Imaging center settles fraud claim

SEATTLE – One of the largest providers of diagnostic imaging services for doctors and hospitals has agreed to pay at least $1.2 million to settle an allegation of Medicaid billing fraud.

The fraud allegation came in a whistle-blower lawsuit filed by a Seattle doctor and a former company vice president.

The lawsuit was filed against Minnesota-based Center for Diagnostic Imaging five years ago. Earlier this week, the Department of Justice announced it intended to intervene in the case and was on the verge of settling the billing issue.

CDI President and Chief Operating Officer Tom Tomlinson gave the Seattle Times details of the proposed settlement on Friday.

Lawyers for the whistle-blowers, Seattle radiologist Dr. Alexander Serra and Patricia West, say the proposed settlement amount is inadequate and they will fight for more in court.

In addition to the billing issue, Serra and West allege CDI provided illegal kickbacks to doctors for referrals, defrauded Medicare by not requiring written doctors’ orders for some examinations, and engaged in a conspiracy to defraud the health care system.

West also claims she was fired in 2004 in retaliation for her repeated complaints about the billing practices.

The lawsuits were filed under a provision of the federal False Claims Act that allows an individual to sue on behalf of the government in cases alleging fraud on the part of contractors or others who receive government money. If they win, the whistle-blowers get to keep between 15 and 30 percent of any money recovered. The remainder goes back to the government.

The Department of Justice reviews every one of these lawsuits and can intervene, in some cases taking over the lawsuit altogether.

In this case, the government joined the whistle-blowers only on the issue of CDI’s practice of allegedly “upcoding” some procedures to obtain larger Medicare reimbursements.

In court filings, the Department of Justice says it will not involve itself in the lawsuit’s other allegations for now, although it will continue to monitor the suit’s progress.

If money is recovered for the government, the False Claims Act allows West and Serra to get a larger cut for having pursued the case on their own.