United States ex rel. Gale v. Omnicare, Inc.

Mr. Gale’s whistleblower complaint alleged a kickback scheme called “swapping,” asserting that Omnicare paid nursing home owners kickbacks in the form of heavily-discounted prescription drugs for Medicare Part A inpatients. The nursing homes are financially responsible for Part A patients’ medical because Medicare pays a flat fee to the facility.

Omnicare offered the nursing homes daily, or “per diem,” pricing. Mr. Gale’s Complaint alleges that the per diem pricing for hundreds of facilities was substantially below the fair market value of the goods provided, and that this violated the Medicare Anti-Kickback Statute and the False Claims Act because Omnicare gave the discounts intending that the nursing homes would refer, or “swap,” their non-Part A patients, most of whom participate in the Medicare Part D prescription-drug benefit program, to Omnicare. Omnicare then charged full price for their prescription drugs and other pharmacy services.

The HHS Office of Inspector General has made clear since 1999, when Medicare Part A services were converted to the “Prospective Payment system,” that swapping was prohibited by the Anti-Kickback Statute.