UPDATED: Lawsuit accuses MRI company, 46 chiropractors of fraud, kickbacks

Update: Lawsuit is attached below.

A diagnostic imaging company and 46 chiropractors were accused in a federal lawsuit Monday of engaging in an elaborate kickback scheme aimed at defrauding the state's no-fault insurance system.

The $1.9 million lawsuit filed by Illinois Farmers Insurance and its subsidiaries against Mobile Diagnostic Imaging Inc, its owner and the chiropractors, is the largest no-fault lawsuit since the law was put in place in the 1974, according to the Insurance Federation of Minnesota.

The allegations reflect what local insurance representatives are saying is a growing trend of kickback schemes and staged accidents that aim to defraud personal injury protection under the state'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," said Mark Kulda, a vice president of public affairs for the insurance federation.

In the latest scheme, the insurance companies allege Edina-based Mobile Diagnostic Imaging and its owner Michael Appleman paid 46 chiropractors kickbacks for ordering MRIs, which Farmers claims were not always medically necessary.

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

A "Chiro Roster" for 2011, included with the lawsuit, lists the chiropractors that the insurance companies allege are receiving kickbacks. There are more than 46 names included in the list, but the insurance companies have redacted those not named in the suit.

"From January of 2011 until November of 2011, Defendants MDI and Appleman paid $221,800 in kickbacks" to the chiropractors, and their clinics named in the lawsuit, the insurance companies claim.

Four of the 46 chiropractors named in the lawsuit have previously received corrective action from the Minnesota Board of Chiropractors related to the use of a "mobile diagnostic imaging company," according to the agreements.

Assiat Boke, Steve Poser, Richard Stoffels and Arlen Lieberman all signed corrective action agreements in April with the Chiropractic Board for violating state statutes that prohibit "splitting fees, or promising to pay a portion of a fee or a commission, or accepting a rebate."

Neither the Minnesota Board of Chiropractic Examiners nor the Minnesota Chiropractic Association could be reached for comment.

If you've been in a car wreck in Minnesota, Whistleblower wants to hear about your experience with no-fault insurance. Send an e-mail to whistleblower@startribune.com or call 612.673.4028.

Farmers Insurance Lawsuit