By Terry Baynes
Oct 23 Omnicare Inc, a leading U.S.
provider of pharmacy services to the elderly, has agreed to pay
the U.S. government $120 million to settle allegations the
company gave nursing homes steep discounts on prescription drugs
in exchange for patient referrals.
Cincinnati-based Omnicare announced the settlement on
Wednesday in a filing with the U.S. Securities and Exchange
Commission, but denied any wrongdoing. The lawsuit, filed in
2010 by former Omnicare employee Donald Gale, had been scheduled
to go to trial on Oct. 28.
Gale accused the company of engaging in a kickback scheme
called "swapping," in which Omnicare allegedly gave nursing
homes heavily discounted prescription drugs for inpatients
covered by Medicare Part A. That federal benefit program pays
skilled nursing facilities a fixed fee per patient, per day, for
the first 100 days of a patient's stay, according to court
In exchange, the nursing homes allegedly referred their
other patients, many covered by other federal benefit programs,
allowing Omnicare to bill the full price of their prescription
drugs and pharmacy services, the lawsuit said.
Omnicare's vice president of investor relations, Patrick
Lee, said in an emailed statement that the company did not admit
liability in settling the lawsuit.
"The Company agreed to settle the matter in order to avoid
continued litigation and to focus on its mission of helping to
ensure the health of seniors and other patient populations in a
cost-effective manner," he said.
Gale brought the case under the federal False Claims Act,
which makes it illegal to submit a kickback-tainted claim for
reimbursement to federal healthcare programs. The law allows
private whistleblowers to sue on the U.S. government's behalf
for defrauding federal healthcare programs.
The case was unsealed in 2011 after the U.S. Attorney for
the Northern District of Ohio declined to intervene, allowing
Gale's lawyers to move forward.
"This result stands as a powerful example of how the False
Claims Act empowers Americans to help fight fraud on the
government that, in the end, hurts all taxpayers," said Gale's
lawyer Ross Brooks of Sanford Heisler.
The agreement still has to be approved by the U.S.
Department of Justice. If the department approves the
settlement, Gale is entitled to share 25 to 30 percent of the
money recovered, according to a statement by his lawyers.
A Justice Department spokeswoman did not provide an
Omnicare previously settled False Claims Act cases that
alleged the payment of kickbacks to nursing homes and the
receipt of kickbacks from drug companies.
The case is USA ex rel. Gale v. Omnicare Inc, U.S. District
Court, Northern District of Ohio, No. 10-127.