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
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

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.

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