Precision Lens FCA Case Settled for $12 Million

As previously promised, we wanted to update our readers on a February 2024 decision by the U.S. District Court for the District of Minnesota to slash a $487 million judgment against Precision Lens and the estate of its former principal, the late Paul Ehlen, following a jury verdict of False Claims Act (FCA) liability based on violations of the Anti-Kickback Statute. In resolving post-judgment motions, the court revised the final judgment down to $217 million, holding that the total FCA treble damages and civil penalties assessed were unconstitutional under the Eighth Amendment’s Excessive Fines Clause.

At the time, we noted that “[w]hether either side will appeal is uncertain, particularly given evidence suggesting that ‘neither Precision Lens nor Paul Ehlen’s estate will be able to satisfy even the compensatory damages in this matter.’” In April 2024, the U.S. Attorney’s Office filed a notice of appeal. However, on July 25, 2024, the Department of Justice (DOJ) announced that after conducting “a review of the defendants’ financial position and ability to satisfy the judgment,” the parties had agreed to settle the case for $12 million. Later that same afternoon, an attorney for Precision Lens and the Ehlen estate issued a statement that noted, in part: “For the past 12 years, DOJ has pursued an unjust and irresponsible lawsuit against Paul Ehlen and Precision Lens…. Contrary to the government's self-serving assertions, Paul and Precision Lens never provided kickbacks to anyone…. 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.”

While the parties’ settlement moots the government’s appeal, the FCA analysis in this case and others suggest that courts may be increasingly willing to conclude that FCA verdicts are unconstitutionally excessive. We at Qui Notes will continue to monitor and report on this trend.

© Arnold & Porter Kaye Scholer LLP 2024 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.