Federal jury finds ophthalmology distributor, its owner liable for paying kickbacks in violation of the False Claims Act

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. (Adobe Stock image)

A federal civil jury has returned a verdict in favor of the United States for more than $43 million for violations of the False Claims Act and Anti-Kickback Statute.

According to a U.S. District Court news release, during the six-week jury trial before U.S. District Judge Wilhelmina M. Wright, the United States proved that the defendants the Cameron-Ehlen Group, Inc., which does business as Precision Lens, and its owner Paul Ehlen paid kickbacks to ophthalmic surgeons to induce their use of Defendants’ products in cataract surgeries reimbursed by Medicare.

The jury found that defendants’ kickbacks caused the submission of 64,575 false claims to the Medicare program between 2006-2015.

The prosecution proved Precision Lens and Ehlen provided kickbacks to physicians in various forms, including travel and entertainment. The United States identified multiple examples of trips, including high-end skiing, fishing, golfing, hunting, sporting, and entertainment vacations, often at exclusive destinations. For many of the trips, Precision Lens and Ehlen transported physicians to luxury vacation destinations on private jets.

According to the court documents, these inducements also included trips to New York City to see a Broadway musical, the College Football National Championship Game in Miami, Florida, and the Masters golf tournament in Augusta, Georgia. Precision Lens and Ehlen also sold frequent flyer miles to their physician customers at a significant discount, enabling the physicians to take personal and business trips at well below fair market value.

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.

“The False Claims Act and the Anti-Kickback Statute provide assurance to the United States and Medicare beneficiaries that healthcare decisions are made based on the best interest of the patient and nothing else,” Assistant U.S. Attorney Chad Blumenfield said in a news release. “The jury’s verdict protects the integrity of the Medicare system for patients and those healthcare providers who operate fairly and legally. Companies may not use expensive trips and other items of value to persuade physicians to use their products, and physicians may not accept that remuneration. We thank the jury for its service throughout this lengthy trial.”

The United States previously announced a $12 million settlement of related allegations with Sightpath Medical, Inc. and TLC Vision Corp. and their former CEO, James Tiffany. Dr. Jitendra Swarup also resolved claims that he had accepted kickbacks in a settlement agreement of more than $2.9 million.

This civil lawsuit was originally brought by a Relator, or whistleblower, under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government for false claims and to share in any recovery. The government often relies on whistleblowers to bring fraud schemes to light that might otherwise go undetected. The whistleblower in this matter, Kipp Fesenmaier, will receive a percentage of the amounts awarded at trial.

The case was handled by the Civil Division of the U.S. Attorney’s Office for the District of Minnesota, including AUSAs Chad Blumenfield, Bahram Samie, and Andy Tweeten and paralegals Darcie Boschee and Laura Kolars. The case was investigated with assistance from the Office of Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation.