The 6th Circuit Court of Appeals on Monday ruled that an $11 million 2011 verdict against a medical imaging company accused by a whistleblower of violating the False Claims Act was incorrect. The appeals judges said MedQuest Associates, operator of a number of BioImaging facilities in Middle Tennessee, had not violated Medicare payment rules as it relates to physician supervision of procedures. Instead, the company's shortcomings relate to so-called "conditions of participation" in Medicare, which cannot result in a False Claims judgment.

The court also said the penalties levied by District Court Judge John Haynes against MedQuest for using a Medicare billing number belonging to a company it had acquired were not warranted.

“We have little sympathy for MedQuest, which sometimes skirted and appears to have often ignored applicable regulations in the conduct of its centers. However, because these regulations are not conditions of payment, they do not mandate the extraordinary remedies of the FCA and are instead addressable by the administrative sanctions available, including suspension and expulsion from the Medicare program.”

The appeals court's complete opinion is available here and Haynes' 2011 ruling can be read here.

SEE ALSO: Waller's take on the 2011 verdict

U.S. District Court Judge William Haynes in late March moved forward one of the class actions filed in the fall of 2009 against the former Psychiatric Solutions and three of the executives who now run Acadia Healthcare. Haynes certified the class of investors who bought Psych Solutions shares between February 2008 and February 2009 and have accused executives of misleading them about performance and patient safety issues.