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$1.9 Million Lawsuit Alleges MRI Kickbacks

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A $19.5 million federal lawsuit charges that Mobile Diagnostic Imaging Inc. (MDI), a mobile MRI provider based in Edina, Minnesota, schemed with 46 chiropractors to defraud the Minnesota no-fault auto-insurance system.

Illinois Farmers Insurance and its subsidiaries say in the suit that MDI paid kickbacks to the chiropractors for ordering MRI of patients who had been involved in car crashes. The lawsuit says at least some of the scans were not medically necessary. It also says that Michael Appleman, who is not a doctor, owns MDI, and that because MDI is “lay-owned” and contracts with another company to actually read the scans, it is practicing medicine illegally.

The Star Tribune of Minneapolis says the lawsuit stems from Minnesota’s auto-insurance law, which requires insurance companies to pay up to $20,000 in medical expenses regardless of who is at fault in an accident:

The allegations reflect what local insurance representatives are saying is a growing trend of kickback schemes and staged accidents that aim to defraud personal injury protection under the state’s no-fault laws.

The lawsuit lists $361,925 in kickbacks that it says MDI paid to chiropractors from January 2011 through November 2011. “While Defendants characterize the MRI scans as medically necessary,” the lawsuit says, “many of the records from the Defendant Clinics and Clinic Owners do not even reference the results of the MRI scans after the scans have been conducted.”

MDI disguised the kickbacks as “rent” or fees for other services and equipment, the lawsuit says.

The lawsuit alleges that MDI, owned by a non-doctor, pays ProScan Imaging of Cincinnati to interpret the scans while billing the insurance companies for the interpretations. Therefore, the lawsuit says, “The arrangement between Defendant MDI and ProScan violates the Corporate Practice of Medicine Doctrine as Defendant MDI is an illegal ‘middleman’ between doctor and patient.”

The suit also contends that MDI violated Minnesota law because its radiologic technologists practice medicine for a “lay-owned facility.”

The lawsuit says Appleman has acknowledged owning MDI in some court proceedings and denied ownership in others. ”Since the incorporation of Defendant MDI, Defendants MDI and Appleman have actively attempted to conceal the lay ownership of Defendant MDI,” the lawsuit says. “Defendant Appleman’s name does not appear anywhere on the Articles of Incorporation for Defendant MDI.”

The lawsuit was filed on Monday. Contacted by the Star Tribune, Appleman declined to comment.

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