The United States Attorney's Office
Central District of California

Thom Mrozek
Public Affairs Officer
(213) 894-6947
thom.mrozek@usdoj.gov

April 14, 2008

U.S. JOINS 'WHISTLEBLOWER' CASE AGAINST BEVERLY HILLS-BASED
RADIOLOGY CLINIC THAT ALLEGES FALSE CLAIMS TO MEDICARE AND FRAUDULENT REFERRALS

The United States today filed a complaint in intervention in a "whistleblower" lawsuit that accuses a Beverly Hills-based diagnostic clinic of defrauding the federal Medicare program by performing unnecessary radiological tests, such as CT scans and MRIs.

The complaint filed today in United States District Court in Los Angeles accuses The Oaks Diagnostics, Inc. (doing business as Advanced Radiology of Beverly Hills); its owner, Ronald Grusd, M.D.; and internal medicine practitioner Earl Fernando, M.D. of defrauding federal health care programs.

The lawsuit alleges that the defendants engaged in a scheme to fraudulently bill Medicare for unnecessary tests performed at Advanced Radiology. As part of the alleged scheme, an Advanced Radiology employee recruited Medicare beneficiaries to undergo diagnostic tests at Advanced Radiology even though the beneficiaries did not need the tests. Unnecessary tests allegedly were also performed on patients referred directly by Fernando. The complaint alleges that Advanced Radiology submitted claims to Medicare for unnecessary diagnostic services rendered to 438 Medicare beneficiaries and that Medicare paid Advanced Radiology more than $600,000 for these services. Under the False Claims Act, the United States may recover three times the amount of its losses plus penalties.

Three weeks ago, an Advanced Radiology employee involved with the scheme, Nordelyn Lowder, pleaded guilty to one count of health care fraud in connection with the fraud scheme. Lowder admitted that she received more than $500,000 in exchange for referring patients to Advanced Radiology over a four-year period. Lowder is scheduled to be sentenced by United States District Judge Florence-Marie Cooper on June 2, at which time she faces a maximum statutory penalty of 10 years in federal prison.

The "whistleblower" lawsuit was originally filed in 2003 by a former Advanced Radiology employee under the qui tam provisions of the False Claims Act, which allows a private party to file an action on behalf of the United States and receive a portion of the recovery. The United States first filed a notice of intervention on February 12. Today, the government filed its lawsuit which takes the place of the original qui tam complaint filed in 2003.

This case was investigated by the Department of Health and Human Services, Office of Inspector General, and the Federal Bureau of Investigation.