Medicare fraud settlement is among largest ever by a physician practice
April 14, 2008 -- A prominent Boca Raton radiologist and owner of several medical scanning centers in southern Florida will pay $7 million to settle a whistleblower lawsuit and government charges that he fraudulently billed Medicare for CT scans and other medical imaging tests that were not ordered, not medically necessary and often never even performed, it was announced today.
The lawsuit brought under the federal False Claims Act against Dr. Fred L. Steinberg and his businesses, University MRI & Diagnostic Imaging Centers, also alleged that he paid illegal kickbacks to internists, neurologists and orthopedic doctors throughout the Boca Raton area in return for sending him patients for CT scans, MRIs and other imaging tests.
Today's Mecicare fraud settlement marks the culmination of a "qui tam" (whistleblower) suit against Dr. Steinberg filed in 2002 by Dr. David Clayman, a radiologist who previously worked for Dr. Steinberg. Upon discovering the fraudulent billings, Dr. Clayman confronted Dr. Steinberg and as a result was immediately fired.
After a lengthy investigation by federal prosecutors and agents, including search warrants executed on Dr. Steinberg's businesses in 2005, the Department of Justice joined in Dr. Clayman's qui tam lawsuit. For his work on the Medicare fraud case and that of his attorneys, the government is awarding Dr. Clayman 25 percent of the government's recovery, which is the maximum reward granted whistleblowers under the terms of the False Claims Act.
"This settlement is among the largest recoveries ever for Medicare fraud against a single physician and his practice," said Peter W. Chatfield, a Washington, DC, attorney with Phillips & Cohen LLP, which represents Dr. Clayman and specializes in representing whistleblowers nationwide. "It took a lot of guts for Dr. Clayman to risk his professional career to pursue this case even after the lawsuit became public and the government hadn't decided whether to join."
The qui tam lawsuit said Dr. Steinberg directed his staff to routinely and fraudulently bill Medicare for more complicated and expensive scans when simpler tests were being done. For example, according to the whistleblower lawsuit, Dr. Steinberg's centers consistently billed Medicare as if their employees had performed dual sets of CT scans on patients - one set with and one set without intravenous contrast - when in reality only a set of scans with contrast was performed.
In other instances, Dr. Steinberg directed his staff to perform extra tests that were not ordered or needed, such as adding a pelvis scan when an abdominal scan was ordered, the qui tam lawsuit said.
"For years Dr. Clayman was vilified by Dr. Steinberg and his attorneys, who disparaged his lawsuit as the bogus allegations of a disgruntled and greedy opportunist," said Janet L.Goldstein of Vogel, Slade & Goldstein, LLP in Washington DC, another nationwide whistleblower law firm which is co-counsel on the case. "There is nothing bogus about today's $7 million payment."
One of the most common kickback arrangement employed by Dr. Steinberg, according to the lawsuit, was to pay referring doctors thousands of dollars for "medical directorships," "consulting" services and "research" that involved little or no work.
For example, according to the lawsuit, three physicians from one referring practice group were paid a total of $52,000 through kickback arrangements in less than a year. In just one month during that period, those doctors referred 106 patients to the imaging centers, resulting in more than $240,000 in revenue to Dr. Steinberg and his businesses.
Another ploy used by Dr. Steinberg, as described in the lawsuit, was to enter into below-market equipment lease deals with referring doctors. The doctors then shared the profits with Dr. Steinberg on the MRIs, CT scans and ultrasounds performed.
"The problem with these types of financial arrangements is that doctors end up referring patients for medical tests with an eye toward lining their own pockets rather than focusing fully on their patients' needs," attorney Chatfield said.
Fraud and abuse in the medical imaging area is of particular concern to the Medicare program. Medicare's spending on medical imaging more than doubled from $6.6 billion to $13.7 billion between 2000 and 2005, an average annual growth rate of 15.7 percent, according to the Department of Health and Human Services Center for Medicare and Medicaid Services.
"Radiologists like Steinberg who bilk Medicare on the services they provide and grease the palms of referring doctors are a huge factor in these soaring costs," said attorney Goldstein. "Our client applauds the aggressive actions taken by the United States here in cracking down on behavior that is all too common in the imaging industry."
Chatfield singled out Amy Easton of the U.S. Department of Justice's Civil Division and Jeffrey Dickstein of the U.S. Attorney's Office in Miami for their work. "They did a great job of picking up the case and working with us to bring it to a successful conclusion," he said.
Case citation: U.S. ex rel David Clayman, M.D., v. Fred Steinberg, et al., Civil Action No. 02-81143