Essilor, a manufacturer and distributor of optical lenses and equipment, will pay $22 million to settle allegations it paid kickbacks to spur sales in violation of the False Claims Act (FCA).

Dallas-based Essilor International and its subsidiaries Essilor of America, Essilor Laboratories of America, and Essilor Instruments USA conducted an incentive scheme from 2011-16 that paid optometrists and ophthalmologists to encourage patients to choose Essilor products, the Department of Justice (DOJ) said Tuesday in a press release.

This caused doctors to submit false claims to Medicare and Medicaid on behalf of those patients that were “tainted by kickbacks,” according to the settlement agreement.

Essilor’s alleged scheme violated the anti-kickback statute of the FCA, which prohibits “offering or paying anything of value to induce the referral of items or services covered by Medicare, Medicaid, and other federally funded programs,” the DOJ said.

“When medical equipment manufacturers provide kickbacks to referring providers, it can compromise the integrity of medical decision-making,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the DOJ’s Civil Division, in the release. “The department will continue to pursue violations of the anti-kickback statute to ensure that patient care is not influenced by improper financial incentives.”

Essilor will pay $16.4 million to the federal government and $5.6 million to states whose Medicaid programs were affected by the alleged misconduct, according to the settlement agreement. Essilor will enter separate settlements with the states, the DOJ said. The agreement does not name the states that are part of the settlement.

The DOJ resolution settles two qui tam lawsuits filed in U.S. District Court for the Northern District of Texas and the Eastern District of Pennsylvania by former Essilor district sales managers Laura Thompson, Lisa Brez, and Christie Rudolph. Under the terms of the FCA, the whistleblowers will receive a portion of the settlement paid by Essilor to the federal government, the agreement said.

Essilor entered settlement without admitting liability and denied portions of the government’s claims.

Compliance considerations: As part of the settlement, Essilor entered a five-year corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General.

Essilor will “hire an independent review organization to review its systems, policies, processes, and procedures for ensuring that any discounts, rebates, or other reductions in price offered to providers comply with the anti-kickback statute,” the DOJ stated. “The CIA also requires Essilor to implement a new written review and approval process to ensure all existing and new discount arrangements comply with the anti-kickback statute.”

Other medical device manufacturers and pharmaceutical companies that have recently run afoul of the FCA’s anti-kickback provision include Biogen, which reached a $900 million agreement in principle in July to settle allegations levied by a whistleblower it paid kickbacks to physicians. In August 2021, Arriva Medical, a mail-order diabetic testing supply company, agreed to a $160 million settlement to resolve charges related to a kickback scheme.

Essilor did not respond to a request for comment.

Aaron Nicodemus covers regulatory policy and compliance trends for Compliance Week. He previously worked as a reporter for Bloomberg Law and as business editor at the Telegram & Gazette in Worcester, Mass.

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