National Cardio Labs Settles Whistleblower Suit for $3.6 Million
An Orange County heart-monitoring service will pay $3.6 million to settle a whistleblower lawsuit that alleged the company defrauded government health care programs, the U.S. Attorney's Office in Los Angeles announced.
National Cardio Labs LLC was based in Santa Ana, Aliso Viejo and then Irvine before it got out of the diagnostic testing business. Two of those targeted in the investigation were grandsons of Bruce Del Mar, who, with Jeffries Holter, developed the first lightweight elecrocardiographic device to record heart activity.
A statement from the feds on the settlement follows after the jump . . .
July 8, 2010
United States Attorney's Office
Central District of California
National Cardio Labs Pays $3.6 Million to Settle Civil Allegations that It Defrauded Federal Health Programs
LOS ANGELES--The government has finalized a settlement of a "whistleblower" lawsuit in which an Orange County company that offered heart monitoring services will pay $3.6 million to resolve allegations that it defrauded government health care programs.
The lawsuit alleged that National Cardio Labs LLC; the company's manager, Adrienne Stanman ; and her husband Robert Parsons, a former manager, both of Laguna Niguel, defrauded Medicare, TRICARE, and health insurance carriers contracted through the federal government for the Federal Employee Health Benefits Program.
The lawsuit alleged that National Cardio Labs knowingly submitted false health care claims to the federal health insurance programs for various cardiac and blood pressure diagnostic testing services performed between January 1998 and February 2004. During that time, National Cardio Labs was operating as an independent diagnostic testing facility that received, analyzed, and printed out data from Holter heart monitors and other medical devices. National Cardio Labs was based in Santa Ana, Aliso Viejo, and then Irvine, before it got out of the diagnostic testing business.
Stanman, Parsons and National Cardio Labs paid the United States nearly $2.3 million in late May, and agree to the agreement keeping an additional $584,000 that was seized by the Federal Bureau of Investigation as part of an asset forfeiture action. They will pay the balance of $720,000 by July 21. United States District Judge David O. Carter finalized the settlement on May 13 when he dismissed a lawsuit that had been filed by two whistleblowers. This week, the government agreed with the whistleblowers that they will receive $1,115,614 from the settlement.
The lawsuit was originally filed in January 2004 by James Cast and Stanton Crowley pursuant to the qui tam provisions of the federal False Claims Act. Mr. Cast was employed as a biller at National Cardio Labs, and Mr. Crowley was employed as a technician responsible for conducting diagnostic testing. The lawsuit alleged that National Cardio Labs billed for services it did not provide, including Holter and event monitoring services, physician services, 24-hour cardiac attended monitoring, electrocardiograms, and nerve conduction tests. Additionally, the company allegedly billed for services that it could not perform and for services for which it had already been paid.
The lawsuit also alleged that National Cardio Labs "unbundled" services, procedures, and supplies and rebilled them to obtain excessive reimbursement. For example, audio cassette tapes used in the Holter monitors were reimbursed by federal insurers as part of the Holter monitoring procedure, but National Cardio allegedly also billed for them a second time using a reimbursement code for medical tape.
Earlier this year, the United States Attorney's Office resolved similar allegations with Matthew Parsons (Robert Parson's brother), Rebecca Eaton Parsons (Matthew Parson's wife), Cardiac Monitoring Services LLC, and Cardiac Research LLC. Those four defendants paid a total of $2,198,442 to settle the allegations against them.
As a result of both these cases the United States has recovered: $6,367,823.
A qui tam lawsuit is a civil action, commonly called a "whistleblower" lawsuit, that is filed by a private party called a relator. The lawsuit is filed under the federal False Claims Act on behalf of the United States. The action, which is initially filed under seal, must allege the submission of false claims seeking payment from the government. The U.S. Department of Justice is given an opportunity to review the allegations to decide whether to intervene and prosecute the case on behalf of the United States. The United States elected to intervene in the lawsuit filed by Mr. Cast and Mr. Crowley for the purpose of settling it.
In a related criminal case, Robert Parsons and Matthew Parsons both pleaded guilty in 2006 to federal health care fraud charges for using their respective cardiac laboratories, and the Holter monitoring technology developed by their grandfather, Bruce Del Mar, to defraud federal insurance programs. Both were sentenced to one year in prison.
The investigation in the civil case was conducted by the U.S. Office of Personnel Management, Office of the Inspector General; the U.S. Department of Health and Human Services, Office of Investigations; the Defense Criminal Investigative Service; the Federal Bureau of Investigations, and the U.S. Railroad Retirement Board, Office of Inspector General.
Get the This Week's Top Stories Newsletter
Every week we collect the latest news, music and arts stories — along with film and food reviews and the best things to do this week — so that you'll never miss OC Weekly's biggest stories. Every week we collect the latest news, music and arts