Harborside Healthcare to pay $1.375M to resolve kickback allegations

Harborside Healthcare and HHC Nutrition Services will pay the United States $1.375 million to resolve False Claims Act allegations that the company received kickbacks and assistance under the guise of a sham durable medical equipment (DME) provider, the Justice Department announced today. The government alleged that McKesson Corp., and its affiliate MediNet Corp. provided the kickbacks and assistance and, in return, Harborside purchased its DME, such as non-enteral supplies, from McKesson. As part of today's settlement, Harborside also agreed to forego $498,000 in DME claims that had not yet been billed to Medicare.

Today's settlement resolves allegations of the United States that this conduct violated the Anti-Kickback Statute and the False Claims Act. There is a related action pending against McKesson and MediNet in the Northern District of Mississippi that remains ongoing. In addition, the United States' investigation of similar conduct involving other DME providers and nursing home chains is continuing.

"It is critical that Medicare providers base their DME purchasing decisions on what is in the best interests of their patients," stated Tony West, Assistant Attorney General for the Civil Division. "The Justice Department will work vigorously to ensure that these decisions about patient care are not tainted by kickbacks."

The settlement was the result of an ongoing investigation by the Justice Department's Civil Division, the Office of Inspector General at the U.S. Department of Health and Human Services, and the U.S. Attorney's Office for the Northern District of Mississippi.

"Our Medicare system depends upon fair competition by medical service providers. We are always vigilant to thwart sham operators, like HHC Nutrition Services," said Jim M. Greenlee, U.S. Attorney for the Northern District of Mississippi.

This action was initiated by the filing of a qui tam or whistleblower suit by Tommy Jamison. Under the False Claims Act, a private individual may bring lawsuits on behalf of the United States and receive a portion of the proceeds of any settlement. Mr. Jamison will receive $275,000 as his share of the government's recovery.