Omnicare Inc., a supplier of drugs to nursing homes, has agreed to settle a lawsuit claiming it paid a kickback in buying a pharmacy company. It was also claimed in the suit that Omnicare submitted false claims for reimbursement to government health insurers. U.S. District Judge John J. Tharp Jr., a federal judge in Chicago, was told that a “settlement in principle” had been reached to resolve the 2007 lawsuit by whistle-blower Maureen Nehls. At press time, it was not known if the settlement had received court approval.
It was contended that Omnicare’s $25 million purchase of Total Pharmacy Services LLC in 2004 included a kickback to one of its owners, Philip Esformes, and his father, Morris. It was alleged that the payment helped Omnicare win contracts with nursing homes owned or controlled by Morris Esformes and gave the company thousands of elderly and disabled customers. It was stated that Omnicare capitalized on the illegal kickback arrangement at the heart of Total Pharmacy’s operations in a March 21 filing. As Total Pharmacy held no assets, aside from a small inventory, virtually all of the $25 million that Omnicare ultimately paid to purchase Total Pharmacy amounted to a kickback for long-term contracts. Omnicare is based in Covington, Ky. Ms. Nehls, who once worked at Total Pharmacy, is now pursuing a nursing degree.
The suit was filed in Boston under the U.S. False Claims Act. The U.S. Justice Department declined in January 2010 to join the case. It also sued under false claims laws in Illinois and Florida. On May 11, Omnicare settled a case with the Justice Department for $50 million. The agency called it the “largest controlled substance settlement in history,” and said Omnicare gave nursing home residents medicines without a prescription, with missing prescription information or without documentation. Omnicare agreed in November 2009 to pay $98 million to settle civil allegations by the U.S. government and various states that it took kickbacks from Johnson & Johnson. This case is United States of America v. Omnicare Inc., 07- cv-5777, U.S. District Court, Northern District of Illinois (Chicago).
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