Judge Orders Precision Lens and Co-Founder to Pay US$487 Million in Damages and Penalties Stemming from Kickback Verdict

In February, a federal jury in Minnesota found that Precision Lens and its co-founder, Paul Ehlen (together, Defendants), violated the False Claims Act (FCA) by submitting over 64,500 claims tainted by violations of the Anti-Kickback Statute (AKS) to the Centers for Medicare and Medicaid between 2006 and 2015. The jury determined that Defendants’ conduct resulted in roughly US$43 million in single damages. Shortly thereafter, the Department of Justice (DOJ) sought treble damages and statutory penalties under the FCA of over US$485 million.

In their response to DOJ’s motion for entry of judgment, Defendants did not quibble with DOJ’s math in calculating the amount, but raised several substantive arguments as to why judgment should be entered in a lesser amount. In addition to arguing that the judgment sought by DOJ is unconstitutionally excessive under the Fifth and Eighth Amendments, Defendants urged the district court to revisit its prior rulings and reject DOJ’s “assertion that [the] False Claims Act provides for the full recovery of all claims filed during a Government-proclaimed ‘taint period’ in which every single claim is automatically and inherently false if the Government proves a ‘causation free’ Anti-Kickback Statute violation, a position that has been flatly rejected by the Eighth circuit in U.S. ex rel. Cairns v. DS Medical, LLC, 42 F.4th 828, 835 (8th Cir. 2022)."¹ In a statement provided by their attorneys after the judgment order was entered, Defendants assert that DOJ “should not have been allowed to seek recovery for every claim associated with these medically necessary surgeries, but at most only for those claims that reimbursed for products supplied by [Precision Lens].”

On May 12, 2023, Judge Wilhelmina M. Wright granted DOJ’s motion and entered judgment in the amount of US$487,048,705.13. The court explained that it was only addressing the numerical calculation and was not resolving any of Defendants’ arguments for entry of judgment in a lesser amount, “anticipat[ing] that those arguments and perhaps others will be raised by Defendants following the entry of judgment.” The court told the parties that it is “highly unlikely” that it would “revisit any of the legal conclusions made prior to or during trial,” and suggested that the bulk of post-judgment briefing would be best directed to issues that have not already been resolved by the court, such as Defendants’ contention that the judgment amount violates the Eighth and Fifth Amendments.

The authors here at Qui Notes will continue to monitor and report on further case developments.

© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.