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California Insurance Frauds Prevention Act Case Nets Over $23 Million

December 20, 2022

The California Department of Insurance announced Essilor Laboratories of America (Essilor) has agreed to settle a California Insurance Frauds Prevention Act (IFPA) case for $23 million.  Essilor designs, manufactures and distributes ophthalmic lenses, frames, and sunglasses.  The settlement resolves a whistleblower case alleging Essilor paid kickbacks to eye care providers to induce them to refer patients to Essilor’s more expensive products.

Improper Kickbacks Paid to Providers to Induce Referrals

According to the Complaint, Essilor made up-front payments of tens of thousands of dollars to eye care providers to induce the referral of business to Essilor. If providers met the “quota” set forth in their agreement with Essilor, then they could use the payments in any manner they chose.  They received additional cash payments when they prescribed and dispensed Essilor’s more costly products and services.  Payments meant to induce referrals are prohibited under IFPA as well as under federal and state anti-kickback statutes because they can influence medical decision making.

The California Insurance Frauds Prevention Act

The kickbacks made by Essilor to induce referrals allegedly violated the California Insurance Frauds Prevention Act (IFPA).  The IFPA allows individuals to file whistleblower suits on behalf of the California Insurance Commissioner against anyone committing insurance fraud in the state.  This includes fraud committed against private insurance companies in California. Each violation of IFPA carries a civil penalty of between $5,000 and $10,000.

IFPA Provides Rewards To Successful Whistleblowers

Similar to a state false claims act statute for fraud committed against state payers, IFPA whistleblowers receive a percentage of the government’s recovery as a reward. The California IPFA provides that successful whistleblowers will receive not less than 30% and not more than 40% depending on the individual’s assistance in prosecuting the action.  This is significantly larger percentage reward than provided for by federal and state false claims acts.  In this case, the Department of Insurance and the State of California will receive approximately $12.7 million. The whistleblower will receive the maximum 40% share (approximately $9.5 million) because of his substantial assistance in this case.

How to Report Fraud and Qualify for a Whistleblower Award

We have assisted many whistleblowers in bringing cases under the federal and various state false claims acts.  For instance, our client’s allegations led to the recovery of $4.5 million from CleanSlate to settle federal and state false claims act violations.  If you know of the violation of any state or federal false claims act, contact us for a free and confidential consultation.