Skip to main content
Press Release

Radiology Billing Company To Pay $1.95 Million To Resolve False Claims Act Allegations

For Immediate Release
U.S. Attorney's Office, Northern District of Georgia

ATLANTA - The United States Attorney’s Office announced that it has reached a settlement with Medical Business Service, Inc. (MBS), which agreed to pay $1.95 million to settle claims that it violated the False Claims Act by fraudulently changing diagnosis codes on claims to Medicare and Medicaid, in order to get the rejected claims paid on behalf of radiologists.  MBS was located in Florida, with an office in Duluth, Ga. 
“Billing companies provide a key check-point to combat medical billing fraud.  Consequently, they will be examined with the same scrutiny as healthcare providers,” said United States Attorney Sally Quillian Yates. 

J. Britt Johnson, Special Agent in Charge, FBI Atlanta Field Office, stated: “Federal funds designated for use through the Medicare and Medicaid programs are much needed but limited.  When those funds are not used as intended, the system does not work as intended and people suffer.  The FBI will continue to work with its various law enforcement partners in dedicating significant investigative resources toward ensuring that these federally funded healthcare based programs are not abused.”

“The health care providers who contracted with MBS placed their trust in the company to correctly process claims and not submit fraudulent information to the Medicare and Medicaid programs,” said Derrick L. Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta.  “The lack of compliance and oversight by MBS placed all these providers at risk.  Billing services such as MBS have no less of a duty to ensure truthful information on claims than do the providers who use these services.”

The civil settlement resolves the United States’ investigation into MBS’s billing practices.  The United States alleges that MBS improperly coded and billed claims by radiologists that were submitted to the Medicare and Medicaid programs.  Medicare and Medicaid issue guidance stating that they will not pay for certain procedures given to patients with specific diagnoses.  Medicare and Medicaid will reject claims for payment that combine those procedures and diagnoses.  MBS allegedly changed the diagnosis codes on previously rejected claims to avoid those restrictions in order to have the claims paid.  The settlement covers a three year period, 2008-2010, during which the conduct allegedly occurred.

This civil settlement resolves a lawsuit filed by Katlisa N. Vaughn under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery obtained.   The case, pending in the Northern District of Georgia, is filed under United States of America, State of Florida, State of Georgia, State of New York, State of Tennessee, and State of Texas ex rel. Katlisa N. Vaughn v. Medical Business Service, Inc., Civ. No. 1:10-CV-2953.  The Federal government will receive $1.917 million from the settlement, while Florida, Georgia, New York, and Texas will split the remainder of the settlement.   Ms. Vaughn will receive a share of the settlement payment that resolves the qui tam suit that she filed.  The claims settled in the civil settlement are allegations only, and there has been no determination of liability.

This resolution is part of the government’s emphasis on combating health care fraud under the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services, in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $14 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $20 billion.

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

The civil settlement was reached by Assistant United States Attorney Christopher J. Huber.

For further information please contact the U.S. Attorney’s Public Affairs Office at or (404) 581-6016.  The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is

Updated April 8, 2015