Federal judge dismisses nursing home 'kickback' case; upholds large X-ray company's 'swapping' method of billing

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The way mobile x-ray company Mobilex bills nursing homes is acceptable, a federal judge recently determined. Mobilex is the nation's largest provider of mobile diagnostic services. It had been facing whistleblower charges that it effectively paid kickbacks to nursing homes through an arrangement known as “swapping.”

The whistleblower did acknowledge that Mobilex intends to follow Medicare rules in the anti-kickback statute, according to court documents. However, he alleged that the company violates that statute by not considering certain costs in pricing its Part A services. For example, it does not consider overhead costs or a “cost to serve” a particular SNF.

Regardless of its intentions, if Mobilex under-prices its Part A services while also accepting Part B business, it would be engaging in “swapping,” the whistleblower claimed. In swapping, a company offers “impermissibly low” prices on Part A services in order to get access to Part B business, which generally is paid at a higher rate.

The judge rejected the argument that Mobilex needs to price its Part A services based on “fully loaded costs.” The whistleblower failed to make his case for several reasons, one of which is that mandating his method of pricing would lead to “absurd results.”

“As Mobilex points out, changes in executive salaries or the cost of rent for its corporate headquarters, even if wholly unrelated to delivering mobile x-ray services, could result in a contract suddenly becoming illegal, as the ‘total costs' of providing the services, under Relator's theory, will have increased,” wrote Judge Algenon L. Marbley of U.S. District Court for the Southern District of Ohio. Marbley dismissed the case on Aug. 12.