Essilor Reaches $22 Million Settlement and Five-Year CIA for Alleged False Claims Act Violations

Earlier this year, Essilor International, Essilor of America Inc., Essilor Laboratories of America Inc., and Essilor Instruments USA (“Essilor”) reached a $22 million settlement with the Department of Justice over allegations that the company violated the False Claims Act by causing claims to be submitted to Medicare and Medicaid that resulted from violations of the Anti-Kickback Statute. In addition to the settlement, Essilor entered into a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS OIG) to “establish policies and practices so it complies with the Anti-Kickback Statute moving forward.”

Essilor manufactures, markets, and distributes optical lenses and the equipment used to produce optical lenses. The settlement notes that “in most cases…providers…advise those patients on frames and certain types of lenses and lens coatings, as well as help fit the eyeglasses properly.”

The civil settlement resolves claims brought under the qui tam provision of the False Claims Act by three relators, all former Essilor district sale managers. The United States alleged that between January 1, 2011 and December 31, 2016, Essilor knowingly and willfully offered and/or paid remuneration to eye care providers to entice them to order and purchase Essilor products for their patients (including Medicare and Medicaid beneficiaries) in violation of the Anti-Kickback Statute. The United States specifically alleged that Essilor used four “Threshold Programs,” Strategic Alliance, Practice Builder Loyalty, Practice Builder Elite, and Growth Financing, to knowingly and willfully either offer or pay unlawful remuneration to Providers to induce them to order and purchase Essilor products.

Essilor’s $22 million settlement is broken down in a $16,433,345.01 federal settlement paid to the United States (of which $8,216,672.50 is restitution) and a $4,566,654.99 to the Medicaid participating states. The $4.57 million State Settlement Amount is the result of separate settlement agreements with certain states.

As is often the case with these types of settlements, the settlement agreement does not involve an admission of liability by Essilor. Essilor denies the allegations in the civil qui tam actions as well as the United States allegations included in the settlement agreement.

Corporate Integrity Agreement

In addition to the settlement, Essilor entered into a five-year CIA that requires the company to implement a new written review and approval process to ensure all existing/renewed – and any new – discount arrangements comply with the Anti-Kickback Statute. The CIA also requires that Essilor hire an independent review organization to review its systems, policies, processes, and procedures and ensure that any discounts, rebates, or other price reductions offered to providers comply with the Anti-Kickback Statute.

The CIA also requires, as we often see, that a Compliance Officer be appointed within 90 days of the effective date (the effective date is April 4, 2022). The Compliance Officer is to be a member of senior management and shall report directly to the President of Essilor, and not be subordinate to (or serve in a dual role as) the General Counsel or Chief Financial Officer. Further, the Compliance Officer shall not have any responsibilities that involve acting in any capacity as legal counsel.

In addition to the Compliance Officer, Essilor needs to appoint a Compliance Committee, which must meet at least quarterly and the minutes of those meetings shall be made available to HHS OIG upon request.

The CIA also outlines 17 stipulated penalties of up to $2,500 for each day Essilor fails to comply with certain sections of the CIA, as well as a stipulated penalty of us to $50,000 for each false certification or false statement made to HHS OIG by, or on behalf of, Essilor under the CIA.