United States of America v. Omnicare (2019 “Cycle Fill”)
The whistleblower lawyers at Mahany Law have brought dozens of state and federal lawsuits across the United States on behalf of whistleblowers. Several of them have broken records… the historic settlement with Bank of America in 2014 that netted $16.7 billion dollars on behalf of taxpayers and homeowners. (And netted approximately $150 million in whistleblower rewards.) Another record breaker was the $300 million trial win against Allied Home Mortgage.
We are proud to represent the pharmacist whistleblower in the recently intervened Omnicare case.
We filed the initial complaint in 2015 on behalf of a pharmacist turned whistleblower. He claimed that Omnicare, the nation’s largest pharmacy catering to nursing homes and assisted living facilities, was automatically refilling prescriptions for assisted living facility residents without a valid prescription. Omnicare’s so-called “cycle fill” allegedly churned out tens of thousands of prescriptions that weren’t ordered by doctors.
In our opinion Cycle Fill endangers patient safety and costs taxpayers millions of dollars. (Many assisted living facility residents are receiving Medicare which is funded by tax dollars.)
Rather than describe what the case is all about, we thought it was easier to simply reprint the Justice Department’s summary of its “complaint in intervention”. But first, a little history about whistleblower suits and why whistleblowers are so important. (They are so important that Congress says they can be paid for their information.)
A Civil War era law allows ordinary citizens with inside information about fraud involving government programs to file a lawsuit in the name of the United States. If the complaint is successful, the whistleblower is entitled to between 15% and 30% of whatever the government collects from the wrongdoer. To qualify, one must have inside information and that information must related to a fraud involving a government program or funds.
The latter test is easy in pharmacy and pharmaceutical cases since Medicare, Medicaid and Tricare are government programs that insure tens of millions of Americans.
Over the last several years we have spoken with many pharmacists. Common schemes involving pharmacies and drug companies include:
- Failing to provide the lowest prices on prescription drugs to the government (Medicaid)
- Repackaging and reselling unused drugs
- Dispensing opioids without valid prescriptions
- Billing Medicare for drugs dispensed without a valid prescription
- Illegal kickback schemes
- Compounding pharmacy schemes
- Importation and distribution of drugs from non FDA approved sources
Pharmacists are often in the best position to spot these schemes. By filing a whistleblower complaint, they are saving taxpayers billions of dollars each year and often protecting the health and safety of their patients.
The False Claims Act recognizes that whistleblowers who report fraud are taking a risk. That is why Congress included robust anti-retaliation provisions in the law as well as the ability to receive cash rewards.
Under the Act, whistleblowers can receive between 15% and 30% of whatever the government collects from wrongdoers. Considering the law includes a triple damage provision and penalties as high as $20,000 per each fraudulent prescription, the rewards can add up quickly.
In 2014, the year before the present Omnicare case was filed, Omnicare paid $124,000,000.00 to settle a False Claims Act case involving alleged kickbacks. A former Omnicare employee turned whistleblower received a $17.24 million reward.
[Whistleblower tip: The government’s press release announcing that settlement indicated “the first whistleblower” was receiving the reward, implying that there was more than one whistleblower. That’s an important point because under the law, generally only the first to report gets paid a reward.
Finally, we noted that the government “intervened” in our whistleblower client’s complaint.
Under the Act, whistleblower complaints are filed under seal meaning they are secret while the government investigates them. Ultimately when the investigation is over, the Justice Department can seek to dismiss the case, allow the whistleblower’s own lawyer to prosecute or take over the case by “intervening.’
To see if you are eligible to receive a reward, see more details and our contact information at the end of this post.
Now without further ado, the summary of the government’s December 17, 2019 intervention complaint. Our comments are in brackets
COMPLAINT-IN-INTERVENTION OF THE UNITED STATES OF AMERICA
The United States of America (the “Government”), by and through its attorney Geoffrey Berman, United States Attorney for the Southern District of New York, brings this Complaint- In-Intervention seeking damages and penalties against Omnicare, Inc. (“Omnicare”) and its parent company, CVS Health Corporation (“CVS”), under the False Claims Act, 31 U.S.C. § 3729-3733 (the “FCA”), and, in the alternative, under the common law, and alleges as follows:
1. From 2010 to 2018 (the “Relevant Period”), Omnicare—the country’s largest provider of pharmacy services to long-term care facilities—fraudulently billed Medicare, Medicaid, and TRICARE for hundreds of thousands of non-controlled drugs dispensed without valid prescriptions to elderly and disabled residents of thousands of assisted living facilities, group homes for individuals with special needs, independent living communities, and other residential long-term care facilities.
