Speaking Of : Medical Fraud

The basis of the case was that insurers suspected that a radiology practice operating through a professional organization was not owned and controlled by a medical professional. The contention was that two individuals — Hillel Sher and Irina Vayman, both of whom were not medical doctors — were the actual owners and were thus the primary beneficiaries of profits. It was asserted that these non-doctors arranged for the corporation's profits to be diverted to themselves. Andrew Carothers, the doctor in this case, unscrupulously allowed his license to be used in the creation of the entity.

The business was therefore fraudulently incorporated, and Dr. Carothers acted as nothing more than the "on-paper" owner of the professional corporation. It was found that he did not engage in the practice of medicine through this professional corporation and gave up total control from both a practical standpoint and also through the contractual relationships that were established between the professional corporation and two companies owned by Sher known as Forum Medical Management, Inc. and MRI Global Imaging, Inc.

Dr. Carothers neither discussed patients' needs or imaging protocols nor did he manage the most basic aspects of the clinical and professional services that were performed, including overseeing the image technicians. He also admitted that, during his first meeting with Sher, he never inquired about the age and condition of the scanners.

Evidence demonstrated that, from Jan. 1, 2005 through Dec. 31, 2006, an alleged 38,000 scans were conducted. However, only 79 MRI narrative reports bore Dr. Carothers' signature stamp. The cross-examination suggested that he had not even read those reports.

Some argue that this decision creates a loophole for insurers to refuse payment to medical practices. Do you agree?

Not at all — the decision will reinforce the insurance industry's efforts to curb the fraud and abuse that has victimized the industry for nearly a decade. It's a victory for patients, too, as this verdict will ensure that medical care is administered when in the best interest of the patient, rather than for non-physicians' pecuniary gain.

When doctors become de facto employees of non-doctors, the quality of patient care is compromised. Testimony presented from a highly regarded neuroradiologist indicated that the films produced at these centers were not even remotely close to offering diagnostic value, a conclusion that Dr. Carothers did not refute.

Does the verdict carry larger implications for medical providers?

These kinds of situations will continue to be somewhat prevalent, but doctors will think long and hard before entering into these types of relationships, as will non-doctors. Many states have comparable prohibitions. Texas, for example, has a significant statute. Very few of these types of cases get tried — close to 95 percent settle — and the levels of proof may vary substantially from case to case. I serve as lead counsel or co-counsel on behalf of medical insurers processing RICO claims on groups in Federal Court in New York to recover money paid on fraudulent claims. It's been my experience that all of these cases have the same underpinnings.