Radiology groups have exchanged lawsuits with a Carmel, Indiana-based billing vendor, alleging “gross misconduct” and ongoing payment issues. Zotec Partners has responded by countersuing, calling the latest complaint a “smokescreen” to hide providers’ own violation of their contract.
The most recent court action involves California Managed Imaging Medical Group, a collection of affiliated radiology practices in the Golden State that filed suit in August. CMI signed an amended agreement for Zotec to provide billing and collections services on behalf of radiologists in April 2020. But the group and its attorneys allege the revenue-cycle management firm has committed “numerous material breaches” of the agreement that cannot be cured. Those include “repeated” failures to bill payers for medically necessary services, “systematic” misbilling for radiology exams, and a denial rate near 25% for claims submitted to independent practice associations.
They also charge that Zotec is aware of “holes” in its software and that the problems are part of a broader pattern, pointing to multiple similar lawsuits in other states. CMI contends the company “intentionally conceals, hides and fails to disclose” these problems.
“The fact that Zotec knowingly permits these ‘holes’ to persist and conceals that information from plaintiffs (and other customers) is inexcusable and exposes plaintiffs to legal risk from payers and patients alike,” according to the amended complaint, filed Aug. 25 in Los Angeles County.
On the other side, Zotec—which works with 21,000-plus providers nationwide, handling billing for 120 million procedures representing $8 billion in annual collections—alleges California Managed Imaging’s claims are bogus and based on “trumped up reasons.” One of the vendor’s senior employees left in 2018, taking trade secrets with him, according to a recently filed countersuit. Zotec claims Dhruv Chopra, MBA, CEO of Collaborative Imaging, in concert with former clients, is improperly using proprietary information to poach Zotec clients. The vendor and its attorneys allege those involved “schemed to manufacture various false pretexts” for prematurely terminating the California provider’s contract with Zotec.
“The misappropriation is he’s [Chopra] going to customers and he’s telling them about what he considers to be glitches or flaws or billing errors, and he is claiming that there’s something wrong with our software,” Zotec’s counsel said, according to court documents.
California Managed Imaging Medical Group now uses billing software from Collaborative Imaging—an independent coalition of practices, which also offers administrative support, workflow solutions and other back-office functions—and the two share the same attorneys.
“CMI’s complaint is a smokescreen intended to cloak their own breach of contract,” a Zotec spokesman told Radiology Business. “We’re disappointed in the path they have chosen, but we intend to fight vigorously in court and are confident we will prevail.”
Plano, Texas-based Collaborative declined to be interviewed, issuing a brief statement.
“We reject Zotec’s allegations against Collaborative Imaging and believe they are without merit,” the firm said Friday.
Meanwhile, other radiology groups have also filed suit against Zotec in recent years, similarly claiming they have experienced billing issues. Those include Southfield (Michigan) Radiology Associates in 2015; Indianapolis-based Specialists in Medical Imaging in 2017; the Global Neurosciences Institute in Lawrenceville, New Jersey, in 2019; and San Diego-based Imaging Healthcare Specialists in 2019. A fifth practice, Texas Radiology Associates, terminated its contract with Zotec, leading to a 2019 lawsuit before the Plano-based provider countersued for damages.
Texas Radiology Associates is also a member of Collaborative Imaging with the same attorney as California Managed Imaging Medical Group. Los Angeles-based lawyer Vinay Kohli, with King & Spalding, declined to comment on the substance of the suits, sharing a statement from CMI.
“We view Zotec’s claims against the individual physicians in our case as an attempt to intimidate through litigation the healthcare providers who had identified serious mistakes made by their medical billing vendor,” the statement read. “And although we had been made aware of Zotec’s prior use of litigation process against other former radiology customers in Texas, California and Indiana, we were incredibly disappointed to see them target our individual physicians in a lawsuit. Our physicians believe it is necessary to stand up for what we believe is right and to hold Zotec accountable. We will not be silenced. We look forward to our day in court and to getting all of the facts out in the open.”
The Zotec spokesman alleged that CMI was satisfied with the company’s billing services up until July, when the radiology group announced its intent to terminate the contract and switch services. Zotec declined to accept terms of the early cancellation, and the lawsuit followed. He also denied allegations the company is trying to intimidate radiologists and that the court cases represent a pattern.
“We totally disagree with that characterization,” he said by phone. “Given Zotec’s size and success, the fact that there is only a handful of lawsuits against us in more than 20 years is a testament to the company’s honesty, integrity and industry-leading service. The lawsuits represent a small fraction of the hundreds of satisfied clients Zotec has and has serviced and the billions of dollars we process on behalf of clients. It’s a very small fraction.”
A judge dismissed the Specialists in Medical Imaging case “with prejudice” in December 2018, resulting in a settlement and both parties paying their own attorney fees. Zotec’s complaint against Texas Radiology Associates is still pending. The Global Neurosciences Institute complaint has also been jointly dismissed, at both sides’ request, in May, resulting in a settlement. And the Imaging Healthcare Specialists case ended in a dismissal with prejudice in May 2020, with both sides paying their own attorney’s fees, while the same happened in the Southfield Radiology Associates v. Zotec case in February 2018.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.