Radiology group will pay $2.35M to settle allegations it violated False Claims Act by submitting sham diagnoses

A Radiology Partners affiliate has agreed to pay $2.35 million to settle allegations it violated the False Claims Act by submitting sham diagnoses for two spinal conditions. RP, meanwhile, refutes the charges.

Seoul Medical Group (SMG), subsidiary Advanced Medical Management Inc., and former president and majority owner Dr. Min Young Cha also were named in the settlement, with the payout totaling over $62 million. Between 2015 to 2021, SMG and Cha allegedly submitted claims to Medicare Advantage for two severe conditions—spinal enthesopathy and sacroiliitis—from which its patients did not suffer. 

When a health plan questioned the medical group, it purportedly enlisted the help of Renaissance Imaging Medical Associates. The Northridge, California, imaging group then allegedly created radiology reports supporting the diagnosis of spinal enthesopathy, a painful condition impacting the attachment of ligaments and tendons to bones.

This resulted in increased payments from CMS to the Medicare Advantage plan that were then passed along to Seoul Medical Group. 

“Providers who game the Medicare program to increase profit undermine the foundation of care and diminish patient trust in the nation’s public healthcare system,” Deputy Inspector General for Investigations Christian J. Schrank, with the Department of Health and Human Services Office of Inspector General, said in a March 26 statement. “HHS-OIG will continue to collaborate with our law enforcement partners and rigorously probe false claims to the fullest extent possible.”

Under the settlement, Seoul Medical Group, based in the Koreatown area of Los Angeles, will pay $58.74 million while former leader Dr. Cha will pay $1.76 million. The civil settlement stems from the qui tam provisions of the False Claims Act. Whistleblower Paul Pew, former VP and chief financial officer of Advanced Medical Management, filed the complaint on behalf of the federal government, with authorities later joining the case. He stands to collect a yet-to-be-determined portion of the proceeds. 

Cha launched Seoul Medical Group in Los Angeles in 1993 and has since expanded to at least six states, employing 150 primary care providers and 1,000 specialists at one point. Renaissance Medical Imaging, meanwhile, employes about 80 radiologists, according to its website. Los Angeles-based Rad Partners marked its entrance into California by acquiring the imaging group in January 2018. 

Backed by Whistler Capital Partners and New Enterprise Associates, Rad Partners is America’s largest imaging group, employing some 4,000 physicians, according to its website.  RP shared a statement Friday, emphasizing the alleged scheme started before Renaissance Imaging Medical Associates joined its organization. 

“While we strongly dispute the allegations and deny any wrongdoing on the part of RIMA or its physicians, we have chosen to settle to avoid the time, expense and disruption of prolonged litigation,” a spokeswoman told Radiology Business March 28. “Patient care remains our top priority, and we remain committed to upholding the highest standards of integrity and compliance in all aspects of our practice. This resolution allows us to focus on delivering quality radiology services without the uncertainty of ongoing legal proceedings. RIMA will continue to cooperate with authorities as needed and has taken steps to reinforce our commitment to compliance and transparency. We appreciate the trust placed in us by our patients, partners, and the medical community and remain dedicated to providing exceptional care.”

The claims resolved by the settlement are allegations only and there has been no determination of liability, authorities emphasized.