Whistleblower Gets 41 Million in PharMerica Illegal Kickback Case
Two of the biggest pharmacy companies in America aren’t exactly a household words. Kentucky based PharMerica and Cincinnati based Omnicare are certainly well known names with the United States Department of Justice, however. Both companies are again in trouble with the feds, this time for receiving kickbacks from Abbott Laboratories in connection with the sale of Depakote, a popular prescription medication used to treat seizures and bipolar disorder.
Under a settlement announced by the government in October, PharMerica will pay $9.25 million to settle charges under the federal Anti-Kickback law and False Claims Act. The company was permitted to settle, however, without an admission of wrongdoing. This week a docket entry by U.S. District Court Judge Pamela Meade Sargent indicates that Omnicare has now also settled.
Judge Meade Sargent’s minute entry, made on December 9th, says:
“Status Conference held regarding settlement with defendant Omnicare by telephone conference call on 12/9/2015 with counsel Mountcastle, Crook, McCabe, Garrett, Dubelier, and Buschner and Mary Reardon from HHS OIG. Memorandum outlining monetary settlement has been approved by all necessary agencies and will be submitted for final Department of Justice approval this week. That process usually takes two weeks, but timing could be complicated by holiday schedules. Defense counsel has forwarded suggested changes in agreement language to government counsel and counsel for the states…”
Omnicare isn’t a household name because it doesn’t sell drugs to the public. It and its chief rival, PharMerica, are considered institutional pharmacies. They cater to nursing homes, assisted living facilities and hospitals.
Many of the patients in nursing facilities receive Medicare or Medicaid benefits. Because these programs rely on tax dollars, a pharmacy’s Medicare sales are subject to the federal Anti -Kickback law and the False Claims Act. The latter law is a Civil War era whistleblower law that empowers civilians to come forward an earn rewards for reporting wrongdoing.
The PharMerica was originally brought under the False Claims Act by whistleblowers; concerned employees who came forward to report the kickbacks.
Whistleblowers, Illegal Kickbacks and the False Claims Act
The federal Anti-Kickback law prohibits the exchange of anything of value in an effort to induce the referral of federal healthcare program business. Usually, when one thinks of kickbacks the first thing that comes to mind is cash. Federal law, however, prohibits giving or receiving anything of value. That includes discounts and rebates.
Why are discounts against the law? If there is a rebate or discount, that money should go the recipient. If Medicare is footing the bill, that means taxpayers. Pharmacies shouldn’t be promoting sales of drugs to nursing homes simply so they can earn a discount from the manufacturer.
When a pharmacy and drug manufacturer conspire to promote a certain drug in return for kickbacks, the scheme becomes illegal. In the words of the U.S. Attorney for Roanoke, Virginia, “When those activities involve improprieties such as the payment of kickbacks, we will not hesitate to hold them accountable. We owe nothing less in fulfilling our duty to ensure that nursing home residents are provided with the appropriate drugs based upon their needs rather than the business interests of the companies providing the drugs.”
A spokesperson for the Department of Health and Human Services said, “Nursing home pharmacies accepting kickbacks from drug makers in exchange for prescribing certain prescription drugs puts vulnerable residents at risk for receiving unnecessary medications, corrupts medical decision making, and inflates health care costs.”
PharMerica and Omnicare are not the only two companies in trouble for the kickbacks. Several years ago Abbott Laboratories paid $1.5 billion dollars in fines and penalties for its role in the scheme.
This isn’t the first time PharMerica or Omnicare have settled Medicare fraud charges. Earlier this year the PharMerica paid millions of dollars to settle yet a different whistleblower claim.
One of the two whistleblowers who first reported the illegal kickbacks is receiving an award of $1 million from the Justice Department and is eligible to receive even more from those states with a state Medicaid fraud whistleblower law.
Illegal kickbacks remain a serious problem and the problem isn’t confined to institutional pharmacies and drug manufactures. We have seen many cases where hospitals pay kickbacks to doctors who admit more patients.
If you have first hand knowledge of illegal kickbacks or other healthcare fraud involving federal or state tax dollars, you may be entitled to an award. To claim an award, however, you must file a sealed complaint in court. Calling a Medicare fraud tip line doesn’t qualify you for the large awards.
Need more information? Down load a copy of our 11 Step Whistleblower Guide or contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries kept strictly confidential.