United States Files $150 Million Complaint Against Medical Imaging Company

January 6, 2012

United States Files $150 Million Complaint Against Medical Imaging Company and Dr. Gwendolyn Washington for Kickbacks for Medicare Test Referrals and Inadequate Supervision of Radiology Tests; Fourteen Physician Groups Disgorge $1.56 Million in Kickbacks

DETROIT – The government has filed suit seeking $150 million in damages and penalties under the False Claims Act against Universal Imaging, Inc. and its current and former owners, Phillip J. Young and Mark Lauhoff, United States Attorney Barbara L. McQuade announced today. The complaint alleges that Universal and the owners, who are not medical professionals, conducted a medical radiology business in violation of numerous Medicare rules relating to adequate supervision of diagnostic tests and generated 90% or more of their business by paying kickbacks to physicians. Also named in the complaint is Gwendolyn Washington, a primary care physician who received kickbacks for referrals from Universal and as a result ordered dangerously high levels of tests involving injection of radioactive material into patients.

The complaint alleges that although Universal was required under Michigan law to be organized as a non-profit corporation to ensure the health and safety of patients, it surreptitiously continued to operate as a for-profit corporation by transferring its equipment to a for-profit entity, MRI Leasing LLC, with the same owners. Universal then made “lease” payments to that for-profit entity for Universal’s equipment, profiting the owners in circumvention of the laws relating to Michigan non-profits.

U.S. Attorney McQuade also announced settlements totaling $1.56 million with fourteen physicians or physician groups who were paid for their referrals by Universal. The settling physicians include Dr. David Schaefer; Drs. Vladimir and Albert Klemptner; Dr. Corey Haber; Drs. John and Andrew Zazaian; Partners in Internal Medicine, PLLC; Drs. Eric Straka, Sara Hashemian and Peter Paul; Drs. Gregory Stevens and Teresa Wargovich-Stevens; Dr. Steven Hartz; Dr. David Leszkowitz; Dr. Alexander Vertkin; Dr. Keith Pierce; Dr. Corrine Adler; Dr. Namir Stephan; Dr. Carmen Bogdan; and Dr. James B. Hayner.

"Doctors should be aware that we are scrutinizing records and detecting fraud and kickbacks," McQuade said. "We hope that our aggressive enforcement will deter doctors from cheating the taxpayers and endangering patients.

McQuade praised radiologist Dr. Richard Chesbrough and his wife Kim Chesbrough, who formerly worked at Universal and who filed a qui tam whistleblower suit under the False Claims Act bringing many of the facts in the case to the government’s attention. “We urge other physicians with knowledge of these inappropriate relationships to come forward, either by calling our office and asking to speak to the criminal or civil health care fraud coordinators, or through the qui tam whistleblower mechanism,” she said.

U.S. Attorney McQuade added, “A great example of the coordination between our civil and criminal enforcement efforts is the case of United States v. Dr. Gwendolyn Washington. Dr. Washington was sentenced in November, 2011 to 120 months imprisonment on charges of public corruption, health care fraud, and conspiring to illegally distribute prescription drugs.”

The case is being handled by Assistant United States Attorney Joan Hartman of the U.S. Attorney's Office for the Eastern District of Michigan and was investigated by Special Agent Steve Rinaldi of the Office of Inspector General of the Department of Health and Human Services.