The U.S. government has filed suit seeking $150 million in damages and penalties under the False Claims Act against Universal Imaging, Inc. and its current and former owners, Phillip J. Young and Mark Lauhoff, U.S. Attorney Barbara L. McQuade announced late last week.
The complaint alleges that Universal and the owners, who are not medical professionals, conducted a medical radiology business in violation of numerous Medicare rules relating to adequate supervision of diagnostic tests and generated 90 percent or more of their business by paying kickbacks to physicians.
[See also: Fraud charges filed against 91 individuals for $295M in false Medicare billing]
Also named in the complaint is Gwendolyn Washington, a primary care physician who received kickbacks for referrals from Universal and as a result, ordered dangerously high levels of tests involving injection of radioactive material into patients.
The complaint alleges that although Universal was required under Michigan law to be organized as a non-profit corporation to ensure the health and safety of patients, it surreptitiously continued to operate as a for-profit corporation by transferring its equipment to a for-profit entity, MRI Leasing LLC, with the same owners. Universal then made "lease" payments to that for-profit entity for Universal's equipment, profiting the owners in circumvention of the laws relating to Michigan non-profits.
McQuade also announced settlements totaling $1.56 million with 14 physicians or physician groups who were paid for their referrals by Universal.
"Doctors should be aware that we are scrutinizing records and detecting fraud and kickbacks," said McQuade in a statement. "We hope that our aggressive enforcement will deter doctors from cheating the taxpayers and endangering patients."
[See also: Fraud costs healthcare industry up to $600M a year]
Richard Chesbrough, MD, and his wife Kim Chesbrough, who formerly worked at Universal, filed a qui tam whistleblower suit under the False Claims Act bringing many of the facts in the case to the government's attention.
McQuade encouraged others to do the same.
"We urge other physicians with knowledge of these inappropriate relationships to come forward, either by calling our office and asking to speak to the criminal or civil health care fraud coordinators, or through the qui tam whistleblower mechanism," she said.
Follow HFN Editor Rene Letourneau on Twitter @ReneLetourneau