Nursing Chain Settles Claims

Times Staff Writer

Nursing home operator Beverly Enterprises Inc. has agreed to pay $20 million to settle allegations that it defrauded federal and California healthcare programs, the Justice Department announced Friday.

The Fort Smith, Ark.-based company, once the nation’s largest nursing home chain with 60 facilities in California, was accused of submitting false reimbursement claims to Medicare and Medi-Cal through a now-defunct subsidiary, MK Medical. Medicare is the federal health plan for seniors and disabled people. Medi-Cal is a federally funded, state-run health plan for the poor.

The company was never charged in court, and its attorney said Friday that the accusations stemmed from lack of proper paperwork, not fraud.

“Beverly raised the issue of proper documentation itself with the government,” attorney Russell Hayman said. “It conducted an audit and has now repaid the moneys identified.”


The company will pay $14.5 million to federal agencies and $5.5 million to California.

The Justice Department said federal agencies were investigating reimbursement claims MK filed between 1998 and 2002 for medical equipment used by Medi-Cal and Medicare patients. Hayman said all equipment was delivered to qualified patients.

In 2002, the company settled separate charges of elderly abuse with the state attorney general’s office. In that case, it paid more than $2 million in penalties and fines. The company also pleaded no contest to felony elder abuse in the death of two patients and promised to improve the quality of care in all its facilities.

Beverly Enterprises, which was acquired by private investors in March, operates 10 facilities in California.