Feds Intervene in False Claims Suit against McKesson

WASHINGTON–The United States has intervened in a lawsuit
alleging McKesson Corp., San Francisco, and several other companies
submitted false claims to Medicare arising from illegal kickbacks
and the establishment of sham durable medical equipment suppliers,
the Department of Justice announced Oct. 6.

In its complaint, the government alleges that McKesson, through
a subsidiary called MediNet, structured arrangements ensuring that
its DME equipment and supplies were used by Beverly Enterprises
nursing facilities, now known as Golden Horizons. The suit further
alleges McKesson promised Beverly it could gain significant profits
from making it appear to Medicare that it was Beverly–not McKesson
or MediNet–that was supplying the equipment and supplies.

MediNet did so by setting up a phony DME company called Ceres
Strategies Medical Services (CSMS), which was affiliated with
Beverly but was actually managed by MediNet, according to a press
release from the DOJ.

The government’s complaint alleges that MediNet’s
management allowed CSMS, “which was thinly capitalized, had
few employees, had almost no DME equipment and performed none of
the DME patient services at the Beverly facilities” to bill
Medicare and retain millions of dollars in Medicare payments for
services and supplies that actually were supplied by MediNet and
not CSMS, the release said. “In exchange for accepting this
arrangement that enabled Beverly to retain these profits, the
government alleges that Beverly agreed to refer to McKesson its
facilities’ needs for DME supplies.”

The lawsuit originally was filed by a whistleblower under the
qui tam provisions of the False Claims Act in the U.S. District
Court for the Northern District of Mississippi. Under the act, a
private individual can sue on behalf of the government and can
potentially share in any recovery.

The companies named in the suit are McKesson Corp., McKesson
Medical-Surgical MediNet, GGNSC Holdings LLC, Golden Gate Ancillary
LLC, Beverly Enterprises, CERES Strategies and CERES Strategies
Medical Services.

According to reports from several news outlets, a McKesson
spokesperson said the company had not yet seen the complaint but
had been cooperating in the investigation for several years.

The investigation has been handled by the DOJ’s Civil
Division, the U.S. Attorney’s Office for the Northern
District of Mississippi and HHS’ Office of the Inspector
General.