Austin chiropractor among 46 named in kickback lawsuit

Published 10:57 am Wednesday, October 16, 2013

A federal lawsuit filed Monday accuses a diagnostic imaging company and 46 chiropractors, including one in Austin and Albert Lea, of engaging in an elaborate kickback scheme aimed at defrauding Minnesota’s no-fault insurance system.

Named in the 56-page lawsuit is Austin chiropractor Mark Reeve of Reeve Chiropractic, and Albert Lea chiropractor Douglas Edwards of Albert Lea Chiropractic.

The Insurance Federation of Minnesota says the $1.9 million lawsuit against Mobile Diagnostic Imaging Inc., its owner and the chiropractors is the largest no-fault suit since the state’s law was put in place in 1974.

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It was filed by Illinois Farmers Insurance and its subsidiaries.

The insurance companies allege that Edina-based Mobile Diagnostic Imaging and its owner, Michael Appleman, paid chiropractors kickbacks for ordering MRIs that were not always medically necessary, according to the lawsuit.

Appleman declined to comment Monday, according to the Star Tribune.

Reeve said he hasn’t been served with the lawsuit yet, but found out about it Tuesday morning. He said he was advised not to comment.

Edwards said he was unaware of the lawsuit but was aware of the controversy.

“When we first heard there was a problem with this thing, we quit right away,” he said. “That was two years ago.”

The insurance companies claim that from January 2011 until November 2011, Mobile Diagnostic Imaging and Appleman paid $221,800 in kickbacks to the 46 chiropractors and their clinics named in the lawsuit.

The suit alleges Reeve Chiropractic received at least $3,200 in kickbacks and Albert Lea Chiropractic received at least $800 in kickbacks during that period. Neither chiropractor was accused of some of the more serious claims in the suit, including violations of the federal Racketeer Influenced and Corrupt Organizations Act, known as the RICO Act.

The alleged kickbacks were written up as leasing of office items including telephones, fax machines, computer copiers and Internet access, Farmers Insurance alleges, saying that “MDI conducts its scans in a self-sufficient MRI trailer.”

The allegations reflect what insurance representatives say is a growing trend of kickback schemes and staged accidents that aim to defraud personal injury protection under Minnesota’s no-fault laws. The law requires insurance companies to pay a minimum of $20,000 for medical expenses regardless of who is at fault in an auto accident.

“Today’s filing of a federal lawsuit reaffirms what our industry has been saying for several years now — that insurance fraud is rampant in Minnesota,” Insurance Federation spokesman Mark Kulda said.

—The Associated Press contributed to this report.