Pharmacy Provider, Omnicare, Settles Two Whistleblower Cases Involving Swapping Scheme Allegations

Omnicare-Agrees-to-Pay-124-MillionPharmacy provider, Omnicare, Inc., just agreed to a $124 million settlement to resolve allegations of a swapping scam that involved below cost discounts.

The Department of Justice announced late last month that it settled with Omnicare, Inc. over two issues in which allegations were made that involved kickbacks from discounts offered to skilled nursing homes for their Medicare and Medicaid patients. The scheme was conducted to induce the facilities to choose Omnicare as their pharmacy provider. Both cases are qui tam whistleblower cases.

These two cases are just two of a number of recently filed lawsuits brought over allegations of similar swapping schemes and this settlement is believed to be the largest of these, to date. Some experts feel that this settlement, and the fact that Omnicare is one of the largest pharmacy providers serving the nursing home community, may prompt other whistleblowers to file similar cases.

The nursing home facilities were participating providers under agreements with Medicare and Medicaid and were filing claims for reimbursement from Medicare for short-term rehabilitation treatment received by patients. At the same time, Omnicare was submitting additional claims for reimbursement to Medicare and Medicaid for drugs it provided. The case was brought in 2010, when a former Omnicare pharmacy manager filed a whistleblower case against the firm.

Whistleblowers are a crucial part of putting an end to illegal employer activities that may cause harm to citizens and which may also defraud the government and other entities. What many may not realize is that, under certain circumstances, whistleblowers may maintain their anonymity during most of the whistleblower process.

The False Claims Act allows for private persons to file lawsuits that provide the government with information concerning wrongdoing. Under the statute, if it is established that a person has knowingly submitted or caused others to submit false or fraudulent claims to the United States, the government may recover treble damages and additional monies for each violation of the statute. Should the government be successful in resolving or litigating its claims, the whistleblower who initiated the action may receive a share of the amount recovered.

In this case, the whistleblower will receive in excess of $17 million; $8.24 million will go to the various states, which jointly funded the Medicare and Medicaid programs impacted by the pharmacy provider’s misconduct. The remainder will go to the federal government.

“Health care providers who seek to profit from providing illegal financial benefits will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division, Stuart F. Delery. “Schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.”
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio said, “Omnicare provided improper discounts in return for the opportunity to provide medication to Medicare and Medicaid beneficiaries.” He added, “Nursing homes should select their pharmacy provider based on the best quality, service and cost to the residents, not based on improper discounts to the nursing facility,” according to the Department of Justice release.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs, the Department of Justice noted.

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