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United States Govt. Joins Lawsuit vs. McKesson Corp. and Golden Horizons

October 16, 2008

Oct 6, 2008  (Reuters)
WASHINGTON - The United States has joined a whistle-blower lawsuit against McKesson Corp and other companies accused of submitting false claims to Medicare, the Justice Department said on Monday.

The complaint says that McKesson set up arrangements to make sure that McKesson's oxygen supplies and other durable medical equipment were used in Beverly facilities, a chain now known as Golden Horizon Nursing Homes.

Under the arrangement, a McKesson subsidiary called MediNet set up a medical goods supplier called CSMS.

""The government's complaint alleges that MediNet's management allowed this entity (CSMS)... to bill Medicare and retain millions of dollars in Medicare payments for services and supplies that actually were supplied by MediNet and not by CSMS,"" the Justice Department said in a statement.

""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"" durable medical supplies, the Justice Department said in a statement.

The case was originally filed by a whistle-blower, under a law which allows a private citizen to sue on behalf of the government and share in any proceeds from the suit.

McKesson spokesman James Larkin said the company had been cooperating with investigators for ""several years.""

""We continue to believe the case is without merit and we will vigorously defend against it,"" Larkin said in an e-mail.

The companies named in the lawsuit were McKesson Corp, its subsidiary McKesson Medical-Surgical MediNet Inc (MediNet), GGNSC Holdings LLC, Golden Gate Ancillary LLC, Beverly Enterprises Inc, CERES Strategies Inc and CERES Strategies Medical Services Inc (CSMS).