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Omnicare Agrees to Pay 124 Million in Nursing Home Kickback Scheme

Jul 16, 2014

Omnicare Inc., the nation’s largest provider of pharmaceuticals and pharmacy services to nursing homes, has agreed to pay $124.24 million to the U.S. Justice Department for allegedly offering improper financial incentives to skilled nursing facilities for selecting Omnicare to supply drugs to Medicare and Medicaid beneficiaries.

In a Justice Department news release, Stuart F. Delery, Assistant Attorney General for the Civil Division said, “Schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.”

The settlement resolves allegations that Omnicare submitted false claims by entering into below-cost contracts to supply prescription medication and other pharmaceuticals to skilled nursing facilities to select Omnicare as their pharmacy provider. In addition to the facilities’ own claims for reimbursement from Medicare, Omnicare submitted additional claims for reimbursement to Medicare and Medicaid for drugs it supplied. Of the $124.24 million to be paid by Omnicare, $8.24 million will go to states that jointly funded the Medicaid programs impacted by Omnicare’s conduct, the news release says.

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 Anti-Kickback Statute is intended to ensure that selection of providers and suppliers is not compromised by improper financial incentives but is based on the best interests of the patient, according to the Justice Department.

The settlement resolves allegations in two lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which allows private parties to bring suit on behalf of the government and to share in any monies recovery. Whistleblower Donald Gale, a former Omnicare employee, will receive $ 17.24 million.

The settlement resulted from coordinated efforts by the U.S. Attorney’s Office for the Northern District of Ohio, the Commercial Litigation Branch of the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General, and the National Association of Medicaid Fraud Control Units. Since January 2009, the Justice Department has recovered a total of more than $19.5 billion through False Claims Act cases, with more than $13.9 billion of that amount recovered in cases involving fraud against federal health care programs.

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