California rad provider settles whistleblower case for $647K
Oaks Diagnostics, which owns Advanced Radiology of Beverly Hills, Calif., has paid the federal government $647,000 to settle allegations that it filed false claims with Medicare for unnecessary radiological tests, reported the U.S. Attorney's Office Central District of California.

The settlement payment prompted the government to ask a federal judge to dismiss a civil lawsuit that alleged Advanced Radiology performed unnecessary diagnostic tests and billed Medicare for the procedures.

The U.S. suit alleged in the civil lawsuit that Advanced Radiology and its owner, Ronald Grusd, MD, engaged in a scheme to bill Medicare for unnecessary tests performed at Advanced Radiology from 1999 through 2002.

As part of the alleged scheme, an Advanced Radiology contractor recruited Medicare beneficiaries to undergo diagnostic exams, such as CT and MRI scans, even though the beneficiaries did not need the tests. That contractor, Nordelyn Lowder, pleaded guilty to one count of healthcare fraud, in connection with the scheme. Lowder was sentenced in June 2008 to 20 months in federal prison and was ordered to pay $426,455 in restitution, according to the U.S. Attorney's Office Central District of California.

The settlement resolves allegations initially made against Advanced Radiology in a whistleblower lawsuit filed pursuant to the qui tam provisions of the False Claims Act, which allow a private party to file a civil action on behalf of the U.S. and receive a portion of the recovery. The whistleblower lawsuit was originally filed in 2003 by a former Advanced Radiology employee. The U.S. intervened and took over prosecution of the case in February 2008.

Advanced Radiology paid the settlement without admitting any wrongdoing and Grusd is not a part of the settlement. However, in light of this settlement, the government has opted to dismiss the lawsuit against him.

The case was investigated by the Office of Inspector General of the Department of Health and Human Services and the Federal Bureau of Investigation.