Beaver Medical Group, L.P. and physician Dr. Sherif Khalil agreed to pay over $5 million to settle recent allegations of Medicare fraud. The medical group is headquartered in Redlands, California but employs more than 200 physicians in eleven offices across California.

According to the lawsuit, the prominent medical group gave invalid diagnoses to patients using Medicare Advantage plans in order to receive inflated payments. In many cases, the group gave patients worse and wrong diagnoses simply to increase the amount of compensation they received from Medicare Advantage Organizations.

The lawsuit was filed on behalf of the U.S. government by whistleblower Dr. David Nutter, a former employee of Beaver. It was filed under the provisions of the False Claims Act. This act gives private citizens the legal right to sue on behalf of the government for false claims for government funds. When they do so and expose fraudulent activity, the whistleblower shares in the recovery.


The case was docketed as United States ex rel. David Nutter, M.D., and David Nutter, M.D., individually, v. Sherif F. Khalil, M.D., Beaver Medical Group, L.P., The Beaver Medical Clinic, Inc., Epic Management, L.P., and Epic Management, Inc., No. CVC17-02035-PSG-KKX (C.D. Cal.).

Several Medicare Advantage Organizations (MAO) in California contracted with Beaver Medical Group to provide healthcare to their beneficiaries. In this case, the whistleblower explained that the Medical Advantage Organizations compensated the defendant with a portion of the payments the Medical Advantage Organization received from Medicare. Because Medicare pays the Medical Advantage Organizations higher payments for sicker patients than it does for healthier patients, the defendant made more money the sicker their patients appeared. As such, they submitted additional diagnostic codes to increase the payments. These diagnostic codes were not supported in any way by the patient’s medical records and were simply added to inflate the payments received.

The whistleblower exposed the defendant’s scheme to fraudulently misrepresent its patients’ diagnoses to make them appear sicker in order to receive greater compensation. Ultimately, the defendant agreed to pay the Government over $5 million and the whistleblower received $850,000.

In settling the case, however, there was no determination of liability.


Under the False Claims Act, the Government is not only able to recover money fraudulently billed to Medicare but also money fraudulent billed to Medicare Advantage Programs under Medicare Part C. Under Medicare Advantage, commonly known as Medicare Part C, Medicare beneficiaries may elect to use private insurance to pay for care. In return, Medicare pays the private insurer a fixed, monthly amount to provide health insurance to the beneficiary. These private insurers, commonly called “Medicare Advantage Organizations,” routinely contract with physician groups and other healthcare providers to provide medical care to the Medicare beneficiaries they enroll. The amount Medicare pays the Medicare Advantage Organizations varies based on the health of the beneficiary.

False diagnoses can inflate payments from Medicare. This fraud costs the United States government billions of dollars every single year. In 2017 alone, improper payments for Medicare were estimated at about $52 billion. In pursuing justice, the government made it clear to all organizations and healthcare groups that exposing fraud in the Medicare Advantage area is a top priority.


At Price Armstrong, we have successfully represented whistleblowers in numerous Medicare Advantage Organization fraud cases under the False Claims Act. We believe in holding unscrupulous physicians and medical groups accountable for their actions. We protect whistleblowers throughout the legal process and help maximize recovery for everyone involved. Contact us today for a confidential case evaluation.