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.