Another Huge Anti-Kickback Statute Verdict – Up to $848 Million under the False Claims Act

A federal jury in February in the District of Minnesota found the Cameron-Ehlen Group, d/b/a Precision Lens, and its founder guilty of violating the False Claims Act (FCA) and Federal Anti-Kickback Statute (AKS) between 2006 and 2015. This was due to their practice of paying kickbacks to ophthalmic surgeons to induce them to purchase and use Precision Lens’ products. This case underscores the need for whistleblowers to step forward and disclose practices in which health care entities are given incentives to use a particular product. The whistleblowers in this case stand to receive a whistleblower award in excess of $100 million.

According to the complaint, Precision Lens, a distributor of medical devices including cataract surgery products took physicians on high-end skiing, fishing, golfing, hunting, sporting, and entertainment vacations to entice them to purchase and use their products in violation of the AKS. Additionally, the Defendants sold frequent flyer miles to physicians at a significant discount and flew them on private jets to lavish locations. To fund these trips, Precision Lens allegedly created a “slush fund” used to hide over $100,000 in “marketing rebates.”

As with other kickback schemes, the Defendants’ goal was to curry favor with physicians so that they would order and use Precision Lens’ ophthalmic supplies and equipment in cataract-related surgeries covered by Medicare.

Following a six-week trial, the jury found the Defendants’ kickbacks caused the submission of 64,575 false claims to Medicare in the relevant time period and assessed $43,694,641 in single damages. This verdict highlights why trials are rare in the FCA space, particularly when potential AKS or Stark Law violations are involved. In this case, the minimum penalties for the vast majority of each of the 64,575 false claims ranges from $5,500 to $11,000, with treble damages ultimately placing the final judgment up to $848 million.