National Cardio Labs settles whistleblower suit for $3.6M

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The government has finalized a settlement of a whistleblower lawsuit in which heart monitoring services provider National Cardio Labs will pay $3.6 million to resolve allegations that it defrauded government healthcare programs.

The lawsuit alleged that National Cardio; the company’s manager, Adrienne Stanman; and her husband Robert Parsons, a former manager, both of Laguna Niguel in Calif., 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 knowingly submitted false healthcare 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 was operating as an independent diagnostic testing facility that received, analyzed and printed out data from Holter heart monitors and other medical devices, based in Santa Ana, Alisa Viejo and Irvine--all in Calif., before it got out of the diagnostic testing business.

Stanman, Parsons and National Cardio paid the U.S. nearly $2.3 million in late May, and agreed to putting aside 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.

U.S. 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 $1.12 million 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. Cast was employed as a biller at National Cardio, and Crowley was employed as a technician responsible for conducting diagnostic testing.

The lawsuit alleged that National Cardio 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 “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 U.S. Attorney’s Office resolved similar allegations with Matthew Parsons (Robert Parsons' brother), Rebecca Eaton Parsons (Matthew Parsons' wife), Cardiac Monitoring Services and Cardiac Research. Those four defendants paid a total of $2,198,442 to settle the allegations against them.

As a result of both these cases the U.S. has recovered: $6.37 million.