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Doshi Diagnostic Imaging Services Settlement for $15.5 Million

In late February of 2014, the United States Attorney for the District of New Jersey, and the Medicaid Fraud Units of the Attorney General of New York and New Jersey reached a settlement in the amount of $15.5 million in a healthcare fraud case.

The case was against Doshi Diagnostic Imaging Services, P.C., as well as Diagnostic Imaging Group, LLC. The two privately held companies, owned by Dr. Leena Doshi, and Nittin Doshi, her husband, operate 38 radiological imaging centers in New York and New Jersey. They used to have several imaging centers in Florida as well. The company headquarters is in Hicksville, NY.

What Did the Company Do Wrong?

The diagnostic firm was falsely billing federal and state healthcare programs and services, and they offered kickbacks to doctors who would agree that patients needed to use their imaging services even though they were not medically necessary, thus getting more business and reaping greater profits. This fraudulent billing caught up to them after a whistleblower exposed the scheme. According to the settlement of $15.5 million, reached thanks to Seeger Weiss, they will pay $13.65 million to the federal government and $1.85 million to the states of New York and New Jersey.

It is important to note that the company itself is the entity accused of the crime, meaning Dr. Doshi is not charged with any of the wrongdoing in the case.

The Whistleblower

Eric H. Jaso, a partner at Seeger Weiss, represented one of the head whistleblowers who exposed the actions of the company. They filed the initial information regarding the case in 2010 in federal district court in New Jersey. The whistleblower said that the imaging companies were entering into special service agreements with certain doctors who would refer their patients to the Doshi centers for their diagnostic tests, even if the medical tests were unnecessary. These amounted to kickbacks, as the doctors received payment depending on how many patients they referred.

The Inspector General of the US Department of Health and Human Services Daniel R. Levinson said that, “Paying physicians for their referrals and submitting false claims to increase Medicare and Medicaid reimbursements simply cannot be tolerated. Besides levying a hefty penalty, the settlement requires an independent organization to review Diagnostic Imaging Group’s claims for five years and to send reports to the government.”

This violated a number of laws in the state, including the False Claims Acts of New York and New Jersey, the federal Anti-Kickback Statute, and the Federal False Claims Act when they billed Medicaid and Medicare for the diagnostic services. In some cases, they not only billed for unneeded tests, but they billed for tests that never even happened.

The initial lawsuit by the whistleblower was what caused the Department of Justice to launch their own investigation into the company, along with New York and New Jersey. The whistleblower, thanks to the False Claims Acts, should receive money for blowing the whistle on the illegal activities of the company. In all, three whistleblowers were involved. The reward for this particular case should be around $2.77 million split between the whistleblowers.

Not only did they do the right thing by reporting the actions of the company, they also received a nice reward for it. The False Claims Act, sometimes called the Whistleblower Act, has been encouraging many people from a variety of different types of companies to step forward with information they have regarding the illegal and unsavory practices of businesses. The reward is an incentive to get people to come forward, and it is working quite well. Many whistleblowers from large pharmaceutical companies, as well as in other fields, have been spilling the secrets of their companies.

Why Is It Illegal to Pay Doctors for Referrals?

It is illegal for diagnostic labs to pay for referrals. According to Jaso, in these agreements where there are payments for referrals, the judgment of the doctors can be affected. Knowing that they can receive money or gifts when they refer patients can cause some physicians to send their patients for the diagnostic tests even though they do not need them. It also makes them more likely to choose one diagnostic facility over another even though a different center might be a better choice for their patients.

What Does the Lawsuit Mean for Doshi?

While Doshi centers are still operating, they have to pay out the $15.5 million to the government to pay back the money they received from fraudulent testing. The settlement makes sure the company returns those millions, and it should help to ensure there are not any activities going on through the company down the road that might be illegal. Even though the owners of the company will not face any charges, it should be enough of a punishment to ensure they, and similar companies, follow the laws and regulations in the future.

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