DOJ and Precision Lens settle kickback case for $12M, far cry from original order of $487M

Precision Lens, the Bloomington-based eye lens distributor, has settled a federal kickback lawsuit for $12 million, a far cry from the $487 million in civil damages initially ordered in connection to a scheme that included flying doctors on private jets to Broadway musicals and the Masters golf tournament in Georgia.

In February 2023, a U.S. District Court jury found that the Cameron-Ehlen Group and Precision Lens majority owner Paul Ehlen, who died later that year, violated the False Claims Act and the Anti-Kickback Statute by paying ophthalmic surgeons to entice them to use Precision Lens products in cataract surgeries reimbursed by Medicare.

The alleged kickbacks included luxury trips, fishing, golf, hunting, sporting and entertainment vacations, often at exclusive destinations.

The U.S. Justice Department (DOJ) contended that for many of the trips, physicians were transported to luxury vacation destinations on private jets, including trips to New York City to see a Broadway musical, the college football national championship game in Miami and the Masters in Augusta.

Precision Lens also sold frequent-flyer miles to its physicians at a significant discount, enabling them to take personal and business trips at well below market value, according to prosecutors.

Such kickbacks, the jury concluded, helped win the company millions of dollars of business and led to the submission of 64,575 false Medicare claims between 2006 and 2015.

The jury found that Precision Lens’ conduct resulted in more than $43 million in fraudulent Medicare claims. By statute, that judgment swelled to $487 million, which included three times the damages and civil penalties under the False Claims Act. However, various motions following the verdict slashed the judgment to $216 million.

From there, the prosecution “conducted a review of the defendants’ financial position and ability to satisfy the judgment, [and] the parties entered into a settlement agreement, which requires Precision Lens and the estate of former owner Paul Ehlen to immediately pay $12 million,” read a statement Thursday from the U.S. Attorney’s Office announcing the meeting of the legal minds.

An attorney for Precision Lens and the Ehlen estate released a statement late Thursday afternoon that read in part, “For the past 12 years, DOJ has pursued an unjust and irresponsible lawsuit against Paul Ehlen and Precision Lens.”

The Justice Department’s “abusive actions destroyed a successful business and more than 50 good jobs,” the statement continued. “Contrary to the government’s self-serving assertions, Paul and Precision Lens never provided kickbacks to anyone. Paul was a lifelong aviator who enjoyed traveling with friends, some of whom were physicians. The government characterized those trips (and other entertainment) as ‘kickbacks’ even though the evidence showed that the costs were split fairly, the surgeries were all medically necessary, no doctors selected any products as a result, and Medicare did not pay a penny more than it should have.”

Firm denials to the very end aside, the statement noted, “Paul’s wife and family have chosen to settle this lawsuit for a small fraction of the judgment so that they can move on with their lives.”

Ehlen died in a private plane crash in Montana in June 2023, just months after being found to have violated the anti-kickback statute and the False Claims Act.

With this resolution, the United States has collected nearly $27 million as a result of the misconduct alleged in this case. The United States previously announced a $12 million settlement of related allegations with Sightpath Medical Inc. and TLC Vision Corp. and their former CEO, James Tiffany. Dr. Jitendra Swarup also resolved claims that he had accepted kickbacks in a settlement agreement of more than $2.9 million.