Whistleblower Cases Involving Allegations of Omnicare Swapping Scheme Settled for $124 Million

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Omnicare, Inc., one of the largest pharmacy providers, has just agreed to a $124 million settlement to resolve whistleblower allegations regarding a swapping scam that involved below cost discounts and Medicare and Medicaid nursing home patients.

In late June, the Department of Justice announced that it settled with Omnicare, Inc. concerning two qui tam whistleblower cases involving allegations over kickbacks from discounts offered to skilled nursing homes for Medicare and Medicaid patients. The scheme was put in place to encourage facilities to choose Omnicare as their pharmacy provider.

These whistleblower cases are just two of numerous recently filed lawsuits that have been brought over allegations of similar swapping schemes. This settlement is believed to be the largest of these cases, to date, and experts believe this settlement, and the fact that Omnicare is one of the largest pharmacy providers serving the nursing home community, may encourage other whistleblowers to come forward to file similar cases.

This alleged scheme involved nursing home facilities that were participating providers under Medicare and Medicaid agreements. The facilities were filing claims for reimbursement from Medicare for short-term rehabilitation treatment received by patients, while Omnicare was submitting additional claims for reimbursement to Medicare and Medicaid for the drugs it provided. A former Omnicare pharmacy manager brought the whistleblower case in 2010.

Whistleblowers are critical to putting an end to illegal employer activities that may cause harm to citizens and may defraud the government and other entities. What many may not realize is that, under certain circumstances, whistleblowers may also maintain their anonymity during much of the whistleblower process.

The False Claims Act allows for private persons to file lawsuits that provide the government with details involving such wrongdoings. Under the statute, if it is established that a person either knowingly submitted and/or caused others to submit false or fraudulent claims to the United States, the U.S. government may then recover treble damages, as well as additional monies for every statute violation. Should the government successfully resolve or litigate its claims, the whistleblower who initiated the action may receive a significant share of the amount recovered.

In this case, the whistleblower will receive more than $17 million; $8.24 million of the settlement will go to the various states involved, which jointly funded the Medicare and Medicaid programs that were impacted by Omnicare’s misconduct. The rest will go to the federal government.

“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.”
Steven M. Dettelbach, United States Attorney for the Northern District of Ohio said, “Omnicare provided improper discounts in return for the opportunity to provide medication to Medicare and Medicaid beneficiaries.” He added, “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,” according to the Department of Justice release.

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 Department of Justice noted.