McKesson investigation: DOJ steps in

Sunday, October 12, 2008

WASHINGTON - The government has intervened in a lawsuit against several companies, including McKesson, that alleges they accepted illegal kickbacks and formed sham durable medical equipment companies, the Department of Justice announced Oct. 6.

In a complaint, the government alleges that McKesson, through a subsidiary called MediNet, structured arrangements that ensured its DME and supplies were used by Beverly Enterprises at its Golden Horizons assisted living facilities. Furthermore, it alleges McKesson promised Beverly significant profits for making it appear to Medicare that Beverly was supplying the DME and supplies, not McKesson or MediNet.

To pull off the scheme, the government alleges MediNet set up a sham company, CERES Strategies Medical Services (CSMS). CSMS was managed by McKesson but affiliated with Beverly. It had few employees, owned almost no equipment or supplies, and performed no patient services.

"The government complaint alleges that MediNet's management allowed this entity to bill Medicare and retail millions of dollars in Medicare payments for services and supplies that actually were supplied by MediNet and not by CSMS," stated the DOJ's release. "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 was originally filed by a private citizen under the qui tam provision of the False Claims Act in the U.S. Attorney's Office for the Northern District of Mississippi and the Office of Inspector General.

Other companies named in the lawsuit: GGNSC Holdings and Golden Gate Ancillary.