Paul Ehlen, Kickback Payments, Minnesota 2023

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MINNEAPOLIS – A local healthcare company agrees to pay $12 million to resolve False Claims Act allegations

Precision Lens and the estate of its former principal, Paul Ehlen, have agreed to pay the United States $12 million to resolve a case involving kickback payments to ophthalmic surgeons in violation of the False Claims Act and the Anti-Kickback Statute. The settlement arises from a federal civil jury verdict in which Precision Lens was found liable for paying kickbacks to physicians to induce their use of Precision Lens products in cataract surgeries reimbursed by Medicare.

The jury found that Precision Lens’s conduct resulted in $43,694,641.71 in fraudulent claims submitted to Medicare. By operation of the statute, the court entered a $487,048,705.13 judgment against the company and its owner, which included treble damages and civil penalties under the False Claims Act. Following post-trial motions, the court reduced the judgment to $216,675,248.55.

The company provided kickbacks to physicians in the form of travel and entertainment, including high-end ski trips, fishing, golfing, hunting, sporting, and entertainment vacations, often at exclusive destinations. For many of the trips, physicians were transported to luxury vacation destinations on private jets. Precision Lens sold frequent flyer miles to its physician customers at a significant discount, enabling the physicians to take personal and business trips at well below fair market value.

The United States previously announced a $12 million settlement of related allegations with Sightpath Medical, Inc. and TLC Vision Corporation 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.

The civil settlement arises from a case brought under the qui tam or whistleblower provisions of the False Claims Act by Kipp Fesenmaier. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of a recovery. The qui tam case is captioned United States of America, et al., ex rel. Fesenmaier v. The Cameron-Ehlen Group, Inc., d/b/a Precision Lens, et al., Case No. 13-cv-3003.

The resolution obtained in this case was the result of a coordinated effort between the U.S. Attorney’s Office for the District of Minnesota, the Office of Inspector General of the U.S. Department of Health and Human Services, and the Federal Bureau of Investigation. Assistant U.S. Attorneys Bahram Samie and Andrew Tweeten represented the government at trial and settlement.