Cardiac Imaging Inc.’s Former CFO, Co-Owner Implicated in Alleged Kickback Scheme

The U.S. Justice Department has filed a complaint implicating Cardiac Imaging Inc.’s (CII) former president, chief financial officer, and co-owner in a cardiac PET scan kickback scheme. Federal prosecutors filed the complaint against Rick Nassenstein in U.S. District Court for the Southern District of Texas under the False Claims Act (FCA). 
 
The complaint claims Nassenstein knowingly played a central role in a scheme whereby CII paid exorbitant, above-fair market value fees ($500 or more per hour) to doctors who referred patients to CII for cardiac PET scans in violation of the Physician Self-Referral Law, also known as the Stark Law. CII provides mobile cardiac positron emission tomography (PET) scans, nuclear medicine tests that doctors use to help assess heart function and diagnose cardiac disease.

The complaint alleges CII provided cardiac PET scans on a mobile basis and paid the referring physicians, usually cardiologists, to provide the physician supervision required under Medicare rules. From at least 2017 through June 2023, Nassenstein helped CII forge compensation arrangements with referring cardiologists, under which the cardiologists were paid as if they were fully occupied supervising CII’s scans even though the cardiologists were actually providing care to other patients in their offices or were not even on site, according to the Justice Department. The complaint alleges CII’s fees also purportedly compensated the cardiologists for additional services beyond supervision that were not actually provided.  

“Financial relationships between healthcare providers and referring physicians can undermine the objectivity of medical treatment decisions and increase the cost of care,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Justice Department will enforce provisions designed to prevent prohibited financial conflicts to ensure that taxpayers and patients can have confidence that decisions about patient care are driven by the medical needs of patients rather than the financial interests of physicians or providers.” 

Last fall, CII and its Founder/CEO Sam Kancherlapalli agreed to pay $85.5 million to resolve the same kickback allegations. CII agreed to pay $75 million, plus additional amounts based on future revenues, and Kancerlapalli agreed to pay $10.48 million.  

The Stark Law prohibits healthcare providers from billing Medicare for certain designated health services referred by a physician with whom the provider has a financial relationship, including a compensation arrangement, that does not meet any statutory or regulatory exception. Congress enacted the Stark Law to protect Medicare patients from financial arrangements that can adversely impact physicians’ decision making and lead to unnecessary services. Claims knowingly submitted to Medicare in violation of the Stark Law also violate the federal FCA. 
 
“Improper compensation arrangements unnecessarily drive up healthcare costs and cloud a physician’s medical judgment,” said U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas. “This complaint alleges that in an effort to increase profits, Nassenstein caused CII to enter into improper compensation arrangements with cardiologists who referred patients for cardiac PET scans. We are committed to enforcing the Stark Law and protecting Medicare from these types of improper financial relationships.”
 
The lawsuit was originally filed under the qui tam or whistleblower provisions of the FCA by Lynda Pinto, a former billing manager at CII. Under the FCA, private parties, known as relators, can file an action on behalf of the United States and receive a portion of the recovery. The FCA permits the United States to intervene in and take over the action, as it has done here. If a defendant is found liable for violating the FCA, the United States may recover three times the amount of its losses plus applicable penalties.
 
The Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas (SDTX) are handling the matter with assistance from the Department of Health and Human Services (HHS) Office of Inspector General. The case is captioned U.S. ex rel. Pinto v. Nassenstein, No. 18-cv-2674 (S.D. Tex.). 

Trial Attorneys Samuel R. Lehman and Jake M. Shields of the Justice Department’s Civil Division and Assistant U.S. Attorney Melissa M. Green for the Southern District of Texas are handling the matter.
 
The claims asserted in this case are allegations only, and there has been no determination of liability.