NEW YORK CITY, Feb. 25, 2014 — A chain of medical radiology facilities has agreed to pay the federal government and the states of New York and New Jersey a total of $15.5 million to settle three whistleblower lawsuits – including one filed by Phillips & Cohen LLP – that alleged Medicare and Medicaid billing fraud.
The “qui tam” lawsuit filed by Phillips & Cohen alleged that Doshi Diagnostic Imaging Services P.C. and its parent company, Diagnostic Imaging Group LLC, billed Medicare and Medicaid for enhanced three-dimensional (3D) images when a patient had certain CT scans done – even though the enhanced 3D images weren’t ordered by the patient’s doctors, weren’t medically necessary and often were never even taken.
The 3D tests are more detailed than the standard two-dimensional CT scans and typically are used to treat complex fractures, tumors in the lungs and cardiac issues where it is important to have a more detailed view of the affected area of the body.
“Three-dimensional CT scans aren’t medically necessary or even useful in all medical situations,” said Tim McCormack, a whistleblower attorney in Washington, DC, with Phillips & Cohen. “They are, however, useful in increasing a healthcare provider’s revenue because Medicare and Medicaid pay an additional cost for them on top of the cost for the base CT scans.”
The other two qui tam lawsuits alleged that Doshi billed Medicare and Medicaid for certain other diagnostic tests in addition to the 3D scans, including retroperitoneal ultrasounds and Doppler scans, and that Doshi paid kickbacks to certain physicians in exchange for referrals.
Doshi is headquartered in Hicksville, NY, and has facilities in New York and New Jersey. It is a subsidiary of Diagnostic Imaging Group, which is registered in Delaware.
The qui tam lawsuits were filed “under seal” in 2009 and 2010 in district courts in New Jersey and Brooklyn, New York. The cases were made public today after the court approved the settlement and unsealed the qui tam lawsuits.
Doshi and its parent company will pay $13.6 million to the federal government, $1.7 million to New York and $95,192 to New Jersey. Payments to the states are based on their share of the Medicaid recoveries.
Under the False Claims Act and similar state laws in New York and New Jersey, whistleblowers may sue companies and individuals that are defrauding the government and collect a reward based on the amount recovered. The three whistleblowers will share the whistleblower reward.
“The team of government lawyers and investigators, working together from multiple jurisdictions, did an excellent job on this case,” said McCormack.