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Crime, Law and Justice
Matt Sepic
St. Paul
Updated:

Twin Cities medical firm settles fraud suit for 2 cents on the dollar

district courthouse
The U.S. District Courthouse for the District of Minnesota in St. Paul.
Nikolas Liepins | AP 2021

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A Bloomington-based medical products company has agreed to pay the federal government pennies on the dollar to resolve a nearly half-billion-dollar judgment for defrauding Medicare and paying kickbacks to doctors.

Last year a federal judge in St. Paul ordered Precision Lens to pay $487 million after a jury sided with the government and a whistleblower plaintiff.

Jurors in the civil case found that the company paid illegal kickbacks and provided luxury travel to eye surgeons in exchange for using their products and made nearly $44 million in fraudulent Medicare claims.

The judgment included triple damages and civil penalties, but the court cut it by more than half on post-trial motions.

In a statement, the Minnesota U.S. Attorney’s Office said that the government agreed to settle the case for $12 million, just over 2 percent of the original judgment, after reviewing the financial position of Precision Lens and the estate of its owner Paul Ehlen, who was killed last year in a plane crash.

In a statement late Thursday, attorneys for Precision Lens denied that Ehlen and the company ever provided kickbacks, and said their clients chose to settle “so that they can move on with their lives.”

“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,” the statement read, calling the government’s lawsuit “unjust and irresponsible.”

The attorneys said the jury verdict “was simply a travesty — the result of unlawful and incomplete instructions demanded by DOJ that they knew would have been reversed on appeal.”

The settlement ends litigation that industry whistleblower Kipp Fesenmaier first brought in 2013 under a part of the False Claims Act that allows private citizens to sue on behalf of the government and get a portion of the amount that’s recovered.

Besides Precision Lens, Fesenmaier also sued Sightpath and a third company, TLC Vision.

The government reached a settlement with Sightpath and TLC in 2017 in which Sightpath also agreed to pay $12 million and TLC Vision agreed to pay $2.9 million. Fesenmaier received nearly 20 percent, or about $2.3 million, of that settlement.

The part of the case that involved Precision Lens went to trial in early 2023.