Edina MRI Company Sued for Insurance Fraud, Giving Kickbacks to Chiropractors

An Edina MRI company and 46 chiropractors are accused in a federal lawsuit filed Monday of joining together to create a kickback scheme aimed at defrauding insurance providers by gaming Minnesota's no-fault system.

The $1.9 million lawsuit against Mobile Diagnostic Imaging Inc., the company's owner, Michael Appleman, and the chiropractors is the largest no-fault lawsuit since the law was instituted in 1974, the Star Tribune is reporting.

Insurance companies—including Illinois Farmers Insurance, the lawsuit's plaintiff—are required to pay up to $20,000 for medical expenses after car accidents, regardless of who was at fault.

The lawsuit alleges that Mobile Diagnostic made rental agreements with chiropractors, reimbursing them for office expenses such as phones, Internet access, fax machines and copiers. But the company conducted its scans in a "self-sufficient MRI trailer," so the rental agreement was "merely a pretext for paying kickbacks to [chiropractors] for the referrals of patients."

Between January 2011 and November 2011, Mobile Diagnostic paid out $221,800 in kickbacks, the lawsuit claims.

Mark Kulda, a vice president of public affairs at the Insurance Federation of Minnesota, told the Pioneer Press that similar scams are common throughout the state.

"This is just further proof of our contention that insurance fraud is rampant here, and we need to do something about it," he said.