Alleged Radiology Services Kickback Scheme Lawsuit Settled in Montana

Bozeman Health, a group of healthcare centers in Southern Montana, reached a settlement on October 31 with two of the hospital’s former radiologists for allegedly submitting millions of dollars in illegal claims to Medicare and Medicaid.

The lawsuit filed in 2015 was introduced under the False Claims Act by radiologists Frank Rembert, MD, and Michael Paradise, MD, who are receiving $66,869 from the settlement. The Department of Public Health and Human Services will be given $238,820.

The claim alleges that Bozeman Health had an exclusive contract to operate radiology services with Intercity Radiology, a local radiology practice that co-owns Advanced Medical Imaging with Bozeman Health.

In 2002, Intercity Radiology began discussing plans to open another outpatient imaging clinic with MRI, CT, and ultrasound services in Bozeman at lower rates, longer office hours, higher quality services, and in a more accessible location.

According to the lawsuit, Bozeman Health convinced Intercity Radiology to ditch those plans and instead open up Advanced Medical Imaging together, a radiology facility in their hospital so they could maintain their monopoly on clinical imaging services in Gallatin County.

Bozeman Health owned 77.5 percent of Advanced Medical Imaging and Intercity Radiology had ownership of the rest. Intercity signed a non-compete clause barring them from working at any other outpatient imaging center. Bozeman Health allegedly referred all patients to Advanced Medical Imaging for a wide variety of imaging procedures and expected to get paid for those referrals. Intercity Radiology complained about the payment scheme and said it violated the federal Anti-Kickback Statute.

In response, Bozeman Health lowered the referral payments; however, they were profiting enormously from the referral system, and Intercity Radiology was only receiving 22.5 percent of the revenue. In order to mediate the situation, Bozeman Health “took steps to track and control the volume of referrals it sent to Advanced Medical Imaging so it could keep the majority of outpatient imaging business for itself,” according to the Bozeman Daily Chronicle.

Although the suit has now been settled, Bozeman Health denies all of Intercity’s allegations.