Court Issues Decision On Illegal Kickbacks By DME Suppliers To Nursing Homes

The U.S. District Court for the District of Mississippi recently denied a motion to dismiss a complaint by the Government alleging that certain Durable Medical Equipment (DME) providers engaged in a scheme to provide unlawful kickbacks to nursing homes in exchange for referrals.  DME suppliers receive funds from the Government’s Medicare Part B program in exchange for providing equipment and services to patients.  In order to receive these funds, the suppliers must submit an application to the National Supplier Clearinghouse to receive a supplier number which is then used to submit claims for reimbursement through Medicare Part B.  In U.S. ex rel. Jamison v. McKesson Corp., et al., Case No. 2:08CV214-SA-DAS (N.D. Miss.), the Government alleged that a DME supplier set up a sham DME company that was owned by a nursing home chain, rather than the DME supplier, in order to obtain a supplier number from the Clearinghouse.  Medicare Part B claims for DME services were then submitted through the supplier number of this sham DME company and, as result, the nursing home was allowed to keep a substantial percentage of the profits resulting from the services provided by the DME supplier.  The Government alleged that in exchange for setting up this sham company to allow nursing home to share in the profits from DME services, the nursing home was induced to refer patients to the DME supplier, in violation of the False Claims Act and Anti-Kickback Statute.  In addition, the Government alleged that in connection with setting up sham DME companies, the DME supplier also offered substantial discounts to the nursing homes as another means of enticing the nursing homes to refer patients to the supplier.  This case was original brought by a quit tam relator, alleging a whistleblower claim under the False Claims Act.

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