Imaging Provider, CEO Pay $85M to Settle Doctor Kickback Allegations

Oakbrook Terrace, Ill.-based Cardiac Imaging Inc. (CII) and its Founder/Owner/CEO Sam Kancherlapalli together are paying $85.4 million to resolve False Claims Act allegations that they paid kickbacks to referring cardiologists to supervise PET scans. CII agreed to pay $75 million, plus additional amounts based on future revenues, and Kancherlapalli agreed to pay $10.48 million. The settlements are based on both parties’ ability to pay.
 
“Healthcare providers that pursue patient referrals through illegal kickbacks and other unlawful financial arrangements will be held accountable,” said Principal Deputy Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to safeguard federal healthcare funds by rooting out financial relationships between healthcare providers and referring physicians that can corrupt medical decisionmaking and increase the cost of care.”
 
Between March 1, 2014, and May 31, 2023, CII and Kancherlapalli violated the AKS and the Stark Law, federal prosecutors claim. Specifically, with Kancherlapalli’s oversight and approval, CII allegedly paid referring cardiologists i$500 or more per hour to supervise PET scans for patients they referred to CII. These fees substantially exceeded fair market value for the cardiologists’ services because CII paid the referring cardiologists for each hour CII spent scanning the cardiologists’ patients, including time the cardiologists were away from CII’s mobile scanning units caring for other patients or were not on site, the government contends. CII’s fees also reportedly compensated the cardiologists for additional services beyond supervision that were not actually provided. CII allegedly relied on a consultant’s fair market value analysis that CII knew was based on fundamental inaccuracies about the services referring physicians provided and that the consultant ultimately withdrew, prosecutors argue.
 
“Paying illegal kickbacks to cardiologists so they refer patients undermines the integrity of federal healthcare programs and needlessly increases costs,” said U.S. Attorney Alamdar Hamdani for the Southern District of Texas. “Patients deserve care based on their medical need and not on a doctor or company’s financial interest or gain. This outcome emphasizes my office’s commitment to pursing justice, ensuring the public’s trust in the federal healthcare system and holding the corrupt accountable.”
 
“Illegal kickback payments not only corrupt the medical decision-making process but also cause harm and financial loss to Medicare and other federally funded healthcare programs,” said Special Agent in Charge Jason E. Meadows for the Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG works closely with our law enforcement partners to root out and hold accountable those who put profit and personal gain ahead of legitimate medical services.”
 
In connection with the settlement, CII and Kancherlapalli entered into a five-year Corporate Integrity Agreement (CIA) with the HHS-OIG. The CIA requires, among other compliance provisions, that CII implement measures designed to ensure that arrangements with referring physicians are compliant with the AKS and the Stark Law. The CIA also requires that CII implement a centralized annual risk assessment and internal review process to identify and address the AKS and the Stark Law risks associated with arrangements and retain an Independent Review Organization to perform a systems and transactions review of arrangements.
 
The civil settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by Lynda Pinto, a former billing manager at CII. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam action also raises claims against CII’s former president and part-owner Richard Nassenstein, which are not resolved in this settlement. The relator’s share of the settlement has not yet been determined.
 
The resolution obtained in this matter resulted from a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas, with assistance from the HHS-OIG, the Defense Health Agency Office of Inspector General, the Railroad Retirement Board Office of Inspector General, and Veteran’s Affairs Office of Inspector General
  
The matter was handled by 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.
 
The claims resolved by the settlement are allegations only and there has been no determination of liability.