Omnicare pays $124M to settle case
Federal officials Wednesday accepted Omnicare Inc.’s offer to pay $124.2 million to settle a whistle-blower lawsuit.
The suit accused the Downtown Cincinnati-based company of 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.
Omnicare, the nation’s largest provider of pharmaceuticals and pharmacy services to nursing homes, proposed a $120 million settlement last October without admitting liability.
“Health care providers who seek to profit from providing illegal financial benefits will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.”
“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,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, in a news release.
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 $124.2 million to be paid by Omnicare, $8.24 million will go to various states which jointly funded the Medicaid programs affected by Omnicare’s conduct.
The federal 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 settlement resolves allegations brought in two lawsuits filed by two whistle-blowers under the federal False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. One of the whistle-blowers, Donald Gale, a former Omnicare employee based in the Akron suburb of Wadsworth, will receive $17.2 million.
The lawsuit settlement announced Wednesday is the latest in a string of whistle-blower complaints alleging kickback violations by the company,
In February, the Fortune 500 company agreed to pay the government more than $4 million to settle a whistle-blower lawsuit in South Carolina alleging the company engaged in illegal kickbacks.
In that case, the government accused Omnicare of soliciting and receiving kickbacks from California-based drug manufacturer Amgen Inc. in return for implementing programs designed to switch Medicaid beneficiaries from a competitor drug to Amgen's Aranesp product.
The government said the alleged kickbacks in this case included performance-based rebates, grants, consulting services and dinners.
In June 2013, Omnicare paid $20 million to settle a whistle-blower case in Chicago claiming that the company bought institutional pharmacies at above-market rates in violation of anti-kickback statutes, the company said in the regulatory filing.
Finally, in 2009, Omnicare paid the government $98 million, resolving a case where Johnson & Johnson paid millions in grants and education payments to persuade Omnicare pharmacists to recommend the psychiatric drug Risperdal to nursing homes. J&J last year paid $2.2 billion to clsoe its case with the feds, the third largest settlement of its kind.