Legal and imaging industry experts agreed that a whistleblower lawsuit against several Chicago-area imaging centers could spur other states to investigate a business practice that is controversial, yet common, among radiologists and referring physicians.
Illinois Attorney General Lisa Madigan announced January 17 that her office was intervening in a whistleblower suit against several imaging center companies charged with paying kickbacks to referring physicians under the false cover of leasing arrangements.
The case arose from a complaint originally filed in February 2006 by John Donaldson, a local imaging center owner. Donaldson's suit seeks "injunctive relief and to recover treble damages and penalties," charging that physicians and 11 imaging centers engaged in a "fraudulent scheme" in which the doctors paid the centers a reduced rate for MRI scans and other services, but charged patients' health insurers a higher rate, pocketing the difference.
"In certain instances, the MRI service center assisted and facilitated the physician, who did none of the MRI services, to bill the patients and the insurers in the physician's name for the MRI scan service performed by the MRI service center," according to the complaint (People Of The State Of Illinois, ex. Rel. John Donaldson, v. MIDI LLC, et al).
Donaldson's suit was sealed for 11 months while the state attorney general's office conducted its own investigation. Investigators ultimately concluded that the physicians were involved in leasing agreements designed to disguise their true nature.
MIDI executives declined to comment for this story. According to the company's Web site, MIDI LLC owns and operates a nationwide network of imaging centers, including 13 in Illinois, all under the name Open Advanced MRI.
Paul Gaynor, chief of the special litigation bureau in the Office of the Illinois Attorney General, told AuntMinnie.com that his office was still calculating the amount of money involved.
"What they did here is illegal," Gaynor said. "They entered into these so-called lease agreements. And the agreements purported that the physicians were renting the space to do their scans; that was not the case." He added that "no value was added for patients" in these transactions.
National ramifications
In light of the case, Jennifer Breuer, a partner in the Chicago law firm of Drinker Biddle Gardner Carton, told AuntMinnie.com that physicians nationwide should reconsider their leasing arrangements.
"What they should learn is that they need to take the rules seriously, because what makes good business sense in the healthcare world isn't always lawful. If we were not in the healthcare arena, a lot of these things that make totally good business sense would be a usual and customary practice," she said.
Breuer, who has helped clients work out leasing arrangements, said that this type of suit could "absolutely" be replicated in other states. "It's also the kind of thing the federal (Office of the Inspector General) could become interested in."
At that point, "you're looking at Medicare, and false claims, and treble damages, and potentially criminal damages," she cautioned.
Of course, the Illinois attorney general's action is not the first state-level development in the leasing area. In June 2005, the state of Florida unsealed a whistleblower action against University MRI & Diagnostic Imaging Centers, charging that a leasing arrangement with referring physicians allegedly violated federal antikickback statutes.
Also that month, the Louisiana State Board of Medical Examiners issued a position statement addressing issues around per-use payments in leasing agreements between referring physicians and imaging centers. That body's interpretation of federal antikickback statutes was that such arrangements clearly violated profit-sharing prohibitions in the statutes.
A prominent healthcare attorney, who spoke to AuntMinnie.com on the condition of anonymity, agreed that other states may soon jump into the fray. He said he was particularly struck by one sentence in a press release by Madigan's office: "This is an illegal practice that must stop."
His interpretation of this statement: Madigan's team has taken a broad-brush view of all "per-click deals," as per-use leasing agreements are sometimes called. "Based on this action, you may see other complaints by other attorneys general in other states," he said.
However, the attorney added that based on the complaint alone, "it's impossible to say whether it's a weak or strong complaint." And how culpable individual radiologists are in this situation is still unknown.
"I know some of the radiologists named in the lawsuit. Some of the radiologists probably were drawn into this situation innocently at first, feeling under economic pressure to make such arrangements," commented Dr. Leonard Berlin, chairman of the department of radiology at Rush North Shore Medical Center in Skokie, IL.
Radiologists and other physicians should look at this lawsuit and carefully consider their business arrangements, Berlin added. The Illinois lawsuit could ultimately be good for the industry, as it might end practices that make the public question the business ethics of radiologists and other doctors, he said.
By Mark Hagland
AuntMinnie.com contributing writer
January 24, 2007
Related Reading
Illinois AG joins leasing suit against MRI centers, January 18, 2007
CA bill to ban leasing deals moves forward, July 10, 2006
Government response to escalating imaging costs, December 12, 2005
Whistleblower accuses radiologist of referral, lease kickbacks, July 19, 2005
States, payors seek to stem tide of self-referral abuse, October 29, 2004
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