A company operating diagnostic testing facilities in New York has agreed to pay $13.65 million to the federal government and $1.85 million to New York and New Jersey for a total of $15.5 million in penalties to settle claims it falsely billed federal and state health care programs for tests that were not performed or not medically necessary and for paying kickbacks to physicians. The company denies liability for the allegations that are part of the settlement.
The settlement resolves allegations that between 1999 and 2010 the radiology group submitted false claims to Medicare and state Medicaid programs in New Jersey and New York for Three Dimensional reconstructions of CT scans that, according to the complaint, were medically unnecessary, were not ordered by the treating physicians, and in some cases were never actually performed or interpreted. These scans are often used in orthopedic, cardiovascular and neurologic imaging, including to visualize complex fractures, tumors in the lungs or soft tissues, and cardiac issues. In addition, the group allegedly submitted false billings for expensive imaging services, including retroperitoneal ultrasounds, Doppler scans, transrectal ultrasounds and pelvic x-rays. These imaging services allegedly resulted in a total of more than 40,000 false claims made to the New York Medicaid program.
The group also allegedly bundled certain procedures, such as ultrasounds and x-rays, on its order forms so that physicians were forced to order additional bundled procedures which were not medically necessary while ordering other procedures. Lastly, the settlement also resolved claims that the radiology group was in violation of the federal Anti-Kickback Statute, the Stark Physician Self-Referral Law as well as corresponding New York state laws. Specifically, the group allegedly paid kickbacks to physicians for the referral of diagnostic tests that were submitted to New York Medicaid from October 5, 2001, to July 22, 2012. The kickbacks were allegedly in the form of payments to the physicians as part of a service agreement to supervise patients undergoing nuclear stress tests. The government averred that these payments exceeded fair market value and were actually intended to reward the physicians for their referrals.
In addition to the steep penalty described above, the company has entered into a five-year Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of the United States Department of Health and Human Services. In addition to a host of other obligations, under the CIA an independent review organization, such as an accounting, auditing, law or consulting firm will have to perform reviews of the group’s claims for five years and send reports to the government.
The settlement is based on three whistleblower lawsuits brought by private individuals in 2009 and 2010 pursuant to state and federal false claims acts filed in the U.S. District for New Jersey and the Eastern District of New York. The False Claims Act (“FCA”) allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The three whistleblowers, the former Associate Medical Director Mark Novick, M.D., medical supply company representative Rey Solano and Florida radiologist Richard Steinman, M.D., will receive $1.5 million, $1.07 million and $209,250, respectively, as part of the settlement.
The three cases are captioned United States ex rel. Mark Novick, M.D. v. Doshi Diagnostic Imaging Services P.C., Civil Action No. 09-4992 (D.N.J.), United States ex rel. Rey Solano v. Diagnostic Imaging Group et al., Civil Action No. 10-267 (D.N.J.) and United States ex rel. Richard Steinman, M.D. v. Diagnostic Imaging Group, et al., Civil Action No. 10-4161 (E.D.N.Y.).