The U.S. Justice Department has joined a whistleblower lawsuit involving several companies, including McKesson Corp., alleging that they submitted false claims to Medicare, paid illegal kickbacks and established sham medical-equipment suppliers. This case originally was filed by a private citizen under the qui tam provisions of the False Claims Act in federal court in Mississippi. These provisions allow private citizens to sue on behalf of the U.S. government for alleged fraud by government contractors and to share in any money recovered.

The government alleges that McKesson, through its McKesson Medical-Surgical MediNet Inc. subsidiary, made arrangements for its supplies to be used in nursing facilities owned by Beverly Enterprises Inc., now known as Golden Living. The suit alleges that McKesson promised Beverly facilities that significant profits could be gained from making it appear to Medicare that it was Beverly, not McKesson or MediNet, that was supplying the equipment and supplies. The suit accuses MediNet of setting up and managing a purported medical equipment supplier, called CSMS, affiliated with Beverly and using that supplier to bill Medicare. According to the suit, Beverly allegedly kept millions of dollars in Medicare payments for services and supplies that were supplied by MediNet in exchange for referring sales to McKesson.

Drug wholesaler McKesson is one of the nation’s largest suppliers of medical equipment, which includes feeding devices and oxygen supplies. The company says it has been cooperating with the government’s investigation for several years. Golden Living also says it has been cooperating with the government’s probe for nearly three years.

Source: Wall Street Journal

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