Precision Lens, Kickback Scheme, Minnesota 2023

Minnesota Medical Device Company Pays $12 Million to Settle Kickback Scheme

MINNEAPOLIS - 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 civil case, brought under the qui tam provisions of the False Claims Act by Kipp Fesenmaier, alleged that Precision Lens paid kickbacks to doctors 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, including trips to New York City to see a Broadway musical, the College Football National Championship Game in Miami, Florida, and the Masters Tournament in Augusta, Georgia.

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 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. After the United States conducted a review of the defendants’ financial position and ability to satisfy the judgment, the parties entered into a settlement agreement which requires Precision Lens and the estate to immediately pay $12 million to resolve the United States’s claims.

With this resolution, the United States has collected nearly $27 million as a result of the misconduct alleged in this case. 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 case highlights the ongoing problem of kickback schemes in the medical device industry, where companies incentivize doctors to use their products by offering luxury vacations and other perks.

The civil settlement arises from a case brought under the qui tam 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.

Defendant: Precision Lens and the estate of Paul Ehlen

Criminal Charges: Violation of the False Claims Act and the Anti-Kickback Statute

City and State: Minneapolis, Minnesota

Exact Date: February 27, 2023

Sentence or Outcome: Agreed to pay $12 million to settle allegations

Dollar Amounts: $12 million, $43,694,641.71 in fraudulent claims submitted to Medicare, $487,048,705.13 judgment, $216,675,248.55 reduced judgment, $27 million collected by the United States

Source: https://www.justice.gov/usao-mn/pr/precision-lens-agrees-pay-12-million-united-states-kickbacks-doctors-violation-false