Yesterday, we told you about the settlement that the attorneys of Berger-Montague helped to negotiate from the Omnicare healthcare firm. As a quick summation, Omnicare was using a kickback scheme to bribe nursing homes and bilk the government as part of a Medicare A/Medicare D swap. Essentially, the firms would sell Medicare Part A pharmaceuticals to nursing homes at a substantially lower price in exchange for the homes purchasing (the more expensive and more subsidized) Medicare Part D drugs from Omnicare.
This kind of swap grew as the incentive structure of Medicare changed, as pharmacies figured out the best way to manipulate the system. But the Omnicare settlement, which is pending approval at the Department of Justice and eventually the judge, will hopefully discourage other companies from doing likewise. It was this blog’s privilege to speak to two of the attorneys leading the way, Daniel Miller and Shauna Itri, to give us some backstory on the case, and tell us why it is such an important settlement.
To begin with, this is not Omnicare’s first go-round with the law. When asked if Omnicare had faced such allegations before, both attorneys laughed. Omnicare, as Miller said, “is the only company I know of that has been accused of both providing and accepting kickbacks.” Miller explained that to his knowledge the $120 million settlement is the largest declined settlement ever, meaning a case in which the government, for various reasons, declined to intervene. Miller went on to explain that the company has a history of malfeasance stretching back at least a decade, having had to sign multiple Corporate Integrity Agreements, including one in 2009.
Now, there are potentially people who don’t see the problem with the Omnicare scam. After all, the system is in place, and finding loopholes is what smart companies do. Why is this different? As Itri explained, the statute against kickbacks is to ensure good service. “A company should be judged based on the service they provide, on the cost they offer.” Providing kickback does an end-around of a system that is in theory self-policing. And Omnicare, Itri explained, knowingly violated that statute.
Miller elaborated on this point, explaining that since Omnicare was losing money by selling Medicare A pharmaceuticals at artificially-deflated prices, they by necessity had to make it up with “fewer pharmacists, fewer staff, leading to a lot more mistakes.” And these mistakes are not in the production of widgets. They are made with potentially life-saving, or at least hugely-beneficial medicines to one of the most vulnerable segment of our society, those in nursing homes. The whole scheme breaks the fundamental trust that a person believes when they or a loved one lives in a nursing home: that all decisions are made for the betterment of the patients.
Unfortunately, while the scale of this is seemingly off-the-charts, it only differs by degree, not by type, from other cases. “This is pretty widespread”, according to Miller. “There are other institutional pharmacies doing the same thing. There is a culture of corruption.”
This culture of corruption is not going unchecked. The attorneys at Berger and Montague are still pursuing the case at the state level, seeking judgment for nearly 30 states. The fight against corruption has just begun. And while Itri and Miller will continue to tenaciously fight against it, they can’t do it without courageous whistleblowers bringing to light these negligent and willfully destructive practices.
This is a huge case, and it isn’t a one-off. As Miller says, “This case is going to change the nursing home and pharmacy world.” Other pharmacies are trying to figure out how to protect themselves. The settlements grab the headlines, but the impact they have on other wrongdoers arguably has the longer impact. “Big cases like these are what drive changes in the healthcare world.”
Keep checking in with the blog this week as we explore healthcare fraud, where the case is going give you the history of the law, and talk about what this all means moving forward, as well as more highlights from our exclusive interview.