Illinois sues radiology clinics over MRI leasing

Legal experts say the lawsuit could have ripple effects on imaging equipment agreements in other states.

By Amy Lynn Sorrel, AMNews staff. Nov. 26, 2007.

In a case legal experts say signals heightened state scrutiny of physician arrangements with imaging facilities, Illinois Attorney General Lisa Madigan is suing at least two MRI clinics for allegedly paying doctors kickbacks for patient referrals.

The state case focuses on a type of leasing agreement the federal government also has put under the microscope in recent years. Under the arrangements, doctors lease time on imaging equipment for a discounted rate, versus paying the MRI owner per scan. The physician or the diagnostic testing facility then bills for the full amount of the service, and the referring doctor gets the difference.

State and federal officials worry that these agreements have the potential to disguise unlawful compensation and encourage unnecessary tests.

Federal safe harbors permit doctors, in limited circumstances, to rent space and equipment for ancillary services, which some physicians say can improve patients' access to diagnostic testing.

However, echoing concerns from the Medicare Payment Advisory Commission, Illinois officials view the leasing deals as a costly public health threat.

The agreements "provide a financial incentive to refer as many patients as possible ... and prescribe procedures that may not be medically necessary," the Oct. 25 Illinois complaint reads. The remunerations also "taint the referring physician's independent judgment as to which imaging facility is best suited for the patient."

The lawsuit accuses Golf Diagnostic Imaging Center and Northwest Corporate Imaging Center -- owned and operated by a nuclear medicine physician -- of creating "sham lease agreements" with at least 56 doctors, court records show. The state claims that the companies overcharged for their services and billed insurers as if the referring doctors were the ones performing the tests. Under the alleged agreements, the facilities charged doctors a rental fee at a fraction of the amount the centers billed insurers. Then the facilities allegedly let the referring physicians keep the extra payment when insurers paid the claim.