Detroit medical imaging company faces $150M lawsuit

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The U.S. government has filed suit seeking $150 million in damages and penalties from Universal Imaging, a Detroit-based medical imaging company, and its current and former owners, Phillip J. Young and Mark Lauhoff, according to the U.S. Attorney’s Office for the Eastern District of Michigan.

Falling under the False Claims Act, the complaint alleges that Universal and its owners, who are not medical professionals, violated numerous Medicare rules relating to adequate supervision of diagnostic tests and generated 90 percent or more of their business by paying kickbacks to physicians.

Also named in the complaint was Gwendolyn Washington, a primary care physician who received kickbacks for referrals from Universal and as a result ordered a high number of tests which could have unnecessarily exposed patients to radiation.

"Doctors should be aware that we are scrutinizing records and detecting fraud and kickbacks," said U.S. Attorney Barbara L. McQuade. "We hope that our aggressive enforcement will deter doctors from cheating the taxpayers and endangering patients."

Under Michigan law, Universal was required to be organized as a non-profit corporation to ensure the health and safety of patients, but the complaint alleges that Universal surreptitiously continued to operate as a for-profit corporation. According to the U.S. Attorney’s Office, Universal allegedly transferred equipment to a for-profit entity, MRI Leasing, which had the same owners, then Universal made “lease” payments to MRI Leasing for the use of Universal’s own equipment, with the owners taking advantage of the profit.

The case was brought to the attention of the government by radiologist Richard Chesbrough, MD, and his wife, Kim Chesbrough, who formerly worked for Universal and filed a qui tam whistleblower suit under the False Claims Act, according to McQuade.

McQuade also said settlements totaling $1.56 million had been reached with 14 physicians or physician groups who were paid for their referrals by Universal.