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Medical supplier settles lawsuit over billing charges

December 7, 2011 |  6:28 pm

A Santa Clarita-based medical supply provider has paid a total of $5 million to the federal government and California to settle a lawsuit triggered by a whistle-blower who alleged the company submitted inflated bills to Medi-Cal, the state’s Medicaid program, the U.S. attorney’s office said Wednesday.

Shield Healthcare, owned by Dharma Ventures Group, paid the settlement Nov. 17. But the government only learned Wednesday that U.S. District Judge David O. Carter unsealed the case and dismissed the lawsuit Nov. 22, officials said.

According to the U.S. attorney office, the lawsuit alleged that Shield -- the largest supplier to the state of incontinence supplies, such as adult diapers and waterproof sheeting -- submitted false claims in violation of a regulation designed to eliminate excessive markups charged to the Medi-Cal program.

“The company allegedly evaded the regulation’s upper billing limit, which requires that providers bill Medi-Cal no more than double their net purchase price,” justice officials said in a statement.

Representatives of Shield could not be reached for comment.

The federal government will receive $2 million of the settlement and $3 million will go to California because both fund the Medi-Cal program, officials said.

The whistle-blower, identified in court papers as Terry Donath, discovered the misconduct while working for one of Shield’s suppliers, authorities said. He also will receive some of the settlement money, officials said.

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