Radiologist forced to settle in whistleblower case. Source: Above the Law

The owner of a medical imaging center chain in Boca Raton, Fla., has agreed to pay $7 million to settle a healthcare fraud lawsuit, which charged that the center billed for CT scans that were never performed and offered payments to doctors to refer patients to its facilities.

According to the Wall Street Journal (WSJ), the centers operate under the umbrella organization of University MRI & Diagnostic Imaging Centers. The U.S. attorney in Miami began investigating owner and radiologist Fred Steinberg, MD, after a radiologist, who was previously employed at the centers, filed a whistleblower lawsuit in 2002 alleging fraud.

The settlement, reached March 31 and announced Monday, also resolves allegations that Steinberg illegally paid as many as 24 local doctors to send him patients for imaging tests, which can cost up to $2,500 each. The facilities also performed CT scans and ultrasound exams that were not ordered by physicians and not medically necessary, according to the WSJ.

The imaging centers deny that any of the financial relationships with physicians were illegal or improper. Federal law prohibits healthcare providers from offering payments in exchange for referrals, the WSJ reported.

U.S. Attorney Alex Acosta said the case represented an "abuse of the Medicare program that squanders scarce Medicare dollars." However, the settlement allows the facilities to continue doing business with Medicare. Steinberg has not admitted any wrongdoing, according to the South Florida Sun-Sentinel.

The U.S. Department of Justice has reached after-the-fact determinations regarding medical necessity for radiology tests, which could have a chilling effect on the ability of radiologists to properly provide their patients high-quality imaging services, according to the Sun-Sentinel.

One arrangement referenced by the government and the whistleblower was "lease agreements" in which local doctors contracted with University MRI to scan their patients. Other inducements offered to physicians for referrals included "medical director" positions for referring physicians and payments for clinical research, according to the U.S. attorney's office.

According to the WSJ, the whistleblower complaint charges that those arrangements required little or no work and were instead a way to pay doctors for referrals. The complaint names 11 physicians who allegedly participated in the arrangements, which paid as much as $6,000 a month.

The American College of Radiology estimates that Medicare and insurers pay as much as $16 billion annually for unnecessary imaging tests ordered by doctors who profit from them.