A False Claims Act settlement of $12 million has been reached in a case involving Medicare and Medicaid, two federal government-sponsored healthcare programs.

The Cameron-Ehlen Group Inc., doing business as Precision Lens, and its owner Paul Ehlen were named defendants in a whistleblower lawsuit filed by a former executive of Sightpath Medical Inc. Sightpath Medical has been identified as a long-standing “corporate partner” of Precision Lens.

The $12 million False Claims Act settlement was based on accusations that the Precision Lens enticed ophthalmologists to utilize products for eye surgery that they or Sightpath manufactured and distributed in lieu of competitor’s products.

The methods of enticement varied but tended to be in the form of high-end vacation or travel experiences such as luxury fishing, hunting, skiing, or golfing getaways.

Other incentives included expensive, gourmet dining adventures, discounted tickets to live shows, theaters, and other entertainment venues. Finally, among the offerings were discounts to purchase their own frequent flyer miles to be used for award travel at a reduced rate.

These were allegedly paid for by funds held in a hidden account.

According to the lawsuit ending in the False Claims Act settlement, incentivizing the purchase of goods from one vendor over another when Medicare and Medicaid is involved is prohibited under the federal Anti-Kickback Statute.

Not only are companies not allowed to offer them to physicians submitting claims to these public health programs, but physicians are in violation of the law if they accept them.

The Department of Justice also reached a $3 million False Claims Act settlement with Dr. Jitendra Swarup, who was alleged to have repeatedly taken incentive kickbacks from Sightpath and Precision Lens from 2006 to 2015.

He was accused of having a consulting arrangement with the companies where he was compensated with a six-figure income without providing any documented consulting services.

A federal attorney for the District of Minnesota—the state where Precision Lens is located—said that public health recipients need to have confidence in the healthcare providers with whom they are entrusting their well being. It is in the spirit of the Anti-Kickback Statute to keep that system unadulterated.

What is the False Claims Act?

The False Claims Act is a federal law that imposes statutory sanctions on entities that attempt to defraud the federal government by presenting ‘false claims’ against publicly-funded programs such as Medicare and Medicaid. It features provisions known as qui tam that allow persons with evidence of fraud against the government to file a civil lawsuit on the government’s behalf.

If the government takes up the case against the defendant and arrives at a false claims settlement, the non-federal ‘relator’ is allowed by law to receive a portion of the funds.

The False Claims Act Lawsuit is U.S. ex rel. Fesenmaier v. The Cameron-Ehlen Group Inc. et al., Case No. 0:13-cv-03003, in the U.S. District Court for the District of Minnesota.