Illinois Attorney General Lisa Madigan today intervened in support of a whistle-blower lawsuit alleging that nearly 20 Chicago-area diagnostic centers paid kickbacks for patient referrals. The 23-page lawsuit, which was filed in Cook County Circuit Court in Chicago by whistle-blower and MRI center owner John Donaldson under seal in 2006, alleges that 19 imaging centers defrauded patients and their insurers by overcharging them for imaging services to allow the payment of illegal kickbacks to referring physicians. No physicians have been named to date in the suit, but the attorney general alleges the doctors receiving the kickbacks did not perform any services to earn the allegedly illegal payments. Similar joint ventures between physicians and service providers have drawn fire from state and federal prosecutors in several states. And in 2004, HHS' inspector generals office issued an advisory opinion warning about the so-called "under arrangement" joint ventures.
Madigan alleged the imaging centers let doctors who refer patients for diagnostic exams bill patients and insurance companies directly for services actually provided by the imaging centers and then split the payments. Prosecutors said that the imaging centers then disguised the alleged kickback schemes through phony lease agreements. The alleged schemes began at least 18 months ago and involve thousands of fraudulent claims. Assistant Attorney General Janet Doyle said additional defendantsdoctors or other imaging centerscould be added to an amended complaint later. One of the companies named, Open Advanced MRI, operates nine centers in the Chicago area and its 12-year-old parent company, McLean, Va.-based Medical Imaging and Diagnostics, owns 15 others in four states. Medical Imaging and Diagnostics President and co-founder Rich Fried said he had not seen the lawsuit and could not yet comment. -- by Mark Taylor