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Mobile cardiac PET provider and founder pay $85 million to settle kickback allegations

by John R. Fischer, Senior Reporter | October 16, 2023
Cardiology Insurance Molecular Imaging
Cardiac Imaging and its founder will pay $85 million to settle allegations that they provided kickbacks to referring cardiologists.
Cardiac Imaging Inc. (CII), a provider of mobile PET scans for heart assessments, and its founder and CEO Sam Kancherlapalli will pay over $85 million to resolve allegations that they paid excessive fees to cardiologists to exclusively refer patients to the company and supervise PET scans it performed.

Headquartered in Illinois, CII partners with physicians across the U.S. to perform rubidium-82 PET myocardial perfusion imaging (MPI) exams, the industry standard for detecting heart disease, with a fleet of mobile PET coaches.

Filed under the False Claims Act, the case, U.S. ex rel. Pinto v. Cardiac Imaging, Inc., et al., says that CII paid $500 or more per hour to cardiologists to manage the scans, fulfilling CMS requirements for physician supervision. The fees exceeded fair market value because CII paid them for each hour that CII scanned their patients, even when the cardiologists were away from the mobile units tending to other patients or not on site. In doing so, the company knowingly allowed for false and fraudulent claims to be made to federal healthcare programs, violating the AKS and the Stark Law.
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Kancherlapalli set the terms and conditions to which CII paid fees and submitted claims. He also received significant profits and dividends from CII’s business operations, benefiting from its unlawful conduct. As part of the deal, CII will pay $75 million and additional amounts depending on future revenues, and Kancherlapalli will pay $10,480,000, for a total of $85,480,000.

“We will continue to safeguard federal healthcare funds by rooting out financial relationships between healthcare providers and referring physicians that can corrupt medical decision-making and increase the cost of care,” said Principal Deputy Attorney General Brian Boynton, head of the Justice Department’s Civil Division, in a statement.

The alleged wrongdoing took place between March 2014 and May 2023. Lynda Pinto, a former billing manager at CII, filed her case on behalf of the U.S. government under the qui tam (whistleblower) provisions of the False Claims Act, entitling her to a portion of any rewards recovered.

The fees that CII paid also compensated the cardiologists for additional services that they did not provide and were reportedly based on a fair market value analysis calculated by a consultant, according to the suit. But the government said the organization knew there were fundamental inaccuracies about the services that referring physicians provided, and that the consultant ultimately withdrew.

Additionally, the suit brings claims against CII’s former president and part-owner, Richard Nassenstein, which are not resolved in this settlement. His share has not yet been determined.

The settlements are based on CII’s and Kancherlapalli’s ability to pay.

The case was filed in the Southern District of Texas.

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