Headlines that Matter for Companies and Executives in Regulated Industries
Ophthalmology Distributer and Owner Oppose Government Request for $490 Million Award After Jury Verdict
A federal jury in Milwaukee recently returned a verdict against the Cameron-Ehlen Group, Inc., d/b/a Precision Lens, and its owner, Paul Ehlen, for paying kickbacks to induce surgeons to use Precision Lens products in connection with cataract surgeries paid for by Medicare.
After a six-week trial, the jury found Precision Lens and Ehlen violated the Anti-Kickback Statute and the False Claims Act when paying for physicians’ travel and entertainment expenses. The defendants frequently flew physicians on private jets to luxurious vacation destinations for hunting, golfing, skiing, and fishing vacations. Many physicians were also treated to Broadway musicals and premier sporting events, such as the Masters Tournament in Augusta, Georgia and the College Football National Championship game in Miami, Florida. According to DOJ’s press release, Precision Lens maintained a secret slush fund that was used to finance many of these trips. The jury found that the defendants submitted 64,575 fraudulent claims to Medicare that resulted in approximately $43.76 million in damages.
After the verdict, the US Attorney’s Office in Minnesota requested that the Court enter judgment in the amount of $489.529 million — approximately $131.083 million in treble damages and $358.445 million in per-claim statutory penalties. The defendants vigorously oppose the government’s request, arguing that the government’s “taint theory”—under which every claim in a “taint period” is automatically and inherently false so long as the government proves a “causation free” AKS violation—was previously rejected by the Court of Appeals for the Eighth Circuit in U.S. ex rel. Cairns v. DS Medical LLC, 42 F.4th 828, 835 (8th Cir. 2022). The defendants also argued that the requested amount is excessive under the Fifth and Eighth Amendments as overly punitive and unconstitutional, particularly because the Medicare program allegedly received full value for the services reimbursed by the claims.
The case is United States ex rel. Fesenmaier v. The Cameron-Ehlen Group Inc. et al., No. 0:13-cv-03003 (RHK/FLN) (D. Minn.), and DOJ’s press release regarding the verdict is available here.
Other Healthcare Fraud News
On March 28, 2023, a Utah man pled guilty in New Jersey federal court for his role in a scheme to violate the Anti-Kickback Statute. According to DOJ’s press release, the man owned and operated, with others, entities that arranged and/or conducted different medical tests and paid kickbacks and bribes to obtain referrals and orders for cancer genetic screening tests, regardless of medical necessity. As a result, the conspiracy caused a loss to the government and private health insurers of approximately $89 million. Read DOJ’s press release here.
Two Houston residents, co-owners of Hefty Healthcare Services, Inc., were sentenced to 36 months imprisonment and 14 months imprisonment after pleading guilty to paying kickbacks to marketers and a physician in exchange for patient referrals. One of the defendants also bribed another doctor to issue orders for home health services which were not medically necessary. The two defendants must also pay nearly $1.5 million in restitution to Medicare. Read DOJ’s press release here.
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