[Those prescriptions that are paid for with tax dollars – primarily Medicare, Medicaid and Tricare – are within the False Claim Act. Many states have similar laws for the state portion of Medicaid including California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Vermont, Virginia, Washington and the District of Columbia. At the time of filing the original complaint, Wisconsin also had a false claims act which has subsequently been repealed.
Two of the above states – California and Illinois – have whistleblower reward laws that cover private insurance.]
2. Omnicare, and its parent company CVS, allowed Omnicare pharmacies to dispense prescription drugs indefinitely to individuals living in these residential facilities based on prescriptions that had expired, were out of authorized refills, or were otherwise invalid. Omnicare disregarded prescription refill limitations and expiration dates—which would have triggered consultation with residents’ treating physicians to evaluate whether the dispensed drugs should be renewed—and instead continued to push drugs out the door based on stale, invalid prescriptions.
[Providing prescription drugs to patients which were not ordered by those patients’ doctors is dangerous and involves a risk of harm.]
3. Rather than performing its basic professional obligation as a pharmacy to obtain a new prescription after an old one expired or ran out of refills, Omnicare simply assigned a new number to the old prescription and kept on dispensing, as if a new prescription had been obtained. Omnicare referred to this as a “rollover” prescription. In at least 1,766 residential facilities, Omnicare allowed prescriptions to “roll over.” And in at least an additional 1,476 residential facilities, Omnicare “rolled over” prescriptions through its “cycle fill” system, an automated system used to refill large volumes of medications in bulk on a periodic basis. Often, even Omnicare’s first dispensation of a drug was based on records that were not valid, legal prescriptions from healthcare providers with prescriptive authority.
4. Omnicare operates approximately 160 pharmacies across the country that collectively dispense tens of millions of prescription drugs to well over one million patients a year. Omnicare “rolled over” prescriptions so that it could push its product out the door as fast as possible. Omnicare management consistently prioritized speed and revenues over sound clinical practice, often ignoring Omnicare’s fundamental obligation as a pharmacy to ensure that drugs are given to patients only pursuant to valid prescriptions.
[Omnicare may not be a household name like its parent CVS but it is the largest supplier of prescription drugs to the nursing home and assisted living facility industry.]
5. Omnicare and CVS failed to ensure that Omnicare’s large network of pharmacies reliably tracked when prescriptions expired and obtained new prescriptions when necessary. Omnicare did not adequately train pharmacy staff on what constitutes a valid prescription or how to use Omnicare’s computer dispensing systems to prevent dispensations based on expired prescriptions. All the while, Omnicare managers exerted excessive pressure on overwhelmed pharmacy staff to dispense quickly so that Omnicare could submit claims and collect payments.
6. This is not the first time Omnicare’s dispensing practices have come under fire. Omnicare has been subject to numerous federal investigations and lawsuits over the years, many of which have resulted in substantial settlements. For instance, Omnicare entered into a $50 million settlement in 2012 after a Department of Justice investigation found that its pharmacies had dispensed controlled substances to long-term care facility residents without valid prescriptions. Yet, even after this investigation and settlement, Omnicare continued to dispense non-controlled prescription drugs illegally.
7. Senior management at Omnicare and CVS knew Omnicare’s pharmacies were routinely dispensing drugs without valid prescriptions. But they failed to begin to address the problem until they found out Omnicare was being investigated again, this time by this Office.
8. Several state boards of pharmacy alerted Omnicare that its pharmacies were illegally dispensing drugs without valid prescriptions. For example, in 2015, the New Mexico Board of Pharmacy investigated Omnicare’s Albuquerque pharmacy and found that “medications were being dispensed after refills had run out” and that “prescription medications were being dispensed pursuant to drug orders which did not have quantities, refills, and in some cases a prescriber’s signature.” These practices were “serious violations of the New Mexico Board of Pharmacy’s statutes and regulations requiring retail pharmacies to dispense medications only pursuant to prescriptions which contain all of the elements of a prescription.” CVS’s Director of Regulatory Affairs was made aware of these findings.
9. Internal audits found that Omnicare pharmacies often lacked valid prescriptions to support drug dispensations. For example, a 2012 draft report summarizing an Omnicare audit of pharmacy processes and controls reported a “recurring issue” identified in multiple operational audits that year: “Renewal physician orders are not consistently obtained due to the lack of an automated process to prevent the pharmacy from dispensing an order beyond 12 months.” This draft report was circulated to several compliance officers, including Omnicare’s Chief Compliance Officer, who did nothing to correct the problem.
