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Defrauding Uncle Sam and Disregarding Patients

A new buzzword in the headlines over recent months and years has been “whistleblower.” Whistleblowers have drawn attention to a variety of fraud, waste, abuse, and illegalities in both the private and public sectors. Most recently, a whistleblower has tried to expose an alleged episode of tremendous fraud in the nursing home sector. A former employee of a long-term care pharmacy called Omnicare filed a lawsuit against Omnicare under the False Claims Act. The False Claims Act is a law dating back to the Civil War that effectively deputizes private citizens as watchdogs of fraud and abuse that defrauds the United States government. It permits citizens to bring suit against a company, agency, institution or other entity for this fraud. In some cases the Department of Justice will get involved along with the plaintiff and take the reins, and in the event of a victory and recovery for the government, the plaintiff, otherwise known as a “relator” in the False Claims Act context, may be able to keep a share of that recovery.

Omnicare Lawsuit
The former employee filed suit against Omnicare claiming that one of the company’s top executives in Illinois instructed the Omnicare Foundation, which is a non-profit arm of the company, to pay off client nursing home owners in the form of charitable contributions. It is alleged that Omnicare used the non-profit wing to make these “donations” seem legitimate and not like kickbacks or bribes to the nursing homes. The alleged kickbacks were to ensure the nursing homes would refer patients/residents directly to Omnicare for pharmaceutical needs. Allegations also included that Omnicare gave out refunds and even illegal discounts. A judge recently ruled that the causes of action on these kickbacks may go forward in the lawsuit.

Interestingly, this does not appear to be the first time Omnicare engaged in such behavior. In 2009 the company paid a $98 million settlement over similar charges alleging it gave kickbacks to nursing homes as well as drug makers. In late 2013, the company settled for $120 million over kickbacks it gave through discounts to nursing homes for certain Medicare services. And just a few months ago, Omnicare paid $4.2 million over allegations of kickbacks it received from a drug manufacturer called Amgen in a scheme to lure Medicaid beneficiaries to use Amgen’s drug instead of a competitor’s drug. In each case, like the current one, it has been whistleblowers who have come forward to initiate these lawsuits.

The Prevalence of Nursing Home Fraud
Omnicare’s woes with the Justice Department is only an example of the expansive fraud that has gone on with nursing homes and affiliated companies that provide medication or other geriatric care or services to seniors living in nursing homes. The exchange of money, discounts, and favors between these entities violates kickback laws and further implicates fraud on the U.S. government where federal money is involved primarily through the Medicare and Medicaid programs.

While a pervasive problem has been the abuse of nursing home residents, either physically, sexually, mentally, emotionally, and/or financially – and this requires the utmost attention – so does the fraud committed by nursing homes and other companies for their own benefit. In committing these acts, they not only defraud the government, but they do not act in the best interests of the nursing home occupants, who should be their type priority.

Related Links:

Office of the Inspector General: Raise the Quality of Care in Our Nursing Homes

Hospice & False Medicare Claims