In a prior post, we discussed how a whistleblower drew attention to substantial fraud going on in the area of nursing homes and long-term care facilities, specifically at a Cincinnati pharmaceutical company called Omnicare Inc. that provides pharmaceuticals to nursing homes. The whistleblower brought to light allegations of fraud through a False Claims Act (otherwise known in Latin as a “qui tam”) lawsuit. As a refresher, people can bring suit under the False Claims Act against a person or entity for defrauding the federal government. The plaintiff is the one who actually files suit, and it is up to the Department of Justice (DOJ) to join in and lead the case. If DOJ does not, then the plaintiff may still pursue the case. Regardless of DOJ’s involvement, if there is a recovery, the plaintiff can keep a certain percentage of it, otherwise known as a bounty.
Details of the Case
Omnicare went through multiple issues of alleged fraud in recent years. These included making kickbacks or bribes to nursing homes in the form of charitable contributions, exclusive discounts, or other payments in order to steer business to Omnicare. In 2009 the company had also settled for $98 million over an alleged kickback scheme with nursing homes and drug manufacturers, and earlier this year paid $4.2 million for a another drug kickback scheme with another drug maker. In between these, in late 2013, there was also a reported settlement agreement with the government for kickbacks through giving discounts to nursing homes so that the homes would purchase drugs from Omnicare for their resident patients, or direct their patients to purchase those drugs from Omnicare. The nursing homes would then file for reimbursement from Medicare and Medicaid for these purchases.
Because Medicare and Medicaid are federal programs and involve spending federal dollars on nursing home resident care, pursuing illegal kickbacks through these discounts as a quid pro quo for Medicare and Medicaid-insured patient referrals for pharmaceutical purchases is a major no-no. This essentially directs federal funds into Omnicare’s possession by illegal means of violating the anti-kickback laws. These illegal financial incentives deprive patients of the choice of where to purchase their medications, and takes away the opportunity to seek out the best quality and best cost for patients in an open pharmaceutical market. This is a fraud and violation that the False Claims Act was meant to combat.
Now, it is reported that the settlement of about $124.24 million plus attorneys’ fees is official, both to address the original whistleblower’s 2010 claim as well as a separate set of claims in New Jersey. As with many settlements, the company did not admit liability, thus the claims remain allegations, but the government has recovered well in excess of a hundred million dollars. $8.24 million of the overall settlement will be directed to multiple states whose own funds supplement Medicaid and were affected by the Omnicare scheme. The whistleblower, who formerly worked for Omnicare, will earn a $17.24 million bounty for his efforts.
As reports indicate, DOJ has been able to recover over $19.5 billion in fraud under the False Claims Act, $13.9 billion of which were related to health care program frauds. Medicare and Medicaid fraud is unfortunately endemic across the country from hospitals to doctors to nursing homes and elsewhere. In Omnicare’s case, the jig was up and it was time to pay up.
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