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On August 27, 2013, the Department of Justice announced that a New York-based diagnostic testing company, Imagimed, LLC, its former owners and the company's former chief radiologist had agreed to a $3.57 million dollar settlement to resolve allegations that the company submitted false claims for magnetic resonance imaging (MRI) services to federal health care programs.

Allegedly, the company submitted claims to Medicare, Medicaid and TRICARE between 2001 and 2008 for the performance of MRI scans with a contrast dye without the direct supervision of a qualified physician. Federal regulations require that a physician directly supervise the administration of contrast dye when used for an MRI as a potential adverse side effect is anaphylactic shock. The government’s allegations underscore the need for strict adherence to the federal requirements when performing diagnostic services. Such requirements can vary depending on the particular procedure being furnished.

The company was also alleged to have submitted claims between 2005 and 2008 for services referred to company by physician with whom the company had "improper financial relationships."

Physician Supervision Requirements

As a condition of payment to receive Medicare reimbursement, outpatient therapeutic and diagnostic services must be performed under an appropriate level of physician supervision. The Centers for Medicare & Medicaid Services (CMS) has established and specifically defined three levels of physician supervision: general, direct and personal. Each outpatient diagnostic and therapeutic service, therefore, must be performed under the appropriate corresponding level of supervision as set by CMS to properly claim and receive payment from Medicare.

General supervision is the lowest level of supervision and only requires the procedure to be provided under the “overall direction and control” of the physician. Importantly, the physician need not be physically present during the performance of the procedure.

Direct supervision, the intermediate level of supervision, requires the physician to be physically present onsite and “immediately available” to provide assistance and direction throughout the procedure. This requirement has been the subject of much confusion and controversy. Currently, CMS defines “immediately available” as requiring the physician to be in the “immediate physical presence” and “interruptible.” The physician, however, need not be present in the same room while the actual procedure is being performed.

Personal supervision, the highest level of supervision, requires the physician to be physically present in the room for the entire duration of the procedure.


This recent settlement serves as a reminder that the physician supervision requirements are and will continue to be enforced. It also emphasizes the need to comply with conditions of payment and other regulatory requirements when furnishing services to Medicare beneficiaries. Government enforcement agencies and qui tam relators take the position that billing Medicare for services not provided in compliance with such requirements is a violation of the False Claims Act. Violation of that law can result in severe financial penalties, including treble damages and per claim assessments. Providers should take this opportunity to reassess their current compliance and ensure their ongoing compliance with these requirements.

The Press Release from the Department of Justice announcing the settlement with Imagimed, LLC can be found online at:

If you have any questions or need further information, please do not hesitate to contact one of our health care attorneys.