Radiology Services Lawsuit Settled for $10 million

Bozeman Health Deaconess Hospital has been ordered to pay $10 million in a settlement involving two of the facility’s former radiologists. Bozeman continues to deny the allegations.

The 2015 lawsuit claiming that the hospital participated in an illegal kickback scheme and raked in millions of dollars in fake claims was settled on October 31. The United States government received $7.5 million and $238,820 is set aside for the state of Montana. Twenty-eight percent is reserved for the filers of the lawsuit, radiologists Frank Rembert and Michael Paradise, and the hospital is also ordered to pay Dr. Rembert and Dr. Paradise’s legal fees which amount to $2.5 million.

In 2002, Bozeman and Intercity Radiology had an exclusive contract to provide radiology services together. Intercity Radiology began hatching plans to open up a new outpatient imaging center in town with all conventional imaging services at lower prices, longer hours, and faster services. In order to avoid competition, Bozeman convinced Intercity Radiology to instead create another imaging center at the hospital called Advanced Medical Imaging. Bozeman received 77.5 percent of profits and Intercity took the rest. They also established a non-competition clause, which barred Intercity employees from working at other facilities.

Bozeman referred all outpatients to Advanced Medical Imaging for a variety of imaging services and demanded to be compensated. The plaintiffs alleged that this system violated the federal Anti-Kickback Statute. In response, Bozeman proposed Intercity pay less for patient referrals.

Both Dr. Rembert and Dr. Paradise were fired from Intercity Radiology in 2011. They were awarded nearly $900,000 each in a wrongful termination lawsuit.