Cardiac Imaging: Supervision Fees That Followed the Referrals

In the Cardiac Imaging settlement, the company and its founder agreed to pay $85,480,000 to resolve allegations of referral payments disguised as supervision fees. The government alleged that cardiologists received payments priced as though supervising PET scans occupied their time, even while they treated other patients or were off-site. For someone who handled the scan schedule or the payments, the question is concrete: what work did the fee actually buy?

Cardiac Imaging Inc., headquartered in Illinois, provided mobile cardiac PET scans, nuclear medicine tests used to assess heart function and diagnose cardiac disease. The Justice Department’s October 10, 2023 announcement described a case brought by a former company billing manager. The alleged arrangement put the same physicians on both sides of the transaction: they referred patients for scans and received fees for supervising them.

What the PET Supervision Fee Bought

The government alleged that, with its founder’s oversight and approval, Cardiac Imaging paid referring cardiologists $500 or more per hour for the time it spent scanning their patients. The payment allegedly continued while doctors worked away from the mobile units or were not even on site, and included additional services beyond supervision that were never provided.

The government’s complaint against the former president describes an arrangement in which physicians could keep practicing medicine while remaining available for an emergency. It quotes a defendant’s description of what the company required:

That description matters because the price rested on a different account of the physician’s working day. The government alleged that the company valued the supervision as though it prevented doctors from seeing their own patients. We see the absurdity in that comparison: paying for a doctor’s lost working time while the doctor keeps working.

The Referral Volume Was in the Contract

The government’s complaint alleged that the medical-services agreements set annual fee limits using the hourly rate multiplied by the anticipated volume of referrals from each practice. According to the complaint, that referral-based ceiling was the only substantive difference between the agreements. The expected patient business was inside the compensation formula.

The contracts allegedly also barred physicians from referring patients to competing mobile cardiac PET providers during the agreement and for a year afterward. According to sworn testimony described in the complaint, some physicians negotiated fees as high as $750 per hour. The arrangement allegedly paid the referral source and restricted where that source could send the next patient.

For an insider, those terms give the fee a business meaning beyond its label. We examine the contract’s promised duties alongside the referral projections and payment calculations, because an agreement called supervision can still describe a purchase of patient business. The connection between physician compensation and referral targets is visible in the formula itself.

A Valuation of a Different Working Day

The government alleged that the valuation analysts believed physicians had to stay aboard Cardiac Imaging’s trucks, unable to run their practices while the scans took place. They therefore priced the work by reference to what those physicians could have earned seeing patients. The complaint attributes those assumptions to the former president’s information and the duties described in the agreements.

The same complaint says the analysts testified that they would have used an on-call valuation method had they understood that physicians could continue seeing patients and were being paid for availability. It also alleges that the former president directed the consultant to include costs the practices did not incur. The settlement announcement says the consultant ultimately withdrew the analysis.

The complaint further alleged that a legal opinion accepted the company’s representation that the compensation reflected fair market value, without independently deciding that question. A letter relying on the company’s price assertion adds no independent check of what the doctor actually did.

When Concerns Were Supposed to Stay Off Email

The government alleged that the company’s chief operating officer raised concerns about the structure and amount of the physician payments. Its complaint describes how the former president responded:

That allegation connects the price question to the response inside the business. The concern was about how the company paid referring physicians. The alleged instruction was about how the concern should be communicated. For us, the valuation file and the internal discussion belong in the same account of what decision-makers knew.

The Billing Records Behind the Medicare Claims

The government alleged that, between 2017 and June 2023, Cardiac Imaging paid over $40 million in the challenged fees and submitted over 75,000 false Medicare claims for services furnished through prohibited referrals. Its complaint tied those claims to the Stark Law restrictions on physician self-referrals. The compensation arrangement reached beyond the contract into the bills sent to Medicare.

Imaging billing separates the professional and technical work: interpreting the image and producing the report are distinct from the resources used to obtain it. A scan log, a physician’s appointment schedule and a payment ledger can each describe a different part of the same transaction.

The former billing manager’s case brought the arrangement to the government, which joined the action. We connect billing evidence with the work and decisions behind it: the agreement’s duties, the projected referrals, the mobile unit’s schedule, the physician’s availability, the fee and the resulting claim. Someone inside the practice or imaging business may know why the valuation’s description of the working day does not match what happened.

What Each Settlement Resolved

Cardiac Imaging agreed to pay $75 million, with additional amounts based on future revenues, while its founder and chief executive agreed to pay $10,480,000. The Justice Department said the settlements were based on their ability to pay. The allegations covered conduct from March 1, 2014, through May 31, 2023, and concerned false claims to federal health care programs arising from alleged violations of the Anti-Kickback Statute and the Stark Law.

The company and founder also entered a five-year Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General. It required measures addressing arrangements with referring physicians, an annual risk assessment and internal review, and an independent organization to review the arrangements’ systems and transactions.

The Justice Department’s Civil Division and the U.S. Attorney’s Office for the Southern District of Texas coordinated the resolution. They received assistance from the inspectors general for Health and Human Services, the Defense Health Agency, the Railroad Retirement Board and Veterans Affairs.

The former president, chief financial officer and co-owner was outside that settlement. In its February 5, 2024 complaint announcement, the Justice Department alleged that he played a central role in the physician-payment arrangements. He later settled as well.

Why Imaging Revenue Can Outgrow Physician Time

Imaging revenue can increase without a matching increase in the referring physician’s working hours. The Robert Wood Johnson Foundation’s 2008 research synthesis, Physician Self-Referral and Physician-Owned Specialty Facilities, describes that incentive directly:

The paper describes arrangements in which physicians leased imaging-center time or paid a fee per scan, submitted a bill covering the technical and professional components, and kept the difference. Cardiac Imaging’s alleged mechanism paid the referring physician a supervision fee instead. The shared financial attraction is earning from the scan while preserving time to see other patients.

A similar mismatch appeared in Gramercy Cardiac Diagnostic Services’ September 2023 settlement. The company admitted referral-based rental calculations and payments for purported supervision that often was not performed. Its whistleblower’s complaint alleged that physicians received more money for referring more patients even when they spent the same time providing the claimed services of reassuring patients. Rent, a per-test payment and an hourly supervision fee can each put a price on the referral while calling it something else. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The Contract and the Working Day

If the supervision agreement described a working day you never saw, speak to one of our Whistleblower Experts about what those fees really paid for. We build your strongest case around the difference between the promised duties and the actual work, and bring in healthcare fraud whistleblower lawyers who understand physician compensation and diagnostic imaging. We stay beside you as your knowledge of that business becomes the foundation of the case.