Court enters $487 million judgment against ophthalmology distributor, founder in kickback scheme in violation of False Claims Act

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U.S. District Judge Wilhelmina M. Wright this week affirmed a judgment against Cameron-Ehlen Group Inc and its owner Paul Ehlen in the amount of $487,048,705.

According to a news release from the U.S. Attorney’s Office, District of Minnesota, the group, which does business as Precision Lenses, owed just over $489.5 million in penalties and damages for allegedly providing kickbacks to physicians.

Precision is accused of providing luxury travel, and sports and theater tickets over the course of a decade to ophthalmologists who promised to buy medical supplies from the company, according to the court release. Supplies were used in cataract operations and other procedures covered by Medicare.

Earlier this year, a federal civil jury concluded that the defendants violated the False Claims Act and the Anti-Kickback Statute by paying kickbacks to ophthalmic surgeons to induce their use of the Defendants’ products in cataract surgeries reimbursed by Medicare. Ehlen appealed that decision.

Moreover, the jury found that 64,575 false claims were submitted to Medicare due to the defendants’ conduct, which resulted in $43,694,641.71 in damages to Medicare.

Under the False Claims Act (FCA), a person or entity found to have violated the FCA is liable to the United States Government for a minimum civil penalty of $5,000 per false claim and three times the amount of damages sustained by the Government. In this matter, the amount included $358,445,780 in statutory penalties and an additional $131,083,925.13 in trebled damages, resulting in a total amount of $489,529,705.13, less $2,481,000 in proceeds from a previous settlement with Sightpath Medical.

The court noted in its release that, as proven in the trial, the defendants provided kickbacks to physicians in various forms, including travel and entertainment.

The kickbacks included luxury skiing, golfing, hunting and sporting trips as well as entertainment vacations to luxury destinations. The defendants would fly physicians on a private jet to New York for a Broadway musical or to the NCAA football national championship, the Masters Golf Tournament in Augusta, Georgia.They also sold frequent flyer miles to their physician customers at a steep discount, enabling the physicians to take personal and business trips at well below fair market value.

“This judgment affirms Congress’ intent to hold individuals and companies accountable when they use illegal kickbacks to defraud federal healthcare programs,” Bahram Samie, Deputy Civil Chief for the United States Attorney’s Office for the District of Minnesota, said in the news release.“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 United States also proved that Precision Lens maintained a fund, referred to internally at Precision Lens as a secret fund or slush fund, in furtherance of its kickback scheme. Precision Lens used money from the secret fund to finance multiple physician trips.