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Montana hospital, radiology group accused of kickbacks to keep monopoly

by Gail Kalinoski, Contributing Reporter | October 17, 2016
Business Affairs Risk Management
Two radiologists who worked at Bozeman Health Deaconess Hospital in Bozeman, Mont., have accused the hospital of making fraudulent Medicare and Medicaid claims as part of an illegal kickback scheme to maintain a monopoly on radiology services.

The allegations were made in a federal lawsuit and brought under the False Claims Act that allows private individuals to file fraud claims on the behalf of the government, according to a report in the Bozeman Daily Chronicle. The lawsuit seeks damages for the federal government and state as well as awards for the men who filed the suit, the newspaper reported.

The suit was filed in U.S. District Court in December but only made public within the past week.

The federal government and state of Montana have an option to intervene in the case, but have not yet done so, the newspaper stated.

Although it has not filed a formal response to the suit, the hospital denies the allegations.

The hospital provided a written statement to the newspaper through its attorney, Ian McIntosh: “While we will defend our organization and its longstanding integrity, our primary focus remains on serving our patients and communities with high quality, high reliability and high value to improve community health and quality of life.”

The suit was filed by radiologists Frank Rembert and Michael Paradise who alleged that Bozeman Health and Deaconess Intercity Imaging LLC, which also did business as Advanced Medical Imaging, “engaged in a decade-long kickback scheme through which BDH traded patient referrals for valuable remuneration,” according to the court documents available on www.kzbk.com.

The suit claims that Bozeman Health, which is the only hospital in Gallatin County, had a monopoly on radiology services in Bozeman and was concerned when the radiology group that practiced at the hospital, Intercity Radiology, was planning on opening up a freestanding, non-hospital, outpatient imaging center that would offer competing services. The suit alleges that the hospital convinced ICR to instead set up Advanced Medical Imaging in the hospital and bribed it to do so with patient referrals that resulted in illegal remuneration from Medicare, Medicaid and other federal health care programs.

The hospital and ICR/AMI are accused of entering into a “sham” joint venture by setting up AMI.

“AMI was and is a sham joint venture created for the sole purposes of exchanging cash for referrals and maintaining BDH’s monopoly on radiology services in the Bozeman market,” according to the court filing.

The alleged scheme called for Bozeman Health to refer a fixed number of patients to AMI in exchange for remuneration, majority ownership and control in AMI, large cash distributions and non-compete agreements.

The Bozeman Daily Chronicle writes that those cash distributions amounted to about $2 million each year and “millions of dollars of false or fraudulent claims paid to the hospital and Advanced Medical Imaging by Medicare, Medicaid and other federal health care programs,” according to the lawsuit allegations.

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