Life Sciences

McKesson accused of Medicare fraud

Device Regulation Alert: Safety, Compliance and Reimbursement News, October 13, 2008

McKesson, North America’s largest durable medical equipment (DME) supplier, defrauded Medicare by creating a sham DME company that submitted false claims and paid kickbacks to a nursing facility company, according to a Department of Justice (DOJ) release.

Federal prosecutors allege McKesson created and managed a phony DME company named CERES Strategies Medical Services, Inc. (CSMS), which was an affiliate of Beverly Enterprises, Inc., a nursing facility company.

According to prosecutors, McKesson supplied all of Beverly’s DME and allegedly promised Beverly significant profits if Medicare believed Beverly was supplying the DME instead of McKesson. According to the suit, Beverly allegedly kept millions of dollars in Medicare payments for services and supplies that were supplied by McKesson’s subsidiary MediNet, in exchange for referring sales to McKesson.

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