Omnicare pays $124 million to settle whistleblowers' allegations it paid kickbacks to nursing homes

by Ben Vernia | June 25th, 2014

On Jue 25, the Department of Justice announced the settlement of whistleblower cases against the long-term care pharmacy giant Omnicare, Inc., over allegations the company paid nursing homes kickbacks for contracts to provide pharmacy services. The settlement in principle of one of the cases, for $120 million, was announced in October 2013. According to DOJ’s press release:

Omnicare Inc., the nation’s largest provider of pharmaceuticals and pharmacy services to nursing homes, has agreed to pay $124.24 million for allegedly offering improper financial incentives to skilled nursing facilities in return for their continued selection of Omnicare to supply drugs to elderly Medicare and Medicaid beneficiaries, the Justice Department announced today . Omnicare is headquartered in Cincinnati, Ohio.

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The settlement resolves allegations that Omnicare submitted false claims by entering into below-cost contracts to supply prescription medication and other pharmaceutical drugs to skilled nursing facilities and their resident patients to induce the facilities to select Omnicare as their pharmacy provider. The facilities were participating providers under agreements with Medicare and Medicaid. In addition to the facilities’ own claims for reimbursement from Medicare for short-term rehabilitation treatment rendered to patients, Omnicare submitted additional claims for reimbursement to Medicare and Medicaid for drugs Omnicare supplied. Of the $124.24 million to be paid by Omnicare, $8.24 million will go to various states which jointly funded the Medicaid programs impacted by Omnicare’s conduct.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Anti-Kickback Statute is intended to ensure that the selection of health care providers and suppliers is not compromised by improper financial incentives and is instead based on the best interests of the patient.

The whistleblower in the largest case will receive $17.24 million (at a minimum, a relator’s share of approximately 15%).

The government did not announce whether Omnicare’s Corporate Integrity Agreement has or will be amended and restated. The company has operated under a CIA since November 2006; that original five-year agreement was extended and revised when the company settled other allegations of fraud.

Disclosure: The Vernia Law Firm has represented a whistleblower in other cases against Omnicare.

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