Nursing homes in Georgia pay $14 million to settle allegations they solicited kickbacks from Omnicare

by Ben Vernia | February 26th, 2010

In November, DOJ announced that it had sued Mariner Health Care, Inc., and SavaSeniorCare Administrative Services LLC, along with three of their principals, alleging that the firms had solicited kickbacks totaling $50 million from the nursing home specialty pharmacy company, Omnicare, Inc.. In November, Omnicare paid $98 million to settle its liability for the scheme.

According to DOJ’s February 26 press release:

In a complaint filed in March 2009 and unsealed in November 2009, the United States alleged that Omnicare, Mariner, Sava, Grunstein, Forman and Schron conspired to arrange for Omnicare to pay Mariner and Sava $50 million in exchange for the right to continue providing pharmacy services to the nursing homes, which together constituted one of Omnicare’s largest customers. The parties allegedly attempted to disguise the $50 million kickback as a payment to acquire a small Mariner business unit that had only two employees and was worth far less than $50 million. According to the complaint, Omnicare paid $40 million of this amount prior to actually acquiring the Mariner business unit and, at the same time, Omnicare obtained new 15-year pharmacy contracts from Mariner and from Sava, a new nursing home chain that Grunstein and Forman created from the Mariner chain. The complaint alleged that Grunstein and Forman illegally tied the new pharmacy contracts to Omnicare’s agreement to purchase the small Mariner business unit, and that the total $50 million purchase price for the business unit actually was a kickback by Omnicare to keep the future business of Mariner and Sava.

Approximately $7.84 million of the settlement proceeds will go to the United States, while $6.16 million has been allocated to certain state Medicaid programs. In November 2009, the United States, numerous states and Omnicare entered into a $98 million settlement agreement that, among other things, resolved Omnicare’s civil liability under the False Claims Act for allegedly paying a kickback to Mariner and Sava.

The government’s complaint further alleged that, in 2006, after the government issued subpoenas concerning the transaction, the individual defendants created backdated documents in a further attempt to hide the kickback.

Mariner entered into a five-year Corporate Integrity Agreement, but HHS reserved its rights to exclude the individuals and SavaSeniorCare from participating in federal healthcare programs.

The case was brought by a whistleblower, but DOJ did not announce what share the relator would receive.

The Government has alleged in separate cases that Omnicare was both paying and receiving kickbacks. In January, 2010, DOJ intervened in two whistleblower suits against Johnson & Johnson, alleging that the company had itself paid kickbacks to Omnicare for purchases of its anti-psychotic drug, Risperdal.

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