BOZEMAN, Mont. — Two former Bozeman radiologists have filed a federal whistleblower lawsuit accusing Bozeman Health Deaconess Hospital of illegally conspiring to maintain its monopoly on radiology services, leading to fraudulent bills being submitted to Medicare and Medicaid.

Frank Rembert and Michael Paradise allege that Intercity Radiology — which contracted with Bozeman hospital — in 2002 considered opening an outpatient imaging center, which would have competed with the hospital for patients. The center would have offered lower prices, better office hours and faster service in a more convenient location, the lawsuit says, and may have forced the hospital to charge lower rates, as well.

To protect its monopoly, the lawsuit accuses the hospital of creating a joint venture with Intercity Radiology and agreed to refer patients to the joint venture in exchange for millions of dollars in kickbacks. The hospital owned 77.5 percent of the joint venture, called Advanced Medical Imaging, the lawsuit said. The hospital’s partnership with Intercity Radiology included a clause that prevented its employees from participating in any other outpatient imaging center.

The scheme resulted in millions of dollars in fraudulent claims being paid to the hospital and AMI by Medicare, Medicaid and other federal health care programs, according to the lawsuit.

Hospital attorney Ian McIntosh denied the allegations and said the hospital will defend itself against the lawsuit, which was filed in December but made public last week, the Bozeman Daily Chronicle ( reported.

Bozeman Health began tracking and controlling the volume of referrals it sent to Advanced Medical Imaging and deliberately overused procedures, leading to more fraudulent claims, the lawsuit alleges.

The False Claims Act allows private individuals to file lawsuits over fraud against the government and collect a percentage of any damages awarded. The lawsuit alleges the joint venture also violated the Federal Anti-Kickback Statute. The hospital and Advance Medical Imaging have until Nov. 21 to file an answer to the complaint.

Information from: Bozeman Daily Chronicle,