Department of Justice Reaches $15.5 million Settlement With Diagnostic Testing Facility for Alleged False Claims and Illegal Kickbacks

by John W. Kaveney

On February 25, 2014 the Department of Justice (DOJ) issued a press release  announcing a false claims settlement with Diagnostic Imagine Group (DIG).  Operating a chain of diagnostic testing facilities through its subsidiary, Doshi Diagnostic Imaging Services,  DIG agreed to pay a total of $15.5 million to resolve allegations that it had falsely billed federal and state health care programs for tests not performed or not medically necessary. The company, which is headquartered in Hicksville New York, was also alleged to have paid improper kickbacks to physicians for referrals.  The settlement was coordinated with the office of New York Attorney General Eric Schneiderman.  DIG will pay $2.9 million of the total settlement for the resolution of New York claims with $190,384 being repaid to the New Jersey Medicaid program.

DIG was facing allegations that it submitted claims to Medicare and the New York and New Jersey Medicaid programs for 3D reconstruction of CT scans that were never performed or interpreted along with allegedly bundling certain tests on its order forms so that physicians could not order other tests without ordering additional bundled tests, which were not medically necessary. Additionally, the settlement resolved allegations of kickbacks to physicians in the form of payments to ostensibly supervise patients who underwent nuclear stress testing, which allegedly exceeded fair market value and were effectively intended to reward physicians for referrals.

The settlement resolves three qui tam, or whistleblower, lawsuits that had been filed pursuant to the provisions of the False Claims Act. The qui tam plaintiffs will receive $1.5 million, $1.07 million and $209,250 respectively from the settlement proceeds for their involvement.  Two of the relators were physicians, including one who had served as an Assistant Medical Director for DIG.

This settlement illustrates the push by the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services (HHS) Kathleen Sebelius to help focus efforts to reduce and prevent Medicare and Medicaid fraud. In FY 2013 alone the government reported recovery of $4.3 billion in health care fraud, which was up $100 million from FY 2012. This brings the grand total recovery over the past five years to $19.2 billion. According to HHS, for every dollar spent on health care-related fraud and abuse investigations through this and other programs in the last three years, the government recovered $8.10.

Comments by Attorney General Eric Holder evidence that the government will only be reinforcing and strengthening its efforts to continue to root out fraud. “With these extraordinary recoveries, and the record-high rate of return on investment we’ve achieved on our comprehensive health care fraud enforcement efforts, we’re sending a strong message to those who would take advantage of their fellow citizens, target vulnerable populations and commit fraud on federal health care programs. Thanks to initiatives like HEAT, our work to combat fraud has never been more cooperative or more effective.” Providers should anticipate enforcement and investigation efforts to only increase in the future.

Copies of the DOJ, HHS and the NY AG press releases can be found at:
http://www.justice.gov/opa/pr/2014/February/14-civ-200.html
http://www.hhs.gov/news/press/2014pres/02/20140226a.html 
http://www.ag.ny.gov/press-release/ag-schneiderman-announces-155m-settlement-ny-radiology-practice-billed-medicaid-and