On March 25, 2009, the Department of Health and Human Services, Office of Inspector General (“OIG”) announced that West Valley Imaging LP, a Nevada diagnostic imaging service, and its two physician owners had agreed to pay $2 million and enter into a five-year corporate integrity agreement to resolve allegations that that they submitted false or fraudulent claims to Medicare. The settlement constitutes one of the largest civil monetary penalty (“CMP”) settlements to date.

The OIG alleged that between January 1, 1998 and June 1, 2003, West Valley Imaging and its two physician owners intentionally defrauded Medicare by improperly providing diagnostic tests to Medicare beneficiaries without the required treating physicians’ orders, in addition to failing to satisfy other billing and coverage requirements.

West Valley Imaging and its owners disputed the allegations and denied liability. Per its terms, the settlement is “neither an admission of liability” by the radiologists “nor a concession by the OIG that its claims are not well-founded.” West Valley Imaging claims that the lack of physician orders were the result of lax record-keeping by West Valley Imaging and its referring physicians.

In addition to the $2 million fine and as part of the CMP settlement, West Valley Imaging agreed to enter into a five year corporate integrity agreement (“CIA”). Terms of the CIA, require West Valley Imaging to, among other things, audit 15 claims each quarter, as well as an additional 60 claims each year, that relate to physician orders