Department of Justice Formally Announces Settlement With Omnicare

As you may recall, we reported heavily months ago on the breadth of the False Claims Act allegations facing Omnicare, Inc. Omnicare, a company reigning as one of the top providers of pharmacy services to nursing homes, has been embroiled in widespread allegations of fraud and unlawful kickbacks spanning years. While no stranger to False Claims Act allegations, its settlements with the federal and state governments have been sizable, to say the least – and hopefully will work to deter other pharmaceutical services companies from engaging in similar conduct. Earlier this week, the Department of Justice formally announced the settlement, which totaled over $120 million. For our client, whistleblower Donald Gale, we were able to secure a reward of $17.24 million.

Background of Allegations Against Omnicare

The allegations against Omnicare Inc. originated with the filing of two whistleblower complaints. The allegations centered on Omnicare’s multi-year scheme in which it contracted with nursing homes for the below-market provision of drugs and pharmacy services to Medicare Part A patients. In an attempt to boost its profits, the Relators alleged that, nursing homes around the Ohio area agreed to pay less for Omnicare’s services in exchange for an agreement to refer all Medicare Part A patients to Omnicare for assistance.

This type of arrangement amounts to an unlawful kickback, which is prohibited by the False Claims Act – among several other federal laws. The kickbacks Omnicare received worked to cast a cloud over the patient-practitioner relationship, removing the patient’s right to choose his or her pharmacy services company in order for Omnicare and the nursing home facilities to increase revenue.

As a result of this set-up, False Claims Act liability was triggered – which assesses up to triple damages in the event of a breach. Following a concerted effort between the U.S. Attorney’s Office for the Northern District of Ohio, the Commercial Litigation Branch of the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General, and the National Association of Medicaid Fraud Control Units, these claims were brought to light and a nine-figure settlement eventually followed.

Government’s Response

As you are aware, the federal government has in recent years upped its efforts against combatting costly and wasteful healthcare fraud. According to U.S. Attorney Steven M. Dettelbach, “Omnicare provided improper discounts in return for the opportunity to provide medication to Medicare and Medicaid beneficiaries,….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.”

U.S. Attorney Stuart Delery reiterated the government’s position, stating, “Health care providers who seek to profit from providing illegal financial benefits will be held accountable….Schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.”

Contact Berger Montague

Much like our efforts in the Omnicare case, our whistleblower attorneys will work to help you not only expose fraud, but obtain a whistleblower reward under the False Claims Act’s qui tam provisions. For more information, contact our office right away.