Florida radiologist agrees to pay $7 million to resolve kickback claims

Dr. Fred L. Steinberg and his imaging centers and related entities in Palm Beach County near Miami will pay $7 million to settle alleged violations of federal Stark self-referral law and anti-kickback statutes. He was also charged with billing fraud.

The settlement, announced April 14, resolves allegations that Steinberg and his imaging centers funneled Medicare payments back to several referring physicians through time leasing arrangements for MRI. It also resolves allegations that payments to referring physicians for their work as medical or research directors at Steinberg's centers and research group exceeded fair market value.

Steinberg denied the government's claims despite agreeing to the settlement.

"Dr. Steinberg entered the settlement to end the protracted litigation and to get these matters behind him," said defense attorney Thomas Greeson in an interview with Diagnostic Imaging. "He admits to no wrongdoing."

Greeson was one of several attorneys from the law offices of Reed Smith LLP who were involved in Steinberg's defense.

The U.S. Department of Justice alleged that portions of CT scans conducted at Steinberg's imaging centers were not performed, though the procedures were billed and reported to patients' physicians. Bills submitted by Steinberg and his entities to federal healthcare programs, including Medicare, claimed that thousands of CT scans were carried out both with and without contrast, when in reality the CT scans without contrast were not performed, according to a DOJ statement.

The government also alleged that the Steinberg facilities did CT scans and ultrasound exams that were not ordered by physicians and were not medically necessary.

The DOJ initiated the investigation in response to a whistleblower action under the False Claims Act brought by Dr. David A. Clayman, a neuroradiologist and former employee of one of Steinberg's group practices. Clayman claimed he was fired in July 2002 after discussing his concerns about Medicare billing problems with Steinberg.

Twenty-four defendants, most of them referring physicians, were named in the original civil suit, but all but Steinberg and three of his imaging facilities - MRI Radiology Network, University MRI of Boca Raton, and West Boca Open MRI - were subsequently dropped from the complaint.

Under the False Claims Act, private individuals can bring actions for fraud on behalf of the U.S. and collect a share of any proceeds recovered by the suit. Clayman will receive $1.75 million as his share of the recovery, the DOJ said.

"This settlement confirms our vigorous pursuit of allegations of fraud and abuse in federal healthcare programs, against both companies and individuals," said Jeffrey S. Bucholtz, acting assistant attorney general for the DOJ's civil division, in a news release. "All participants in these programs must abide by the government's requirements for the provision of care and proper billing, and this settlement reflects the importance the department places on compliance with the law, including those laws governing prohibited financial relationships."

The settlement also resolves allegations that financial inducements were paid to physicians for patient referrals, which is prohibited under the Stark law and the anti-kickback statute. These inducements took the form of medical directorships, clinical research chairs, employment, facility use, and equipment lease agreements that exceeded fair market value or otherwise failed to comply with federal law, according to the DOJ.

The size of the $7 million settlement was more a reflection of the alleged self-referral and anti-kickback violations than the alleged billing fraud segment of the case, according to Greeson. The Steinberg case was a rare instance in which the Justice attorneys pursued a radiologist as a result of his financial relationship with referring physicians.

"When they look at arrangements with respect to Stark and anti-kickback issues, even when the studies are ordered and appropriate, the government believes they are all fair game for repayment," Greeson said.

A news release issued by University MRI and Diagnostic Imaging Centers questioned the department's use of "after-the-fact" determinations regarding the medical necessity for radiolology tests in the case.

"This could have a chilling effect on the ability of radiologists to properly provide their patients high-quality imaging services," it said.

For more information from the Diagnostic Imaging archives:

Scan time leases: referring clinicians mine for gold in radiology's backyard

Whistleblower alleges fraud at Florida imaging centers

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