By: Christopher Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, MA
A Health Care Provider Defense and Compliance Firm

A former operations and regional sales manager for a mobile diagnostic company has admitted to orchestrating a multi-state kickback scheme involving over $70 million in fraudulent claims for transcranial Doppler (TCD) ultrasounds—a case that underscores how physician referrals, when improperly incentivized, can turn criminal fast.

James Rausch, 57, of Port Jefferson Station, New York, pleaded guilty to conspiracy to violate the Anti-Kickback Statute under 18 U.S.C. § 371. Rausch’s role included pitching physicians, drafting sham administrative contracts, and delivering cash kickbacks of $100 to $150 per brain scan ordered, regardless of medical necessity.

According to court filings, Medicare paid more than $17.5 million of the $70.6 million in claims. The U.S. Attorney’s Office recommends an 18½-month sentence, $17.5 million in restitution to the Centers for Medicare & Medicaid Services (CMS), and forfeiture of $408,000, the amount Rausch personally pocketed from the scheme.

The scheme used fake documentation and improper diagnosis codes, such as “vertebrobasilar insufficiency,” to secure payment for unnecessary services. The TCD company coached providers to use specific codes to guarantee insurer reimbursement even when patients did not have the indicated conditions.

The Fallout from This Plea Serves as a Cautionary Tale:

• Kickbacks disguised as administrative fees or rental payments are still illegal if they are volume-based.
• CMS does not pay claims tainted by illegal inducements. These claims violate the False Claims Act.
• Those who enable these arrangements—from sales executives to billing personnel—face serious personal liability, including prison time, financial forfeitures, and career-ending sanctions.

This plea agreement is part of a broader federal crackdown on diagnostic fraud, particularly schemes that abuse vulnerable payment systems with bogus referrals and “per-click” incentive arrangements.

At Parrella Health Law, we’re seeing a surge in government investigations into downstream referral arrangements for sham service and rental contracts.

If your company is operating under any kind of referral incentive model—even if cloaked as a legitimate contract—it’s time to reassess your risk exposure.

Contact Parrella Health Law for a confidential compliance review or defense consultation. Let us help you get ahead of the government, before they get ahead of you.

Have concerns about your referral arrangements or marketing contracts? Call 857-328-0382 or email Chris directly at cparrella@parrellahealthlaw.com