Rhode Island Medical Imaging targeted in whistleblower lawsuit

Updated at 7:54 p.m.

PROVIDENCE – Rhode Island Medical Imaging Inc.’s former executive director has sued the company, claiming he was fired last September after he uncovered widespread improper billing of government insurance programs for unnecessary or unrequested tests.

In a lawsuit, Wayne Arruda alleged RIMI retaliated against him after he started an investigation into what he said was “false billing” of Medicaid and Medicaid by the company and then tried to stop the billing practices.

At one point, the lawsuit said, Arruda notified RIMI President Dr. John Pezzullo that the improper billing “was likely to be substantial and that RIMI needed to take action to return the overpayments.”

Arruda asserted that he was demoted by Pezzullo on Sept. 4 and fired the next day after Arruda notified RIMI he was resigning at the end of the month. Arruda had worked for RIMI for 20 years, the final seven years as executive director.

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The lawsuit was initially filed in state Superior Court but was moved to U.S. District Court in Rhode Island this week at the request of RIMI and Pezzullo, who is also named as a defendant.

The company said in a statement Friday, “Rhode Island Medical Imaging categorically denies these allegations and will be pursuing all legal options to disprove them. RIMI has and always will uphold the highest standards of integrity, as we continue to care for our many patients who remain our number one priority. RIMI remains in compliance with all state and federal laws governing health care payments, and we look forward to answering these unfounded and disturbing allegations in the court of law.”

The company is Rhode Island’s largest private radiology practice, providing diagnostic imaging services such MRI and CT scans for patients sent there by their doctors.

Arruda’s lawsuit said RIMI and Pezzullo violated the state Whistleblowers’ Protection Act, as well as state and federal False Claims Acts.

He is seeking double the amount of his lost salary and benefits, plus money for pain, suffering, emotional distress and damage to his reputation and punitive damages. His attorney, Louise Herman, told PBN on Friday that no dollar figure has been established. He also is seeking to be reinstated.

The Centers for Medicare and Medicaid Services did not immediately respond to a message seeking comment on Friday. And Herman said Friday that she was unaware if any government agency had reviewed Arruda’s accusations or taken any action.

The lawsuit says Arruda started looking into improper billing last May after learning of a complaint that a patient had been billed for a radiological test that hadn’t been ordered by the patient’s doctor.

Over two months, the lawsuit asserts, Arruda reviewed about 100 reimbursement claims that RIMI had submitted to health-care programs such as Medicare and Medicaid. He allegedly found a “pattern and practice” of RIMI submitting claims for tests that had not been ordered by doctors, the lawsuit says.

In certain cases, the lawsuit says, RIMI was submitting claims for both pelvic and transvaginal ultrasound tests when only one of the two tests had been ordered. In other cases, reimbursement claims for abdominal and scrotal ultrasounds using Doppler equipment had been filed even though the Doppler hadn’t been requested by a doctor, according to lawsuit.

Arruda also asserted in the lawsuit that RIMI was submitting reimbursement claims for mammograms that were conducted without doctors’ orders.

During the investigation, the lawsuit alleged, Arruda discovered RIMI technicians were consulting a list of doctors before running tests. If an ultrasound had been ordered by a doctor on the list, technicians would perform additional tests even if they had not been ordered, according to the lawsuit.

After Arruda attempted to end the billing practices, the lawsuit said, he was excluded from some portions of board of directors meetings and contact with Pezzullo diminished. “Arruda was isolated and ignored” before he was demoted then fired, according to court documents.

William Hamilton is a PBN staff writer. Email him at Hamilton@PBN.com.