10. Omnicare’s own pharmacists complained to management about “rollover” dispensations. For instance, one pharmacist who worked in an Ohio Omnicare pharmacy from 2011 until 2018 reported that she and others repeatedly complained to management that Omnicare was not tracking whether a prescription had any authorized refills before dispensing drugs to residential facilities. But Omnicare management ignored those complaints.
11. Omnicare’s Compliance Department succinctly acknowledged the dispensing problem in an April 2015 email exchange among senior compliance officers, in which oneRegional Compliance Officer stated: “An issue that I am running into more and more in multiple states concerns the ability of our systems to allow prescriptions to continue to roll after a year to a new prescription number without any documentation or pharmacist intervention.” A compliance officer then forwarded the email to the head of Omnicare’s Third Party Audit group, who responded that she had a “potential solution (programmed last year) but no one is rolling it out now.” (Emphasis added.)
[According to the government’s intervention complaint, Omnicare was aware of the problem, paid tens of millions of dollars to settle an earlier but similar problem and even had a fix worked out. We are curious as to Omnicare will respond.]
12. Omnicare’s practice of illegally dispensing drugs to elderly and disabled individuals living in residential facilities exposed these vulnerable individuals to a significant risk of harm. Many of the prescription drugs dispensed by Omnicare without valid prescriptions treat serious, chronic conditions, such as dementia, heart disease, and diabetes. They include antipsychotic drugs, anticonvulsant medications, cardiovascular drugs, and other medications that can have dangerous side effects and need to be closely monitored by doctors. This is particularly true for elderly and disabled patients, who are commonly on multiple drugs at the same time and thus face increased risks of side effects and adverse drug interactions.
[Many folks think that Medicare is a victimless crime. That is simply not true. Medicare fraud hurts taxpayers and in cases like this, puts vulnerable patients at risk.]
13. In contrast to traditional skilled nursing homes, where residents have access to 24-hour medical care supervised by physicians, assisted living and other residential facilities offer more limited medical care or none at all. In particular, these facilities generally do not have physicians on staff to oversee and monitor residents’ drug therapy. Rather, residents in these communities typically rely on their own doctors, outside of the facilities, to prescribe drugs, monitor the drugs’ effects, and determine whether they should stop taking a drug or alter the dosage or frequency with which a drug is taken. By repeatedly dispensing potent drugs without current and valid prescriptions to elderly and disabled individuals living in residential facilities, Omnicare jeopardized the health and safety of tens of thousands of people who continued to take the same drugs for months, and sometimes years, without consulting their physician to determine whether that medication was still clinically appropriate.
14. A large percentage of the long-term care residents serviced by Omnicare are beneficiaries of federal healthcare programs, including Medicare, Medicaid, and TRICARE (collectively, “Federal Healthcare Programs”). By routinely dispensing drugs to individuals in residential facilities without valid prescriptions, Omnicare presented, or caused to be presented, hundreds of thousands of false claims to Federal Healthcare Programs, as well as contracted Medicare Part D plans, Medicaid Managed Care Organizations, and pharmacy benefit managers (“PBMs”) (collectively, “Government Payors”). These claims were ineligible for reimbursement. In addition, Omnicare knowingly transmitted false information to Government Payors that made it appear that drug dispensations were supported by current, valid prescriptions from physicians when in fact they were not because any underlying prescription had expired, was out of refills, or was otherwise invalid.
There you have it. The actual complaint is 89 pages long and has dozens of pages of attachments.
Omnicare CVS Whistleblower Claims
This isn’t our only pharmacy scheme case. Only because it is unsealed can we share some of the details. To find out if you are eligible for your own whistleblower reward, visit our Medicare fraud whistleblower information page. Eligible whistleblowers can receive up to 30% of whatever monies are collected from wrongdoers.
Omnicare and its parent CVS have paid hundreds of millions of dollars in healthcare related fines and penalties. If you have information about an ongoing scheme or fraud involving CVS, Omnicare or any other pharmacy, call us. From corporate giants to small local compounding pharmacies, we are ready to help you stop fraud and receive a reward. We are also interested in hospitals or drug companies that may be participating in kickback schemes with pharmacies.
All inquiries are protected by the attorney – client privilege and kept strictly confidential.
To see if you qualify for a reward, contact us online, by email or by phone at 414-704-6731 (direct).