In October 2008 the Department of Justice intervened in a qui tam action against national nursing home chain Beverly Enterprises/ Golden Gate, LLC that was originally filed in 2004. Here is the government’s complaint filed in the Northern District of Mississippi. Mississippi attorneys Cliff Johnson and Brad Pigott filed the original complaint on behalf of a private citizen.

The government alleges that Beverly/ Golden Gate and other companies submitted false claims to Medicare arising from illegal kickbacks and the establishment of sham durable medical equipment supplier companies. No one who has studied Beverly / Golden Gate will be surprised by these allegations. Beverly has run afoul with DOJ previously and in 1999 agreed to pay $175 million to settle Medicare fraud charges. Beverly’s entire operating system is built around squeezing Medicare dollars from the government by, among other things, only performing skilled therapy on residents who are eligible for high-rate Medicare reimbursement. The company now operates nursing homes under the name Golden Living Centers. The only thing golden about these places is the pot of gold in the operator’s pockets.

The current action looks bleak for Beverly/ Golden Gate, which is owned by the hedge fund Fillmore Capital Partners. My understanding of qui tam actions is that if the government intervenes, the defendants are DOA and almost always settle.