SouthEast Eye Specialists Pays $17 million to Settle Anti-Kickback, False Claims Act Allegations
SouthEast Eye Specialists has agreed to pay $17 million to settle allegations that they violated the Anti-Kickback Statute and False Claims Act. The allegations are surprisingly common in the ophthalmology field an allege that the company illegally incentivized optometrists to refer patients to them for cataract surgeries by offering financial rewards. These referrals were reimbursed by Medicare and TennCare, which led to potential violations of the False Claims Act.
The allegations were brought forward in a False Claims Act lawsuit by two whistleblowers. The individuals claimed that SouthEast Eye Specialists used various tactics to secure referrals, including providing continuing education, meals, sporting events, and entering into inappropriate co-management agreements with optometrists.
Co-management is a pretext practice where the surgeon performing the cataract surgery retains 80% of the Medicare reimbursement, while the referring optometrist receives 20%.
The complaint alleged that SouthEast Eye Specialists manipulated this relationship to serve their own interests and those of the referring optometrists, rather than prioritizing the patient’s well-being. By pre-arranging surgeries and co-management, they potentially violated the Anti-Kickback Statute and cast doubt on the integrity of the necessity of these procedures. According to prolific whistleblower lawyer and former FBI Special Agent Jason T. Brown, “The Anti-Kickback Statute seeks to eliminate even the appearance of impropriety, it’s likely that most, if not, all of these cataract surgeries were needed, but when you couple the surgery with an economic inducement to refer there’s an appearance that the surgery was done just for economics sake, and the best interest of the patient may be subordinate. Kickbacks are a big no-no under the False Claims Act and some of the biggest False Claims Act settlements and whistleblower awards are related to kickbacks.”
The Anti-Kickback Statute prohibits offering remuneration to influence patient referrals, aiming to safeguard patients from financial biases and protect government healthcare programs such as Medicare and TennCare from unnecessary costs. It also prevents unfair competition by excluding competitors who do not engage in referral payments.
The False Claims Act enables private citizens to file lawsuits on behalf of the government against entities who are alleged to defraud the federal government. These qui tam cases seek to recover damages for false claims made to government programs. The complaint in this specific case was filed in Tennessee in 2017 by two optometrists who raised concerns about SouthEast Eye Specialists’ anti-competitive practices and the use of inappropriate co-management arrangements as a revenue opportunity for referring optometrists. As a result of their cooperation, the optometrists were eligible for up to roughly $ 5 million in whistleblower rewards.
The case was filed in the United States District Court for the Middle District of Tennessee under the name United States ex rel. Odom, et al. v. SouthEast Eye Specialists, PLLC, et al., with the case number 17-00689.