Omnicare reaches $124 million settlement in nursing home kickbacks case

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 Nursing home can't escape billing charges for "worthless care," federal judge rules.
Nursing home can't escape billing charges for "worthless care," federal judge rules.

The nation's largest long-term care pharmacy has agreed to a $124 million settlement over claims of kickbacks to nursing homes in the form of price breaks on certain drugs, the U.S. Department of Justice announced Wednesday.

The case originated in 2010, when former Omnicare pharmacy manager Donald Gale launched a whistleblower case. He alleged that Omnicare improperly discounted some Medicare Part A drugs for skilled nursing facility clients, and the SNFs in exchange referred more lucrative business to Omnicare.

Cincinnati-based Omnicare originally disclosed settling this case in a 10Q Securities and Exchange filing in October. The settlement amount was listed as $120 million in that filing. This is the amount that Omnicare actually will pay, as Gale has agreed in principle to pay about $4 million to the company to settle a motion for sanctions related to a potential breach of seal on the case, according to the most recent 10Q filing.

“The settlement is not an admission of liability and Omnicare continues to deny that there was any wrongdoing,” a company spokesman emphasized Wednesday in a statement emailed to McKnight's. Omnicare agreed to a settlement to avoid litigation and “focus on its mission” of ensuring the health of seniors and other patients, the statement noted.

Gale will receive more than $17 million as part of the deal, according to the DOJ.

“Omnicare provided improper discounts in return for the opportunity to provide medication to Medicare and Medicaid beneficiaries,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “Nursing homes should select their pharmacy provider based on the best quality, service and cost to the residents, not based on improper discounts to the nursing facility.”

The settlement also resolves some allegations leveled in a separate complaint brought by whistleblower Marc Silver, according to Omnicare's SEC filings. To resolve these claims, more than $8 million of the settlement amount will be divided among states whose Medicaid programs allegedly were affected by the practices in question.

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