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DOJ Catch Of The Week -- Omnicare

Posted  June 27, 2014

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to Ohio-based Omnicare Inc., the country’s largest provider of pharmaceuticals and pharmacy services to nursing homes.  On Wednesday, the company agreed to pay $124 million to settle government charges of offering improper financial incentives to skilled nursing facilities in return for their continued selection of Omnicare to supply drugs to their elderly Medicare and Medicaid patients. See DOJ press release.

According to the DOJ, Omnicare provided improper discounts to skilled nursing facilities and their resident patients to induce them to use Omnicare as their pharmacy provider. This is a violation of the Anti-Kickback Statute which prohibits financial incentives to induce referrals for products or services covered by Medicare, Medicaid and other federally funded programs.  The Anti-Kickback Statute is intended to ensure the selection of health care providers and suppliers is not compromised by improper financial incentives but based on the best interests of the patient. Claims for payment for products or services subject to such improper inducements also constitute violations of the False Claims Act.

In the DOJ’s press release announcing the settlement, Civil Division Chief Stuart Delery stated, “schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.” Steven Dettelbach, US Attorney for the Northern District of Ohio, echoed this sentiment, emphasizing that “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.”

The government’s action against Omnicare originated with two lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act. The first whistleblower, former Omnicare employee Donald Gale, will receive roughly $17 million out of the government’s recovery.

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