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Zwanger & Pesiri settles fraud allegations for over $10 million

by Gail Kalinoski, Contributing Reporter | November 21, 2016
Business Affairs
A Long Island, N.Y., radiology practice has agreed to pay over $10 million to settle civil and criminal allegations of Medicare and Medicaid fraud over a 12-year period.

The allegations against Zwanger & Pesiri Radiology, a Lindenhurst, N.Y.-based practice with more than 20 locations on Long Island, were brought to light by two billing specialists who acted as whistleblowers and filed a qui tam lawsuit under provisions of the New York State and federal False Claims Act.

The investigation and settlement were the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of New York and the New York State Attorney General’s Office. The settlement covers Zwanger & Pesiri Radiology Group L.L.P., Zwanger Radiology P.C. and Dr. Steven Mendelson, and requires the payment of $8.2 million to resolve allegations of submitting false claims to Medicaid and Medicare from Jan. 1, 2003, through Oct. 26, 2015.

The firm also pleaded guilty to two federal criminal charges of health care fraud for illegally performing and billing for procedures that had not been ordered by physicians, and agreed to pay $2.4 million in criminal restitution.

“These defendants knowingly overbilled Medicaid by millions, draining the program of important resources meant to help some of our most vulnerable individuals,” Eric T. Schneiderman, New York attorney general, said in a prepared statement.

“Zwanger-Pesiri illegally pursued corporate profits at the expense of federal and state health care providers and taxpayers,” added U.S. Attorney Robert Capers. “Today’s guilty plea and approximate $10.5 million global settlement demonstrates our vigilance in bringing justice to those who put profits first and health care second.”

The firm was accused of submitting claims for services provided or supervised by physicians, or at a Zwanger location, that were not enrolled in Medicare and/or Medicaid, and also claiming that Mendelson, who was a Medicare and Medicaid provider, had performed the procedures. The settlement also covered claims from Jan. 1, 2008, through Feb. 2, 2014, that Zwanger submitted false claims for radiology procedures that were not ordered by a treating physician, including certain types of X-rays and ultrasounds in female patients.

Billing specialists Linda Gibb and Donna Geraci discovered the fraud and reported the Medicare and Medicaid billing abuses. Geraci, who joined the firm in 2010, said senior executives directed her to do whatever necessary to “get the claims paid,” according to an article on Patch.com. Gibb said she also repeatedly complained about the fraudulent billing practices and also about improper procedures, such as automatically performing pelvic and transvaginal ultrasounds on female patients when their doctors only ordered one of the tests.

The women were represented by Constantine Cannon L.L.P. attorneys Timothy McCormack and Molly Knobler and co-counsel Mitchell J. Birzon, a partner at Birzon, Strang & Associates.

Knobler said the women “put relationships and employment opportunity in potential jeopardy to pursue justice for this betrayal.”

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