Jack L. Baker, MD, a Houston radiologist who owned and operated Fairmount Diagnostic Center and Open MRI, has agreed to pay $650,000 to the U.S. to settle claims that he illegally paid doctors to induce referrals to his imaging center.

Allegations against Baker include violations of the False Claims Act, the Anti-Kickback Statute, the Stark Statute and the Texas Medicaid Fraud Prevention Act between 2002 and 2010, according to a release issued by the U.S. Attorney’s Office, Southern District of Texas.

“Improper financial relationships between health care providers and their referral sources can corrupt a physician's judgment about the patient's true healthcare needs,” Kenneth Magidson, U.S. Attorney, said in the release.

Specifically, Baker was alleged to have entered into improper financial relationships with up to 17 physicians, including sham personal services contracts that took into account the value of referrals from medical directors and contracts that paid the salaries of employees in physicians’ offices, which also took the value of referrals into account. Billing Medicare for referrals from doctors with whom the providers have a financial relationship is prohibited in most cases under the Stark Statute and the Anti-Kickback Statute, according to the U.S. Attorney’s Office.

The allegations first came to light in a 2010 whistleblower lawsuit filed under the False Claims Act by two practicing physicians, Philip Blum, MD, and David Spinks, MD. In bringing the suit on behalf of the government, Blum and Spinks will receive 20 percent of the proceeds of the settlement.

In addition to the settlement payment, Baker also agreed to a voluntary suspension from the Medicare and Medicaid programs under which he will not be allowed to bill for treatment of Medicare and Medicaid beneficiaries for six years, according to Magidson.