Health Care Law Blog

Omnicare Settles Whistleblower Lawsuit Alleging Kickback Scheme With Nursing Homes

Omnicare Inc., the nation's largest dispenser of prescription drugs in nursing homes, announced on October 23, 2013, that it has agreed to pay $120 million to settle a whistleblower lawsuit alleging kickbacks to nursing homes.

The whistleblower in the case, an Ohio pharmacist named Donald Gale, worked for Omnicare from 1993 until 2010. The lawsuit, filed in federal court in Cleveland in 2010, accused Omnicare of giving discounts for prescription drugs to nursing homes for certain Medicare patients in return for referrals of other patients at higher prices paid for by the federal government.

Omnicare did not admit liability as part of the settlement, and issued a statement that: "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."

The case was brought under the federal False Claims Act, which prohibits false statements in connection with an application for benefits under a federal health care program. If the settlement is approved by the federal government and the court, Gale stands to receive between 25-30 percent of the settlement amount - up to $36 million. The balance will go the federal government.

This is not the first time Omnicare has had to deal with a claim under the False Claim Act. It previously settled a case that alleged the payment of kickbacks to nursing homes and the receipt of kickbacks from drug companies.

Categories: Billing/Payment, Fraud & Abuse, Medicare/Medicaid, Pharmacy, Providers