MRI provider and 46 chiropractors sued in $1.9M lawsuit for fraud, kickbacks

Illinois Farmers Insurance and its subsidiaries have filed a $1.9 million federal lawsuit against Edina, Minn.-based Mobile Diagnostic Imaging, Inc., its owner, and its referring chiropractors. The diagnostic imaging provider is accused of orchestrating an elaborate kickback scheme intended to defraud Minnesota’s no-fault insurance system. 

Minnesota’s no-fault laws, in place since 1974, require insurance companies to pay a minimum of $20,000 for medical expenses regardless of the party at fault in an automobile accident. Kickback schemes and staged accidents aimed to defraud this personal injury protection have consequently become increasingly popular in the state, according to the Minnesota Star Tribune.

Illinois Farmers Insurance alleged that Mobile Diagnostic Imaging and owner Michael Appleman paid 46 chiropractors kickbacks for ordering patients to undergo unnecessary MRIs.

“While Defendants characterize the MRI scans as medically necessary, many of the records from the Defendant Clinics and Clinic Owners do not even reference the results of the MRI scans after the scans have been conducted,” wrote the insurance companies’ attorney, Richard S. Stempel, in the complaint.

Mobile Diagnostic Imaging allegedly disguised the kickbacks as payment for leasing office items like phones, fax machines, computer copiers, and internet access, according to the complaint.

A list of chiropractors believed to be receiving kickbacks in 2011—identified as Mobile Diagnostic Imaging’s “Chiro Roster”—is included with the lawsuit. Illinois Farmers Insurance claims the imaging provider paid $221,800 in kickbacks from January to November 2011 to the named chiropractors and clinics.

“Since Defendants have victimized not only Plaintiffs but the citizens of Minnesota, Defendants should be held accountable under federal and state law, including the federal RICO Act, the Minnesota Consumer Protection Act, the Minnesota No-Fault Act, and the common law doctrines of fraud, piercing the corporate veil, negligent misrepresentation, the Corporate Practice of Medicine Doctrine, civil conspiracy, fraudulent concealment, and unjust enrichment,” read the lawsuit.