Modern Nuclear Inc. (MNI), a provider of mobile positron emission tomography (PET) scans headquartered in La Habra, California, has agreed to pay a total of $8,334,350.71, plus additional amounts based on future revenues, to resolve False Claims Act allegations that it paid referring cardiologists excessive fees to supervise PET scans in violation of the Anti-Kickback Statute (AKS). This settlement is based on MNI’s ability to pay.
The United States alleged that between Sept. 1, 2016, and Jan. 14, 2025, MNI knowingly submitted false or fraudulent claims to federal health care programs arising from violations of the AKS. Specifically, MNI allegedly paid kickbacks to referring cardiologists in the form of above-fair market value fees, ostensibly for cardiologists to supervise PET scans for the patients they referred to MNI. The United States alleged these fees substantially exceeded fair market value for the cardiologists’ services because MNI paid the referring cardiologists for time they spent in their offices caring for other patients or while they were not on site at all, or for additional services beyond supervision that were never or rarely actually provided. MNI purported to rely on an attorney-opinion letter regarding fair market value that the United States alleged was premised on fundamental inaccuracies and that the consultant ultimately withdrew.
“We will diligently pursue and hold accountable healthcare providers that seek patient referrals through illegal kickbacks and other unlawful financial inducements,” said Assistant Attorney General Brett A. Shumate, head of the Justice Department’s Civil Division. “By rooting out financial relationships between healthcare providers and referring physicians that corrupt the medical decision-making process, we will continue to protect and safeguard taxpayer dollars.”
“Paying illegal kickbacks to cardiologists so they refer patients undermines the integrity of federal healthcare programs and needlessly increases costs,” said First Assistant U.S. Attorney Bill Essayli for the Central District of California. “Patients deserve care based on their medical need and not on a doctor or company’s financial interest. Our office will continue to bring such cases to hold wrongdoers accountable.”
“Paying kickbacks to physicians — as alleged in this case — can undermine the integrity of the Medicare program by interfering with impartial medical decision-making,” said Special Agent in Charge Robb R. Breeden of the U.S. Department of Health and Human Services Office of Inspector General (HHS‑OIG). “This resolution demonstrates our agency’s continued commitment to holding Medicare providers accountable and ensuring that medical decisions are driven by patient needs, not illegal incentives.”
“Modern Nuclear Inc.’s civil settlement acknowledges its role in compromising the Federal health care system,” said Special Agent in Charge John Helsing of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), Western Field Office. “DCIS remains committed to combating health care fraud by holding providers accountable and protecting TRICARE, the Department’s primary health care program, from abuse. The work done by DCIS, our investigative partners, and the Department of Justice ensures that resources are preserved for the legitimate care of our service members, their families, and retirees.”
In connection with the settlement, MNI entered into a five-year Corporate Integrity Agreement (CIA) with the HHS-OIG. The CIA requires, among other compliance provisions, that MNI implement measures designed to ensure that arrangements with referring physicians are compliant with the AKS. The CIA also requires that MNI implement a compliance program to identify and address the AKS risks associated with other financial arrangements and retain an Independent Compliance Expert to perform a review of the effectiveness of the compliance program.
The civil settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by relators Matt Lieberman and James Whitney. Under those provisions, a private party or relator can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Lieberman v. Modern Nuclear, Inc., et al.,case number 8:23-cv-01646-DOC-KES in U.S. District Court for the Central District of California. The relators will receive 16% of the total recovery in this matter.
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Central District of California, with assistance from the HHS-OIG and the Defense Health Agency Office of Inspector General.
The investigation and resolution of this matter illustrate the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the HHS at 800-HHS-TIPS (800-447-8477).
The matter was handled by Senior Trial Counsel Sanjay M. Bhambhani of the Justice Department's Civil Division and Assistant U.S. Attorney Paul B. La Scala for the Central District of California.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
