Precision Lens Pays $12 Million to Resolve FCA and AKS Violations

Precision Lens Pays $12 Million to Resolve FCA and AKS Violations

Late last week, Precision Lens and the estate of its former principal agreed to pay $12 million to resolve allegations regarding violations of the False Claims Act (FCA) and Anti-Kickback Statute (AKS).

Last year, a federal civil jury found that Precision Lens violated both the FCA and AKS by paying kickbacks to ophthalmic surgeons to induce them to utilize the company’s products in cataract surgeries reimbursed by Medicare. According to prosecutors, these kickbacks included travel and entertainment, such as “high-end ski trips, fishing, golfing, hunting, sporting, and entertainment vacations, often at exclusive destinations.” Additionally, prosecutors stated that, for many of these trips, health care providers were provided private jets for transportation.

The jury found that Precision Lens’ conduct resulted in $43,694,641.71 in fraudulent claims submitted to Medicare. However, due to the availability of treble damages and civil penalties under the FCA, the court entered a $487,048,705.13 judgment against the company and its owner. Following post-trial motions, however, this amount was reduced to $216,675,248.55. According to prosecutors, the United States conducted a review of the defendants’ financial position and ability to satisfy the judgment and ultimately agreed to settle the matter for $12 million.

The US Department of Justice’s (DOJ) press release is available here.

United States Pursues Stark Law Claim Against Erlanger Health System

The United States has elected to intervene in a matter brought under the whistleblower provisions of the FCA against Murphy Medical Center, Inc., doing business as Erlanger Western Carolina Hospital and Chattanooga-Hamilton County Hospital Authority d/b/a Erlanger Health System and Erlanger Medical Center (collectively, Erlanger), a health system located in Tennessee and North Carolina.

On July 26, the government filed its complaint in intervention, alleging that Erlanger violated the Stark Law and, in doing so, violated the FCA, was paid by mistake, and was unjustly enriched. Under the Stark Law, entities such as hospitals are prohibited from submitting claims to Medicare for payment for “designated health services” referred to the entity by a physician with whom the entity has a financial relationship that does not qualify for an exception to the prohibition. Here, the government alleges that Erlanger had employment relationships with physicians that did not meet any Stark Law exception, and yet received referrals from those physicians and submitted claims to Medicare knowing that these claims were not eligible for payment.

For the alleged violations, the government seeks treble damages and civil penalties under the FCA, the amount that Erlanger was unjustly enriched through its actions, the amount that Erlanger illegally obtained and retained, and pre- and post-judgment interest and costs.

Notably, statements from Principal Deputy Assistant Attorney General Brian M. Boynton, head of the DOJs Civil Division, US Attorney Dena J. King for the Western District of North Carolina, and Special Agent in Charge Tamala E. Miles of the US Department of Health and Human Services Office of Inspector General all emphasized the government’s commitment to pursuing action against entities that violate the Stark Law and, in turn, the FCA.

The DOJ’s press release is available here.

See our Summer 2024 FCA Enforcement and Compliance Digest for a discussion of continuing government scrutiny of physician compensation arrangements and Stark Law compliance.

East Coast Ophthalmology Practice and Owner to Pay $460,000 to Resolve FCA and AKS Claims

On July 29, the DOJ announced that it had reached a settlement agreement with Burlington County Eye Physicians (BCEP), an ophthalmology practice with locations in New Jersey and Pennsylvania, and Dr. Gregory H. Scimeca, an ophthalmologist and the owner of BCEP, to resolve allegations that they violated the FCA and AKS.

According to prosecutors, from May 2019 through February 2021, BCEP and Dr. Scimeca submitted and caused the submission of false claims for payment for medically unnecessary transcranial doppler (TCD) tests to Medicare and the Federal Employee Health Benefit (FEHB) Program. Prosecutors further allege that an arrangement between BCEP and a medical diagnostics company violated the AKS because BCEP and Dr. Scimeca accepted remuneration from the company by billing for and retaining payments from Medicare and the FEHB Program for services that the company provided.

Under the settlement agreement, BCEP and Dr. Scimeca have agreed to pay $469,232 to resolve these allegations.

The DOJ’s press release is available here.

Telemarketing CEO Sentenced to 25 Years for Fraudulent Health Insurance Scheme

Last week, Simple Health Plans, LLC CEO Steven Dorfman was sentenced to 25 years in federal prison for his role in a fraudulent scheme to sell health insurance plans. Dorfman’s sentencing comes five months after his conviction for wire and mail fraud in relation to the scheme.

Along with another former executive of the company, Dorfman utilized Simple Health to sell policies to more than 400,000 people across the United States. While the company promised consumers comprehensive health insurance — including coverage for preexisting conditions, prescription medication, and hospitalization — for a monthly payment of up to $500, consumers were on the hook for all medical expenses once they reached the plans’ low coverage caps.

In a separate Florida civil case, Dorfman was also ordered to pay the Federal Trade Commission $195 million for his role in the scheme. In that case, the court described the insurance plans as “practically worthless” and noted that while the defendants profited from the scheme, “consumers were left with inadequate health coverage and devastating medical bills.”

The criminal case is US v. Steven Dorfman, case number 3:22-cr-30024, in the US District Court for the Southern District of Illinois. The civil case is Federal Trade Commission v. Simple Health Plans, LLC, et al., case number 0:18-cv-62593, in the US District Court for the Southern District of Florida.

Nigerian National Pleads Guilty to Multi-Faceted Fraud Scheme

On July 26, Nigerian national Amowie Kelvin Imatitikua pleaded guilty to one count of bank fraud, one count of bank fraud conspiracy, and one count of money laundering conspiracy for his role in an online fraud scheme encompassing pandemic relief fraud, romance scams, and other online scams.

According to prosecutors, Imatitikua opened bank accounts utilizing fake names and fraudulent passports. He then used those accounts to receive the proceeds from fraudulent schemes perpetrated by his co-conspirators. Prosecutors state that between 2019 and 2021, Imatitikua received more than $400,000 in fraud proceeds.

Imatitikua now faces up to 30 years in prison, five years of supervised release, and a fine of up to $1 million (or twice the gross gain or loss, whichever is greater), along with forfeiture for the charges of bank fraud and conspiracy to commit bank fraud. He faces up to 20 years in prison, three years of supervised release, a fine of $500,000 (or twice the value of the criminally derived property, whichever is greater), and forfeiture for the charge of money laundering conspiracy.

The DOJ’s press release is available here.

Federal Grand Jury Returns Indictment for $3.5 Million Elder Fraud Scheme

On July 30, a federal grand jury returned an indictment charging three individuals — Amit Ahuja, Kapil Gulati, and Priyanshu Walia — with conspiracy to commit wire fraud and wire fraud for their roles in an elder fraud scheme.

According to prosecutors, Ahuja, Gulati, and Walia engaged in a technical support scheme in which victims were made to believe that they needed to provide payment to fix major computer issues, such as viruses or susceptibility to hacking. Victims would receive either an unsolicited call or pop-up window directing them to call a specific phone number, and were led to believe that they were working with legitimate computer companies to fix these faux issues.

Prosecutors allege that more than 1,000 victims, many of whom were older adults, sent at least $3.5 million to the defendants and other conspirators as a result of this scheme. If convicted, the defendants face a maximum sentence of 20 years in prison for the wire fraud conspiracy and each count of wire fraud. 

The DOJ’s press release is available here.