A South Texas children's hospital and a nearby radiology center have agreed to pay a total of $2.3 million to settle whistle-blower allegations that they double-billed government healthcare programs for work on genetic ultrasounds, even after the billing problems initially came to light.

The settlement agreement (PDF) says that a physician practice owned by the health system that runs Driscoll Children's Hospital in Corpus Christi billed Medicare, Medicaid and other programs for both performing and interpreting pediatric genetic ultrasounds. But the hospital had an agreement with an outside doctors' group called Radiology Associates on Corona Drive in Corpus Christi that was separately being paid to interpret the same test results, the lawsuit says.

The double-billing was said to have occurred for several thousand ultrasounds between 2002 and 2007. The whistle-blower who filed the lawsuit in 2008 was Diana Kulwicki, a former revenue manager and coding compliance officer for Radiology Associates whose job included auditing radiology reports and coding.

Driscoll Children's Hospital's wholly owned affiliate, Children's Physician Services of South Texas, will pay $1.5 million, and Radiology Associates will pay $800,000. Kulwicki was awarded 21% of the settlement for bringing the allegations to light, court files say.

An e-mailed statement from the hospital said that a physician at the hospital believed his actions were legal, and had at one point contacted Medicaid officials about the issue, which led to the billing rules being changed in 2007.

“CPSST decided to settle the case, as its former administrator and the physician involved have long since relocated out-of-state, and to avoid the delay, uncertainty, inconvenience and expense of protracted litigation of the claims that it feels were a matter of interpretation,” the hospitals' statement says, adding that the settlement is not an admission of wrong-doing.

A person who answered the phone at Radiology Associates directed all questions to the practice's attorney, who did not respond to a request for comment Friday.

A news release from the Texas attorney general's office said Radiology Associates informed the hospital's physician group about the double-billing at one point, but hospital officials denied it was taking place and reiterated that the hospital group would bill only for performing the tests, not interpreting them.

“Despite additional evidence of double billing, Radiology Associates ignored the evidence, accepted CPSST's misrepresentations without question and continued to bill and receive payment for” interpreting the test results, the government's statement says.