Illinois MRI centers to pay $1.2 million to settle kickback charges

Jan 14, 2009

Illinois Attorney General Lisa Madigan has reached a $1.2 million settlement with 14 imaging centers in the state that allegedly paid illegal kickbacks to doctors in exchange for referrals. The lawsuit centered on "time-share" leasing arrangements in which referring physicians received blocks of time on imaging equipment operated by the centers.

The settlement requires Virginia-based imaging services firm MIDI and its 14 affiliates that operate as Open Advanced MRI centers to stop paying the illegal kickbacks and to pay money damages, restitution, and penalties.

The state of Illinois' share of $840,000 will be distributed in grants to benefit low-income people who need healthcare services.

Madigan initiated the lawsuit in 2007, alleging that the radiology centers entered into bogus lease agreements through which doctors received a reduced rate for MRI and CT scans, charged the patients' insurance carriers a higher rate, and pocketed the difference.

The lawsuit charged the participants with violations of the Consumer Fraud and Deceptive Business Practices Act and Illinois' Insurance Claims Fraud Prevention Act.

The 14 Open Advanced MRI centers named in the settlement are:

Open Advanced MRI of Chicago
Open Advanced MRI of Tinley Park (IL)
Open Advanced MRI of Crystal Lake (IL)
Open Advanced MRI of Round Lake (IL)
Open Advanced MRI of Plainfield (IL)
Open Advanced MRI of Lincoln Park (Chicago)
Open Advanced MRI of Deer Park (IL)
Open Advanced MRI of Skokie (IL)
Gold Coast MRI at Washington Square (Chicago, now closed)
Open Advanced MRI of North Shore (Skokie, IL, now closed)
Open Advanced MRI of Oak Brook (Westmont, IL)
Open Advanced MRI of Schaumburg (IL)
Advanced Imaging of Deerfield (IL, now closed)
Open Advanced MRI of Wheaton (IL)

This week's settlement with MIDI comes after more than two years of legal maneuvering, lawsuits, and subsequent agreements with other medical imaging centers for what the attorney general's office called fraudulent schemes.

In December 2007, Madigan had to refile the lawsuits after a state judge ruled in September 2007 that more evidence was needed on the allegations against each defendant.

At that time, the litigation charged the defendants with submitting more than $10 million in "inflated and illegal billings" by allegedly paying physicians for patient referrals, under the guise of leasing arrangements that made it appear as though referring physicians were in charge of the equipment themselves.

Attorneys for the centers told the Chicago Tribune newspaper that they believe the arrangements were lawful and they expected to be exonerated.

In October 2007, the attorney general's office reached agreements with several small imaging centers to cease alleged kickbacks. The settlements did not include an admission of any wrongdoing. Central States Imaging agreed to pay $40,000 to a compliance fund set up by Madigan's office and an additional $25,000 to MRI center operator John Donaldson, according to the Chicago Tribune.

By Wayne Forrest
AuntMinnie.com staff writer
January 15, 2009

Illinois MRI leasing suit refiled, October 29, 2007

Judge derails Illinois MRI leasing suit, September 14, 2007

Illinois AG dishes dirt on 'sham' MRI leasing deals, May 17, 2007

Illinois AG's lawsuit may chill equipment leasing deals, January 24, 2007