Department of Justice Seal Department of Justice
(202) 514-2007
TDD (202) 514-1888

Beverly Enterprises Inc. to Pay $20 Million
for False Claims by Former Subsidiary

WASHINGTON – Beverly Enterprises Inc. has agreed to pay the United States and the State of California $20 million to settle allegations that its former wholly owned subsidiary, MK Medical, violated the civil False Claims Act, the Justice Department announced today.

The government alleged that MK Medical submitted false claims for payment to the Medicare and Medi-Cal programs from 1998 until 2002, while Beverly owned the company. MK Medical, a now-defunct wholesaler of durable medical equipment (DME), allegedly billed Medicare and Medi-Cal for DME provided to the programs’ beneficiaries without obtaining the proper claims and medical documentation.

“This agreement reflects the government’s determination to prevent fraud and abuse by ensuring that health care providers comply with program safeguards regarding critical documentation,” said Assistant Attorney General Peter D. Keisler of the Justice Department’s Civil Division.

Beverly has agreed to settle these allegations by paying $14,487,278 to the United States and $5,512,722 to the state of California. No action has been filed in court. The Medicare program is funded by the federal government, while the Medi-Cal program is jointly funded by the federal government and California.

“Health care fraud is one of the priorities of this office,” said Kevin V. Ryan, U.S. Attorney for the Northern District of California, whose office participated in the investigation. “We are committed to pursuing allegations of fraud against federal health care programs, and to safeguarding federal funds against false claims.”

The investigation was conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of California in San Francisco, the Office of Inspector General for the Department of Health and Human Services and the Federal Bureau of Investigation.