$23.8 Million Settlement Between CA Department of Insurance and Essilor Laboratories of America, Inc. Impacts Californians, Carriers and Others
On Monday, December 5, 2022, California Insurance Commissioner Ricardo Lara announced a $23.8 million settlement with optical equipment manufacturer Essilor Laboratories of America, Inc. (“Essilor”). The settlement is the result of the conclusion of a 2016 civil lawsuit filed by a whistleblower alleging that Essilor violated the California Insurance Frauds Prevention Act by providing kickbacks and other unlawful incentives to eye care providers that unfairly drove customers towards more expensive services.
As per the recitals of the settlement agreement, Essilor devised a scheme in which it enrolled eyecare practices in promotional programs where it could provide unlawful remunerations or “kickbacks.” The eyecare practices involved in the promotional programs would then submit false claims to California payors, including insurance companies, health services plans, and vision benefit organizations for Essilor ophthalmic products and services, such as lens and lens enhancements, and laboratory services. The settlement agreement alleges the eyecare practices began participating in the Essilor promotional programs as far back as January 1, 2007.
The Insurance Commissioner filed a Complaint in intervention in 2021 citing The Insurance Frauds Prevention Act, which prohibits unlawful incentives like those alleged in the lawsuit. The California legislature has found such illegal acts can, and do, influence medical decision making.
Commenting on the settlement, Commissioner Lara stated: “This settlement is an important victory for consumers and patients who were the targets of corporate greed. Health insurance fraud causes billions of dollars of premium losses annually, resulting in increased cost to Californians. This settlement sends a strong signal that fraudulent practices that hurt California consumers will not be tolerated and will be prosecuted to the full extent of the law.”
The Department of Insurance announced the State of California will receive approximately $12.7 million of the $23.8 million settlement. The proceeds will reimburse the Department’s investigation for this case as well as fund future investigations, and part will go to the state’s General Fund. The remaining settlement funds will be disbursed to the whistleblower under the Insurance Frauds Prevention Act.
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