Consumer Fraud

Omnicare settles whistleblower’s allegations of providing illegal kickbacks to nursing facilities

osha whistle Omnicare settles whistleblower’s allegations of providing illegal kickbacks to nursing facilitiesCLEVELAND, Ohio – Omnicare Inc., a provider of pharmaceuticals to nursing homes and other health care facilities, has agreed to settle a whistleblower lawsuit alleging it violated federal anti-kickback laws by giving nursing homes discounts on Medicare services in exchange for patient referrals. The Cincinnati-based company will pay $120 million plus attorney fees to resolve the allegations.

The whistleblower lawsuit was filed in federal court in Cleveland by former Omnicare pharmacist Donald Gale. Mr. Gale alleged the company offered discounts and below-cost prices for drugs and supplies to nursing facilities in exchange for referrals of patients with prescription needs that the company could bill to public health care programs.

According to Stuart Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division, U.S. laws prohibit health care providers from engaging in kickback schemes because they “subvert the home health care market place and undermine the integrity of consumer choice.” Such programs are also designed to boost corporate profits by abusing health care programs at the expense of patients and taxpayers.

Mr. Dale filed his lawsuit under the qui tam provisions of the False Claims Act, which allow private individuals with evidence of fraud and other wrongdoing to sue on behalf of the United States. In exchange, whistleblowers receive up to 30 percent of the recovery.

The U.S. government may or may not join or take over whistleblower lawsuits filed under the False Claims Act for various reasons. In Mr. Dale’s case, the federal government opted not to intervene. Mr. Gale then pursued the action independently as the False Claims Act allows.

Mr. Gale’s case isn’t the first time Omnicare has been implicated in an illegal kickback scheme.

Omnicare paid $98 million to the U.S. government in November 2009 to settle five whistleblower complaints alleging it participated in a number of kickback schemes, including receiving kickbacks from medical giant Johnson & Johnson for recommending that doctors prescribe its antipsychotic drug Risperdal to nursing home patients.

In 2010, Omnicare settled two other whistleblower lawsuits alleging the company participated in kickback schemes and defrauded Medicare and Medicaid programs.


Bloomberg News