California Medical Imaging Provider to Pay Over $8.3 Million to Settle Kickback Allegations

Modern Nuclear Inc. (MNI), a mobile cardiac imaging provider based in La Habra, California, has agreed to pay more than $8.3 million to resolve allegations that it violated federal law by paying kickbacks to referring physicians over a nine-year period.

The Department of Justice announced that MNI will pay $8,334,350.71 plus additional amounts tied to future revenues to settle claims that it systematically paid cardiologists excessive fees for supervision of positron emission tomography (PET) scans – tests the same doctors had referred to MNI.

Federal investigators alleged that between September 2016 and January 2025, MNI paid cardiologists well above market rates for supposed supervision services, even when physicians were not physically present at scan locations or were occupied with other patients in their offices.

These arrangements violated the Anti-Kickback Statute, which prohibits healthcare providers from offering or receiving compensation in exchange for referrals involving federally funded healthcare programs, prosecutors said. Each Medicare claim connected to these improper arrangements constituted a false claim under the False Claims Act.

The case highlights the Justice Department’s ongoing scrutiny of mobile imaging providers. MNI has operated throughout Southern California since 1988, bringing diagnostic imaging equipment directly to cardiology practices across Los Angeles, Orange, Riverside, San Bernardino, and San Diego counties.

“Financial relationships between referring physicians and testing facilities demand careful compliance with federal law,” said a healthcare fraud attorney familiar with such cases but not involved in this settlement. “When physicians receive compensation tied to their referral patterns, it creates exactly the conflict of interest the Anti-Kickback Statute was designed to prevent.”

According to regulatory records, MNI’s CEO is Patrick Laverty II, a Certified Nuclear Medicine Technologist. The company’s business model involves transporting sophisticated cardiac imaging equipment to physician practices, allowing cardiologists to offer patients advanced diagnostic services without installing permanent infrastructure.

This mobile service model created the conditions for the alleged kickback scheme. By paying referring cardiologists inflated hourly rates to “supervise” scans they had ordered, prosecutors contend MNI was essentially providing financial incentives for continued referrals rather than compensating for legitimate medical services.

The $8.3 million settlement represents only a portion of the potential damages and penalties MNI might have faced at trial. The Justice Department structured the agreement as an “ability-to-pay” settlement after determining the company lacked financial resources to satisfy the full amount the government could have demanded.

In addition to the fixed payment, the settlement includes provisions requiring MNI to share portions of future revenue with the government, extending recovery over time as the company generates income. Such arrangements are common in healthcare fraud cases involving smaller providers where demanding immediate full payment might force bankruptcy.

The MNI case follows a similar $85 million settlement with Cardiac Imaging Inc. (CII) and its CEO in 2023. In that case, CII allegedly paid referring cardiologists $500 or more per hour for supervision services, including time when physicians were absent from mobile imaging units.

Healthcare compliance experts note that the nearly decade-long violation period in the MNI case is particularly striking, as it spans multiple Medicare billing cycles and compliance certification periods during which the company should have identified and corrected the improper arrangements.

For patients who received cardiac PET scans through MNI during this period, the settlement raises questions about whether their diagnostic imaging was ordered based purely on medical necessity or was influenced by financial relationships between their cardiologists and the imaging provider.

The Justice Department has repeatedly emphasized that financial arrangements in healthcare must be structured to ensure patient care decisions remain untainted by profit motives, particularly when taxpayer dollars fund the services through Medicare and other federal healthcare programs.