Whistleblower alleges Medicare fraud at Florida imaging centers

A Florida radiologist has been named as a defendant in a whistleblower lawsuit alleging Medicare fraud though improper lease arrangements, kickbacks, and upcoding.

The lawsuit was brought against Dr. Fred L. Steinberg, a radiologist who operates three MR imaging facilities in the Boca Raton area by Dr. David A. Clayman, a neuroradiologist who alleges he was terminated the same day he confronted Steinberg about coding standards at the practice. Clayman worked for Steinberg from October 1999 until July 2002.

Clayman's complaint was filed in the U.S. District Court for the Southern District of Florida in Miami in December 2002 and was kept sealed while the government investigated the allegations and determined whether to join the action. The government's criminal investigation is still under way.

Judge Donald M. Middlebrooks ordered the document unsealed on June 1 and summonses were then issued for Steinberg, his businesses, and 24 defendants, most of them referring physicians. In early July, the plaintiff dropped most of the defendants from the complaint, leaving only Steinberg and three of his businesses: MRI Radiology Network, University MRI of Boca Raton, and West Boca Open MRI.

Both sides have agreed to a six-month stay through December. A trial date may be set in early January by Magistrate Judge Linnea R. Johnson provided plaintiffs file an amended complaint.

Clayman declined to comment. A spokesperson for Steinberg said that the allegations in the complaint are just that, allegations, and nothing more.

"The first time that Dr. Steinberg and University MRI ever heard of these allegations was when the complaint was unsealed in June of this year. Not once in his years with University MRI did Dr. Clayman raise any of these issues or concerns with Dr. Steinberg," said Dana Clay.

The complaint against Steinberg falls under the federal False Claims Act and could result in fines of between $5000 and $11,000 for each claim, and three times the amount of the damages sustained by the government.

The False Claims Act also entitles Clayman to share in any recovery, ranging from 15% to 30%, according to Phillip Benson of Warren/Benson in Los Angeles, an expert in qui tam, or whistleblower, law. Steinberg's revenue from patient fees between 1999 and 2002 exceeded $33 million, according to the complaint.

In an attempt to dismiss the complaint, Steinberg filed on July 8 a motion that states, in part, that Clayman does not support any of his allegations with facts, as is required under the False Claims Act.

The complaint alleges three types of fraud: upcoding, billing for medically unnecessary services, and billing for services referred or ordered by others with whom there were financial relationships not protected under the federal Stark II anti-kickback law. The complaint alleges that Steinberg used incentive programs to compensate physicians for referring patients. One involved creating medical directorships for referring physicians, which the complaint said were "papered to look legitimate but that in fact constituted unlawful kickback arrangements that compensated physicians for referrals to Steinberg and his entities for radiology services."

Another involved lease agreements between Steinberg and physician groups at below-market terms. According to the complaint, Steinberg was hired to perform radiology services for those groups, which could share in the technical and professional reimbursement. In return, these groups would refer most of their other, more lucrative radiology work to Steinberg.

According to the complaint, one orthopedic group referred business to Steinberg valued at more than $550,000 for MR scans and nearly $225,000 for CT scans in November 2000. This was after the orthopedists had entered into a bone mineral density lease agreement with Steinberg.

Upcoding involves using a CPT code that provides a higher payment rate than the code that better describes the service furnished to the patient. The complaint alleges that Steinberg systematically upcoded radiology procedures at all of his facilities. Bills that were sent for reimbursement would report an upcoded service such as "CT chest with and without contrast," while the radiologist's report in the patient's file would describe only the procedure performed such as "CT of the chest with contrast only." In this example, the added revenue from the higher code is $75.

The complaint alleges that Steinberg performed virtual colonoscopies that were not reimbursable but billed them using reimbursable codes, performed CT scans of the abdomen and pelvis with contrast and reported them as scans with and without contrast, resulting in an overpayment of $133, and routinely added pelvis to abdominal CT scans, resulting in an overpayment of $385.

Unbundling MR brain scans proved profitable for Steinberg, according to the complaint. MRI of the pituitary has no separate CPT code but is part of an MRI of the brain. The complaint alleges that Steinberg would do a separate scan through the pituitary fossa and code it for MRI orbit, face, and neck, netting added revenue of $1029. He'd use the same code - 70543 - to get paid separately for an MRI of the internal auditory canals, which has no CPT code, the complaint asserts.

Despite nearly three years of investigation and fact gathering, Clayman has alleged only overly broad allegations of fraud and not detailed information about claims actually submitted, according to Clay.

The motion to dismiss concludes that Clayman's complaint must be dismissed because he does not identify any invoices submitted by defendants to the government based on the alleged fraud.

On May 19, dozens of investigators from the U.S. Postal Service and Department of Health and Human Services raided University MRI, one of Steinberg's businesses, according to the Boca Raton News. No arrests were made, and it is unclear whether the investigators removed any computer hardware, according to the report.

Clay would not characterize the police presence as a "raid," saying that University MRI and Steinberg are cooperating fully with the government, and according to the government, neither Steinberg nor University MRI are targets of the investigation.

For more information from the Diagnostic Imaging archives:

I just hate to hear that lonesome whistle blow

Danger lurks in schemes involving outside reads

Florida fraud crackdown targets MRI, leads to a host of new regulations

Huge award vindicates Yale radiologists