Houston-Based One Step Diagnostic Agrees to Settle False Claims Act Case for $2.6 Million

Houston-based One Step Diagnostic, which operates several medical imaging diagnostic centers around Houston, Texas, has agreed to pay $2.6 million to the federal government in order to settle claims it engaged in unlawful kickbacks and inappropriate financial relationships in violation of the False Claims Act and federal Stark Law.

The Department of Justice, in keeping with its mission to eradicate costly healthcare fraud, announced the settlement on October 17, 2004, following a concerted effort by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Texas, and the Department of Health and Human Services – Office of Inspector General.

Details of allegations against One Step Diagnostic 

Doctors, medical corporations, hospitals, and any other party to a medical transaction are prohibited from engaging in any sort of kickback plan if, in so doing, Medicare and Medicaid patients would be treated by parties to the agreement. In other words, any submission for reimbursement to Medicare or Medicaid for any medical treatment derived as a result of a kickback arrangement is considered a false claim and is therefore subject to possible liability under the False Claims Act.

In the case against One Step Diagnostic, the Department of Justice and three unidentified relators asserted that two of One Step’s centers had executed “sham consulting and medical director agreements” with doctors in exchange for those doctors’ promise to exclusively refer patients to the centers for diagnostic imaging and other services. In addition, another One Step Diagnostic center agreed to pay a separate sum of $1.5 million to settle allegations it also engaged in “improper” financial relationships with doctors willing to send patients to any of its subsidiaries: Complete Imaging Solutions, LLC, doing business as Houston Diagnostics; Deerbrook Diagnostics & Imaging Center, LLC; Elite Diagnostic, Inc.; Galleria MRI & Diagnostic, LLC; Spring Imaging Center, Inc.; and West Houston MRI & Diagnostics, LLC. Alarmingly, these centers are alleged to have billed Medicare and Medicaid for services rendered under a physician provider number that had not authorized such billings and was not involved in the provision of the billed services whatsoever.

Government’s response

According to Acting Assistant Attorney General Joyce R. Branda:

“The Department of Justice has long-standing concerns about improper financial relationships between health care providers and their referral sources, because such relationships can alter a physician’s judgment about the patient’s true health care needs and drive up health care costs for everyone….In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The U.S. Attorney working on the case also commented:

“These settlements totaling more than $2.6 million represent the continuing commitment of our office in combating health care fraud….The U.S. takes these accusations seriously.  Working within the whistleblower laws, we will continue to bring these cases to public view where taxpayer money is being used improperly.”

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