Eye Specialists Pay $17M to Resolve False Claims Act Violations

SouthEast Eye Specialists, SouthEast Eye Surgery Center, and the Eye Surgery Center of Chattanooga (SEES) must pay $17 million to the United States and Tennessee to resolve allegations that they violated the Anti-Kickback Statute and the False Claims Act.

Two whistleblowers alleged that SEES induced optometrists to refer patients to SEES for cataract surgeries by offering them several forms of financial remuneration. The referrals provided to SEES were reimbursed by Medicare and TennCare—Tennessee’s state Medicaid program—resulting in alleged violations of the False Claims Act.

The complaint was filed in Tennessee in 2017 by Ross Lumpkin, OD, an optometrist, and Gary Odom, a former executive in the statewide optometric association.

The lawsuit alleges that SEES used various approaches to incentivize the optometrists to initiate referrals, including continuing education, meals, sporting events, and inappropriate pre-arranged co-management agreements.

When cataract surgery is co-managed, the performing surgeon receives 80 percent of the Medicare reimbursement and the referring optometrist performing the post-operative exam receives 20 percent. Co-management should be decided on a case-by-case basis and consider patient health, convenience, and choice.

The whistleblower complaint states that SEES used this arrangement to serve its own interests and the interests of its referring optometrists instead of thinking of what was best for patients. When patient-centered co-management decisions revolve around the financial interests of providers, it may violate the Anti-Kickback Statute.

The Anti-Kickback Statute prohibits providing remuneration to induce recommendation or referral of patients, aiming to shield patients from clouded medical judgment and protect government healthcare programs from fraud and abuse that increase costs. The law also aims to prevent unfair competition that excludes competitors unwilling to pay or get paid for referrals.

“Dr. Lumpkin and Mr. Odom exposed fraud on the government and the taxpayers by shining a light on what happens when a permissible practice is corrupted by financial interest rather than staying focused on patient need,” said Jennifer Verkamp, an attorney with Morgan Verkamp, one of the firms representing the plaintiffs. “When healthcare providers pay kickbacks to obtain business from other providers, honest companies and honest providers cannot compete, and the entire system suffers.”

While the government was not permitted to intervene, policies under the False Claims Act allowed law firms Morgan Verkamp and Phillips & Cohen to litigate the case and work with the government to recover $17 million back to the US and Tennessee treasuries.

Despite settling, SouthEast Eye Specialists has denied the allegations.

"Throughout this case, we have believed that the defense of our approach to eye care has been important for our patients and the eye care industry more broadly. We have refuted the allegations leveled against us and vigorously defended our position at every turn. While we have not wavered in our view of the merits, we have reached a settlement to conclude this litigation and to eliminate any further financial, administrative, and operational burden on our organization stemming from this matter," SouthEast Eye Specialists said in a statement emailed to RevCycleIntelligence.

"The settlement is a deliberate decision by our Board to put this matter behind us, allowing us to move forward with implementing exciting strategic initiatives and focusing dedicated resources toward our strong growth trajectory. It is important to note that there was no finding of any wrongdoing whatsoever. We continue to firmly believe that our practice was and continues to be in compliance with all applicable legal and medical ethical requirements and guidelines and we continue to hold ourselves to the very highest legal, ethical and compliance standards."

editor's note 5/25/23 - This article was updated to include a statement from SouthEast Eye Specialists.