Life Science Compliance Update

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September 05, 2017

DOJ Announces Another FCA Settlement - Sightpath Medical and TLC Vision Corporation

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In late August 2017, the United States Department of Justice (DOJ) announced a $12 million settlement with Sightpath Medical and TLC Vision Corporation, as well as the former CEO of both entities, James Tiffany. The suit was brought by Kipp Fesenmaier, former vice president of the company, in 2013 for allegedly violating the False Claims Act and the Anti-Kickback Statute. Fesenmaier claimed that Sightpath knowingly took advantage of Medicare by using extravagant trips and social events to entice doctors to use its products and services, which were then billed to government healthcare programs.

The complaint alleges that the companies paid kickbacks to physicians in various forms, including travel, entertainment, and improper consulting agreements. The complaint specifically refers to examples of trips such as luxury skiing vacations and high-end fishing, golfing, and hunting trips. The complaint alleges that these various items of value were provided to induce the physicians to use products and services supplied by the company. The companies supply intraocular lenses, as well as ophthalmic surgical equipment and services to medical facilities. The products and services are used by ophthalmologists for eye surgeries, including cataract surgeries.

The United States further alleged that James Tiffany directed much of the conduct at issue, particularly between 2010 and 2013 when he was CEO of Sightpath and TLC, and that he was directly involved in setting up and participating in several of the trips with physicians who were either Sightpath customers or potential customers. In addition, Tiffany directly participated in establishing and continuing the lucrative consulting agreements with physicians and physician practices.

According to the settlement agreements, from 2006 to 2015, the Sightpath Entities provided physicians items of value to induce the use of Sightpath Entities’ products and services, which resulted in the submission of false claims to the United States for ophthalmological products and services. Additionally, the Sightpath Entities entered into consulting agreements with physicians and physician practices for services that were never performed or not properly tracked, resulting in payments in excess of fair market value.

The U.S. attorney’s office also intervened in an underlying lawsuit against the Cameron-Ehlen Group, Inc., which does business as Precision Lens. Sightpath and Precision Lens supply surgical equipment and services for ophthalmologists, including tools used in cataract surgeries performed in “ambulatory surgical centers.”

As part of the FCA Agreement and in exchange for a release of OIG’s permissive exclusion authority, Sightpath has agreed to enter into a 5-year corporate integrity agreement (CIA) with OIG. Although not a signatory to the CIA, TLC is participating in the CIA as a “covered person.” In its statement Monday, Sightpath said it reached the agreement to avoid the “delay, expense and uncertainty of litigation.” The company said it is “continually reviewing and enhancing our compliance and conduct policies and procedures to meet the expectations of our customers and the requirements of our industry.”

Tiffany's lawyer told the Business Journal that his portion of the settlement would be paid by the company. In a statement, Sightpath — which admitted no wrongdoing in the deal — said it was "pleased to resolve this civil matter and move forward with a focus on helping our physicians and facilities provide exceptional patient care."

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