Two Houston-based diagnostic center groups have reached settlements with the United States, totaling over $2.6 million, to resolve allegations of False Claims Act violations. Acting Assistant Attorney General Joyce R. Branda of the Department of Justice’s Civil Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas jointly announced the settlements. These agreements were finalized without any admission of liability or the commencement of litigation.
One entity, operating as One Step Diagnostic and owned by Fuad Rehman Cochinwala, has agreed to a $1.2 million settlement. The allegations against One Step Diagnosis center around violations of the Stark Statute and the False Claims Act. Specifically, the government contended that One Step Diagnosis entered into improper “sham” consulting and medical director agreements with physicians. These agreements were allegedly designed to incentivize these physicians to refer patients to One Step Diagnosis centers, potentially violating regulations designed to prevent healthcare fraud and abuse.
The second group of diagnostic centers, under the ownership and control of Rahul Dhawan, has agreed to a larger settlement of $1,457,686. This group includes Complete Imaging Solutions LLC (doing business as Houston Diagnostics), Deerbrook Diagnostics & Imaging Center LLC, Elite Diagnostic Inc., Galleria MRI & Diagnostic LLC, Spring Imaging Center Inc., and West Houston MRI & Diagnostics LLC. The core allegation against these centers is their involvement in improper financial relationships with referring physicians. Furthermore, it was alleged that these centers improperly billed Medicare using the provider number of a physician who had neither authorized such use nor been involved in the actual provision of the billed services. This practice raises serious concerns about fraudulent billing and the integrity of healthcare claims submitted to federal programs.
“The Department of Justice is deeply concerned about inappropriate financial connections between healthcare providers and their referral sources,” stated Acting Assistant Attorney General Branda. “Such relationships can compromise a physician’s impartial judgment regarding a patient’s genuine healthcare needs and contribute to escalating healthcare costs for everyone. This settlement not only ensures a financial recovery for taxpayers but also serves as a deterrent against similar misconduct in the future, ultimately contributing to a more affordable healthcare system.”
U.S. Attorney Magidson added, “These settlements, totaling over $2.6 million, underscore our office’s unwavering commitment to combating healthcare fraud. The U.S. government takes these accusations with the utmost seriousness. Through the utilization of whistleblower laws, we will continue to bring these cases to light, particularly where taxpayer funds are being misused.”
The settlements announced are the result of a lawsuit initiated by three whistleblowers under the qui tam provisions of the False Claims Act. This act empowers private citizens to file lawsuits on behalf of the government concerning false claims and to receive a share of any recovered funds. Whistleblowers play a crucial role in uncovering healthcare fraud, and the False Claims Act provides a vital mechanism for reporting and addressing such issues.
This case highlights the government’s strong focus on actively combating healthcare fraud and represents another success for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative. Launched in May 2009 by the Attorney General and the Secretary of Health and Human Services, HEAT aims to reduce and prevent Medicare and Medicaid fraud through enhanced inter-departmental cooperation. The False Claims Act is recognized as one of the most effective tools in this ongoing fight against healthcare fraud. Since January 2009, the Justice Department has recovered over $22.5 billion through False Claims Act cases, with over $14.3 billion specifically related to fraud against federal healthcare programs, demonstrating the significant financial impact of these enforcement efforts.
The case, United States ex rel. Holderith, et al. v. One Step Diagnostic, Inc., et al., Case No. 12-CV-2988 (S.D. Tex.), was managed by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Texas, and the Department of Health and Human Services – Office of Inspector General. It is important to note that the claims resolved by this agreement are allegations only, and there has been no formal determination of liability in this matter.
