A federal civil jury recently returned a verdict against The Cameron-Ehlen Group d/b/a Precision Lens and its majority owner Paul Ehlen for more than $43 million for violations of the False Claims Act and the Anti-Kickback Statute.
In a six-week jury trial in the United States District Court for the District of Minnesota, the United States proved that Precision Lens and Ehlen were jointly liable for kickbacks paid to ophthalmic surgeons to get them to use Precision Lens products in cataract surgeries reimbursed by Medicare. The jury found that the kickbacks caused the submission of 64,575 false claims to Medicare between 2006 and 2015.
The jury found that Precision Lens and Ehlen paid kickbacks in various forms, including travel and entertainment. Some of the trips were to destinations for high-end skiing, golfing, hunting, fishing, and sporting events like the College Football National Championship and the Masters golf tournament. The physicians were often transported to the luxury destinations on private jets. Precision Lens and Ehlen also sold their frequent flyer miles to physician customers at a steep discount, which would allow the physicians to take personal and business trips at a cost well below fair market value.
Additionally, the United States proved that Precision Lens had a fund specifically focused on the kickback scheme, known internally as a secret fund or slush fund. This fund was used to finance some of the physician trips discussed at trial.
Under the False Claims Act, the jury determines single damages (the $43 million discussed above) that are tripled, leading to a potential $129 million verdict based on damages. Additionally, each false claim is subject to a civil penalty ranging from $5,500 to $11,000, bringing total damages and civil penalties to potentially more than $486 million.
The case was initially brought by a whistleblower via the qui tam provisions of the False Claims Act and they will receive a percentage of the amounts awarded at trial. The whistleblower was a former employee and executive of Sightpath Medical, a company partnered with Precision Lens and Ehlen to provide kickbacks. Sightpath reached their own settlement with the United States of $12 million in 2017.
“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,” said Assistant U.S. Attorney Chad Blumenfield. “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.”