European eyewear manufacturer resolves government kickback allegations.
Late last month, Essilor Laboratories of America, the North American subsidiary of European eyewear manufacturer Essilor International, agreed to a settlement of almost $22 million to resolve claims the company paid kickbacks and bribes to eye doctors in exchange for for choosing its products.
Essilor International is the world’s largest eyewear manufacturer, and its American division had its headquarters in Dallas, Texas, until the end of 2016. Around the 2015–2016-timeframe, three district sales managers from Texas and Pennsylvania stepped forward with allegations made under the provisions of the False Claim Act (FCA), a federal statute that protects whistleblowers making valid claims about instances of fraud, waste, abuse, and other misconduct regarding federal programs.
After years of investigation, prosecutors found that Essilor gave improper gifts and awards to eye doctors to choose its products over its competitors. While things like reasonable discounts and free samples are legal and fall outside of the Anti-Kickback Statute, the government alleged the company offered illegal bribes including interest-free financing, gift cards, entertainment expenses, retirement account matching, and much more. In doing so, it defrauded governmental programs.
Before the case could go to trial, Essilor reached a settlement with the court. According to the agreement, “Essilor International is an international company that, through its various affiliates, designs, manufactures, markets, and distributes eye care equipment and products, including optical lenses, and provides various eye care services.” Essilor of America, Inc. and Essilor Laboratories of America, Inc., are “wholly owned subsidiaries of Essilor International that, among other things, manufacture and distribute optical lenses to independent eye care providers” throughout the country. During the time period in question, “Essilor Instruments USA was an affiliate of Essilor International that, among other things, manufactured and distributed edging and finishing equipment, as well as other optical instruments, for in-store retail use by independent eye care providers, or ‘Providers.’ Esslior knowingly caused Providers to submit false claims to Medicare and Medicaid for Essilor products that were tainted by kickbacks that Essilor offered or paid to Providers.”
As part of the agreement, the company will fork over $16.4 million to the government and another $5.6 million to states where the company operates. Essilor of America must also to undergo a five-year restructuring plan (called a Corporate Integrity Agreement or CIA) that includes outside audits of its practices by third parties to ensure compliance with the Anti-Kickback Statute. Any further business with eye doctors needs to be approved to remove any doubt that the company continues to operate outside the bounds of the law. The agreement will be overseen by the Department of Health and Human Services Office of Inspector General (HHS-OIG).
Under the provisions of the False Claims Act, the three whistleblowers are entitled to a portion of the proceeds resulting from their role in bringing the eyewear company to justice and will be compensated as part of the settlement payout. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery.