Department of Insurance investigation leads to $23.8 million settlement with Essilor Laboratories of America, Inc.
News: 2022 Press Release
SACRAMENTO — Insurance Commissioner Ricardo Lara announced that Essilor Laboratories of America, Inc. (Essilor) has agreed to a $23.8 million settlement in a lawsuit which alleged the company violated the Insurance Frauds Prevention Act. The suit alleged Essilor provided kickbacks and other unlawful incentives to eye care providers that ultimately hurt consumers by unfairly driving them toward more expensive services.
Essilor manufactures, markets, and distributes optical lenses and equipment used to produce optical lenses throughout California and the nation.
“This settlement is an important victory for consumers and patients who were the targets of corporate greed,” said Commissioner Lara. “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. It also will restore key protections for eyecare patients so they receive care and recommendations that are in their best interest.”
This settlement brings to a close a 2016 whistleblower lawsuit brought against Essilor. After investigating the allegations, the Commissioner filed a complaint in intervention in 2021.
The lawsuit alleged that Essilor provided unlawful kickbacks to eye care providers, with an up-front payment of tens of thousands of dollars, or sometimes hundreds of thousands of dollars, in exchange for these providers’ promises to send business to Essilor for a period of anywhere between three to five years. The providers were free to use the up-front payment from Essilor in any manner that they chose so long as they hit the volume requirements pursuant to the agreement.
Additionally, the lawsuit alleged Essilor further provided kickbacks to California eye care providers through a program called “PracticeBuilder” where providers were given cash payments for using Essilor lenses and laboratory services. The cash payments through the PracticeBuilder program were done to reward the eye care providers who prescribed and dispensed Essilor’s more expensive lenses and coatings and to use its laboratory services.
Unlawful incentives, like those alleged in the lawsuit, are prohibited under the Insurance Frauds Prevention Act as these illegal acts can, and do, influence medical decision making. California laws are in place to protect patients and encourage medical decision makers to act solely in the best interest of their patient.
The lawsuit further alleges Essilor knowingly submitted false claims to California private payors, including insurance companies, health care savings plans, and vision benefit organizations.
The resolution is the result of a collaborative prosecution between the Commissioner and the whistleblower’s counsel, Baron & Budd, P.C., The Weiser Law Firm, and Keller Grover, LLP.
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- The settlement agreement can be found here.
- Of the $23.8 million, the Department of Insurance and State of California will receive approximately $12.7 million. The money will reimburse the Department’s investigation of this case and go toward future investigations and part will go to the state’s General Fund. The remaining amount is dispersed to the whistleblower under the Insurance Frauds Prevention Act.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.