PDQ Imaging: The Transportation Bill and the Referral Bargain

In the PDQ Imaging fraud case, the imaging companies and their owners agreed to pay $300,000 over alleged improper Medicare transportation charges for portable x-ray services. The whistleblowers also alleged kickbacks to skilled nursing facilities in exchange for patient referrals, an arrangement they called swapping. For an imaging-company or nursing-home insider, the case raises questions on both sides of the business: what Medicare was billed for, and what the facility received for sending patients to the supplier.

What the PDQ Civil Case Alleged

PDQ Imaging supplied mobile imaging services, including portable x-rays. Two whistleblowers brought the False Claims Act qui tam case in the Eastern District of Texas, challenging the company’s billing and referral arrangements.

The Justice Department’s December 12, 2017 announcement described the agreement by the imaging companies and their owners to pay to resolve the transportation-charge allegations. The United States joined the case for settlement.

An insider who knows how the imaging account was priced may have a different part of the story from the employee who knows how its transportation charges reached Medicare. The referral allegation concerns what the supplier offered the nursing facility for its business. The transportation allegation concerns what the supplier charged Medicare for bringing portable x-ray services to patients.

What Are the Medicare Billing Guidelines for Skilled Nursing Facility Care?

Medicare billing guidelines for skilled nursing facility care put the SNF in charge of billing for services included in a covered Part A stay, including many services an outside supplier provides. Medicare pays the facility, and the facility’s contract determines what the supplier receives.

Under the Centers for Medicare & Medicaid Services’ consolidated-billing rules, bundled services cannot generate a separate Medicare payment to the outside provider. The covered stay includes medical services as well as room and board, with limited exclusions. The supplier’s invoice is therefore an expense the facility has to meet from its payment.

A cheaper facility-paid service from a health care supplier leaves the SNF with more of its bundled payment. Other services can generate separately payable business for the supplier. In a swapping arrangement, the allegation connects those streams: a concession on the facility’s own bill buys referrals for business billed to the government. The facility keeps the discount while taxpayers fund the referred business.

The useful question for an insider is what the supplier expected in return for the price it offered the facility. A low price on one account can be the cost of obtaining another.

What Evidence Is Needed to Prove Fraud?

For allegations like these, evidence connects the service, the bill and the people who controlled it. For a referral arrangement, it also connects what the facility received to the business it sent back.

We examine the supplier contract and price schedule alongside facility invoices and payment records. Together, they can show the price the facility agreed to pay and what it actually paid. A contract describes the arrangement on paper. The account history can show how it operated, including discounts or balances written off.

For transportation billing, we compare the service records with the transportation charge and the submitted Medicare claim. For the referral side, we connect the facility’s financial benefit to referral volume and the resulting supplier claims. Communications about pricing and account decisions can explain who tied those parts together.

A billing employee may know how charges were submitted. Someone handling supplier contracts may know why a particular facility received its terms. An insider handling referrals may know which business the supplier expected. We work with the part you know and build the connections the case needs.

What Is the Reward for a Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

In PDQ’s settlement, the whistleblowers were allocated a whistleblower reward of 19% of the United States’ recovery.

Diagnostic Labs Shows the Bargain Behind the Discount

In a separate case, Kan-Di-Ki, doing business as Diagnostic Laboratories and Radiology, agreed to a $17.5 million settlement over allegations that below-cost Part A services bought Medicare Part B and Medi-Cal referrals. The company supplied laboratory and radiology services to nursing facilities.

The whistleblowers alleged that facilities paid for Part A and HMO services from their own budgets. In return for artificially low rates on that business, they allegedly sent Diagnostic Labs all their Part B and Medi-Cal business, which the supplier billed directly at the maximum allowable rate. The complaint put the value of the discount in plain terms:

The same complaint alleged that Diagnostic Labs forgave customer debts to keep the government-paid referrals coming. That adds something an insider can recognize beyond an unusually low contract rate: an unpaid balance disappears, and the supplier keeps the referral business. In that alleged bargain, the facility saved on its own expenses while Medicare and Medi-Cal kept paying the supplier. The discount stayed with the facility.

The complaint also compared bills for the same types of lab tests and x-rays. It alleged that a nursing facility in Pasadena received discounted prices, while Diagnostic Labs withheld those discounts when billing Medicare and Medi-Cal. The difference was who paid the bill. The facility got the lower price on its own account, and the government paid the supplier’s undiscounted rate for the referred business.

The complaint alleged that Diagnostic Labs priced some facility-paid services at a fixed amount per patient, per day. That gave the facility a predictable bill, while the supplier billed the referred government business at the maximum allowable rate. The bargain sat across both accounts.

You Know How the Imaging Account Worked

If you know why a facility received a discount, where its referrals went or how the transportation bills reached Medicare, talk with our whistleblower experts about your imaging case. We build the case with you, bring in healthcare fraud whistleblower lawyers who understand SNF supplier billing and referral arrangements, and stay with you through the whole case.