Sabine Settlement

BATON ROUGE, LA – Acting United States Attorney Walt Green and Louisiana State Attorney General James “Buddy” Caldwell announced today that the United States and the State of Louisiana have reached a civil settlement with defendants, SABINE OPTICAL LABORATORIES, INC. d/b/a THE VISION CENTER (“SABINE”), DR. CARL CARNAGGIO, SR., DR. CARL CARNAGGIO, JR. and LORI CARNAGGIO (collectively “SABINE DEFENDANTS”) and Cypress Optical Laboratory, LLC, a SABINE-affiliated company. According to the terms of the settlement, SABINE paid $1,200,000 to the United States and the State of Louisiana, $819,960 of which constitutes the federal share and $380,040 of which constitutes the state share of costs reimbursed to the Medicaid program, which is a Federal-State matching entitlement program providing medical assistance for certain individuals and families with low incomes and resources.

The settlement concludes a two-and-a-half-year investigation into a major health care fraud “whistle blower” or “qui tam” law suit filed in March 2011 by a former SABINE employee under the qui tam provision of the Federal and State False Claims Acts. This provision allows a private person, known as a “relator,” who has information concerning the submission of false or fraudulent claims to government programs such as Medicaid, to bring a lawsuit on behalf of the United States and the State of Louisiana and receive a portion (between 15-25 percent) of any recovered damages. The lawsuit remains under seal during the investigation until the Court orders otherwise.

The settlement resolves allegations that from August 2005 through April 30, 2012, the SABINE DEFENDANTS violated the Federal and State False Claims Acts (and unlawfully enriched themselves) by improperly billing Medicaid for services performed by an unauthorized provider using the Medicaid provider number of another provider, for adjustment and dispensing services that were never performed, for worthless services due to an excessive number of Medicaid patients being seen in one day, and for lenses that were never made.

In September 2012, the Court ordered a partial lift of the seal enabling the United States, the State of Louisiana, and the SABINE DEFENDANTS to engage in extensive discussions and negotiations which ultimately led to the signing of the Settlement Agreement. The SABINE DEFENDANTS fully cooperated during all stages of the process. The Settlement Agreement is neither an admission of liability by the SABINE DEFENDANTS nor a concession by the United States or the State of Louisiana regarding the merits of the claims. Also, in accord with the terms of the Settlement Agreement, the qui tam lawsuit has been dismissed with prejudice as to the Relator and the State of Louisiana, with prejudice as to the United States as to those elements that are coextensive with the Covered Conduct identified in the Settlement Agreement, but without prejudice as to the United States as to any conduct that falls outside the scope of the Covered Conduct.

Acting United States Attorney Walt Green stated, “Our office has made fighting health care fraud a top priority in this district, through criminal and civil prosecutions against those who violated federal health care laws. This case demonstrates our steadfast commitment to this mission. By using available federal civil remedies such as the False Claims Act—the particular remedy used in this case—we not only recover millions of dollars from those who have unlawfully enriched themselves at the expense of our nation’s taxpayers, but we send a clear and strong message to would-be fraudsters and those who would seek to play fast and loose with this nation’s health care laws and programs that we will not allow them to profit from their unlawful and fraudulent schemes.”

Attorney General Buddy Caldwell said, “This case serves as a successful example of ensuring that those who attempt to abuse our Medicaid program reap the consequences of their actions. We’re pleased that hundreds of thousands of dollars will be returned to Louisiana’s Medicaid fund and pay for programs that serve some of our most vulnerable citizens.” Caldwell added, “In addition to protecting Medicaid and Louisiana taxpayers, we are committed to sustaining a pro-business environment where those who cheat do not profit at our citizens’ expense, or at the expense of businesses that play fair.”

The investigation of the “whistle blower” or “qui tam” lawsuit was conducted by the United States Attorney’s Office for the Middle District of Louisiana, headed by Assistant United States Attorney, James L. Nelson, who serves as the office’s Affirmative Civil Enforcement and Civil Health Care Fraud Coordinator, with the assistance of Celia Bailey, the office’s Health Care Fraud Paralegal Specialist, and Michelle Martin, the office’s ACE Investigator; the Louisiana Department of Justice Medicaid Fraud Control Unit (MFCU), headed by Assistant Attorney General Nick Diez, with the assistance of MFCU Investigator Virginia Brandt; and the Baton Rouge Office of the United States Department of Health and Human Services, Office of the Inspector General, headed by now-retired by Bill Root, Resident-Agent-in-Charge (RAC) and presently by RAC Barbara Alleman, with the assistance of OIG Investigator Michele Louviere.