MedNet: The Direct-Bill Discount Alleged to Buy Monitoring Referrals

In the MedNet direct bill settlement, the company agreed to pay more than $1.35 million to resolve allegations that it bought cardiac-monitoring referrals by letting customers bill Medicare for MedNet’s work and keep the difference. The alleged benefit sat inside the service contract: a hospital or physician clinic paid MedNet less than Medicare reimbursed it. Someone who knew the contract price and who actually performed the monitoring could see what the arrangement was worth.

MedNet was a remote cardiac-monitoring company based in Ewing, New Jersey, and a BioTelemetry subsidiary when the Department of Justice announced the settlement on November 15, 2016. A whistleblower brought the allegations in a qui tam case under the False Claims Act.

How the Direct-Bill Agreements Worked

The government’s account put the customer between MedNet and Medicare. Under the alleged fee-for-service or direct-bill agreements, MedNet charged hospitals and physician clinics for work connected with event monitoring and telemetry. The customers billed Medicare for those same services and retained reimbursement above MedNet’s fee.

The government said the claims were primarily for work MedNet performed. Medicare was funding a profit for the customer on someone else’s monitoring work. The referral source had become a customer with a financial reason to send more business.

That retained profit was the alleged kickback. The government contended that MedNet offered the arrangement to induce referrals, violating the Anti-Kickback Statute and causing false Medicare claims. The service fee, the reimbursement and the referral relationship were parts of the same transaction. Reading the invoice alone would miss the benefit the customer received from the claim.

Who Performed the Monitoring and Who Billed?

MedNet supplied the monitoring work that its customers could bill for under the alleged arrangements. The whistleblower’s complaint describes MedNet as an Independent Diagnostic Testing Facility that provided remote cardiac monitoring under exclusive supplier agreements with physicians and hospitals.

The complaint describes technicians monitoring heart data and providing results and analysis to treating physicians. For event monitoring, it separates the work of connecting the device and interpreting the results from the technical work of monitoring, notifying physicians of urgent findings and reporting patient data. These were distinct services with distinct billing components.

That division matters to the alleged discount. A physician could perform the professional work while MedNet performed the technical work. The complaint’s account turns on who then claimed payment for each part, and how much of that payment stayed with the physician or hospital.

For a telehealth contract or billing employee, the MedNet allegations connect the decisions behind the claim: what the customer bought from the monitoring company, what it billed the insurer, and what business the monitoring company expected in return.

Private-Payer Discounts and Government Referrals

The complaint also alleged that favorable billing terms for privately insured patients helped MedNet win government-program patients. It described a sales arrangement called “Split Bill Medicare and Fee for Service for Private Payors.”

Under that alleged arrangement, the provider billed private insurers a global amount covering both the provider’s professional services and MedNet’s technical services. It remitted a fraction to MedNet and retained the rest. For government-program patients, the provider and MedNet billed their respective professional and technical components separately.

The whistleblower alleged that MedNet expected the government business to make up for accepting a lower fee on private patients. The complaint described how sales representatives presented that trade:

The complaint put the provider’s retained amount at approximately $240 to $250 per privately insured event-monitoring test, compared with about $47 for its own professional services. It alleged that competing monitoring companies generally offered separate billing for both government and private patients, making MedNet’s terms more profitable to the referring provider and shutting competitors out of those referrals.

The complaint’s private-payer allegations and the government’s direct Medicare billing account focus on the same commercial incentive: the share of reimbursement left with the business choosing the monitoring supplier.

For a contract or sales employee, the private-payer terms can therefore explain a decision involving Medicare referrals. In the complaint’s account, an exclusive agreement connected the two patient groups. Looking only at the government claim would leave out the discount offered elsewhere in that relationship.

A Device Lease With a Much Larger Billing Benefit

The complaint alleged a related telemetry arrangement in which a low device lease opened the way to a much larger share of reimbursement. MedNet allegedly leased its Heartrak eCat device for a low fixed monthly payment and allowed providers to bill both professional and technical services.

One example concerned Desert Cardiology in California. The whistleblower alleged that the practice leased a device for approximately $30 a month and billed for technical work performed by MedNet. The complaint said the practice retained $455 per telemetry test after paying MedNet, compared with approximately $27 for professional interpretation if the parties billed separately.

The complaint further alleged that MedNet did not consistently pursue the lease payments. In that account, the amount printed on the lease was only part of the financial relationship. The billing rights and retained reimbursement supplied the larger benefit.

The whistleblower also alleged that some providers shortened monitoring studies to increase the number of patients enrolled on each device. That allegation connects the billing incentive to how the service ran: more enrollments could mean more reimbursable tests. It is a reason to understand the monitoring records alongside the contract’s promised return.

The Settlement Covered Conduct Before the Acquisition

The government’s settlement account covers March 15, 2006, through January 31, 2014, before BioTelemetry acquired MedNet.

Other Cardiac-Monitoring Cases Followed Different Incentives

LifeWatch Services allegedly offered free staffing to induce monitoring referrals, another financial benefit for the customers directing the business. CardioNet’s coding case concerned inaccurate diagnoses allegedly used to justify more expensive monitoring. BioTelemetry and LifeWatch’s enrollment case concerned telemetry allegedly selected when physicians intended cheaper monitoring.

The recurring question is who controlled the decision that produced the claim. In MedNet’s alleged arrangements, the customer’s financial benefit was part of the effort to win referrals. A contract employee could see that incentive before any individual claim reached Medicare.

What Contract and Billing Insiders Can Explain

Contract and billing knowledge can connect a promised financial benefit to the work performed and the resulting claims. A 2024 Rutgers University Law Review analysis of kickbacks and false claims points out that companies hold their own records and understand their own billing processes.

For the MedNet arrangements, that knowledge means understanding how the customer agreement, MedNet’s fee, the monitoring work and the insurance reimbursement fit together. The complaint alleged that management authorized the sales arrangements and that marketing materials promoted their financial advantages. Someone familiar with those decisions may understand why a customer accepted terms that a claim form never explains.

We work with insiders to connect the contract, the monitoring records and the payments to the referral business the arrangement was meant to bring in.

You Know What the Direct-Bill Discount Bought

If you worked with monitoring contracts, customer billing or referral accounts, tell our whistleblower experts how the arrangement worked. We build the case with you around the work, the retained reimbursement and the decisions that connected them, and bring in healthcare fraud whistleblower lawyers who understand diagnostic-service kickbacks. We stay beside you through the case. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.