SACRAMENTO, Calif.—Essilor has agreed to pay $23.8 million to settle a lawsuit brought by the California Department of Insurance which alleged the lens maker violated the state’s Insurance Frauds Prevention Act (IFPA). The suit, which names Essilor Laboratories of America, Essilor of America, and Empire Optical of California, an Essilor-owned wholesale laboratory, is the culmination of a six-year investigation by the California Department of Insurance. The investigation found that Essilor provided “kickbacks and other unlawful incentives to eyecare providers that ultimately hurt consumers by unfairly driving them toward more expensive services,” according to a statement by insurance commissioner Ricardo Lara issued on December 5.

Essilor offered the incentives through various promotions and promotional programs. The lawsuit contends that Essilor “submitted or caused to be submitted claims for payment to private insurance companies and their insureds, including, but not limited to, health care service plans, vision benefit organizations and their members, in the state of California in violation of the IFPA.”

Under the terms of the settlement agreement, Essilor has denied all allegations in the lawsuit as well as any wrongdoing or liability.

Essilor provided this comment to VMAIL, “Like all lens suppliers, Essilor offers promotional programs intended to provide accessibility and affordability for its lens products. We strive to manage these promotional programs in a legal, compliant, and ethical way, and in recent years, we have further strengthened our compliance program, making it an industry leading program.

The Essilor statement noted, “In 2016, the California Department of Insurance (CDI) launched a review of certain lens promotional programs that were in place in the state of California prior to that time. While we believe we have always managed our programs in a legal and compliant way, following a multi-year review, we recently reached a settlement agreement with the CDI to avoid the expense of continued litigation and the significant disruptions caused by ongoing government allegations. While we did reach a settlement agreement with the CDI, we do not agree with the allegations made by the CDI and expressly deny any wrongdoing in relation to our promotional programs.”

The settlement between Essilor and the State of California follows a related lawsuit brought by the U.S. Department of Justice that was resolved in August. That lawsuit, which Essilor settled with a $22 million payment, alleged that Essilor International, Essilor of America, Essilor Laboratories of America and Essilor Instruments USA violated the federal False Claims Act by causing claims to be submitted to Medicare and Medicaid that resulted from violations of the Anti-Kickback Statute.

In connection with the Department of Justice settlement agreement, Essilor entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). The CIA requires, among other things, that Essilor hire an independent review organization to review its systems, policies, processes and procedures for ensuring that any discounts, rebates or other reductions in price offered to providers comply with the Anti-Kickback Statute.

The CIA also requires Essilor to implement a new written review and approval process to ensure all existing and new discount arrangements comply with the Anti-Kickback Statute.