EXCLUSIVE: CDI CEO Talks Whistleblower Suit, Imaging Billing Issues

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Earlier this week, a settlement was reached in a five-year whistleblower suit against Minneapolis, MN-based Center for Diagnostic Imaging, Inc..

The suit alleged "that CDI defrauded federally funded health programs by (1) improperly upcoding billings associated with epidural injections, (2) billing for services without a written order from the treating physician, a requirement for proper billing according to federal law, and (3) using lease arrangements which disguised improper kickbacks to treating physicians," according to a press release from Hagens Berman Sobol Shapiro, LLP, the attorneys hired by the relators.

In all, CDI will pay nearly $3 million to settle the case with no admission of wrongdoing. Imagingbiz spoke with CDI CEO Tom Tomlinson to get his perspective on where the group goes from here.

Imagingbiz: From a cultural standpoint, how do you address internally a disruption like this?Tom Tomlinson: This case itself really has not had an impact on our culture, for which I am thankful. We have tried to shoulder that workload with corporate staff specifically so it wouldn’t distract people in the clinical operations. I can point you to metrics that we track on patient satisfaction scores; none of this litigation had any detrimental effect at all. This was never a distraction for our clinical people in the field.

IB: Are there systems that CDI will put in place to prevent being exposed to this sort of liability in the future?TT: Going back over ten years, every other year we’ve hired an external, independent third party to independently audit and review our billing practices and issue a report independent of management to the audit committee of our board of directors. We’ve done that because we feel that we need to hold ourselves accountable to an independent review and to our board of directors. We’ve done this for years, long before this case ever came about.

Here’s the fact: in America, anyone can sue anyone else at any time. We don’t in this country have a practice in the legal community where the loser pays. And so, you can bring a case, you can cause the other party to incur significant costs, and you can, by bringing a case, create settlement value. That’s just a fact of life in America, and I don’t think there’s anything a person or company can do to insulate themselves.

IB: Do you have any perspective on the current healthcare reform environment and the way it affects provider reimbursement?TT: I think the biggest challenge is actually not with the providers. The biggest challenge, from our perspective, is that third-party administrators are struggling to keep up with the pace of change.

5010 is an issue for providers like us because it has slowed our collections. The reason is not that CDI was not prepared to comply with the 5010 rules; the carriers are not prepared to accept the claims and process them in a timely manner. Providers have borne the cost of preparing for 5010, and now we bear a second cost of having slower cash collections because the carriers who are supposed to be prepared for processing claims in a timely manner are not prepared to do so. That’s a challenge.

I think we have some understanding of the legislative aims of these programs, which is to allow the government to have more information about the kinds of services provided. They’re pushing to have more detailed information at the same time they’re pushing for lower costs, and those two objectives are somewhat opposed.

IB: In total, your business was hit with $2.8 million in penalties from the decision. How significantly do you anticipate this will affect your bottom line?TT: That was significantly less money than we’d spent in legal defense costs over the last five years. The best guess we had was that our legal costs going forward would be well in excess of the amount that we agreed to settle for. We felt like the wiser course of action would be to dispose of the remaining claims of the settlement. We did this because it was a lower-cost alternative and a less distracting alternative.

IB: Do you anticipate having to address additional legal action on the allegations of billing for services without a written order and/or your leasing arrangements, which were called into question in the suit?TT: In those settlement agreements, we make it clear that there’s no admission on the part of CDI that we billed anything inappropriately, that we did anything inappropriately. It is our view to this