil penalty totals $5,000 per false claim and three times the amount of damages sustained by the government, according to a U.S. Dept. of Justice news release. In this matter, that amounts to more than $358 million in statutory penalties and an additional $131 million in trebled damages. That brings the penalty to $489.5 million, less $2.5 million in proceeds from a previous settlement with Sightpath Medical.
About the Precision Lens kickback verdict
DOJ said that, as proven at trial, the defendants provided kickbacks to physicians in various forms, including travel and entertainment. The government identified examples of trips, such as high-end skiing, fishing, golfing, hunting, sporting and entertainment. These often took place at exclusive destinations, DOJ said. Many trips included transport by private jet.
The government said the trips included activities such as a Broadway musical in New York City and the NCAA Football National Championship Game in Miami, as well as the Masters golf tournament in Augusta, Georgia. Defendants also sold frequent flyer miles to physician customers at a significant discount, DOJ noted.
“This judgment affirms Congress’ intent to hold individuals and companies accountable when they use illegal kickbacks to defraud federal healthcare programs,” said Bahram Samie, deputy civil chief for the U.S. Attorney’s Office for the District of Minnesota. “Medicare beneficiaries are entitled to know with certainty that their physician’s decision-making has not been compromised by a private flight, expensive ski trip, or any other unlawful inducement. This office is committed to investigating misconduct and recovering funds unlawfully obtained from federal healthcare programs.”
The government also proved that Precision Lens maintained a fund to further its kickback scheme, DOJ said. Precision Lens referred to the fund internally as a secret fund or slush fund, using the money to finance physician trips.
DOJ previously announced a $12 million settlement for related allegations with Sightpath Medical and TLC Vision Corporation. Dr. Jitendra Swarup also resolved claims that he accepted kickbacks in an agreement of more than $2.9 million.
A whistleblower originally brought the civil lawsuit under the qui tam provisions of the FCA. That whistleblower, Kipp Fesenmaier, received a percentage of the amounts awarded at trial.