Harborside Healthcare and HHC Nutrition: The Sham DME Provider Arrangement

In the Harborside HHC Nutrition DME settlement, Harborside Healthcare and HHC Nutrition Services agreed to pay $1.375 million to resolve allegations of kickbacks through a sham durable medical equipment provider. The government’s allegation put the purchasing relationship at the center of the case: assistance coming from a vendor, equipment purchases going back to it, and Medicare behind the claims. Honest durable medical equipment suppliers compete for the order. An alleged kickback rewards the buyer instead, with Medicare paying the claims.

The Justice Department announced the settlement on October 8, 2009. A whistleblower brought the qui tam case that led to the resolution. The government alleged violations of the Anti-Kickback Statute and the False Claims Act. The announcement placed the case within a wider investigation of similar conduct involving durable medical equipment providers and nursing home chains.

How the Sham DME Provider Arrangement Worked

The alleged exchange connected Harborside’s equipment purchases to benefits from its vendor. The Justice Department alleged that McKesson Corp. and its affiliate MediNet Corp. supplied kickbacks and assistance under the guise of a sham durable medical equipment provider. In return, Harborside bought equipment and supplies, including non-enteral supplies, from McKesson.

Harborside was the equipment buyer in the government’s account. HHC Nutrition Services was one of the settling entities, and the government described it as a sham operator. The allegation reached the business presented as the provider, as well as the vendor supplying the equipment.

The government’s concern was that health care purchasing decisions should serve Medicare patients. When a vendor allegedly wins those purchases by supplying kickbacks, patient needs and fair competition lose their place in the decision. A supplier competing on the equipment and service it offers has to contend with a benefit going to the buyer instead.

The Medicare Claims Harborside Agreed to Forgo

Beyond the cash settlement, Harborside agreed to forgo $498,000 in durable medical equipment claims that had not yet been billed to Medicare. The Justice Department’s announcement lists those claims separately from the payment.

The settlement therefore reached both money Harborside would pay and bills it would never send. A billing employee may know the claims waiting to be submitted even without having chosen the vendor. That knowledge can connect the purchasing side of the business to the demands for Medicare payment.

Other Durable Medical Equipment Cases Show Where the Benefit Sits

Respironics allegedly provided free physician prescribing data to help suppliers market to physicians, inducing false claims for respiratory equipment, according to the Justice Department’s September 2022 settlement announcement.

Vision Quest Industries allegedly paid sales-commission kickbacks to a representative who could direct clinics’ knee-brace orders, securing exclusive supply and causing Medicare claims tainted by kickbacks, according to the August 2022 announcement.

What Is the Reward for a Medicare Fraud Whistleblower?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In the Harborside case, the whistleblower who brought the qui tam suit was to receive about 20% of the government’s recovery, according to the Justice Department.

An insider’s account can connect a vendor’s offer of assistance to the purchasing decisions and claims that followed. If you know those decisions from inside a supplier, a provider or a vendor, our whistleblower experts can assess that connection with you. Your knowledge of the business can explain why a benefit mattered and how it affected the choice of supplier.

You Know What the Vendor Supplied

If you saw a provider arrangement built around a vendor’s assistance and the purchases it secured, speak to one of our Whistleblower Experts about what the vendor supplied. We stay beside you through the pursuit of a recovery and bring in durable medical equipment fraud whistleblower lawyers who know kickback cases. Together, we connect the benefit, the purchasing decisions and the Medicare claims to build your strongest durable medical equipment whistleblower case.