Sightpath and Its CEO Will Pay $12 Million to Resolve Kickback Allegations Involving Ophthalmological Services and Products

Minnesota-headquartered Sightpath Medical, Inc. and a subsidiary will pay $12 million to resolve False Claims Act allegations raised in a lawsuit filed by whistleblower Kipp Fesenmaier.

Sightpath and Its CEO Will Pay $12 Million to Resolve Kickback Allegations Involving Ophthalmological Services and Products
Kipp Fesenmaier

The complaint stated that Sightpath and Precision Lens, a company that was targeted by another lawsuit, offered kickbacks to physicians in exchange for their use of their products and services, which include intraocular lenses, ophthalmic surgical equipment, and related services to hospitals. Some of the services and products in question were reimbursed by Medicare and other federal programs.

The alleged kickbacks paid to numerous ophthalmologists included luxury skiing, golfing, and fishing trips, improper consulting agreements. Sightpath, Precision Lens, and some of their executives allegedly used these enticements to induce physicians to use their products and services, which ultimately resulted in the submission of false claims to government programs.

The kickback scheme was exposed at length in a whistleblower lawsuit filed by Kipp Fesenmaier, a former Sightpath executive, in 2013. Fesenmaier, who is now Senior Director of Global Business Solutions at the Mayo Clinic, started working at Sightpath as National Manager in 1994. His last position with the company was VP-GM of Diagnostics, which lasted from January 2006 till December, 2007.

Whistleblower Kipp Fesenmaier exposed Sightpath Misconduct - $2.3M Reward

Fesenmaier sued Sightpath under the False Claims Act. As per Federal laws, he is entitled to a share of any recoveries resulting from the legal proceedings. In this case, the whistleblower's share has been set at 19.5 percent, which amounts to about $2.3 million to be paid to Fesenmaier.

Moving on to a successful career in the health industry, he is a positive example of a whistleblower who was able to not only receive his rightful reward, but also flourish professionally after speaking out about corporate misconduct.

The lawsuit against Sightpath and a separate one against Precision Lens name and detail the participation in the scheme of Sightpath's CEO, James Tiffany, Precision Lens owner Paul Ehlen, and one of the, allegedly, bribed ophthalmologists, Jitendra Swarup, who worked at the Albemarle Eye Center in Elizabeth City.

According to the complaint, Swarup joined Sightpath and Precision Lens execs on several luxury trips, was given free use of pricey surgical equipment, and was paid $8,000 per month in “consulting fees,” without providing any “commercially reasonable services,” all in exchange for using products and services offered by the companies.

A spokesperson for Swarup referred to Fesenmaier as a “disgruntled” employee, and denied that the alleged fraudster had any involvement in contracts between Sightpath and local hospitals, highlighting his alleged role in training surgical technicians and offering consulting services to the company. The spokesperson also justified Swarup's alleged luxury trips, saying that they were somehow connected with his services to Sightpath.

The Department of Justice largely disagrees.

Swarup is not part of the current settlement between Sightpath and the federal government.

Another CEO Fraud Settlement but Sightpath Covers CEO James Tiffany’s Tab

The recent $12 million agreement comprises two different settlements, one of $11.65 million to be paid by the company and another one of $350,000 to be paid by its CEO, James Tiffany. According to a Sightpath spokesperson, the company is actually also covering Tiffany's part of the settlement.

The settlement also constrains Sightpath to enter into a five-year corporate integrity agreement with the Office of the Inspector General. In a statement, the company assured that it is committed to “reviewing and enhancing compliance and conduct policies and procedures.”

FBI Special Agent in Charge Richard T. Thornton commented, “The FBI together with our law enforcement partners aggressively investigate companies and individuals who engage in kickback schemes at the expense of Medicare and other federal health care programs... Those who seek to exploit the nation’s health care system through fraud will be held accountable.”

According to Assistant U.S. Attorney Chad Blumenfield, “Medicare beneficiaries depend on their physicians to make decisions based on sound medical judgment.”

In a statement, he emphasized the Attorney General's Office's “decisive action to address allegations that medical providers are receiving improper financial benefits that could influence medical decision making,” and expressed his gratitude to law enforcement “for their excellent work in investigating this matter.”

If you have evidence of physicians receiving kickbacks from hospitals, manufacturers or any other healthcare industry company, we are working on several kickback stories and could use your information. We can keep your name confidential if you wish. Call Us at 202.787.3875 or Connect Online

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