/>iFederal Judge Affirms $487 Million Judgment Against Medical Device Distributor for FCA Violations
On May 12, 2023, US District Judge Wilhelmina M. Wright of the District of Minnesota affirmed the entry of a $487 million judgement against Cameron-Ehlen Group, Inc., d/b/a Precision Lens, a distributor of ophthalmologic medical devices, and its owner, for violations of the Anti-Kickback Statute (AKS) and False Claims Act (FCA).
In February, a jury found that the defendants had violated the AKS by offering remuneration by providing expensive trips, flights on private planes, expensive meals, entertainment such as Broadway musicals, and other items of value for over 10 years to medical providers. In exchange for these gifts, items, and payments, the providers allegedly purchased medical supplies for cataract surgeries from the defendants and then sought reimbursement from Medicare and Medicare for medical procedures using the supplies. The jury concluded that the defendants’ requests for Medicare reimbursement were in violation of the FCA because they failed to disclose the AKS violations, and the defendants had caused the submission of false claims or the creation of records supporting the false claims. The jury found that 64,575 false claims were submitted to Medicare, resulting in $43,694,641.71 in damages. The plaintiffs requested an entry of judgment for roughly $487 million to account for treble damages, interest, and statutory penalties.
While Judge Wright held that the $487 million judgment was an accurate calculation, the defendants objected to the award and argued that the damages amount was unconstitutionally excessive, the judgment must be offset by the amount of settlement payments made to the plaintiffs, and that the verdict resulted from errors made by the court in interpreting the FCA and AKS prior to trial. Judge Wright subsequently ordered that the objections had to be raised in post-trial motions after the entry of judgment.
The case is captioned United States ex rel. Kipp Fesenmaier v. The Cameron-Ehlen Group, doing business as Precision Lens and Paul Ehlen., No. 1:13-cv-3003 (D. Minn.).
Virginia Man Pleads Guilty to Laundering Healthcare Funds from Kuwaiti Embassy
On May 16, 2023, the US Department of Justice (DOJ) announced that a Virginia man pled guilty to laundering money from a Kuwaiti Embassy.
According to court documents, from January through September 2014, the defendant, along with his co-conspirators, conspired to defraud the Kuwaiti Embassy’s Health Office, which had paid for services provided by US medical providers to Kuwaiti citizens traveling to the United States for medical care. The defendant and his co-conspirators created sham companies to impersonate healthcare providers and submitted fraudulent invoices to the embassy, falsely claiming that they had provided health services to Kuwaiti citizens. Allegedly, the defendant’s co-conspirators in the Health Office approved the invoices and issued checks totaling over $1.5 million to the defendant and the fake companies. The defendant allegedly used the embezzled funds for numerous personal purchases. The defendant initially fled the United States in 2014 and was extradited from Egypt to the United States on December 14, 2021.
The defendant pled guilty to money laundering and is scheduled to be sentenced on August 24, 2023. The defendant’s co-conspirators pled guilty to money laundering back in 2016.
The DOJ press release can be found here.
Founder of a Darknet Site Pleads Guilty to Selling Stolen Financial Information
On May 16, 2023, the DOJ announced that the founder of a darknet “carding” site pled guilty to selling stollen financial information.
According to court documents, the founder and his co-conspirators sold stolen financial information, including credit and debit card numbers, from 10s of thousands of US victims between 2016 and 2019. As a part of their fraudulent scheme, the defendant and his co-conspirators allegedly disguised their fraudulent conduct by conducting sales through the use and receipt of digital currencies, including Bitcoin, and employing the use of “mixers” and “tumblers”— services designed to conceal the transaction history of the digital currencies — to make their scheme harder to trace. The defendant allegedly earned at least $1 million worth of cryptocurrencies as a part of the scheme, which have significantly appreciated since that time.
The defendant pled guilty to one count of conspiracy to commit access device fraud, one count of access device fraud, and six counts of money laundering. Under the terms of his plea agreement, the defendant is required to forfeit any property obtained through the offenses, including million of dollars’ worth of cryptocurrency, financial accounts, and property. Additionally, the defendant faces up to five years in prison for the conspiracy count.
